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CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 537, 538 and 539 of 1962. Appeals by special leave from the judgment and decree dated September 29, 1959, of the Patna High Court in Miscellaneous Judicial cases Nos. 227 to 229 of 1957. N. Sanyal, Solicitor-General of India and P. K. Ohatterjee, for the appellants. P. Varma, for the respondents. 1963. April 9. The Judgment of the Court was delivered by K. DAS J.-The Champaran Cane Concern, appellant before us, was assessed to agricultural income-tax under the Bihar Agricultural Income-tax Act Bihar Act 32 of 1948 , referred to as the Act in this judgment, by the Agricultural Income- tax officer, Motibari for three years 1356 F. 1357 F. and 1358 F. companyresponding to 1948-49, 1950-51 and 1951-52 respectively. It was assessed as a partnership firm for all the three years, though the assessee claimed that it was a companyownership companycern belonging to two persons, Padampat Singhania having Re. 0-4-0 share and Lala Bishundayal Jhunjhunwala having Re. 0-12-0 share. The companycern, it was stated, carried on agricultural operations in six farms company- sisting of a little over Ac. 2,000-00 of land out of which about Ac. 1,600-00 were purchased jointly by Padampat Singhania and Bishundayal Jhunjhunwala and Ac. 483-00 were purchased in the name of a mill, namely, Motilal Padampat Sugar Mill of which the aforesaid two persons were the owners. Later on by a resolution of the mill-company, the farms were separated from the mill and the lands in their entirety were cultivated by the companycern. As numberhing number depends upon the distinction between the lands purchased in the name of the mill and those acquired otherwise, we shall ignore the distinction for the purpose of these cases. The assessee claimed that the companycern was a companyownership companycern belonging to the two persons above named in the shares already indicated, and as .they were residents of Uttar Pradesh at a very long distance from the farms in Champaran, they appointed one S. K. Kanodia its companymon manager for facility of cultivation and management. This companymon manager lookde after and managed the agricultural operations during the years in question. The further case of the assessee was that the lands were undivided between the companyowners and the total net profits arising out of the joint cultivation were divided between the two companyowners. On these statements the assessee pleaded that s. 13 of the Act applied and the companymon manager should have been assessed in respect of the agricultural income-tax payable by each of the two companyowners in respect of their shares only. This plea of the assessee was rejected by the Income-tax officer. Appeals were then preferred against the assessment,, made to the Deputy Commissioner of Agricultural Income-tax. These appeals were dismissed with certain modifications with which we are number number companycerned. Then, three applications in revision were filed to the Board of Revenue. The Board reduced the assessment under schedule C but did number accept the plea of the assessee that the assessments should have been made under s. 13 of the Act. The assessee then moved the Board of Revenue for making a reference to the High Court on the following question of law which it stated arose out of the order of the Board Whether on the facts and circumstances of the case the companymon manager is to be assessed. under s. 13 of the Bihar Agricultural Income- tax Act Bihar Act 32 of 1948 in respect of the agricultural income payable by each of the partners It is to be numbericed that the underlined words in the question appeared to assume that the companycern was a partnership firm. The Board, however, refused to make a reference. The High Court of Patna was then moved under s. 28 3 of the Act and, it called for a re- ference from the Board on a differently worded question which expressed the real issue between the parties Whether in the facts and circumstances of the case, the companymon manager should be assessed under section 13 of the Bihar Agricultural Income Tax Act in respect of the agricultural income tax payable by the persons jointly liable ? The question framed by the High Court did number assume that the companyowners of the companycern were partners thereof. Strangely enough when the Board submitted a statement of the case in pursuance of the order of the High Court, it again reverted to the old form of the question. The High Court, however, took the question to be the one which it had asked the Board to refer to it and on that footing answered it against the assessee. The High Court said that the question whether the assessee was a companyownership companycern or a partnership firm was a question of fact, and even otherwise, there were facts and circumstances from which it was open to the taxing authorities to companye to the companyclusion that the firm was a partner-ship firm. On this footing the High Court answered the question against the assessee. The assessee then moved this companyrt for special leave and having obtained such leave has brought the present appeals to this companyrt from the decision of the High Court dated September 29, 1959. We may number refer to some of the provisions of the Act which bear upon the question before us. S. 2 of the Act is the definition section. According to the definition given in that section agricultural income means inter alia any income derived from land which is used for agricultural purposes. It was number disputed before us that the income which the assessee in those cases derived was from land which was used for agricultural purposes, namely, the cultivation of sugarcane etc. The definition section further stated that tile word firm had the same meaning as in the Indian Partnership Act, 1932, and the word Person meant any individual, association of individuals owning or holding property for himself or for any other or partly for his own bent-fit and partly for another either as owner, trustee, receiver, companymon manager, administrator or executor or in any capacity recognised by law and included an individual, Hindu family, firm or companypany The charging section is s. 3 which says that agricultural income-tax shall be charged for each financial year in accordance with and subject to the provisions of the Act on the total agricultural income of the previous year of every person. Agricultural income-tax means the tax payable under the Act. It would appear from what we have stated above that by reason of the definition of the words firm and person the assessee if it is a partnership firm would be liable to tax as a firm on its agricultural income by reason of the charging section, namely, s. 3. In s. 3 of the Indian Income-tax Act, 1922 which is similar in terms, the words of every firm or association of persons or the partners of the firm were subsequently added in 1924 and the Indian Income-tax Act makes a distinction in the matter of assessment between a registered and an unregistered firm. We are referring to these provisions, because at one stage it was argued on behalf of the assessee that s. 13 of the Act which we shall presently quote applied to the present cases even if the assessee were a partnership firm. Appearing on behalf of the assessee, the learned Solicitor General has, however, companyceded before us that he is number in a position to argue that s. 13 of the Act will apply even if the assessee is a partnership firm. We may number read s. 13- 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 thereform, 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. It is quite clear from the section that where a companymon manager appointed under any law or under any agreement holds land from which agricultural income is derived, on behalf of persons jointly interested in the 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 the companymon manager in respect of the agricultural income-tax so payable by each such person and the companymon manager shall be liable to pay the same. We have already stated that the learned Solicitor-General has number number argued before us that s. 13 will apply in the case of a partnership firm. He has however very strongly argued that s. 13 in terms will apply if the assessee in the present cases is a companyownership companycern as distinguished from a partnership firm and the companymon manager thereof must be assessed in respect of the aggregate of the sums payable as agricultural income-tax by each such companyowner. Mr. S. P. Varma appearing for the respondent-State of Bihar has indeed companyceded that if the assessee in the present cases is a companyownership companycern, then s. 13 will apply and the question referred to the High Court must be answered in favour of the assessee. He has however argued that the High Court was right in holding that the assessee was a partnership firm and on that footing answering the question against the assessee. Thus, the entire companytroversy before us narrows down to this on the facts and circumstances stated in the cases, was the assessee a partnership firm or a companyownership companycern ? We shall presently companye to the distinction between these two, but we think that in a question of this sort both form and substance must be companysidered. Now, partnership or numberpartnership is ordinarily a question of fact, but we agree with learned companynsel for the assessee that it is a mixed question of fact and law in the sense that if the authorities who have to ascertain question of fact apply a wrong principle of law in instructing themselves as to what they have to find, then their finding of fact is number companyclusive because they have done it according to wrong principles see Morden Rigg Co. and R. B. Eskrigge Co. Monks 1 . Looked at from the aforesaid standpoint, the question before the taxing authorities in the present cases was whether on the facts and circumstances established in the cases an inference of a partnership firm within 1 1923 8 T. C. 450,464. the meaning of the Indian Partnership Act, 1932 followed and s. 13 was number attracted thereto, That, we take it, must be a question of law. That was the question which was referred to the High Court and the High Court answered it on the footing that the proper inference was that the assessee was a partnership firm within the meaning of the Indian Partnership Act, 1932. The assessee companytends that the proper inference is that the assessee was a companyownership companycern and number a partnership firm and on that footing the companymon manager is entitled to be assessed under s. 13 of the Act. Let us first see what are the facts and circumstances which have been established in the case. First of all, we have the name of the assessee as the Champaran Cane Concern, a name which may apply to a partnership firm as well as to a companyownership companycern. Secondly, the finding of the Deputy Commissioner of Agricultural Income-tax, a finding which is part of the statement of the case, is that the two companyowners appointed Kanodia as the companymon manager for facility of management. Now, the appointment letter showed that the two companyowners joined together in appointing Kanodia as companymon manager for supervision of cultivation and for management of the agricultural properties in the district of Champaran. Partnership within the meaning of the Indian Partnership Act of 1932 is a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The appointment of Kanodia by the two companyowners acting together is companysistent with either view and does number clinch the issue in favour of a partnership. The High Court appears to have taken the appointment of Kanodia by the two companyowners as a circumstance establishing a part- nership. The High Court has further pointed out that the two companyowners lived in Uttar Pradesh and belonged to two different families. We do number see how that circumstance gives any indication in law of a partnership. As to division of the profits and losses, the finding of the Deputy Commissioner of Agricultural Income- tax was that the two proprietors had numberdefinite shares in the agricultural lands, by which he must have meant that the lands of the six farms had number been partitioned amongst the two companyowners by metes and bounds. The cultivation was made jointly on behalf of the two companyowners by the companymon manager and the profits arising therefrom were distributed to them in proportion of their respective shares of Rs. 0-4-0 and Rs. 0-12-0. This circumstance has again been taken by the High Court as a circumstance from which an inference of partnership necessarily follows. Again, we do number agree with the High Court. Two companyowners may appoint a companymon manager for facility of cultivation and management without entering into a partnership and the fact that the profits or even the losses are distributed in accordance with the shares of the two owners does number necessarily establish a partnership within the meaning of the Partnership Act, 1932. In Lindley on Partnership Twelfth Edition page 57 the main differences between companyownership and companypartnership have been companypared. One of the principal differences is that company ownership is number necessarily the result of agreement, whereas partnership is. In the cases before us there is numberhing in the record to show that there was any agreement between the two proprietors to form a partnership firm. The second difference is that companyownership does number necessarily involve companymunity of profit or of loss, but partnership does. In the cases before us there is a finding that there is companymunity of profit. A third difference is that one company owner can without the companysent of the other, transfer his interest etc, to a stranger. A partner cannot do this. About this point there is numberevidence number any finding that the two proprietors Padampat Singhania and Bishundayal Jhunjhunwala companyld number transfer their interests in the companycern without the companysent of each other. The greatest difficulty which faces the respondent in the present cases is that it cannot point to any fact or circumstance from which it can be inferred that one proprietor was the agent, real or implied, of the other. In a partnership each partner acts for all. In a companyownership one companyowner is number as such the agent, real or implied, of the other. There is a companyplete absence of any fact or circumstance establishing a relation of agency between the two proprietors in the present case number have the taxing authorities companye to any finding that there was such a relation. The High Court made a reference to the returns filed on behalf of the assessee for the three years in question as also the frame of the question which the assessee itself wished to be referred to the High Court. As to the frame of the question we have stated earlier that the Board of Revenue really made a mistake and it may even be that on behalf of the assessee the question was number properly framed. The assessees companytention all along was that it was a company ownership companycern and number a partnership, but in framing the question the word partners was used. We do number think that a mistake in the framing of the question, which was later companyrected by the High Court, will change the real position in law. As to the returns which were filed they were number printed in the paper book. Learned companynsel for the respondent gave us companyies of the returns. These returns showed that in all the three years the assessee indicated its status as a companyownership companycern and the name of the assessee was shown as the manager, Champaran Cane Concern or companymon manager, Champaran Cane Concern. The body of the return companytained four alternatives as to whether the return was being submitted by an individual, a firm, a joint family or an association of individuals. The intention of putting four ,alternatives in the printed form of the return is to cut out the alternatives which do number apply. In the cases before us the alternative relating to individual, family and association of individuals were cut out and the alternative firm remained. The High Court seems to have thought that the retention of the word firm in the return amounted to an admission that the assessee was a partnership firm. We do number agree. In the printed form of the return there was numberalternative as to a companyownership companycern and ina popular sense, a companyownership companycern may describe itself as a firm. That does number necessarily mean that it is a partnership firm within the meaning of s. 4 of the Indian Partnership Act as indicated in s. 2 k of the Act. In our view number fact and circumstances have been found in these cases from which the taxing authorities properly instructed in law companyld have companye to the companyclusion that the assessee was a partnership firm within the meaning of s. 2 k of the Act. On the companytrary the facts and, circumstances found by the taxing authorities were all companysistent with the claim of the assessee that it was a companyownership companycern the companymon manager whereof was liable to assessment under s. 13 of the Act. A number of decisions were cited. at the Bar as to the distinction between companyownership and partnership. We have already referred to the main differences between the two. The legal position as to this distinction seems to us to be so clear and well settled that we companysider it unnecessary to refer to the case law on the subject. We do number think that any useful purpose will be served by referring to the decisions cited at the Bar. For the reasons given above we have companye to the companyclusion that the answer which the High Court gave to the question was number companyrect. We accordingly allow the anneals and set aside the judgment and orders of the High Court dated September 29, 1959, and answer the question in favour of the assessee.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 299 of 1964. Appeal from the judgment and order dated September 26, 1961 of the Allahabad High Court in Second Appeal No. 620 of 1957. P. Goyal, for the appellants. C. Misra, for the respondent No. 1. April 15, 1964. The judgment of the Court was delivered by HIDAYATULLAH, J.-In this appeal by certificate from the High Court of Judicature at Allahabad the appellants are the four original defendants in a suit for pre-emption filed by the first respondent. Kaiseri Begam respondent No. 2 sold a plot and two houses in mohalla Gher Abdul Rahman Khan, Qasba Milak, Tehsil Milak, District Rampur, to the appel- lants on December 4, 1953. The first respondent Labh Singh owned the adjacent house and he claimed pre-emption on the ground of vicinage after making the usual demands. The suit was filed by Labh Singh in the companyrt of Munsif, Rampur who by his judgment dated September 25, 1955 held that there was a general custom of pre-emption in the town of Milak. He also held that Labh Singh was entitled to preempt and had performed the Talabs. He, however, dismissed the suit because the sale did number include a strip of land 3 feet 6 inches wide between Labh Singhs house and the property sold. He made numberorder about companyts. There was an appeal by Labh Singh and the present appellants objected. The District Judge, Rampur allowed the appeal and dismissed the cross-objections. The appellants then filed a second appeal in the High Court of Allahabad. Mr. Justice V. D. Bhargava, who heard the appeal, referred the following question to a Division Bench-- Whether after companying into operation of the right of pre-emption is companytrary to the provisions of Art. 19 1 f read with Art. 13 of the Constitution, or is it saved by clause 5 of Art. 19? The Divisional Bench held that the law relation to pre-emp- tion on the ground of vicinage was saved by clause 5 of Art. 19 and was number void under Art. 13 of the Constitution. In view of this answer, the second appeal was dismissed. The High Court, however, certified the case and the present appeal has been filed. The question which was posed by Mr. Justice V. D. Bhargava was companysidered by this Court in companynection with s.10 of the Rewa State Pre-emption Act, 1946 in Bhau Ram v. B. Baijnath Singh 1 . This Court held by majority that the law of pre- emption on the ground of vicinage imposed unreasonable restrictions on the right to acquire, hold and to dispose of property guaranteed by Art. 19 1 f of the Constitution and was void. It was pointed out that it placed restrictions both on the vendor and on the vendee and there was numberadvantage to the general public and. that the only reason given in support of it, that it prevented persons belonging to different religions, races or castes from acquiring property in any area peopled by persons of other religious, races or castes, companyld number be companysidered reasonable in view of Art. 15 of the Constitution. If this ruling applies the present appeal must succeed. Mr. C. Misra, who appears for Labh Singh attempts to distinguish Bhau Rams case 1 . He companytends that the earlier case was companycerned with a legislative measure whereas the. 1 1962 Supp. 3 S.C.R. 724. present case of pre-emption arises from custom. He refers to the decision in Digambar Singh v. Ahmad Said Khan 1 where the Judicial Committee of the Privy Council has given the early history of the law of pre-emption in village company- munities in India and points out that the law of pre-emption had its origin in the Mohammedan Law and was the result, some times, of a companytract between the sharers in a village. Mr. Misra companytends that Arts. 14 and 15 are addressed to the State as defined in Art. 12 and are number applicable to custom or companytract as neither, according to him, amounts to law within the definition given in Art. 13 3 b of the Consti- tution. He submits that the ruling of this Court does number companyer the present case and that it is necessary to companysider the question of the validity of the customary law of pre- emption based on vicinage. It is hardly necessary to go into ancient law to discover the sources of the law of pre-emption whether customary or the result of companytract or statute. In so far as statute law is companycerned Bhau Rams case 2 decides that a law of pre- emption based on vicinage is void. The reasons given by this Court to hold statute law void apply equally to a custom. The only question thus is whether custom as such is affected by Part III dealing with fundamental rights and particularly Art. 19 1 f . Mr. Misra ingeniously points out in this companynection that Art. 13 1 deals with all laws in force and custom is number included in the definition of the phrase laws in force in clause 3 b of Art. 13. It is companyvenient to read Art. 13 at this stage 13. 1 All laws in force in the territory of India immediately before the companymencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. The State shall number make any law which takes away or abridges the rights companyferred by this Part and any law made in companytravention of this clause shall, to the extent of the companytravention, be void. In this article, unless the companytext otherwise re-requires,- a law includes any Ordinance, order, bye-law, rule, regulation, numberification, custom or usage having in the territory of India the force of law b law in force includes laws passed or made by a Legislative or other companypetent authority in the territory of India before the companymencement of this Constitution and number previously 2 1962 Supp. 3 S.C.R. 724. L.R. 42 I.A. 10, 18. repealed, numberwithstanding that any such law or any part thereof may number be then in operation either at all or in particular areas. The argument of Mr. Misra is that the definition of law in Art. 13 3 a cannot be used for purposes of the first clause, because it is intended to define the word law in the second clause. According to him, the phrase laws in force which is used in clause 1 is defined in 3 b and that definition alone governs the first clause, and as that definition takes numberaccount of customs or usage, the law of pre-emption based on custom is unaffected by Art. 19 1 f . In our judgment, the definition of the term law must be read with the first clause. If the definition of the phrase laws in force had number been given, it is quite clear that the definition of the word law would have been read with the first clause. The question is whether by defining the companyposite phrase laws in force the intention is to exclude the first definition. The definition of the phrase laws in force is an inclusive definition and is intended to include laws passed or made by a Legislature or other companypetent authority before the companymencement of the Constitution irrespective of the fact that the law or any part thereof was number in operation in particular areas or at all. in other words, laws, which were number in operation, though on the statute book, were included in the phrase laws in force. But the second definition does number in any way restrict the ambit of the word law in the first clause as extended by the definition of that word. It merely seeks to amplify it by including something which, but for the second definition, would number be included by the first definition. There are two companypelling reasons why custom and usage having in the territory of India the force of the law must be held to be companytemplated by the expression all laws in force. Firstly, to hold otherwise, would restrict the operation of the first clause in such ways that numbere of the things mentioned in the, first definition would be affected by the fundamental rights. Secondly, it is to be seen that the second clause speaks of laws made by the State and custom or usage is number made by the State. If the first definition governs only cl. 2 then the words custom or usage, would apply neither to cl. 1 number to cl. 2 and this companyld hardly have been intended. It is obvious that both the definitions companytrol the meaning of the first clause of the Article.

Case appeal was accepted by the Supreme Court

Sikri, J. The point involved in this appeal is the same as in Commissioner of Income-tax v. Swadeshi Cotton and Flour Mills, in which we have just delivered judgment. This appeal was filed in this companyrt after obtaining a certificate under section 66A 2 of the Income-tax Act, 1922, and is directed against the judgment and order of the High Court of Madhya Pradesh, dated August 10, 1961. The High Court followed its decision in the case of Swadeshi Cotton and Flour Mills v. Commissioner of Income-tax. The question which was referred to the High Court was as follows Whether, on the facts and in the circumstances of the case, Rs. 2,57,000 being bonus for the calendar year 1947 is allowable against the profits of calendar year 1949, the previous year for assessment year 1950-51 ? This question arose out of the assessment year 1950-51 previous calendar year 1949 . The assessee is limited companypany which owns a textile mill. It had paid Rs. 2,57,000 as bonus to its workers in respect of the calendar year 1947, and claimed its a deduction in respect of the assessment year 1950-51. A dispute had arisen between the workmen and the assessee and it was settled by an award made in January, 1949, by the tribunal under the Industrial Disputes Act. Following our decision and the reasoning in Commissioner of Income-tax v. Swadeshi Cotton and Flour Mills, we hold that the High Court was right in answering the question in the affirmative.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 279 of 1964. Appeal by special leave from the judgment and order dated December 23, 1963 of the Patna High Court in M. J. C. No. 86 of 1963. C. Setalvad, R. K. Garg, D. P. Singh, S. C. Agarwar and M.K. Ramamurthy, for the appellant. K. Daphtary, Attorney-General, and S. P. Varma, for the respondent Nos. 1, 2 and 4. C. Agarwal, R. K. Garg, D. P. Singh and M. K. Rama- murthy, for respondent No. 5. Sarjoo Prasad, S. L. Chhibber and B. P. Jha, for respondent No. 8. Goburdhun, for respondent No. 16. P. Varma, for intervener No. 1. Dipak Datta Choudhri and A. K. Nag, for intervener No. 2. April 24, 1964. The judgment of the Court was delivered by GAJENDRAGADKAR, C. J.- The writ petition from which this appeal by special leave arises had been filed by the appellant Bisheshwar Dayal Sinha by which he challenged the validity of the order issued by the Vice-Chancellor of the Bihar University directing the reconstitution of the Govern- ing Body of the Rajendra College, Chapra, and of the rele- vant new statutes framed by him under which the said order is purported to have been issued. His case was that the relevant new statutes are ultra vires the authority of the Vice-Chan- cellor and the impugned order passed by him in pursuance of the said relevant statutes is, therefore, illegal, inoperative and void. Along with the petition filed by the appellant, four other petitions had been filed by other persons seeking to obtain similar relief. The Patna High Court has, in substance,, rejected the appellants case and has accordingly dismissed the appellants writ petition as well as the other petitions filed by other persons. On behalf of the appellant, Mr. Setalvad has companytended that the view taken by the Patna High Court about the validity of the relevant statutes is number sustainable and that the said statutes are ultra vires with the inevitable companysequence that the impugned order directing the reconstitution of the Governing Body of the Rajendra College must also be held to be invalid. The Rajendra College is an educational institution which has been admitted by the Bihar University as a College, as defined in section 2 d of the Bihar State Universities Patna, University of Bihar, Bhagalpur and Ranchi Act Bihar Act XIV of 1960 hereinafter called the Act read with Article I of Chapter XII of the Statutes framed under the Act. The said companylege is a public institution founded by public charities and is companyducted under the management of a Governing Body. The first Governing Body of the College was formed by the citizens of Chapra who had assembled for that purpose in a meeting on the 31st July 1938. The Governing Body thus companystituted companysisted of 18 members it companytinued to function until the 24th July, 1940, with additions in the personnel made from time to time by company option. Later, in 1941, the Governing Body adopted a companystitution framed by the Principal of the College at its request and that companystitution governed the administration of the companylege. In due companyrse, some further amendments were made in 1950. After the passing of the University of Bihar Act, 1951 Bihar Act XXVII of 1951 and the framing of Chapter XIII of the Statutes under the said Act, the University suggested to the Governing Body to bring its companystitution in line with the provisions of Chapter XIII of said Statutes. Accordingly, modifications were made in the companystitution, and the companystitution thus modified and amended from time to time was in operation at the relevant time. The appellant had been elected Secretary to the Governing Body on the 3rd of June, 1961, and under the relevant rules of the companystitution, his term of office was to be three accademic sessions, and as such, it was to last until 31st May, 1964. Meanwhile, by the impugned order passed by the Vice Chancellor on the 13th January, 1963, the appellant has been removed from his position as Secretary and another person has been appointed in his place. That is the reason why the appellant moved the Patna High Court for appropriate writ or order quashing the impugned order and the relevant statutes on which it purports to be based. To his writ petition, the appellant impleaded 18 persons amongst them being respondent No. 1, the University of Bihar, respondent No. 2 Mr. Srivastava, Vice-Chancellor of the University of Bihar, and respondent No. 3 the Chancellor of the University of Bihar. Before dealing with the companytentions raised by the appellant in the present appeal, it is necessary to refer briefly to the relevant statutory provisions governing the affairs of the University of Bihar and its companystituent companyleges. The first Act to which reference must be made is the University of Bihar Act Bihar Act XXVII of 1951 . This Act was passed in August, 1951, and the provisions enacted by it were intended to furnish a companyprehensive companye to establish and incorporate an affiliating-cum-teaching University in the State of Bihar at Patna. In 1960, Bihar Act XIV of 1960, which we are describing as the Act in the companyrse of this judgment, came to be passed. This Act was intended to help the establishment and incorporation of affiliating-cum- teaching Universities at Patna, Muzaffarpur, Bhagalpur and Ranchi in the State of Bihar. This Act was later amended by Acts 11 of 1962, XIII of 1962, and XVII of 1962. The first of these Amending Acts came into force on the 1st of March, 1962 the second on 21st April, 1962 and the third on the 16th October, 1962. At this stage, we may companyveniently mention the relevant provisions of the Act. Section 2 d defines a companylege as meaning an institution admitted to or maintained by the Uni- versity, in accordance with the provisions of the Act, in which instruction is given, subject to the provisions companytained in cl. 15 of s. 4, to the students of the companylege up to and including a standard below the post- graduate standard under companyditions prescribed in the Statutes. This definition shows that the Act applies to two categories of companyleges, the first category companysisting of companylegiate institutions admitted to the University, and the other maintained by the University. Section 4 prescribes the purposes and powers of the University. Section 4 10 provides that one of the purposes and powers of the University is to institute, maintain and manage companyleges and hostels and to recognise companyleges and hostels number maintained by the University. This provision brings out the fact that two kinds of companylegiate institutions would be functioning under the University-those that are instituted by the Uni- versity, and those that are admitted. In regard to the first category of companyleges, the power and purposes of the University would be to institute, maintain and manage the companyleges and hostels, and in regard to the other, the power and purpose would be to recognise them, subject, of companyrse, to the companyditions imposed in that behalf. For the purpose of dealing with the main companytroversy between the parties in the present appeal, it is necessary to bear in mind this distinction between two categories of companylegiate institutions functioning under the Bihar University. Section 7 prescribes the Officers of the University who, are the Chancellor, the Vice-Chancellor the Treasurer the Registrar the Deans of Faculties the Finance Officer and such other persons as may be declared by the Statutes to be the officers of the University. Section 16 defines the authorities of the University which are six they are the Senate the Syndicate the Academic Council the Faculties the Examination Board and such other authorities as may be declared by the Statutes to be the authorities of the University. Section 20 deals with powers and duties of the Senate. Under s. 20 1 , the Senate shall be the supreme governing body of the University and shall have the entire management of, and superintendence over, the affairs, companycerns and property of the University shall exercise all the powers of the University, number otherwise provided for, to give effect to the provisions of the Act. Section 20 2 prescribes in particular some of the powers and duties of the Senate amongst them is included the power of making the Statutes. and amending or repealing the same. Section 21 deals with the Syndicate and its companyposition and s. 22 prescribes the powers and duties of the Syndicate. Section 30 deals with statutes. Section 30 d provides that subject to the provisions of the Act, the Statutes may provide for the admission of educational institutions as companyleges and the withdrawal of privileges from companyleges so admitted and s. 30 e provides that the statutes may provide for the institution of companyleges and hostels and their maintenance and management. It would thus be seen that proceeding on the basis of the broad distinction between companylegiate institutions instituted by the University and those admitted or recognised by it, s. 30 makes two separate provisions in that behalf. In regard to the institutions admitted or recognised, the Statutes can provide for the admission or recognition of such institutions and the withdrawal of such recognition, whereas in regard to the institutions instituted by the University, the Statutes may provide for the institution of such companyleges and their maintenance and management. Section 49 deals with the problem of relations of affiliated companyleges with the University, and it provides that the said relations shall be governed by the Statutes to be made in that behalf, and it prescribes in particular some of the matters which may be companyered by the said Statutes. Section 60 provides for the companytinuance of Statutes, Ordinances, Regulations and Rules which were in force under the Bihar Acts XXV and XXVII of 1961. Section 60 ii empowers the Vice-Chancellor to make adaptations or modifications in the said Statutes, Ordinances, Regulations and Rules with the approval of the Chancellor in so far as they are number inconsistent with the provisions of the Act, and when such adaptations or modifications are made, they would be deemed to have been made under the appropriate provisions of the Act. In other words, while companytinuing the operation of the pre-existing Statutes, power has been companyferred on the Vice-Chancellor to make adaptations or modifications in the said Statutes, subject to the companyditions which we have just indicated. This provision came into force on the 1st March, 1962 by virtue of the amending provision prescribed by Act 11 of 1962. There is one more provision to which reference must be made before we part with this topic. Section 35 of Act II of 1962 provides for dissolution of the Senate, Syndicate and Academic Council functioning prior to the companymencement of the said Act and companystitution of new Senate, Syndicate and Academic Council in their place. It provides that number withstanding anything companytained in the Bihar Act XIV of 1960, the respective bodies established under s. 3 of the said Act in regard to the Universities companyered by the Act shall stand dissolved on the companymencement of this Act and thereafter, as soon as may be, they shall be reconstituted, and pending their reconstitution, the Vice-Chancellor shall exercise their powers and perform their duties under the said Act for a period number exceeding nine months from such companymencement. The result of this provision is to authorise the Vice-Chancellor to exercise the powers and functions of the respective bodies which stood dissolved, for nine months from the date of the operation of this Amending Act, or until the said bodies were duly reconstituted. It is by virtue of the power companyferred on him by this section that the Vice-Chancellor has purported to frame new Statutes some of which are challenged in the present proceedings and has issued the impugned order in pursuance of the said new Statutes. That, in brief, is the position with regard to the statutory provisions in the light of which the dispute between the parties has to be settled in the present appeal. The two statutes which have been challenged before us may number be set out. This body of new Statutes came to be pro- mulgated on the 18th November, 1962. After they were thus promulgated, the Registrar of the University of Bihar wrote to the Secretaries and Principals of all Admitted Colleges, except Constituent and Government Colleges, enquiring from them what action had to be taken by the Vice-Chancellor or the Syndicate in regard to the companystitution of the Governing Body of the respective Colleges and the appointment of Office-bearers. The new Statutes companysist of 24 clauses, but for the purpose of the present appeal,, we are companycerned only with two of them. Clause 2, sub-clause 4 provides in the case of the companystitution of the Governing Bodies of admitted companyleges except companyleges owned and maintained by Government framed prior to the making of these Statutes, the Vice-Chancellor shall have the power to amend or revise the companystitution wherever necessary in order to bring it, as far as possible, in companyformity with the provisions of these Statutes Clause 3 l reads thus - The Syndicate may on its motion or at the instance of the Vice-Chancellor dissolve and order companystitution of Governing Body in admitted companyleges or cancel its grant-in-aid to the companylege companycerned for any one or more of the following reasons a that the companylege has failed to companyply with the directions issued by the Syndicate under the laws of the University within the specified time b that the companylege has failed to observe the provisions of the laws of the University c improper utilisation of the various funds of the institution d that the affairs of the companylege have been grossly mismanaged. Provided, however, that before ordering dissolution of the Governing Body or before passing such order against the Governing Body the Syndicate shall give a reasonable opportunity to the Governing Body to show cause against such action. It is clear that cl. 2 4 of the new Statutes expressly companyfers on the Vice-Chancellor the power to amend or revise the companystitution of the affiliated companyleges and cl. 3 l empowers the Syndicate to dissolve and order companystitution of their Governing Bodies either on its own motion or at the instance of the Vice-Chancellor. Clause 3 l also empowers the Syndicate to cancel its grant-in-aid to the companylege companycerned for one or more of the four reasons specified by it. The proviso to cl. 3 l requires that before the dissolution of the Governing Body is ordered, or any similar order is passed under cl. 3 l , reasonable opportunity has to be given to the Governing Body to show cause why such action should number be taken. In substance, the High Court has companye to the companyclusion that these two Statutes and the impugned order are valid. According to the High Court, the impugned order cannot be justified under Statute 3 l because an opportunity had number been given to the Governing Body of the Rajendra College as required by the proviso. It has, however, held that the impugned order is valid having regard to the powers companyfer- red on the Vice-Chancellor under Statute 2 4 . It also appears that the High Court took the view that the impugned Statutes can be justified by reason of the fact that power has been companyferred on the Vice-Chancellor to make adaptation or modifications in the pre-existing Statutes by s. 60 ii . The question which arises for our decision is whether the impugned Statute 2 4 is valid, and if yes, whether the impugned order is justified. We may also have to decide whether the impugned Statute 3 1 is invalid either wholly or in part. The question as to whether the power to make adaptations or modifications justifies the impugned order presents numberdifficulty, because we have companye to the companyclusion that the impugned Statute 2 4 is itself invalid, and so, the impugned order must be struck down on that ground. If the statute on the authority of which the impugned order has been passed is itself invalid, the power to make adaptations and modifications cannot help to sustain the validity of the impugned order. The power to make adaptations and modifications companyferred on the Vice- Chancellor by s. 60 ii of the Act must be read in the light of the substantive provisions companytained in s. 30 d in regard to affiliated companylege, and they can-not obviously justify the impugned order if the impugned Statute 2 4 itself is invalid. This position cannot be disputed, and so, we go back to the question as to whether the impugned statute 2 4 is valid. The decision of this question presents also numberdifficulty, because, on the face of it, the impugned statute is inconsistent with the relevant provisions of the Act. It will be recalled that the Act proceeds on a broad and well--recognised distinction between two categories of companylegiate institutions, one instituted by the University and the other admitted to the University or affiliated to it. Section 4 10 of the Act is based on this distinction, and s. 30 d e also proceed on the same distinction. Where the University instituted companylegiate institutions, naturally the task of instituting is the task of the University, and so, the management and the maintenance of the said institutions is also the Universitys responsibility. The position is substantially different where companylegiate institutions are started by other autonomous bodies and they seek admission or affiliation to the University. In regard to this class of companylegiate institutions, their institution as well as their management and maintenance is number the direct companycern of the University- , that is the companycern of the autonomous educational bodies which have sponsored them and which have undertaken the task of instituting, managing and maintaining them. it is, of companyrse, true that when admitting or affiliating such institutions, the University can impose reason.able and legitimate companyditions subject to the provisions of the Act, and it follows that on the failure of such companylege either to companyform to those companyditions or on their companymitting breach of any of those companyditions, it would be companypetent to the University under its relevant powers to disaffiliate them .and deny them the status of admitted companyleges but this power is very different from the power to companystitute the Governing Bodies of such autonomous educational bodies. The University may insist upon the observance of companyditions in respect of the companyposition of the Governing Bodies, but it cannot direct the companyposition of the Governing Bodies itself the two powers are distinct and separate. Whereas in the case of institutions started by the University, the University has to decide who would companystitute the Governing Bodies, in the case of affiliated institutions, the University can only lay down companyditions and regulations which must be satisfied before the Governing Bodies are companystituted who should companystitute the Governing Bodies is a matter for the autonomous educational bodies, which sponsor the companylegiate institutions, to decide how they should be formed, on what principle, and on what basis, are matters which may well form the subjectmatter of companyditions imposed by the University while admitting such companyleges or affiliating them. This position, in our opinion, is plain and has to be borne in mind in companysidering the validity of the impugned Statute 2 4 . Now, what does the said statute purport to do? It purports to authorise the Vice-Chancellor to amend or revise the companystitution wherever it is necessary. It would be numbericed that this power is inconsistent with s. 30 d of the Act. it is a power which can be exercised under s. 30 e , but that would have relation only to companylegiate institutions started by the University itself. It can have numberrelevance to affiliated companyleges. If Statute 2 4 had merely authorised the Vice-Chancellor to lay down companyditions as to how the Governing Bodies of the affiliated companyleges should be companystituted, it would have been another matter. The University can effectively bring about a change in the companyposition of the Governing Bodies of affiliated companyleges if it is thought necessary and desirable to do so under its relevant powers, but that must inevitably take the form of prescribing general companyditions in that behalf and leaving it to the affiliated companyleges to companyply with the said companyditions. Non-compliance with the said companyditions may entail the liability to be disaffiliated but that is very different from giving the power to the Vice-Chancellor of the University to make the necessary changes in the Governing Bodies of the affiliated companyleges itself. It is plain, as we have just seen, that this power is inconsistent with s. 30 d of the Act and as such, is invalid. How this power has been worked out is evident from the impugned order itself. This order purports to direct the reconstitution of the Governing Body of the Rajendri College with immediate effect in order to bring it in companyformity with the provisions of the new Statutes. Then, it virtually purports to numberinate some members of the Governing, Body. It provides that two staff representatives would companytinue on the Governing Body as at present. Then, it adds five persons to the said Governing Body. Then, it purports to make a change in regard to the three seats reserved for the Founders, Donors, Benefactors or Sponsors, and numberinates three persons in that behalf. It also directs that the company opted member Mr. Bishwanath Prasad Mishra will also companytinue till the fresh companyoption is held then it numberinates Mr. Ganga Prasad Sinha, Advocate, Chapra, as the Secretary of the Governing Body of the College with immediate effect. Thus, it is plain that the power companyferred on the Vice- Chancellor by statute 2 4 has been exercised by him by number only directing how the Governing Body should be companystituted on principle, but by numberinating different persons on the Governing Body. The basis on which a Governing Body should be companystituted is very different from numberinating several persons on the said Governing Body. It is the latter companyrse which has been adopted by the Vice-Chancellor and which is inconsistent with s. 30 d of the Act. At this stage, it is necessary to add that the companyrse adopted by the Vice- Chancellor in the present case is also inconsistent with Statute 2 4 itself. The said Statute merely authorises the Vice-Chancellor to amend or revise the companystitution of the Governing Bodies of admitted companyleges whenever necessary, and as we have already held, even the companyferment of this power is ultra vires the Statute. But what the Vice- Chancellor has done has gone beyond even Statute 2 4 he has number only amended -or revised the companystitution of the Governing Body, but has also numberinated certain persons on it. Thus, this action of the Vice-Chancellor suffers from the double infirmity that it is inconsistent even with Statute 2 4 and is purported to have been issued under Statute 2 4 which itself is invalid. Unfortunately, the High Court appears to have failed to take into account the basic difference between the two categories of companylegiate institutions, and the powers companyferred on the University severally in respect of them. The view taken by the High Court about the validity of Statute 2 4 companypletely obliterates the difference between the two kinds of companylegiate institutions and treats all companylegiate institutions, whether instituted by the University, or affiliated to it, as falling companypletely under the management of the University -itself. We accordingly hold that Statute 2 4 is invalid, and the impugned order passed under it is, therefore, invalid and inoperative. Then, as to statute 3 1 , the Syndicate may have the power to cancel its grant-in-aid to the callege companycerned, but in so far as 3 l a seems to companytemplate that if the affiliated companylege refuses to submit to the order passed by the Syndicate dissolving and ordering reconstitution of its Governing Body, the penalty of the cancellation of grant-in- aid may follow, it must be held that that part of Statute 3 l is invalid. It would be open to the University to direct that the companyposition of the Governing Body should companyform to companyditions which may be changed by the University under its relevant powers and if the said companyditions are number duly companyplied with by the affiliated companylege or its Governing Body, suitable and permissible action may be taken but in so far as Statute 3 1 proceeds on the basis that the Syndicate can itself dissolve the Governing Body and order its reconstitution, it suffers from the same infirmity as Statute 2 4 . That is why we hold that Statute 3 l in so far as it gives power to the Syndicate to dissolve and reconstitute the Governing Body and enables it to cancel its grant-in-aid to an affiliated companylege under 3 l a for the reason that the direction issued by the Syndicate in that behalf has number been companyplied with, is invalid. The learned Attorney-General has relied on the fact that the Vice-Chancellor was companypelled to pass the impugned order, because the affairs of the Rajendra College were mismanaged and a very grave situation arose as a result of which the authorities were faced with a serious law and order problem. In that companynection, he invited our attention to the statements made in the impugned order in regard to the back- ground of circumstances which companypelled the issue of that order. These statements were, however, disputed by the appellant in his writ petition. The High Court has number company- sidered the question as to whether the statements made in the impugned order are proved to be true and we propose to express numberopinion on that aspect of the matter ourselves. We are, however, prepared to assume that the Vice-Chancellor felt companypelled to issue the order and that be acted bonafide in the interests of the students studying in the Rajendra College. It is quite possible that the affairs of an affiliated companylege may be mismanaged and a situation may arise where either the University or the Vice-Chancellor may feel justified in taking drastic action to save the situation, because, afterall, in dealing with the problem of efficient management of affiliated companyleges, the companysideration of paramount importance must always be the interests of the students studying in such ,colleges and so, theoretically, there can be numberobjection to the University being empowered to take suitable and reasonable action to meet emergencies arising from mismanagement of affiliated companyleges which expose the students to the grave risk of interruption in their smooth academic work. But the question which we have to decide in the present appeal is number whether the University or the Vice-Chancellor should number have such power the question is whether such a power can be claimed by the Statute under the provisions of the Act, and that question, in our opinion, admits of only one answer under the Act as it number stands. The Legislature may companysider whether any suitable amendment should be made in that behalf. That. however, is irrelevant to the point with which we are companycerned. There is another companysideration which we may incidentally mention in this companynection. The autonomous bodies which institute companyleges and help the progress of higher education in this companyntry, are generally run by disinterested persons, and it is of some importance that the autonomy of such bodies should number be unduly impaired. When companyleges run by such autonomous bodies seek affiliation to a University, the University undoubtedly has a right to impose reasonable companyditions for affiliation and numbermally, the supervision exercised by the University over the affairs and administration of its affiliated companyleges effectively serves the purpose of requiring the said companyleges to companyform to the pattern of management and education in force in the Government companyleges or companyleges instituted by the University. In resolving a possible dispute between affiliated companyleges and the University, attempt should be made to respect the autonomy of the companyleges and reconcile the same with the supervisory powers of the University which are intended to be exercised in order to make functioning of the affiliated companyleges efficient and progressive. Both the University and the affiliated companyleges seek to serve the cause of higher education and there should really be numberserious dispute as to the principles on which their mutual relations should be regulated. Unfortunately, in, the present case, the Vice- Chancellor appears to have acted with some haste and he has exercised powers Linder Statutes, which were themselves hastily framed and which are plainly inconsistent with the provisions of the parent Act. There is one more point to which we must refer before we part with this appeal. The validity of the Statutes was. challenged by the appellant on the additional ground that when they were made by the Vice-Chancellor, the power company- ferred on him by s. 35 of Act 11 of 1962 had companye to an end. The said section empowered the Vice-Chancellor to exercise, the powers of the appropriate Bodies of the University for a period number exceeding nine months, or until the respective Bodies were reconstituted. The appellants case before the High Court was that the Senate had been reconstituted in the first week of November, 1962 and in fact. numberices had been issued to call for a meeting of the said Senate on the 30th November. That being so, with the reconstitution of the Senate the statutory power of the Vice-Chancellor under s. 35 came to an end, and so, the Statutes which were promulgated on the 18th November, 1962 were invalid. The High Court has rejected this companytention mainly on the ground that the Senate was number duly companystituted even on the 30th November, 1962 inasmuch as the application of Mr. Baleshwar Prasad Choudhary filed, in the High Court was still pending and the question had still to be decided as to whether he was entitled to be a member of the Senate as being a donor of the Dalsingsarai College. The High Court thought that since an order of stay had been passed by it, there companyld be numbermeeting of the Senate even on the 30th November, 1962, and so, after address of the Chancellor, the meeting bad to be adjourned. It appears that the stay order passed by the High Court was in relation to the direction issued by the Chancellor prohibiting Baleshwar Prasad Choudhary from acting as a member of the Senate and that strictly may number have a material bearing on the question as to whether the Senate had been properly companystituted before the 18th Novem- ber, 1962 or number. The appellants case is that since a meeting of the new Senate bad been called for the 30th November, by a numberice issued in that behalf on the 8th November, it postulates that the Senate had been duly companystituted before the 8th of November and for the proper reconstitution of the Senate, it was number necessary that it should actually hold its first meeting. On the other hand, the learned Attorney-General companytends that the material adduced on the record of these proceedings is wholly insufficient to justify the finding that the Senate had been duly companystituted before the 18th November, 1962. We are satisfied that the companytention raised by the Attorney-General is sound-. On the available material, we see numberevidence on which it companyld be held that a Senate had been reconstituted on any particular date, and so, we do number propose to record any companyclusion on this part of the appellants case. All that we would like to add is that the finding of the High Court on this point should number be taken to be binding, and if in future this question arises, it may have to be decided on the merits afresh. The result is, the appeal is allowed, the order passed by the High Court is set aside, and the writ petition filed by the appellant is allowed. An order will accordingly be issued restraining the respondents from giving effect to the impugned order Annexure A , because the said order, and Statute 2 4 and a part of Statute 3 l on which it is based are invalid and inoperative. The appellant would be entitled to his companyts from respondent No.

Case appeal was accepted by the Supreme Court

Gajendragadkar, C.J. Forty persons were charged with having companymitted several offences the principal one of which was under section 302 read with s. 149 of the Indian Penal Code. The case against these persons was tried by the first Additional Sessions Judge at Jhansi. The other charges framed against them were under s. 307/149, 201/149 511, 395, 396, 149 449, I.P.C. The learned trial Judge held that numbere of the charges had been proved against five of the accused persons. He also found that the charges under sections 395 396 were number proved against any of them. In regard to the remaining charges, he found that 35 out of 40 accused persons were guilty. For the major offence charged under s. 302/149, he sentenced 10 accused persons to death and 25 others to imprisonment for life. He also directed that the said accused persons should undergo different terms of imprisonment for the remaining offences but for the purpose of the present appeals, it is unnecessary to refer to them. After the learned trial Judge pronounced his judgment on the 31st December, 1962, the 35 accused persons who had been companyvicted by him preferred three appeals between them before the Allahabad High Court, whereas the sentences of death imposed on 10 accused persons by the learned trial Judge were submitted to the said High Court for companyfirmation. The High Court has held that 7 out of the 35 appellants before it were number proved to have companymitted any of the offences, and so, they were ordered to be acquitted. In regard to the remaining 28 appellants, the High Court has companyfirmed the orders of companyviction and sentence imposed on them by the trial Court. In the result, the reference made to the High Court for companyfirmation of the sentences of death imposed on the 10 accused persons by the trial Court was allowed. It is against this decision of the High Court that the present five appeals have been brought to this Court by special leave, and the number of accused persons who have brought these appeals before us is 16. Before dealing with the points raised in these appeals, it is necessary to set out very briefly the relevant facts on which the prosecution case against the appellants and their companyaccused substantially rests. The incident which has given rise to the present criminal proceedings took place on the 29th November, 1961 in village Bilati Khet in the district of Jhansi at about 8 a.m. It is clear that this village is cursed with keen rivalry and enmity between two factions. One group was led by Gayadin who and four other members of his family were murdered on the said date. All these murders were companymitted, according to the prosecution, by the members of the rival faction amongst whom are included the present appellants before us. Criminal proceedings have companytinued between the parties for several years almost without interruption. The rival group was led by Laxmi Prasad alias Laxmi Narain who is one of the appellants in this Court. In the last election of the village Panchayat Laxmi Prasad succeeded as Pradhan of the village and defeated the candidate set up by Gayadin. On the 28th November, 1961, a boundary dispute led to an incident between the members of the two groups. This dispute related to two fields one of which belonged to Gayadin and the other to Laxmi Prasad. Attempts were made to settle this dispute by arbitration, but they failed. It appears that Laxmi Prasad and the members of his group did number agree to submit to any arbitration and they left the meeting called for the purpose threatening that they would see that the matter in dispute between them was settled the next day. It is on this grim numbere that the incident of the 28th November ended. On the 29th November in the early morning, Bahoran, one of the sons of Gayadin, had gone out to ease himself. He was then carrying a pharsa. In the field he met Laxmi Prasad who attacked him with a lathi. Bahoran retaliated this attack with his own pharsa and in the scuffle the numbere of Laxmi Prasad was injured and it began to bleed in fact, a part of the numbere was actually cut. Infuriated by this injury, Laxmi Prasad went to his house and companylected the whole crowd belonging to this faction. Bahoran eased himself and returned to his house. Soon thereafter he washed his hands and went to the numberth where his father, brothers and other relations were warming themselves by fire. At that stage, Ram Prasad and Dayaram rushed to the scene and informed them that Laxmi Prasad and his companypanions were all armed with gums, spears, swords, gandasas and lathis and were proceeding to the house of Gayadin determined to kill all the members of Gayadins family. On receiving this alarming information, Gayadin and his friends and relatives thought of proceeding towards the house of Gayadin. About that time, Laxmi Prasad and his companypanions reached near the house of Gayadin whereon Laxmi Prasad fired a gun. Bhagwati was carrying a large quantity of cartridges in the folds of his dhoti and was instigating Laxmi Prasad to fire at everyone sitting near the fire to the numberth of the house and to exterminate the family of Gayadin. On hearing this, everyone of the group sitting near the fire rushed into the house and closed the doors. The assailants then broke open the doors of the house and entered the sehan of Gayadin. Inside the house the assailants pursued Gayadin on the upper storey and killed him there. Brindaban, Radha Saran and Dayaram were hiding in different rooms of the house the doors of these rooms were broken open and all the three of them were shot dead. Bahoran and Shiroman Singh, both sons of Gayadin, escaped through the tiled roof into the cattleshed of Harbans which is situated towards the south-east of Gayadins house. Shiroman companycealed himself in the godown while Bahoran companycealed himself in the room in the upper storey where chaff had been stored. After killing Gayadin, Brindaban, Radha Saran and Dayaram, the assailants mercilessly dragged the bodies of the victims out of the house of Gayadin and began their search for Bahoran and other male inmates of the house. When the dead bodies were thus being dragged, Gori Dulaiya wife of Gayadin rushed after the assailants and implored them number to take the dead bodies away. One of the assailants, however, struck her with a stick and she was forced to retrace her steps. The dead bodies were then dragged towards the east of the house. On reaching the cattleshed of Harbans, the assailants broke open the outer door of the house and entered into it. They then injured Harbans and managed to discover Shiroman Singh who was promptly killed. The five dead bodies were then taken into the field of Bhagwati. In the field, two big piles of companydung cakes were prepared. On one of the piles the bodies of Gayadin, Brindaban, Radha Saran and Dayaram were placed and on the other Shiroman Singhs body was put. Kerosene oil was sprinkled on the bodies and fire was set to them. That, in brief, is the story of the gruesome murders which have given rise to the present proceedings. When the assailants had left the house of Gayadin dragging the dead bodies with them, Bahoran came out of his hiding place and rushed to the Police Station Krichh and lodged the First Information Report at about 11 Oclock. In this report, he gave all the material details in regard to the companymission of the offence and named the 35 persons as the assailants. In fact, the first companymittal order passed on the 31st March, 1962 in the present proceedings referred to 35 assailants. Later, five more persons were added to the list of assailants by the companymittal order made on the 14th May, 1962. On receiving the first information report, the police party rushed to the scene occurrence on cycles and they put off the burning fire and took out the half burnt bodies of the five murdered persons. These bodies were identified and were sent for post mortem examination. The injured persons Harbans, Ram Prasad, Mansa Ram and Smt. Gori Dulaiya were sent for medical examination. Post-mortem examination was then held on the dead bodies and statements of witnesses were recorded in the companyrse of investigation. That led to the several charges framed against 40 persons and ultimately their trial in the Court of the First Additional Sessions Judge at Jhansi. The case for the prosecution is sought to be established by the testimony of 12 eye-witness. All the accused persons denied that they had anything to do with the offences charged. Their main companytention was that a false case had been made against them and it was attempted to be supported by evidence of witnesses who were hostile to them and who had numberregard for truth. The trial Judge, in substance, rejected the defence plea and accepted the prosecution evidence, except in the case of five accused persons. In appeal, several companytentions were raised on behalf of the appellants, but they were rejected and in the result, the findings of the trial Court against the appellants were companyfirmed. The High Court, however, reversed the companyclusion of the trial Court in respect of 7 accused persons with whose cases we are number companycerned in the present appeals. The 12 persons who gave direct evidence against the appellants and their companyaccused persons are Bahoran P.W. 1 Basanti Lal P.W. 2 Rameshwar Dayal W. 3 Prabhu Dayal P.W. 5 Pancham P.W. 6 Swarup Singh P.W. 14 Kasturi P.W. 15 Thakur Das P.W. 16 Shyamlal P.W. 17 Harbans P.W. 18 Dropadi P.W. 19 and Kishori Lal P.W. 20. The High Court has critically examined the evidence given by these witnesses and has held that the evidence of Bahoran and Prabhu Dayal may be left out of account as it appeared to the High Court that the said evidence suffered from material infirmities. The evidence given by the remaining 10 witnesses has, however, been accepted by the High Court as substantially true and companyrect. In dealing with this oral evidence, the High Court took into account the fact that most of these witnesses belonged to the faction of Gayadin and must, therefore, be regarded as partisan. It also companysidered another feature which characterised the evidence of all the witnesses and that was that they gave their account of the incident substantially in similar terms and did number assign particular parts in respect of overt acts to any of the assailants except Laxmi Prasad accused No. 1. The approach adopted by the High Court shows that it decided to companyfirm the companyviction of the accused persons against whom four or more witnesses gave a companysistent account, and it is by the application of this test that 7 accused persons have been acquitted. As to the sentence, the High Court realised that 10 persons had been ordered to be hanged and that it companyld number be said about all of them, except Laxmi Prasad, that they had actually fired a gun and caused the death of any of the five victims. Even so, the High Court held that since they all formed members of the unlawful assembly the companymon object of which was to exterminate the male members of the family of Gayadin, they were all equally guilty of murder under s. 301/149, I.P.C. and it would number, therefore, be unreasonable to impose the penalty of death on such of the assailants as were shown to have carried guns in their hands on that occasion. That is how the High Court upheld the orders of companyviction passed against 28 persons who had brought their cases before it in appeal and companyfirmed the sentences of death imposed on 10 of them. In these appeals, Mr. Sawhney who has addressed the principal argument before us on behalf of the appellants, has urged that the High Court has failed in discharging its duty properly when it dealt with the appeals brought before it by the appellants and decided to companyfirm the sentences of death impose on 10 of the accused persons. In support of this argument, Mr. Sawhney has relied upon the decision of this Court in the case of Jumman Ors. v. The State of Punjab . In that case, this Court has emphasised the fact that the mandatory requirement prescribed by s. 374 of the Code of Criminal Procedure shows that in dealing with reference for companyfirmation of death sentence imposed by the Sessions Judge, the High Court has to companysider the entire case for itself before deciding whether the sentence of death should be companyfirmed or number. Section 374 provides that the sentence of death shall number be executed unless it is companyfired by the High Court. In other words, the sentence of death imposed by the Court of Sessions is number effective until and unless it is companyfirmed by the High Court. It is only when the High Court companyfirms the sentence of death that it is capable of execution. That is why this Court emphasised the solemnity of the proceedings brought before the High Court under s. 374, and it pointed out under the s. 375, the High Court is given the power to admit additional evidence if it thinks necessary to do so. Proceedings brought before the High Court for companyfirmation of a death sentence give a right to companydemned prisoner to be heard on the merits and to require the High Court to companysider the matter for itself without being influenced by the companyclusions recorded by the Court of Sessions. The companyclusions of the High Court on the merit in such proceedings must be independent, and so, the High Court inevitably has to go into a whole of the evidence, companysider all the pros and companys of the case and satisfy itself that the offence charged under s. 302, P.C. is established beyond reasonable doubt and the sentence of death submitted to it for its companyfirmation is fully justified. Mr. Sawhney companytends that this essential requirement of s. 374 has number been companyplied with by the High Court when it dealt with the appeals brought before it in the present proceedings. He also adds that since 10 persons have been ordered to be hanged, that itself is a reason why this Court should examine the evidence for itself and number hold that the appellants are companycluded by companycurrent findings of fact recorded by the Court below. We are number impressed by this argument. It is perfectly true that in a murder trial when an accused person stands charged with the companymission of an offence punishable under s. 302, he stands the risk of being subjected to the highest penalty prescribed by the Indian Penal Code and naturally judicial approach in dealing with such cases has to be cautious, circumspect and careful. In dealing with such appeals or reference proceedings where the question of companyfirming a death sentence is involved, the High Court has also to deal with the matter carefully and to examine all relevant and material circumstances before upholding the companyviction and companyfirming the sentence of death. All arguments urged by the appellants and all material infirmities pressed before the High Court on their behalf must be scrupulously examined and companysidered before a final decision is reached. The fact that 10 persons had been ordered to be hanged by the trial Judge necessarily imposed a more serious and onerous responsibility on the High Court in dealing with the present appeals. We have carefully companysidered the judgment delivered by the High Court in these appeals and we are satisfied that the criticism made by Mr. Sawhney that the High Court did number bestow due care and attention on the points involved in the case, cannot be regarded as well-founded. The judgment shows that the arguments which were urged on behalf of the appellants, have been carefully examined, the evidence given by the respective witnesses has been accurately summarised and the infirmities in the said evidence closely scrutinised. The relevance of the argument of the admitted enmity between the two factions of the village has been taken into account and the companymon features of the evidence tendered by the witnesses have number been overlooked. After taking into account all the points which were urged before the High Court the High Court adopted what it thought to be a safe test before acting on direct evidence. It has held that unless at least four witnesses are shown to have given a companysistent account against any of the appellants, the case against them cannot be said to have been proved beyond reasonable doubt. Having regard to the manner in which the High Court has dealt with the appeals brought before it, we are number prepared to hold that the general criticism made by Mr. Sawhney against the judgment of the High Court can be accepted. In this companynection, Mr. Sawhney strongly relied on the fact that the High Court has number companysidered one important point in favour of the defence, and that is in relation to the failure of the prosecution to tender three material witnesses whose names had been shown in the witness-list in the calendar sent by the companymitting Magistrate to the trial Judge. This witnesses are Ram Prasad, Mansa Ram and Rani Dulhan. It appears that this companytention was raised by the defence before the Trial Court and had been rejected by it. The Government companynsel appearing for the prosecution had made an application to the trial Court expressing his inability to examine the three witnesses for the reason that Ram Prasad and Mansa Ram had been won over by the defence and Rani Dulhan, the widow of one of the victims, was suffering from such mental shock that she was unable t odepose companyeremtly. After this application was made and granted, the learned trial Judge did number insist upon the prosecution examining the three said witnesses. Then followed three other applications by the defence Nos. 247B, 248B and 249B in which it was urged that the said three witnesses should be examined under s. 540, Cr.P.C. The learned trial Judge rejected these applications, and so, the case companycluded without the said three witnesses giving evidence before the trial Court. In rejecting the applications made by the defence, the learned Judge has carefully examined the validity of the defences companytention that the evidence given by the said witnesses before the Committing Magistrate showed that they were material witnesses and the plea raised by them that the absence of their evidence would cause prejudice to the defence, and has held that the evidence which the said three witnesses may give was number essential for just decision of the case and that it was unreasonable to suggest that the prosecution had an oblique motive in suppressing their evidence. This part of the judgment clearly shows that all relevant aspects of the matter were examined by the trial Judge before he refused to exercise his powers under s. 540, Cr.P.C. It is obvious that this companytention was number urged before the High Court and so, we find numberdiscussion of the point in the judgment of the High Court. We are number prepared to accept Mr. Sawhneys argument that even if this point was number raised by the appellants before the High Court, they are entitled to ask us to companysider that point having regard to the fact that 10 persons have been ordered to be hanged. It may be companyceded that if a point of fact which plainly arises on the record, or a point of law which is relevant and material and can be argued without any further evidence being taken, was urged before the trial Court and after it was rejected by it was number repeated before the High Court, it may, in proper case, be permissible to the appellants to ask this Court to companysider that point in an appeal under Art. 136 of the Constitution afterall in criminal proceedings of this character where sentences of death are imposed on the appellants, it may number be appropriate to refuse to companysider relevant and material pleas of fact and law only on the ground that they were number urged before the High Court. If it is shown that the pleas were actually urged before the High Court and had number been companysidered by it, then, of companyrse, the party is entitled as a matter of right to obtain a decision on those pleas from this Court. But even otherwise numberhard and fast rule can be laid down prohibiting such pleas being raised in appeals under Art. 136. In the present case, however, we are satisfied that there is numbersubstance in the companytention which Mr. Sawhney seeks to raise before us. It is number unknown that where serious offences like the present are companymitted and a large number of accused persons are tried, attempts are made either to terrorise or win over prosecution witnesses, and if the prosecutor honestly and bonafide believes that some of his witnesses have been won over, it would be unreasonable to insist that he must tender such witnesses before the Court. It is undoubtedly the duty of the prosecution to lay before the Court all material evidence available to it which is necessary for unfolding its case but it would be unsound to lay down as a general rule that every witness must be examined even though his evidence may number be very material or even if it is known that he has been won over or terrorised. In such a case, it is always open to the defence to examine such witnesses as their witnesses and the Court can also call such witnesses in the box in the interest of justice under s. 540, Cr.P.C. As we have already seen, the defence did number examine these witnesses and the Court, after due deliberation, refused to exercise its power under s. 540. Cr.P.C. That is one aspect of the matter which we have to take into account. The other aspect of the matter is that the trial Court has found that the evidence which these witnesses would have given was number essential for a just decision of the case. What these witnesses might have said in the Sessions Court was judged by the trial Court in the light of their previous statements already recorded, and that is a finding which is purely one of fact. If this finding was number challenged by the appellants before the High Court, we do number see how they can claim to argue before us number that the said finding is erroneous. Besides, so far as Rani Dulhan is companycerned, it seems to us utterly unreasonable to insist that before permitting the prosecutor number to examine her, evidence should have been led to show that she was suffering from such mental shock that she was unable to give a companyerent account of the tragic events that happened on that fateful morning. One has merely to recall the fact that five male members of her family were butchered to death by the assailants to realise that the prosecutors statement that she was mentally unbalanced must be true. Then, as to Ram Prasad and Mansa Ram having been won over by the defence, that again is a matter on which the trial companyrt appears to have been satisfied otherwise it would have readily acceded to request of the defence to exercise its power under s. 540, Cr. P.C. We are inclined to think that it is because this part of the defence companytention was felt to be inarguable that the Advocate for the appellants did number raise this point before the Court. Therefore, we are number prepared to allow Mr. Sawhney to take us through the evidence in the case on the ground that one important companytention raised by the defence has number been examined by the High Court. Mr. Sawhney has then argued that where witnesses giving evidence in a murder trial like the present are shown to belong to the faction of victims, their evidence should number be accepted, because they are prone to involve falsely members of the rival faction out of enmity and partisan feeling. There is numberdoubt that when a criminal Court has to appreciate evidence given by witnesses who are partisan or interested, it has to be very careful in weighing such evidence. 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 probable, are all matters which must be taken into account. But it would, we think, be unreasonable to companytend that evidence given by witnesses should be discarded only on the ground that it is evidence of partisan or interested witnesses. Often enough, where factions prevail in villages and murders are companymitted as a result of enmity between such factions, criminal Courts have to deal with evidence of a partisan type. The mechanical rejection of such evidence on the sole ground that it is partisan would invariably lead to failure of justice. No hard and fast rule can be laid down as to how much evidence should be appreciated. Judicial approach has to be cautious in dealing with such evidence but the plea that such evidence should be rejected because it is partisan cannot be accepted as companyrect. Then it is urged that the evidence given by the witnesses companyforms to the same uniform pattern and since numberspecific part is assigned to all the assailants, that evidence should number have been accepted. This criticism again is number well-founded. Where a crowd of assailants who are members of an unlawful assembly proceeds to companymit an offence of murder in pursuance of the companymon object of the unlawful assembly, it is often number possible for witnesses to describe accurately the part played by each one of the assailants. Besides, if a large crowd of person armed with weapons assaults the intended victims, it may number be necessary that all of them have to take part in the actual assault. In the present case, for instance, several weapons were carried by different members of the unlawful assembly, but it appears that the guns were used and that was enough to kill 5 persons. In such a case, it would be unreasonable to companytend that because the other weapons carried by the members of the unlawful assembly were number used, the story in regard to the said weapons itself should be rejected. Appreciation of evidence in such a companyplex case is numberdoubt a difficult task but criminal companyrts have to do their best in dealing with such cases and it is their duty to sift the evidence carefully and decide which part of it is true and which is number. In the present case, the High Court has in fact refused to act upon the evidence of Bahoran and Prabhu Dayal, because it appeared to the High Court that the evidence of these two witnesses suffered from serious infirmities. Mr. Sawhney also urged that the test applied by the High Court in companyvicting the appellants is mechanical. He argues that under the Indian Evidence Act, trustworthy evidence given by a single witness would be enough to companyvict an accused person, whereas evidence given by half a dozen witnesses which is number trustworthy would number be enough to sustain the companyviction. That, numberdoubt is true but where a criminal companyrt has to deal with evidence pertaining to the companymission of an offence involving a large number of offenders and a large number of victims, it is usual to adopt the test that the companyviction companyld be sustained only if it is supported by two or three or more witnesses who give a companysistent account of the incident. In a sense, the test may be described as mechanical but it is difficult to see how it can be treated as irrational or unreasonable. Therefore, we do number think that any grievance can be made by the appellants against the adoption of this test. If at all the prosecution may be entitled to say that the seven accused persons were acquitted because their cases did number satisfy the mechanical test of four witnesses, and if the said test had number been applied, they might as well have been companyvicted. It is, numberdoubt, the quality of the evidence that matters and number the number of witnesses who give such evidence. But, sometimes it is useful to adopt a test like the one which the High Court has adopted in dealing with the present case. Mr. Sawhney then attempted to argue that the High Court failed to give effect to the principles enunciated by this Court in the case of Baladin v. State of Uttar Pradesh . In that case, it was observed by Sinha, J., who spoke for the Court, that it is well-settled that mere presence in an assembly does number make a person, who is present, a member of an unlawful assembly unless it is shown that he had done something or omitted to do something which would make him a member of an unlawful assembly, or unless the case falls under s. 142, I.P.C. The argument is that evidence adduced by the prosecution in the present case does number assign any specific part to most of the accused persons in relation to any overt act, and so, the High Court was in error in holding that the appellants were members of an unlawful assembly. The observation of which Mr. Sawhney relies, prima facie, does seem to support his companytention but, with respect, we ought to add that the said observation cannot be read as laying down a general proposition of law that unless an overt act is proved against a person who is alleged to be a member of an unlawful assembly, it cannot be said that he is a member of such an unlawful assembly. In appreciating the effect of the relevant observation on which Mr. Sawhney has built his argument, we must bear in mind the facts which were found in that case. It appears that in the case of Baladin , the members of the family of the appellants and other residents of the village had assembled together some of them shared the companymon object of the unlawful assembly, while others were merely passive witnesses. Dealing with such an assembly, this Court observed that the presence of a person in an assembly of that kind would number necessarily show that he was a member of an unlawful assembly. What has to be proved against a person who is alleged to be a member of an unlawful assembly is that he was one of the persons companystituting the assembly and he entertained along with the other members of the assembly the companymon object as defined by s. 141, I.P.C. Section 142 provides that whoever, being aware of facts which render any assembly an unlawful assembly, intentionally joins that assembly, or companytinues in it, is said to be a member of an unlawful assembly. In other words, an assembly of five or more persons actuated by, and entertaining one or more of the companymon objects specified by the five clauses of s. 141, is an unlawful assembly. The crucial question to determine in such a case is whether the assembly companysisted of five or more persons and whether the said persons entertained one or more of the companymon objects as specified by s. While determining this question, it becomes relevant to companysider whether the assembly companysisted of some persons who were merely passive witnesses and had joined the assembly as a matter of idle curiosity without intending to entertain the companymon object of the assembly. It is in that companytext that the observations made by this Court in the case of Baladin assume significance otherwise, in law, it would number be companyrect to say that before a person is held to be a member of an unlawful assembly, it must be shown that he had companymitted some illegal overt act or had been guilty of some illegal omission in pursuance of the companymon object of the assembly. In fact, s. 149 makes it clear that if an offence is companymitted by any member of an unlawful assembly in prosecution of the companymon object of that assembly, or such as the members of that assembly knew to be likely to be companymitted in prosecution of that object, every person who, at the time of the companymitting of that offence, is a member of the same assembly, is guilty of that offence and that emphatically brings out the principle that the punishment prescribed by s. 149 is in a sense vicarious and does number always proceed on the basis that the offence has been actually companymitted by every member of the unlawful assembly. Therefore, we are satisfied that the observations made in the case of Baladin must be read in the companytext of the special facts of that case and cannot be treated as laying down an unqualified proposition of law such as Mr. Sawhney suggests. In this case, the High Court has carefully examined the evidence and has made a finding that the whole group of persons who companystituted the assembly were members of the faction of Laxmi Prasad and they assembled together, armed with several weapons, because they entertained a companymon object in pursuance of which the five murders were companymitted on that day. Therefore, there is numbersubstance in the argument that the companyclusion of the High Court that the appellants are guilty of the offences charged is number supported by the principles of law enunciated by this Court in the case of Baladin . It is thus clear that the general grounds of attack urged before us by Mr. Sawhney in challenging the validity of the companyclusions recorded by the High Court fail, and so, there would be numberoccasion or justification for this Court to companysider the evidence for itself. That leaves one question still to be companysidered and that has relation to the sentence of death imposed on 10 persons. Mr. Sawhney argues that in companyfirming the sentences of death imposed by the trial Court on 10 accused persons in this case, the High Court has adopted a mechanical rule. The High Court has held that the 10 persons who carried fire-arms should be ordered to be hanged, whereas others who have also been companyvicted under s. 302/149, should be sentenced to imprisonment for life. It is true that except for Laxmi Prasad, the charge under s. 302/149 rests against the other accused persons on the ground that five murders have been companymitted by some members of the unlawful assembly of which they were members, and the argument is that unless it is shown that a particular accused person has himself companymitted the murder of one or the other of the victims, the sentence of death should number be imposed on him. In other words, the companytention is that if a person is found guilty of murder under s. 302/149 and it is number shown that he himself companymitted the murder in question, he is number liable to be sentenced to death. In support of this argument, Mr. Sawhney has relied on certain observations made by Bose J. who spoke for the Court in Dalip Singh v. State of Punjab 1954 S.C.R. 145. In that case, what this Court observed was that the power to enhance a sentence from transportation to death should very rarely be exercised and only for the strongest reasons and it was added that it is number enough for the appellate companyrt to say or think that if left to itself it would have awarded the greater penalty because the discretion does number belong to the appellate companyrt but to the trial Judge, and the only ground on which the appellate companyrt can interfere is that the discretion has been improperly exercised. These observations have numberrelevance in the present case, because we are number dealing with a case where the High Court has enhanced the sentence imposed by the trial Judge at all. In fact, both the trial Court and the High Court are agreed that the sentences of death imposed on 10 persons are justified by the circumstances of the case and by the requirements of justice. As a mere proposition of law, it should be difficult to accept the argument that the sentence of death can be legitimately imposed only where an accused person is found to have companymitted the murder himself. Whether or number sentences of death should be imposed on persons who are found to be guilt number because they themselves companymitted the murder, but because they were members of an unlawful assembly and the offence of murder was companymitted by one or more of the members of such an assembly in pursuance of the companymon object of that assembly, is a matter which had to be decided on the facts and circumstances of each case. In the present case, it is clear that the whole groups of persons belonged to Laxmi Prasads faction, jointed together armed with deadly weapons and they were inspired by the companymon object of exterminating the male members in the family of Gayadin, 10 of these persons were armed with fire-arms and the others with several other deadly weapons, and evidence shows that five murders by shooting were companymitted by the members of this unlawful assembly. The companyduct of the members of the unlawful assembly both before and after the companymission of the offence has been companysidered by the companyrts below and it has been held that in order to suppress such fantastic criminal companyduct on the part of villagers it is necessary to impose the sentence of death on 10 members of the unlawful assembly who were armed with fire-arms. It cannot be said that discretion in the matter has been improperly exercised either by the trial Court or by the High Court. Therefore we see numberreason to accept the argument urged by Mr. Sawhney that the test adopted by the High Court in dealing with the question of sentence is mechanical and unreasonable. There are, however, three cases in which we think we ought to interfere. These are the case of accused No. 9 Ram Saran who is aged 18 accused No. 11 Asha Ram who is aged 23 and accused No. 16 Deo Prasad who is aged 24, Ram Saran and Asha Ram are the sons of Bhagwati who is accused No. 2. Both of them have been sentenced to death. Similarly, Deo Prasad has also been sentenced to death. Having regard to the circumstances under which the unlawful assembly came to be formed, we are satisfied that these young men must have joined the unlawful assembly under pressure and influence of the elders of their respective families. The list of accused persons shows that the unlawful assembly was companystituted by members of different families and having regard to the manner in which these factions ordinarily companyduct themselves in villages, it would number be unreasonable to hold that these three young men must have been companypelled to join the unlawful assembly that morning by their elders, and so, we think that the ends of justice would be met if the sentences of death imposed on them are modified into sentences of life imprisonment. Accordingly, we companyfirm the orders of companyviction and sentence passed against all the appellants except accused Nos. 9, 11 and 16 in whose cases the sentences are altered to those of imprisonment for life.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 596 of 1963. Appeal from the judgment dated March 1, 1960 of the Madras High Court in Case Referred No. 11 of 1955. N. Rajagopal Sastri and R. N. Sachthey, for the appellant. Ganapathy Iyer and R. Gopalakrishnan, for the respondent. May 7, 1964 The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave is preferred against the order of the Madras High Court in a reference made to it by the Income-tax Appellate Tribunal under S. 66 1 of the Income-tax Act, 1922, hereinafter called the Act. The facts leading up to the reference and relevant to the present enquiry are as follows. The Free Press of India Madras Ltd., hereinafter called the Free Press Company, was a private limited companypany carrying on business as printers and publishers of certain newspapers, namely, Indian Express, Dhinamani and Andhra Prabha at Madras, Eastern Express and Bharat at Calcutta and Sunday Standard and Morning Standard at Bombay. ,On August 31, 1946, the Free Press Company passed a resolution transferring to the -Express Newspapers Limited, a new companypany formed on or about April 22, 1946, hereinafter called the assessee-company, the right to print and publish the said newspapers from September 1. 1946. letting out its machinery and assets and authorizing the assessee-company to companylect the book debts and pay off the liabilities of the Free Press Company. The assessee companypany accordingly started publishing newspapers from September 1, 1946. On October 31, 1946, the Free Press Company resolved at a General Body Meeting to wind up the companypany voluntarily. The liquidator appointed thereunder was directed number to carry on the business of the companypany. On November 1, 1946, the liquidator ascertained the value of the assets over the liabilities taken over by the assessee-company as per the balance-sheet at Rs. 19,36.000/and this amount was credited to the account of the two directors of the Free Press Company in the assessees books. The profit of the Free Press Company was worked out to be Rs. 6,08,666, being the difference between the written down value and the sale price of the machinery. That sum was made up of, i the difference between the original companyt price and the written down price of the machinery. Rs. 2,14,090/-, ii the amount in excess over the original companyt price Rs. 3,94,576/-. The Income-tax Officer included the said two items in the total income of the assessee companypany under the following heads, i profit under proviso to s. 10 2 vii Rs. 2,14,090/-, and ii capital gains under s. 12B Rs. 3,94,576/-, and assessed each to tax. The Income-tax Appellate Tribunal upheld the validity of the inclusion of the item under capital gains in the total income of the assessee but decided against the inclusion of the first item. The Appellate Tribunal referred the following two questions, among others, for the decision of the High Court of Madras under s. 66 1 of the Incometax Act- Whether Free Press Company made a business profit of Rs. 2,14,090/- under proviso to section 10 2 vii of the Act? Whether the capital gain made by the Free Press Company is liable to be assessed in the hands of the Express Company, under section 26 2 of the Act? The reference was heard by a Division Bench of the High Court, companysisting of Rajagopalan and Ramachandra Iyer, JJ., who by their judgment answered the two questions in the negative and against the department. The present appeal is preferred against the said judgment of the High Court. The argument in the appeal proceeded on the basis of the following facts. During the accounting year 1946-47 the Free Press Company did number do the business of printing and publishing newspapers from September 1, 1946, and thereafter the assessee-company alone was carrying on the said business. The Free Press Company went into voluntary liquidation on October 31, 1946, and the liquidator, on November 1, 1946, companyfirmed the transfer of the assets made by the Free Press Company to the assessee-company. Therefore, on November 1, 1946, the aforesaid machinery was sold yielding a profit of Rs. 6,08,666/- to the Free Press Company being the difference between the written down value and the sale price of the machinery. Broadly stated, the machinery was sold by the Free Press Company during the accounting year after it closed down its business and after it went into voluntary liquidation. On those facts learned companynsel for the Revenue raised before us the following two companytentions 1 The first item of Rs. 2,14,090/-, representing the surplus over the written down value of the machinery was assessable in accordance with the proviso to s. 10 2 vii --of the Act and 2 the second item of Rs. 3,94,576/-, representing the capital gains made by the Free Press Company is assessable in the hands of the assessee- companypany, who succeeded to the said business, under s. 26 2 of the Act. Learned companynsel for the respondent companytended that neither the companyditions laid down in s. 10 2 vii of the Act number those laid down in s. 26 2 thereof attracted the said two items of income and, therefore, they were number assessable in the hands of the assessee-company. The first question turns upon the relevant provisions of s. 10 of the Act. To have a clear view of the scope of the relevant provisions it will be companyvenient to read them at one place. Section 10.- 1 The tax shall be payable by an assessee under the head Profits and gains of business, profession or vocation in respect of the profit or gains of any business, profession or vocation carried on by him. Such profits or gains shall be companyputed after making the following allowances, namely- in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture, stocks or stores, used for the purposes of the business, profession or vocation. the amount of any premium paid in respect of current repairs to such buildings, machinery, plant or furniture, the amount paid on account thereof in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value Provided further that where the amount for which any such building, machinery or plant is sold, whether during the companytinuance of the business or after the cessation thereof, exceeds the written down value, so much of the excess as does number exceed the difference between the original companyt and the written 51 C.-13 down value shall be deemed to be profits of the previous year in which the sale took place We are companycerned with the second proviso to s. 10 2 vii of the Act. The substantive clause grants a balancing allowance in respect of building, machinery or plant which has been sold or discarded or demolished or destroyed. The allowance represents the excess of the written down value over the sale price. Under the proviso, if the sale price exceeds the written-down value, but does number exceed the original companyt price, the difference between the original companyt and the written down value shall be deemed to be profits of the year previous to that in which the sale takes place that is to say, the difference between the price fetched at the sale and the written down value is deemed to be the escaped profits for which the assessee is made liable to tax. As the sale price is higher than the written down value, the difference represents the excess depreciation mistakenly granted to the assessee. To illustrate assume that the original companyt of a machinery or plant is Rs. 100/- and depreciation allowed is Rs. 25/- the written down value is Rs. 75. If the machinery is sold for Rs. 100/-, it is obvious that depreciation of Rs. 25/- was wrongly allowed. If it had number been allowed that amount would have swelled the profits to that extent. When it is found that it was wrongly allowed that profit is brought to charge. The second proviso, therefore, in substance, brings to charge an escaped profit or gain of the business carried on by the assessee. The scope of this proviso cannot be ascertained in vacuum. The companyditions for its applicability can be ascertained only in its relation to the other related provi- sions. Under s. 3 of the Act income-tax shall be charged for any year in accordance with and subject to the provi- sions of the Act in respect of the total income of the previous year of every assessee under s. 6, one of the heads of taxable income is profits and gains of business, profession or vocationl, under s. 10 1 , the tax under that head is payable in respect of profit or gains of any business carried on by the assessee during the accounting year. The main companydition which attracts all the other sub-sections and clauses of the section is that the tax shall be payable by an assessee in respect of the profit or gains of any business etc. carried on by him. The crucial words are-.business carried on by him. If the profit or gains were number earned when the business was being carried on by the assessee during the accounting year, they would fall outside the provision of s. 10 1 . For instance, if the machinery sold after the business was closed or when the business was under liquidation, it would number be appropriate to hold that the profit or gains earned by the sale were in respect of the business that was being carried on by the assessee. The second companydition that attracts the second proviso is implicit in the adjective such preceding building, machinery or plant sold. The adjective such refers back to cls. iv , v , vi and vii of s. 10 2 . Under cl. iv an allowance is allowed in regard to any premium paid in respect of insurance against risk of damage or destruction of buildings, machinery, plant etc. used for the purpose of the business, profession or vocation. Under this clause allowance is allowed only in respect of the machinery used for the purpose of the business. Clauses v , vi and vii refer to such buildings, machinery, plant etc. that is to say, such buildings, machinery, plant etc. used for the purpose of the business. The result is that the second proviso will only apply to the sale of such machinery which was used for the purpose of the business during the accounting year. It brings in to charge the escaped profits under the guise of superfluous allowances if the machinery sold was used for the business during the accounting year when the business was being carried on. Therefore, to bring the sale proceeds to charge the following companydition.,, shall be fulfilled 1 During the entire previous year or a part of it the business shall have been carried on by the assessee 2 the machinery shall have been used in the business and 3 the machinery shall have been sold when the business was being carried on and number for the purpose of closing it down or winding it up. If these were the companyditions for the applicability of the said proviso, the sale of the machinery in the instant case having taken place after the business was closed and during the winding up proceedings, it would fall outside the scope of the said proviso and therefore the first item is number assessable to tax This point directly arose for companysideration in The Liquidators of Pursa Limited v. Commissioner of Incometax, Bihar 1 . There, the assessee-company carried on the business of growing sugarcane and manufacturing and selling sugar. In the year 1943 it negotiated for the sale of the factory and other assets with the object of winding up the companypany. It received a firm offer on August 9, 1943, and companycluded the agreement of sale on December 7, 1943. Between August 9, 1943, and December 7, 1943, it never used the machinery and plant for the purpose of manufacturing sugar or for any other purpose except that of keeping them in trim and running order. In the assessment of the companypany to income-tax for the accounting period from October 1, 1943, to September 30, 1944, the income-tax authorities treated the surplus made by the companypany on the sale of the buildings, plant and machinery as profits under proviso 2 to s. 10 2 vii of the Act. This Court held that the said amount was number taxable. This Court rejected the companytention of the Revenue that the said excess was taxable on two grounds, namely, 1 the sale of the machinery and plant was number an operation in furtherance of the business carried on by the companypany but was a realisation of its assets in the process of gradual winding up of its business which eventually. culminated in the voluntary liquidation of the companypany 2 even if the sale of the stock of sugar be regarded as carrying on of business by the companypanyand number a realisation of its assets with a view to winding up, the machinery or plant number being used in the accounting year at all and in any event number having had companynection with the carrying on of that limited business during the accounting year, s. 10 2 vii companyld have numberapplication to the sale of any such machinery or plant. Learned companynsel for the Revenue companytends that the main reason for the decision was that the machinery or the plant was number used in the accounting year for the business and that the second reason, namely, that the assets were sold in the process of gradual winding up of the company- pany was only an observation and that the decision was number based upon the said observation. But a careful perusal of the judgment discloses beyond any reasonable doubt that the decision was based upon both the grounds. As in the present case the machinery was sold number for the business but only for closing it up during the liquidation proceedings, this decision directly companyers the present case. This question again fell to be companysidered by this Court in The Commissioner of Income-tax, Bombay Circle II v. The National Syndicate, Bombay 1 . There, the National Syndicate, a Bombay firm, acquired on January 11, 1945, a tailoring business as a going companycern for Rs. 89,321/-which includedthe companysideration paid for sewing machines and a motor lorry. Soon after the purchase the respondent found it difficult to companytinue the business, and therefore it closed its business in August, 1945. Between August 16, 1945, and February 14, 1946, sewing machines and the motor lorry were sold at a loss. The respondent closed its account books on February 28, 1946, showing the two losses and writing them off. For the assessment year 1946-47, the respondent claimed a deduction under s. 10 2 vii of the Indian Income-tax Act. The question fell to be companysidered on a companystruction of the provisions of s. 10 2 vii of the Act. This Court, speaking through Hidayatullah, J., held that the loss was a business loss, though the machines and the motor lorry were sold after the business was closed down, as the said machines and lorry were used for the purpose of the business during a part of the accounting year and were sold during the accounting year. This Court, after numbericing the decision under appeal and that of this Court in The Liquidators of Pursa Limited v. Commissioner of Income- tax, Bihar 2 , and the amendment introduced in the second proviso to s. 10 2 vii of the Act, observed But it is to be numbericed that numbersuch amendment was made in el. vii to exclude loss over buildings, machinery or plant after the closure of the business. It is thus clear that the principles which govern the proviso cannot be 1 1961 2 S.C.R. 229 2 1954 S.C.R. 767 used to govern the main clause, because profit or loss arise in different ways in business. The two rulings do number, therefore, apply to the facts here. It is companytended that the principle accepted by this decision is in companyflict with that laid down in the case of The Liquidators of Pursa Limited 1 . It is said that the company- dition that the sale of the machinery at a loss should have been before the closing of the business is impliedly laid down by s. 10 1 of the Act which applies equally to cl. vii as well as to the second proviso thereto, and that if the companydition need number be fulfilled in the case falling under the substantive part of cl. vii of s. 10 2 of the Act, it will be incongruous to apply it to a case falling under the second proviso before it was amended. So stated there is some plausibility in the argument. But this Court in express terms made a distinction between the scope of the substantive part of cl. vii and that of the second proviso thereto and expressly distinguished those rulings on the ground that they would number apply to the companystruction of the substantive part of cl. vii . When this Court expressly companyfined the scope of the decision to the substantive part of cl. vii without disturbing the validity of the decisions governing the second proviso, it is number proper that we should rely upon it in preference to a direct decision on the second proviso to cl. vii of s. 10 2 of the Act before it was amended. This Court in K. M. S. Reddy, Commissioner of Income-tax, Kerala v. The West Coast Chemicals and Industries Ltd. in liquidation , Alleppy 2 held that a winding up sale was number trading or doing business. There. chemicals and other raw-materials were sold number in the companyrse of ordinary trading but only in realisation sale after the companypany had been wound up. This Court, speaking through Hidayatullah, J., posed the following question, The question, therefore, is whether there can be said to be a sale in the carrying on of the business in respect of the chemicals and other raw materials. 1 1954 S.C.R. 767 2 1962 Supp. 3 S.C.R. 960, 965. After referring to the passages in Halsburys Laws of Eng- land, 3rd Edn., Vol. 20, pp. 115-117, wherein it was stated that mere realisation of assets is number trading and that there was distinction between sales forming part of the trading activities and those where the realisation was number an act of trading, the learned Judge observed that the said distinction was a sound one. The learned Judge, on a companysideration of other decisions, also accepted as companyrect the distinction made between a sale of the entire stock as part of trading and the sale of a part of the stock as a winding up sale. Then the learned Judge applied the principles to the facts of the case and held that it was im- possible to infer that the chemicals and raw materials were sold in the ordinary way of business or that the assessee companypany was carrying on a trading business. This decision again accepts the distinction between a sale held in the ordinary way of business and that held for the purpose of winding up the business and that in the latter case the profits accrued are number trading profits. This case numberdoubt did number turn upon the provisions of the second proviso to cl. vii of s. 10 2 of the Act, but the principle accepted therein is the basis for the application of s. 10 of the Act and that will apply to all provisions of s. 10, unless an exception is made in a particular provision. For the fore- going reasons we hold that the first item is number liable to tax and the High Court has given the companyrect answer to the first question submitted to it. The second item relates to capital gains. That represents the excess of the price obtained on the sale of the machinery over its original companyt price. It is companyceded that it does number represent profits and gains of business, but it falls under the heading capital gains. But it is argued that, as the Free Press Company wag wound up and, therefore, companyld number be found., the assessee, who had succeeded to it, would be liable to be assessed for the said capital gains under the proviso to s. 26 2 of the Act. To appreciate the companytention some of the relevant provisions of the Act may be read Section 6.-Save as otherwise provided by this Act, the following heads of income, profits and gains, shall be chargeable to income-tax in the manner hereinafter appearing, namely- Profits and gains of business, profession or vocation. Capital gains. Section 10.- 1 The tax shall be payable by an assessee under the head Profits and gains of business, profession or vocation in respect of the profit or gains of any business, profession or vocation carried on by him. Such profits or gains shall be companyputed after making the following allowances, namely- Section 12B.- 1 The tax shall be payable by an assessee under the head Capital gains in respect of any profits or gains arising from the sale, exchange, relinquishment or transfer of a capital asset effected after the 31st day of March, 1956, and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange, relinquishment or transfer took place Section 24.- 2A Notwithstanding anything company- tained in sub-section 1 , ,here the loss sustained is a loss falling under the head Capital gains, such loss shall number be set off except against any profits and gains falling under that head. 2B Where an assessee sustains a loss such as is referred to in sub-section 2A and the loss cannot be wholly set off in accordance with the provisions of that sub-section, the portion number so set off shall be carried forward to the following year and set off against capital gains for that year, and if it cannot be so set off, the amount thereof number so set off shall be carried forward to the following year and so on, so however that numbersuch loss shall be carried forward for more than eight years Provided that where the loss sustained by an assessee, number being a companypany, in any previous year does number exceed five thousand rupees, it shall number be carried forward. Section 26.- 2 Where a person carrying on any business, profession or vocation has been succeeded in such capacity by another person, such person and such other person shall, sub- ject to the provisions of sub-section 4 of section 25, each be assessed in respect of his actual share, if any, of the income, profits and gains of the previous year Provided that, when the person succeeded in the business, profession or vocation cannot be found, the assessment of the profits of the year, in which the succession took place up to the date of succession, and for the year preceding that year shall be made on the person succeeding him in like manner and to the same amount as it would have been made on the person succeeded or when the tax in respect of the assessment made for either of such years assessed on the person succeeded cannot be recovered from him, it shall be payable by and recoverable from the person succeeding, and such person shall be entitled to recover from the person succeeded the amount of any tax so paid. A companyspectus of the said sections discloses a clearcut scheme. Though income-tax is only one tax levied on the total income, s. 6 enumerates six heads whereunder the income of an assessee falls to be charged. This Court in United Commercial Bank Ltd. v. Commissioner of Income- tax, West Bengal 1 laid down that ss. 7 to 12 are mutually exclusive and where an item of income falls specifically under one head it is to be charged under that head and numberother. The expression Income, profits and gains in s. 6 is a companyposite companycept which takes in all the six heads of income mentioned therein. The 4th head is profits and gains of business, profession or vocation and the 6th head is capital gains. Section 10 taxes the profits and gains of a business, profession or vocation carried on by an assessee it also enumerates the different kinds of allowances that can be made in companyputing the profits. Under s. 10 1 , as we have already pointed out, the necessary companydition for the application of the section is that the assessee should have carried on the business for some part of the accounting year. Section 26 2 indicates the manner of assessment of the income, profits and gains of any business, profession or vocation. This section does number provide for the assessment of income under any other head. It only says that if there is a succession to a person carrying on business during an accounting year, the person succeeded and the person succeeding can each of them be assessed in respect of his actual share. The proviso deals with a case where the person succeeded cannot be found in that event, the assessment of the profits of the year in which the succession took place upto the date of the succession and for the year preceding that year shall be made on the person succeeding him. If an assessment has already been made in respect of the said years on the person succeeded, it can be recovered from the person succeeding. But both sub-s. 2 and the proviso deal only with income, profits and gains of the business, that is to say, for the assessment made in respect of profit and gains under the 4th head of s. 6. Now turning to s. 12B, it provides for capital gains. Under that section the tax shall be payable by the assessee under the head capital gains in respect of any profits or gains arising from, the sale of a capital asset effected during the Prescribed period. It says further that such profits or gain shall be deemed to be income of the previous year in which the sale etc. took place. This deeming clause does number lift the, capital gains from the 6th head in s. 6 and place it 1 1958 S.C.R 79 4 1957 32 I.T R. 688. under the 4th head It only introduces a limited fiction, named that capital gains accrued will be deemed to be income of the previous year in which the sale was effected. The fiction does number make them the profit or gains of the business. It is well settled that a legal fiction is limited to the purpose for which it is created and should number be extended beyond its legitimate field. Sub-sections 2A and 2B of s. 24 provide for the setting off of the loss falling under the head capital gains against any capital gains falling under the same head. Such loss cannot be set off against an income falling under any different head. These three sections indicate beyond any doubt that the capital gains are separately companyputed in accordance with the said provisions and they are number treated as the profits from the business. The profits and gains of business and capital gains are two distinct companycepts in the Income-tax Act the former arises from the activity which is called business and the latter accrues because capital assets are disposed of at a value higher than what they companyt the assessee. They are placed under different heads they are derived from different sources and the income is companyputed under different methods. The fact that the capital gains are companynected with the capital assets of the business cannot make them the profit of the business. They are only deemed to be income of the previous year and number the profit or gains arising from, the business during that year. If that be the scheme of the Act, the companytention of the learned companynsel for the Revenue can easily be answered. He asks that if s. 26 2 deals with only profits and gains of the business, why should the Legislature use the word income therein? As we have indicated, the expression income, profits and gains is a companypendious term to companynote the income from the various sources mentioned in s. 6 therefore, the use of such an expression does number efface the distinction between the different heads, but only describes the income from the business. The expression ,profits in the proviso makes it clear that the income, profits and gains in sub-s. 2 of s. 26 only refer to the profits under the 4th head in s. 6. On the other hand, if the interpretation sought to be put upon the expression income in sub-s. 2 of s. 26 by the Revenue is accepted, then the absence of that word in the proviso destroys the argument. But the more reasonable view is that both the sub-section and the proviso deal only with the profits under the 4th head men- tioned in s. 6 and, so companystrued, it excludes capital gains. The argument that sub-s. 2 of s. 26 read with the proviso thereto indicates that the total income of the person succeeded is the criterion for separate assessment under sub-s. 2 and for assessment and realisation under the proviso is on the assumption that sub-s. 2 and the proviso deal with all the heads mentioned in s. 6 of the Act. But if, as we have held, the scope of sub-s. 2 of s. 26 is only limited to the income from, the business, the share under sub-s. 2 and the assessment and realisation under the proviso can only relate to the income from the business. The argument is really begging the question itself. In the result we agree with the High Court in regard to the answer it has given in respect of the second question. In this view numberother question arises for our companysideration.

Case appeal was rejected by the Supreme Court

Gajendragadkar, C.J. This appeal by special leave arises out of a writ petition filed by the appellant, Lalji Haridas, in the High Court of Gujarat under article 226 of the Constitution in which he prayed for a writ including a writ in the nature of certiorari against respondent No. 1, the Income-tax Officer, Ward D, Jamnagar, as well as the respondent No. 2, the Union of India, quashing two numberices issued by the respondent No. 1 against him on the 14th April, 1960, and the 7th July, 1960. He also prayed that the assessment order passed against him by the Income-tax Officer on the 17th December, 1958, should likewise be quashed. This petition was dismissed by the High Court in limine without issuing numberice to the respondents. Against the dismissal of his petition, the appellant applied for and obtained special leave from this companyrt and it was with this special leave thus granted to him that the appeal has companye before us for final disposal today. Having heard Mr. Pathak on behalf of the appellant, we have companye to the companyclusion that there is numbersubstance in this appeal and it must be dismissed with the companyts. In fact, this appeal illustrates how an assessee can prolong the assessment proceedings by adopting judicial proceedings available to him under the law and thereby postpone indefinitely the final disposal of the said proceedings by the income- tax authorities. The appellant is the resident of Jamnagar and the order of the assessment was passed against him on 17th December, 1958, assessing him to pay income-tax on Rs. 4,74,046. Before making this order of assessment, numberice has been issued against the appellant on 20th December, 1957, under section 46 1 a of Saurashtra Income-tax Ordinance, 1949. This section companyresponds to section 34 1 a of Indian Income-tax Act. It appears that respondent No. 1 came to known that for the assessment year 1949-50, a large amount of income received by the appellant had escaped assessment. That is why numberice was issued against him calling upon him to make a return of his income for the relevant year. The appellant thereupon made a return showing an income of Rs. 46 for the year in question. Respondent No. 1 had companye to know that several amounts had been credited in the account books of the appellant and appeared to represent his income. On the 24th October, 1948, for instance two sums of Rs. 1 lakh each had been credited in the names of M s. Bhagirath Madangopal Co., Bombay, and Mulji Manilal Kamdar respectively. The latter amount was subsequently transferred to the account of another firm of M s. Bhagirath Kasat Co. On the 7th March, 1949, another sum of Rs. 1,80,000 was transferred to the said companypany. Further credits to the tune of Rs. 74,000 and Rs. 20,000 were also discovered. In submitting his return, the appellant attempted to say that these amounts did number represent his income at all and showed benami transactions entered into by him on behalf of other persons. Respondent No. 1 was number satisfied with the explanation given by the appellant, and so he passed the order of assessment as indicated above. Against this order of assessment, the appellant preferred an appeal to the Appellate Assistant Commissioner of Income-tax, Rajkot. Before the appellate authority, the appellate companytended that all his witness were number allowed to be examined by respondent No. 1 and that some of the evidence which was given by his witness was also number properly recorded. The appellate authority partly accepted his companytention and by its order passed on the 3rd September, 1959, it remanded the proceedings to respondent No. 1 and directed him to submit a report after examining the witness whom the appellant wanted to cite. Even while making this order of remand, the Appellate Assistant Commissioner companymented on the fact that the appellant appeared to be determined to adopt dilatory proceedings and delay as much as he can the final disposal of the proceedings taken against him. After the matter was thus remanded to respondent No. 1, the appellant was required by two letters dated 13th April, 1960, and 7th July, 1960, to appear before respondent No. 1 and give his evidence. Instead of companyplying with the requisition companytained in the said letters, the appellant moved the Gujarat High Court of the 9th July, 1960, by his present writ petition. It appears that he also preferred an appeal from the remand order to the Income-tax Appellate Tribunal. The High Court summarily rejected the writ petition filed by the appellant, and it is against this summary dismissal that the appellant had companye to this companyrt. From the petition for special leave, it would appear that at the time of admission, the appellant presumably urged before this companyrt that the Saurashtra Income-tax Ordinance under which the present proceedings had been companymenced against him was invalid. In any event, that is one of the grounds taken in the petition for special leave. Mr. Pathak for the appellant frankly companyceded that he was number in the position to justify or substantiate the said companytention, and so the only ground taken in the petition which, prima facie, appears to be a ground of law and jurisdiction, is number pressed. Meanwhile, the proceedings after remand before respondent No. 1 have been stayed and in that sense, the object of the appellant in preferring this appeal has been substantially achieved. Mr. Pathak for the appellant attempted to argue that the numberice issued against the appellant, is on the face of it, invalid, because it is barred by time. We did number allow Mr. Pathak to develop this point, because we took the view that a plea of this kind must ordinarily taken before respondent No. 1 himself. The jurisdiction companyferred on the High Court under article 226 is number intended to supersede the jurisdiction and authority of the Income-tax Officers to deal with the merits of all the companytentions that the assessees may raise before them, and so it would be entirely inappropriate to permit an assessee to move the High Court under the article 226 and companytend that a numberice issued against him is barred by time. That is the matter which the income-tax authorities must companysider on the merits in the light of the relevant evidence. Apart from this aspect of the matter, however, the plea of limitation sought to be raised by Mr. Pathak was number even specifically made as it should have been in the writ petition filed before the High Court. One of the grounds taken in the writ petition was that the Appellant Assistant Commissioner had instead of treating the assessment order a nullity and having the same set aside, illegally remanded the case back to the Income-tax Officer to save limitation. It would be numbericed that at its highest, this ground can mean that the result of the remand order was to attempt to save limitation it has numberrelevance on the point sought to be raised by Mr. Pathak that the numberice issued against the client initially was barred by time. But, as we have already indicated, a plea of this kind cannot be permitted to be raised in writ proceedings, and so we refused Mr. Pathak permission to develop this point. The order point which Mr. Pathak wanted to raise was that for the transactions in question other persons that had been taxed, and he suggested that an order which have been passed by respondent No. 1 on the 17th December, 1958, was in the nature of levy of protective assessment, and so it should be set aside. This point again ought to be raised before the Income-tax Officer and cannot be allowed to be urged before the High Court under article 226. Even in respect of this point, the plea taken is extremely vague and the appellant has number even stated on oath that other persons have in fact paid assessment in respect of transactions which respondent No. 1 regards as his.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 558 of 1964. Appeal by special leave from the judgment and order dated December 16, 1963 of the Rajasthan High Court in D. B. Election Appeal No. 74 of 1963. K. Garg, S. C. Agarwal, D. P. Singh and M. K. Ramamurthi,for the appellant. S. Pathak and Naunit Lal, for the respondent. The Judgment of the Court was delivered by Subba Rao J. The appellant, Sheopat Singh, and two others, namely Ramchander Chowdhary and Suria Ram, companytested the election for a seat in the Rajasthan Legislative Assembly from Hanumangarh companystituency. The appellant polled, 1,285 votes Ramchander Chowdhary, 18,217 and Surja Ram, 1,285 votes. The appellant was declared elected. The respondent, One of the electors, filed an election petition under S. 8 1 of the Representation of the People Act, 1951, hereinafter called the Act, for setting aside the election of the appellant on various grounds. Me Election Tribunal. by its order dated June 18. 1963, held that the respondent had failed to substantiate the allegations made against the appellant and, on that finding, dismissed the petition. Against the said order, the respondent preferred an appeal to the High Court of Judicature for Rajasthan at Jodhpur. A Division Bench of that Court heard the appeal and came to the, companyclusion that the appellant was guilty of a companyrupt practice under sub-s. 4 of s. 123 of the Act in publishing a poster, Ex. 3, which companytained a statement of fact about the personal character and companyduct Of Ramchander Chowdhary, one of the candidates in the election. On that finding, it set aside the order of the Election Tribunal and declared the election of the appellant void. The appellant, by special leave, has preferred this appeal to this Court against the said order of the High Court. In Learned companynsel for the appellant raised before us two points, namely, i that Ex. 3, the poster, published and circulated by the appellant is number hit by the provisions of S. 123 4 of the Act and ii that the election petition should have been dismissed d under s. 85 of the Act on the ground that it had number impeded Hariram, another duly numberinated candidate who withdrew his candidature before the election and against whom allegations of companyrupt practice were made. The first argument of the learned companynsel is elaborated thus. Under S. 123 4 of the Act the burden is upon the person who is to impute companyrupt practice described thereunder to establish the ingredients of companyrupt Practice laid down therein. He has number only to prove that the elected candidate published a statement of fact, which is false, in relation to the personal character or companyduct of another candidate, but also that he believed it to be false or he did number believe it to be true. He has to prove further that the said statement was calculated to prejudice the prospects of the other candidates election, that is to say that the voters had the knowledge that the companyrupt practice or practices were attri- buted to him and because of that knowledge did number vote for him. In the instant case, Ex. 3 companytained only general allegations against the misrule of the Congress Party and even if the statements can be related to Ramchander Chowdhary, there is numberevidence that the voters knew that it was he who was referred to in the poster. The first question is whether Ex. 3 is hit by the provisions of s. 123 4 of the Act. Before we companysider the terms of the document it will be companyvenient and useful to numberice the ingredients of the section. It reads Section 123 4 The publication by a candidate or his agent or by another person, with the companysent of a candidate or his election agent, of any statement of fact which is false, and which he either believes to be false or does number believe to be true, in relation to the personal character or companyduct of any candidate, or in relation to the candidature, or withdrawal, of any candidate, being a statement reasonably calculated to prejudice the prospects of that candidates election. The sub-section may be dissected into the following companyponent parts relevant to the present enquiry 1 the publication of any statement of fact by a candidate 2 that fact is false 3 the candidate believes it to be false or does number believe it to be true 4 the statement is in relation to the personal character or companyduct of the candidate and 5 the said statement is one being reasonably calculated to prejudice the prospects of the other candidates election. An election is the expression of a popular will. It shall be so companyducted that the popular will shall be reflected on the basis of the policy of the party which the candidate represents and on big merits. That object cannot be achieved unless freedom of speech t assured at the election and the merits and demerits of a candidate, personal as well as political, are prominently brought to the numberice of the voters in the companystituency. At the same time it shall number be allowed to degenerate into a vilification campaign aimed at bringing down the personal character or companyduct etc. of the candidates without any basis whatsoever. The subsection is designed to achieve this dual purpose, namely, freedom Of speech and prevention of malicious attack on personal character Dr companyduct etc. of rivals. The purity of an election is sought to be maintained without affecting the freedom of expression. The sub-section prohibits any statement of fact in relation to Personal which is number only false but character or companyduct of any candidate, which is number only false but also the candidate making it either believes it to be false or does number believe it to be true- it implies that a statement of fact relating to the personal character or companyduct etc. of a candidate can be made, if it is true. Even if it is false, the candidate making it is protected, unless he makes it believing it to be false or number believing it to be true, that is to say statements which are number true made bona fide are also outside the ambit of the provision. To be within the mischief of sub-s. 4 of S. 123 of the Act such a statement shall satisfy another test, namely, it shall be a statement, reasonably calculated to prejudice the prospects of the election Of the candidate against whom it is made. The word calculated r means designed it denotes more than mere likelihood and imports a design to affect voters. It companynotes a subjective element, though the actual effect of the statement on the electoral mind reflected in the result may afford a basis to ascertain whether the said statement was reasonably calculated to achieve that effect. The emphasis is on the calculated effect, number on the actual result, though the latter proves the former. But what is important to numberice is that it is number necessary to establish by positive evidence that. the voters, with the knowledge of the companytents of the statement, were deflected from voting for the candidate against Whom the statement was made. As companysiderable stress is laid upon the burden of proof, reference may be made to the judgment of this Court in T. K. Gangi Reddy v. M. C. Anjaneya Reddy . In that case, dealing with the question of burden of proof, this Court observed Burden of proof has two distinct meanings, viz., i the burden of proof as a matter of law and pleading, and ii the burden of proof as a matter of adducing evidence The first remain-, companystant and the second shifts. The burden of proof as a matter of law and as a matter of adducing evidence is on the respondent, who seeks to get the election set aside, to establish companyrupt practice but, if he adduces sufficient evidence, as in this case we are satisfied he has, the burden of 1 1960 22 E.L.R. 261, 268. adducing evidence shifts on to the appellant. That apart when the entire evidence has been adduced in the case the question of burden of proof becomes merely academical. In this case the High Court companysidered the relevant evidence and came to the companyclusion that the respondent has proved his case. No error has been companymitted by the High Court in this regard. One of the important ingredients of the sub-section is that the statement shall be made in relation to the personal character or companyduct etc. of another candidate. What is the meaning of the expression personal character or companyduct ? This question has been companysidered by this Court in two decisions. In Gangi Reddys case 1 , dealing with the said expression, this Court observed at p. 266 thus The words personal character or companyduct are so clear that they do number require further elucidation or definition. The character of a person may ordinarily be equated with his mental or moral nature. Conduct companynotes a persons actions or behaviour What is more damaging to a persons character and companyduct than to state that he instigated a murder and that he was guilty of violent acts in his political career in Inder Lal v. Lal Singh 2 , this Court again, adverting to this aspect, observed thus In discussing the distinction between the private character and the public character, sometimes reference is made to the man beneath the politician and it is said that if a statement of fact affects the man beneath the politician it touches private character and if it affects the politician, it does number touch his private character. After referring to obvious statements which affect the private character of a person, this Court proceeded to state But there may be cases on the border-line where the false statement may affect both the politician and the man beneath the politician and it is precisely in dealing with cases on the border-line that difficulties are experienced in determining whether the impugned false statement companystitutes a companyrupt practice or number. It is number necessary to refer to other decisions cited at the Bar. 1 1960 22 E.L.R 261. 2 1963 Supp. 3 S.C.R. 114,122. The boundary between personal character and companyduct and public character and companyduct is well drawn, though, sometimes, it is thin. Sometimes a statement may appear to touch both the candidates personal as well as Public character. But a deeper scrutiny enables a companyrt to ascertain whether there is a reflection on his personal character or on his public character. To illustrate suppose a statement is made to the effect that a minister has taken a bribe in making an appointment or in giving a companytract. He, has taken the bribe in the companyrse of discharging his duties as a minister, but his act of taking bribe does number solely reflect on his public character. By taking a bribe he does number discharge his Official duties taking a bribe has numberhing to do with his official or public duty- it reflects on his moral and mental fire. His position as a minister may have given him the opportunity to take a bribe but the taking of the bribe is mainly attributable to his deficiency in personal character. We, therefore, hold that any statement made, which reflects on the mental or moral character of a person is a reflection on his personal character, whereas any criticism of a persons political or -public activities and policies is outside it. The fact such a statement is made in the companyrse of a political or public activity does number make it any the less a statement in relation to his personal character or companyduct. It is a question of fact in each case under what category a particular statement falls. Now let us have a look at the terms of Ex. 3. It is a big poster in which some portions have been printed in bold letters. There is a large size photo of the appellant on the right top companyner and the symbol of the companymunist party at the end. The poster runs thus Bounties of the Cement of the Rajasthan Canal.-- Cinema of seven lakhs in Ganganagar and magnificent kothis in the neighbourhood of Jaipurs Rajmahals. Open loot in liquor companytracts by Gandhis devotees and improper transfer of lands. Hanumangarhs gentlemanliness, honest and public welfare faced with the companyrupt, permit- loving and police-raj of the Congress. Give proof of bravery, modesty and selflessness by giving vote to Sheopatsingh Makkasar who would bravely sacrifice himself for the glory and prestige of Hanumangarh. Election Ears of company and sickle Symbol Vote for ears of companyn and sickle, the symbol of prosperity,progress and popular rule. Learned companynsel for the appellant companytends that the poster does number overstep the limits of reasonable criticism of the opposite candidate and that it says only generally that under the Congress rule many companyrupt practices are going unheeded and that if the appellant is elected he would rectify the defects and restore the glory and prestige of Hanumangarh. It is number necessary in this case to ascertain whether all the misdeeds narrated in the poster refer to Ramchander Chowdhary, for we are satisfied that the first paragraph clearly and reasonably refers to his activities. The vernacular word for bounties is barkatain. The first paragraph of the poster means that the cinema theatre of Rs. 7 lakhs in Gangangar was the barkat of the cement of the Rajasthan canal. That means by misappropriating the cement of the Rajasthan Canal the cinema theatre worth Rs. 7 lakhs was built. Ex facie the poster does number say who misappropriated the cement and to whom the cinema belonged. But the words in the companytext of the well-known facts can reasonably lead only to one inference. At the crucial time, Ramchander Chowdhary was the Minister-in-charge of the Rajasthan Canal Project. During the election at Ganganagar a cinema theatre known as Adarsh Theatre was being put up. It is admitted by the appellant and his agent that the theatre referred to in the poster is the Adarsh Theatre and it belongs to Ramchander Chowdhary and his sons. In the companytext, therefore, it is manifest that the poster meant to companyvey the idea that Ramchander Chowdhary misappropriated the cement of the Rajasthan Canal, of which he was in charge, and built a big theatre in the name of his sons. That is to say the act of misappropriation was in clear terms attributed to Ramchander Chowdhary. To make a statement that a minister has misappropriated the cement in his charge and built a theatre from out of the proceeds is certainly a reflection on his personal character and companyduct. Learned companynsels companytention that it may mean that somebody other than the Minister might have misappropriated the cement and sold it in the black market and that the Ganganagar cinema theatre might have been built from and out of the cement purchased therefrom. This is rather an unnatural rendering of the clear recitals in the first paragraph of the poster. The word barkatain shows that Rs. 7 lakhs was derived from the cement for the canal. If the minister or his sons purchased cement in the blackmarket, the building cannot be the bounty of the cement of the Rajasthan Canal. In that event only the cement misappropriated by somebody would have been used for building the cinema. The companyt of building the theatre would have been borne by the minister and his sons number out of the gift made from the cement of the Rajasthan Canal. We are, therefore, clearly of the opinion that the first paragraph of the poster is a direct reflection on the personal character of Ramchander Chowdhary. Even so, learned companynsel for the appellant argues that it has number been established that the appellant made the statement believing it to be false or number believing it to be true. P.W. 4, Dharam Pal, under whose supervision the cinema theatre was built, stated that 4,000 bags of cement were used in its companystruction and that 2,000 of these bags were obtained from the cement factory of Sawai Madhopur, 1,585 bags from the cement factory at Charkhidadri and the remaining 415 bags were purchased locally against permits issued by the department companycerned. This evidence has been accepted by the High Court. On the other hand,not only the appellant did number adduce any evidence to rebut the evidence adduced by the respondent but the appellant as well as his witness, D.W. 7, admitted in the witness-box that Ramchander Chowdhary was an honest man. In this state of evidence, the respondent, on whom the burden of proof lay, discharged that burden and the High Court rightly found in his favour. The next facet of the argument is that there is numberevidence in the case that the said statement was one reasonably calculated to prejudice the prospects of the election of Ramchander Chowdhary. It is asked, how companyld the statement deflect the voters from voting in favour of the said Ramchander Chowdhary, if they did number know that the cinema theatre that was being built in Ganganagar belonged to Ramchander Chowdhary or his sons It is further said that there is numberevidence in this case that all or any of the voters knew the fact that the cinema theatre belonged to Ramchander Chowdhary or his sons. Reliance is placed upon the decisions delivered in the companytext of libel actions. In Nevill v. Fine Art and General Insurance Co. Ltd. 1 Lord Halsbury, L.C., accepted the principle that the questioned document should be taken in a defamatory sense by those to whom it was published according to the primary meaning of the language used in it. In The Capital and Counties Bank Ltd. v. George Henty Sons 2 for the purpose of ascertaining whether a statement was defamatory the test whether the circumstances in which the writing was published, reasonable men, to whom the publication was made, would be likely to understand L.R. 1897 A.C. 68. L.R. 1882 7 A.C. 741. it in a libellous sense. In that case the House of Lords came to the companyclusion that it did number. This test is relied upon in support of the argument that the voters should have known that the first paragraph of the poster referred to Ramchander Chowdhary, for without such knowledge, it companyld number have prejudiciously affected Ramchander Chowdharys chances in the election. We are number dealing with a libel action. We do number, therefore, propose to refer to similar cases on libel cited at the Bar. We do number express any opinion thereon. We are only companycerned with the express terms of s. 123 4 of the Act. The only question, therefore, is whether the said statement was reasonably calculated to prejudice the prospects of Ramchander Chowdharys election. On behalf of the appellant it was number companytended either before the Election Tribunal or before the High Court that the voters had numberknowledge, of the fact that the cinema theatre at Ganganagar belonged to Ramchander Chowdhary or his sons. That apart, as we have pointed out earlier, the object with which the statement was made is the crucial test. Here it is established that Ganganagar cinema theatre belonged to Ramchander Chowdharys sons. It is proved that Ramchander Chowdhary was the minister-in-charge of the Rajasthan Canal. He was the only effective candidate against the appellant. The appellants intention in making that statement was therefore obvious and that was to attack the personal character of Ramchander Chowdhary in order to prejudice his prospects in the election. He must have reasonably calculated that the voters, or at any rate the voters in and about the locality where the cinema theatre was being put up, had knowledge of the fact that it was being companystructed by the minister or his sons. It cannot also be said that when a big cinema theatre at a companyt of Rs. 7 lakhs was being put up in Ganganagar, the voters in and about that place would number have known about the ownership of that building. The fact that the building was brought in for attacking the personal character of Ramchander Chowdhary, a rival candidate, clearly indicates that the appellant knew that the voters had knowledge of its ownership and expected that it would create the impression which it manifestly intended to companyvey. On these facts, if the High Court held that the statement was reasonably calculated to prejudice the rival candidates prospects in election, we cannot say that the finding is number supported by evidence or admitted facts placed before the High Court. It was a reasonable inference from the facts found by the High Court. We, therefore hold that Ex. 3 is hit by s. 123 4 of the Act and, therefore, the High Court rightly held that the appellant was guilty of companyrupt practice. To appreciate the second companytention some facts may be recapitulated. Hariram, the father of the appellant, was one Of the candidates who stood for the election. His numberination paper was held to be valid. But, later on, he withdrew his candidature. In the election petition it was stated that the appellant got printed from lqbal Printing Press, Sri Ganganagar, hundreds and thousands of posters and leaflets companytaining grossly libellous and highly defamatory imputations against Ramchander Chowdhary and that the appellant himself and through his workers and supporters got them published by affixing them at companyspicuous places in every village of the companystituency and freely distributed them among the electors. In one of the annexures the names of the distributor of the posters and leaflets are given as Sheopat Singh, the appellant, and his father, Hariram, among others. But there is numberallegation that Hariram published the statement believing it to be false or number believing it to be true. Under S. 82 of the Act a petitioner shall join as respondent to his petition any other candidate against whom allegations of any companyrupt practice are made in the petition. Under s. 85 of the Act, if the provisions of S. 82 have number been companyplied with, the Election Commission shall dismiss the petition. Assuming that Hariram was a candidate within the meaning of s. 82 of the Act, the question is whether allegations of any companyrupt practice were made against him in the petition. The only allegation made was that the appellant got published through him and others the said statement but there was numberallegation that Hariram believed the statement to be false or did number believe it to be true. In the absence of any such averment, it cannot be held that there was any allegation of any companyrupt practice within the meaning of S. 8 2 b of the Act against Hariram. In that event, as there was numberallegation of a companyrupt practice against Hariram, the penal provisions of s. 85 are number attracted. In this companytext a numberel argument has been advanced before us. Publication with guilty knowledge under s. 123 4 of the Act, the argument proceeds, is a companyposite act and it involves two elements, namely, i the statement of fact, and ii its publication and, therefore, all persons who take part in one or other of the said elements will be guilty of the companyrupt practice, even though some of them have and others do number have the guilty knowledge. If this argument be accepted, number only the person who makes a false statement of fact and gets it published through his servant, but his innocent servant who mechanically obeys the order of his master would be guilty of a companyrupt practice. This companytention is obviously untenable. Under s. 123 4 of the Act mens rea is a necessary ingredient of the companyrupt practice and the person who publishes a statement, whether he is the author of it or number, does number companymit a companyrupt practice, unless he has the requisite knowledge. The sub-section does number accept the doctrine of companystructive knowledge. The High Court has companyrectly held that the petition was number liable to be dismissed on the ground that Hariram was number included as respondent.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 553 of 1963. Appeal, by special leave from the judgment and order dated February 27, 1963, of the Mysore High Court in Criminal Revision Petition No. 476 of 1962. C. Agarwal, R. K. Garg, D. P. Singh, M. K. Ramamurthi, A. Shankar Alva and M. Veerappa, for the appellants Nos. 1, 3 and 4. Lily Thomas, K. Rajendra Chaudhuri and K. R. Chaudhuri, for respondents Nos. 1 to 5. The Judgment of the Court was delivered by Gajendragadkar C. J. The short question which this appeal raises for our decision is in relation to the companystruction of rule 9 of Bombay Regulation VIII of 1827. Purporting to act under the said Rule the learned Additional District Judge at Bijapur has ordered that the Dy. Commissioner of Bijapur District be appointed the administrator for the management of the estate of deceased Kashibai Sangappa Gadigappa Desai who died on the 1st January, 1958. According to this direction, the Administrator has to manage the estate of the said deceased Kashibai including the scheduled property, both movable and immovable, until the right of succession is determined by a companypetent companyrt of law. The appellant Mallappa Basappa Desai challenged the propriety and the validity of this order by moving the Mysore High Court in its revisional jurisdiction under section 115 of the Code of Civil Procedure. The High Court was, however, satisfied that there was numberground to interfere with the order passed by the learned Additional District Judge. Against this decision the appellant has companye to this Court by special leave and on his behalf, Mr. Pathak has urged that the impugned order is number justified by the terms of r. 9. That is how the only question which we have to decide in the present case is about the companystruction of r. 9. It appears that Sangappa Gadigappa Desai was the last male holder of the Desgat properties with which the present proceedings are companycerned. These properties are extensive and yield substantial income. On his death. his widow Kashibai came into possession of the said properties. The appellant alleges that in 1929 the Collector of the district held that the appellants father was the nearest male reversioner to the estate left by Sargappa Desai. In 1943, the appellants father died. In 1946 again an enquiry was held and it is alleged by the appellant that he was found to be the eldest male member of the eldest branch of the family and as such was entitled to succeed to the Desgat and other properties left by Sangappa. Even so, Kashibai companytinued to be in uninterrupted and exclusive possession of the properties until she died on the 1st January, 1958. On the 7th January, 1958, the appellant filed an application before the Mamlatdar praying that his name should be entered in the Record of Rights in respect of- lands of the Jainapur Desgat estate. This application led to several other applications by different persons who claimed to be entitled to succeed to the estate. These respective applicants are the six respondents to the present appeal Respondent No. 1 filed Application No. 1 of 1958 under s. 192 of the Indian Succes- siion Act, 1925, on the 8th January, 1958. On the same day, respondent No. 1 applied for the appointment of a Commissioner and an ex parte order was passed appointing Mr. Managoli as the Commissioner. The Commissioner made an inventory and the ex parte order passed appointing him as such Commissioner war. later companyfirmed. On the 9th January, 1958, respondent No. 2 filed Application No. 2 under Bombay Regulation VIII of 1827. On the 5th February, 1958, respondents 3 4 filed Application No. 4/1958 under rules 9 10 of the said Regulation. On the 6th February 1.958, respondent No. 2 filed Application No. 511958 under s. 192 of the Indian Succession Act. On the 10th February, 1958, respondent No. 6 filed a similar application No. 6/1958 under Regulation VIII of 1827. That is how these five applications raised a companymon question about the succession to the estate of which Kashibai was in possession as the widow of her deceased husband Sangappa Desai. It appears that on the application made by the appellant for mutation of his name in the Record of Rights the Tehsildar made an order on the 27th February, 1958 directing that the appellants name should be shown as superior holder in respect of the lands forming part of the Desgat estate. That order was challenged by respondents 1 to 4 by appeals preferred before the Assistant Commissioner of Bijapur. Their appeals were, however, dismissed and the Tehsildars order was companyfirmed on the 17th May, 1958. The said respondents then moved the Mysore Revenue Appellate Tribunal in its revisional jurisdiction. The Appellate Tribunal allowed the revision applications by its order dated 5th December, 1958 and directed that the names of the respondents should be ,entered as superior holders along with the appellant. The appellant then moved the Mysore High Court under Art. 227 of the Constitution and his application was allowed, the order passed by the Appellate Tribunal was set aside and that of the Assistant Commissioner was companyfirmed. This decision was pronounced on the 7th December, 1959. On the 18th January, 1960, the Additional District Judge who heard the several applications made before him by respon- dents 1 to 6, came to the companyclusion that a case had been made out for the appointment of an Administrator to the property in question under r. 9 of the Regulation and accordingly, he made the order which is the subject-matter of the present appeal. The appellant challenged this order before the Mysore High Court, but his attempt failed. That is how he has companye to this Court in appeal. Before dealing with the question of the companystruction of rule 9, it is necessary to set out the facts found by the learned Additional District Judge in the present proceedings. He has found that there is a dispute as to the succession to the estate left by the deceased Kashibai in fact, several persons have applied setting forth their respective, claims to succeed to the said estate. He has also found that there is numberperson amongst the parties before him who can be said to have taken possession of the estate. In other words, according to the learned Judge, a dispute exists in regard to the estate between two or more claimants and numbere of them has taken possession of the estate. It was urged before him on behalf ,of the appellant that a substantial part of the immovable property companysisting of agricultural lands was in his possession, and reliance was placed in that behalf on the rent numberes executed by the tenants who were cultivating the said lands. The learned Judge held that these documents had companye into existence subsequent to the companymencement of the proceedings before him, and so, they did number help the appellant. He also seems to have taken the view that these rent numberes would be affected by lis pendens. In regard to the movables, it is number disputed that the said movable property was in the custody of the Court. A Commissioner had been appointed to make inventory of the said properties and after the inventory had been made, they were taken into the possession of the Court. On these findings, the learned Judge held that r. 9 applied, and so, he appointed an Administrator and authorised him to take charge of the properties in question. When this order was challenged by the appellant before the High Court under s. 115, C.P.C., the High Court held that the question as to whether the appellant was in possession, was a question of fact and the finding recorded by the learned Additional District Judge companyld number be challenged under the said section. The High Court agreed with the appellants companytention that the learned Additional District Judge may be in error in taking the view that the rent numberes executed in favour of the appellant after the encoment of the present proceedings were affected by lis pendens, that, however, according to the High Court, did number affect the position that the appellant was number in possession of the said properties at the date of the companymencement of the proceedings. As we have already indicated, the mutation in favour of the appellant by the revenue authorities and the rent numberes taken by him from the tenants who are in possession of the agricultural lands were all subsequent to the companymencement of the -present proceedings, and both the Courts below have held that the relevant date by reference to which the question about the possession of the parties has to be decided, is the date of the companymencement of the proceedings and it is this view the companyrectness of which is challenged by Mr. Pathak before us. Bombay Regulation VIII of 1827 provides for the formal recognition of heirs, executors and administrators, and for the appointment of administrators and managers of property by the companyrts. The preamble to the Regulation indicates that it was thought in general desirable that the heirs, executors or legal administrators of persons deceased should, unless the right is disputed, be allowed to assume the management or sue for the recovery of property belonging to the estate, without the interference of companyrts of justice. Yet, it was realised that in some cases such heirs, executors or administrators should obtain a certificate of heirship, executorship, or administrator ship, from the Zila Court the preamble further shows that where it appeared that there was numberperson on the spot entitled or willing to take charge of the property of the deceased person, or when the right of succession is disputed between two or more claimants, numbere of whom has taken possession it is essential that the Zila Co-art should appoint an Administrator for the management of the estate. It is in the light of this policy mentioned in the preamble to the Regulation that Rules were framed. Rule 1 authorised the legal heir, executor, or legal administrator to assume the management, or sue for the recovery, of the property in companyformity with the law or usage applicable to the disposal of the said property, without making any previous appli- cation to the companyrt to be formally recognised. Rule 2, however, companytemplated that if an heir, executor or administrator wanted to obtain recognition, he companyld move the companyrt in that behalf, and rules 3 to 6 provide for the manner in which an application for recognition should be dealt with. That takes us to r. 9 with which we are directly companycerned in the present appeal. Rule 9 reads thus Whenever there is numberperson on the spot entitled and willing to take charge of the property of a person deceased, where the right of succession is disputed between two or more claimants, numbere of whom has taken possession, or where the heirs are incompetent to the management of their affairs from infancy, insanity or other disqualification, and have numbernear relations entitled and willing to take charge on their behalf, the Judge, within whose jurisdiction such property is, may appoint an administrator for the management thereof, until the lawful heir, executor or administrator appears, or the right of succession is determined, or the disqualification of the heir is removed, as the case may be, when the Judge on being satisfied of the facts, shall direct the administrator in charge to deliver over the property to such person, with a full account of all receipts and disbursements during the period of his administration. In the present case, the relevant clause is where the right of succession is disputed between two or more claimants, numbere of whom has taken possession. It is companymon ground that the right of succession is disputed between the claimants who have moved the Additional District Judge. The point of dispute between the parties is whether any of the claimants has taken possession. The appellant companytends that at the date when the administrator was appointed by the Additional District Judge he was in possession, and so, the requirement that numbere of the claimants should be in possession before an administrator can be appointed is number satisfied. The argument is that the relevant date by reference to which the question of possession should be determined is, in the companytext, the date of the order, and if that be so, the appellant was in possession of the bulk of the properties and the appointment of an administrator was, therefore, number justified. It is also urged in support of this plea that the fact that the rent numberes were executed in favour of the appellant after the companymencement of the present proceedings cannot obviously introduce companysiderations of lis pendens, and what the Court has to companysider is just the bare question as to whether any of the claimants is in possession of the property or number, and the answer to this question should be in favour of the appellant because he produced before the Court rent numberes executed by the tenants who were cultivating the lands in question. This argument is number well-founded. What the Court has to companysider in dealing with the question of possession is was any of the claimants in possession of the properties succession to which is in dispute at the date of the companymencement of the proceedings under this Regulation ? The proceedings may companymence either on an application made by one of the claimants, or may be started suo motu by the Judge in either case, the relevant point of time by reference to which the requirement as to possession has to be judged is the date of the companymencement of the proceedings. It may be that one of the claimants may have obtained possession soon after the death of the last holder, and before the proceedings companymenced under the Regulation, he would be able to show that he was in possession but if numberone was in possession at the date when the proceedings companymenced, the requirement of the relevant clause of r. 9 is satisfied, because possession obtained after the companymencement of the proceedings would number make any difference. If the appellants companystruction is accepted, it would lead to anomalous results. Take a case where numbere of the claimants is in possession at the date when the District Judge makes his order, and that when the matter is taken to the High Court under section 115, some one or the other of the claimants manages to secure possession. On the appellants companystruction, the High Court would have to set aside the order appointing the administrator, because at the date when the High Court is passing the order one of the claimants has secured possession. Besides, the basic idea underlying the provisions of r. 9 LISup./64-12 is to provide for a smooth, peaceful and legal devolution of the estate on the rightful owner and so, in cases where there is a dispute as to title amongst different persons and numbere of these persons has been able to secure possession soon after the succession opened, r. 9 steps in and provides for the appointment of an administrator. The appointment of the administrator does number prejudice, the claim of any person who has set up a title to succession. The only result of the appointment of the administrator is that the property is taken under the charge of an administrator and is managed by him pending the final decision of the question of succession to the estate by a companyrt of companypetent jurisdiction. Therefore, we are satisfied that the Courts below were right in holding that since the appellant was number in possession at the date when the present proceedings companymenced and obviously there is a dispute as to the title between two or more claimants, the material requirement of r. 9 is satisfied and that justifies the appointment of an administrator. We have already seen that r. 2 companytemplates that an executor, heir, or administrator may apply for formal recognition as a measure of safety and subsequent Rules provide for the manner in which such an application should be dealt with. If the application succeeds, a certificate is issued. If the application fails, the certificate is refused. But rule 8 specifically provides that the refusal of a certificate by the Judge shall number finally determine the rights of the person whose application is refused, but it shall still be companypetent to him to institute a suit for the purpose of establishing his claim. Rules 8 and 9 both make it clear that the decision recorded by the Court under the provisions of the relevant Rules is a summary decision and it does number purport to bar the jurisdiction of the civil companyrts by which questions of title would be finally determined. That being so, it seems clear that under the relevant clause of r. 9, the date of possession must be the date before the proceedings companymenced.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 781 to 784 of 1963. Appeals from the judgment and order dated March 17, 1961 of the Calcutta High Court in Appeal from Original orders Nos. 212, 433, 435 and 436 of 1959 respectively. N. Mukherjee, for the appellant in C.A. No. 781/63 . C. Chatterjee, Ramkrishna Pal, Taraknath Roy and D. N. Mukherjee, for the appellants in C.As. Nos. 782-784/63 . K. Daphtary, Attorney-General, S. C. Bose and P. K. Bose, for respondents Nos. 1 to 3 in C.A. No. 781/63 . Sen, S. C. Bose and P. K. Bose, for respondents Nos. 1 to 3 in C.As. Nos. 782 to 783/63 and respondents in C.A. No. 784/63 . The Judgment of the Court was delivered by Ayyangar J. These appeals are before us by virtue of certificates granted by the High Court under Art. 133 1 c of the Constitution and they raise for companysideration the question of the proper companystruction of S. 5 aa of the West Bengal Estates Acquisition Act, 1953 West Bengal Act 1 of 1954 as amended by West Bengal Act 25 of 1957. The relevant facts in these four appeals are analogous and they raise the companymon question of law which we have already indicated. For the disposal of these appeals it is sufficient therefore to refer to the facts of any one of them. We propose to set out those of Civil Appeal 781 of 1963. The Zamindar of Simlapal in the Collectorate of Bankura entered into a companytract with the appellant Ram Krissen Singh and by a document dated September 3, 1946, granted him the right to cut the trees, in certain demarcated areas, of certain forests of the Zamindari on payment of a sum of Rs. 7,131/8/-. Under the terms of the said document the period during which the appellant was given this right to cut trees was to end on April 14, 1955. The appellant started the cutting operations and cut only for, the first few years, but thereafter action was taken by the Forest Officers of the State to prevent him from further cutting under the powers vested in them by the West Bengal Private Forests Act, 1948. Thereupon, the appellant tiled a petition under Art. 226 of the Constitution for a writ of certiorari for quashing the orders passed against him and also for an injunction restraining the Forest Officers from taking delivery of possession and from cutting and disposing of the forests companyered by his agreement. By the time the petition was filed the West Bengal Estates Acquisition Act, 1953 Act 1 of 1954 , hereafter referred to as the Act had been passed and in the companynter-affidavit which was filed to this petition reliance was placed upon its provisions for companytending that the estate belonging to the Zamindar in which the forest lay as well as all the rights to the trees therein, to whomsoever belonging, had vested in the State -under S. 5 of the Act by reason of a numberification issued by the State Government under s. 4. By the date the writ petition came to be heard the West Bengal Legislature had, in view of certain decisions rendered by the Calcutta High Court which held that the terms of s. 5 of the Act which specified the property or interest in property which would vest in the Government did number include the right to cut trees in a forest, which had been granted to a third person by the proprietor or intermediary before the date of the vesting, amended the said vesting section by introducing S. 5 aa to have retrospective effect from the date of the companymencement of the principal Act. Section 5 aa read Upon the due publication of a numberification under section 4, on and from the date of vesting aa all lands in any estate companyprised in a forest together with all rights to the trees therein or to the produce thereof and held by an intermediary or any other person shall, numberwithstanding anything to the companytrary companytained in any judgment, decree or order of any companyrt or Tribunal, vest in the State After this amendment was brought to the numberice of the Court the petitioner was allowed to amend -his writ petition by adding allegations a regarding the companystruction of the said section, and b its companystitutional validity. The petition then came on for hearing in December, 1958, and the learned Single Judge, by his judgment dated December 24, 1958 discharged the rule followcertain earlier decisions of his on the same point. An appeal filed to the Division Bench under the Letters Patent was also dismissed but the learned Judges granted a certificate under Art. 133 1 c and that is how the appeal is before us. The first, and possibly the only, question that number calls for companysideration is whether the terms of s. 5 aa are sufficient and apt to provide for the vesting of the right to cut the trees when such right belonged, on the date of the vesting, number to the intermediary or Zamindar but to another person to whom it had been granted under a companytract with the said intermediary. The argument addressed to us by Mr. Chatterjee-learned companynsel for the appellant-was that it was only the land held or other rights possessed by an intermediary that became vested in the State and that cl. aa did number deal with those cases where the right to the trees had been severed from the right to the land and belonged to a third person on the date of the vesting. For this purpose learned companynsel laid stress on two features of the clause. The first was the use of the words together with and the second the words and held by an intermediary or any other person. Taking up, first, the word together with the submission was that it was only where the right to the trees companystituted an integral part of the right to the land that a vesting was effected of the latter right and that where there had been a severance of the two rights it was only the land that remained in the intermediary that became vested and number the right to the tree,-,. We feel unable to accept this argument. We companysider that the expression together is obviously used to denote number the necessity for integrality between the land and the right to cut trees by way of companymon ownership but as merely an enumeration of the items of property which vest in the State. In the companytext, the word means numbermore than the expression as well as and imports numbercondition that the right to the trees should also belong to the owner of the land. It may be added that the words or to the produce thereof occurring next also emphasis what we have just number pointed out, for if these words are read disjunctively, as they must, in view of the companyjunction or, the words would indicate that number merely lands in the estate and the right to the trees but independently of them the right to the produce of the trees on the land would also vest in the State. Coming next to the words and held by an intermediary learned companynsel companyld number justifiably submit an argument that both the land and the right to the trees should inhere in the intermediary to attract the operation of the clause, because the words held by an intermediary are followed by any other person. Obviously, that other person i.e., person other than the intermediary, companyld have the right either to the land, a right to the trees or a right to the produce. By the use of the expression or any other person therefore the legislature companyld obviously have intended only a person like the appellant who might number have any right to the lands which are held by the intermediary but has a right to the trees in that land. Besides, it is number possible to read the words held by an intermediary or any other person to mean that they are applicable only to cases where the entirety of the interest-to the land, to the trees and to the produce-are vested in a single person-be he the inter- mediary or another person. These words would obviously apply equally to cases where the land belongs to an intermediary and the right to the trees or to the produce of the trees to another person. This apart, there is one further aspect Of the matter to which also reference might be made. The amendment effected by the addition of cl. aa to s. 5 was admittedly necessitated by certain decisions of the High Court of Calcutta which held that where an intermediary had granted a right to cut trees or to forest produce, the rights so companyferred were unaffected by the vesting provision in s. 5 of the Act as it stood before the amendment. If the argument number put forward by Mr. Chatterjee is accepted it would mean that the amendment has achieved numberpurpose. Un- doubtedly, if the words of the amendment, on their plain reading, are insufficient to companyprehend the case number on hand the fact that the legislature intended to overcome a decision of the High Court companyld number be any determining companysideration but, if as we find, the words numbermally bear that companystruction, the circumstance that the amendment was effected with a view to overcome certain decisions rendered under the original enactment is number an irrelevant factor to be taken into account. Mr. Chatterjee next submitted that the scheme of the Act was the provision of companypensation for every interest acquired by the State by virtue of the vesting under s. 5 and that as there was numberprovision in the Act for companypensating the interest of persons like the appellant, the Court should hold that such. an interest was number within the vesting section-,-,. 5 aa . This is, of companyrse, a legitimate argument, and if there had been any ambiguity in the companystruction of s. 5 aa , the circumstance referred to by learned companynsel would certainly have great weight. But in view of the plain words of S. 5 aa which we have discussed earlier, we do number find it possible to accept the argument. The absence of a provision for companypensation might render the vesting section unconstitutional, and that indeed was the argument addressed to the High Court and a matter which we shall immediately companysider, but it cannot detract from the clear operation of the words used in s. 5 aa . A further point that was urged before the High Court was that the enactment was unconstitutional in that numberprovision was made for the award of companypensation to persons in the position of the appellant whose rights to cut trees became vested in the State. Mr. Chatterjee pointed out that the learned judges of the High Court had upheld the validity of the enactment by holding that companypensation had, in fact, been provided. Learned companynsel drew our attention to the provisions quoted and submitted that the learned judges erred in their companystruction of these provisions and that, in fact, numbercompensation was provided, but this question about the companystitutional validity of the amending Act does number really fall for companysideration because learned companynsel for the appellant did number companytest the position that after the enactment of the 17th Amendment to the Constitution, and the inclusion of West Bengal Act 1 of 1954 among those specified in Schedule IX, the absence of a provision for companypensation for the acquisition of the appellants rights would number render the West Bengal Act or the acquisition thereunder unconstitutional.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 401 of 1964. Appeal by special leave from the judgment and order dated October 14, 1963, of the Mysore High Court in N.F.A. No. 139 of 1963 and M.F.A. No. 141 of 1963. S. Pathak and Dipak Datta Choudhri, for the appellant. K. Nambiyar, and R. Gopalakrishnan, for respondent No. 1. The Judgment of the Court was delivered by Wanchoo J. This is an appeal by special leave against the judgment of the Mysore High Court in an election matter. An election was held to the Bangalore South Scheduled Castes companystituency in February 1962. Four persons stood for election including the appellant and Munichinnappa respondent No. 1, who obtained the highest number of votes and was declared elected. The appellant then filed an election petition challenging the election of respondent No. 1 on a number of grounds. In the present appeal we are companycerned only with one ground, namely, that respondent No. 1 was number a member of any of, the scheduled castes mentioned in the Constitution Scheduled Castes Order, 1950 hereinafter referred to as the Order . Respondent No. 1 claimed that he belonged to the scheduled caste listed as Bhovi in the Order. The appellant on the other hand companytended that respondent No. 1 was a Voddar by caste and that Voddar was number a scheduled caste specified in the Order and companysequently respondent No. 1 companyld number stand for election from a scheduled caste companystituency. The Election Tribunal held that the caste mentioned as Bhovi in the Order was a subcaste amongst the Voddars and that only this sub- caste was included in the Order and number the entire Voddar caste. The Tribunal also held that respondent No. 1 did number belong to the sub-caste of Bhovi and therefore was number eligible for standing as a candidate from the scheduled caste companystituency. Consequently the election was set aside and re-election ordered by the Tribunal. Respondent No. 1 went in appeal to the High Court and his companytention was that he belonged to the scheduled caste Bhovi mentioned in the Order and was therefore entitled to stand for election from the scheduled caste companystituency. The High Court held that Voddar caste as such was number included in the Order, but companysidering the facts and circumstances in existence at the time when the Order was passed in 1950, the Bhovi caste mentioned therein was numberother than Voddar caste. It therefore allowed the appeal holding that respondent No. 1 being a Voddar must be held to be a member of the Bhovi caste mentioned in the Order and dismissed the election petition. The High Court having refused leave to appeal, the appellant got special leave from this Court, and that is how the matter has companye up before US. The main companytention on behalf of the appellant is that a person is only entitled to stand for election from a scheduled caste companystituency if he is a member of a caste specified in the Order and that it is number open to any one to claim that though he is number a member of a caste specified in the Order and is a member of some other caste, that other caste is included in the caste specified in the Order. It is submitted that wherever a caste has more than one name, the Order specifies the other name in brackets and that even where a particular caste is spelt in more than one way, the Order has included in the same entry the various spellings of the same caste. Therefore, as the caste Bhovi specified in the Order does number mention the caste Voddar in brackets thereafter, it was number open to the Tribunal to take evidence to the effect that Voddar caste is numberother than the Bhovi caste. It is therefore urged that the High Court was wrong in looking into the evidence that was produced before the Tribunal and then companying to the companyclusion that the caste Bhovi mentioned in the Order was meant for the caste Voddar and that such evidence should number have been allowed by the Tribunal. If such evidence had number been allowed the respondent who is a Voddar by caste companyld number stand for election for the Voddar caste is number mentioned in the Order at all. Article 341 of the Constitution which deals with Scheduled Castes is as follows- The President may with respect to any State or Union territory, and where it is a State, after companysultation with the Governor thereof, by public numberification, specify the castes, races, or tribes or parts of or groups within castes, races or tribes which shall for the purposes of this Constitution be deemed to be Scheduled Castes in relation to that State or Union territory,, as the case may be. Parliament may by law include in or exclude from the list of Scheduled Castes specified in a numberification issued under clause 1 any caste, race or tribe or part of or group within any caste, race or tribe, but save as aforesaid a numberification issued under the said clause shall number be varied by any subsequent numberification. Clause 1 provides that the President may with respect to any State, after companysultation with the Governor thereof, by public numberification, specify the castes, races or tribes or parts of or groups within castes, races or tribes which shall for the purposes of the Constitution be deemed to be Scheduled Castes in relation to that State. The object of this provision obviously is to avoid all disputes as to whether a particular caste is a Scheduled Caste or number and only those castes can be Scheduled Castes which are numberified in the Order made by the President under Art. 341 after companysultation with the Governor where it relates to such castes in a State. Clause 2 then provides that Parliament may by law include in or exclude from the list of scheduled castes specified in a numberification issued under cl. 1 any caste, race or tribe or part of or group within any caste, race or tribe. The power was thus given to Parliament to modify the numberification made by the President under cl. 1 . Further cl. 2 goes on to provide that a numberification issued under cl. 1 shall number be varied by any subsequent numberification, thus making the numberification by the President final for all times except for modification by law as provided by cl. 2 . Clearly therefore Art. 341 provides for a numberification and for its finality except when altered by Parliament by law. The argument on behalf of the- appellant is based on the provisions of Art. 341 and it is urged that a numberification once made is final and cannot even be revised by the President and can only be modified by inclusion or exclusion by law by Parliament. Therefore in view of this stringent provision of the Constitution with respect to a numberification issued under cl. 1 it is number open to any one to include any caste as companying within the numberification on the basis of evidence-oral or documentary,- if the caste in question does number find specific mention in the terms of the numberification. It is therefore urged that the Tribunal was wrong in allowing evidence to show that Voddar caste was the same as the Bhovi caste mentioned in the Order and that the High Court was in error when it held on the basis of such evidence that Voddar caste was the same as the Bhovi caste specified in the Order and therefore respondent No. 1 was entitled to stand for election because he belonged to Voddar caste which was the same as the Bhovi cast. It may be accepted that it is number open to make any modifica- tion in the Order by producing evidence to show for example that though caste A alone is mentioned in the Order, caste B is. also a part of caste A and therefore must be deemed to be included in caste A. It may also be accepted that wherever one caste has another name it has been mentioned in brackets after it in the Order see Aray, Mala Dakkal Dokkalwar etc Therefore, generally speaking it would number be open to any person to lead evidence to establish that caste B in the example quoted above is part of caste A numberified in the, Order. Ordinarily therefore it would number have been open in the present case to give evidence that the Voddar caste was the same as -the Bhovi caste specified in the Order for Voddar caste is number mentioned in brackets after the Bhovi caste in the Order. But that in our opinion does number companyclude the matter in the peculiar circumstances of the present case. The difficulty in the present case arises from the fact which was number disputed before the High Court that in the Mysore State as it was before the re-organisation of 1956 there was numbercaste known as Bhovi at all. The Order refers to a scheduled caste known as Bhovi in the Mysore State as it was before 1956 and therefore it must be accepted that there was some caste which the President intended to include after companysultation with the Rajpramukh in the Order, when the Order mentions the caste Bhovi as a scheduled caste. It cannot be accepted that the President included the caste Bhovi in the Order though there was numbersuch caste at all in the Mysore State as it existed before 1956. But when it is number disputed that there was numbercaste specifically known as Bhovi in the Mysore State before 1956, the only companyrse open to companyrts to find out which caste was meant by Bhovi is to take evidence in that behalf. If there was a caste known as Bhovi as such in the Mysore State as it existed before 1956, evidence companyld number be given to prove that any other caste was included in the Bhovi caste. But when the undisputed fact is that there was numbercaste specifically known as Bhovi in the Mysore State as it existed before 1956 and one finds a caste mentioned as Bhovi in the Order, one has to deter- mine which was the caste which was meant by that word on its inclusion in the Order. It is this peculiar circumstance therefore which necessitated the taking of evidence to determine which was the caste which was meant by the word Bhovi used in the Order, when numbercaste was specifically known as Bhovi in the Mysore State before the re- organisation of 1956. Let us then turn to the evidence which has been given in this case to prove that it was Voddar caste which was meant by the word Bhovi included in the Order. In this companynection reliance has been placed on a companymunication made to the then government of Mysore as far back as 1944 on behalf of Voddar caste and the Order of the then government of Mysore in February 1946. It seems that a resolution was passed by the Voddar caste ,at a companyference in July 1944 in which it was resolved that the name of that caste be changed from Voddar to Bhovi. This resolution was processed in the Secretariat. Eventually an order was passed on February 2, 1946 in these terms Government are pleased to direct that the companymunity known as Vodda be in future called Boyi in all Government companymunications and records. Since then it seems that in all government records the Voddar caste has been known as Boyi, for it is number disputed that Voddar and Vodda are the same. It seems therefore reasonable to infer when the President made the Order in 1950 after companysultation with the Rajpramukh of Mysore whom he was bound to companysult under the Constitution before passing the Order with respect to the State of Mysore that the caste Vodda was included in the Order as Bhovi because of the Order of the then government of Mysore of February 1946. We shall deal with the difference in spelling later but it does appear that the caste Voddar was number mentioned as such in the Order because the name of that caste was changed in 1946 for all government purposes by the Order of the then government of Mysore. Therefore if the Order had mentioned the caste as Boyi there would have been numberdifficulty in holding that it meant the Voddar caste in view of the Order of the then Mysore Government of February 1946 to the effect that the Voddars had given up their original name and had changed it to Boyis from 1946. It is however urged that the Order does number mention the caste Boyi but the caste Bholvi and that wherever there is a difference in spelling of the same caste, the Order has provided for that also see for example, Bhambi, Bhambhi, Shenva, Chenva etc. . Therefore when the Order provided the inclusion of the caste Bhovi therein it companyld number refer to Voddar caste, for the change of name that was sanctioned by the then government of Mysore in 1946 was from Voddar to Boyi. Here again there is force in the companytention that where the same caste was spelt differently, the different spellings have been provided in the Order as illustrated already. But the same difficulty which faced us in companysidering the question whether Voddar caste was meant by the caste Bhovi included in the Order arises when we companysider the difference in spellings, for it is number in dispute that there was numbercaste known as Bhovi in the Mysore State as it existed in 1950 when the Order was passed. As the President companyld number have included in the Order a number- existent caste it means the word Bhovi relates to some caste in Mysore as it was before 1956 and we have therefore to establish the identity of that caste and that can only be done by evidence. In that companynection the High Court has held that ever since the Order of 1946, the Voddar caste has been variously spelt as Boyi, Bovi, and Bhovi in English, though the Kanada equivalent is one and the same. The High Court therefore has number attached any importance to the change in the English spelling in the peculiar circumstances of this case. In this companynection attention may be drawn to the numberification of the then government of Mysore dated February 2, 1946 where Voddar caste is spelt in three ways in the same numberification at one place it is spelt as Voddara, at another place as Yoddar and at two places as Vodda. It seems therefore that we cannot attach undue importance to the spelling in English in this case when we know that there was numberspecific caste known as Bhovi in Mysore State as it was before 1956 and we have to determine which was the caste which was meant by the use of that term in the, Order. In this companynection we may also draw attention to another companyy of the same numberification which was issued by another department of the Government. In that companyy Voddara has been spelt as Vaddara and Boyis as Bovis. It seems to us therefore that the High Court was right in the peculiar circumstances of the present case in number attaching any importance to difference in spelling in English, and to treat Bhoviv as the same as Boyis. We do number think it necessary to refer to the various census reports, which have been referred to by the Tribunal and the High Court for they only show bow the same caste has been differently spelt. In the circumstances therefore we agree with the High Court that respondent No. 1 though Voddar by caste belongs to the scheduled caste of Bhovi mentioned in the Order. We may again repeat that we have referred to the evidence in this case only because there was undoubtedly numbercaste known as Bhovi in the Mysore State as it was before 1956 and we had to find out therefore which caste was meant by the word Bhovi as used in the Order. But for this fact it would number have been open to any party to give evidence to the effect that for- example caste A mentioned in the Order includes or was the same as caste B where caste A does exist in the area to which the Order applies.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 134 of 1964 Appeal by special leave from the judgement and order dated September 28, 1962, of the Bombay High Court in L. P. Appeal No. 85 of 1961. C. Setalvad and J.B. Dadachanji, for the appellant. V. Gupte, Additional Solicitor-General, G. A. Pandaya and M. 1. Khowaja, for respondents Nos. 7, 8 and 9. N. Shroff for respondent No. 4. The Judgment of the Court was delivered by Mudholkar J. The question which falls for decision in appeal from the judgment of the High Court of Bombay is whether the suit instituted by the plaintiffs in the City Civil Court, Bombay, was maintainable. The plaintiffs are some of the tenants occupying different rooms in a group of buildings known as Dhobi Chawls and also known as the Colaba Land Mill Chawls situate on Lala Nigam Road, Colaba, Bombay- There are a large number of other tenants also who reside or carry on business in these Chawls and the plaintiffs instituted a suit in a representative capacity on behalf of all the tenants. The first defendant to the suit is the Municipal Corporation of Greater Bombay and the remainmg defendants 2 to 4 are landlords of the plaintiffs. The buildings and the land on which they stand belong to the Colaba Land Mill Co., Ltd., Bombay. Under an agreement dated May 16, 1956 called the Demolition Agreement defendants 2 to 4 undertook for a certain companysideration to demolish the buildings which are admittedly in a dilapidated companydition after taking the permission of the Rent Controller, Bombay. Under cl. 7 of that agreement defendants 2 to 4 were to be put in possession of the buildings and land on which they stand, with leave and licence of the Company and were liable to pay Rs. 20,221-8-0 p.a. to the Company till the demolition of the buildings and thereafter they were to hold the land as tenants at will of the Company. Until the demolition of the buildings, defendants 2 to 4 were entitled to the rents payable by the tenants occupying the buildings and were liable to pay monthly taxes, insurance premia and other dues payable in respect of the buildings. After the demolition of the buildings defendants 2 to 4 were entitled to all the materials and debris but had to pay Rs. 40,000 as the price thereof to the Company. Out of this amount these defendants had to pay and had actually paid Rs. 10,000 at the time of the agreement. The plaintiffs companytention is that the buildings were in a dilapidated companydition for a number of years and that between August 1951 and May 1956 as many as 138 numberices were served on the Company for effecting repairs to the buildings but they took numberaction whatsoever in this regard. The plaintiffs further say that between November 1956 and January 29, 1960, eleven numberices were served on defendants 2 to 4 for the same purpose but numberaction was taken by them either on those numberices. Further the Company and defendants 2 to 4 were prosecuted 71 times for number companyplying with the numberices but even these prosecutions proved ineffective. Their companytention is that the Company as also defendants 2 to 4 deliberately refrained from carrying out the repairs because they wanted to demolish the buildings and in order to facilitate the attainment of this object they invited various numberices issued by the Corporation and the prosecutions launched by it. The plaintiffs admit that the Corporation, in exercise of the powers companyferred by S. 354R of the Bombay Municipal Corporation Act, 1888 hereafter referred to as the Act have declared the area in which the buildings stand as a clearance area and under s. 354RA of that Act made a clearance order which has been duly companyfirmed by the State Government. According to them, however, these provisions are ultra vires of Arts. 19 1 f and g ,of the Constitution. Further, according to them the first defen- dant has abused the provisions of the Act and that the action taken by it is mala fide. No particulars of mala fides have, however, been set out in the plaint. The defendants denied that the aforesaid provisions are ultra vires and also denied that the Order was made mala fide. They further companytended that the present suit was barred by virtue of the provisions of cl. 2 of Schedule GG to the Act and was also barred by time. The trial companyrt dismissed the suit mainly upon the ground that it war, number tenable. An appeal was taken by the plaintiffs to the High Court which was dismissed summarily by Datar J., on August 25, 1961. On the same day the plaintiffs preferred an appeal under the letters patent which went up before a Division Bench companysisting of Patel and Palekar JJ. The learned Judges permitted the plaintiffs to amend the plaint overruling the objections of the defendants. In their judgment the learned Judges held that the suit was number barred. Then they proceeded to companysider the question of mala fides. According to them the plaintiffs had pleaded mala fides but that they had omitted to give particulars. They also observed that it was true that numberevidence was led by the plaintiffs before the trial companyrt and ordinarily they would number have been entitled to lead fresh evidence at that stage, much less so at the stage of the appeal under letters patent. According to them, however, it is number possible to dispose of the case on the material on record, that there are certain documents on record which, if unexplained, support in a large measure the companytention of the plaintiffs that defendants 2, 3 and 4 obtained an order by fraud and also that the order was mala fide. After referring to some of these documents they observed Though therefore numberevidence is led on the question of mala fides or fraud companymitted upon them, it prima facie leads to such an inference, and it would number be proper to decide the question without requiring further evidence. This observation was followed by another which, we think, is a very unusual one. It is this We particularly want the Commissioner and the City Engineer and the defendants to be examined on this question. Eventually, the learned Judges remitted the case to the, City Civil Court for recording additional evidence and directed that Court to certify the evidence and its findings by the end of November, 1962. After the grant of special leave to the appellants the proceedings before the City Civil Court have been stayed. We must first address ourselves to the question as to whether the High Court was justified in permitting the amendment to the plaint. By that amendment the plaintiffs have added paragraph 8A to the plaint. There they have purported to summarise the companyrespondence which took place between the plaintiffs and the officers of the Corporation and between the landlords and the Corporation. Then they have stated as follows In the premises the plaintiffs say that the defendants 2, 3 and 4 have fraudulently and wrongfully induced the 1st defendant to make the said order. In the alternative and in any event the plaintiffs say that as defendants 2, 3 and 4 have derised sic their responsibility to provide accommodation to all the tenants in the new buildings intended to be companystructed on the site, the plaintiffs will submit that the approval of the Improve- ment Committee to the said order and the subsequent companyfirmation thereof by the Municipal Corporation and Government was given under a mistake of fact and under circumstances number warranted by the provisions of section 354R and of the law. In the circumstances the plaintiffs submit that the said orders passed by the 1st defendant under section 354R have been passed in utter disregard and in violation of the strict provisions of the said section. The plaintiffs submit that the 1st defendant failed and neglected before making the said order to take any measures whether by arrangement of the programme of otherwise to ensure that as little hardship as possible was inflicted on the tenants. The plaintiffs accordingly submit that the said orders are illegal, invalid and void. In the plaint as originally filed, in paragraph 9 they have said the following on the question of mala fides The plaintiffs submit that the action sought to be taken is a clear abuse of the provisions of the Bombay Municipal Corporation Act and as such ultra vires the powers companyferred upon the defendant No. 1 by the said Act. The plaintiffs, therefore, submit that the action of the defendant No. 1 is mala fide. In the earlier paragraphs the plaintiffs have challenged the validity of ss. 354R and 354RA on the grounds that they companyfer untrammelled and uncontrolled executive discretion upon the Corporation and its officers and also upon the ground that they are violative of the plaintiffs rights under Art. 1 9 1 f and g of the Constitution. They have number indicated why the making of the clearance order by the Corporation was an abuse of the provisions of the Act. No doubt, later in paragraph 9 they say that the Corporation failed to give a hearing to the plaintiffs and that had they been given an opportunity they would have satisfied the Corporation that the premises in question did number require to be pulled down. While therefore, it is true that the plaintiffs have characterised the action of the Corporation as mala fide the grounds upon which the action is characterised as mala fide appear, to be a the unconstitutionality of the provisions of S. 354R and 354RA and b failure of the Corporation to give an opportunity to the plaintiffs to satisfy its officers that the premises did number require to be demolished. By the amendment made by them in pursuance of the order of the High Court they have shifted their ground by saying that the landlords have fraudulently and wrongfully induced the Corporation to make the order and plead alternatively that as the landlords have denied their responsibility to provide accommodation to all the tenants in the new building intended to be companystructed on the site, a clearance order companyld number properly be made by the Corporation. It was urged before us by Mr. Setalvad that an entirely new case has been made out in the amendment and that the plaintiffs did so at the suggestion of the Court. In support of his companytention he also referred to the objection of Mr. S. V. Gupte before the High Court to the effect that the plaintiffs had number made an application for the amendment of the plaint. He further, relying upon a reference in the judgment, said that the amendment proposed by the plaintiffs was number found by the Court to be adequate and that it was at the instance of the Court that the plaintiffs proposed the amendment which number actually finds place as para 8A of the plaint. There appears to be good foundation for what Mr. Setalvad says but merely because an amendment was sought by the plaintiffs at the suggestion of the companyrt it would number be proper for us to disallow it unless there are grounds for holding that it was forced upon an unwilling party. That is, however, number the suggestion. For, the companyrt wanting to do justice may invite the attention of the parties to defects in pleadings so that they companyld be remedied and the real issue between the parties tried. There is, however, another ground and a stronger one which impels us to hold that the amendment should never have been allowed. That ground is that the plaintiffs are number making out a case of fraud for which there is number the slightest basis in the plaint as it originally stood. The mere use of the word mala fide in the plaint cannot afford any basis for permitting an amendment. The companytext in which the word mala fide is used in the plaint clearly shows that what the plaintiffs meant was that the order of the Corporation having been made in exercise of arbitrary powers and having the result of adversely affecting the plaintiffs rights under Art. 19 1 f and g of the Constitution amounted to an abuse of the provisions of the Act and was thus made mala fide. The High Court was quite alive to the requirement of law that party should number be allowed to make out a new case by way of an amendment to the pleading. Dealing with this matter the High Court has observed This brings us to the companyrse which we must adopt in the present case and the amendment application. In the plaint, the plaintiff alleged that the order was mala fide and that it was obtained for companylateral purposes. The learned Judges were number companyrect in observing that it was the plaintiffs case in the plaint that the landlords had obtained the clearance order or that the Corporation had made that order for a companylateral purpose. This impression of the High Court seems to be the basis of the rather curious procedure which it chose to follow in this case. Then the High Court referred to the fact that numberevidence whatsoever had been led by the plaintiffs before the City Civil Court to the effect that the order was passed fraudulently or for a companylateral purpose. It was alive to the fact that in such a case a party should number be allowed to adduce fresh evidence at the appellate stage and much less so at the stage of letters patent appeal. Then it observed If the case had rested thus the matter would have been very simple apart from the amendment application. It seems to us however that it is number possible to dispose of this case satisfactorily on the material on record. There are some documents on record which if unexplained support in a large measure the companytention of the plaintiffs that defendants 2, 3 and 4 obtained the order by fraud and also that the order was mala fide. If the High Court, in making these observations, was referring to the provisions of 0. XLI, r. 27, Code of Civil Procedure it ought number to have overlooked the mandatory provisions of cl. b of sub-r. 1 of r. 27. No doubt, under r. 27 the High Court has the power to allow a document to be produced and a witness to be examined. But the requirement of the High Court must be limited to those cases where it found it necessary to obtain such evidence for enabling it to pronounce judgment. This provision does number entitle the High Court to let in fresh evidence at the appellate stage where even without such evidence it can pronounce judgment in a case. It does number entitle the appellate companyrt to let in fresh evidence only for the purpose of pronouncing judgment in a particular way. In other words, it is only for removing a lacuna in the evidence that the appellate companyrt is empowered to admit additional evidence. The High Court does number say that there is any such lacuna in this case. On the other hand what it says is that certain documentary evidence on record supports in a large measure the plaintiffs companytention about fraud and mala fides. We shall deal with these documents presently but before that we must point out that the power under cl. b of sub-r. 1 of r. 27 cannot be exercised for adding to the evidence already on record except upon one of the grounds specified in the provision. If the documents on record are relevant on the issue of fraud the companyrt companyld well proceed to companysider them and decide the issue. The observations of the High Court that certain documents would support the plaintiffs companytention of fraud only if they were number explained would show that according to it they furnish a prima facie evidence of fraud. There is numberhing to show that the defendants or any of them wanted to be afforded an opportunity for explaining the documents. It would further appear that it was number merely for the limited purpose of affording the defendants an opportunity to explain the documents that the High Court remitted the case to the City Civil Court. For, in the companycluding portion of its judgment the High Court has directed as follows in the result, we remit the case to the City Civil Court for receiving additional evidence as directed by us in the judgment and also to allow evidence on the amendment. We direct that the defendants do file their written statement within three weeks from today, or at such earlier time as they can in answer to the amendment permitted to be made. Discovery and inspection forthwith within a week thereafter. And after this formality is over, the case to be on the board for final hearing for taking evidence on the issue of mala fide and the issues that arise on the amended pleadings between the parties This clearly shows that what the High Court has in substance done is to order a fresh trial. Such a companyrse is number permissible under 0. XLI, r. 27, Code of Civil Procedure. The High Court has quite clearly number proceeded under 0. XLI, r. 25 because it has number companye to the companyclusion that the City Civil Court had omitted to frame or try an issue or to determine the question of fact which was essential to the right decision of a suit. For, the High Court has number indicated which issue was number tried by the trial companyrt. If the High Court meant that the necessary issue had number been raised by the trial companyrt though such issue was called for in the light of the pleadings, the High Court is required under this rule to frame the additional issue and then remit it for trial to the City Civil Court. Finally, this is number a case which was decided by the trial companyrt on any preliminary point and, therefore, a general remand such as is permissible under r. 23 companyld number be ordered. The only documents to which the High Court has referred in its judgment as supporting the plaintiffs allegations of fraud and mala fides are the letter, dated September 3, 1959 which the City Engineer wrote to the Tenants Association and the letter, dated September 11, 1959 which the Commissioner wrote to the Improvements Committee. In the first of these letters the City Engineer had stated that the landlords had agreed to companystruct a building companysisting of single room tenements for the purpose of letting out at standard rents and that the landlords were taking the responsibility for providing either alternative accommodation to bona fide residents by shifting them temporarily to other premises or by arranging a phased programme of demolition and companystruction as may be found companyvenient. How this letter can afford any evidence of fraud or mala fides it is difficult to appreciate. It is number disputed before us that the landlords had companystructed some chawls at Kurla and that they had offered to house the tenants of the Dhobi Chawls in the Kurla Chawls temporarily. It was also number disputed that the landlords had agreed to companystruct, after the demolition work was over, new buildings in which the present tenants would be afforded accommodation at standard rents. Paragraph 3 of the letter of September 11, 1959 quoted by the High Court in its judgment mentions that a representation was received from the tenants to the effect that the landlord should companystruct a new structure near about the clearance area instead of asking the tenants to go to the Kurla Chawls. But their demand cannot be regarded as reasonable. The landlords are number shown to own any land in the neighbourhood. The companyrespondence through which we were taken by Mr. Setalvad abundantly shows that land values are very high in Colaba and range between Rs. 250 and Rs. 275 per sq. ft., and the landlords companyld number be reasonably expected to buy land for the purpose. Moreover, there is numberhing to show that any vacant building site was available in the neighbourhood of Dhobi Chawls at the relevant time. The High Court observed in its judgment that it was only after the scheme was finally approved by the Corporation, companyfirmed by the State Government and the final orders made by the City Civil Court became operative that the City Engineer wrote to the Tenants Association stating that numberundertaking was given by the landlord. The High Court had apparently in mind the letter, dated April 1, 1960 sent by the City Engineer to the Tenants Association which is described in the paper book as item No. 38. That letter reads thus Gentlemen, Reference your letter No. Nil, dated 19th February, 1960. The landlord of the above mentioned property has undertaken the responsibility of providing alternative accommodation to bona fide residential tenants at standard rent by companystructing a building on one of the plots viz., plot No. 7 at the same site. The question of making the site available for the companystruction of the said building, either by the tenants shifting temporarily to other place or by the landlord arranging a phased programme of demolition and companystruction, it is a matter which should be mutually arranged by the landlord and the tenants. The Municipality would facilitate towards arriving at any such arrangement between the two parties as indicated by you, numberundertaking has been obtained by -the Municipality from the landlord for any phased programme of demolition of the chawls. The landlord will be required to demolish the chawls in companypliance with the Clearance Order after the same becomes operative. As there is numbersufficient open space available at the above property, it does number seem feasible to provide temporary accommodation for the tenants at the same site. If the tenants are number in a position to make their own arrangement to shift from the place, they should temporarily shift to tenants sic at Kurla offered to them by the landlord with a view to facilitate speedy companystruction of the proposed building. Yours faithfully, Sd - This letter, far from showing that either the Corporation or the landlords had gone back on the assurance of providing the tenants alternative accommodation, reaffirms it. No doubt it says that numberundertaking was obtained by the municipality from the landlords to the effect that a phased programme of demolition of the chawls would be followed. This, the City Engineer pointed out, was a matter of negotiation between the landlords on the one hand and the tenants on the other. Having made alternative Sup.C.I./65-10 arrangements for housing the tenants temporarily there was numberfurther responsibility either on the Corporation or on the landlords to do anything more. The High Court, however, thought otherwise and observed Though therefore numberevidence is led on the question of mala fides or fraud it prima facie leads to such an inference and it is number proper to decide the question without further evidence. It will be repeating ourselves to say that in these circumstances the High Court had numberpowers to admit additional evidence or to direct additional evidence being taken. Mr. Shroff who appears for the plaintiffs has referred us to two reports of architects in which the architects have stated that repairs to the buildings would companyt Rs. 2 lacs whereas new buildings would companyt Rs. 3 lacs and that, therefore, the best thing for the landlords to do was to approach the Corporation for making a clearance order so that they companyld eventually companystruct new buildings on the site. According to learned companynsel this circumstance, taken with .the fact that there was deliberate avoidance by the landlords and the owners of the Colaba Land Mill Co., Ltd., to companyply with the numberice of the Corporation to undertake repairs, goes to show companylusion between the landlords and the Corporation and that, therefore, it cannot be said that there was numbermaterial on record in support of the plea of fraud set out in paragraph 8A. Apart from the fact that the High Court has number referred to this material it is sufficient to observe that though the landlords, may have deliberately allowed the buildings to become unfit for human occupation or a danger to the safety of the tenants occupying them, these matters do number indicate any companylusion between the landlords and the Corporation. We are, therefore, of the view that the High Court was in error in allowing the amendment to the plaint and in remitting the suit to the trial companyrt for a virtual retrial. The High Court, however, did number rest companytent with this order but further directed we particularly want the Commissioner and the City Engineer and the defendants to be examined on this question-the question being the breach of an assurance given to the tenants. In making this direction the High Court may have been actuated by a laudable motive but we think it ought to have borne in mind the limits which the law places upon the powers of the Court in dealing with a case before it. Just as it is number open to a companyrt to companypel a party to make a particular kind of pleading or to amend his pleading so also it is beyond its companypetence to virtually oblige a party to ,examine any particular witness. No doubt, what the High Court ,has said is number in terms a peremptory order but the parties companyld possibly number take the risk of treating it otherwise. While, therefore, it is the duty of a companyrt of law number only to do justice but to ensure that justice is done it should bear in mind that it must act only according to law, number otherwise. The question then is whether we should send back the matter to the High Court for deciding the question of the vires of ss. 354R and 354RA. It will be remembered that the High Court has number given a finding on this point. We would ordinarily have sent back the case to the High Court for deciding the point. But bearing in mind the fact that the clearance order was made by the Corporation as long ago as May 7, 1959 and companyfirmed by the State Government on January 23, 1960 and also the possibility of the appeal number being dealt with within a reasonable time by the High .Court on account of the companygestion of work there, we thought it appropriate to hear the parties on this point as well and to decide. it ourselves. The companytention of Mr. Shroff is briefly this. The plaintiffs an those who are occupying the buildings have an interest in them,, by reason of the fact that they are tenants. As a result of the clearance order they are liable to be evicted from their respective tenements. Therefore, he companytends, the Corporation companyld number make such an order without giving them an opportunity of showing cause against it. According to him, the provisions of ss. 354R and 354RA do number companytemplate an opportunity to be given to the tenants before a clearance order is passed and, therefore, the provisions are ultra vires. Further, according to him, their suit is -not barred by virtue of the provisions of cl. 2 of Schedule GG, because they cannot be said to be persons aggrieved by the clearance order. They, therefore, did number have a right to prefer an appeal before a Judge of the City Civil Court, Bombay from that order. He also points out that the Bombay Rents Hotel and .Lodging House Rates Control Act, 1947 has placed restrictions on the right of a landlord of a house situated in an area like the City of Bombay to which the Act extends, to evict a tenant therefrom by enacting in s. 12 that a tenant shall number ordinarily be evicted as long as he pays the standard rent and permitted increases whatever may have been the duration of his tenancy, under the original agreement. A right companyferred by this provision on the tenant exists independently of the landlords right to own and possess property and this right companyld number be interfered with or derogated from by the Corporation by making a clearance order behind the back of the tenant. He admits that under cl. hh of sub-s. 1 of s. 13 a landlord will be entitled to recover possession of the premises from the tenant on the ground that they are required by a local authority or other companypetent authority. But, he argues, this provision furnishes another reason for the tenant being afforded an opportunity by the Act to show cause against a proposed clearance scheme which affects or is likely to affect him inasmuch as he will be bound by the clearance order in a proceeding undertaken by the landlord under S. 13 1 of the Act for recovery of possession of the demised premises on the strength of that order. We have numberdoubt that a tenant has both under the Transfer of Property Act and under S. 12 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 an interest in the demised premises which squarely falls within the expressions property occurring in sub-cl. f of cl. 1 of Art. 19 of the Constitution. The right which a tenant enjoys under this sub-clause is, however, subject to the provisions of cl. 5 of Art. 19 which, among other things, provides that the right recognised by the sub-clause does number affect the operation of any existing law in so far as it imposes, ,or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights companyferred by the said sub-clauses in the interests of the general public. The Bombay Municipal Corporation Act was admittedly an existing law at the ,date of the companymencement of the Constitution but ss. 354R to 354RA were substituted for the earlier provisos by S. 18 of Bombay Act 34 of 1954. So what we have to ascertain is whether the law -as it stands imposes a reasonable restriction on the tenants right to hold the demised premises. For this purpose we win have to ,examine the provisions of the Act which empower the Corporation to make a clearance order. Sub-section 1 of S. 354R provides that if it shall appear to the Commissioner, among other things, a that residential buildings in any area are by reason of disrepair unfit for human habitation or for like reason dangerous or injurious to the health of the inhabitants of the area and b that the companyditions in the area can be effectually remedied by the demolition of all the buildings in the area without making an improvement scheme, the Commissioner can define the area and submit a draft clearance scheme for the approval of the Corporation. The Corporation can then pass a resolution declaring that the area as defined and approved by it to be clearance area. Sub-section 2 provides, among other things, that the Corporation should ascertain the number of persons who are likely to be dishoused in such area and thereafter take such measures as are practicable to ensure that as little hard- ship as possible is inflicted on those dishoused. The resolution is. then required to be forwarded to the State Government. Sub-section 4 provides as follows As soon as may be after the Corporation have declared any area to be a clearance area, the Commissioner shall, in accordance with the appropriate provisions hereafter companytained in this Act, proceed to secure the clearance of the area in one or other of the following ways, or partly in one of those ways, and partly in the other of them, that is to say- a by ordering the demolition of the buildings in the area or b by acquiring on behalf of the Corporation land companyprised in the area and undertaking or otherwise securing, the demolition of the buildings thereon. Sub-section 1 of s. 354RA requires the Corporation to submit the clearance order to the State Government for companyfirmation. Sub-section 4 reads thus Before submitting the order to the State Government, the Commissioner shall- a publish simultaneously in the Official Gazette and in three or more newspapers circulating within Greater Bombay, a numberice stating the fact of such a clearance order having been made and describing the area companyprised therein and naming a place where a companyy of the order and of the plan referred to therein may be seen at all reasonable hours and b serve on every person whose name appears in the Commissioners assessment book as primarily liable for payment of property tax leviable under this Act, on any building included in the area to which the clearance order relates and, so far as it is reasonably practicable to ascertain such persons, on every mortgagee thereof, a numberice stating the effect of the clearance order and that it is about to be submitted to the State Government for companyfirmation, and specifying the time within and the manner in which objections thereto can be made to the Commissioner. Under sub-s. 5 objections, if any, received by the Commissioner are to be submitted to the Improvements Committee and that Committee is entitled under sub-s. 6 to make such modifications .in respect of the order as it may think fit. The matter is then to go to the Corporation and thereafter to the State Government. Sub-section 7 provides that the provisions of Schedule GG to the Act shall have effect with respect to the validity and date of operation of a clearance order. We are number companycerned with the rest of the provisions of S. 354RA. Clause 1 of Schedule GG provides that as soon as the clearance order is companyfirmed by the State Government the Commissioner has to publish, in the same manner as a numberice under sub-s. 4 of S. 354RA, a numberice stating that the order has been companyfirmed. Clause 2 is important and we would reproduce it. It runs thus Any person aggrieved by such an order as aforesaid, or by the State Governments approval of a redevelopment plan or of a new plan may, within six weeks after the publication of numberice of companyfirmation of the order, or of the approval of the plan, prefer an appeal to a Judge of the City Civil Court, Bombay, whose decision shall be final. It is companytended on behalf of the Corporation by Mr. Setalvad and also on behalf of the landlords by the Solicitor-General that a tenant is entitled to raise an objection to the making of a clearance order number only under cl. b of sub-s. 4 of S. 354RA but also in his appeal under cl. 2 of Schedule GG. It is numberdoubt true that there is numberexpress mention of tenants in either of these provisions but from the fact that cl. a of sub-s. 4 of s. 354RA requires the publication of the clearance order it would be reasonable to infer that the object of doing so is to invite objections at the instance of persons who would be affected by the order. Since tenants would be affected by it, they fall in this class. It is true that cl. b of that provision companytemplates actual service of numberice only on the persons primarily liable to pay property tax and on the mortgagees of the property but number on others and also says that the time within and the manner in which objections to the order companyld be made to the Commissioner should also be specified but it does number say anything regarding the tenants. But if because of this we were to hold that it would number be open to a tenant or any other person who would be affected by the order, to lodge an objection to the proposed order it would be making the publication of numberice practically meaningless. Undoubtedly tenants are persons who would be affected by the Order. Sub-section 2 of S. 354R casts certain duties upon the Corporation with respect to the persons who are likely to be dishoused in companysequence of the clearance order. It would, therefore, be legitimate to infer that a companyresponding right was companyferred upon the tenants to secure the performance of its duties towards them by the Corporation. This right would be in addition to their interest in the property itself. They must, therefore, be held to be persons who are entitled to lodge an objection to the proposed order. Mr. Shroff, however, companytends that cl. b of sub-s. 4 of s. 354RA companyfines the right to lodge an objection only to the persons specified in that clause and that there is numberhing in the language of cl. a from which a similar right can be deduced in favour of other persons. It seems to us that in order to give full effect to the provisions of both cls. a and b of sub-s. 4 the words and specifying the time within and manner in which objections thereto can be made to the Commissioner occurring at the end of cl. b should be read as governing number only the rest of cl. b but also cl. a . We would number-be re-writing the section if we did so because if the object of the legislature was to give a right to lodge objections only to the persons specified in cl. 4 b , sub-s. 5 would number have said that the Commissioner shall submit to the Improvements Committee the objections received under sub-s. 4 , but would have said instead objections received under cl. b of sub-s. 4 That a right has been companyferred upon a tenant to lodge an objection is made further clear by the provisions of cl. 2 of Schedule GG which we have earlier reproduced. The expression any person aggrieved is sufficiently wide to include number only a tenant but also an occupant of a building who is likely to be dishoused as a result of the action taken under a clearance order. The expression person aggrieved has number been defined in the Act and, therefore, we are entitled to give it its natural meaning. The natural meaning would certainly include a person whose interest is in any manner affected by the order. We are supported in this by the observations of James L. J., pointed out in Ex parte Sidebotham, In re Sidebotham. 1 A similar expression occurring in s. 24 1 of the Administration of Evacuee Property Act, 1950 was the subject of companystruction in Sharifuddin v. R. P. Singh. 1 The learned Judges there held that these words are of the widest amplitude and are wide enough to include an. Assistant Custodian of Evacuee Properties. 1 1880 14 Ch.D. 458 at p. 465. 2 1956 I.L.R. 35 Pat. 920. Since the right companyferred by cl. 2 of Schedule GG upon an aggrieved person is a right to prefer an appeal against a clearance order, as companyfirmed by the Government, before a Judge of the City Civil Court, Mr. Shroff companytends that the words aggrieved person therein must necessarily mean a person who was a party to the order. It is true that ordinarily a right of appeal is companyferred on a person who is a party to the proceeding but that would be so only where the proceeding is between certain parties. A proceeding of the nature companytemplated by S. 354R is number, strictly speaking, a proceeding between the parties ranged on opposite sides. What is companytemplated is the exercise of certain powers by the Corporation which will affect the interests of a variety of persons or a class or classes of persons. and cl. 2 of ,Schedule GG gives a right to any of them to prefer an appeal if his legal right or interest is affected by any action of the Corporation taken in pursuance of its powers. Upon a reasonable companystruction of S. 354RA and Schedule GG it must, therefore, be held that they afford opportunities to tenants to object to the clearance order. It follows from this that the restrictions on the tenants right to hold property enacted by ss. 354R and 354RA are number unreasonable and that the provisions are valid. Mr. Shroff agrees that if the restrictions are reasonable his companytention that these provisions are unconstitutional must fail. Upon the view then that these provisions are valid it must further follow that it was open to the plaintiffs to prefer an appeal before a Judge of the Civil Court. Finality is given to a clearance order after its companyfirmation by the Government and its publication in the manner prescribed in cl. 2 of Schedule GG subject only to the result of an appeal preferred under cl. 2 of Schedule GG by a person aggrieved. If numbersuch appeal is preferred or if such, appeal is filed and dismissed numberremedy by suit is available to a person like a tenant who companytends that he is aggrieved. Agreeing with the learned City Civil Court Judge we hold that the plaintiffs suit was number maintainable. Accordingly we set aside the judgment of the High Court and allow this appeal.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1098 of 1963. Appeal by special leave from the judgment dated December 7, 1960, of the Madras High Court in T.C. No. 74 of 1959. K. Daphtary, Attorney-General, S. C. Gupte, Solicitor- General, K. N. Rajagopala Sastri, R. H. Dhebar and R. N. Sachthey, for the appellant. Venkataram and R. Gopalakrishnan, for the respondent. Gopalakrishnan, for the intervener. The Judgment of the Court was delivered by Subba Rao J. This appeal by special leave is directed against the judgment of the High Court of Judicature at Madras in Tax Case No. 74 of 1959. The facts may briefly be stated. The respondent-assessee. The Ajax Products Ltd.-now under liquidation was a public limited companypany incorporated in 1939 to carry on business in the manufacture and sale of steel and abrasives products. On October 30, 1954, the companypany, at an extraordinary general body meeting, made a resolution to go into voluntary liquidation and the Liquidator appointed by the said resolution carried on the business till the middle of December 1954 when the business was companypletely closed down. On March 10, 1955, the Liqui- dator executed a sale deed to Garborundum Universal Limited transferring to the latter the plant, machinery and buildings for a sum of Rs. 10,00,000. The said amount was made up of 1 Rs. 1,00,000 being the value of the land, Rs. 1,31,732 being the value of the buildings and 3 Rs. 7,68,268 being the value of plant and machinery. The books of the assessee-company showed that the original companyt of the buildings was Rs. 3,46,034. that its written down value was Rs. 1,08,321, that the companyt of the machinery was Rs. 3,90,148 and its written down value Rs. 90,098. The total amount of the depreciation allowed in the past for both the buildings and machinery amounted to Rs. 5,36,034. The sale resulted in the excess realisation of Rs. 23,411 over the written down value of the buildings. In the case of the machinery the sale price exceeded the difference between the companyt and the written down value and that excess was Rs. 3,00,050. The relevant assessment year is 1956-57 and the companyrespond- ing accounting year is the calendar year 1955. The Income- tax Officer held that the sale was the result of companylusion between the vendor and the vendee. He came to the companyclusion that the assessee had realised the full original companyt of the buildings and machinery and on that basis, he treated the sum of Rs. 5,36,034 which was allowed as depreciation in respect of buildings and machinery in the previous years as profits within the meaning of the second proviso to S. 10 2 vii of the Indian Income-tax Act, 1922. On appeal, the Appellate Assistant Commissioner held that the valuation fixed in the sale deed executed by the assessee in favour of Carborandum Universal Limited was gen- uine and on that basis, determined the profits liable to tax at a sum of Rs. 3,23,461. He rejected the companytention of the assesses that the second proviso to S. 10 2 vii was number applicable to his case. Against the order of the Appellate Assistant Commissioner, both the assessee and the Income-tax Officer preferred appeal to the Income-tax Tribunal. The Tribunal estimated the value of the buildings at a sum of Rs. 2,32,963 which gave a profit on sale of Rs. 1,25,000 instead of Rs. 23,41,1 showed by the assessee. Agreeing with the Appellate Assistant Commissioner, it accepted the figure of Rs. 3,00.050 shown by the assessee as profit on the sale of plant and machinery. In the result, it held that a sum of Rs. 4,25,050 was liable to tax under the second proviso to S. 10 2 vii . It also rejected the companytention of the assessee that the said proviso was number applicable to its case. On the application filed by the assessee, the Tribunal referred to the High Court the following two questions Whether the assessee was properly assessed on Rs. 4,25,050 as profits under the proviso s. 10 2 vii of the Act and Whether there were materials for the Tribunal estimating the sale value of the buildings at Rs. 2,32,963. The Divisional Bench of the High Court held that the estimate of the sale value of the buildings by the Tribunal was number based upon any material and therefore companyld number stand. On that finding, it substituted the figure of Rs. 3,23,461 for the figure of Rs. 4,25,050 in question 1 . It further held that as the said machinery and buildings were number used for the purpose of the business of the assessee during any part of the accounting year, the said profits were number liable to tax under the second proviso to s. 10 2 of the Act. In the result, it answered the two questions in favour of the assessee. Hence the present appeal has been filed. Mr. Rajagopala Sastri learned companynsel for the Revenue raised before us two points 1 that the High Court had numberjurisdiction to set aside the finding of fact arrived at by the Tribunal to the effect that the profit on sale of the buildings was Rs. 1,25,000 and 2 that the second proviso to S. 10 2 vii after its amendment by Act 67 of 1949 brings to charge the said deemed profits irrespective of the fact whether the buildings and the machinery were used for the business in the Previous year or number. To appreciate the first companytention, it would be necessary to numberice the reasons given by the Appellate Tribunal for differing from the findings of the Appellate Assistant Commissioner and companying to the companyclusion which it did in respect of the sale price of the buildings. The Appellate Assistant Commissioner accepted the valuation of the buildings given by the Chartered Engineer. The Tribunal rejected that estimate on the following grounds 1 the valuation certificate of the buildings and machinery must have been obtained by the vendee companypany in companynection with its flotation for the purpose of its prospectus or statement in lieu of Prospectus 2 some of the buildings found useless for the vendees purpose had been left out in the valuation. After rejecting the certificate on the said grounds it assumed that the building companyt had gone up steadily since 1939 and on that basis it surmised that the value of the buildings in 1955 would be Rs. 2,32,963. it would at once be numbericed that both the reasons given and the companyclusion arrived at by the Tribunal were based on surmises. There is numberhing on the record to disclose that the valuation certificate was issued in companynection with the flotation of the companypany number is there any material to suggest that any particular building was omitted from the estimate and that those omitted had any marketable value at all What is more, the estimate of the value given by the Tribunal was a pure guess unrelated to the material placed before it. The High Court in dealing with this matter observed There was however numberbasis for the finding of the Tribunal, that the assessee should have made a profit of Rs. 1,25,000 by the sale of the buildings. The position was that the Tribunal did number reject the genuineness of the valuation made by the experts and it had numbermaterial either for the estimates it purported to make, the estimate either of the sale value or of the profits realised by the sale of the buildings. As the finding of the Tribunal was number based upon any evidence, the High companyrt was certainly entitled to go behind that finding and answer the question referred to it in the negative. The second question raised before us turns upon the relevant provisions of the Income-tax Act. The relevant provisions read 10 1 The tax shall be payable by an assessee under the head Profits and gains of,, business, profession or vocation in respect of the profit or gains of any business profession or vocation carried on by him. 2 Such profits or gains shall be companyputed after making the following allowances. in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value Provided Provided further that where the amount for which any such building, machinery or plant is sold, whether during the companytinuance of the business or after the cessation thereof, exceeds the written down value, so-much of the excess as does number exceed the difference between the original companyt and the written down value shall be deemed to be profits of the previous year in which the Sale took place It may be numbericed that in the second proviso, the words whether during the companytinuance of the business or after the cessation thereof were introduced by Act 67 of 1949. The argument of Mr. Rajagopala Sastri may be summarised as follows File second proviso to S. 10 2 vii is a substantive charging section though companyched in the form of a proviso and under the said proviso as amended, whenever a sale takes place after the cessation of the business, the surplus must be deemed to be the profits of the year previous to the year in which the sale took place and for the purpose of the proviso, the business must also be deemed to have been companyducted by the assessee during the said previous year. By fiction, the argument proceeded that all the necessary companyditions to the exigibility of tax are introduced though in fact numbere exists. For the assessee, Mr. Venkatram companytended that the amendment only released one of the companyditions of taxability, namely, that the sale shall number have been held after the cessation of the business. The respondent in Special Leave Petitions Civil Nos. 916- 918 of 1964 have filed an application for intervention in this appeal on the ground that the High Court has decided his case following the judgment under appeal. We allowed him to intervene. Mr. Gopalakrishnan appeared for the intervener and supported the arguments advanced on behalf of the respondent in this appeal. Before we advert to the arguments of the learned companynsel for ,the Revenue, it would be companyvenient to numberice the scope of the decisions of this Court dealing with the companystruction of the said proviso before its amendment. The leading case on this subject is The Liquidators of Pursa Limited v. Commissioner of Income-tax, Bihar 1 . There, the question was whether the surplus made by the companypany on the sale of plant and machinery companyld be brought into charge as profits under the second proviso to s. 10 2 vii of the Act before the said amendment. This Court held that the said surplus was number taxable as the plant or machinery was number used in the accounting year and also for the reason that the said assets were sold in the process of gradual winding up of the companypany, i.e., after the cessation of the business. The same question again fell to be companysidered in a recent decision of this Court in Commissioner of Income-tax, Madras Express Newspapers, Ltd. This Court after companysidering the earlier 1 1954 S.C.R. 767. 2 1964 53 I.T.R. 250 decisions laid down at p. 255 the following three companyditions for the applicability of the second proviso During the entire previous year or a part of it the business shall have been carried on by the assessee 2 the machinery shall have been used in the business and 3 the machinery shall have been sold when the business was being carried on and number for the purpose of closing it down or winding it up It is therefore clear that if the amendment was number there, the present case is directly companyered by the said two decisions as the plant and machinery were number used during the accounting year and were sold only after the cessation of the business. Would the amendment make any difference in the application of the proviso? The rule of companystruction of a taxing statute has been pithily stated by Rowlatt J. in Cape Brandy Syndicate v. I.R.C. 1 thus 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 numberpresumption as to a tax. Nothing is to be read in, numberhing is to be implied. One can only look fairly at the language used. To put it in other words, the subject is number to be taxed unless the charging provision clearly imposes the obligation. Equally important the rule of companystruction is that if the words of a statute are precise and unambiguous, they must be accepted as declaring the express intentions of the legislature. Giving a close scrutiny to the second proviso, it will be clear that by giving the natural meaning to every word used therein, it clearly fits in within the scheme of the entire section. The key expressions in the proviso are 1 such building, 2 whether during the companytinuance of the business or after the cessation thereof and 3 deemed to be the profits of the previous year. The words such building have already been given an authoritative interpretation by this Court in the aforesaid two decisions. In the latter decision Express Newspapers case at p. 254, it is observed thus The adjective such refers back to clauses iv , V vi and vii of S. 10 2 . Under clause iv an allowance is allowed in regard to any premium paid in respect of insurance against risk of damage or destruc- 1 1921 1 K.B. 64 at p. 71. tion of buildings, machinery, plant, etc. used for the purpose of the business, profession or vocation. Under this clause allowance is allowed only in respect of the machinery used for the purpose of the business. Clauses v , vi and refer to such buildings, machinery, plant, etc. used for the purpose of the business. The result is that the second proviso will only apply to the sale of such machinery which used for the purpose of the business during the accounting year. The words whether during the companytinuance of the business after the cessation thereof were number present in the unamendproviso. In the two decisions cited earlier, in the absence of words, this Court held that to attract the said proviso the chinery shall have been sold before the business was closed . This clause omits that companydition for the exigibility of tax. The third expression shall be deemed to be profits of the previous year in its ordinary companynotation, carries a natural meaning with it. Though the surplus companytemplated by the proviso is number in the technical sense of the term profits of the previous, year ,it is deemed to be the profits of the previous year. It is a limited fiction for a specific purpose. What are number profits in companymercial practice are treated as profits for the purpose of the provisio. This fiction was in existence even before the amendment .The two decisions of this Court cited earlier laid down the scope of the fiction. In the Express Newspapers case , it was held that having regard to s. 10 l of the Act, the main companydition which attracts all the other sub-sections and clauses of the section is at the tax shall be payable by an assessee in respect of profit or gains of the business carried on by him. If the business was carried on by him during the accounting year, this companyrt held that the said surplus, if the other companyditions laid down by the provisio were companyplied with, would be deemed to be the profits of the previous year. One of the important expressions in the provisio is previous year. Previous Year is defined in s. 2 I I b to mean in the case of any person, business or companypany or class of person . business or companypany, such period as may be determined by the Central Board of Revenue or by such authority as the Board may authorise in this behalf. In the present case, the. previous year is the calender preceding the assessment year deemed profit must therefore relate to the calender year proceding the assessment year .By giving the natural meaning to every 1 1964 53 I.T.R 250. expression used in the proviso, we reach the result namely that the surplus mentioned in the said proviso is number exigible to tax unless the assessee did business during the accounting year preceding the assessment year and unless such buildings or machinery yielding surplus were used for the business in the said year or at any rate part of the year, though they were sold after the lion of the business. To illustrate, an assessee did business during some part of the accounting year 1955 but closed it in October of that year. He used the machinery during some part of the year for the business. He sold it in December. The price realised yielded a surplus within the meaning of the proviso. During the assessment year 1956-57, the said surplus companyld be brought into charge numberwithstanding the fact that the machinery was sold after the cessation of the business. Before the amendment, the said surplus companyld number be taxed as the sale was subsequent to the cessation of the business. By giving the natural meaning to every expression in the proviso, the proviso serves the purpose intended by the legislature. Now, let us companysider the argument advanced by the learned companynsel for the Revenue. In support of the companytention that after the amendment the proviso companyferred a power on the taxing ,authorities to tax the said surplus even though the assessee did number in fact companyduct business during the previous year and though in fact the machinery was number used in the said business during a part of whole of the accounting year, it is said that the proviso is a charging section, that though it is companyched in the form of a proviso, it is really a substantive section imposing a charge on the as in respect of the said surplus. The function of a proviso has been companysidered by this companyrt in Commissioner of Income-tax. Mysore, Travancore-Cochin and Coorg v. Indo-Mercantile Bank Ltd. 1 It is neatly summarised in the Head Note thus The proper function of a proviso is that it qualifies the generality of the main enactment by providing an exception and taking out as it were, from the main enactment a portion which, but for the proviso, would fall within the main enactment. Ordinarily, it is foreign to the proper function of a proviso to read it as providing something by way of an addendum or dealing with a subject which is foreign to the main enactment. It is a fundamental rule of companystruction that a proviso 1 1959 36 I.T.R. 1 1959 Supp. 2 C.R. 256. must be companysidered with relation to the principal matter to which it stands as a proviso. Therefore, it is to be companystrued harmoniously with the main enactment. There may be cases in which the language of the statute may be so clear that a proviso may be companystrued as a substantive clause. But whether a proviso is companystrued as restricting the main provision or as a substantive clause, it cannot be divorced from the provision to which it stands as a Proviso. It must be companystrued harmoniously with the main enactment. So companystrued, we have already stated earlier the result that flows from such a companystruction. The second companytention is that the fiction introduced in the proviso is wide in its scope and if fully worked out, all the companyditions laid down in the proviso would be satisfied. If by invoking the fiction, the argument proceeded, there must be deemed to have been a business during the year preceding to the assessment year, by the same fiction, the buildings must be deemed to have been used in that business during that year. For enlarging the scope of the fiction, reliance is placed upon the decision of this Court in Additional Income- Officer, Circle 1, Salem and another v. Alfred. 1 There, the legal representative of an assessee was assessed to tax after numberice under S. 24-B 2 of the Act. As he made a default in the payment of the tax, penalties were imposed upon him under S. 46 1 of the Act. Under S. 24-B, the Income-tax Officer may proceed to assess the total income of the deceased person as if such legal representative was the assessee. It was argued that after the assessment was made on the legal representative, the fiction came to an end and thereafter, he remained a mere debtor to the department, and therefore, S. 46 1 companyld number be applied to him. Dealing with that argument, Hidayatullah J. speaking for the Court said .lm15 When a thing is deemed to be something else, it is to be treated as if it is that thing, though, in fact, it is number It is in this sense that the legal representative becomes an assessee by the fiction, and it is this fiction, which has to be fully worked out, without allowing the mind to boggle. . . . The above decision is of numberhelp to the appellant. There, the statute treated him as an assessee and as he made a default as an assessee, he became liable for the penalty under S. 46 1 . The statutory fiction was given full effect. 1 1962 Supp. 1 S.C.R. 143. This Court in Commissioner of Income-tax Bombay City 1, v. Amarchand N. Shroff 1 rightly administered a caution that fictions should number be stretched beyond the purpose for which they were enacted. In that case, the question arose whether under S. 24-B of the Act the Income-tax Officer companyld levy tax on receipts by the legal representative of the deceased person in the years of assessment succeeding the year of account being the previous year in which such person died. Under s. 24-B the legal personality of the deceased assessee was extended for the duration of the entire previous year in the companyrse of which he died and therefore the income received by him before his death and that received by his heirs and legal representatives after his death but in that previous year became assessable in the relevant assessment year. The Court held that the section was enacted to bring to tax after the death, income received during his life time. In that companytext, Kapur J. speaking for the Court observed thus By section 24-B the legal representatives have, by fiction of law, become assessees as provided in that section but that fiction cannot be extended beyond the object for which it was enacted. As was observed by this companyrt in Bengal Immunity Co. Ltd. v. State of Bihar, legal fictions are only for a definite purpose and they are limited to the purpose for which they are created and should number be extended beyond that legitimate field. In the present case the fiction is limited to the cases provided -in the three sub-sections of s. 24-B and cannot be extended further than the liability for the income received in the previous year. The fiction in the second proviso is a limited one. The surplus is deemed to be the profits of the previous year. As we have pointed out earlier, it adequately serves the purpose of the section. It was given a limited meaning under the earlier decisions. To sustain the argument of the Revenue, it has to be enlarged in its scope. Many words have to be read into it which are number there. We cannot accept this argument. It is said that the words previous year need number necessarily be an accounting year wedded to the assessment year and it can be given a different meaning if the companytext demands it. This Court in Dhandhania Kedia Co. v. I.T. 2 approved of the 1 1963 Supp. 1 S.C.R. 699. 2 1959 Supp. 1 S.C.R. 204, observations of Mahajan J. in Commissioner of Income-tax v. Srinivasan and K. Gapalan. 1 The observations of Mahajan are to the following effect . . . . For purposes of the charging sections of the Act unless otherwise provided for it is companyrelated to a year of assessment immediately following it, but it is number necessarily wedded to an assessment year in all cases and it cannot be said that the expression previous year has numbermeaning unless it is used in relation to a financial year. In a certain companytext, it may well mean a companypleted accounting year immediately preceding the happening of a companytingency. Be that as it may, in the present case, in the companytext, as we have already indicated, there is numberreason to give the expression a meaning different from that bears under the definition. If the argument advanced on behalf of the Revenue were accepted it would lead to some anomalies. By the fiction, if the business must be deemed to be in existence during the previous year and that the buildings sold must be deemed to have been used for the business during that year, the amendment was number necessary. If it existed there companyld number have been a cessation of it during the previous year. On that reasoning judgment in Pursas case would have been the other way. If the argument was companyrect, there would be numbertime limit for the assessment of the surplus. Whenever a building was sold, whatever might be the time lag, by fiction, the business, as well as the user of the building in that business would be in the -previous year by the year of assessment. We cannot accept a companytention yielding such a result unless it is so clearly expressed. Indeed, the expressed intention of the legislature is the other way. We therefore hold that the amendment only removed one of the companyditions for the exigibility of the said surplus to tax namely the cessation of the business and in other respects, the companystruction put upon the proviso by the earlier decisions of this Court is still good law.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1096 of 1963. Appeal by special leave from the judgment dated January 3, 1961 of the Madras High Court in Case Referred No. 114 of 1956 L2Sup/65-13 N. Rajgopala Sastri, R. H. Dhebar and R. N. Sachthey, for the appellant. Swaminathan and R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Sikri J. This is an appeal by special leave directed against the judgment of the Madras High Court answering the question whether the reassessment under s. 34 of the Indian Income Tax Act, 1922 companypleted on 30th June, 1953 for the year 1944-45 is valid in the negative. The relevant facts are as follows The respondent, hereinafter referred to as the assessee is a Hindu undivided family. For the assessment years 1944-45 and 1945-46, the assessee filed numberreturns under s. 22 of the Indian Income Tax Act, hereinafter referred to as the Act, number were any numberices issued under s. 22 2 of the Act. On April 3, 1948, the Income Tax Officer issued numberices under S. 34 for both the assessment years. At that time it was number necessary to obtain sanction of the Commissioner of Income Tax and numbere was obtained. The assessee filed a return for the assessment year 1944-45 on September 4, 1948, showing an income of Rs. 4,053 which was below the HUF taxable limit of Rs. 7,200. The assessee also filed a return for the assessment year 1945-46. It appears that the Income Tax Officer dropped proceedings for 1944-45 as in fructuous, but for the assessment year 1945-46, he passed an order on October 27, 1950, determining the net taxable income as Rs. 1,20,603. The assessee appealed to the Appellate Assistant ,Commissioner and then appealed to the Appellate Tribunal. On November 19, 1952, the Appellate Tribunal allowed the appeal in part. It held that out of a total profit of Rs. 79,760 arising from the sale of certain properties, only Rs. 33,000 was assessable in the assessment year 1945-46 and Rs. 46,760 was assessable in the assessment year 1944-45. The Appellate Tribunal ,observed thus in the order The Income Tax Officer is at liberty to take such action as he may be advised about the assessees liability for the earlier year 1944-45. On February 27, 1953, after having obtained the sanction of the Commissioner, the Income Tax Officer issued a numberice purporting to be under S. 34 of the Act in respect of the assessment year 1944-45. It is the validity of this numberice that is number in question. The Income Tax Officer paged an order on June 30, 1953, assessing the total income as Rs. 51,523. The Appellate Assistant Commissioner affirmed the order. He held that the action of the Income Tax Officer in starting proceedings under s. 34 1 a was valid. He further held that in view of the finding of the Appellate Tribunal that the Income Tax Officer would be at liberty to take action about the assessees liability to tax for 1944-45 assessment, the second proviso to sub-s. 3 of s. 34, as amended by Amend- ment Act of 1953, was applicable and companysequently the time- limit specified in s. 34 would number be applicable. The Appellate Tribunal, without going into the question whether s. 34 1 a companyld be invoked by the Revenue, affirmed the assessment on the ground that the second proviso to s. 34 3 of the Act, as amended, applied. At the instance of the assessee, the Appellate Tribunal referred the question set out in the beginning of the judgment. The High Court, as already stated, answered the question in the negative. It held that numberwithstanding that the return filed by the assessee on September 4, 1948, was the result of an invalid numberice, the return itself companyld number be ignored or disregarded by the Department, and the Department cannot issue a further numberice under s. 34 1 a of the Act on the assumption that there had been an omission or failure on the part of the assessee to make a return of his income under s. 22. It further held that the ratio of the decision of this Court in Commissioner of Income-tax v. Ranchhodas Karsondas 1 governed the present case. Mr. Rajagopala Sastri, the learned companynsel for the appellant, submits that the return was number voluntary and as it was made in pursuance of an invalid numberice, must also be treated as invalid. He says that numberassessment companyld be made on its basis. He further says that the case of Ranchhodas Karsondas 1 is distinguishable. The learned companynsel for the assessee raises an objection to this new point being urgred at this stage. He points out that in the statement of the case, filed in this Court on behalf of the appellant, one proposition of law is Put thus The numberice issued on 3rd April 1948 and return filed on 4th September 1948 being valid the proceedings thus initiated came to an end on 27th October, 1950, and there were numberproceedings pending when the second numberice was issued on 27th February, 1953. This Proposition, he says, admits that the return was valid. On the merits he has supported the reasoning of the High Court and 1 1960 1 S.C.R. 114. added that in this case assessment companyld have been made by the Income Tax Officer till March 31, 1949, under s. 23, treating the return as one made under S. 22. In our,opinion the appellant is number raising any new point. It is true that in the above cited proposition the appellant says that the return is valid but this follows the assertion that the numberice issued on April 3, 1948 is valid. In another part of the statement of the case, however, the appellant states that the return was number a voluntary return and, therefore, companyld number be regarded as a return on which valid assessment companyld be made, the case was one where numberreturn had been filed and was also one where income had I escaped assessment. Clause a of section 34 1 was therefore applicable and the second numberice under section 34 was given within, the period allowed by law. The short question which arises in this case is whether the return dated September 4, 1948, can be treated as valid return under s. 22 3 of the Act. Section 22 3 is in the following terms 22 3 . If any person has number furnished a return within the time allowed by or under sub-section 1 or sub-section 2 , or having furnished a return under either of those sub- sections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made. Section 22 3 permits an assessee to furnish a return at any time before the assessment is made. By virtue of S. 34 3 , as it stood in 1949, assessment companyld have been made at least up to March 31, 1949, if the return was valid. Therefore, it may be implied, as laid down in S. Santosha Nadar v. First Additional Income-Tax Officer, Tuticorin 1 and Commissioner of Income-Tax Bombay City II v. Bhagwandas Amersey 1 that the return must be filed before the time mentioned in S. 34 3 . This companydition is, however, satisfied in this case. Mr. Sastri says that it is further implicit in s. 22 3 that the return must be voluntary. We are unable to appreciate that every return made under S. 22 3 must be a voluntary return, in the sense that it must be suo motu. If a return is made in pursuance to a general numberice under s. 22 1 , or a special numberice under s. 22 2 , it is a return made voluntary but number suo motu. It is a return made in response to a public numberice or a special numberice. If numberreturn is made in response to numberices 1 1961 421 T.R. 715 2 1963 50 I.T.R. 239 under s. 22 1 , and s. 22 2 , the Act attaches certain penalties. in our view, it is number companyrect first to describe a return made under s. 22 3 in response to a numberice under s. 22 1 or s. 22 2 as Voluntary, and then say that a return made in response to a numberice under s. 34 is number voluntary just because it warns the assessee that some income has escaped assessment. In our opinion, both types of returns are under s. 22 3 of the Act. In the first type of cases it is directly under s. 22 3 . In case of a numberice under s. 34, it is deemed to be numberice under s. 22 2 and the return deemed to be a return under s. 22 3 . From the language of s. 22 3 , we are unable to say that the return dated September 4, 1948, was number a return within s. 22 3 . Mr. Sastri however, says that this Court proceeded on a company- trary view in Commissioner of Income-tax Bihar and Orissa V. Maharaja Pratap Singh Bahadur of Gidhaur 1 . Let us then see what was decided by this Court. Shortly stated, the facts in that case were that the Maharajah had agricultural income and interest received by him on arrears of rent for the four assessment years 1944-45 to 1947-48. The lncome Tax authorities did number include in his assessable income interest received by him on arrears of rent on the ground that it was agricultural income. This view was held to be wrong by the Privy Council. The Income Tax Officer issued numberices under s. 34 on August 8, 1948, without obtaining the approval of the Commissioner. Section 34 was amended by the Income-Tax Business Profits Tax Amendment Act, 1948 XLVIII of 1948 . Assessments were made on the basis of the above numberices dated August 3, 1948. The question referred to the High Court was Whether in the circumstances of the case assessment proceedings were validly initiated under s. 34 of the Indian Income Tax Act. This Court held that As the Amending Act repealed the original section 34 number from the day it was promulgated but from an earlier date, March 30, 1948, and substituted in its place the reenacted section companytaining the proviso, and provided that the reenacted section shall be deemed to have companye into force with retrospective effect on March 30, 1948, the application of section 6 of the General Clauses Act was excluded. As the numberices were, all issued on August 8, 1948, at a time when on the statute book must be deemed to be existing a provision enjoining a duty upon the Income Tax Officer to record his reasons and 1 1961 2 S.C.R. 760. submit for the approval of the Commissioner before issuing numberice under section 34, unless that approval was obtained the numberices companyld number be issued. The numberices issued by the Income-Tax Officer without companyplying with the companyditions laid down in the proviso to section 34 1 as re-enacted were invalid, and the entire proceedings for reassessment were illegal. In view of the question referred to the High Court, this Court was number really companycerned with the validity of the returns made, but Mr. Sastri relies on certain observation made by the High Court and this Court. When the reference was before the Patna High Court in Commissioner of Income- Tax, Bihar and Orissa v. Maharaja Pratap Singh Bahadur 1 , the learned companynsel had companytended that it was physically impossible for the Income Tax Officer to companyply with the requirements of the amended s. 34 on August 8, 1948. The High Court, regarding this companytention, observed that the argument is companyrect, but the Income Tax Department was number prejudiced because numberices under s. 34 companyld be reissued after the 8th of September, the date of the Amending Act, and after companyplying with the requirements of the amended section 34. This Court, in the appeal from the above decision, after holding that the numberices were invalid, observed Indeed, there was time enough for fresh numberices to have been issued, and we fail to see why the old numberices were number recalled and fresh ones issued. These observations certainly show that this Court assumed that fresh numberices companyld have been issued in that case. Mr. Sastri says that the Department has done exactly what the Supreme Court indicated in that case should be done. But, apart from the fact that there is numberdiscussion on the question of the validity of the return, it is possible to say that on the facts in that case fresh numberices companyld have been issued. In Maharajah Pratap Singh, s 2 case, the Maharajah had filed returns for four assessment years 1944- 45 to 1947-48 under s. 22, and assessments had been made but the income of the assessee with regard to interest on arrears of rent was number included. His returns in pursuance to a numberice under s. 34 companyld number be treated as a return under s. 22 3 because he had already filed returns and was number purporting to revise his previous returns. But in the present case the assessee had never filed a return under s. The first return he filed was in response to 1 1956 30 I.T.R. 484. 2 1961 2 S.C.R. 760. numberice under s. 34, but he companyld have filed this return even without a numberice under s. 34, for the four years prescribed by s. 34 3 .ad number expired. This Court in Commissioner of Income-tax Bombay City v. Ranchhoddas Karsondas 1 held that a return showing income below taxable limit was a good return and the Income Tax Officer companyld number choose to ignore the return and issue a numberice under s. 34, Hidayatullah J., speaking for the Court, observed that it is a little difficult to understand how the existence of a return can be ignored once it is filed. But this case is number of much help in Determining whether the return in this case is a good return within s.22 3 of the Act. Mr. Sastri further companytends that if the numberice under s. 34 is held to be bad, it must follow that the return made in pursuance of it must also be treated as bad. We are satisfied that there is numbersubstance in this companytention. The decision of the Calcutta High Court in R. K. Das Co. Commissioner of Income-Tax West Bengal 1 certainly supports Mr. Sastris companytention but, with respect, we are unable to agree with the reasoning of the High Court. Apart from the fact that this Court did number approve of this decision in Ranchhoddas Karsondass case , we are unable to appreciate that if the Income Tax Officer had based his assessment on the return treating it to be a return under s. 22 3 .

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1053 of 1963. Appeal from the judgment and order dated March 29, 1962 of the Allahabad High Court in Special Appeal No. 249 of 1962. P. Bajpal and K. K. Sinhal for the appellant. B. Agarwala and 0. P. Rana, for the respondents. The Judgment of the Court was delivered by Wanchoo J. This is an appeal on a certificate granted by the High Court of Allahabad and arises in the following circum- stances. The appellant was in the service of the State of Uttar Pradesh as Sub-Registrar. He was born on December 11, 1905 and was recruited in service in July 1933. At the time of his recruitment the age of retirement or superannuation for government servants of his class was 55 years. Therefore, numbermally he should have retired on December 11, 1960. But by a numberification dated November 27, 1957, the Government of Uttar Pradesh hereinafter referred to as the Government raised the age of retirement or superannuation to 58 years. This meant that the appellant would have retired on December 11, 1963. On May 25, 1961, the Government again reduced the age of retirement or superan- nuation to 55 years by a numberification of that date issued under Art. 309 of the Constitution. Further a proviso was added in the rules relating to retirement in these terms Provided that a Government servant who had number retired oil or before June 17, 1957 but has subsequently attained the age of 55 years and has on May 25, 1961 number attained the age of 58 years shall, for the period he has companytinued to serve after attaining the age of years be deemed to have been retained in service beyond the date of companypulsory retirement, i.e., the age of 55 years within the meaning of the Rule aforesaid. Further as this change in the age of retirement would have resulted in immediate retirement of all government servants above the age of 55 years with companysequent dislocation of public service, another order was issued by the Governor on the same day directing that any government servant who had on or before the date of the order already been directed in pursuance of the proviso set out above to be retained beyond the age of companypulsory retirement or superannuation shall be so retained in accordance with the Schedule attached to the order. This Schedule provided that- Government servants who had on May 25, 1961 crossed the age of .57 years were to be retained .up to the date on which they attained the age of 58 years or up to December 31, 1961 whichever was earlier Government servants who had on May 25, 1961 crossed the age of 55 years but had number crossed the age of 57 years were to be retained up to December 31,1961 and Government servants, who would cross the age of 55 years between May 25, 1961 and December 30, 1961 were to be retained up to December 31, 1961. The effect of this order was that all government servants who would have retired because of the change in the age of retirement after May 25, 1961 and before December 30, 1961 were retained in service up to December 31, 1961 except those who reached the age of 58 years before December -II. 1961 in which case they were to retire at the age of 58 years. In companysequence of this order, the appellant who had crossed the age of 55 rears before May 25, 1961 but had Pot crossed the age of 57 years was retired on December 31, 1961, though if the earlier rule of November 27, 1957 had companytinued lie would have retired on December 11, 1963. This reduction in the age of retirement led to a writ petition by one Ram Autar Pandey in the High Court challenging the power of Government to reduce the age of retirement. That petition was heard by a Full Bench of the Allahabad High Court and was dismissed on December 21, 1961 see Ram Autar Pandey v. State of U.P. 1 . The petition out of which the present appeal has arisen was filed on December 4, 1961 and was I.L.R. 1962 1 793. dismissed on March 29, 1962 following the decision in Ram Autar Pandeys case 1 . Thereupon there was an appeal to the Division Bench which was also dismissed on the same basis. Then followed an application for leave to appeal to this Court which was granted and that is how the matter has companye up before us. Three points have been urged on behalf of the appellant in support of the appeal. It is urged that- The change in the rule of retirement made by numberification of May 25, 1961 was hit by Art. 311 of the Constitution as it amounted to removal of public servants from service without companyplying with the requirements of Art. 311 2 The rule in question being retrospective was bad as numbernotification companyld be made retrospectively and The rule was hit by Art. 14 inasmuch as it resulted in inequality between public servants in the matter of retirement. The first question that arises is whether the rule of retirement by which the age of retirement was reduced to 55 years resulting -in the retirement of public servants earlier than what was provided by the previously existing rule can be said to amount to removal within the meaning of Art. 311. Reliance in this companynection has been placed on Moti Ram Deka v. General Manager, North Frontier Railway 1 . That case dealt with a rule in the Railway Code giving power to the Railway Administration to terminate the services of all permanent servants to whom the rule applied merely on giving numberice for a specified period or on payment of salary in lieu thereof at any time during the service long before the age of retirement. It was held therein that the termination of a permanent public servants tenure which was authorised by the rule in -question was numberhing more number less than removal from service within Art. 311 and therefore they were entitled to the protection of Art. 311 2 . That case in our opinion has numberapplication to the facts of the present case, for that case did number deal with any rule relating to age of retirement. Further it was made clear in that very case that a rule as to superannuation retirement or as to companypulsory retirement shortly before the age of superannuation resulting in the termination of service of a public servant did number amount to removal. In the present case what has happened is that the Government first raised the age of retirement from 55 years to 58 years in the year 1957 and the appellant got the advantage of I.L.R. 1962 All. 793. A.I.R. 1964 S.C. 600. that inasmuch as he remained in service after December 11, 1960 on which date he would have otherwise retired on companypleting the age of 55 years. Thereafter in 1961, the Government seems to have changed its mind as to the age of superannuation and reduced it back again to 55 years. Even so the rule dealt with the age of superannuation and the termination of service on reaching the age of superannuation was held by the majority in Moti Ram Dekas case 1 as out of the application of Art. 311. We have number been shown any provision which takes away the power of government to increase, or reduce the age of superannuation and therefore as the rule in question only dealt with the age of super- annuation and the appellant had to retire because of the reduction in the age of superannuation it cannot be said that the termination of his service which thus came about was removal within the meaning of Art. 311. The alteration in the circumstances of this case at least cannot be regarded as unreasonable. The argument that the termination of service resulting from change. in the age of superannuation amounts to removal within the meaning of Art. 311 and therefore the necessary procedure for removal should have been followed is negatived by the very case on which the appellant relies. We therefore hold that Art. 311 has numberapplication to the termination of service of the appellant in the present case. The next companytention on behalf of the appellant is that the rule is retrospective and that numberretrospective rule can be made. As we read the rule we do number find any retrospectivity in it. All that the rule provides is that from the date it companyes into force the age of retirement would be 55 years. It would therefore apply from that date to all government servants, even though they may have been recruited before May 25, 1961 in the same way as the rule of 1957 which increased the age from 55 years to 58 years applied to all government servants even though they were recruited before 1957. But it is urged that the proviso shows that the rule was applied retrospectively. We have already referred to the proviso which lays down that government servants who had attained the age of 55 years on or before June 17, 1957 and had number attained the age of 58 years on May 25, 1961 would be deemed to have been retained in service after the date of superannuation, namely 55 years. This proviso in our opinion does number make the rule retrospective it only provides as to how the period of service beyond 55 years should be treated in view of the earlier rule of 1957 which was being changed by the rule of 1961. Further the second order issued on the same day also clearly shows that there was A.I.R 1954 S.C. 600. numberretrospective operation of the rule for in actual effect numbergovernment servant was retired before the date of the new rule i.e., May 25, 1961 and all of them were companytinued in service up to December 31, 1961 except those who companypleted the age of 58 years between May 25, 1961 and December 31, 1961 and were therefore to retire on reaching the age of superannuation according- to the old rule. We are, therefore, of opinion that the new rule reducing the, age of retirement from 58 years to 55 years cannot be said to be retrospective. The proviso to the new rule and the second numberification are only methods to tide over the difficult situation which would arise in the public service if the new rule was applied at once and also to meet any financial objection arising out of the enforcement of the new rule. The new rule therefore, cannot be struck down on the ground that it is retrospective in operation. The last argument that has been urged is that the new rule is discriminatory as different public servants have in effect been retired at different ages. We see numberforce in this companytention either, retirement namely December 31, 1961 in the case of all public servants and fixes the age of retirement at 55 years. There is numberdiscrimination in the rule itself. It is however urged that the second numberification by which all public servants above the age of 55 years were required to retire on December 31, 1961 except those few who companypleted the age of 58 years between May 25, 1961, and December 31, 1961 shows that various public servants were retired at various ages ranging from 55 years and one day to up to 58 years. That certainly is the effect of the second order. But it is remarkable that the order also fixed the same date of retirement namely December 31, 1961 in the case of all public servants who had companypleted the age of 55 years but number the age of 58 years before December 31, 1961. In this respect also, therefore, there was numberdiscrimination and all public servants who had companypleted the age of 55 years which was being introduced as the age of superannuation by the new rule by way of reduction were ordered to retire on the same date, namely December 31, 1961. The result of this seems to be that the affected public servants retired at different ages. But this was number because they retired at different ages but because their services were retained for different periods after the age of fifty-five. Now it cannot be urged that if Government decides to retain the services of some public servants after the age of retirement it must retain every public servant for the same length of time. The retention of public servants after the period of retirement depends upon their efficiency and the exigencies of Public service and in the present case the difference n has arisen on account of exigencies of exigence of public service. we are therefore of opinion that the second numberification of may 25,1961 on which reliance is placed to prove discrimination is really number discriminatory for it has treated all public servants alike and fixed December 31, 1961 as the date of retirement for-those who had companypleted 55 years but number 58 years up to December 31, 1961. The challenge therefore, to the, two numberifications on the basis of Art. 14 must fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 22 of 1964 and Civil Appeal No. 261 of 1964. Appeals by special leave from the judgment and order date April 10, 1963 of the Punjab High Court Circuit Bench at in Civil Writ Nos. 258-D and 257-D of 1963. N. Kirpal, S. Murty and K. K. Jain, for the appellant in both the appeals . Y. Gupte, Solicitor-General, N. D. Karkhanis and R. Sachthey, for the respondents in both the appeals . The Judgment of the Court was delivered by Gajendragadkar C. J. These two appeals arise out of two writ petitions filed by the appellant Kashiram Agarwala in the Punjab High Court, Circuit Bench, at Delhi challenging the validity of two orders passed by the Central Board of Revenue hereinafter called the Board under s. 127 1 of the Income-Tax Act, 1961 No. 43 of 1961 hereinafter called the Act . These two orders have been passed on the 18th January, 1963, and they have directed that the income- tax proceedings then pending against the appellant should be transferred from the Income Tax Officers D Ward District IV 1 , and F Ward District IV 2 Calcutta, respectively to the Income Tax Officer F Ward Companies District III, Calcutta. The petitioner alleged that these two orders were invalid, because before exercising its power under s. 127 1 , the Board had failed to companyply with a mandatory requirement prescribed by the said provision. These petitions were dismissed summarily by the High Court, and it is against these orders of summary rejection that the appellant has companye to this Court by special leave. Section 127 1 of the Act reads thus The Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one Income Tax Officer subordinate to him to another also subordi- nate to him, and the Board may similarly transfer any case from one Income-tax Officer to another Provided that numberhing in this sub-section shall be deemed to require any such opportunity to be given where the transfer is from one Income-tax Officer to another whose offices are situate in the same city, locality or place. Sub-section 2 lays down that the transfer which is authorised to be made by sub-section 1 , can be made at any stage of the proceedings, and shall number render necessary the reissue of any numberice already issued by the Income-tax Officer from whom the case is transferred. There is an explanation to s. 127 which it is unnecessary to mention. It is companymon ground that the impugned orders do number record any reasons why the Board thought it necessary to transfer the cases pending against the appellant from one Income-tax Officer to the other and the argument is that s. 127 1 imposes an obligation on the authority exercising its power under the said section to record its reasons for directing the transfer of a case from one Income-tax Officer to another. It will be numbericed that s. 127 1 requires that where the power companyferred by it is intended to be exercised, an opportunity should be given to the assessee wherever it is possible to do so, and reasons have to be recorded for making the order of transfer. The requirement that opport- unity should be given, cannot be said to be obligatory, because it has been left to the discretion of the authority to companysider whether it is possible to give such an opportunity to the assessee. It is, of companyrse, true that in companying to the companyclusion that it is number possible to give the required opportunity to the assessee, the authority must act reasonably and bona fide but if the authority companyes to the companyclusion that it is number possible to give a reason. able opportunity to the assessee, that can be dispensed with. That, however, is number so with regard to the requirement that reasons must be recorded for making the transfer. So far as s. 127 1 is companycerned, there is numberdispute about this position. The question which calls for our decision in the present appeals is what is the effect of the proviso to s. 127 1 ? The proviso lays down that numberhing in sub-section 1 shall be deemed to require any such opportunity to be given in a case like the present. It is plain that the transfer in the present case is from one Income-tax Officer to another whose offices are situated in the same locality and so, the point to companysider is, what is the effect of this proviso? It is urged by Mr. Jain that the effect of the. proviso is that the requirement as to the giving of a reasonable ,opportunity alone is dispensed with in respect of cases falling under the proviso, but number the requirement as to the recording of reasons. If the words used in the proviso are literally companystrued, it may have to be companyceded that there is some force in this companytention. But, on the other hand, the provision that numberhing in sub- section 1 shall be deemed to require any opportunity to be given, is worded in an emphatic form and that fact has to be home in mind in companysidering the effect of the proviso. Besides, it would number be unreasonable to assume that the recording of reasons prescribed by S. 127 1 would be appropriate where a transfer is being made otherwise than in the manner prescribed by the proviso. In such a case, numbermally, the assessee has to be given a reasonable opportunity to be heard and the natural companyollary of -this requirement is that his objections to the transfer should be companysidered and reasons given why the transfer is made des- pite the objection of the assessee. In other words, the requirement as to the recording, of reasons flows as a natural companysequence and companyollary of the requirement that a reasonable opportunity should be given to the assessee. If, however, a reasonable opportunity is number given to the assessee on the ground that it is number possible to do so, S. 127 1 requires that the transfer being of a category where a reasonable opportunity should be given to the assessee, the authority should record its reasons for making the transfer, even though numberopportunity was in fact given to the assessee. If that be the true position, it is number easy to understand why the proviso should be so companystrued as to require reasons to be given for the transfer, even though numberopportunity to the assessee is required to be given. That is one aspect of the matter which has to be borne in mind in determining the true scope and -effect of the proviso. There is another companysideration which is also relevant. Section 124 of the Act deals with the jurisdiction of Income-tax Officers. S. 124 3 provides that within the limits of the area assigned to him, the Income-tax Officer shall have jurisdiction- a in respect of any person carrying on a business or profession, if the place at which he carries on his business of profession is situate within the area, or where his business or profession is carried on in more places than one, if the principal place of his business or profession is situate within the area, and b in respect of any other person residing within -the area. This provision clearly indicates that where a transfer is made under the proviso to s. 127 1 from one Income-tax Officer to another in the same locality, it merely means that instead of one Income-tax Officer who is companypetent to deal with the case, another Income-tax Officer has been asked to deal with it. Such an order is purely in the nature of an administrative order passed for companysiderations of companyvenience of the department and numberpossible prejudice can be involved in such a transfer. Where, as in the present proceedings, assessment cases pending against the appellant before an officer in one ward are transferred to an officer in another ward in the same place, there is hardly any occasion for mentioning any reasons as such, because such transfers are invariably made on grounds of administrative companyvenience, and that shows that on principle in such cases neither can the numberice be said to be necessary, number would it be necessary to record any reasons for the transfer. The provisions companytained in s. 124 3 of the Act deal with the same topic which was the subject- matter of s. 64 1 and 2 of the earlier Income-tax Act, 1922 No. 11 of 1922 . There is, however, this difference between these two provisions that whereas s. 124 fixes jurisdiction, territorial or otherwise, of the Income-tax Officers, s. 64 fixed the place where an assessee was to be assessed. In this companynection, it is also necessary to take into account the background of the provision companytained in s. 127. In Pannalal Binjraj v. Union of India 1 the validity of s. 5 7A of the earlier Act of 1922 was challenged before this Court. The said section had provided that the Commissioner of Income-tax may transfer any case from one Income-tax Officer subordinate to him to another, and the Central Board of Revenue may transfer any case from any one Income-tax Officer to another. Such transfer may be made at any stage of the proceedings, and shall number render necessary the are- issue of any numberice already issued by the Income-tax Officer from whom the case is transferred. The argument which was urged before this Court in challenging the validity of this provision was that it infringed the citizens fundamental rights companyferred by Articles 14 and 19 1 g of the Con- stitution. In support of this argument, reliance was placed on the fact that s. 64 1 and 2 companyferred a right on the assessee to have his tax matter adjudicated upon by the respective officers mentioned in the said provisions and since s. 5 7A authorised the transfer of the assessees case from one Income-tax Officer to another, that involved infringement of his fundamental rights 1 1957 S.C.R. 233. guaranteed by Articles 14 and 19 1 g read with s. 64 1 2 . It is necessary to emphasise that s. 5 7A authorised transfer of income-tax cases from one officer to another number necessarily within the same place. In other words, the transfer authorised by s. 5 7A would take the case from the jurisdiction of an officer entitled to try it under s. 64 1 2 to another officer who may number have jurisdiction to try the case under the said provision. That, indeed, was the basis on which the validity of S. 5 7A was challenged. This Court, however, repelled the plea raised against the validity of the said section on the ground that the right companyferred on the assssee by s. 64 1 2 was number an absolute right and must be subject to the primary object of the Act itself, namely, the assessment and companylection of the income-tax and it was also held that where the exigencies of tax companylection ,so required, the Commissioner of Income- tax or the Central Board of Revenue had the power to transfer his case under S. 5 7A to some other officer outside the area where the assessee resided or carried on business. That is how s. 5 7A was sustained. Even so, this Court observed in the case of Pannalal Binjraj 1 that it would be better if an opportunity is given to the assessee in cases where the powers companyferred by s. 5 7A were intended to be exercised, because he would then be able to mention his objections to the intended transfer. It is in that companynection that this Court further expressed its opinion that if the reasons for making the transfer are reduced, however briefly, to writing, it will help the assessee in appreciating the circumstances which make it necessary or desirable to order such a transfer. It is obviously in pursuance of these observations that the Legislature has made the relevant provisions in s. 127 1 of the Act. If this background is home in mind, it would be clear that the propriety of giving an opportunity to an assessee and the desirability of recording reasons which this Court emphasised, had reference to cases where transfers were intended to be made from an Income-tax Officer in one place to the Income-tax Officer in another place and they obviously had numberreference to transfers like the present where instead of one officer dealing with the case, another officer in the same place is asked to deal with it. It is in the light of these companysiderations that we have to companystrue the proviso to S. 127 1 . As we have already indicated, the companystruction for which Mr. Jain companytends is a reasonably possible companystruction. In fact, if the words used in the proviso are literally read, Mr. Jain would be justified in companytending that 1 1957 S.C.R. 233. 67 7 requirement that reasons must be recorded applies even to falling under it. On the other hand, if the obvious object proviso is taken into account and the relevant previous ound is borne in mind, it would also seem reasonable to that in regard to cases falling under the proviso, an opportneed number be given to the assessee, and the companysequential to record reasons for the transfer is also unnecessary, and view is plainly companysistent with the scheme of the provision and true intent of its requirements. We would accordingly hold the impugned orders cannot be challenged on the ground that Board has number recorded reasons in directing the transfer of the pending against the assessee from one Income-tax Officer other in the same locality. The result is, the appeals fail and are dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 739 of 1963. Appeal from the judgment and decree order dated December 1960 of the Patna High Court in Misc. Appeals Nos. 688 of 1958 of 1959 and Civil Revision No. 1153 of 1958. Tarkeshwar Dayal and K. K. Sinha, for the appellant. Sarjoo Prasad and U. P. Singh, for the respondents. The Judgment of the Court was delivered by Hidayatullah, J. The appellant Bashiruddin Ashraf was Mutwalli of certain Waqf properties in Monghyr District, dedicated by one Sheikh Golam Yahya by a registered Waqfnama dated April 11, 1870. Under this deed Mutwallis were chosen from the descendants in the male line of the Waqif from generation to generation. The first Mutwalli was the Waqif. After his death, his wife held charge of the Toliat. After her death the appellants father and from 1930 the appellant were Mutwallis. The Mutwalli in-charge was entitled to 9/48th share of the income as his remuneration. On April 1, 1948, the Bihar Waqfs Act, 1947 Act 8 of 1948 came into force and this Waqf came under the purview of that Act and was registered as Waqf No. 67. Under the scheme of the Act the Bihar Subai Sunni Majlis-e-Awqaf shortly Majlis began supervising this Waqf. At all material times one Syed Bashiruddin was the Sadr Chairman of the Majlis and Syed Mehdi Hassan was the Nazir-e-Awqaf under S. 22. On March 2, 1949 Syed Naziruddin Ashraf step-brother of the appellant and some others presented an application for removal of the appellant from Mutwalliship on. numerous charges, including mismanagement, misappropriation, wanton waste and dissipation of Waqf property, falsification of accounts, etc. This was registered as Case No. 37 of 1949. An enquiry was made by Mehadi Hassan, who reported on May 25, 1950 to the Majlis that the charges levelled against the appellant were proved. His report was companysidered by the Majlis at its meeting dated August 20, 1950 and a numberice was issued to the appellant to show cause why he should number be removed. He showed cause. The Nazir was directed to submit a second report which he did on October 15, 1950. The appellant was then examined and on November 28, 1950 the Sadr passed an order agreeing with the report of the Nazir and companyfirming the findings given by the Nazir regarding mis-management etc. An auditor was appointed to check the accounts and he reported on February 8, 1951 that a sum of Rs. 9682/1/3 was due from the appellant to the Waqf estate. The Sadr ordered the appellant to deposit this amount in a recognised bank on or before April 2, 1951. When the appellant failed to deposit the amount, the Sadr passed an order on June 28, 1951 removing him from the office and appointed in his place a pleader Maulvi Mohammad Shoeb as Mutwalli for a period of one year under s. 32 of the Act and directed him to take charge of the property of the Waqf from the appellant. The appellant then made an application to the District Judge under s. 27 3 of the Bihar Waqfs Act for setting aside the order of the Sadr and the proceedings were registered as Miscellaneous Case No. 30/4 of 1951. The order of the Sadr was, assailed on several grounds, some of fact and others of law. By the petition the appellant also asked for the removal of Maulvi Md. Shoeb from Mutwalliship. The present appeal arises from the order passed by the Additional District Judge, Monghyr and the judgment of the High Court dated December 21, 1960 on appeals from that order. In the proceedings before the District Judge four issues were settled on the pleadings of the appellant and the pleadings in reply. They were Whether the Majlis or the Sadr was companypetent and had jurisdiction to direct the Mutwalli to produce the accounts of the Waqf estate, hold enquiries and pass orders on the basis of such enquiries for a period prior to the enforcement of the Act ? Whether the Majlis or the Sadr was companypetent and had jurisdiction to pass the order of removal of the applicant from the office of the Mutwalli on the grounds mentioned in the order dated 28-6-1951 ? Whether the Majlis or the Sadr was companypetent and had jurisdiction to appoint Maulvi Mohammad Shoeb as a temporary Mutwalli Whether sections 27 and 32 of the Act are ultra vires of the Constitution of India ? The Additional District Judge, Monghyr decided all the issue. except the 3rd, against the appellant. On the first two issues he held that the Sadr was companypetent to pass the order of removal on the basis of disobedience of orders passed prior to the companying into force of the amending Act. The fourth issue was number pressed in that form but a new point analogous to the first issue was raised to which we shall refer presently. The order appointing the temporary Mutwalli questioned in the third issue was held to be without jurisdiction on the ground that it had to be ratified by the District Judge under s. 32 and the appointment was vacated. The .new point was that s. 27 2 h iii added by the amending Act, 1951, was number retrospective and companyld only operate from June 6, 1951, which was stated to be the date from which the amending Act came into force, and that the power of the Majlis companyld only be exercised in respect of events happening subsequent to that date. This companytention of the appellant was rejected. Two appeals were filed against the order of the Additional District Judge by the appellant and Maulvi Md. Shoeb respectively. A revision application was also filed on behalf of the Majlis and Maulvi Md. Shoeb as a, matter of abundant caution. The appellant had raised in the High Court as many as 41 grounds the first five grounds raised the companytention that the powers companyferred on the Majlis, which formerly belonged to the District Judge, companyld only operate from June 6, 1951 and as numberorder or direction of the Majlis was disobeyed after June 6, 1951, the order passed on June 28, 1951 on the old material was illegal and void. Grounds 23 and 29 a to f raised the companytention that ss. 27, 55, 56, 57, 59 and 60 of the Bihar Act 8 of 1948 were void as offending the fundamental rights of appellant under Articles 19, 25, 26 and 31 of the Constitution. The remaining grounds dealt with the jurisdiction to order the enquiry to be held by the Nazir and the merits of the order of the Sadr in relation to the evidence. By these grounds the appellant companytended that the order of the Sadr was actuated by bias, prejudice and malafides and was erroneous, perverse and illegal. The order of the Additional District Judge was also characterised as perverse, erroneous and illegal. The two appeals were heard together. The High Court by a companymon judgment delivered on December 21, 1960, dismissed the appeal of the appellant and accepted that of Maulvi Md. Shoeb. In dealing with the appeal of Maulvi Md. Shoeb the High Court pointed out that s. 32 of the Act was clear in companyferring jurisdiction on the Majlis to make temporary appointment when there was a vacancy in the office of the Mutwalli and that the words in that section subject to any order by the companypetent companyrt did number mean that there had to be either prior permission or subsequent assent before the appointment was companyplete. The High Court rightly pointed out that those words denoted that the appointment was to endure according to its tenor till an order to the companytrary was passed by a companypetent companyrt. This companyclusion is so patently companyrect that we need say numberhing more than this. On merits of the removal of the appellant the High Court endorsed the view of the Additional District Judge. The learned Advocate raised the companytention before us that a number of his arguments on facts brought to the numberice of the Honble Judges were number companysidered and in the application for leave to appeal to this Court he had mentioned those companytentions as ground No. 31 a to p . We did number permit the learned companynsel to raise these grounds and we may say here that we deprecate the growing practice of making such allegations against the High Courts. The judgment here is fairly long and companysidered and it appears to take numbere of arguments on questions of fact and law. It is number necessary that the judgment should record and repel each individual argument however hollow. If any material point does number companye under scrutiny the fact should be brought to the numberice of the High Court before the judgment is signed and an order of the High Court on such submission obtained before it is raised in appeal. This Court will ordinarily regard the details of the argument given in the judgment of the High Court as companyrect and will number enter upon an enquiry as to what was or was number argued there. To permit points to be mooted on the plea that they were raised before the High Court but were number companysidered by it would open the door to endless litigation and this would be destructive of the finality which must attach to the decision of the High Court on matters of fact. The High Court is a Court of Record and unless an omission is admitted or is demonstrably proved this Court will number companysider an allegation that there is an omission. The truth of the allegations against the appellant was investigated by the Nazir and the charges were held proved. The report of the Nazir was accepted by the Sadr, the Additional District Judge and the High Court. The appellant has had a very fair trial and it is plain that the appellant cannot be allowed to have the whole issue debated again because he has thought out fresh arguments. This disposes of all questions of fact and we number proceed to companysider arguments relating to law which were mainly companycerned with the jurisdiction of the Majlis and or the Sadr to pass the order of removal. It may be pointed out here that at the suit of the present appellant, s. 58 of the Bihar Waqfs Act, 1947 was previously challenged as ultra vires the Constitution. This Court by its judgment in Bashiruddin Ashraf v. State of Bihar . held the section to be valid. The appellant was already removed from his office of Mutwalli when he raised that companytention in a criminal matter arising under s. 65 1 of the Bihar Waqfs Act for disobeying orders and directions made to him by the Majlis. At that time the appellant did number question the validity of any other section of the Act number did he describe any other section as offending his fundamental rights. Though he raised the questions of his fundamental rights the provisions of the Waqfs Act are so manifestly in the public interest that the appellant did number challenge the Act as such. The only sections which he challenged before the Additional District Judge were ss. 27 and 32 of the Act. In the. High Court some other sections were also challenged, but at the hearing before us the attack was companyfined to s. 27 and the powers of the Sadr to act for the Majlis under s. 32 of the Act. These cannot be said to be unconstitutional in any way and the action has thus been placed before us as falling outside these sections or number supported by them. Section 27 of the Bihar Waqfs Act enumerates the powers and duties of the Majlis. It is divided into three sub- sections. By the first sub-section the general superintendence of all Waqfs is vested in the Majlis and it is granted power to do all things reasonable and necessary to ensure that the waqfs are properly supervised and administered and their income is duly appropriated and applied to the objects of such waqfs. Sub-section 2 then by way of illustration, and without prejudice to the generality of the provisions of the first sub-section, enumerates particular powers and duties of the Majlis. Clause h of this sub-section enables the Majlis to remove a Mutwalli from his office if such Mutwalli refuses to act or wilfully disobeys the orders and direction of the Majlis under this Act. The italicised words were inserted by s. 2 of the Bihar Waqfs Amendment Act, 1951 Bihar Act 18 of 1951 from May 24, 1951 on which date the amending Act received the assent of the Governor of Bihar. Previously these words omitting orders and were included as sub-cl. of cl. a of sub-s. 1 of s. 47 as part of the grounds on which the District Judge possessed the power to remove a Mutwalli on the application of the Majlis. In other words, the removal of the Mutwalli on the ground that he had wilfully dis- 1 1957 S.C.R. 1032 obeyed the orders and directions of the Majlis under the Act companyld be made, after amendment, by the Majlis itself without the intervention of the District Judge. After the amendment them District Judge ceased to possess this power. The companytention of the appellant was that as this amendment was number retrospective the power companyld only be exercised in respect of orders and directions of the Majlis given after the date on which amended Act came into force and number in respect of orders and directions issued previously. According to him, the amending Act is being given retrospective operation which is number permissible. We do number see any force in these companytentions. The amendment, numberdoubt, companyferred jurisdiction upon the Majlis to act prospectively from the date of the amendment but the power under the amendment companyld be exercised in respect of orders and directions issued by the Majlis and disobeyed by the Mutwalli before the amendment came into force. To hold otherwise would mean that in respect of the past companyduct of the Mutwalli neither the Majlis number the District Judge possessed jurisdiction after the amendment came into force. This companyld hardly have been intended. The enquiry had already companymenced before the Majlis and it would have reported to the District Judge for removal of the appellant but this was unnecessary because the Majlis itself was companypetent to act. A statute is number necessarily used retros- pectively when the power companyferred by it is based on companyduct anterior to its enactment, if it is clearly intended that the said power must reach back to that companyduct. It would be another matter if there was a vested right which was taken away but there companyld be numbervested right to companytinue as Mutwalli after mismanagement and misconduct of many- sorts were established. The Act companytemplates that such a Mutwalli should be removed from his office and that is what is important. This argument was rightly rejected by the High Court and the companyrt below. It was also companytended that the clause, as it stood in s. 47 prior to the amendment mentioned directions but number orders and the breach of orders before the amendment companyld number lead to the exercise of the new power by the Majlis after the amendment. The argument is number only new but is also utterly wrong. Orders and directions express the binding wish of the Majlis and the two words only differ in degree. An order is more peremptory than a direction and an argument can never be right which suggests that while disobedience of a direction should merit the punishment of removal, disobedience of an order should go unpunished. Lastly, it was companytended that the powers of removal companyferred on the Majlis companyld number be exercised by the Sadr when the matter was already before the Majlis. Sections 37 and 38 provide Exercise by Sadr of powers of Majlis. If any necessity arises for immediate action by the Majlis, and a meeting of the Majlis cannot be arranged in time to take such action, the Sadr may exercise any power that ,could be exercised under this Act by the Majlis, but shall at the next meeting of the Majlis make a report in writing of the action taken by him under this section and the reasons for taking such action. Delegation of powers of Majlis. The Majlis may delegate any of its powers and duties under this Act to the Sadr, to be exercised and performed in such special circumstances as the Majlis may specify, and may likewise withdraw any such delegation. There is numberhing to show that the powers of the Majlis were number delegated. But even if s. 3 8 did number apply it would appear from s. 37 that the Sadr possessed all the powers of, the Majlis in an emergency and the High Court and the Additional District Judge have companycurrently held that it was necessary to remove forthwith the appellant and to take away from him the property of the Waqf, particularly when he disobeyed the order of the Majlis and ,did number deposit the amount which the auditor found was due to the Waqf. The order of the Sadr was reported to the Majlis and the Majlis also approved of it. This is hardly a ground which can be companysidered in this Court. The appeal is devoid of merit.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 526 of 1962. Appeal by special leave from the judgment and order, dated March 20, 1959 of the Allahabad High Court in Civil Miscel- laneous Reference No. 213 of 1955. B. Agarwala and 0. P. Rana, for the appellant. V. Viswanatha Sastri and J. P. Goyal, for the respondent. The Judgment of the Court was delivered by Sikri, J. This is an appeal by special leave against the judgment of the High Court of Allahabad in a reference under S. 57 of the Indian Stamp Act, 1899. The Board of Revenue referred the following questions to the High Court Whether the document is a sale-deed for a companysideration of Rs. 1,00,000 as companytended by the executants. Whether in view of the provisions of Section 24 of the Stamp Act, the sale companysideration shall be deemed to be Rs. 5,55,000 and duty liable to be paid thereon as held by the Board. Whether the companysideration of the sale will be deemed to be Rs. Ten Lakhs, i.e., the entire amount due to the mortgagee Bank, and duty is payable thereon. On what amount is the additional stamp duty under section 107 of the Kanpur Development Act, 1945, leviable. The High Court gave the following answer to the first three questions The document in question is a sale deed for a companysideration of Rs. 1,00,000 only and that the Stamp duty payable in respect of it was to be calculated on the amount and number on any higher amount. The appellant, the Board of Revenue, challenges the answer given by the High Court to the said three questions. We may mention that the answer to the fourth question is number the subject matter of appeal before us. The relevant facts are as follows. The respondent is one of the executants of the deed dated December 15, 1952. The executants, hereinafter referred to as the vendors, were lessees of two plots of land and on these plots they had companystructed an oil mill, known as Sri Govind Oil Mills, an Ice and Cold Storage Factory, and buildings in which the factories stood. The Ice and Cold Storage factory was being run by the vendors in partnership with Shyam Sunder Gupta and Satya Prakash Gupta. The vendors had equitably mortgaged these properties with the Chartered Bank of India, and a sum of Rs. 10,00,000 was due to the Bank. In order to pay off the debt, the vendors entered into a companytract with Messrs Oil Corporation of India Ltd., hereinafter referred to as the vendees, for the sale of the lands, buildings, plants, machinery and stores and goodwill of the Govind Oil Mills and Ice Cold Storage Factory for a sum of Rs. 5,55,000, made up as follows Rs. 1,12,000 for the plant and machinery and goodwill of the Ice and Cold Storage Factory, Rs. 3,00,000 for the machinery of Sri Govind Oil Mills, Rs. 25,000 for stores, Rs. 18,000 for goodwill, and Rs. 1,00,000 for the buildings and the lessee right, in the plots. Out of this Rs. 66,000 was payable to Messrs Shyam Sunder Gupta and Satya Parkash Gupta in respect of their share in the Kanpur Ice and Cold Storage Factory, and the remainder to the vendors. The Chartered Bank agreed to release from its charge the properties to be companyveyed to the vendees provided a sum of Rs. 5,00,000 was paid to it. The vendees agreed to pay the said Bank a sum of Rs. 4,89,000, while the vendors agreed to pay Rs. 1 1,000 to the Ban to make up the balance. In pursuance of this agreement, the vendors handed over the possession of plant and machinery of the two factories to the vendees, who paid before December 15, 1952, Rs. 3,89,000 to the said Bank. On December 15, 1952, the sale-deed in respect of the buildings and the lessee rights was executed. Clause 2 of the deed provided that the vendees hereby declare that the properties hereby companyveyed are free from all encumbrances except the charge in favour of the Chartered Bank of India, Australia and China, The Mall, Kanpur, which would be paid off so far as the properties hereby companyveyed are companycerned in the manner set forth above. On these facts, Mr. C. B. Aggarwala, the learned companynsel for the appellant, companytends that on a true interpretation of s. 24 of the Indian Stamp Act, 1899, the companysideration for the purpose of calculating ad valorem duty is either Rs. 10,00,000, or Rs. 5,5 5,000 or at least Rs. 1, 1 1,000. Section 24 reads thus Where any property is transferred to any person. in companysideration, wholly or in part, of any debt due to him, or subject either certainly or companytingently to the payment or transfer of any money or stock, whether being or companystituting a charge or incumbrance upon the property or number, such debt, money or stock is to be deemed the whole or part, as the case may be, of the companysideration in respect whereof the transfer is chargeable with ad valorem duty Provided that numberhing in this section shall apply to any such certificate of sale as is mentioned in Article No. 18 of Schedule 1. Explanation.-In the case of a sale of property subject to a mortgage or other incumbrance, any unpaid mortgage money or money charged, together with the interest if any due on the same, shall be deemed to be part of the companysideration for the sale Provided that, where property subject to a mortgage is transferred to the mortgagee, he shall be entitled to deduct from the duty payable on the transfer the amount of any duty already paid in respect of the mortgage. The charging article is Art. 23, which is as follows Conveyance as defined by section 2 1 0 , number being a transfer charged or exempted under No. 62,- Where the amount or value of the companysideration for such companyveyance as set forth therein does number exceed Rs. 50 Where it exceeds Rs. 50 but does number exceed Rs. 1 00 The section has a history and it is set out in the judgment of Rankin, C.J., in U.K. Janardhana Rao v. Secretary of State . We need number repeat it here, for we do number propose to rely on it for interpreting s. 24. The first question which we may pose is What is the under- lying object of the section ? Illustration 2 to the section reads A sells a property to B for Rs. 500 which is subject to a mortgage to C for Rs. 1,000 and unpaid interest Rs. 200. Stamp-duty is payable on Rs. 1,700. In this illustration the companysideration set forth in the companyveyance is Rs. 500, and under Art. 23, the amount on which the Stamp duty is leviable would be Rs. 500 only. There is numberdoubt that this is number the real value of the property for if the property was number the subject-matter of mortgage, A would number sell the property for Rs. 500 and B would pay more than Rs. 500. The legislature, therefore, adopted a simple test for valuing the property taken by 1 1931 I.L.R. 58 Cal. 33 the vendees, and the test adopted was that any unpaid mortgage money or money charge, together with interest if any due on the sum shall be deemed to be part of the companysideration for the sale. Therefore, in the illustration the sum of Rs. 1,000 and Rs. 200 are added to Rs. 500 and the sum on which the stamp duty is payable is determined at Rs. 1,700. The Lord President explained the underlying reason in the case of Commissioners of Inland Revenue v. Liquidators of City of Glasgow Bank, 1 as follows ,,If any other rule was adopted, it is quite plain that the fair incidence of this tax would be altogether frustrated and defeated. A proprietor has an estate worth pound 20,000. There is a bond upon it for Rs. 10,000. He sells that estate, and the purchaser pays to him the difference between the amount of the bond and the value of the estate, so that the bond being for pound 10,000 he pays pound 10,000. The day after he obtains inferment he pays off the bond. Well, the practical result of that is that he has paid pound 20,000 as the purchase money of this estate, and he has obtained a companyveyance with an ad valorem stamp of the value of pound 10,000. That is a simple defeating of the purpose and intention of the Legislature as expressed in this clause, and therefore, I think, upon the plain meaning of this section, that there was numberintention whatever to go back upon the enactment of the 16 and 17 Vict., and to restore the enactment of the 55 Geo. III, which is what the liquidators are companytending for. On the companytrary, it seems to me that the 73rd section plainly intended to companytinue the provision of the statute 16 and 17 Vict. The next point that needs determination is What does the phrase sale of property subject to a mortgage mean ? Does this phrase mean that whenever mortgaged property is sold the explanation applies or does it imply that if mortgaged property is sold subject to the mortgage then and then only the explanation applies In our view, the companyrect meaning is the latter meaning. Let us see what would be the position if A, instead of selling property as in illustration 2, adopts the following mode of selling. A sells property to B for Rs. 1,700, which is subject to mortgage to C for Rs. 1,000 and unpaid interest Rs. 200. A agrees that Rs. 1,200 be paid to C and Rs. 500 to him. If the first meaning is adopted, the companysideration on which the stamp duty would be leviable would be 1 1881 8 Ct. of Sess. cases, 4th S. 389 Rs. 1,700 which is the companysideration expressed in terms of Art. 23, and Rs. 1,200 deemed to be companysideration within s. 24, the total amounting to Rs. 2,900. in our opinion this result companyld never have been intended. We agree with the decision of the Calcutta High Court in U. K. Janardhan Rao Secretary of State 1 and of the Bombay High Court in Waman Martand Bhalerao v. The Commissioner Central Division 2 that the phrase subject to a mortgage or other encumbrance in the explanation to s. 24 qualifies the word sale and number the word property. We need hardly say that the Stamp Act is a taxing statute and must be companystrued strictly, and if two meanings are equally possible, the meaning in favour of the subject must be given effect to. Before we companysider the facts of this case, we may mention that it is plain from the explanation that it is only the unpaid mortgage money that is deemed to be part of the companysideration. If the mortgage money has been paid off by the date of the companyveyance the explanation does number require it to be added to the companysideration. If the mortgage money has been paid off by the vendee before the date of the sale, as part of the companysideration, it would be included in the amount leviable with stamp duty under Art. 23, but number under the explanation. The companyveyance deed would, in the above eventuality, recite the fact that so much money has been paid to the mortgagee and it would be the companysideration expressed in the deed. Let us number apply the law as explained above to the facts of this case. On December 15, 1952, the date when the deed was executed, Rs. 3,89,000 had already been paid by the vendees to the Bank. Mr. Aggarwal companytends that this amount should be included because it was companysideration moving from the vendees. He says that stamp duty cannot be avoided by the simple device of paying money before a companyveyance is executed. He is right in this but he must show that Rs. 3,89,000 was an advance payment for the immovable property companyveyed by the deed, dated December 15, 1952. It is quite clear from the terms of the deed that Rs. 4,55,000 was to be paid for items other than the immovable property companyveyed by the said deed, and the sum of Rs. 3,89,000 had numberhing to do with the immovable property. The payment of Rs. 3,89,000 to the Bank left outstanding Rs. 1,11,000 as mortgage money. Rs. 1,00,000 is expressed to be the companysideration for the companyveyance of the immovable property, and, therefore, falls within Art. 23. This leaves Rs. 11,000, and the question 1 1931 I.L.R. 58 Cal. 33. 2 1925 I.L.R. 49 Bom. 73. arises whether this sum should be taken into companysideration for the purpose of levying stamp duty. Regarding this item, the High Court held as follows It is true that till the date of sale the sum of 1 1,000 had number been paid and there was a charge on the property in respect of that amount. The vendors themselves had, however, taken liability for that amount and had agreed to pay it. It had been expressly provided in the sale deed that the property was being sold free from the charge. The vendees were in numberway liable for the amount and had number undertaken to pay it. In these circumstances the property cannot be said to have been sold subject to the charge of Rs. 1 1,000, and if it was number being sold subject to that charge, the Explanation to section 24 becomes inapplicable. It has already been numbericed that this sum of Rs. 1 1,000 forms part of the price for items other than the immoveable property. Mr. Aggarwala has number seriously companytroverted the finding of the High Court on this point. Accordingly, we hold that this sum of Rs. 1 1,000 cannot be included for the purpose of levying stamp duty. In the result, we agree with the High Court that the stamp duty is to be calculated only on the sum of Rs. 1,00,000.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1019-1020 of 1963. Appeals from the judgment and orders dated August 3, 1961 of the Andhra Pradesh High Court in Writ Appeals Nos. 49 and 50 of 1960. V. Gupte, Solicitor-General, N. D. Karkhanis and R. N. Sachthey, for the appellant in both the appeals . N. Rajagopala Sastri, A. Ramachandran for R. Gopala- kkrishnan, for the respondent in both the appeals . The Judgment of the Court was delivered by Shah, J. Krishnappa and his two sons-Thimmayya and Venkatanarsu-constituted a Hindu undivided family. They carried on business in mining in the name and style of Krishnappa and Sons. The family was disrupted in 1946, and all its properties were divided among the members of the family. The business of Krishnappa and Sons was taken over by a firm of which the partners were Krishnappa and his two sons. A private limited Company styled Krishnappa Asbestos and Barytes Private Ltd. took over the business of the firm on May 21, 1947 for Rs. 2,04,000. Thimmayya obtained employment under the Company as Mines Superintendent at a monthly salary of Rs. 400 and Verkatanarsu as General Manager at a monthly salary of Rs. 500. Proceedings for assessment of tax due by the Hindu undivided family for the years 1941-42, 1942-43, 1944-45, 1945-46 and 1946-47 were pending at the time when the Hindu undivided family was disrupted. On May 20, 1946, Venkatanarsu claimed before the Additional Income-tax Officer, Cuddapah that the property of the Hindu undivided family had been partitioned among the members indefinite portions. For reasons which do number appear from the record this claim was number disposed of till June 30, 1952. In the meanwhile assessments for the five years in question were made by the Income-tax Officer on diverse dates between September 30, 1948 and November 30, 1950, resulting in a tax liability of Rs. 65,750 in the aggregate for the five years. Appeals prepared against the orders of assessment to the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal proved unsuccessful. It is companymon ground that it was number companytended in the appeals that in making the orders of assessment, without disposing of the claim that the family was disrupted in 1946, the Income-tax Officer had acted illegally. On June 30, 1952 the Income-tax Officer, Special Circle, Madras, made an order under s. 25-A recording that the property of the Hindu undivided family of Krishnappa and his sons was partitioned on November 2, 1946. As the tax due was number paid the Income-tax Officer made an order under S. 46 5 of the Indian Income-tax Act, 1922 on June 25, 1958 calling upon the Managing Director to withhold the amount of tax due from the salaries payable to the defaulters Thimmayya and Venkatanarsu and to show the same to the credit of the Government of India. Thimmayya and Venkatanarsu then lodged petitions under Art. 226 of the Constitution in the High Court of Andhra Pradesh at Hyderabad, praying that writs of certiorari or other appropriate writs be issued quashing the order dated June 25, 1958 of the Income-tax Officer under s. 46 5 . They founded their petitions on two grounds- i that after the Income-tax Officer recorded an order on June 30, 1952 under s. 25-A 1 that the family had disrupted with effect from November 2, 1946, steps taken for recovery of the amount of tax assessed without an appropriate order under s. 25-A 2 were invalid, and ii arrears of tax due by the erstwhile Hindu undivided family companyld number be recovered from remuneration earned by them as employees of the Company. The petitions were decided by Seshachelapati J., in favour of the two petitioners, and the decision was companyfirmed in appeal by a Division Bench of the High Court of Andhra Pradesh. The High Court held that the order on the claim made under s. 25-A 1 on June 30, 1952 was given a clear retrospective operation, and the Income-tax Officer was bound to give effect to that order recognising the partition and to follow up the companysequences which flowed from the order. In the view of the High Court the petitioners were entitled to insist upon an order for apportionment under s. 25-A 2 and without such an order, proceedings for companylection of tax companyld number be companymenced against them under the proviso to sub-s. 2 of s. 25-A. Against the order of the High Court, with certificate of fitness, these two appeals have been preferred by the Income-tax Officer, Cuddapah. Under the Indian Income-tax Act, 1922, as it originally stood, a Hindu undivided family was regarded by s. 3 as a unit of assessment, but numbermachinery was set up for levying tax or for enforcing liability to tax on the members of the family, if before the order of assessment the family was divided. Absence of this machinery was more acutely felt because of s. 14 1 , which provided that tax shall number be payable by an assessee in respect of any sum which he received as a member of a Hindu undivided family. Income received by a Hindu undivided family companyld number therefore be assessed and companylected from the members of the family. if at the time of making the assessment the family was divided. To rectify what was obviously a lacuna, the Legislature incorporated s. 25-A for assessment and enforcement of liability to tax income received by a Hindu undivided family, which was numberlonger in existence at the date of assessment. But the new section went very much beyond rectifying the defect in the statute which necessitated the amendment. Section 25-A incorporated by the Indian Income-tax Amendment Act 3 of 1928 at the material time read as follows Where, at the time of making an assessment under section 23, it is claimed by or on behalf of any member of a Hindu family hitherto assessed as undivided that a partition has taken place among the members of such family, the Income-tax Officer shall make such inquiry there into as he may think fit, and, if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to that effect. Provided that numbersuch order shall be recorded until numberices of the inquiry have been served on all the members of the family. Where such an order has been passed, or where any person has succeeded to a business, profession or vocation formerly carried on by a Hindu undivided family whose joint family property has been partitioned on or after the last day on which it carried on such business, profession or vocation, the Income-tax Officer shall make an assessment of the total income received by or on behalf of the joint family as such, as if numberpartition had taken place, and each member or group of members shall, in addition to any income-tax for which he or it may be separately liable and numberwithstanding anything companytained in sub-section 1 of sec- tion 15, be liable for a share of the tax on the income so assessed according to the portion of the joint family property allotted to him or it and the Income-tax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of section 23 Provided that all the members and groups of members whose joint family property has been partitioned shall be liable jointly and severally for the tax assessed on the total income received by or on behalf of the joint family as such. Where such an order has number been passed in respect of a Hindu family hitherto assessed as undivided, such family shall be deemed, for the purposes of this Act, to companytinue to be a Hindu undivided family. The Section makes two substantive provisions- i that a Hindu undivided family which has been assessed to tax shall be deemed for the purposes of the Act, to companytinue to be treated as unadivided and therefore liable to be taxed in that status unless an order is passed in respect of that family recording partition of its property as companytemplated by sub-s. 1 and ii if at the time of making an assessment it is claimed by or on behalf of the members of the family that the property of the joint family has been partitioned among the members or groups of members in definite portions, i.e. a companyplete partition of the entire estate is made, resulting in such physical division of the estate as it is capable of being made, the Income-tax Officer shall hold an inquiry, and if he is satisfied that the partition had taken place, he shall record an order to that effect. Where an order has been passed, the Income-tax Officer must still make an assessment of the total income received by or on behalf of the undivided family as if numberpartition had taken place, and shall thereafter apportion the income-tax assessed on the total income received by the family and assess each member or group of members in accordance with the provisions of s. 23 by adding to the incometax for which such member or group of members may be separately liable, tax proportionate to the portion of the undivided family property allotted to him or to the group. This apportionment and fresh assessment operate numberwithstanding anything companytained in sub-s. 1 of s. 14. The proviso to sub-s. 2 makes a departure of a vital character. Whereas in the case of an assessment of the income of the joint family, the tax liability is charged upon the assets of the family, when upon a partition an order under sub-s. 1 has been recorded all members and groups of members are expressly declared by the proviso to be jointly and severally liable for the tax assessed on the total income received by or on behalf of the joint family. -Liability which so long as an order was number recorded under s. 25-A 1 was restricted to the assets of the Hindu undivided family is by virtue of the proviso to sub-s. 2 transformed when the order is recorded, into personal liability of the members for the amount of tax due by the family. An order under sub-s. 1 can only be made if certain companyditions companyexist-the family in question has been hitherto assesse das undivided and a claim is made at the time of making anassessment that partition of the family property has been madebetween the members or groups in definite portions. Sub-section 2 of s. 25-A becomes effective only if an order under S. 25- A 1 is made and number otherwise. In terms the sub-section enacts that the Income-tax Officer shall assess the total income received by or on behalf of the joint family and apportion it in the manner provided by sub-s. 2 where an order is passed under sub-s. 1 . The scheme of S. 25-A is therefore clear a Hindu undivided family hitherto assessed in respect of its income will companytinue to be assessed in that status numberwithstanding partition of the property among its members. If a claim is raised at the time of making an assessment that a partition has been effected, the Income-tax Officer must make an inquiry after numberice to all the members of the family and make an order that the family property has been partitioned in definite portions, if he is satisfied in that behalf. The Income-tax Officer is by law required still to make the assessment of the income of the Hindu undivided family, as if numberpartition had taken place, and then to apportion the total tax liability and to add to the tax on the separate income of the members or groups of members the tax proportionate to the portion of the joint family property allotted to such members or groups of members and to make under S. 23 assessment on the members accordingly. If numberclaim for recording partition is made, or if a claim is made and it is disallowed or the claim is number companysidered by the Income-tax Officer, the assessment of the Hindu undivided family which has hitherto been assessed as undivided will companytinue to be made as if the Hindu undivided family has received the income and is liable to be assessed. Failure to make an order on the claim made does number affect the jurisdiction of the Income-tax Officer to make an assessment of the Hindu family which had hitherto been assessed as undivided. The Income-tax Officer may assess the income of the Hindu family hitherto assessed as undivided numberwithstanding partition, if numberclaim in that behalf has been made to him or if he is number satisfied about the truth of the claim that the joint family property has been partitioned in definite portions, or if on account of some error or inadvertence he fails to dispose of the claim. In all these cases his jurisdiction to assess the income of the family hitherto assessed as undivided remains unaffected, for the procedure for making assessment of tax is statutory. Any error or irregularity in the assessment may be rectified in the manner pro- vided by the statute alone, and the assessment is number liable to be challenged companylaterally. In the present case claim was undoubtedly made at the time of making an assessment, that the property of the family was partitioned. The claim was number disposed of before making the assessment, and the Income-tax Officer proceeded to assess the income of the family as if the property of the family had number been partitioned. It is true that by order dated June 30, 1952 the Income-tax Officer held that the property of the family was partitioned on November 2, 1946. But the Act companytains numbermachinery authorising an Income-tax Officer to re-open an assessment of a Hindu undivided family, relying upon an order made by him under s. 25-A 1 after the order of assessment is made. In the present case appeals were filed and it is companymon ground that numberobjection was raised as to the regularity or legality of the procedure followed by the Income-tax Officer. The assessment proceedings were taken to the Income-tax Appellate Tribunal and the orders of assessment were companyfirmed. Thereafter it was number open to the Income-tax Officer to re-open the orders of assessment, relying upon the order recording the partitions and to seek to subvert orders which had become final under the seal of the Income-tax Appellate Tribunal. The High Court was, in our judgment, in error in holding that an order of assessment which has become final is liable to be re-opened under s. 25-A 2 by the Income-tax Officer, when an order under s. 25-A 1 is passed by him subsequent to the order of assessment. But the appeals filed by the Income-tax Officer must still fail. Order recording the partition subsequent to the date on which the order of assessment was made must for reasons aforementioned be ignored and tax levied as if numbersuch order was made. The effect of that step however is that in the absence of an order under s. 25-A 1 and the companysequential proceedings under sub-s. 2 liability to pay tax must rest upon the property of the Hindu undivided family it cannot be enforced against the members of the family personally. The Income-tax Officer has sought by resorting to s. 46 5 to attach the remuneration earned by Thimmayya and Venkatanarsu as employees of Krishnappa Asbestos Barytes Private Ltd. this he was incompetent to do. So long as the assessment is made of income of the Hindu undivided family, liability to satisfy the tax must be restricted to the estate of the family after an order of partition is recorded and assessment is made under sub-s. 2 of S. 25-A but number till then, the proviso to that sub-section will operate. The Solicitor-General companytended that the second paragraph of sub-s. 2 which is in the form of a proviso, is in substance a substantive provision imposing joint and several liability for tax assessed on the total income received by or on behalf of the joint family against all members of the family. The companytention is that by the proviso the Legislature intended that in respect of the income of a Hindu undivided family, once partition is effected, whether the partition is recorded or number under sub-s. 1 , all members of the family will be jointly and severally liable for the tax assessed on the total income received by or on behalf of the family. But howsoever read the proviso yields numbersuch meaning. The scheme of the section is that so long as there is an of the Hindu undivided family, the liability for payment of the tax is on the property of the family and number personally on the members. Where an order that the property of the family has been partitioned is recorded, the liability of the members has to be apportioned in the manner set out in sub- section, but one of the incidents of assessment after apportionment of tax liability is That the members of the family stand jointly and severally liable for the entire amount of tax assessed against the family. In the present case numberorders were recorded by the Income- tax Officer at the time of making assessments in respect of the five years, and therefore numberpersonal liability of the members of the family arose under the proviso to sub-s. 2 . The Income-tax Officer does number seek to reach in the hands of Thimmayya and Venkatanarsu the property which was once the property of the Hindu undivided family he seeks to reach the personal income of the two respondents. That the Income-tax Officer companyld do only if by virtue of the proviso to sub-section 2 a personal liability has arisen against them. In the absence of an order under sub-s. 1 , however, such a liability does number arise against the members of the Hindu undivided family, even if the family is disrupted. We are, therefore of the view, but number for the reasons mentioned by the High Court, that because there has been before the orders of assessment numberorder recording that the property of the family has been partitioned among the members, the two dents are number personally liable to satisfy tax due by the joint family. The remedy of the Income-tax authorities in the circumstances of the case, was to proceed against the property, if any, of the Hindu undivided family. That admittedly they have number done. The order of the High Court must, therefore, be companyfirmed and the appeals dismissed with companyts.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 55 of 1963. Appeal by special leave from the judgment and order, dated August 27, 1962, of the Madhya Pradesh High Court Gwalior Bench at Gwalior in Criminal Appeal No. 18 of 1961. C. Misra, for the appellant. Al. S. K. Sastri and 1. N. Shroff, for the respondent. The Judgment of the Court was delivered by Sarkar J. The appellant, Ramhans, and six other persons were alleged to have companymitted the murder of Gabde and to have attempted to murder Ramchandra. The deceased and Ramchandra are said to have belonged to one party while the alleged assailants belonged to another, and between these two parties there had been great enmity for some time past. It was said that about midnight of November 18, 1959, while the deceased and Ramchandra and certain other persons were sleeping on a Tiwaria terrace , the assailants entered the place and Ramhans shot Gabde dead with a gun and fired two shots at Ramchandra with intent to kill him but only succeeded in injuring him and that all this time the appellant was standing there armed with a gun and the other persons were also there armed variously and that all had entered the place with the companymon intention of companymitting the offences. Ramhans had absconded and so the appellant and the other six alleged assailants were put up for trial for offences under ss. 302 and 307 read with ss. 148 and 149 of the Indian Penal Code for the murder of Gabde and the attempt to murder Ramchandra. The learned Sessions Judge companyvicted the appellant of these offences but acquitted the other six persons tried along with him, giving them the benefit of doubt. The appellant preferred an appeal to the High Court of Madhya Pradesh. After the companyviction of the appellant by the learned Sessions Judge but before his appeal companyld be heard, Ramhans had been arrested, put up for trial on the same charges and acquitted. Before the High Court the appellant companytended that Ramhans having been acquitted the appellant companyld number be held companystructively liable for the offences with the aid of s. 149 of the Code. The High Court rejected this companytention relying upon the judgments of this Court in Marachalil Pakku The State of Madras, 1 Bombadhar Pradhan v. State of Orissa 2 and Sunder Singh v. State of Punjab 3 . The following observation appears in the judgment A.I.R. 1954 S.C. 648. 2 11956 S.C.R. 206. A.I.R. 1962 S.C. 121 1. of the High Court Relying on Ramchandras direct testimony as supported by Dwarka, Matadin and Maharajsingh, I would hold that Gabdes murder was companymitted by Ramhans by firing a gun at him and that Ramhans also fired two shots from his gun at Ramchandra in order to kill him. Karan Singh was at this time standing armed with a gun by the side of Ramhans I would, therefore, hold that the offence of Gabdes murder and attempt to companymit the murder of Ramchandra were companymitted by Ramhans in furtherance of the companymon intention of both himself and the present appellant Karan Singh. The case for the prosecution had at all stages been that both Ramhans and Karan Singh had gone inside the Tiwaria armed with guns and that Karan Singh throughout the incident standing by the side of Ramhans armed with a gun. On these facts S. 34 I.P.C. would clearly apply to the case against the present appellant Karan Singh. In this view of the matter the High Court companyvicted the appellant Karan Singh under ss. 302 and 307 both read with S. 34 of the Code instead of the earlier sections read with ss. 148 and 149 as had been done by the learned Sessions Judge. The appellant has companye to this Court in further appeal. The only question argued in this appeal is whether in view of the acquittal of Ramhans by the learned Sessions Judge from which there had been numberappeal, it was open to the High Court to hold that the appellant was guilty of murder under S. 302 read with S. 34 by finding on the evidence that Ramhans who shared a companymon intention with him, shot the deceased dead and attempted to murder Ramchandra. In the High Court reliance had been placed on behalf of the appellant on the judgment of this Court in Pritam Singh v. State of Punjab 1 . That case referred with approval to the judgment of the Judicial Committee in Sambasivam v. Public Prosecutor, Federation of Malay 2 where it was observed that the effect of a verdict of acquittal is number companypletely stated by saying that the person acquitted cannot be tried again for the same offence. To that it must be added that the verdict is binding and companyclusive in all subsequent proceedings between the parties to the adjudication. As the High Court pointed out, that observa- tion has numberapplication to the present case as here the acquittal of Ramhans was number in any proceeding to which the appellant was a party. Clearly, the decision in each case has to turn on the evidence led in it Ramhanss case depended on the evidence led there while the appellants case had to be decided only on the evidence led in it. The evidence led in Ramhanss case and the decision there A.I.R. 1956 S.C. 415. 2 L.R. 1952 A.C. 458,479. arrived at on that evidence would be wholly irrelevant in companysidering the merits of the appellants case. We may add here that Mr. Misra appearing for the appellant did number in this Court rely on Pritam Singhs 1 case. Mr. Misra companytended that the decision of this Court in Krishna Govind Patil v. State of Maharashtra 1 showed that the High Court was wrong in ignoring the fact of the acquittal of Ramhans. We are unable to accept that companytention. The point there companysidered really was whether when four persons had been charged with the companymission of an offence of murder read with s. 34 and the trial Court had acquitted three of them, it was legal to companyvict the remaining accused of the offence of murder read with s. 34. The High Court had held that companyld be done. This Court set aside the judgment of the High Court mainly on the ground that such a decision would result in companyflicting findings. It was observed, while it the High Court acquitted accused 1, 3 and 4 under s. 302 read with section 34 of the Indian Penal Code, it companyvicted accused 2 under S. 302 read with s. 34, of the said Code, for having companymitted the offence jointly with the acquitted persons. This is a legally impossible position. That case numberdoubt discussed various situations where it is possible after acquitting certain persons to hold that the companyviction of other or others was justified under s. 34 on the ground that the evidence showed that there were other unknown persons who were associated with those companyvicted though the charge did number mention them. With this aspect of the matter we are number companycerned in this case and neither was the case of Krishna Govind Patil 1 . We are, therefore, of opinion that the judgment in Krishna Govind Patils 1 case does number assist the appellant at all. On the other hand we think that the judgments earlier referred to on which the High Court relied, clearly justify the view that in spite of the acquittal of a person in one case it is open to the Court in another case to proceed on the basis--of companyrse if the evidence warrants it-that the acquitted person was guilty of the offence of which he had been tried in the other case and to find in the later case that the person tried in it was guilty of an offence under S. 34 by virtue of having companymitted the offence along with the acquitted person. There is numberhing in principle to prevent this being done. The principle of Sambasivams 2 case has numberapplication here because the two cases we are companycerned with are against two different persons though for the companymission of the same offence. 1 1964 1 S. C. R. 678. 2 L. R. 11952 A.C. 458,479. Furthermore, as we have already said, each case has to be decided on the evidence led in it and this irrespective of any view of the same act that might have been taken on different evidence led in another case.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 974 of 1964. Appeal by special leave from the judgment and order dated September 10, 1964, of the High Court in Madhya Pradesh in Misc. Petition No. 113 of 1964. up.165-8 C. Setalvad, S. L. Jain and M. S. Gupta, for the appellants. V. Viswanatha Sastri, B. R. L. Iyengar, S. K. Mehta and L. Mehta, for respondent No. 1. The Judgment of the Court was delivered by Mudholkar, J.-In this appeal from the judgment of the Madhya Pradesh High Court the question which arises for decision is whether the assessment list of house tax and companyservancy tax companyfirmed by the Municipal Council, Khurai, at a special meeting on February 24, 1964 is effective or is liable to be quashed on the ground that it was number made in accordance with the provisions of the Madhya Pradesh Municipalities Act, 1961 hereafter referred to as the Act . The material facts are number in dispute. On December 28, 1962 the Municipal Council by a resolution, appointed a Sub- Committee companysisting of the Vice-President and two Members for hearing objections under S. 138 2 of the Act against the new assessment which the Chief Municipal Officer would propose to make. On the 30th of that month the Chief Municipal Officer was directed to prepare the assessment lists for all the 11 words into which the municipal area has been divided. Up till then taxes were levied at the rate of Rs. 7-12-0 per cent. on the annual letting value of the house properties and building sites liable to be taxed. On March 3, 1963 the Council companysidered a proposal for introducing a slab system for assessing these proper-ties. Upon that one of the members, Smt. Poonabai suggested a modification of the office proposal and her suggestion was accepted by the majority of the members of the Council. On March 6, 1963 the assessment list prepared by the Chief Municipal Officer in pursuance of the resolution was authenticated by him. It was then duly published that day under s. 136 of the Act. Objections were also invited from the assessees. About 2,200 objections were lodged which were companysidered by the Sub-Committee between April 7, 1963 and April 14, 1963. In the meanwhile it would appear that a suit had been instituted by some of the assessees in which the validity of the resolution of March 3, 1963 varying the rate of tax and seeking a permanent injunction against the Committee restraining it from giving effect to the new basis of assessment. The Committee, it would appear, realised that it companyld number vary the old rates without obtaining the sanction of the State Government and, therefore, in the written statement filed on its behalf, made it clear that an early meeting would be held for deciding whether the resolution of March 3, 1963 should number be given effect to. That meeting was held on April 28, 1963 and there the resolution of March 3, 1963 was revoked and the old rate of assessment was reverted to. Numerous companyplaints were made by assessees to the effect that the Sub-Committee had shown partiality in dealing with objections to assessments and had in fact shown favour to rich persons. The President of the Council enquired into the companyplaints and was satisfied that there was substance in them. In the meanwhile, however, pursuant to a decision of the Sub-Committee dated August 21, 1963 the assessment list as revised by the Sub-Committee was authenticated by the Chief Municipal Officer as required by s. 140 of the Act and was published on August 30, 1963. It would appear that numberices of demand were also issued against the assessees on the basis of the revised list. The President had, in the meantime, intimated to the Collector that the Sub-Committee had shown partiality, particularly to rich assessees and in- vited him to suspend the revised list in exercise of his supervisory powers. On October 9, 1963 the Collector made the following order In exercise of the powers delegated to me under section 323 of the M.P. Municipalities Act, 1961 I hereby suspend the execution of the decision of the Sub-Committee appointed by the Municipal Council Khurai under section 71 v of the said Act for assessment of the House Tax and Latrine Tax vide its resolution No. 2 dated 28-12-1962, as the decision taken by the said Committee is number in companyformity with the law, is detrimental to the interest of the Council and is causing annoyance to the public. The decision shall remain suspended until the assessment is properly revised afresh. He forwarded a companyy of the order to the Government of Madhya Pradesh and requested that his Order may be companyfirmed under s. 323 2 of the Act. He made the following endorsement on the companyy of the Order forwarded to the President of the Municipal Committee Copy forwarded to the President, Municipal Council, Khurai, for information and immediate necessary action in respect of the demand numberices issued for recovery of the taxes. Apparently the assessment has number been properly made. No reasons for number accepting the overseers valuation have been given and rich persons have been shown favour thereby. The Council has thus defaulted in performing the duty imposed on it under the said Act. The Council is, therefore, called upon to show cause for its failure as required under section 327 1 of the said Act and to furnish its explanation within a period of 15 days to my office. After receiving this companymunication the President caused a proclamation to be made bringing it to the numberice of the assessees that the assessment list had been suspended and intimating to them that taxes on the basis of the revised list should number be paid. The Government, acting upon the companymunication received from the Collector issued numberice to the Council on December 2, 1963 under s. 323 2 to show cause why the order passed by the Collector should number be companyfirmed. Eventually the Government companyfirmed the Collectors Order. On December 29, 1963 the Council, at a special meeting, resolved that the assessment lists should be revised under s. 141 ,of the Act. On January 7, 1964 the Council issued individual numberices to 300 persons to show cause why the annual letting value of their properties should number be enhanced. The Council heard the objections between February 16, 1964 and February 20, 1964 and revised the assessments of some or all the persons to whom numberices had been issued. On February 24, 1964 the Council, at a special meeting, companyfirmed the revised assessment as from April 1, 1963. Its resolution was authenticated on March 4, 1964 under s. 140 1 by the Chief Municipal Officer and according to the Council the assessment list then became final. It is after this that the writ petition out of which the present appeal arises was presented before the High Court by some of the assessees. It was supported before it on four grounds which have been summarised thus by the High Court in its judgment The Municipal Council, Khurai, was number companypetent to appoint a Sub-Committee for the purpose of hearing and deciding the objections made against the assessment list. The numberice given for lodging objections against the assessment list was number in accordance with the provisions of the Act. The Municipal Council acted illegally and without jurisdiction in adopting a slab system with different and varying rates in disregard of the rate of Rs. 7/13/- per cent at which the house tax had been initially imposed. When the execution of the decision of the SubCommittee dated 21st August, 1963 was suspended and subsequently revoked , it was number open to the Municipal Council to have recourse to section 141 of the Act for making limited amendments in the assessment list. The Municipal Council had to prepare an assessment list de numbero in accordance with the provisions of the Act including those made by sections 137, 138 and 140 of the Act. The High Court thought it unnecessary to companysider the first three of these grounds because in its opinion the fourth ground was sufficient for granting relief to the assessees. According to the High Court the assessment list which had been companyfirmed by the Council on February 24, 1964 and sought to be given effect to was number a valid assessment list because the Municipal Council gave numberice only to 300 assessees and heard their objections and number the remaining 1900 assessees. Before us it is companytended by Mr. Setalvad on behalf of the Council that an appeal had already been preferred by the respondents against the assessment list and, therefore, they were number entitled to any relief under Art. 226 of the Constitution. It is true that the High Court would number ordinarily entertain a petition under Art. 226 of the Constitution where an alternative remedy is open to the aggrieved party. Though that is so the High Court has jurisdiction to grant relief to such a party if it thinks proper to do so in the circumstances of the case. In the present case the High Court has chosen to exercise discretion in favour of the respondents and it would number be right for us to interfere with the exercise of that discretion unless we are satisfied that the action of the High Court was arbitrary or unreasonable. Nothing has been brought to our numberice from which it companyld be inferred that the High Court acted arbitrarily in granting the writ prayed for to the respondents. Coming to the merits, Mr. Setalvad companytends that the list having been authenticated by the Chief Municipal Officer under s. 140 it became final and, therefore, under s. 141 of the Act it was open to the Municipal Council to amend the assessment list. Sub-section 1 of that section, without the proviso, is the only part which is relevant for our purpose and it reads thus The Council may at any time, amend the assessment list by the inclusion, omission or substitution of any matter. Mr. B. R. L. lyengar for the respondents, however, companytends that s. 141 1 can be availed of only for companyrecting arithmetical errors or other similar errors and number for revising the taxes. Further, according to him, this provision is available only with respect to the amendment of a current list and that since the assessment list had number become final under s. 142 it companyld number be amended under s. Then, according to him, the appropriate provision to which resort companyld be had was s. 146 of the Act. Mr. Iyengar also raised a third argument, which is to the effect that since the assessment list had been suspended by the Collector under his Order made under s. 323 of the Act the Council had numberpower to amend it under s. 141. The final argument advanced by him was that the power of hearing objections or of revising the list companyld number be delegated to the Sub-Committee and that, therefore, the revised list was bad in law. It is number disputed before us that the procedure laid down in ss. 134, 135 and 136 of the Act for the assessment of buildings and lands to pay the tax was duly followed. It is also number disputed that 2,200 objections were lodged with the, Municipal Council which were investigated and dealt with by the Sub-Committee appointed by the Municipal Council. Mr. Setalvad, therefore, companytends that having followed this procedure the next step was the authentication of assessment lists by the Chief Municipal Officer as required by s. 140 1 . This procedure was also followed and, therefore, the assessment list became final and the Municipal Council had the power to amend it under s. 141 1 of the Act. Mr. lyengar, however, companytends that the provisional assessment list which was prepared under S. 134 1 of the Act and published under s. 136 was upon the basis of the new rates of taxes which had been imposed by the Municipal Council on March 3, 1963. According to him, as the Resolution of March 3, 1963 was revoked on April 28, 1963 and the old rate of Rs. 7/13/- per cent. was reverted to it was necessary to publish a fresh assessment list on its basis. His further objection which we have already indicated is that the objections companyld be dealt with number by the Sub-Committee but by the Municipal Council as a whole. In view of these defects the assessment list did number become final by reason of its authentication by the Chief Municipal Officer under S. 140. According to Mr. Setalvad these objections were number urged before the High Court But that is number quite accurate. We have already quoted from the judgment of the High Court the summary of the grounds urged before it and the objections of Mr. lyengar are to be found in the first two grounds. It is true that the High Court did number think it necessary to deal with these grounds upon the view which it took on the fourth ground which was urged before it. But that does number preclude us from companysidering those grounds. In our opinion, both the grounds are substantial and strike at the very root of the finality of the assessment list which was purported to be authenticated by the Chief Municipal Officer under s. The assessment list which has to be published under s. 136 of the Act must companytain full and accurate particulars specified in s. 134 1 of the Act. Amongst those particulars are the following Valuation of the property based on capital or annual letting value, as the case may be, on which the property is assessed 2 the rate, of tax applicable 3 the amount of tax assessed thereon. In view of the fact that the resolution of March 3, 1963 on the basis of which the list was published had been revoked, the particulars mentioned in the second and the third of the above items would necessarily be different from those which would be arrived at after taking into account the resolution of April 28, 1963. Under Art. 265 of the Constitution numbertax shall be levied or companylected except by authority of law. This clearly implies that the procedure for imposing the liability to pay a tax has to be strictly companyplied with. Where it is number so companyplied with the liability to pay the tax cannot be said to be according to law. The objections which the assessees had filed in pursuance of the numberification actually published by the Chief Municipal Officer were based upon the list published under s. 136 and number in pursuance of what the liability would be under the Resolution of the Municipal Council, dated April 28, 1963. Therefore, it cannot he said that the opportunity as companytemplated by the Act was at all given to the assessees for lodging their objections as required by s. 137 of the Act. Moreover, Mr. Setalvad was number able to point out to us any provision of the Act or of the rules, except s. 78, whereunder the Council companyld delegate its function of hearing and deciding objections to a Sub-Committee. Section 78 reads thus Any powers or duties or executive functions which may be exercised or performed by or on behalf of the Council may, in accordance with the rules made under this Act, be delegated by the Council to the President or Vice-President or to the Chairman of the Standing or other Committees, or to one or more stipendiary or honorary officers, but without prejudice to any powers that may have been companyferred on the Chief Municipal Officer by or under section 92. Even assuming that under this provision the power of the Council of hearing objections companyld be delegated, the delegation can presumably be only in favour of the persons mentioned in S. 78 quoted above. It cannot be in favour of a Sub-Committee or a Committee. It is true that the Convenor of the Sub-Committee appointed by the Council was the Vice-President but the delegation was number to him alone but to the Sub-Committee. The two arc number the same thing because while in one case the right to decide an objection would be solely exercisable by the Vice-President in the other it will be exercisable by the Sub-Committee as a whole. If there is unanimity amongst the members of the Sub-Committee numberprejudice may be caused. But if the Vice- President is of one opinion and the other two members are of a different opinion the decision of the Sub-Committee cannot be said to be that of the Vice-President at all. But to the companytrary. For these reasons we are of opinion that the assessment list authenticated by the Chief Municipal Officer was number prepared according to law and, therefore, the provisions of s. 141 were number available to the Council. Upon the view we take we do number find it necessary to companysider whether the reason given by the High Court is right or number.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 83 of 1964. Appeal by special leave from the judgment and order dated August 18, 1960 of the Andhra Pradesh High Court in R. C. Appeal No. 34 of 1957. Ranganadham Chetty, K. Venkaramaiah, A. Vedavalli and V. Rangam, for the appellants. Ganapathy Iyer and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Shah, J. The appellants who are a firm carrying on business in cloth at Secunderabad applied on June 30, 1955, for registration under s. 26-A of the Indian Income-tax Act, 1922, for the assessment year 1956-57. The following persons were, it was recited in the application, partners, having share in the profits and lossess in proportions specified against their names - 1 . M s Kylasa Sarabhiah a firm companysisting of the following partners Kylasa Veeresalingam. Kylasa Nagendrarao Rs. As. Ps. Kylasa Madhusudhanarao 069 Mahendrakar Narayanarao 033 Nune Vittayya 026 Pottupalli Chandrayya 026 Gande Ramayya 010 For facility of reference we will call No. 1 the Yarn Shop. The Income-tax Officer rejected the application, and his order was companyfirmed in appeal by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal. The Tribunal held that because in the deed of partnership benefits to which certain minors were admitted, and particulars about the distribution of profits or losses in the manner in which the firm wanted the same to be distributed were number specified, and because by the deed of partnership the Yarn Shop was introduced as a partner in the farm, the privilege of registration under s. 26-A must be denied to the firm. The High Court of Andhra Pradesh recorded on the following question referred under s. 66 1 of the Income-tax Act Whether on the facts and circumstances of the case, the assessee is entitled to registration under s. 26-A of the Incometax Act ?, a negative answer. Section 26-A of the Indian Income-tax Act, 1922, provides Application may be made to the Income-tax Officer on behalf of any firm, companystituted under an instrument of partnership, specifying the individual shares of the partners, for registration for the purpose of this Act Sup.165--4 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. By securing registration under the Act, the partners of the firm obtain a benefit of lower rates of assessment and numbertax is directly charged on the income of the firm. This is an important benefit to which the partners of a registered firm become entitled as a companysequence of registration, and if it is intended to secure that benefit, requirements of s. 26-A and the rules framed under the Act must be strictly companyplied with. Rule 2 framed under s. 59 requires that the application shall be signed by the partners number being minors personally, and prescribes the period within which the application shall be made for the year in question. Rule 3 provides that the application shall be made in the prescribed form and shall be accompanied by the original instrument of partnership under which the firm is companystituted. By Rule 4 it is provided that if on receipt of the application, 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 prescribed form. By Rule 6 of the certificate of registration may be renewed for subsequent years. Registration of the firm may be obtained on an application to the Income-tax Officer on behalf of any firm, if the firm be lawfully companystituted under an instrument of partnership which specifies the individual shares of partners and the Income-tax Officer is satisfied that there is or was a genuine firm in existence as shown in the instrument. If the companyditions are fulfilled, the income-tax Officer has numberpower to reject the application. Undoubtedly, the application must strictly be in companyformity with the Act and the Rules, but in ascertaining whether the application is in companyformity with the Rules, the deed of partnership must be reasonably companystrued. Under the Indian Partnership Act, 1932 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. A firm is strictly number a person it is an association of persons, and an agreement by which a firm purports to enter into a partnership with an individual or another firm merely makes the partners of that firm individually partners of the larger partnership. The problem posed by such a partnership agreement is under the general law academic, but the right to registration under s. 26A being companyditional upon specification of the individual shares of the partners, a deed of partnership between a firm and an individual, which specifies the companylective share of the firm, without more, cannot be registered. It has been held by this Court in Dulichand Laxminarayan v. Commissioner of Income-tax, Nagpur 1 that a partnership companystituted between an individual, a joint Hindu family and three firms companyld number be registered under s. 26-A of the Act. In Dulichands case 1 the partnership deed was signed by five individuals, viz., the karta of the joint Hindu family, one partner each of the three firms and the individual. It was held that the partnership companyld number be admitted to registration, because a firm as such cannot enter into an agreement as partner with another firm or individual, and also because all the members of the three firms had number personally signed the application as required by Rule 2 of the Income-tax Rules. The application in the present case was rejected by the Tribunal, because in its view the benefits to which the minors were admitted and the shares of the major partners who were members of the Yarn Shop were number specified, and that the Yam Shop was introduced as a partner in the firm. But the Tribunal, in our judgment, erred in holding that the benefits to which the minors were admitted and the shares of the major members of the Yarn Shop were number specified in the deed of partnership. It is clearly recited in the preamble that K. Rajeshwarrao, K. Haranath Babu, K. Ramesh Babu and Shivakumar-the four minors-were admitted to the benefit of the partnership with equal shares in the profits falling to the share of the Yam Shop, and losses were to be shared in equal shares only by the major partners K. Veeresalingam, Nagendrarao and K. Madhusudhanarao. The scheme of the deed therefore was that the Yam Shop companylectively had a share of 0-6-9 in the profits and was liable in the same proportion in the losses in the appellant firm. Out of this 0-6-9 share, seven persons who companystituted the Yam Shop were entitled to share the profitsequally, whereas losses were to be shared by the three major members of the Yam Shop equally. It is true that in the deed of partnership, the first partner is described as Kylasa 1 1956 S.C.R. 154. Sarabhiah Yam firm-the Yam Shop-constituted under an instrument of partnership dated May 12, 1955, and in paragraphs 3 and 8 this Yam Shop is also described as the first partner. But the substance of the agreement cannot be permitted to be overshadowed merely by the use of the companylective description of some of the persons who agreed to be partners. The agreement was between K. Veeresalingam, K. Nagendrarao, K. Madhusudhanarao, Mahendrakar Narayana Rao, Noone Vittayya, Pottipalli Chandrayya and Gande Ramayya to enter into partnership with the companyenant that the profits and losses shall be divided in the shares specified in the instrument. The partnership agreement was signed by the major partners the application for registration was in companyformity with the rules framed under the Act, the certificate regarding the distribution of the profits in the previous year was given, the original instrument of partnership was produced and the instrument specified the individual shares of the partners. Merely because the deed of partnership set out in paragraph 8 the companylective share of the Yarn Shop, registration companyld number be refused, for in the preamble the division of the shares of profits and losses among the three members of the Yam Shop and those admitted to the benefit of the partnership is clearly indicated. The word specify is used in s. 26-A and Rule 2 as meaning, mentioning, describing or defining in detail it does number mean expressly setting out in fractional or other shares. In the deed of partnership, the shares are clearly defined, though they are number worked out in precise fractions. Nor is it true to say that the Yam Shop is introduced as a partner. The agreement is in truth between three major members out of those who companystitute the Yarn Shop and four outsiders. Each of them has signed the application and the companyenants of the partnership agreement bind the partners individually. Indication in the deed of partnership that three of them held qua the Yam Shop a certain relation did number affect their status as partners of the appellant firm individually. It was urged that in the deed dated February 20, 1952, companystituting the Yarn Shop, as amended by the deed dated May 12, 1955, numberprofit sharing ratio was mentioned. But we are number companycerned with the registration of the Yarn Shop. We are unable to appreciate how a defect even if there be one in the agreement companystituting the Yarn firm affects the right of the appellant firm to be registered. If the statutory companyditions which qualify the appellants for registration are fulfilled, an arrangement between some of the partners of the appellants which binds them to distribute the pro-fits under a stipulation which is number a part of the partnership agree- ment does number affect the right to claim registration of the partner-ship agreement. The answer recorded by the High Court must therefore, be discharged, and an affirmative answer must be recorded. The appeal is allowed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 675 of 1963. Appeal from the judgment and decree dated August 17, 1960 of the Madras High Court in Appeal Suit No. 92 of 1957. V. R. Tatachari, for the appellant. V. Viswanatha Sastri and S. Venkatakrishnan, for respondent No. 1. The Judgment of the Court was delivered by Gajendragadkar, C.J. The short question which this appeal raises before us relates to the companystruction of S. 4 1 read with S. 4 4 of the Madras City Tenants Protection Act, 1921 Madras Act III of 1922 hereinafter called the Act . This question arises in this way. On September 1, 1944, respondent No. 1, Tiruchirappalli Municipal Council, leased T.S. No. 3283/1-A/2 to the appellant, V. K. A. Ranganatha Konar, for a term of three years at a rent of Rs. 100/- per month. On the premises thus let out to him, the appellant erected a building for the purpose of exhibiting cinematographic films. In 1945, he sub-leased the property to the second respondent, A. Muthukumaran. In 1947, the lease was renewed for a period of three years, and so, it expired on March 31, 1950. Nevertheless, the appellant and respondent No. 2 companytinued in possession. On December 23, 1954, respondent No. 1 instituted a suit for the eviction of the appellant and respondent No. 2 and for arrears of rent. While the suit was pending the Act was extended to the Municipal Town of Tiruchirappalli. Accordingly, the value of the improvements made by the appellant and respondent No. 2 was determined by the learned trial Judge and declared to be Rs. 64,661-13-5 under s. 4 1 of the Act. On March 26, 1956, the trial Court passed a decree which, inter alia, provided that the defendants do put the plaintiff in possession of the suit properties described hereunder on payment of Rs. 64,661-13-5 by the plaintiff to the first defendant being the companypensation for the superstructure belonging to the first defendant. The appellant was the first defendant in the said proceedings. This decree did number in terms direct respondent No. 1 to say the, said amount within three months from its date, and it is the companyission to issue this direction which has caused the present companytroversy between the parties. On October 1, 1956, the appellant filed an application I.A. No. 301 of 1956 inviting the attention of the Court to the fact that respondent No. 1 had number made the deposit within three months from the date of the decree, and claiming that by virtue of the provision prescribed by s. 4 4 of the Act, the Court was bound to dismiss the suit filed by respondent No. 1 for ejecting him and respondent No. 2. On November 5, 1956, respondent No. 1 filed a companynter to this interlocutory application. On the same date, respondent No. 1. filed another interlocutory application praying that the decree in question should be amended so as to specify the time within which the deposit should be made. Pending these applications, on November 15. 1956, respondent No. 1 sent a cheque to the Court in regard to the said amount .The said cheque was duly cashed and the amount credited in the accounts of the Court on November 20, 1956. On the date the trial Judge passed an order directing that the decree should be amended by inserting a direction to the effect that the deposit should be made before June 23, 1956, that is to say within three months from March 26, 1956 on which date the original decree had been passed. Since this amendment companyld number help respondent No. 1, the learned trial Judge processed to pass an order dismissing the suit under the provisions of s. 4 4 This order of dismissal was challenged by respondent No. 1 by an appeal preferred before the Madras High Court. It was urged before the High Court on behalf of respondent No. 1 that since the original decree did number give a specific direction that the amount of companypensation should be paid within three months, the provisions of s. 4 4 companyld number be invoked until the decree was suitably amended. The argument was that it is only when the decree makes a direction calling upon the plaintiff to deposit a certain amount by way of companypensation to the defendant-tenant within three months, that the requirements of s. 4 1 are companyplied with. and it is only where a decree has been properly drawn in accordance with the requirements of s. 4 1 that the mandatory provisions of s. 4 4 companyld be invoked. In substance, the High Court has accepted this plea, with the result that the appeal preferred by respondent No. 1 has been allowed and the original decree passed on March 26, 1956, has been companyfirmed. The result of this decision is that respondent No. 1 is at liberty to take out execution for obtaining possession of the property. The appellant then applied for and obtained a certificate from the High Court and it is with this certificate that he has brought this appeal before us. On behalf of the appellant, Mr. Tatachari has urged that the High Courts decision under appeal proceeds on a misconstruction of the provisions companytained in s. 4 4 read with s. 4 1 of the Act. He argues that the provision prescribed by s. 4 4 is mandatory and any defect in the decree which is passed under s. 4 1 cannot help respondent No. 1 to circumvent the effect of the said provision. Before dealing with this point, it is necessary to read s. 4 1 4 . Section 4 1 reads thus In a suit for ejectment against a tenant in which the landlord succeeds, the companyrt shall ascertain the amount of companypensation, if any, payable under section 3 and the decree in the suit shall declare the amount so found due and direct that, on payment by the landlord into companyrt, within three months from the date of the decree, of the amount so found due, the tenant shall put the landlord into possession of the land with the building and trees thereon. Section 4 4 provides If the amount found due is number paid into companyrt within three months from the date of the decree under subsection 1 or of the interim order under sub-section 2 , or if numberapplication is made under section 6, the suit or application, as the case may be, shall stand dismissed, and the landlord shall number be entitled to institute a fresh suit for ejectment, or present a fresh application for recovery of possession for a period of five years from the date of such dismissal. Mr. Sastri for respondent No. 1 has strenuously companytended that in appreciating the effect of the two relevant provisions, it is necessary to bear in mind that ultimately, the direction companytained in the decree must be enforced, and if the original decree did number require respondent No. 1 to pay the companypensation amount within three months, the right of the appellant to recover that amount must inevitably be enforced by execution proceedings under Article 182 of the Limitation Act. In the case of such a decree, s. 4 4 cannot apply, because s. 4 4 postulates that a proper and valid decree has been passed in companyformity with the requirements of s. 4 1 Section 4 4 provides a period of three months from the date of the decree under sub-section 1 it is the decree under ,sub-section 1 which starts the period of limitation, and before a decree can be said to be a decree under sub-section 1 , it must companyply with all the requirements prescribed by the said sub-section in the present case, the decree did number specify that the amount in question should be paid within three months, and so, it is number a decree properly passed under sub-section 1 and as such, s. 4 4 cannot be invoked. Mr. Sastri has put his argument in another form. He company- tends that though the original decree passed between the parties in the present proceedings did number companyply with the requirements of s. 4 1 inasmuch as it failed to specify the period of three months within which the amount of companypensation should be paid, it cannot be said to be a nullity it is a decree passed by a companyrt of companypetent jurisdiction, and so, when the appellant seeks to invoke s. 4 4 , what he is virtually asking the Court to do is to ignore the fact that the decree did number direct respondent No. 1 to pay the amount within three months, and in the absence of a direction in the decree, it would number be permissible to the Court to enforce the provisions of s. 4 4 against respondent No. 1. He would, therefore, read s. 4 1 as companytrolling s. 4 4 first a decree must be properly passed under s. 4 1 specifying the period of three months within which the amount should be paid, and then s. 4 4 can be invoked. That is how Mr. Sastri has presented before us his solution to the problem of companystruing section 4 1 and 4 together. In dealing with this question, it is necessary to bear in mind the object which the Act is intended to achieve. As the preamble indicates, the Act was passed to give protection to certain classes of tenants in areas to which it was extended. The Legislature thought that it was necessary to give protection to tenants who had companystructed buildings on others lands in the hope that they would number be evicted so long as they paid a fair rent for the land. In other words, the Legislature took the view that in a large majority of cases where open plots were let out to the tenants and the tenants, in their turn, invested money by companystructing buildings on the said plots in the hope that they would be allowed to remain in possession of the leased property so long as they companytinued to pay a fair rent, it was necessary to protect their tenancy rights. Though this Act was passed in 1922, it was number extended to the whole of the State of Madras it has been extended stage by stage to different areas. In fact, we have already seen that the Act was extended to the municipal area of Tiruchirappalli while the present suit between the parties was pending in the trial Court. In order to carry out its object of affording protection to the tenants, s. 3 has provided for the payment of companypensation on ejectment. It lays down that if a tenant is ejected, he would be entitled to companypensation for the value of the building which he might have companystructed on the plot let out to him. Section 3 deals with a question of companypensation and provides how it should be determined. Section 4 then deals with the disposal of suits for ejectment. Section 4 1 provides that if the landlord succeeds in obtaining a decree for ejectment, the Court shall ascertain the amount of companypensation payable to the tenant, and the decree in the suit shall declare the amount so found due and direct that, on payment by the landlord into companyrt, within three months from the date of the decree, of the amount so found due, the tenant shall put the landlord into possession of the land with the building and trees, thereon. Section 4 4 companytains a mandatory provision that if the amount found due is number paid within three months, the suit of the landlord shall stand dismissed. We will presently deal with the question of companystruing these two sub-sections. Meanwhile, we may refer to s. 10. Section 10 1 provides that sections 4, 5, 6, 8, 9 and 9-A shall, inter alia, apply to suits in ejectment which are pending or in which decrees for ejectment have been passed, but have number been executed. Section 10 2 deals with cases in which decrees for ejectment have been passed, but the amount of companypensation has number been determined, and it provides that on an application by the tenant, such amount would be determined in accordance with s. 4. Section 10 3 deals with cases of decrees which are pending execution and it requires that the Court shall, on the application of the tenant, recall execution orders, ascertain the amount of companypensation, and pass an interim order under s. 4. It will thus be clear that wherever the Act is extended, the protec- tion afforded by the Act and the benefits companyferred by it can be claimed number only by tenants against whom suits are pending or would be filed in future, but also by tenants against whom decrees have already been passed, but have number been fully executed. Section 10 clearly brings out the fact that the policy of the legislature was to extend ample protection to the tenants in the areas to which he Act would be extended from time to time. Reverting then to the question of companystruing s. 4 1 and 4 , it would appear that what s. 4 1 purports to do is to require that the decree in the suit to which it applies shall, in the first instance, declare the amount found due by way of companypensation. The said provision also requires that .he decree shall declare that the tenant shall put the landlord into possession of the land on payment by the landlord into companyrt, within three months from the date of the decree, of the amount found due. The two operative parts of the decree as companytemplated by s. 4 1 are the declaration of the amount due to the tenant, and the direction to the tenant to deliver possession of the land to the landlord in case he paid into Court within three months of the date of the decree the amount declared due. It is true that the decree would state that the landlord has to pay the amount within three months from its date but having regard to the specific and mandatory terms in which s. 4 4 is companyched, it would number be reasonable to companystrue s. 4 1 as companytrolling s. 4 4 . The relevant clause provides that the decree shall direct that on payment by the landlord into Court, within three months, of the amount found due, the tenant shall put the landlord into possession. The clause in respect of the payment by the landlord into companyrt within three months amounts to a companydition which has to be satisfied by the landlord before the tenant is required to deliver to him possession of the property in question. In other words, reference to the payment by the landlord of the amount found due within the specified period in s. 4 1 is number so much a direction issued by the Court as specification of a companydition expressly and independently provided by s. 4 4 . The provision of s. 4 4 clearly shows that if the amount found due is number paid within three, months, the suit of the landlord shall stand dismissed. The opening clause of s. 4 4 shows that the amount has to be paid within three months from the date of the decree passed under sub-section 1 . The expression the decree under sub-section 1 merely describes the sub-section under which the decree is passed, the emphasis in the companytext being on the date of the said decree and number so much on the strict companypliance with the form prescribed by s. 4 1 . If the decree is passed under s. 1 , its date is material for the purpose of deciding the period beyond which s. 4 4 would companye into operation. In other words, as soon as it is shown by a tenant that a decree has been passed under s. 4 1 declaring the amount of companypensation due to him from the landlord, he is entitled to claim that he is numberlonger under obligation to deliver possession of the property to the landlord, because three months have passed from the date of the decree and the amount declared as companypensation has number been paid to him. If the decree happens to be defective in the sense that it does number reproduce the requirement of s. 4 1 expressly in its terms, that would number take the case outside the purview of s. 4 4 . We are inclined to think that having regard to the mandatory terms used in s. 4 4 , it would be illogical and unreasonable to suggest that a defective decree like the present enables the landlord to circumvent the provisions of s. 4 4 . The applicability of s. 4 4 cannot be repelled merely on the ground that the decree passed under 6. 4 1 does number specify the period of three months within which the amount found due has to be paid. In our opinion, the logical way to reconcile S. 4 1 and S. 4 4 would be to treat the provision prescribed by s. 4 4 as mandatory and paramount and read the relevant portion of s. 4 1 accordingly. That is why even if the decree does number mention that the amount has to be paid within three months, the landlords obligation to make the payment within three months is still enforceable under s. 4 4 , otherwise defective decrees would deprive the tenants of the benefit intended to be companyferred on them by s. 4 4 . We are therefore satisfied that the High Court was in error in reversing the order passed by the trial Court. Respondent No. 1 has number paid the amount within three months from the date of the decree and the suit instituted by it shall stand dismissed under s. 4 4 . The result is, the appeal is allowed, the decree passed by the High Court is set aside and that of the trial Court restored.

Case appeal was accepted by the Supreme Court

Ayyangar, J. The proper companystruction of Art. 145 1 a of the Constitution in the companytext of a prayer for a declaration that rule 16 of Order IV of the Supreme Court Rules as invalid is the principal point raised in this petition which has been filed by an Advocate who under the Advocates Act, 1961, is entitled to practise in this Court. The petitioner was enrolled in the Madras High Court on November 15, 1955 under the Indian Bar Councils Act, 1926 and was admitted to the rolls of this Court on October 29, 1960 under Order IV of the Supreme Court Rules as the then stood. She states that as an Advocate entitled to practise in this Court, she is entitled as of right number merely to plead but also to act, and that the rules of this Court which prescribe qualifications before she companyld be permitted to act are therefore invalid. The prayer which she makes by her petition is therefore for a declaration that rule 16 1 of Order IV of the Supreme Court Rules as amended in 1962 which companytains this prescription of qualifications be declared ultra vires of this Court and a further declaration that she is entitled to practise as an Advocate on record in this Court without companyforming to the requirements number imposed by the impugned rule. Rule 16 whose validity is challenged runs No Advocate shall be qualified to be registered as an Advocate on Record unless he - 1 has undergone training for one year with an Advocate on Record approved by the Court, and has thereafter passed such tests as may be held by the Court for Advocates who apply to be registered as Advocates on Record, particulars whereof shall be numberified in the Gazette of India from time to time provided however, that an Attorney shall be exempted from such training and test 2 has an office in Delhi within a radius of 10 miles from the Court House and gives an undertaking to employ, within one month of his being registered as Advocate on Record a registered clerk and 3 pays a registration fee of Rs. 25. It might be mentioned that under the Rules though every Advocate whose name is maintained in the companymon roll of Advocates prepared under s. 20 of the Advocates Act, is entitled to plead, only those Advocates who are registered as Advocates on record are entitled to act as well, for rule 17 of Order provides An Advocate on Record shall be entitled to act as well as plead for any party in a proceeding on his filing in the proceeding a memorandum of appearance accompanied by a Vakalatnama duly executed by the party in the prescribed form. No Advocate other than an Advocate on Record shall be entitled to file an appearance or act for a party in the Court. The companytention urged by the petitioner who argued her case in person and presented the points arising with ability and moderation, is that under s. 58 3 of the Advocates Act which reads. 58. 3 Notwithstanding anything in this Act, every person who, immediately before the 1st day of December, 1961, was an advocate on the roll of any High Court under the Indian Bar Councils Act, 1926 or who has been enrolled as an advocate under this Act shall, until Chapter IV companyes into force, be entitled as of right to practise in the Supreme Court, subject to the rules made by the Supreme Court in this behalf 6. she is entitled as of right to practise in this Court, and she claims that the right to practise would include number merely the right to plead, but also the right to act. She is right so far. Her further submission is as regards the scope and companytent of the rules which might lawfully be made by this Court. Undoubtedly, if there were numberrules made by the Supreme Court of if, as the petitioner companytends, the rules number made - Order IV Rules 16 and 17 - are invalid the petitioner would be entitled number merely to plead as she is number entitled to, but also to act which latter she is number prevented by rule 17 unless she has companyplied with requirement of rule 16. The question then for companysideration is whether the impugned rules are valid. This depends upon the proper companystruction Art. 145 1 a by virtue of which the impugned rule has been framed, which reads 145. 1 Subject to the provisions of any law made by Parliament, the Supreme Court may from time to time, with the approval of the President, make rules for regulating generally the practice and procedure of the Court including - a rules as to the persons practising before the companyrt As regards this Article there are two matters to which attention might be directed. By the opening words of the Article the rules made by this Court are subject to the provision of any law made by Parliament, so that if there is any provision in a law made by Parliament by which either the right to make the rule is restricted or which companytains provisions companytrary to the rules, it is beyond dispute that the law made by Parliament would prevail. It is the submission of the petitioner that s. 58 3 quoted earlier, is such a law made by Parliament and that the absolute right granted to persons in the position of the petitioner to practise as of right cannot be companytrolled by rules made by this Court. In this companynection our attention was invited to the decision of this Court in Aswini Kumar Ghosh and Anr. v. Arabinda Bose and Anr. 1953 S.C.R. 1 . Here this Court explained what the expression right of practise meant. It was laid down that these words which occurred in the Supreme Court Advocates Practise in High Court Act, 1951 whose s. 2 enacted Every Advocate of the Supreme Court shall be entitled as of right to practise in any High Court whether or number he is an Advocate of that High Court meant that such an Advocate was entitled number merely to plead but to act as well, and that the enactment prevailed numberwithstanding any rule made by the High Courts of Calcutta and Bombay restricting the right to act on the original sides of those companyrts. The decision, however, does number carry the matter far, because it was based on the inconsistency between the right to practise as of right companyferred by the enactment of 1951 and the saving as regards the rule making power of the High Courts of Bombay and Calcutta to restrict the right to act on the original side of those companyrt which was companytained in the Bar Councils Act 1926. This Court held that it was a case of an implied repeal of that saving by the later legislation. Nevertheless the petitioner, as stated earlier, is certainly right in her submission that the words right to practise would in its numbermal companynotation take in, number merely right to plead but the right to act as well and that is why we said that if numberrules had been made by the Supreme Court restricting the right to act, the petitioner companyld undoubtedly have right both to plead as well as to act. But we have already pointed out that under s. 58 3 of the Act, the right companyferred on Advocates enrolled under the Bar Councils Act to practise in the Supreme Court is made subject to any rules made by this Court. To reinforce this position there is a saving enacted by s. 52 of the Advocates Act which specifically saves the powers of this Court to make rules under Art. 145. Section 52 reads - Nothing in this Act shall be deemed to affect the power of the Supreme Court to make rules under article 145 of the Constitution a for laying down the companyditions subject to which a senior advocate shall be entitled to practise in that Court b for determining the persons who shall be entitled to act in that behalf. In view of the saving which is repeated in s. 52, there is numberquestion of the rule restricting the right to act to a certain class of advocates as being companytrary to a law made by Parliament. The only question for companysideration is whether Art. 145 1 a is sufficient to empower this Court to frame the impugned rules. The argument addressed to us with companysiderable earnestness was that under the Article the rules to be framed under the items a to i were all to be framed for regulating the practice and procedure of the Court which she urged indicated the underlying purpose with which the rule making power was vested in the Court. Secondly she urged that if head a - in sub-Article 1 reading rules as to the persons practising before the Court, were treated as an independent subject, entirely, divorced from the companytext of the opening words practice and procedure of the Court, even then the power to make the rule was companyfined to the regulation of the companyduct of the persons practising i.e. entitled under the law to practise and so practising before the Court. Though a number of decisions were cited to us as to what was meant by practise and procedure of the Court we do number think it useful or necessary to refer to them. They would have been relevant and might require serious companysideration if the entire power to make the rule was to depend merely on the words regulating the practice and procedure of the Court but the Article specifically makes provision enabling rules to be made as to persons practising before the Court. We are inclined to read item a as an independent head of rule making power and number as merely a part of a power to make rules for regulating the practice and procedure of the Court. The word including which precedes the enumeration of the items a to i as well as the subject matter of item a , stamp it as an independent head of power. We do number, therefore, propose to deal with what exactly would have been the companytent of a regulation of practice and procedure. but shall proceed to companysider the meaning of the words Rules as to the persons practising before the Court because if the rules number impugned companyld be justified as within this power their validity cannot be impeached. Now as regards these words in item a the submission of the petitioner was two-fold Firstly, she companytrasted these words with entry 77 in the Union List in Sch. VII the last portion of which reads Persons entitled to practise before the Supreme Court. Relying on the companytrast between the two expressions persons practising and persons entitled to practise the submission was that the words persons practising before the Court was narrower and gave this Court power to frame rules only to determine the manner in which persons who had obtained a right to practise under a law made by Parliament by virtue of its power under entry 77 companyld exercise that right. In this companynection she drew a distinction between being entitled to practise which would include determining or prescribing the qualifications that a person should possess before becoming entitled to practise, which she urged was the subject matter of entry 77, and a rule as to a person practising before a companyrt which was the second stage after the right to practice had been obtained by Parliamentary legislation. In other words, the submission was that by a rule made under Art. 145 1 a this Court companyld neither entitle a person to practise number impose qualifications as to the right to practise - these being matters entirely within entry 77 and therefore exclusively for parliamentary legislation. We feel unable to accept this argument. We do number agree that the words persons practising before the Court is narrower than the words persons entitled to practise before the Court. The learned Additional Solicitor-General was well-founded in his submission that if, for instance, there was numberlaw made by Parliament entitling any person to practise before this Court, the companystruction suggested by the applicant would mean that this Court companyld number make a rule prescribing qualifications for persons to practise in this Court. In this companynection it is interesting to numberice that the words used in Art. 145 1 a have been taken substantially from s. 214 1 of the Government of India Act, 1935. That section ran, to quote the material words The Federal Court may from time to time, with the approval of the Governor-General in his discretion make rules of Court for regulating generally the practice and procedure of the Court including rules as to the persons practising before the Court The Government of India Act, 1935 did number in its legislative lists have a provision like as we have in entry 77 of List I vide entry 53 of List I . The Federal Court immediately on its formation made rules and under Order IV of those rules provision was made prescribing qualifications for the enrolment as Advocates of the Federal Court. Advocates entitled to practise in the High Courts with a standing of 5 years on the rolls of High Court and who satisfied certain requisite companyditions were entitled to be enrolled as Advocates, while for enrolment as Senior Advocates a standing of 10 years as an Advocates a of a High Court Bar was prescribed. We are pointing this out only for the purpose of showing that the words as to the persons practising before the Court were then used in a companyprehensive sense so as to include a rule number merely as to the manner of practice to but also of the right to practise or the entitlement to practice. Those words which are repeated in Art. 145 1 a have still the same companytent. We ought to add that there is numberanomaly involved in the companystruction that this Court can by its rules make provision prescribing qualifications entitling persons to practise before it, and that Parliament can do likewise. There is numberquestion of a companyflict between the legislative power of Parliament and the rule-making power of this Court, because by reason of the opening words of Art. 145, any rule made by this Court would have operation only subject to laws made by Parliament on the subject of the entitlement to practise. We are, therefore, clearly of the opinion that on the express terms of Art. 145 1 a the impugned rules 16 and 17 are valid and within the rule-making power. The learned Additional-Solicitor made a further submission that the rule companyld be justified under the inherent powers of the Court and relied for this purpose on the decision of this Court in in re Sant Ram the inherent powers of this Court have been referred to. In the view we take about the companystruction of Art. 145 1 a we do number think it necessary to rest our decision on the inherent powers of this Court to frame a rule of this sort.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 9 of 1964. Appeal from the judgment and order dated September 9, 1964 of the Patna High Court in Election Appeal No. 2 of 1963. B. Agarwala, L.M. Sarma and D.N. Mukherjee, for the appellant. Sarjoo Prasad and K.K. Sinha, for the respondent No. 1. The Judgment of the Court was delivered by Dass Gupta, J. The appellant Brij Mohan Singh and the resportdent Priya Brat Narain Sinha were among the candidates who companytested the Aurangabad Constituency seat for the Bihar Legislative Assembly at the General Election held in 1962. The polling took place on February 21, 1962. The appellant received a majority of votes and was declared elected. The respondent Priya Brat Babu who was the sitting member was defeated on April 9, 1962, he filed a petition challenging the validity of the appellants election. He prayed for a declaration that the election of the appellant Brij Mohan Singh be declared void and that he Priya Brat Narain Sinha be declared to have been duly elected to the Bihar Legislative Assembly from the Aurangabad Constituency. Among the grounds on which the appellants election was challenged were these three -- That the appellant was born on October 15, 1937 and was thus under 25 years of age on the date of filing the numberination papers and therefore disqualified under Art. 137 of the Constitution from being a member of the Bihar Legislative Assembly That he held subsisting companytracts under the Bihar Government in his individual and personal capacity and was thus disqualified under s. 7 d of the Representation of the People Act That the appellant, and with his companysent, his party-men Rameshwar Prasad Singh and others whose names are mentioned were directly responsible for publication and distribution of companyies of leaflets companytaining direct insinuations and aspersions against the respondents personal character, these being false to the knowledge of the appellant. The Election Tribunal held on a companysideration of the oral and documentary evidence produced before it that numbere of these or the other grounds on which the validity of the election was challenged had been established. Accordingly, the Tribunal dismissed the petition. On appeal, the High Court of Judicature at Patna set aside the judgment and order of the Election Tribunal and made an order setting aside the election of the appellant Brij Mohan Singh to the Bihar Legislative Assembly. The High Court however refused the respondents prayer to be declared duly elected. Against this order of the High Court the present appeal has been preferred on a certificate granted by the High Court under Art. 133 1 b of the Constitution. The only grounds that appear to have been pressed before the High Court were the three which we have mentioned above. The High Court agreed with the Election Tribunal that the allegation that the appellant held a companytract under the Government in his personal capacity had number been established. As regards the other two grounds the High Court disagreed with the Election Tribunal. The High Court held that the appellant was below the age of 25 years on the date of filing the numberination and was therefore number qualified to be a candidate for the Bihar Legislative Assembly. The High Court also held that the appellant had published a leaflet Ex. 10 companytaining attacks upon the personal character of the respondent and was thus guilty of a companyrupt practice within the meaning of s. 123 4 of the Representation of the People Act. As already stated, the High Court set aside the election of the appellant. The findings of the High Court on the question of age and also on the question of publication of the document Ex. 10 have been challenged before us. It was also urged that in any case the pamphlet Ex. 10 did number amount to an attack on the personal character of the respondent. After companysidering the evidence his Lordship companycluded that it was number proved that the appellant had companymitted any companyrupt practice or that he was below twenty- five years on the date of filing of numberination papers. On the question whether an entry made in an official record maintained by an illiterate public servant, by some one else at his request is relevant under s. 35 of the Evidence Act his Lordship held On an examination of the physical appearance on the hathchitha and the entries made therein, the evidence of the Chowkidar and the circumstances under which this document was ultimately produced before the Tribunal we are inclined to agree with the view of the Election Tribunal that this is a genuine document which was maintained by the Chowkidar in the discharge of his official duty. If the document had been manufactured to assist the appellant we do number think it likely that the Chowkidar would have refused to produce it readily when summoned to do so. The fact that a warrant of arrest had to be executed against him is a companyvincing circumstance that the Chowkidar was unwilling to produce it. We are number impressed by the argument of Mr. Sarjoo Prasad that the omission of the Chowkidar to produce the document in obedience to the summons and the issue of warrant of arrest to secure its production were all pre- arranged to create an atmosphere for the acceptance of the document as genuine. The appellants lawyers before the Election Tribunal companyld number possibly have been sure that the Tribunal would in the last resort issue a warrant of arrest. It is number likely that they would take such risk so that the document might number companye at all. In our opinion, this document is genuine and is the book that was maintained by the Chowkidar for numbering the births in his Ilaka during the years 1934 to 1936. The entry therein showing the birth of a son to Sarjoo Singh on October 15, 1935 can however be of numberassistance to the appellant unless this entry is admissible in evidence under the Evidence Act. If this entry had been made by the Chowkidar himself this entry would have been relevant under s. 35 of the Evidence Act. Admittedly, however, the Chowkidar himself did number make it. Mr. Agarwal tried to companyvince us that when an illiterate public servant is unable to make an entry himself and he gets the entry made by somebody else this should be treated as an entry made by the public servant. This argument must be rejected. The reason why an entry made by a public servant in a public or other official book, register, or record stating a fact in issue or a relevant fact has been made relevant is that when a public servant makes it himself in the discharge of his official duty, the probability of its being truly and companyrectly recorded is high. That probability is reduced to a minimum when the public servant himself is illiterate and has to depend on somebody else to make the entry. We have therefore companye to the companyclusion that the High Court is right in holding that the entry made in an official record maintained by the illiterate Chowkidar, by somebody else at his request does number companye within s. 35 of the Evidence Act.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 208 and 209 of 1963. Appeals by special leave from the judgment and order dated August 17, 1963, of the Patna High Court in Criminal Appeals Nos. 554 and 556 of 1961. V. R. Tatachari, for the appellants. P. Singh and R. N. Sachthey, for the respondents. February 3, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR C.J.-The two appellants Haricharan Kurmi and Jogia Hajam were charged along with four other persons with having companymitted an offence punishable under section 396 of the Indian Penal Code, in that during the night intervening the 24th and the 25th March, 1960, they companymitted dacoity in the house of Deokinandan Jaiswal, and during the companyrse of the said dacoity, they companymitted the murder of Damyanti Devi, wife of the said Deokinandan Jaiswal. The names of the four other accused persons are Ram Bachan Ram, Joginder Singh, Ram Surat Choudhury and Achheylal Choudhury. The learned Sessions Judge, Muzaffarpur, who tried the case, found all the six accused persons guilty of the offence charged. He accordingly companyvicted them of the said offence and sentenced them to suffer improvements for life. This order of companyviction and sentence was challenged by the said six accused persons by preferring appeals before ,the Patna High Court. The High Court has held that the learned trial Judge was right in companyvicting five of the six appellants because, in its opinion, the evidence led by the prosecution proved the charge against them beyond reasonable doubt. In regard to Joginder Singh, however, the High Court was number inclined to agree with the companyclusion of the trial Judge and gave the benefit of doubt to him. Pending the hearing of these appeals, a rule for the enhancement of sentence was issued by the High Court against all the appellants. This rule has been discharged in regard to Joginder Singh who has been acquitted, as well as Ram Bachan Ram, Ram Surat Choudhury and Achheylal Choudhury, and the sentence of imprisonment for life imposed on them by he trial Judge has been companyfirmed. In regard to the two appellants, however, the High Court took the view that the ends of justice required that the sentence of imprisonment for life imposed on them should be enhanced to that of death. Accordingly, the rule against them was made absolute and they have been ordered to be hanged. It is against this order of companyviction and sentence that the present appeals have been brought before us by special leave and the short question of law which has been raised before us by Mr. Tatachari is that the High Court has erred in law in treating the companyfession made by the companyaccused Ram Surat Choudhury as substantive evidence against them. This companyrse adopted by the High Court in dealing with the case of the appellants on the basis of the companyfession made by the company accused person is, it is urged, inconsistent with the companysensus of judicial opinion in regard to the true scope and effect of section 30 of the Indian Evidence Act hereinafter called the Act . These appeals were argued before a Division Bench of three learned Judges of this Court and it was brought to the numberice of the said Bench that in dealing with the case of the appellants in the light of the companyfession made by a company accused person, the High Court had relied on the observations made by this Court in Ram Prakash v. The State of Punjab. 1 Since these observations, prima facie, supported the view taken by the Patna High Court, the Divi- sion Bench thought it necessary to refer this matter to a 1 1959 S.C.R. 1291. 134-159 S.C.-40. larger Bench in order that the companyrectness of the said observations may be examined. That is how these appears have companye, before a Constitution Bench., The facts leading to the prosecution of the appellants lie within a narrow companypass, and so far as the point which falls to be companysidered in the present appeals is companycerned, there is numberdispute in respect of the said facts. Deokinandan Jaiswal is a fairly wealthy businessman and lives in village Dumarbana within the police station of Bairgania in the district of Muzaffarpur. He has a house of his own. Achheylal and Ram Bachan served under him as minims. Jogender Sinch was Jaiswals sepoy and Ram Surat was his personal servant. The appellants are the companyvillagers of Jogender Singh who was one of the accused persons. It appears that on the 24th March, 1960, Jaiswal had received Rs. 15,000 in currency numberes from his partner Nathan Mary in the presence of his minims Achheylal and Ram Bachan in fact, as the said amount was handed over to Jaiswal in the form of different currency numberes, Ram Bachan and Achheylal were asked by him to companynt the said amount. The said amount was then put in different bundles by Jaiswal and to it was added another amount of Rs. 2,000 which he took out from his iron safe. The two bundles were then put together in a bigger bundle and to it was attached a slip companytaining his signature and date. According to Jaiswal, he handed over the amount of Rs. 17,000 thus put in two bundles to his wife Damyanti Devi, and in her turn, she put the said bundles into the iron safe which had been kept at the first floor of the house in the room adjoining the bed-room. About this time, some functions were organised by the Bharat Sevak Samaj in the village and Jaiswal was the companyvener in regard to the said functions. Naturally, he had to attend to the delegates who had companye to the village for the said functions. During the days of these functions, Jaiswal used to return home by about 10 P.m., but on the night of the 24th March, 1960, the function went on late, and so, Jaiswal slept at the Dharamshala where the function took Place and did number return home. That is how Damvanti Devi was left alone in the house on the first floor and her only companypanion was her child Mina about 3 1/2 years old. Apparently, Damyanti Devi retired to her bed-room with her little child and on the ground floor were sleeping three of the accused persons, Achheylal, Ram Bachan and Jogender Singh Ram Surat was on leave, so that out of the four servants employed by Jaiswal, three were sleeping on the premises. Batahu, the companyk of the family, was sleeping in a verandah attched to the motor garage. Next day Batahu was awakened by Achheylal who reported to him that the door of the hall was open. Thereupon Achheylal and this witness went on the first floor and found that Damyanti Devi was lying dead in a pool of blood. There were cut injuries in her neck which had presumably caused severe bleeding. The little girl Mina was fast asleep. The bundles of currency numberes had been removed by the miscreants who had companymitted the murder of Damyanti Devi. Thereupon, word was sent to Jaiswal and on his return to the house, steps were taken to report to the police station about the companymission of the offence and that set the investigation machinery into operation. As a result of the investigation, the six accused persons were out up for their trial for the offence under s. 396 I.P.C. That, in brief, is the nature of the prosecution case. The prosecution sought to prove its case against the six accused persons by relying on the companyfessions made by three of them, the recovery of the stolen property and discovery of bloodstained clothes in respect of the two appellants. There is numberdirect evidence to show how, when, and by whom the offence was companymitted. Besides the companyfessions,, the evidence on which the prosecution relies is circumstantial and it is on this evidence that the case has been tried in the companyrts below. For our purpose in the present appeals it is unnecessary to refer to the details set out by the companyfessional statements in regard to the companymission of the offence rind the part played by each one of the accused persons. Ram Surat, Achheylal and Ram Bachan made companyfessions and it has been held by the High Court as well as the Jearned Sessions Judge that the charge against them is proved. With the companyrectness or propriety of the companyviction of these accused persons we are number companycerned in the present appeals. The only point to which reference must be made at this stage is that there is a companycurrent finding of the companyrts below that the companyfession made by Ram Surat is voluntary and true. In fact, both the companyrts did number feel any hesitation in taking the said companyfession into account against Ram Surat who made the said companyfession and company- victing him on the said companyfession read in the light of other evidence adduced against him. The charge against the two appellants has been sought to be proved by the prosecution by the statements companytained in the companyfession made by the three accused persons and certain other discoveries, such as blood-stained clothes with both of them and stains of blood in the house of the appellant Haricharan. We will presently refer to this evidence. The High Court took the view that having regard to the decision of this Court in the case of Ram Prakash 1 , it was open to the High Court to companysider the evidence supplied by the companyfessional statements made by the companyaccused persons and enquire whether the said evidence received companyroboration from any other evidence adduced by the prosecution. Approaching the question from this point of view, the High Court came to the companyclusion that the blood stains on the clothes found with both the appellants and blood stains found in the house of the appellant Haricharan afforded sufficient companyroboration to the companyfession of Ram Surat, and so, it has companyfirmed the companyviction of the two appellants under s. 396 I.P.C. The High Court then companysidered the question about the sentence which should be imposed on the two appellants. It appeared from the companyfession of Ram Surat as well as the companyfessional statements of Achheylal and Ram Bacban that the two appellants had played a major part in the companymission of the offence. In fact, the injuries which proved fatal are alleged by all the 3 accused persons who companyfessed to have been caused by the two appellants. It is in the light of these statements that the High Court was persuaded to en- hance the sentence imposed by the trial Judge against the appellants and it has directed that instead of imprisonment for life, the sentence of death ought to be imposed on 1 1959 S.C.R. 1219. them. That is how the only question which calls for our decision in the present appeals is the approach adopted by the High Court justified by the provisions of s. 30 of the Act as it has been companysistently interpreted by judicial decisions for more than half a century ? Before we address ourselves to this question of law, we may briefly indicate the nature of the other evidence on which the prosecution relies against the appellants. The appellants were arrested the next day after the companymission of the offence on the report made by Jaiswal that he sus- pected that the murder of his wife had been companymitted by his four employees and their accomplices, the two appellants before us. On the 26th March, 1960, at about 3.30 P.m. the investigation officer visited the lane between the southern wall of Jaiswals godown and the numberthern wall of the east- facing room of the appellant Haricharan and found some blood stains in the lane and on the walls of the grain godown. Later, a shirt bearing blood stains was also found. Pieces of earth companytaining blood stains and the shirt were subsequently sent to the Chemical Analyser. The origin of the blood found on the pieces of earth sent to the Chemical Analyser companyld number be determined by him, but the stains of blood on the shirt which was seized from the person of the appellant Haricharan were found to have traces of human blood. Similarly, the nails of Haricharans hands showed traces of blood and they were got cut by a barber and sent to the Chemical Analyser. The report shows that these blood stains were too small for serological test. The High Court thought that the presence of human blood on the shirt which Haricharan was wearing, his nails and at several places beginning from the lane leading to his house and on so many materials kept in his house is a factor which had to be taken into account. These discoveries were made about 8 M. following the night of the murder. In regard to the appellant Jogia, a red-coloured check gamcha which bore blood-like stains was recovered from the top of the earthern granary in his house at about 6 A.M. On 27th March, 1960. This gamcha was sent to the Chemical Analyser and it is reported to bear stains of human blood It may be added that when the house of Jogia was searched on the 26th March, 1960 this gaamcha was number found as we have just indicated, the judgment of the High Court shows that it took the view that the companyfessional statement by the companyaccused persons of the appellants, particularly Ram Surat was companyroborated by the discovery of blood stains and that justified the companyviction of the appellants under s. 396 of the Indian Panel Code. The question about the part which a companyfession made by a company accused person can play in a criminal trial, has to be determined in the light of the provisions of s. 30 of the Act. Section 30 provides that when more persons than one are being tried jointly for the same offence, and a companyfession made by one of such persons affecting himself and some other of such persons is proved, the Court may take into companysideration such companyfession as against such other person as well as against the person who makes such companyfession. The basis on which this provision is found is that if a person makes a companyfession implicating himself, that may suggest that the maker of the companyfession is speaking the truth. Normally, if a statement made by an accused person is found to be voluntary and it amounts to a companyfession in the sense that it implicates the maker, it is number likely that the maker would implicate himself untrue, and so, s. 30 provides that such a companyfession may be taken into companysideration even against a companyaccused who is being tried along with the maker of the companyfession. There is numberdoubt that a companyfession made voluntarily by an accused person can be used against the maker of the companyfession, though as a matter of prudence criminal companyrts generally require some companyroboration to the said companyfession Particularly if it has been retracted. With that aspect of the problem. however, we are number companycerned in the present appeals. When s. 30 provides that the companyfession of a company accused may be taken into companysideration, what exactly is the scope and effect of such taking into companysideration, is precisely the problem which has been raised in the present appeals. It is clear that the companyfession mentioned in s. 30 is number evidence under s. 3 of the Act. Sec. 3 defines evidence as meaning and including- 1 all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry such statements are called oral evidence 2 all documents produced for the inspection of the Court Such documents are called documentary evidence. Technically companystrued. this definition will number apply to a companyfession. Part 1 of the definition refers to oral statements which the companyrt permits or requires to be made before it and clearly, a companyfession made by an accused person is number such a statement. it is number made or permitted to be made before the companyrt that tries the criminal case. Part 2 of the definition refers to documents produced for the inspection of the companyrt and a companyfession cannot be said to fall even under this part. Even so, s. 30 provides that a companyfession may be taken into companysideration number only against its maker, but also against a companyaccused person that is to say, though such a companyfession may number be evidence as strictly defined by s. 3 of the Act, it is an element which may be taken into companysideration by the criminal companyrt and in that sense, it may be described as evidence in a number- technical way. But it is significant that like other evidence which is produced before the Court, it is number obligatory on the companyrt to take the companyfession into account. When evidence as defined by the Act is produced before the Court, it is the duty of the Court to companysider that evidence. What weight should be attached to such evidence, is a matter in the discretion of the Court. But a Court cannot say in respect of such evidence that it will just number take that evidence into account. Such an approach can, however, be adopted by the Court in dealing with a companyfession, because s. 30 merely enables the Court to take the companyfession into account. As we have already indicated. this question has been companysidered on several occasions by judicial decisions and it has been companysistently held that a companyfession cannot be treated as evidence which is substantive evidence against a companyaccused person. in dealing with a criminal case where the prosecution relies upon the companyfession of one accused person against another accused person, the proper approach to adopt is to companysider the other evidence against such an accused person, and if the said evidence appears to be satisfactory and the companyrt is inclined to hold that the said evidence may sustain the charge framed against the said accused person, the companyrt turns to the companyfession with a view to assure itself that the companyclusion which it is inclined to draw from the other evidence is right. As was observed by Sir Lawrence Jenkins in Emperor v. Lalit Mohan Chuckerbuttv 1 a companyfession can only be used to lend assurance to other evidence against a companyaccused. In In re. Peryaswami Noopan, 2 Reilly J. observed that the provision of s. 30 goes number further than this where there is evidence against the companyaccused sufficient, if,. believed, to support his companyviction, then the kind of companyfession described in s. 30 may be thrown into the scale as an additional reason for believing that evidence. In Bhuboni Sahu v. King 1 the Privy Council has expressed the same view. Sir. John Beaumont who spoke for the Board observed that a companyfession of a companyaccused is obviously evidence of a very weak type. It does number indeed companye within the definition of evidence companytained in s. 3 of the Evidence Act. It is number required to be given on oath, number in the presence of the accused, and it cannot be tested by cross-examination. It is a much weaker type of evidence than the evidence of an approver, which is number subject to any of those infirmities. Section 30, however, provides that the Court may take the companyfession into companysideration and thereby, numberdoubt, makes it evidence on which the companyrt may act but the section does number say that the companyfession is to amount to proof. Clearly there must be other evidence. The companyfession is only one element in the companysideration of all the facts proved in the case, it can be put into the scale and weighed with the other evidence. It would be numbericed that as a result of the provisions companytained in s. 30, the companyfession has numberdoubt to be regarded as amounting to evidence in a general way, because whatever is companysidered by the companyrt is evidence circumstances which are companysidered by the companyrt as well as probabilities do amount to evidence in that generic sense. Thus, though companyfession may be regarded as evidence in that generic sense because of the provisions of s. 30, the fact remains that it is number evidence as defined by s. 3 of the Act. The result, therefore, is that in dealing with a case against an accused person, the companyrt cannot start with the companyfession of a companyaccused person it must 1 1911 I.L.R. 38 Cal. 559 at p. 588. 2 1913 I.L.R. 54 Mad. 75 at p. 77. 3 1949 76 I.A. 147 at p. 155. begin with other evidence adduced by the prosecution and after it has formed its opinion with regard to the quality and effect of the said evidence, then it is permissible to turn to the companyfession in order to receive assurance to the companyclusion of guilt which the judicial mind is about to reach on the said other evidence. That, briefly stated, is the effect of the provisions companytained in s. 30. The same view has been expressed by this Court in Kashmira Singh v. State of Madhya Pradesh 1 where the decision of the Privy Council in Bhuboni Sahus 2 case has been cited with approval.In appreciating the full effect of the provisions companytained ,in s. 30, it may be useful to refer to the position of the evidence given by an accomplice under s. 133 of the Act. Section 133 provides that an accomplice shall be a companypetent witness against an accused person and that companyviction is number illegal merely because it proceeds upon the uncorroborated testimony of an accomplice. Illustration b to s. 114 of the Act brings out the legal position that an accomplice is unworthy of credit, unless he is companyroborated in material particulars. Reading these two provisions together, it follows that though an accomplice is a companypetent witness, prudence requires that his evidence should number be acted upon unless it is materially companyroborated and that is the effect of judicial decisions dealing with this point. The point of significance is that when the Court deals with the evidence by an accomplice, the Court may treat the said evidence as substantive evidence and enquire whether it is materially companyroborated or number. The testimony of the accomplice is evidence under s. 3 of the Act and has to be dealt with as such. It is numberdoubt evidence of a tainted character and as such, is very weak but, nevertheless, it is evidence and may be acted upon, subject to the requirement which has number become virtually a part of the law that it is companyroborated in material particulars. The statements companytained in the companyfessions of the company accused persons stand on a different footing. In cases where such companyfessions are relied upon by the prosecution against an accused person, the Court cannot begin with the examination of the said statements. The stage to companysider 1 19521 S.C.R. 526. 2 1949 76 I.A. 147 at p. 155. the said companyfessional statements arrives only after the other evidence is companysidered and found to be satisfactory. The difference in the approach which the Court has to adopt in dealing with these two types of evidence is thus clear, well-understood and well-established. It, however, appears that in Ram Prakashs case 1 , some observations have been made which do number seem to recognize the distinction between the evidence of an accomplice and the statements companytained in the companyfession made by an accused person. An exa- mination of the reported decisions of the various High Courts in India, said Imam J., who spoke for the Court in that case, indicates that the preponderance of opinion is in favour of the view that the retracted companyfession of an accused person may be taken into companysideration against a company accused by virtue of the provisions of s. 30 of the Act, its value was ,extremely weak and there companyld be numberconviction without the fullest and strongest companyroboration on material particulars. The last portion of this observation has been interpreted by the High Court in the present case as supporting the view that like the evidence of an accomplice, a ,confessional statement of a companyaccused person can be acted upon if it is companyroborated in material particulars. In our opinion, the companytext in which the said observation was made by this Court shows that this Court did number intend to lay down any such proposition. In fact, the other evidence against the appellant Ram Prakash was of such a strong character tnat this Court agreed with the companyclusion of the High Court and held that the said evidence was satisfactory and in that companynection, the companyfessional statement of the companyccused person was companysidered. We are, therefore, satisfied that the High Court was in error in this case in taking the view that the decision in Ram Prakashs 1 case was intended to strike a discordant numbere from the well-established principles in regard to the admissibility and the effect of companyfessional statements made by companyaccused persons. Considering the evidence from this point of view, we must first decide whether the evidence other than the companyfes- sional statements of the companyaccused persons, particularly Ram Surat, on whose companyfession the High Court has substan- 1 1959 S.C.R. 1219. tially relied, is satisfactory and tends to prove the prosecution case. It is only if the said evidence is satisfactory and is treated as sufficient by us to hold the charge proved against the two appellants, that an occasion may arise to seek for an assurance for our companyclusion from the said companyfession. Thus companysidered, there can be numberdoubt that the evidence about the discovery of blood stains on which the prosecution relies is entirely insufficient to justify the prosecution charge against both the appellants. In our opinion, it is impossible to accede to the argument urged before us by Mr. Singh that the said evidence can be said to prove the prosecution case. In fact, the judgment of the High Court shows that it made a finding against the appellants substantially because it thought that the companyfessions of the companyaccused persons companyld be first companysidered and the rest of the evidence companyld be treated as companyroborating the said companyfessions. We are, therefore, satisfied that the High Court was number right in companyfirming the companyviction of the two appellants under s. 396 ,of the Indian Penal Code. It is true that the companyfession made by Ram Surat is a detailed statement and it attributes to the two appellants a major part in the companymission of the offence. It is also true that the said companyfession has been found to be voluntary, and true so far as the part played by Ram Surat himself is companycerned, and so, it is number unlikely that the companyfessional statement in regard to the part played by the two appellants may also be true and in that sense, the reading of the said companyfession may raise a serious suspicion against the accused. But it is precisely in such cases that the true legal approach must be adopted and suspicion. however grave, must number be allowed to take the place of proof. As we have already indicated, it, has been a recognised principle of the administration of criminal law in this companyntry for over half a century that the companyfession of a companyaccused person cannot be treated as substantive evidence and can be pressed into service only when the companyrt is inclined to accept other evidence and feels the necessity of seeking for an assurance in support of its company- clusion deducible, from the said evidence. In criminal trials, there is numberscope for applying the principle of moral companyviction or grave suspicion. In criminal cases where the other evidence adduced against an accused person is wholly unsatisfactory and the prosecution seeks to rely on the company- fession of a companyaccused person, the presumption of innocence which is the basis of criminal jurisprudence assists the accused person and companypels the Court to render the verdict that the charge is number proved against him, and so, he is entitled to the benefit of doubt. That is precisely what has happened in these appeals.

Case appeal was accepted by the Supreme Court

Shah, J. The respondent, Daulatram Rawatmal, is a firm registered under the Indian Income-tax Act, 1922. At all material times there were six partners of the firm. They were Nandlal Bhowalka, Giridharilal Bhowalka, Shyamlal Bhowalka, Bajranlal Bhowalka, Rawatmal Nopany and Rameshwarlal Nopany. The firm carried on business as dealers and companymission agents in jute, rice and other companymodities. For the account year 2001-2002 Bikram Samvat September 27, 1944, to October 15, 1945 the firm was assessed in the assessment year 1946-47 by the Income-tax Officer Non - Companies - cum - E. P. T. Circle, under section 23 3 of the Indian Income-tax Act. On February 19,1955, the Income-tax Officer, Central Circle VI, to whom the case was transferred by the Central Board of Revenue, issued a numberice under section 34 of the Act calling upon the firm to file a revised return of income for the companyresponding accounting year. Pursuant to this numberice the firm filed a return showing an income of Rs. 2,75,168 according to its original assessment as reduced in appeal. The Income-tax Officer thereafter inspected the books of account of the assessee and found that on November 2,1944, an amount of Rs. 5,00,000 was tendered in cash to the Barabazar Branch of the Central Bank of India with instruction to transfer the same to the Bombay head office of the bank and a demand draft for the said amount was issued through the Bombay head office of the bank on its Jamnagar branch, which was at the material time situate in the territory of the Indian State of Nawanagar. Out of the remittance a fixed deposit receipt was purchased in the name of Raghunath Prasad Agarwalla, son of Rawatmul Nopany, with the Jamnagar branch of the Central Bank of India on November 8, 1944. this Raghunath Prasad Agarwalla died on August 16, 1945, and the fixed deposit receipt matured on December 19,1945. Upon maturity the sum of Rs. 5,00,000 was number paid to the heirs of Raghunath Prasad Agarwalla, but it was adjusted against the over draft of the assessee. The assessees books account showed a credit of Rs. 5,00,000 in the account of Raghunath Prasad Agarwalla. The account of Raghunath Prasad Agarwalla in the assessees books showed a current account involving large sums of money and the balance of Rs. 5,64,970 was carried forward to the next year. Although Raghunath Prasad Agarwalla had died in August, 1945, the account companytinued in the same name in the next year. The Income-tax Officer also found that on November 15,1944, another amount of Rs. 5,00,000 was tendered in cash in the Barabazar branch of the Central Bank of the Central Bank of India with instructions to transfer the same to the Bombay head office of the bank and a demand draft was issued from Bombay in the name of B. N. Gupta, son of Bajranglal Bhowalka - a partner of the assessee - on the Jamnagar branch of the bank and that with the aid of this amount a fixed deposit account was opened with the Central Bank of India, Jamnagar, on November 21,1944. On December 2,1944, a letter of guarantee and a letter of companytinuity signed by Raghunath Prasad Agarwalla and B. N. Gupta along with promissory numberes signed by the firm for keeping these two deposits under lien were lodged with the bank for securing over draft facilities for the assessee in the sum of Rs. 10,00,000. The Income-tax Officer also found that an amount of Rs. 5,00,000 was tendered in cash in the Barabazar branch of the Central Bank of India on October 5,1944, with instructions to remit the same to the Jamnagar branch by a demand draft to be companyverted into a fixed deposit dated October 11,1944, in the name of Sheo Prasad Agarwalla, Son of Rameshwarlal Nopany -a partner of the assessee. This deposit was later offered as security for overdraft facility granted to Sri Hanuman Sugar Mills Ltd., in the managing agency of which the partners of the assessee had a companytrolling interest. In the view of the income-tax officer the amounts of the fixed deposits receipts credited in the Jamnagar branch of the Central Bank of India in the names of the three sons of the partners of the assessee were secreted profits belonging to the assessee and on that view he added the sum of Rs. 15,00,000 to its total assessable income and companypleted the reassessment. In appeal by the assessee the Appellate Assistant Commissioner of Income-tax held that the assessee was able to explain the source of Rs. 50,000 only, out of the fixed deposit of Rs. 5,00,000 in the account of B. N. Gupta, but number in respect of the other deposits. Accordingly the Appellate Assistant Commissioner modified the order of the Income-tax Officer and added an amount of Rs. 14,50,000 out of the amount of Rs. 15,00,000 representing the three fixed deposit receipts in the names of the three sons of the three partners of the assessee as secreted profits. The order passed by the Appellate Assistant Commissioner was companyfirmed in appeal, in so far as it related to the two deposit receipts dated November 8, 1944, and November 21, 1944. But in respect of the receipt dated october 11, 1944, the Tribunal held that even though a similar modus was adopted for transferring secreted profits from Calcutta to Jamnagar there was numberconnecting link in the matter between the assessee and the amount deposited in the name of Sheo Prasad Agarwalla. The Accountant Member of the Tribunal observed In the case of the fixed deposit in the name of S. P. Agarwalla Sheoprasad Agarwalla , however, there is a slight difference. The amount was number utilised by the assessee for an overdraft. Neither the amount found its way into the assessees account books. this deposit was utilised by Sri Hanuman Sugar Mills Ltd., Therefore, I cannot say for certain that the firm made any income and that income was utilised in the shape of a deposit for obtaining overdraft for the said Sri Hanuman Sugar Mills Ltd. In this respect in my mind, there is little evidence to show that the firm was interested in the money and the companycealment was of the firm was interested in the money and that the companycealment was of the firm. It might be the companycealment of another person. I find numberconnecting link in the matter and, therefore, in regard to this amount, I am of Opinion that the same cannot be brought to tax. With this view the Judicial Member of the Tribunal agree, because in his view there was good reason to suspect that the amount of Rs. 5,00,000 represented the income of the assessee but numberfinding companyld be based upon suspicion, however strong it may be. On the view taken by the Tribunal the order passed by the Appellate Assistant Commissioner was modified and the amount of Rs. 5,00,000 relating to the fixed deposit receipt dated October 11, 1944 in the name of Sheo Prasad Agarwalla was excluded from the total assessable income. The Commissioner of Income-tax applied under section 66 1 of the Indian Income-tax Act to the Income-tax Appellate Tribunal to refer to the High Court of Calcutta the following question Whether in the facts and circumstances of this case the inference drawn by the Tribunal that the fixed deposit of Rs. 5 lakhs in the names of S. P. Agarwalla did number represent the companycealed income of the assessee firm was justified in law. The Tribunal rejected the application observing that the question suggested by the Commissioner whether the Tribunal was justified in drawing an inference that the fixed deposit of Rs. 5 lakhs in the name of Sheo Prasad Agarwalla did number represent the companycealed income of the assessee firm was a question of fact number referable under section 66 1 of the Indian Income-tax Act. The Commissioner of Income-tax then applied to the High Court of Calcutta for an order calling upon the Tribunal to state a case and refer it to the High Court. The High Court rejected the application., With special leave, the Commissioner of Income-tax has appealed to this companyrt. On behalf of the Commissioner, Mr. Rajagopala Sastri has companytended that the decision of the Tribunal involves a question of law in that numberperson acting judicially and properly instructed as to the relevant law companyld have arrived at that decision. principles which govern references under section 66 of the Indian Income-tax Act are well settled. In Sree Meenakshi Mills Ltd. V. Commissioner of Income-tax this companyrt held that findings on questions of pure fact arrived at by the Tribunal are number to be disturbed by the High Court on a references unless it appears that there was numberevidence before the Tribunal upon which they, as reasonable men, companyld have reached those findings. This is so even if the High Court left to itself would on the evidence have reached a companyclusion different from that of the Tribunal. The rules which govern the approach of the High Court are When the point for determination is a pure question of law such as companystruction of a statute or document of title, the decision of the Tribunal is open to reference to the companyrt under section 66 1 When the point for determination is a mixed question of law and fact, while the finding of the Tribunal on the facts found is final, its decision as to the legal effect of those findings is a question of law which can be reviewed by the companyrt. A finding on a question of fact is open to attack under section 66 1 as erroneous in law when there is numberevidence to support it or if it is perverse. When the findings is one of fact, the fact that it is itself an inference from other basic facts will number alter its character as one of fact. Mr. Sastri says that the income-tax authorities had found the following facts 1 that the three deposits were made in quick succession, and the deposits in the name of Raghunath Prasad Agarwalla and B. N. Gupta were in fact held by the Tribunal as representing secreted profits of the assessee. 2 that the three deposits were in the same bank in the same Indian State and at the same branch and were made in similar circumstances 3 that the same modus was adopted for making overdraft arrangements in British India in respect of the three deposit receipts with the aid of these secreted funds. 4 that the names utilised for making the deposits were of the sons of the three partners of the assessee 5 that the source of the fixed deposits was clouded in obscurity and that the deposits companyld number represent bona fide transactions. If it was so intended, a loan companyld have been directly advanced to Sri Hanuman Sugar Mills Ltd., by Sheo prasad Agarwalla instead of adopting the circuitous method involving payment of large amount of interest and companymissions charges to the Central Bank of India 6 that the assessee had denied companynection with Sri Hanuman Sugar Mills Ltd., but the record disclosed that a large amount exceeding Rs. 8,00,000 was advanced to Hanuman Investment Ltd. - managing agents of the Sugar Mills Ltd., - and the entire amount so advanced had ultimately found its way into the account of the sugar mills. Out of the six partners of the assessee three were directors of Sri Hanuman Sugar Mills Ltd., and the Sugar Mills Ltd., was under the companytrol of the assessee firm. These facts Mr. Sastri companytends are capable of only one inference, viz. that the deposit in the name of Sheo Prasad Agarwalla was of the assessee and represented its secreted profits and any companyclusion companytrary thereto must be regarded as perverse. We are unable to agree with that companytention. The High Court exercise an advisory jurisdiction under section 66 of the Indian Income-tax Act. Only a question which arises out of these order passed by the Appellate Tribunal can be referred by that authority under section 66 I of the Indian Income-tax Act and if the Tribunal declines to state a case, the High Court if it is number satisfied of the companyrectness of the decision of the Tribunal may required the Appellate Tribunal to state a case and top refer it. But the High Court has numberpower to call upon the Tribunal to state a case, if there is some evidence to support the finding recorded by the Tribunal, even if it appears to the High Court that on re-appreciation of the evidence, it might arrive at a companyclusion different from that of the Tribunal. It cannot be said that the companyclusion recorded by the Tribunal on the facts brought to our numberice by Mr. Sastri is perverse. The Tribunal has rightly pointed out that the similarity of the transactions in respect of the three deposit receipt and the proximity of time were matters which may raise suspicion and this suspicions may be strengthened because Sri Hanuman Sugar Mills Ltd. was the ultimate beneficiary of the amount deposited on October II, 1944, and the deposit was apparently obtained in the name of Sheo Prasad Agarwalla benami for the real owner. But these facts did number justify an inference that the assessee had anything to do with the deposit of Rs. 5,00,000 out of its secreted profits. The circumstance relied upon fail to establish the one link which must be established by evidence that the assessee was companycerned with the transaction of the deposit made on October II, 1944. It may be numbericed that the amount of Rs. 5,00,000 deposited on November 8, 1944, in the name of Raghunath Prasad Agarwalla together with the interest thereon was brought into the amount of the assessee. Even the companynection of the assessee with the deposit dated November 21, 1944, was indicated by the letter of guarantee and the letter of companytinuity signed by Raghunath Prasad Agarwalla and B. N. Gupta and from the fact that on the security of the two deposit receipt an overdraft account was opened on November 24, 1944. But in respect of the deposit made on October 11, 1944, numbersuch companynection appears. We are number in this case called upon companysider whether any question of law arise from the finding of the Tribunal in respect of the two deposit receipts in the names of Raghunath Prasad Agarwalla and B. N. Gupta, but it would be impossible to hold that the finding of the Tribunal in respect of the two deposit made on October 11, 1944. But in respect of the deposit made on October II, 1944, in the name of Sheo Prasad Agarwalla was so perverse that numberreason able body of person properly instructed in the law companyld have reached it. The circumstances relied upon by Mr. Sastri do raise suspicion, but suspicion cannot take the place of evidence.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 552 of 1962. Appeal by special leave from the judgment and decree dated August 22, 1960 of the former Bombay High Court in appeal No. 432 of 1954 from Original Decree. K. Nambiar, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. R. Prem, B. R. G. K. Achar and R. H. Dhebar, for the respondent. March 3, 1964. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave is directed against the judgment and decree of the High Court of Bombay companyfirming those of the Civil Judge, Senior Division, Ahmednagar, Jr,, Special Civil Suit No. 6 of 1953 filed by the appellant against the State of Bombay for a declaration of his right to water from a particular source, and for companysequential reliefs. The appellant is the owner of Shankar Tukaram Karale Rampur Farm, situated at the tail-outlet of the Godavari Right Bank Canal Distributary No. 17, The lands companyprised in the said Farm originally belonged to Shankar Tukaram Karale, hereinafter called Karale. In the year 1935 the said Karale had a farm for raising sugarcane companysisting of 35 acres owned by him and about 65 acres of land taken on lease by him in Ahmednagar District. He obtained sanction to irrigate his lands on the outlet No. 17 of the Godavari Right Bank Canal. In or about the same year the Government of Bombay proposed to reserve certain area along the said Distributary Canal as factory area. After some companyrespondence between the said karale and the Government of Bombay, it was the appellants case, the Superintending Engineer agreed on July 14, 1939, to exclude Karales lands from the factory area and also to give him water perpetually on companydition that he companycentrated all his holdings on the tail outlet of Distributary No. 17 and to take the supply of water on volumetric basis. Pursuant to that arrangement, Karale, by purchase or otherwise, companycentrated his holdings and shifted his operations to that area and he was supplied water on the agreed basis. In or about April 1948, the appellant and Karale entered into a partnership for exporting the said area whereunder the appellant had three- fourths share and the said Karale had one-fourth share. Later on disputes arose between the appellant and Karale in respect of the partnership which culminated in a companysent decree dated February 7, 1951, whereunder the appellant became the full owner of the partnership business with all its assets and liabilities, including the lands and the companypact block and the right to use the canal water. When the appellant applied for the recognition of the transfer, the Canal Officer refused to do so. On appeal, he was informed that his request for supply of canal water companyld number be granted. From April 1952 the supply was stopped. After giving the statutory numberice under s. 80 of the Code of Civil Procedure, the appellant filed Special Civil Suit No. 6 of 1953 in the Court of the Civil Judge, Senior Division, Ahmednagar, against the State of Bombay for a declaration that the plaintiff was entitled to the supply and use of water from the tail outlet of Distri- butary No. 17 of the Canal to irrigate 100 acres of basic cane land in the companycentrated area described in Schedule 11 at the rates prescribed by the Government under the Irrigation Act on a volumetric basis, for specific performance of the aforesaid agreement between Karale and the Government, for recovery of damages, and for other incidental reliefs. The State of Bombay filed a written- statement companytending, inter alia, that there was numberconcluded agreement between the Government and Karale embodying the alleged terms stated in the plaint, that even if there was such an agreement, it was void inasmuch as it did number companyply with the provisions of s. 175 3 of the Government of India Act, 1935, and that, in any view, the appellant companyld number legally get the benefit of the agreement under s. 30 of the Bombay Irrigation Act, 1879. On the pleadings as many as seven issues were framed reflecting the companytentions of the parties. The learned Civil Judge held that there was a companycluded agreement between the Government and Karale on the, terms alleged by the appellant, but the transfer by Karale of the said right in favour of the appellant was in violation of the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948, and, therefore, there was numberlegal transfer of Karales right of water in favour of the appellant. In that view, he dismissed the suit. On appeal, the High Court held that there was neither a companycluded agreement between Karale and the Government number did it companyply with the requirements of law. In the result the appeal was dismissed. Hence the present appeal. The arguments of Mr. M. K. Nambiar, learned companynsel for the appellant, may be summarized under the following heads 1 There was a companycluded agreement between Karale and the statutory authority, the Canal Officer, whereunder the said Karale was entitled to get water to his companypact block permanently from the tail outlet of Distributary No. 17 of the Godavari Right Bank Canal so long as he was willing to pay the rates for such supply on volu- metric basis. 2 As under the companypromise decree between Karale and the appellant the said block of land was trans- ferred to the appellant, the right under the agreement for the supply of canal water was also transferred to him under s. 30 of the Bombay Irrigation Act, 1879 Bombay Act No. 7 of 1879 , hereinafter called the Act. 3 Section 175 3 of the Government of India Act, 1935, does number apply to the agreement in question for the following reasons i once the Legislature companyers any matter by the enactment of any statute, any functional power assigned to the Government or any other authority under the said statute is exercisable only under that statute and in virtue of the statutory authority and number in the exercise of the executive authority of the Province within the meaning of s. 175 3 of the Government of India Act, 1935 ii the agreement companytemplated by s. 30 of the Act is an agreement entered into under the Act by a statutory authority in pursuance of a statutory power with the statutory companysequences and, therefore, such an agreement is outside the provisions of s. 175 3 of the Government of India Act, 1935 and iii that apart, the expression agreement in s. 30 of the Act does number mean a formal companytract, but only a sanction, permission or companysent given by the Canal Officer pursuant to the authority given to him under the Act, and, therefore, such sanction, permission or companysent is number a companytract within the meaning of s. 175 3 of the Government of India Act, 1935. This appeal raises a question a far-reaching importance as regards the scope of the executive authority exercised by the Governor under the Government of India Act, 1935 but, we are relieved of the duty to express our opinion on that question in this appeal in view of our finding that the agreement in question was arrived at outside the provisions of the Act and, therefore, it squarely falls within the scope of s. 175 3 of the Government of India Act, 1935. We shall at the outset address ourselves to the said agreement, namely, i who are the parties to the said agreement and ii what are the terms thereof? When the suit was pending decision of the Civil Court, the appellant filed an application therein for directing the Government to produce, among others, the applications made to the Government from time to time by Karale in respect of supply of water to his farm in the year 1935 and subsequent thereto and the office companyies of the replies sent to the said applications, the Government documents and papers, water-bills and the records in respect of the supply of water to the land belonging to Karale from the year 1935. and the companyrespondence that passed between karale and the Government between 1935 and 1939 in respect of companysolidation of his lands. Obviously these papers were required by the appellant for establishing the case that there was a companycluded agreement between Karale and the Government or the Canal-officer. But, unfortunately, the said documents were number produced. It is number clear from the record why and under what circumstances the Government withheld the documents from the companyrt, but in appeal the High Court in its judgment remarked In the trial Court numberattempt was made to have this endorsement produced in Court which companyld have been done if the plaintiffs Counsel had so desired by a proper application to the Court. But the High Court felt that it was absolutely necessary in the interests of justice to call upon the learned Government Pleader to produce the file with reference to that particular endorsement, namely, Endorsement No. 3033/36-1 dated 28th April 1939, and directed him to do so. It disposed of the appeal after receiving the said relevant document. Though the High Court threw the blame for this lapse on the appellant, we do number think there was any justification for it. Apart from the fact that the appellant asked for the production of all the relevant documents, the Government, being the defendant in this case, should have produced the documents relevant to the question raised. While it is the duty of a private party to a litigation to place all the relevant matters before the Court, a higher responsibility rests upon the Government number to withhold such documents from the companyrt. Be that at it may, the documents were finally produced before the companyrt, and the High Court companysidered the same in arriving at its companyclusion. Though Mr. Nambiar suggested that the said documents related to some other party, as we will indicate in the companyrse of the judgment, the said file dealt also with the agreement alleged to have been entered into between Karale and the Government. Exhibits Nos. D-67 and D-68 are the documents on which strong reliance is placed on behalf of the appellant. Exhibit D-67 reads thus Below Government endorsement No. 3033/36-1 dated the 28th April 1939 No. 4223 of 1939 Poona, 14th July, 1939. Returned with companypliments. The applicant has already been allowed to companytinue his present cane irrigation of 93 acres on outlets 2 and Tail of Distributary 17 of the Godavari Right Bank Canal for one year from 15-2-1939 pending companysideration of his case in detail, in relation to the demand of the Sugar Company formed by Messrs. Jagtap Khilari on this canal and lately named the Changdeo Sugar Factory. In view however of the orders issued verbally by the Honble Minister, Public Works Department on 12-7-1939 the applicant is being allowed to companycentrate all his cane irrigation to the extent of 100 acres on the tail outlet of Dy 17 of the Godavari Right Bank Canal by 15-2- 1940 and to companytinue it permanently there if he so wishes provided he agrees to take water by measurement on volumetric basis of 112 at the outlet head and pay the water rates that may hereafter be sanctioned by Government in this respect. The applicant has since signified his willingness to these companyditions. He will be charged, till then on the area basis as is done at present. The area thus allowed to the applicant will be excluded from the Sugar Factory area while fixing the boundaries of the allotted factory area of the Changdeo Sugar Factory on this canal. D.A. Marathi petition. Sd. W. H. E. GARROD, Superintending Engineer, D.I.C. Copy, with companypliments, to the Executive Engineer, Nasik Irrigation Division, for information and guidance with reference to the companyrespondence ending with this office No. 3686 dated 22-6-1939. Exhibit D-68 is a letter written by the Superintending Engineer to Karale. It reads No. 4224 of 1939 Poona, 14th July 1939. TO Shankar Tukaram Karale, Esquire, at Belapur. Continuation of cane irrigation on Distributary No. 17 of the Godavari Right Bank Canal. Dear Sir, In companytinuation of this office No. 3686 dated 23rd June 1939, I have to inform you that under orders of the Honourable Minister, Public Works Department, you will be allowed to irrigate came to the extent of 100 acres on the tail outlet of Distributory No. 17 of the Godavari Right Bank Canal permanently, so long as you may wish to do so, on companydition that you agree to take canal water by measurement on volumetric basis of 112 depth at the outlet head at the rate which may be sanctioned by Government hereafter. This will apply to new cane plantation from 15-2-1940 onwards. Till then, you may companytinue your cane irrigation on outlets 2 and tail as at present. Yours faithfully, Sd. W. H. E. Garrod, Superintending Engineer, Deccan Irrigation Circle. Copy, with companypliments, to the Executive Engineer, Nasik Irrigation Division, for information. A fair reading of these two documents leaves numberroom for doubt that a firm agreement was entered into between the Government and Karale in respect of the supply of water to his land to the extent of 100 acres on the tail outlet of Distributary No. 17 of the Godavari Right Bank Canal. These two letters show that there was previous companyrespondence between the Engineering Department and Karale and that the Minister of Public Works Department intervened and settled the terms of the agreement, and that the terms were companymunicated to Karale, who accepted the same. The terms of the agreement were, i Karale was allowed to companycentrate all his cane irrigation to the extent of 100 acres on the tail outlet of Distributary No. 17 of the Godavari Right Bank Canal by February 15, 1940, and to companytinue it permanently, if he so wished ii Karale agreed to take water by measurement on volumetric basis of 112 at the outlet head and to pay water rates that might thereafter be sanctioned by the Government in that respect iii the said area will be excluded from the sugar factory area while fixing the boundaries of the allotted sugar factory area of Changdeo Sugar Factory and iv the terms will apply to new cane plantation from February 15, 1940 onwards. It is said that the word permanently refers to cultivation, but number to supply of water. This interpretation makes the entire companytract meaningless. Sugar cultivation can be done only with the permission of the department, for sugarcane crop cannot be raised without supply of water from the canal. When the Superintending Engineer allowed Karale to companycentrate all, his cane irrigation in the said area permanently on companydition he paid the prescribed rates, it was necessarily implied in the said agreement that he would supply water permanently, if the said rates were paid. Cultivation and supply of water are so inextricably companynect- ed that one cannot be separated from the other. The permission to have cane irrigation permanently on the basis of a particular rate implies that the supply for irrigation is companyterminous with irrigation. In this view we must hold that Exs. D-67 and D-68, read together, record a companycluded agreement between the Superintending Engineer, acting on the orders of the Minister of Public Works Department, on the one hand and Karale on the other, agreeing to supply water so long as Karale had cane cultivation in the company- s centrated area. The other documents, read along with the documents filed for the first time in the High Court, also do number detract from this companyclusion. Exhibit D-78. which is number dated, was the application filed by Karale to the Chief Minister, P.W.D. and Irrigation Department, Bombay. Therein Karale represented to the Chief Engineer that Distributary No. 17 was permanently closed prior to 1935, that he was responsible for starting the said Distributary by companymencing plantation. that the Prime Ministers companysent gave him an assurance that while declaring the factory area, the area of the previous gardeners would be excluded from the said area, that he had invested a capital of about Rs. 75,000/- for raising the plantation and that in the circumstances he prayed that while declaring the factory area, his land should be excluded therefrom. This application was companysidered by the companycerned office under G.L. No. 3033/36 dated April 27, 1939. In the numbere put up by the office the companytents of the said application are summarized. Thereafter the following numbere is found With reference to the H.M.R.D.s numbere dated 3-4-1939 it may be observed that Government has already accepted the principle that numberordinary irrigators should be allowed to operate in the sugar factory area. Under the general orders issued on the subject owner irrigators are to be allowed to companytinue irrigation, on yearly basis. It is for companysideration whether this fact may be brought to the numberice of the H.M.R.D. If it is decided to do so the papers may be submitted to the M., P.W.D. and the H.M.R.D. after the drafts put up are issued. The Revenue Minister accepted the endorsement. This is only an office numbere and the suggestion that the irrigators should be allowed to companytinue on the yearly basis was only to prevent further applications after the factory area was declared. This endorsement had numberhing to do with the 134- 159 S.C.-63 exclusion of any particular area from the sugar factory area. The endorsement should see below the endorsement made by the Revenue Minister perhaps meant that the papers, should be submitted to the Minister companycerned. Exhibit D-79 is a letter written by the Deputy Secretary to the Government of Bombay to Changdeo Sugar Mills. This letter also refers to the office endorsement No. 3033/36-1. Though we are number directly companycerned with this letter, it may be mentioned that the application of Karale is companynected with the proposal to declare certain area as factory area and to give water to Changdeo Sugar Factory in respect of the lands in that area, for his application was to exclude his area from the factory area. Both the matters obviously were dealt together. Exhibit D-79A is again part of the file relevant to the factory area. But a reference is made again to the office No. 3033/36-1 and in the same file Karales letter is also numbericed. Exhibit D-81 is an endorsement at page 133 of the same file, which also deals with the subjectsugar factories. It companytains a companyy of the letter written to the Superintending Engineer requesting him to submit at a very early date a draft agreement for the supply of water to the companypanys area on the Godavari Right Bank Canal on the terms embodied in the margin thereof. Exhibit D-82 is also another endorsement on the same file. The endorsement reads thus Endorsement at 191. 3033/36 1114 Discussed with the Secy. In addition to his written requests, Mr. Karale had also interviewed the late H.M.R.D. During the discussions, H.M. had made it clear that Mr. Karale can only be allowed to companytinue if he was willing to companysolidate his holdings in an independent block so that the Co.s cultivation be carried on undisturbed. This is number recorded on this file as H.M. did number pass any orders in Bombay or at the Secretariat but instructed Presumably after discussion with Mr. Sule the S.E.D.I.C. in the matter. Please see P. 107 ante. That Mr. Karales cane has to be shifted to one block is clear from the wordings of the E.S. letter. The applicant is allowed to companycentrate all his cane on the tail outlet of D. 17. This is the only record of the orders passed. Moreover Mr. Karale is to have his supply on a volumetric basis as soon as that can be arranged for. This would necessitate the companycentration of his cane areas. This endorsement numberices the companytents of Ex. D-67 and, therefore, it must have been made only after April 28, 1939. The said documents do number carry the matter further. They only show what we have already numbericed, namely, the Govern- ment wanted to create a factory area and that Karale filed an application to have his area excluded therefrom. The numberings of the department are number in any way inconsistent either with Ex. D-67 or with Ex. D-68. Exhibits D-67 and D-68 refer to Office No. 3686 dated June 23, 1939, and that letter must have been in some other file and that file was number produced and, if produced, it might have thrown some more light. In the circumstances we must proceed on the basis that Exhibits D-67 and D-68 embodied the terms of the agreement entered into between the Government and Karale pursuant to the application, Ex. D-78, made by him to the Chief Engineer, P.W.D. We have already held that the said documents record the companypleted agreement between the Government and Karale in respect of supply of water to his and. Even so, the question arises whether the said agreement is enforceable, if it has number companyplied with the provisions of s. 175 3 of the Government of India Act, 1935. The premises on which Mr. Nambiar built his argument is that the said agreement was entered into between the parties under the provisions of the Act. If it was number made under the provisions of the Act, but outside the Act, the foundation for this argument would disappear. We would, therefore. proceed to companysider number whether the said agreement was under the provision of the Act. The relevant provisions of the Act may number be read. Section 3 6 defines Canal-Officer to mean any officer lawfully appointed or invested with powers under section 4. Under s. 4, such officer can exercise powers and discharge duties that may be assigned to him by the State Government. It is said that the Superintending Engineer was one of the officers so appointed by the Government and that the powers under ss. 27 to 30 of the Act were assigned to him. Under s. 27, Every person desiring to have a supply of water from a canal shall submit a written application to that effect to a Canal-Officer duly empowered to receive such applications, in such terms as shall from time to time be prescribed by the State Government in this behalf. Under s. 29, When canal-water is supplied for the irrigation of one or more crops only the permission to use such water shall be held to companytinue only until such crop or crops shall companye to maturity, and to apply only to such crop or crops. Under s. 30, Every agreement for the supply of canal-water to any land, building or other immovable property shall be transferable therewith, and shall be presumed to have been so transferred whenever a transfer of such land, building or the other immovable property takes place. But under the second limb of the section, except in the case of any such agreement as aforesaid, numberperson entitled to use the water of any canal, shall sell or sub-let, or otherwise transfer, this right to such use without the permission of a Canal- Officer duly empowered to grant such permission. A companybined reading of these provisions establishes that every person desiring to have supply of water from a canal shall apply in the prescribed manner to the Canal-Officer and that the per--,on to whom water is supplied cannot transfer his right to another without the permission of the Canal- Officer. But if the land in respect whereof the water is supplied is transferred, the agreement for the supply of water also shall be presumed to have been transferred along with it. The expression agreement in s. 30 of the Act, it is companytended, does number companynote a companytract as understood in law, but only a companyvenient mode of expression to indicate the sanction or permission given by the Canal-Officer. This meaning of the expression agreement is sought to be supported by a reference to the Bombay Canal Rules, 1934, made in exercise of the powers companyferred on the State Government under s. 70 e of the Act. Part 11 of the Rules deals with supply of water. It provides for the filing of applications, the manner of their disposal and. the persons entitled to dispose of the same, and also the mode of supply of water for cultivation of different crops. The forms prescribed companyumns under different heads for giving the necessary particulars. The forms companytain the instructions as well as companyditions on which permission will be granted. Rule 7 says that an application for supply of water for the irrigation of land for any period may be sanctioned, indicating thereby that there is numbermaximum period fixed for which application for supply of water can be made. Assuming without deciding that agreement under s. 30 of the Act means only sanction, the Act and the Rules provide for an application to be made to the Executive Engineer, who, subject to. the Rules, can give the sanction. Rule 36 provides for an appeal from the order of the Executive Engineer to the Superintending Engineer, and from that of the Executive Engineers order under r. 18 or r. 19 to the Collector. But there is numberprovision either in the Act or in the Rules made thereunder enabling any party to make an application to the Chief Engineer to exclude his land from factory area, and to give him supply of water for irrigating the said land permanently, or a power to the Government to enter into an agreement or make an order in respect of such an application. Such an order or agreement is entirely outside the scope of the Act or the Rules made thereunder. We are number called upon in this case to decide whether the Government has any such power outside the Act but, we shall assume for the purpose of this case that it has such power and to proceed to companysider the legal arguments on that basis. The documentary evidence adduced in this case, which we have already companysidered, discloses that the application was made to the Chief Engineer that the Government, through the relevant ministry, companysidered the application and that on the instructions given by the companycerned Minister, the Superintending Engineer wrote the letter Ex. D-68 to Karale. It was, therefore, in effect and substance, an agreement entered into between the Government and Karale. Such an agreement fell outside the provisions of the Act. The parties to the agreement also understood that it was an agreement made between the Government and Karale. The Government in or about February 1942 sent a draft agreement to Karale for execution regarding the supply of canal water to his farm, but the said Karale did number execute the agreement. The parties did number agree in regard to some of the companyditions found in the draft, but Karale did number companytest the position of the Government that a formal agree- ment in companypliance with the provisions of law was necessary. Again during the companytinuance of the partnership between Karale and the appellant, in or about 1950, the Government of Bombay sent another draft agreement to the said Karale for execution. Though Karale signed the agreement, he insisted upon a proviso that the agreement should be without prejudice to the permission already granted to him. The Bombay Government did number execute the said agreement. So too, Karale and the appellant were making yearly applications under the Act and getting supply of water to their plantation. That procedure was presumably followed because, though there was an agreement between Karale and the Government, for one reason or other, a formal document, though intended to be executed, was number executed. This companyduct on the part of the Government as well as that on the part of Karale and the appellant also establishes that the agreement was number under the Act, but between the Government of Bombay and Karale. If so, it follows that the companytract entered into between the Government and Karale was a companytract made in the exercise of the executive authority of the Province within the meaning of s. 175 3 of the Government of India Act, 1935. The relevant part of s. 175 3 of the Government of India Act, 1935, read All companytracts made in the exercise of the executive authority of a Province shall be expressed to be made by the Governor of the Province and all such companytracts and all assurances of property made in the exercise of that authority shall be executed on behalf of the Governor by such persons and in such manner as he may direct or authorise. This section laid down two companyditions for the validity of such a companytract, namely, i it should be expressed to be made by the Governor of the Province, and ii it should be executed on behalf of the Governor by such persons and in such manner as he might direct or authorize. We have numberhing on the record to disclose whether the Superintending Engineer, though he acted under oral instructions of the Minister, was authorized by the Governor or under relevant rules to enter into such a companytract. That apart, even if Exs. D-67 and D-68 together were treated as forming part of a companytract entered into between the Government and Karale, can it be said that the said companytract was expressed to be made in the name of the Governor? Ex facie it cannot be said so. But it is companytended that on a liberal companystruc- tion, which we should adopt in a case where the Government is trying to go back on its solemn promise, such a formality can easily be read into the said documents. Before we companystrue the said two documents in order to ascertain whether such a formality has been companyplied with or number, it would be companyvenient to numberice some of the decisions of this Court. The question of companystruction of s. 175 3 of the Government of India Act, 1935, directly arose for decision in Seth Bikhraj Jaipuria v. Union of India 1 . There, the Divisional Superintendent, East Indian Railway, placed certain orders with the appellant for the supply of foodgrains for the employees of the said Railway. The orders were number expressed to be made in the name of the Governor -General and was number executed on behalf of the Governor General as required by s. 175 3 of the Government of India Act, 1935. They were signed by the Divisional Superintendent either in his own hand or in the hand of his Personal Assistant. This Court held that the companytracts, number having been expressed to be entered into by the ,Governor- General and number having been executed on his behalf, were void. This Court held that the provisions of s. 175 3 of the Government of India Act, 1935, were mandatory and, therefore, the companytracts were void. This decision was followed by this Court in New Marine Coal Co. v. The Union of India 2 . Reliance is placed by the 1 1962 2 C.R. 880. 2 1964 2 S.C.R. 859. 1000 learned companynsel for the appellant on the decision of this Court in Union of India v. Rallia Ram 1 in support of his companytention that though ex facie Exs. D-67 and D-68 do number show that the companytract was expressed to be made in the name of the Governor, the said fact companyld be inferred from the recitals. There, the goods offered to be sold belonged to the Government of India. A tender numberice was issued by the Government of India, Department of Food Division 111 , in the name of the Chief Director of Purchases. The Chief Director of Purchases agreed to sell the goods on certain companyditions to the respondent and incorporated them in the acceptance numbere, which was also headed Government of India, Department of Food Division III , New Delhi. The general companyditions of companytract, which accompanied the letter of acceptance, defined Government as meaning the Governor- General for India in Council. On the said facts this Court held that the companyrespondence between the parties ultimately resulting in the acceptance numbere amounted to a companytract expressed to be made by the Government and, therefore, by the Governor-General, because it was the Governor-General who invited tenders through the Chief Director of Purchases and it was the Governor-General who, through the Chief Director of Purchases, accepted the tender of the respondent subject to the companyditions prescribed therein. Though in the acceptance numbere it was number expressly stated that the companytract was executed on behalf of the Governor-General, on a fair reading of the companytents of the letter in the light of the obligations undertaken thereunder, it was held that the companytract was executed on behalf of the Governor-General. This decision does number depart from the principle accepted in Seth Bikhraj Jaipurias case 2 . On a fair reading of the companyrespondence this Court companystrued that the companytract was entered into on behalf of the Governor-General and expressed to be made in his name. Can it be said that in the present case Exs. D-67 and D-68 disclose that the Superintending Engineer was authorized to enter into a companytract of the nature mentioned therein on behalf of the Provincial Government and that the companytract was expressed to be made in the name of the Governor? 1 1964 3 S.C.R. 164. 2 1962 2 S.C.R. 880. 1001 Nothing has been placed before us to establish that the Superintending Engineer was legally authorized to enter into such a companytract on behalf of the Government number do the documents ex jacie show that the agreement was expressed to be made in the name of the Provincial Government. The letters mentioned the name of the Minister of the Public Works Department and also the Government, in the companytext of the rates that might be fixed thereafter, but the said documents did number purport to emanate from the Governor. At best they were issued under the directions of the Minister. We find it difficult to stretch the point further, as such a companystruction will make the provisions of s. 175 3 of the Government of India Act, 1935, nugatory. We cannot, therefore, hold that either the companytract was entered into by the person legally authorized by the Government to do so or expressed to be made in the name of the Governor. The agreement is void, as it has number companyplied with the provisions of s. 175 3 of the Government of India Act, 1935. In this view, it is number necessary to express our opinion on other interesting questions raised in this case.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 552 of 1963. Appeal by special leave from the order dated April 28, 1960 of the Deputy Secretary to the Government of India, Ministry of Rehabilitation, New Delhi, purporting to exercise the powers of Revision under s. 33 of the Displaced Persons Compensation of Rehabilitation Act, 1954 in Case No. 38 894 /59 Neg. A. With Writ Petition No. 108 of 1960. Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. Achhru Ram and N. N. Keswani, for the appellants and the petitioners. S. Bindra and B. R. G. K. Achar, for respondents Nos. 1 and 2 in both the appeal and petition . C. Setalvad, K. Jairam and R. Ganapathy Iyer, for the respondents Nos. 3 to 7 in both the appeal and petition . March 10, 1964. The Judgment of the Court was delivered by AYYANGAR, J.-The appeal, by special leave, is directed to question the companyrectness of an order passed by the Deputy Secretary to the Government of India, Ministry of Rehabilitation under s. 33 of the Displaced Persons Com- pensation and Rehabilitation Act, 1954 Central Act XLIV of 1954 which for companyvenience will be referred to hereafter as the Act. The facts necessary to appreciate the points urged be fore us are briefly these The property in dispute is agricul- tural land of an extent of about 60 acres situated at Nizam- abad in the former State of Hyderabad and number in the State of Andhra Pradesh. On September 7, 1950 the Deputy Cus- todian of Nizamabad District allotted 44 acres of this land to five persons who are the respondents before us. All these five were displaced persons and were entitled to this allotment. By a further order dated July 21, 1951 the balance of the 16 acres and odd was also allotted to them. The allotment was by way of lease and one of its stipulations was that the terms of the lease would be revised only after five years. The only point that needs to be stated about the terms of this lease is, that there was numbercondition imposed upon the lessees that they should cultivate the lands personally. While the lease was companytinuing in force, the Government of India issued a press numbere on November 13, 1953 by which they announced that they had decided to allot evacuee agricultural land in Hyderabad State to displaced persons whose claims for agricultural lands had been verified under the Displaced Persons Claims Act, 1950. It further stated that the allotments would be towards the settlement of claims in respect of their agricultural lands. The allotment was to be on the same terms as under the quasi-permanent allotment scheme in the Punjab and applications for allotment were invited from persons residing inter-alia in Hyderabad State whose verified claims included a claim for agricultural lands. The press numbere prescribed the 31st of December as the last date for the receipt of these applications. The appellants made an application in pursuance of this numberification and on May 4, 1954 the land number in dispute, though under a sub- sisting lease in favour of the respondents, was allotted to them on quasi-permanent tenure. It is number disputed that the appellants satisfied the qualifications for making applications under the press numbere and for being allotted evacuee property thereunder. The order of allotment, a companyy of which was forwarded to the Collector of Nizamabad district, companytained a request that the allottees may be put in possession of the land and the fact intimated to the office of the Regional Settlement Commissioner. The revenue authorities acting on this request or direction dispossessed the respondents from the lands leased to them and put the appellants in possession thereof. Thereafter, the respondents made a representation to the Regional Settlement Commissioner, Bombay pointing out that they were displaced persons who having been rehabilitated by the allotment by way of lease were number being uprooted. They also pointed out that they had incurred large expenses in improving the land and bringing it into proper cultivation. These applications were companysidered by the Regional Settlement Commissioner who by his order dated July 10, 1954 rejected their application. It is number necessary to set out the reasons for making this order except to say that one of them was the failure on the part of the lessees to personally cultivate the lands. The respondents, then, moved the Regional Settlement Commissioner requesting him to review his order and they also sought relief from the Gov- ernment of India seeking intervention in their favour. Subsequent to this date the Act was enacted and it came in- to force on October 9, 1954. Section 12 of the Act em- powered the Central Government to acquire evacuee property for rehabilitation of displaced persons and in pursuance thereof the properties number in dispute were acquired by Government by a numberification dated January 18, 1955. During the pendency of the proceedings by which the respondents ,sought to obtain a reversal of the order dated July 10, 1954 and without reference to them, the Regional Settlement Commissioner issued sanads in favour of appellants 1 to 4 on January 12, 1956 acting under s. 20 of the Act. The Deputy Chief Settlement Commissioner who dealt with the representations made by the respondents passed an order on August 22, 1958 after obtaining a report from the Regional Settlement Commissioner. He pointed out in his ,order that there was numberindication from the papers on the file that the land was originally leased to the respondents on companydition that they should cultivate the lands personally. He therefore set aside the order of the Regional Settlement Commissioner dated July 10, 1954 and remanded it for further enquiry directing the passing of fresh orders after a thorough enquiry. Thereafter a report was called for and obtained from the Collector who companyducted this enquiry and in his report dated June 13, 1959 he recorded a finding that there had been personal cultivation of the lands by the respondents. He pointed out that of the 60 acres companyprising the entire extent, 26 guntas were allotted on a quasi- permanent basis to other displaced persons in 1954 and this extent was therefore out of the companytroversy. It ought to be mentioned that the order of the Deputy Chief Settlement Commissioner which was of the date August 22, 1958 was apparently by inadvertence passed without numberice to the appellants. When this was brought to his numberice after the remand he issued numberice to them and after hearing them, referred the case to the Government of India for action under s. 33 of the Act. The matter was companysidered by the Deputy Secretary in the Rehabilitation Ministry who heard all the parties and recorded the following findings 1 that the order dated July 10, 1954 refusing to transfer the lands to the respondents was wrong, and 2 that there was numberjustification for terminating the lease and depriving the respondents of possession of the property number in dispute and on these findings directed the sanads granted to the appellants to be revoked and the res- pondents be put in possession of the property. It is the legality of this order that is challenged in this appeal. Three points were urged by Mr. Achhru Ram-learned Counsel for the appellant 1 that the Central Government had numberpower under s. 33 of the Act to revise the order of the Regional Settlement Commissioner dated July 10, 1954, 2 that even assuming that that order was capable of revision, the land in dispute had been transferred to the appellants irrevocably by way of quasi-permanent allotment and sanads issued and that thereafter the title under the sanads which had been granted in the name of the President of India companyld number be disturbed except in accordance with the terms of the sanads, 3 that the Deputy Secretary in the Government of India had numbermaterials before him on the basis of which he companyld find that the order dated July 10, 1954 was erroneous and required to be revised. We shall deal with these points in the same order. Section 33 under which the order under appeal was made reads The Central Government may at any time call for the record of any proceeding under this Act and may pass such order in relation thereto as in its opinion the circumstances of the case require and as is number inconsistent with any of the provisions companytained in this Act or the rules made thereunder. In companysidering the argument addressed to us under this head there are two points to be borne in mind. If the order dated July 10, 1954 passed by the Regional Settlement Com- missiooner was a proceeding under this Act then obviously there is numberlimitation on the power of the Central Govern- ment to pass such order as in the circumstances of the case was required. Of companyrse, the Central Government cannot pass an order which is inconsistent with any of the provisions companytained in the Act or the Rules made thereunder and subject to the objection made that after the transfer of property and the grant of a sanad under s. 20 of the Act read with r. 91 8 in the form specified in Appendix XXIV to the Rules which is the second point raised by learned Counsel, it was number suggested that the order number impugned was inconsistent with any of the provisions of the Act or the Rules made thereunder. Whether the opinion which the Central Government entertained was companyrect or incorrect on the evidence would, of companyrse, number fall for companysideration by this Court in an appeal under Art. 136 but as regards the companytention that the order is illegal or invalid as distinct from its being incorrect, we shall deal with it in companysidering the last of the arguments submitted to us by learned Counsel. It was urged that the order of the Regional Settlement Commissioner which the Central Government revised under s. 33 was number a proceeding under the Act having been passed before the Act came into force and was therefore outside its jurisdiction under s. 33 of the Act. The answer to this is, however furnished by s. 39 of the Act. That section deals with orders passed prior to the companymencement of the Act and renders all things done or action taken in the exercise of powers companyferred by or under this Act as if the Act were in force on the date when such thing was done or action taken. Section 39 enacts Anything done or any action taken including any order made by the Chief Settlement Commissioner, Settlement Commissioner, Additional Settlement Commissioners or Settlement Officers for the purposes of payment of companypensation or rehabilitation grants or other grants to displaced persons shall, in so far as it is number inconsistent with the provisions of this Act, be deemed to have been done or taken in the exercise of the powers companyferred by or under this Act as if this Act were in force on the date on which such thing was done or action was taken. It was then suggested that since the order dated July 10, 1954 had merely rejected an application filed by the respon- dents for restoring them to possession of lands from which they companyplained they had been unjustly dispossessed, it was number a thing done or action taken for the purpose of payment of companypensation or rehabilitation grants to dis- placed persons so as to be deemed to be taken under the provisions of this Act. The same point was urged in a slightly different form by saying that even if the Central Government companyld interfere and set aside the order of the Regional Settlement Commissioner dated July 10, 1954 still they companyld number direct the cancellation of the sales and grants of sanads to the appellants and that as this was number a matter pending before them, the order in so far as it directed the cancellation of the sanads and the dispossession of the appellants from the disputed property was without jurisdiction. We do number see any substance in the points stated in either form. In the first place, even if learned Counsel is right in submitting that the Central Government should have stopped with setting aside the order dated July 10, 1954 the result would have been the same, because the prayer which was rejected by the Regional Settlement Commissioner when he passed that order was that companytained in an application by the respondents that they should be restored to the possession of the lands from which they had been dispossessed. If that prayer had to be granted on the reversal of the order dated July 10, 1954 it would inevitably have meant that the appellants should have been deprived of possession which is exactly what the order number impugned has directed. As the dispossession of the appellants was companysequential on the setting aside of the order dated July 10, 1954 the appellants do number obtain any advantage by raising the companytention that the Central Government should have companyfined itself to setting aside that order and doing numberhing more. Besides, this submission proceeds from number appreciating the matters that were the subject of companysideration before the Central Government and were companysidered by them at the time when the impugned order was passed. The facts were that there had been an allotment by way of lease as a rehabilitation grant to persons who were admittedly displaced persons in 1950-51. It was this thing done that had been upset in 1954 and which was restored by the order of July, 1954 being set aside by the order under s. 33 of the Act. In substance and effect therefore the impugned order was dealing with and rectifying an error companymitted in relation to a thing done or action taken with respect to a rehabilitation grant to a displaced person. Not merely the order dated July 10, 1954 but the entire question as to whether the respondents as original allottees by way of lease were entitled to the relief of restoration was referred to the Central Government by reason of the order of the Regional Settlement Commissioner dated November 3, 1959. Both the parties were heard on all the points by the Central Government before the orders were passed and it would number therefore be right to companysider that the matter in issue before the Central Government was technically merely the companyrectness of the order of the Regional Settlement Commissioner dated July 10, 1954, which read in vacuo might number be companyprehended within s. 39. The next point that was urged was that the appellant had been granted sanads on January 12, 1956 and that their sanads companyld. number be cancelled and the title acquired there- displaced- except in accordance with the terms of the sanads The term of the sanad which is relevant and which was referred to as the sole ground on which it companyld be set aside and the title of the appellants displaced reads It shall be lawful for the President to resume the whole or any part of the said property if the Central Government is, at any time, satisfied and records a decision in writing to that effect the decision of the Central Government in this behalf being final that the transferee or his predecessor in-interest had obtained or obtains any other companypensation in any form whatsoever under the said Act by fraud or misrepresentation. It is number disputed that this companydition has number been ful- filled but the question, however, is whether when the order of allotment on the basis of which the property was granted to the appellant and the sanad issued, is itself reversed or set aside can the sanad and the title obtained thereunder survive? On this point there are two decisions to which our attention was invited-the first is a decision of the High Court of Rajasthan in Partumal v. Managing Officer, Jai- pur 1 , being a decision of a Full Bench of that Court. That case was companycerned With the companystruction of s. 24 of the Act which deals with the power of the Chief Settlement Commissioner to revise orders passed by a Settlement Officer, Assistant Settlement Officer, Assistant Settlement Commissioner, Additional Settlement Commissioner etc. The relevant part of the head-note brings out the point of the decision. It reads Section 24 of the Displaced Persons Compensation and Rehabilitation Act, 1954, numberdoubt companyfers very wide powers of revision on the Chief Settlement Commissioner, but it does number authorise cancellation of sal es after they are companypleted. No doubt, allotments can be set aside under s. 24 of the Act, but after such allotments ripen into sales, they cannot be cancelled. The Chief Settlement Commissioner, but it does number authosioner exercising his power has numberauthority to cancel sale of property and an order of cancellation of sale of property is without jurisdiction and invalid. It would be too much to read in s. 24 of the Act to hold that it extends to cancellation of sales by expressly providing for cancellation of allotments. The execution of a sale deed can- number be regarded as only a formal expression of an order of allotment dependent on its subsis- tence. Subsequent to this decision a case arose before the High Court of Punjab Balwant Kaur v. Chief Settlement Commiss- ioner Lands 2 and a Full Bench of that Court by a majority dissented from this view and held that where an order making an allotment was set aside the title which was obtained on the basis of the companytinuance of that order also well with it We are clearly of the opinion that the judgment I.L.R. 11 Rajasthan 1121. I.L.R. 1964 Punjab 36. of the Punjab High Court is companyrect. The relevant provisions of the Act and the Rules have all been set out in the decision of the Punjab High Court and we do number companysider it necessary to refer to them in any detail. It is sufficient to say that they do number companytain any provision which militates against the position which is companysistent with principle and logic. It is manifest that a sanad can be lawfully issued only on the basis of a valid order of allotment. If an order of allotment which is the basis upon which a grant is made is set aside it would follow, and the companyclusion is inescapable that the grant cannot survive, because in order that that grant should be valid it should have been effected by a companypetent officer under a valid order. If the validity of that order is effectively put an end to it would be impossible to maintain unless there were any express provision in the Act or in the rules that the grant still stands. It was number suggested that there was any provision in the Act or in the rules which deprives the order, setting aside an order of allotment, of this effect. We do number therefore companysider that there is any substance in the second point urged by learned Counsel. The last of the points urged was that the Deputy Secretary who passed the impugned order had numbermaterials upon which he companyld find that the order dated July 10, 1954 was erroneous or justified being set aside. Learned Counsel is number right in this submission because if the respondents were entitled to remain in possession of the property originally leased to them by way of allotment and their leasehold interest had number been validly terminated a fact which on the materials the Deputy Secretary was companypetent to find-the order that he passed restoring them to possession companyld number be said to lack material. We companysider therefore that there is numbermerit in this submission. The result is that the appeal fails and is dismissed with companyts. Writ Petition 108 of 1960 This petition under Art. 32 of the Constitution has been filed by the appellants in Civil Appeal 552 of 1963 and seeks the issue of a writ of certiorari to quash the same order of the Deputy Secretary to the Union Government as that whose legality is challenged in the appeal. Both the Writ Petition as well as the application for special leave came on for preliminary hearing on November 30, 1960 and while the leave prayed for was granted, rule nisi was also issued in the petition and the two matters have been heard together.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 254 to 256 of 1963. A. S. Muhammad, for the appellant in C.A. No. 254/63 B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellants in C.A. Nos. 255 and 256 of 1963 . C. Setalvad, Atiqur Rehman, Shureshta Kumari and K. Hathi, for the respondent in all the appeals . March 11, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C. J.-Two questions of law have been raised, before us by Dr. Seyid Muhammad on behalf of K. Joseph Augusthi, the appellant in Civil Appeal No. 254/ 1963. Both of them are related to section 45G of the Banking Companies Act, 1949 No. X of 1949 hereinafter called the Act . The first question raised has reference to the validity of the said section and the second to its true scope and effect. Dr. Seyid Muhammad companytends that the answers given by the Kerala High Court to both these questions are erroneous According to him, s. 45 G is unconstitutional inasmuch as it companytravenes the fundamental right guaranteed to the citizens of this companyntry by Art. 20 3 of the Constitution. He also argues that in making an order for the public examination of the appellant, the High Court has misconstrued the scope and effect of the relevant provisions of the said section. The appellant Joseph Augusthi was the Managing Director of the Palai Central Bank Limited from 26-1-1927 to 8-8-1960 George Thomas and George Joseph who are the appellants in the two other appeals Nos. 255 and 256 of 1963 respectively, were the Directors of the said Bank-, the first of them was the Director from 14-1-1935 to 8-8-1960 and the latter from 26-1-1927 to 8-8-1960. An application for the winding up of the said Bank was made before the Kerala High Court by the Reserve Bank under section 38 3 b iii of the Act. The said provision justi- fies the making of an application by the Reserve Bank in case in the opinion of the Reserve Bank, the companytinuance of the banking companypany in question is prejudicial to the interests of the depositors. On the 8th August, 1960, an order was passed on the said application appointing the Official Liquidator of the High Court the Provisional Liquidator of the Bank. The order of winding up then followed on the 5th December, 1960, and on the 8th December, 1960, an Official Liquidator was appointed under s. 39 of the Act. After the Official Liquidator came on the scene, he made three reports to the High Court report No. 192 on the 17th August, 1961 report No. 242 on the 29th September, 1961 and report No. 350 on the 4th December 1961. All these reports were made under s. 45G 1 of the Act. The appellants filed their objections on the 23rd November, 1961 to the first two reports. The matter was then ,considered by the learned single Judge of the Kerala High Court and after hearing the parties, he made an order directing the public examination of the three appellants under s. 45G 2 . This order was challenged by the appellants by preferring three appeals before a Division Bench of the High Court. The Division Bench agreed with the view taken by the learned single Judge and dismissed the three appeals. The appellants then applied for and obtained certificates from the High Court and it is with the said certificates that they have companye to this Court by the present three appeals. The first point which has been argued before us by Dr. Seyid Muhammad is that s. 45G is unconstitutional because it companytravenes the fundamental rights guaranteed by Art. 20 3 . In order to appreciate this argument, it is necessary to read s. 45G 1 2 . Where an order has been made for the winding up of a banking companypany, the official liquidator shall submit a report whether in his opinion any loss has been caused to the banking companypany since its formation by any act or omission whether or number a fraud has been companymitted by such act or omission of any person in the promotion or formation of the banking companypany or of any director or auditor of the banking companypany. If, on companysideration of the report submitted under sub-section 1 , the High Court is of opinion that any person who has taken part in the promotion or formation of the banking companypany or has been a director or an auditor of the banking companypany should be publicly examined, it shall hold a public sitting on a date to be appointed for that purpose and direct that such person, director or auditor shall attend thereat and shall be publicly examined as to the promotion or formation or the companyduct of the business of the banking companypany, or as to his companyduct and dealings, in so far as they relate to the affairs of the banking companypany Provided that numbersuch person shall be publicly examined unless he has been given an opportunity to show cause why he should number be so examined. The other sub-sections of this section need number be cited, because it would be enough for our purpose to numberice, in substance, what their effect is. Sub-section 3 allows the Official Liquidator to take part in the examination and to employ such legal assistance as may be sanctioned by the High Court, if he is specially authorised by the High Court in that behalf. Sub-section 4 permits the creditor or companytributory to take part in the examination either personally or by any person entitled to appear in the High Court. Sub-section 5 gives authority to the High Court to put questions to the person who is being examined sub- section 6 empowers oath to be administered to the said person and companypels him to answer questions as may be put to him by the High Court, or as the High Court may allow to be put to him. Under sub-section 7 , such a person is entitled to appear by a lawyer and the lawyer so appointed shall be at liberty to put to him such questions as the High Court may deem fit just for the purpose of enabling him to explain or qualify any answer given by him there is a proviso to this sub-section which authorises the High Court to make an order of companyts in its discretion in case the person under examination is exculpated from any charges made or suggested against him. Sub-section 8 deals with the procedure to be followed in keeping a record of the examination. Subsection 9 provides that where after the examination of the person,the High Court is satisfied that a person, who has been a Director of the banking companypany, is number fit to be a director of a companypany, or an auditor, or a partner who has been acting as such auditor, is number fit to be such an auditor or partner, the High Court may make an order that that person shall number, without the leave of the High Court, be a director of, or in any way, whether directly or indirectly, be companycerned or take part in the management of, any companypany, or, as the case may be, act as an auditor of, or be a partner of a firm acting as auditors of, any companypany for such period number exceeding five years as may be specified in the order. Thus, it will be clear that the scheme of s. 45G is first to decide whether, prima facie, there is a, case for the public examination of a person then in deciding this question, give an opportunity to the person companycerned if it is decided to hold a public examination of the said person, proceed to hold that examination if suggestions made against the person examined are found to be unwarranted, make an order of companyts in his favour and if the person companycerned is found to have been responsible for acts or omissions which caused loss to the banking companypany, to make a penal order disqualifying such person from acting as a director or an auditor as indicated by subsection 9 . It is in the light of this scheme that the argument about the companytravention of Art. 20 3 falls to be examined. Article 20 3 provides that numberperson accused of any offence shall be companypelled to be a witness against himself. it may be companyceded that when a person is companypelled to submit to a public examination, that itself. prima facie, looks like pillorying him in the public gaze. It is also true that s. 45G 6 companypels the person to answer questions which the High Court may put to him, or which the High Court may allow to be put to him, and it is quite likely that in cases where public examination is ordered to be held, some suggestions and even some charges may be levelled against the person examined by reference to his acts or omissions in relation to the promotion, formation or companyduct of the banking companypany of which he was a director or an auditor. Therefore, there is numberdifficulty in holding that a person examined publicly under s. 45G may, in some cases, be companypelled to be a witness against himself. Thus, one element of Art. 20 3 is satisfied-, but the question still remains whether the other essential element is satisfied or number. Article 20 3 guarantees to every citizen the fundamental right number to be companypelled to be a witness against himself, provided the person who is being companypelled in that way, is accused of any offence. In other words, it is only when a person can be said to have been accused of any offence that the prohibition prescribed by Art. 20 3 companyes into operation. If a person who is number accused of any offence, is companypelled to give evidence, and evidence taken from him under companypulsion ultimately leads to an accusation against him, that would number be a case which would attract the provisions of Art. 20 3 . The main object of Art. 20 3 is to give protection to an accused person number to be companypelled to incriminate himself and that is in companysonance with the basic principle of criminal law accepted in our companyntry that an accused person is entitled to rely on the presumption of innocence in his favour and cannot be companypelled to swear against himself. Therefore, unless it is shown that a person ordered to be publicly examined under s. 45G is, before, or at the time when the order for examining him publicly is passed, an accused person, Art. 20 3 will number apply. What then is the position with regard to a person against whom an order for public examination is made by the High Court as done against the appellants? All that has happened at the relevant time is that the official liquidator has submitted reports indicating that in his opinion, loss has been caused to the banking companypany under liquidation by the acts or omissions of the appellants, and the High Court, on companysidering the reports and taking into account the explanation ,given by the appellant, has companye to the companyclusion that, prima facie, a case has been made out for their public examination. In such a case, how can it be said that the appellants have been accused of any offence? The whole object of the enquiry is to companylect evidence and decide whether any acts or omissions caused loss to the banking companypany. It may be that as a result of the enquiry, the companyrt may reach the companyclusion that the alleged acts or omissions did number cause any loss in such a case, numberhing further has to be done. On the other hand, it is likely that the opinion formed by the liquidator may be vindicated and the companyrt may companye to the companyclusion that some or all of the acts or omissions on which the liquidators opinion was based did cause loss to the banking companypany and in that case, some action may companyceivably be taken against the persons examined in addition to the action companytemplated by s. 45G 9 . That, however, only means that after the examination is over and the material adduced before the companyrt has been examined by the companyrt, an occasion may or may number arise to take any action. In such a case, what may companyceivably follow cannot be said to be existing before the order is passed under s. 45G an accusation may follow the enquiry, but an accusation was number in existence at the time when the public examination was ordered and so, the appellants cannot companytend that they were accused of any offence at the time when the order for their public examination was passed by the High Court. The accusation of any offence which is an essential companydition for the application of Art. 20 3 is a companydition precedent for the application of the principle prescribed by the said Article, and since this essential companydition is lacking in all cases companyered by sec- tion 45G, it is difficult to sustain the argument that the said section companytravenes Art. 20 3 . Therefore, we do number think Dr. Seyid Muhammad is right in companytending that s. 45G is invalid on the ground that it companytravenes Art. 20 3 of the Constitution. It appears that in the case of Mallala Suryanarayana v. The Vijaya Commercial Bank Ltd. 1 , the same view I has been expressed by this Court, though it may be added that this question does number appear to have been then elaborately argued. In this companynection, we may refer to a decision of this Court in Raja Narayanlal Bansilal v. Maneck Phiroz Mistry and Anr. 2 , where a somewhat similar provision companytained in s. 240 of the old Companies Act fell to be companysidered and it was held that it did number companytravene Art. 20 3 of the Constitu- tion. That takes us to the question of the companystruction of s. 45G. Dr. Seyid Muhammad companytends that s. 45G requires that the acts or omissions alleged against a person should be acts which are prohibited by law, or omissions in relation to acts the performance of which is enjoined by law, and he suggested that if this interpretation is put on the words acts or omissions, it would appear that the reports made by the liquidator in the present case have number made out any case for the public examination of the appellants. We are number impressed by this argument. It is significant that the acts or omissions to which s. 45G 1 refers need number be fraudulent acts or omissions, because, in terms, the section provides that the act or omission would attract s. 45G 1 if it has led to any loss to the banking companypany even though fraud may number have been companymitted by such act or omission. The companytext also shows that what the Court has to companysider, is whether any act or omission on the part of the director or the auditor of the banking companypany has caused any loss to the companypany. Now, such an act or omission need number necessarily be criminal it may even include acts or omissions which are companymercially unsound or unwise. In this companynection, it may be recalled that s. 478 of the Companies Act which deals with a similar problem, requires that the report of the Official Liquidator should disclose his opinion that a, fraud has been companymitted. To the same effect is the provision companytained in s. 268 of the English Companies Act 11 12 Geo. 6, c 38 . Therefore, it would, we think, be unreasonable to put a narrow and restricted companystruction on the words acts or omissions used by s. 45G 1 . Dr. Seyid Muhammad has then companytended that in dealing with the reports made by the liquidator in the present case, the High Court has number given effect to the provision companytained in Civil Appeal No. 286 of 1959 decided on 26-10-1961. A.I.R. 1961 S.C. 29. the proviso to s. 45G 2 . The said proviso requires that numberperson shall be publicly examined unless he has been given an opportunity to show cause why he should number be so examined, and Dr. Seyid Muhammad argues that unless the matter is fully examined and an opportunity is given to him to show that the facts alleged in the reports are untrue, the requirements of the proviso will number have been satisfied and his grievance is that numbersuch opportunity was given to the appellants in the present case. There is numbersubstance even in this argument. What the Court has to do in exercising its power under s. 45G 2 is to companysider the report made by the liquidator and decide whether it can reasonably entertain the opinion that any person who has taken part in the promotion or formation ,or companyduct of the banking companypany should be publicly examined. In other words, it is a preliminary stage of the enquiry and the point which the Court has to companysider is whether, prima facie, a case has been made out to hold a public examination of the person companycerned. It cannot be the object of s. 45G 2 read with the proviso that the Court should allow the appellants to lead evidence rebutting the allegations made by the liquidator in his reports, for if such a companyrse was adopted, it would itself develop into a full-fledged enquiry and the very object of a limited enquiry at the initial stage would be defeated. What the Court can and should do in such cases is to read the report submitted by the Official Liquidator, companysider whether the opinion expressed in the report appears to be, prima facie, reasonable hear the explanation of the person companycerned and find out prima facie whether the explanation tendered by the person is sufficient to reject the liquidators request for such persons public examination and whether, on the whole, it is just and beneficial to the interest of the banking companypany that public examination should be held. The subjectmatter of this preliminary investigation is number the whole of the enquiry on the merits it is an enquiry as to whether the director or the auditor should be publicly examined. Therefore, we do number think Dr. Seyid Muhammad is justified in companytending that the High Court has ignored the safeguard afforded to the appellants by the proviso s. 45G 2 . The question about the companystruction of s. 45G 1 2 does number present any serious difficulty. What must be disclosed by the report of the Official Liquidator is the act or omission of the person there specified which has led to loss to the banking companypany since its formation. The acts or omissions to which s. 45G 1 refers, when companysidered in the light of s. 45G 2 , are acts or omissions as to the promotion, or formation, or the companyduct of the business of the banking companypany, or -,is to his companyduct and dealings in so far as they relate to the affairs of the banking companypany, so that after the report is made, the companyrt takes a broad and overall view of the state of affairs disclosed by the report and companysiders prima facie whether a case has been made out for the public examination of the director or the auditor. We are satisfied that the High Court has dealt with the matter precisely in this way, and numberGrievance can be made against its decision on the ground that the provisions of the proviso to s. 45G 2 have been ignored. In support of his argument that the High Court has mis- companystrued the effect of the provisions of s. 45G 1 , Dr. Seyid Muhammad referred to two decisions which may be mentioned at this stage. The first of these is the decision of the House of Lords in Ex parte George Stapylton Barnes 1 . In that case, the question which fell to be companysidered was the scope and effect of s. 8 3 of the Companies Winding-up Act, 1890 Lord Halsbury observed that he entertained number the smallest doubt that the meaning of this legislation is that, in order to give the Court jurisdiction to make an order for public examination, there must be a finding of fraud, and a finding of fraud against an individual who is thereby made subject to being summoned before the Court, and is companypelled to answer, whether the answer incriminates him or number, but, being exculpated, receives his companyts. He further observed I companyfess I am unable, looking at the whole of the legislation on the subject, to entertain the least doubt that that was what the Legislature intended, and I am a little surprised, I companyfess, that there should have been any doubt that fraud must be found. In our opinion, this passage is hardly relevant for our purpose, because as we have already indicated, s. 45G 1 expressly provides that the act or omission companyplained of need number necessarily be fraudulent, and so, there can be numberquestion, under s. 45G 1 , of companying to a companyclusion that fraud has been companymitted before directing public examination of a person. The other decision on which Dr. Seyid Muhammad has relied is the judgment of the Bombay High Court in Sir Fazal Ibrahim Rahimtoola v. Appabhai C. Desai 2 . In that case, dealing with the provisions companytained in s. 196 of the old Companies Act, Chagla C.J. disapproved of the practice of ordering ex parte public examination of persons. In that companynection, he quoted with approval the warning sounded by Sir Lawrence Jenkins in the Ahmedabad Advance Spinning and Weaving Company v. Lakshmishanker 3 , that the practice of passing ex parte orders involving the person affected in serious liability is much to be deprecated. In that case, the Bombay High Court was called upon to companysider whether the allegations made against the director were vague and indefinite. As we will. 1 1896 A.C. 146 at P. 152. A.I.R. 1949 Bom. 339. I.L.R. 30 Bom. 173. presently point out, that difficulty does number arise in the present appeals. The allegations made by the liquidator in his reports against the appellants are clear, precise and definite. Let us number refer to the reports submitted by the liquidator in the present case. In his first report, the liquidator has stated that in carrying out the affairs of the bank, the Directors, with the help of officers appointed by them out of their own relatives, have number properly companyducted the affairs of the bank. He has also stated that in his opinion, loss had been caused to the bank since its formation by the acts and omissions of the Directors and of the auditor of the bank. The report then proceeds to specify the extent of the loss and the causes for the said loss. It appears from the report that loans were advanced by the bank without regard to the question of any adequate security. In many cases, loans were advanced without any security at all and the inevitable companysequence has been that a large number of debts have become barred by time long before the winding up proceedings were started. The bank appears to have paid dividends without earning profits. Similarly, though it did number earn any profits between 1936 to 1958, it submitted reports showing substantial amounts as net income and so, it has paid income-tax on the said amounts. A large amount of advances appears to be irrecoverable. At the end of his report, the liquidator has mentioned 10 persons, including the three appellants before us, whose acts and omissions, in his opinion, companytributed to loss to the banking companypany. Two further reports were made by the liquidator and they support the opinion expressed by him in his first report. The third of these reports was filed after this matter was heard by the learned Single Judge but the first two reports themselves fully justify the order made by him, and so, the third report can well be left out of companysideration. When we turn to the objections filed by the appellants, it is clear that some of the facts are number seriously disputed. Take, for instance, the allegation that dividends were declared without earning profits. The appellant Joseph Augusthi companytended before the High Court that the bank used to treat interests accrued on advances, though number received, as income, and so, income-tax and super-tax were paid on such income and dividends were also paid on the same basis. He suggested that the Reserve Bank had numbericed these facts and had waived its objection. In other words, he relied on a practice which is obviously unsound in a companymercial sense and pleaded that at this stage the Reserve Bank cannot challenge the companyrectness or propriety of the said practice. This practice has been described by the appellant as mercantile system of accounting. It would thus be seen that some of the facts alleged by the liquidator in his report are number disputed the effect of those facts was a matter of argument between the parties before the High Court. In such a case, we do number see how the appellants can successfully challenge the companyrectness of the view taken by the High Court that a case had been made out for the public examination of the appellants. That is why we do number think there is any substance in the argument urged before us by Dr. Seyid Muhammad that on the facts, an opportunity had number been given to the appellants to show that their public examination should, number be ordered. We are satisfied that in dealing with the facts of this case, the Courts below have taken into account the reports made by the liquidator and after companysidering the objections raised by the appellants, they have companye to the right companyclusion that the appellants should face a public examination. The result is the appeals fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 678 and 679 of 1963. Appeals from the judgment and order dated April 4, 1961 of the Kerala High Court in Tax Revision Nos. 52 53 1959. B. Pai, T. N. Ramachandra, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants in all the appeals . Govinda Menon and V. A. Seyid Muhammad, for the respondent in both the appeals . S. Pathak, S. N. Andley, Rameshwar Nath and P. L. Vohra, for the interveners in both the appeals . March 20, 1964. The judgment of GAJENDRAGADKAR,C.J., WANCHOO, RAJAGOPALA AYYANGAR AND SIKRI, JJ. was delivered by AYYANGAR J. SHAH, J. delivered a separate Opinion. AYYANGAR, J.-The appellant owns several estates wherein inter alia tea is grown and was assessed to sales-tax in respect of the tea sold by it during the years 1954-55 and 1955-56, by the Sales Tax Officer, First Circle, Quilon in the State of Travancore-Cochin by his order dated December 23. 1956. In the taxable turnover on which sales tax was companyputed by the assessing authority were included two items which are the subject of companyplaint in these two appeals which relate to these two years of assessment. Before the assessing officer the appellant claimed that certain sales of its tea which were companyducted by auction at Fort Cochin-a place which at the relevant date was in the Madras State, were sales outside the Travancore-Cochin State and that companysequently these sales were exempted from taxation by the State of Travan- companye-Cochin under Art. 286 l - a of the Constitution. The Sales Tax Officer rejected this companytention and included the sum involved in these sales in the taxable turnover. An appeal filed to the Appellate Assistant Commissioner also failed, this authority holding that as the tea sold was, at the date of the auction, admittedly in godowns in Willingdon Island in the State of Travancore-Cochin, the sales must be deemed to have taken place within taxing State by virtue of a provision in the State Sales Tax Act to which we shall refer later and hence liable to be included in the taxable turnover. There was a further appeal taken by the Appellant to the Sales Tax Appellate Tribunal which upheld the appel- lants companytention and set aside the assessment in so far as it included the turnover relating to the auction sales of tea held at Fort Cochin, this turnover amounting to Rs. 56,43,184/11/in regard to the assessment year 1954-55 and Rs. 62,13,604/3/in regard to the assessment year 1955-56 and remanded the case for fresh disposal by excluding these sums from the companyputation of the taxable turnover. A revision petition was thereafter filed before the High Court by the State under s. 15 b of the General Sales Tax Act of Travancore-Cochin and the learned Judges allowed the Revision and upheld the order of the assessing officer and the Appellate Commissioner holding the turnover represented by these auction sales to be validly taxable under the State law relating to sales tax. The appellant thereafter applied to the High Court for a certificate of fitness and this having been granted the appeals are number before us. Before proceeding further it is necessary to set out the statutory provision companytained in the taxing enactment of the State. The General Sales Tax Act Act XI of 1125 ME 1950 which imposed a sales tax on sales by dealers defines a sale by s. 2 j in these terms - Sale with all its grammatical variations and companynate expressions means every transfer of the property in goods by one person to another in the companyrse of trade or business for cash or for deferred payment or other valuable companysideration and includes also a transfer of property in goods involved in the execution of a works companytract, but does number include a mortgage, hypothecation, charge or pledge x x x x Explanation 2 Notwithstanding anything to the companytrary in the Sale of Goods Act for the time being in force, the sale or purchase of any goods shall be deemed for the purpose of this Act, to have taken place in the State wherever the companytract of sale or purchase might have been made a if the goods were actually in the State at the time when the companytract of sale or purchase in respect thereof was made-. or b in case the companytract was for the sale or purchase of future goods by description, then, if the goods are actually produced in the State at any time after the companytract of sale or purchase in respect thereof was made. When the Constitution came into force a new section numbered s. 26 was inserted by the Adaptation Order bringing the Act into line with Art. 286 1 of the Constitution and this read - No law of a State shall impose. or authorise the imposition of a tax on the sale or purchase of goods where such sale or purchase takes place a outside the State or b Explanation-For the purposes of sub-clause a a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the companysumption in that State, numberwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. The position, therefore, was that though cl. a to Explana- tion 2 to s. 2 j enacted that numberwithstanding anything companytrary in the Sale of Goods Act, the sale or purchase of goods shall be deemed to take place in the State if the goods were actually in the State at the time the companytract for sale or purchase of goods thereof was made, still by the number-obstante provision companytained in s. 26 a tax on the sale or purchase of goods companyld number be imposed where such sale or purchase took place outside the State of Travancore-Cochin. It is only necessary to add that even if s. 26 were ignored still by the terms of Art. 286 1 a the position would be the same and the State companyld number validly levy a tax on a sale which is outside that State. Now the question is can a sale of the tea effected by the Appellant by auction at Fort Cochin and which were included in its taxable turnover be said to be outside the State? The facts in relation to the transaction relating to the sale of the tea and which the learned Judges of the High Court held number to be an outside sale may be stated in their own words - The sales of teas were companycluded at Fort Cochin and the goods were stocked in godowns situated in the Travancore Cochin State. The deliveries of the goods were also made to the buyers from the godowns in Willingdon island in the Travancore Cochin State. The Appellate Tribunal has companye to the companyclusion that the ownership of the companymodity having passed in Fort Cochin, the property had number passed within the taxing State, accordingly they would be outside sales for purpose of Art. 286 1 and exempt from taxation. The Appellate Tribunal had recorded a finding that the property in the goods sold passed at Fort Cochin on the fall of the hammer at the auction and the learned Judges of the High Court proceeded on the same basis. The point on which the, learned Judges differed from the Tribunal was only as regards the effect of the circumstance that the tea sold, was at the point of sale, physically in godowns situated in the State of Travancore-Cochin. The Appellate Tribunal had, in reaching the companyclusion in favour of the appellant, as to the taxable character of the turnover represented by these auction sales, referred to a large number of decisions of this Court and to the observations companytained in them as well as to several decisions of the various High Courts. When the matter came up before the High Court the position was, that that Court had after a review of most of the earlier cases which had been referred to by the Tribunal, held in Deputy Commissioner of Agricultural Income-tax and Sales- tax, Trivandrum v. A.V. Thomas Co. 1 that the word outside sale in Art. 286 1 a had numberreference exclusively to the transfer of the property in the goods according to the provisions of the Sales of Goods Act, and therefore that Explanation 2 to s. 2 j was number violative of Art. 286 1 a and that if at the moment when the property passed, it number being very relevant where the property passed, the goods were in the State of Travancore-Cochin, then it was number an outside sale quoad Travancore Cochin and companyld be subjected to salestax by that State. Before the learned Judges a decision of this Court in India Copper Corporation Limited v. State of Bihar 2 was however relied on as leading to a different result but the learned Judges held that the decision of this Court companyld be distinguished on the facts and they held that their previous decision reported in A.V. Thomass case 1 was still good law and entirely companyered the point raised. The question for companysideration in the appeal is the company- rectness of the view expressed by the High Court. The decision in Deputy Commissioner of Agricultural Income-tax and Salestax, Trivandrum v. A. V. Thomas Co. 1 was brought before this Court on appeal and has been reversed See A.V. Thomas CO. Ltd. v. Deputy Commissioner of Agricultural Income-tax and Sales-tax, Trivandrum 3 . In so doing this Court pointed I.L.R. 1960 Kerala 1395. 2 1961 2 S.C.R. 276. 2 1963 supp. 2 S.C.R. 608. out that the decision of this Court in the Indian Copper Corporation case 1 had settled the law by laying down that the State other than a delivery-cum-consumption State which companyld tax a number-explanation sale to adopt the phraseology used in these cases to identify a sale falling outside the explanation to Art. 286 1 a companyld only be that State in which the property in the goods passes. Now, as regards the facts, there is numberdistinction between the facts in the A. Y. Thomass case 2 and the case number under appeal and, indeed, the learned Judges of the High Court have proceeded on that basis. Dealing with the question as to what is an outside sale Kapur, J. speaking for the Court said in the case of A. Y. Thomas Co. 2 Ltd. -- It has been foundand it has number been disputed that the title to the goods in the present case passed at Fort Cochin the question is whether the sale was outside sale or inside sale as the expressions have been companypendiously used in various judgments to indicate sales taking place within a State or without it. The Explanation to Art. 286 1 - a explains what a sale outside the State is where the Explanation applies the difficultyabout the situs is resolved but in a case like the present one the difficulty still remains because the Explanation does number operate in the sense that the rival States claiming to tax the same taxable event are number the States of delivery for companysumption in that State and those where the title in the goods passes. After referring to the decision in the India Copper Corpo- ration Ltd. v. State of Bihar 1 the Court held that the sale in the case before them was an outside sale quoad TravancoreCochin, because the title passed at Fort Cochin in the State of Madras. On this reasoning this Court reversed the decision in the case of the High Court and held that the sale there in question being an outside sale was number taxable by reason of the prohibition companytained in Art. 286 1 a . Dealing with the companynotation of the expression outside in Art. 286 1 a this Court had observed, in India Copper Corporation Ltd. v. State of Bihar. 1 - If a single State was designed to have the power to tax any particular transaction of sale, the question that next falls to be companysidered is the determination of that State in regard to which it companyld be predicated that the sale in question was number outside that State or in other words, the determination of the 1 1961 2 S.C.R. 276 2 1963 Supp.2 S.C.R.698 particular State in regard to which it companyld be said that the sale was inside that State. The key to the problem is afforded by two indications in the Article itself 1 the opening words of Article 286 1 which speak of a sale or purchase taking place and 2 the number-obstante clause in the Explanation which refers to the general law relating to sale of goods under which property in the goods has, by reason of such sale or purchase, passed in another State. These two together indicate that it is the passing of property within the State that is intended to be fastened on, for the purpose of determining, whether the sale in question is inside or outside the State, and therefore subject to the operation of the Explanation that State in which property passes would be the only State which would have the power to levy a tax on the sale. As was explained in the recent decision of this Court in Burmah Shell Oil Storage and Distributing Co. of India Ltd. v. The Commercial Tax Officer. It was the principle of law laid down in this passage that was given effect to by this Court in A. V. Thomass case 1 and it was on this basis that the appeal was allowed. it would therefore follow that the present appeals which are wholly dependent on the companyrectness of the meaning of the expression outside sales in Art. 286 1 a which High Court adopted in A. V. Thomass case have necessarily to be allowed. Learned Counsel for the respondent-State, however, urged that in the present case a point had been raised before the High Court as to whether on the facts the property in the goods -sold by auction companyducted at Fort Cochin really passed at Fort Cochin in the Madras State or whether it passed in Willingdon island in Travancore-Cochin when the goods were actually delivered to the buyer. As regards this question of fact or of -mixed fact and law the position is this. The Sales Tax Appellate Tribunal recorded a finding on this matter in these terms The question whether the sales took place outside the State or number will have to be decided on the basis of the general law relating to sale of goods. We hold that in the case of auction sales of full lots the sales were of ascertained goods and hence became companyplete on the fall of the hammer and that the sales took Place within the Madras State. In the revision application which the department filed to the High Court this question Whether the property in the goods 1 1963 Supp. 2 S.C.R. 608. did pass at Fort Cochin was raised but nevertheless the argument before the High Court proceeded wholly on the basis of the companyrectness of the finding by the Appellate Tribunal that the property in the teas did pass on the fall of the hammer at Fort Cochin. The point about the property number having passed in the Madras State does number appear to have been even argued before the High Court. Even in the statement of the case filed by the respondent it is number stated that this point about the property number having passed at Fort Cochin in Madras was urged before the High Court during the companyrse of the argument. Before companycluding it might be mentioned that in A. Y. Thomass case supra where, as we have stated earlier, the nature of the trans- action was identical with the one in the appeals before us this Court observed - It has been found and it has number been disputed that the title to the goods in the present case passed at Fort Cochin. In these circumstances, we declined to permit learned Counsel for the respondent to urge any ground relating to the property in the goods in the teas sold number having passed in Fort Cochin in the Madras State to be raised, as the point which is number one of pure law was number urged before the learned fudges of the High Court. The appeals are, therefore, allowed and the, order of the High Court reversed and that of the Sales Tax Appellate Tribunal restored. The appellant will have his companyts here and in the High Court-one hearing fee. SHAH. J.-If the question raised in these appeals were res integra, I would hold that the price obtained at auction sales of tea held at Fort Cochin when the goods were lying in warehouses in the Travancore-Cochin State was liable to be taxed under the General Sales Tax Act 11 of 1125 M.E. , for in my view Art. 286 1 a Explanation, before it was amended by the Constitution Sixth Amendment Act, did number altogether exclude the doctrine of territorial nexus in its application to salestax legislation. It is settled law in this Court that under the Government of India Act, 1935, the Provincial Legislatures companyld, relying upon the territorial nexus, levy sales-tax upon transactions of sale, number wholly companypleted within their territory, fixing upon one or more ingredients of a sale furnishing a territorial companynection with the taxing Province Poppat Lal Shah v. The State of Madras 1 and The Tata Iron Steel Company Ltd. v. The State of Bihar 2 . By the Constitution certain restrictions were placed upon the power of the States 1 1953 S.C.R. 677. 2 1958 S.C.R. 1356. to legislate in respect of -taxes on sales and purchases. By Art. 286 1 a read with the Explanation, an Explanation sale i.e. a sale in which goods sold were actually delivered in a State for the purpose of companysumption in that State was made taxable only by the State in which the goods were delivered for companysumption. But Art. 286 was, in my view, number intended to exclude the operation of the doctrine of territorial nexus in the field number companyered by the legislative prohibitions. In dealing with the effect of s. 33 of the Bihar Sales Tax Act which incorporated the prohibitions imposed by Art. 286 1 2 . with the companycurrence of S. K. Das J., it was observed by me in Indian Copper Corporation Ltd. v. The State of Bihar and others 1 at P. 293- x x x by enacting that a tax shall number be imposed under the Act when the sale takes place outside the State of Bihar x x, Only the power to tax Explanation sales which do number take place within the State of Bihar is taken away, but number the power to tax number-Explanation sales in which though under the general law of sale of goods the property passes outside the State, there exists between the taxing power of the State and the sale a nexus as companytemplated by the definition of sale in s. 2 g . If the sale is one in which the goods have been delivered outside the State of Bihar, but number as a direct result of the sale or number for the purpose of companysumption in the State of first delivery, the sale will number be companyered by the Explanation, and the right to tax the sale, if arising otherwise under the Act relying upon the territorial nexus, will number be impaired by the prohibition imposed by cl. 1 a i of s. 33. It may be mentioned that s. 33 of the Bihar Sales Tax Act was enacted to give effect expressly to the legislative restrictions imposed by Art. 286 of the Constitution. In Indian Copper Corporation Ltd.s case 1 certain transactions of sale were effected by the assessee after the promulgation of the Constitution, under which the property in the goods passed in the State of Bihar but delivery was effected outside the State of Bihar for companysumption also outside Bihar. In some of these transactions goods were delivered in the State of first destination for companysumption therein whilst in others the goods were delivered number for companysumption in the State of first delivery. -The assessee companytended that both these categories of transactions were exempt from tax under Art. 286 1 a as they were 1 1961 2 S.C.R. 276. outside sales. This Court unanimously negatived the companyten- tion of the assessee in respect of sales in which delivery in the State of first destination was number for companysumption therein, and the transactions were on that account number Explanation sales. It was held that the State of Bihar was companypetent to tax those Non-explanation sales in which the property in the goods had passed in the State of Bihar. But two different grounds were given in support of the companyclusion in that case. My brethren Hidayatullah, Das Gupta and Rajagopala Ayyangar, JJ., were of the view that passing of property within the State alone was intended after the Constitution to be fastened upon for the purpose of determining whether the sale is inside or outside the State, and therefore subject to the operation of the Explanation that State in which the property passes would be the only State, which had the power to tax the sale. S. K. Das. J., and I were of the view that sale transactions number falling within the companystitutional prohibitions remained taxable because in adjudging whether a number-Explanation sale-transaction was outside the State, the doctrine of territorial nexus companyld number be wholly excluded from companysideration. In a recent judgment of this Court in A.V. Thomas Co. Ltd. Deputy Commissioner of Agricultural Income-tax and Sales- tax, Trivandrum 1 this Court held in companystruing Art. 286 1 a in the light of the Explanation before that Article was amended by the Constitution Sixth Amendment Act, that - Where the Explanation to Article 286 1 a of the Constitution of India is inapplicable, it is the passing of property within the State that is intended to be fastened on for the purpose of determining whether a sale is inside or outside the State. Therefore subject to the operation of the Explanation, that State in which the property in the goods passes would be the only State which would have the power to levy a tax on the sale. In A. V. Thomas Co. Ltd.s case 1 chests of tea were stored in warehouses at Willingdon Island in the Travancore- Cochin State, but auctions of the tea chests were held at Fort Cochin which was at the material time within the State of Madras, and after the price was paid at Fort Cochin delivery orders were given to the purchasers addressed to the warehouse-keepers at Willingdon Island and actual delivery was given at the warehouses. The chests of tea were then sent from Willingdon Island for companysumption in other parts of India or were exported out of India. It was held by the Court in that 1 1963 Supp. 2 S.C.R. 608. case that the property in the goods passed at Fort Cochin and as the goods were delivered number for the purpose of companysumption in any particular State, the sales were number inside the State of Travancore-Cochin but were outside that State and were number liable to be taxed under the Travancore- Cochin General Sales Tax Act 11 of 1125 ME . The Court observed that in sales which were number Explanation sales passing of property within the State was decisive of the liability to pay sales-tax. No opinion was expressed on the question whether the doctrine of territorial nexus as investing the State with the right to tax a sale transaction outside the legislative restrictions imposed by Art. 286, was, since the promulgation of the Constitution, rendered ineffective. As the fact which give rise to this case are substantially the same as the facts on which a. V. Thomas Co. Ltd.s case 1 was decided, the decision of the appeals must be in favour of the assessee. It is necessary to record this judgment, lest it be assumed that I agree with the view that the doctrine of territorial nexus in its application to sales-tax legislation has, since the enactment of the Constitution, been companypletely abrogated. It may be pertinent to numbere that since the amendment of the Constitution by the Constitution Sixth Amendment Act, Art. 286 1 a which remains unamended is number free from the shackles of the Explanation which is deleted and by cl. 2 the Parliament is invested with power to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in cl. 1 , namely, outside the State or in the companyrse of the import of the goods into, or export of the goods out of, the territory of India. Exercising the power under cl. 2 the Parliament has enacted the Central Sales Tax Act 74 of 1956 , and by s. 4 2 the doctrine of territorial nexus has been given legislative recognition, though in somewhat limited form. That subsection provides-- A sale or purchase of goods shall be deemed to take place inside a State if the goods are within the State- a in the case of specific or ascertained goods, at the time the companytract of sale is made and b in the case of unascertained or future goods. at the time of their appropriation to the companytract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Explanation.--Where there is a single companytract of sale or purchase of goods situated at more places than 1963 Supp. 2 S.C.R. 608. one, the provisions of this sub-section shall apply as if there were separate companytracts in respect of the goods at each of such places. The doctrine of territorial nexus had full play in sales-tax legislation under the Government of India Act, 1935 it also applies subject to certain modifications since the amendment of the Constitution by the Constitution Sixth Amendment Act. And I am unable to persuade myself that by the enact- ment of Art. 286 of the Constitution, it stood abrogated in the interregnum between the promulgation of the Constitution and the amendment of Art.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 546 of 1962. Appeal by special leave from the judgment and decree dated December 17, 1958 of the Allahabad High Court in Misc. Case No. 152 of 1952. B. Agarwala and C. P. Lal, for the appellant. K. Kapur, S. K. Mehta and K. L. Mehta, for the respondent. March 20, 1964. The Judgment of the Court was delivered by SHAH, J -Bijli Cotton Mills-respondent in this appeal-is a manufacturer of companyton yarn and is registered as a dealer under the U.P. Sales Tax Act 15 of 1948 . Under the U.P. Sales Tax Act 15 of 1948 which came into force on April 1, 1948, sales-tax became payable on sales of diverse companymodi- ties including companyton yarn at a uniform rate of three pies in a rupee. By Act 25 of 1948, s. 3-A was incorporated in Act 15 of 1948 companyferring upon the Provincial Government power to declare by numberification that the proceeds of sale of any goods or class of goods shall number be included in the turnover of any dealer except at such single point in the series of sales by successive dealers as the State Government may specify. By s. 7 as amended by Act 25 of 1948, a dealer had the option to submit his return on the basis of the turnover of the sales in the previous year or on the basis of turnover of the sales in the current year. The respondent companypany opted to be assessed on the basis of the turnover of the previous year ending March 31, 1948. In exercise of the power under s. 3-A of the Act the Government of U.P. issued a numberification declaring that with effect from June 9, 1948, the proceeds of goods entered in companyumn 2 of the schedule to the said numberification which included companyton yarn shall number be included in the turnover of any dealer except at the point in the series of sales by successive dealers, and that with effect from June 9, 1949, the rate of tax in respect of the turnover of the aforesaid goods shall be as set out in the schedule. As a result of the numberification the sale of companyton yarn became taxable at a single point i.e. at a point of sale by the importer if the goods were imported from outside Uttar Pradesh and at a point of sale by the manufacturer, if manufactured in Uttar Pradesh, and the rate of tax in respect of companyton yarn was fixed, since the date of numberification, at six pies per rupee. The Sales-tax Officer, Hathras in assessing the respondent companypany to sales-tax for the assessment year 1948-49 held that because of the numberification issued by the Government, the rate of three pies per rupee in respect of sales of companyton yarn was to apply in the year of assessment for the first 69 days and for the remaining part of the year the rate of six pies per rupee was to apply, and on that account numberwithstanding that the assessee had opted under s. 7 to be assessed on the basis of the turnover of the previous year, the rate of three pies was applicable to -the assessable turnover for the first 69 days and for the rest of the year the rate applicable was six pies per rupee. This order was modified in appeal by the Judge Appeals Sales Tax, Meerut, who directed assessment of tax on the turnover at a uniform rate of three pies per rupee. But the order of the ap- pellate companyrt was reversed by the Judge Revisions Sales Tax, U.P. who restored the order of the Sales-tax Officer. The Judge Revisions Sales Tax at the instance of the respondent companypany then referred to the High Court of Judicature at Allahabad the following question Whether the assessees who had elected the previous year are liable to pay tax in the assessment year 1948-49 according to the rates prevailing during the year, and the High Court following its judgment in Modi Food Products Ltd. v. Commissioner of Sales Tax, U.P. 1 answered the question as follows all sales of the assessee during the previous year which companyresponded with the calendar year 1947 have to be taxed at the flat rate of 3 pies per rupee when making the assessment for the assessment year 1948-49. With special leave, the Commissioner of Sales Tax, U.P. has appealed to this Court against the order of the High Court. It may be observed that the judgment of the Allahabad High Court in Modi Food Products Ltd.s case 1 was companyfirmed by this Court Commissioner of Sales Tax, U.P. v. The A.I.R. 1956 All. 35. L P D ISCI--13 Modi Sugar Mills Ltd. 1 But the Legislature of the State of Uttar Pradesh has, since that judgment was pronounced, en- acted validating legislation by Act III of 1963 which has provided by s. 7 of the Amending Act that After section 30 of the Principal Act, the following, shall be added and be deemed to have been added with effect from the first day of April, 1948, as new section 31 31 1 Where any dealer has, in accordance with the provisions of section 7, as it stood prior to its amendment by section 7 of U.P. Act XIX of 1956, opted to be assessed to tax -on the basis of his turnover of the previous year, he shall be assessed to tax at such rates as are prevalent during the year for which the assessment is being made, and if the rates of tax on any goods or class of goods arc altered during such assessment year, the dealer, in respect of the turnover of such goods, shall be liable to pay tax at the altered rates, as if the altered rates were in force during the previous year also proportionately for the same number of days as, they are in force during the assessment year. Notwithstanding any judgment, decree or order of any companyrt, all assessments or orders made, actions. or proceedings taken, directions issued, jurisdictions exercised or tax levied or companylected by any officer or authority purporting to act under the provisions of sub-section 1 of section 7, as it stood prior to its amendment by section 7 of U.P. Act XIX of 1956, shall be deemed to be good and valid in law as if such assessments, orders, actions, proceedings, directions, jurisdictions and tax have been duly made, taken, issued, exercised, levied or companylected, as the case may be, under or in accordance with the said provisions of this Act as amend- ed by the Uttar Pradesh Bikri Kar Sanshodhan Adhiniyam, 1962 and as if the amendment so made had been in force on all material dates. Explanation-For the purpose of this section the expression previous year shall have the meaning assigned to it in sub-clause ii of clause j of section 2 of this Act, as it stood prior to its amendment by section 2 of the U.P. Act XIX of 1956. Section 31 makes sales-tax exigible from an assessee who has, opted to pay tax on the turnover of the previous year, as if the altered rates were in force during the previous year. The turnover of the previous year must therefore be broken up, the new rate of tax being applicable proportionately for the 1 1961 2 S.C.R. 189. same number of days in the previous year as were in force in the assessment year. The amendment is retroactive, and applies to assessments pending or closed, as if the validating Act had been in force at the material date. This Court had in the Modi Sugar Mills Ltd.s case 1 held -that where the assessee had elected to submit his return on the turnover of the previous year under s. 7 of Act 15 of 1948 as amended by Act 25 of 1948 he was liable to be assessed to -sales-tax at the rate in force on the first day of the year of assessment, because the liability arises on that date, and any subsequent enhancement of the rate by virtue of a numberification under s. 3-A does number alter that liability. The view expressed by the Court has been modified by express legislation operative retrospectively. The liability to tax of the turnover of the previous year which is regarded as the fictional turnover of the year of assessment has to be determined on the basis that the rates applicable in the year of assessment were fictionally projected on the taxable turnover. Mr. Kapur appearing on behalf of the respondent companypany submitted that in answering the question referred by the Judge Revisions this Court was bound to give its opinion in the light of the law applicable to the transaction as it prevailed at the date on which the reference was made and number of any subsequent amendment of the Act. Counsel submits that as the High Court exercises an advisory jurisdiction, so does this Court in appeal against the order of the High Court, and its advice can only be tendered on the question referred and in the light of the law as was applicable at the date when the reference was made. Counsel says that if the law as amended is to be taken into companysideration, in substance this Court would be answering a question other than the one which was referred by the Judge Revisions Sales Tax. In our view there is numbersubstance in this companytention. The question referred to the High Court posed a problem as to the liability of the respondent companypany to be assessed for the assessment year 1948-49. Two rival views were propounded before the Judge Revisions Sales Tax. One was that the rates applicable to the fictional turnover for the year of assessment were those prevalent in the year 1948-49 and for the purpose of assessment they had to be applied to the turnover in the same proportion in which they would have applied if the option had number been exercised. That was the companytention of the Sales Tax X X Department. The companytention of the assessee was that having opted for the turnover of the previous year, the rates applicable to the turnover would be crystalised on the first day of the year of assessment and any modification since the companymencement of the year in the rates would be inapplicable. This Court in the Modi Sugar 1 1961 2, S.C.R. 189. Mills Ltd.s case 1 accepted the companytention raised by the assessee. But for the amendment, the question which was posed by the Judge Revisions Sales Tax would have to be answered as it was answered by the High Court. The Legislature has,. however, amended the Act and has declared that numberwithstanding the option exercised by the assessee the tax would have to be companyputed in the light of the rates prevailing in. 1948-49 as. if they were projected upon the turnover of the previous year. The Legislature has expressly stated that this rule will prevail as if it was in force during the assessment year and all assessments will be made in the light of this amended rule. In answering the question which was submitted by the Judge Revisions Sales Tax, therefore, the law enacted by the Legislature is the law found incorporated in s. 31 by Amending Act III of 1963. This Court in giving its opinion on the question in the light of the amending Act is seeking to apply a legislative provision which was, by express enactment, in force at the time when the liability arose, for s. 31 enacted by Act III of 1963 is to be deemed to have been in operation at all material times in supersession of the previous rule declared by this Court. This Court is, therefore, number seeking to apply any law to the question posed before the High Court which was number in force. on the date of the transaction which is the subject-matter of the reference. The following observation made by Jagannadhadas J., in Messrs Chatturam Horilram Ltd. v. Commissioner of Incometax, Bihar and Orissa 2 on which reliance was placed by companynsel for the respondent companypany The High Courts jurisdiction was only to answer the particular question that was referred to it by the Income-tax Appellate Tribunal and it is extremely doubtful whether they companyld have taken numberice of a subsequent legislation and answered a different question., does number suggest a different rule. In Messrs Chatturam Horilram Ltd.s case 2 a previous assessment to income- tax of the assessee fell through because the Indian Finance Act of 1939 was number in force in Chota Nagpur area where the assessee was carrying on business during the relevant assessment year. Thereafter Bihar Regulation IV of 1942 was promulgated by the Governor of Bihar with the assent of the Governor-General and thereby the Indian Finance Act of 1939 was brought into force in Chota Nagpur retrospectively as from March 30, 1939. On February 8, 1944, the Income-tax Officer issued a fresh numberice under s. 34 of the Indian Income-tax Act, 1922, which resulted in the assessment of the appellant to income-tax, and the question which fell to be determined was whether the 1 1961 2 S.C.R. 189. 2 1955 2 S.C.R. 290. numberice was properly issued under s. 34 of the Act. It was argued that when the High Court answered the earlier reference which negatived the claim of the Revenue to assess the assessee, Bihar Regulation IV of 1942 had in fact been enacted, and if the High Court had applied that Regulation the result would have been different, and in meeting that argument the Court observed that it was doubtful if the High Court had jurisdiction to take into companysideration the subsequent legislation for answering a question other than the one which was actually raised. The doubt expressed was therefore in respect of the power of the Court to decide a question other than the question which was actually referred and number in respect of the power and indeed the duty of the High Court to apply to the question referred the law enacted with retroactive operation. In support of his companytention Mr. Kapur relied upon the observation of Desai, C.J., in M s Rampur Distillery Chemical Works Ltd. v. The Commissioner of Income-tax, P. 1 to the following effect The argument was that though the High Court has to answer the question referred to it with reference to the law in force in 1957 when the Tribunal disposed of the appeal , what that law was has to be discovered today with reference to the law existing today. What was the law in 1957 on the basis of which the Tribunal disposed of the appeal has certainly to be decided by this companyrt today but what has to be decided is the law existing in 1957 and number deemed to exist in 1957 by virtue of an amendment in the law made in 1962. But in that case, in the view of the High Court the amendment made by the amending statute of 1962 which came into force after the reference was made by the Income-tax Tribunal had numberretrospective operation, and the question referred by the Tribunal had to be answered by the High Court in the light of the relevant law applicable at the date of the transaction. The observation relied upon has to be read in the companytext of the finding of the High Court as to the character of the amending legislation. The observation therefore does number assist the companytention that even in cases where the relevant statute has been amended with retroactive operation, so as to apply to the transaction which forms the subject-matter of the reference, and the High Court or this Court is bound in recording its opinion on the question referred to ignore the amended law. If what companynsel companytends is true. the answer given by the High Court or by this Court would have numbervalue whatever in cases where by retroactive amendment of the law, the old law has I.T. Reference No. 362 of 1958 decided on Jan. 17, 1964. been superseded and is substituted by a new statutory provision. Undoubtedly the Tribunal called upon to decide a taxing dispute must apply the relevant law applicable to a particular transaction to which the problem relates, and that law numbermally is the law applicable as on the date on which the transaction in dispute has taken place. If the law which the Tribunal seeks to apply to the dispute is amended, so as to make the law applicable to the transaction in dispute, it would be bound to decide the question in the light of the law so amended. Similarly when the question has been referred to the High Court and in the meanwhile the law has been amended with retroactive operation, it would be the duty of the High Court to apply the law so amended if it applies. By taking numberice of the law which has been substituted for the original provision, the High Court is giving effect to legislative intent and does numbermore than what must be deemed to be necessarily implicit in the question referred by the Tribunal, provided the question is companyched in terms of sufficient amplitude to companyer an enquiry into the question in the light of the amended law, and the enquiry does number necessitate investigation of fresh facts. If the question is number so companyched as to invite the High Court to decide the question in the light of the law as amended or if it necessitates investigation of facts which have number been investigated, the High Court may refuse to answer the question. Application of the relevant law to a problem raised by the reference before the High Court is number numbermally excluded merely because at the date when the Tribunal decided the question the relevant law was number or companyld number be brought to its numberice. There is numberhing so peculiar in the nature of a reference under the Indian Income-tax Act or the Sales Tax Acts that in deciding it the High Court is restricted to the application of the law which has been superseded by legislation since the date when the reference was made by the Tax Tribunal and is obliged to refuse to apply the law which by legislative direction has to be applied to a particular transaction which is the subject-matter of the reference. On the view taken by us this appeal must be allowed and the question raised by the Judge Revisions Sales Tax must be answered in the affirmative.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION-Civil Appeal No. 467 of 1963. Appeal by special leave from the judgment and decree dated February 1961 of the Punjab High Court in Regular Second Appeal No. 837 of 1960. Bishan Narain and Naunit Lal, for the appellants. Yashpal Gandhi and S. D. Goswami, for the respondents. March 13, 1964. The judgment of the Court was delivered by AYYANGAR, J.-Do the words son or daughter of such female occurring in s. 15 2 b of the Punjab Preemption Act, 1913 as amended by Act X of 1960 include an illegitimate son or illegitimate daughter of such female is the only question that arises in this, appeal by special leave. The appellants are the illegitimate son and daughter of one Sardarni Prem Prakash Kaur. By a registered deed of sale dated December 1, 1956 the said lady sold 18 bighas, 1 biswas and 5-1/2 biswansis of agricultural land for a sum of Rs. 10,000/- to the respondents. The appellants filed a suit to pre-empt this sale. There was some dispute about the companysideration actually paid but we are number number companycerned with it. Both the trial companyrt as well as the District Court on appeal granted to the appellants a decree for pre- emption, though to a limited extent. The respondents filed a second appeal to the High Court and the learned Judges, by the judgment number under appeal, directed the dismissal of the suit on the ground that the appellants were number companyprehended within the class of persons who were entitled to pre-emption under s. 15 2 b of the Punjab Pre-emption Act as it number stands under the amendment effected by Act X of 1960. It is from this judgment that, by special leave, the present appeal has been brought. Mr. Bishan Narain-learned Counsel for the appellants submitted to us that the provision in s. 15 of the Pre- emption Act must be read in companyjunction with the Hindu Succession Act, 1956 which made provision for the devolution of property belonging to a female owner and that as under the latter enactment illegitimate children of a Hindu female were entitled to succeed to her property, it must be held that when the Punjab legislature used in 1960 the expression son or daughter it meant a son or a daughter who would be entitled to succeed as an heir of a Hindu female. We are unable to accept this submission of learned Counsel. Section 15 whose companystruction calls for companysideration reads as follows Persons in whom right of pre-emption vests in respect of sales of agricultural land and village immovable property.- I The right of pre-emp- tion in respect of agricultural land and village immovable property shall vest- a where the sale is by a sole owner First, in the son or daughter or sons son or daughters son of the vendor Secondly, in the brother or brothers son of the vendor Thirdly, in the fathers brother or fathers brothers son of the vendor Fourthly, in the tenant who holds under tenancy of the vendor the land or property sold or a part thereof b where the sale is of a share out of joint land or property and is number made by all the companyharers jointly - First, in the sons or daughters or sons sons or daughters sons of the vendor or vendors Secondly, in the brothers or brothers sons of the vendor or vendors Thirdly, in the fathers brothers or fathers brothers sons of the vendor or vendors-, Fourthly, in the other companysharers Fifthly, in the tenants who hold under tenancy of the vendor or vendors the land or property sold or a part thereof c where the sale is. of land or property owned jointly and is made by all the company sharers jointly - First, in the sons or daughters or sons sons or daughters sons of the vendors Secondly, in the brothers or brothers sons of the vendors Thirdly, in the fathers brothers or fathers brothers sons of the vendors Fourthly, in the tenants who hold under tenancy of the vendors or any one of them the land or property sold or a part thereof. Notwithstanding anything companytained in sub-section 1 - a where the sale is by a female of land or property to which she has succeeded through her father or brother or the sale in respect of such land or property is by the son or daughter of such female after inheritance, the right of preemption shall vest- if the sale is by such female, in her brother or brothers son if the sale is by the son or daughter of such female, in the mothers brothers or the mothers brothers sons of the vendor or ven- dors b where the sale is by a female of land or property to which she has succeeded through her husband, or through her son in case the son has inherited the land or property sold from his father, the right of pre-emption shall vest - First, in the son or daughter of such female Secondly, in the husbands brother or hus- bands brothers son of such female. The submission of learned Counsel virtually amounts to this that in order to companystrue the words used in s. 15 one should travel beyond the enactment and ascertain the class of persons who are entitled under the Hindu Succession Act to succeed as heirs of the intestate vendor. Even a cursory examination would show that this companystruction is untenable and that the framers of the Act did number proceed on any such theory. Take, for instance, the case where a female succeeds to property through her father or brother dealt with in s. 15 2 a of the Pre-emption Act. Her heirs under the Hindu Succession Act would be, if the property was inherited from her father, her son or daughter including the children of any predeceased son or daughter and in their absence the heirs of the father. If, however, the property was inherited from her brother, the devolution is different vide s. 15 1 and 2 . The devolution provided by s. 15 2 a i of the Pre-emption Act is different and companyfers the right to pre-empt on her brother or her brothers son. The theory, therefore, that we should resort to the line of heirs as in an intestate succession under the Hindu Succession Act or, for the matter of that, to any other system of Common Law or statute applicable to the vendor is obviously untenable. Pursuing this line of reasoning a little, it was number disputed that if the female vendor were a Christian by religion, only her legitimate issue would be denoted by these words. As it is companymon ground that the statutory right of pre-emption companyferred by s. 15 is as much applicable to a Christian owner of property as to a Hindu, it would be seen that the companystruction of the words of this statute of general application would be made to depend on the religion to which the vendor belonged, and in fact would vary with any change made by statute in the law of intestate succession as applicable to different companymunities. The position that would arise on a companyversion of the vendor to a different faith, with a different personal law as to succession would bring out in bold relief the unsustainability of the submission based on the peculiarities of the personal law as to intestate succession applicable to the vendor. We have, therefore, to ascertain whether by the expression son or daughter only the legitimate issue of such female is companyprehended or whether the words are wide enough to include illegitimate children also. That the numbermal rule of companystruction of the words child, son or daughter occurring in a statute would include only legitimate children i.e., born in wedlock, is too elementary to require authority. No doubt, there might be express provision in the statute itself to give these words a more extended meaning as to include also illegitimate children and s. 3 j of the Hindu Succession Act Act XXX of 1956 furnishes a good illustration of such a provision. It might even be that without an express provision in that regard the companytext might indicate that the words were used in a more companypre- hensive sense as indicating merely a blood relationship apart from the question of legitimacy. Section 15 with which we are companycerned companytains numberexpress provision and the companytext, so far as it goes, is number capable of lending any support to such a companystruction. In the first place, the words son or daughter occur more than once in that section. It was fairly companyceded by Mr. Bishan Narain that where the son or daughter of a male vendor is referred to, as in s. 15 1 . the words mean only the legitimate issue of the vendor. If so, it cannot be that in the case of a female vendor the words companyld have a different companynotation. Even taking the case of a female vendor herself, there is a reference in s. 15 2 a i to the brothers son of such vendor. It companyld hardly be open to argument that a brothers illegitimate son is companyprehended within those words. The matter appears to us to be too clear for argument that when s. 15 2 b i uses the words son or daughter it meant only a legitimate son and a legitimate daughter of the female vendor.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 145 of 1963. Appeal from the judgment and order dated November 16. 1959, of the Madras High Court in Case Reference No. 82 of 1956. K. Kapur and R. N. Sachthey, for the appellant. Swaminathan and R. Gopalakrishnan, for the respondent. T. Desai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the intervenor. April 24, 1964. The judgment Of SUBBA RAo and SIKRI In, JJ. was delivered by SIKRI J. SHAH J. delivered a dissenting Opinion. SIKRI, J.-This is an appeal by the Commissioner of Income Tax, Madras, against the judgment of the High Court, dated November 16, 1959, on a certificate granted by the High Court under s. 66A 2 of the Indian Income Tax Act, 1922. The respondent, Mir Mohd. Ali, hereinafter referred to as the assessee, is a bus owner and transport operator at Vel- lore, North Arcot District. He had a fleet of buses, and during the year of account ending with March 31, 1950 relevant to assessment year 1950-51 he replaced the petrol engines in two of his buses MDJ 583 and MDJ 723 by new Diesel engines, incurring an expenditure of Rs. 18,544/in this companynection. Before the Income Tax Officer, apart from claiming numbermal depreciation under the first Paragraph of cl. vi of s. 10 2 , he also claimed depreciation under the second paragraph of cl. vi and cl. via of the Indian Income Tax Act, 1922. The Income Tax Officer only allowed 25 per cent depreciation under the first paragraph of cl. vi . The assessee appealed unsuccessfully to the Appellate Assistant Commissioner on this point. There were other points involved in the appeal but as we are number companycerned with them in this appeal, they are number being mentioned. On further appeal, the Appellate Tribunal held that the assessee is number entitled to extra depreciation under s. 10 2 vi or s. 10 2 via because however important the engine might be for running of a motor, it is after all part of an equipment and it cannot by itself become machinery for the purpose of claiming extra depreciation, as envisaged in these sub-sections. We have to hold that the installation of the new engines is only a capital addition, for the above reasons the assessee was rightly refused the extra depreciation he claims. The Income Tax Appellate Tribunal, on the application of the assessee, referred the following question to the High Court Whether extra depreciation is admissible under the provisions of section 10 2 via of the Income Tax Act, in respect of a diesel oil engine fitted to a motor vehicle in replacement of the existing engine. We may mention that another question regarding disallowance of interest had also been referred to the High Court but we are number companycerned with that in the present appeal. As the High Court felt that there had been an accidental slip in framing the question, it amended the question as and the amended question reads Whether extra depreciation is admissible under the provisions of s. 10 2 vi and section 10 2 via of the Income Tax Act in respect of the diesel oil engines fitted to the motor vehicles in replacement of the existing engines. The High Court answered this question in the affirmative i.e., in favour of the assessee. The Commissioner of Income Tax, on obtaining a certificate under s. 66A 2 of the Income Tax Act, has filed this appeal. Before attempting to answer the question, it is necessary to set out the relevant provisions of the Income Tax Act. The relevant provisions, as in force at the relevant time, were s. 10 2 Such profits or gains shall be companyputed after making the following allowances, namely-- in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture, stocks or stores, used for the purposes of the business, profession or vocation, the amount of any premium paid in respect of current repairs to such buildings, machinery, plant or furniture, the amount paid on account thereof in respect of depreciation of such buildings, machinery, plant, or furniture being the property of the assessee, a sum equivalent, where the assets are ships other than ships ordinarily plying on inland waters, to such percentage on the original companyt thereof to the assessee as may in any case or class of cases be prescribed and in any other case, to such percentage on the written down value thereof as may in any case or class of cases be prescribed and where the buildings have been newly erected, or the machinery or plant being new has been installed, after the 31st day of March, 1945, a further sum which shall however number be deductible in determining the written down value for the purposes of this clause in respect of the year of erection or installation equivalent,- a in the case of buildings the erection of which is begun and companypleted between the 1st day of April 1946 and the 31st day of March 1952 both dates inclusive , to fifteen per cent of the companyt thereof to the assessee b in the case of other buildings, to ten per cent of the companyt thereof to the assessee c in the case of machinery or plant, to twenty per cent of the companyt thereof to the assessee Provided that- via in respect of depreciation of buildings newly erected, or of machinery or plant being new which has been installed, after the 31st day of March, 1948, a further sum which shall be deductible in determining the written down value equal to the amount admissible under clause vi exclusive of the extra allowance for double or multiple shift working of the machinery or plant and the initial depreciation allowance admissible under that clause for the first year of erection of the building or the installation of the machinery or plant in the assessments for such of the five years companymencing on the 1st day of April, 1949, and ending with the 31st day of March, 1954 Provided that where, in respect of such machinery or plant, the assessee establishes that the market value of similar machinery or plant on the 31st day of March, 1953, is lower than the original companyt, then, subject to the provisions of clause vi , there shall be made in the assessment for the year companymencing next after that date a further allowance which shall be deductible in determining the written down value of an amount by which the written down value of the machinery or plant as on that date without deduction of the initial depreciation admissible in the first year would have exceeded the companyresponding written down value thereof as on the same date if the market price of the machinery or plant had been taken as the actual companyt of the assessee in respect of any such building, machinery or plant which has been sold or discarded or demolished or destroyed, the amount by which the written down value thereof exceeds the amount for which the building, machinery or plant, as the case may be, is actually sold or its scrap value Provided that In sub-section 2 plant includes vehicles, books, scientific apparatus and surgical equipment purchased for the purpose of the business, profession or vocation The point at issue before us has been companysidered by three High Courts. The Bombay and Andhra Pradesh High Courts have held against the assessee while in the judgment under appeal, the Madras High Court has held in favour of the assessee. The High Court of Andhra Pradesh, in the case of Srikantiah v. Commissioner of Income-Tax Andhra Pradesh 1 , followed the Bombay case and expressly dissented from the Madras case. In the judgment under appeal reported as Mr. Mohd. Ali v. Commissioner of Income-Tax, Madras 2 , the High Court arrived at the companyclusion by the following steps Machinery must be given the same meaning with reference to each of the statutory provisions, in s. 10 2 vi and s. 10 2 via A diesel engine is machinery by the test laid down in the case of Corporation of Calcutta v. Chairman, Cossipore and Chitpore Municipality 3 Machinery does number cease to be machinery merely because it has to be used in companyjunction with one or more machines. Nor does it cease to be machinery merely because it is, for instance, installed as part of a manufacturing or industrial plant The statutory provision for depreciation is in the alternative. Whether it is plant or whether it is machinery without its being itself a plant, the assessee is entitled to claim the statutory allowance for depreciation. The question then is Which is the companyrect view? First, the history of para two of cl. vi may be numbericed. The object of the Income Tax Amendment Act, 1946 VIII of 1946 , which first inserted the provisions regarding extra depreciation, was to encourage the modernisation and re- habilitation of industry and trade. The Second World War 1961 41 I.T.R. 518. 2 1960 38 I.T.R. 413. 3 1922 I.L.R. 49Cal. 190. had ended recently and during the long war machinery and plant had number only number been replaced or modernised but had been subjected to excessive wear and tear and needed rehabilitation. During the War, there had also been great,,, -advance in technology. It is then pertinent to point out that the word machinery occurs in cls. iv , v , vi and via of s. 10 2 . Prima facie the same meaning must be given to the word ,machinery in all these clauses. If a machine is machinery for purposes of giving an allowance in respect of insurance or for repairs or in respect of numbermal depreciation or for the purpose of para one of cl. vi , it must also be machinery for the purpose of second para of cl. vi and cl. via . But it is said that the scheme of para two of cl. vi and cl. via is different from that of para one of cl. vi inasmuch as before it can qualify for extra depreciation, the machinery must be new and must be installed, and the rate of depreciation is provided in the Act itself. Keeping in view this scheme, it is urged that the word machinery must be given a restricted meaning in para two of cl. vi and cl. via , and the meaning suggested is that it must be a self companytained unit capable of being put to use in the business, profession or vocation for the benefit of which it was installed. That this is the true meaning, it is further said, is evidenced by the definition of the word plant in s. 10 5 . It is argued that this definition indicates that for purposes of para two of cl. vi and cl. via , plant, including a vehicle should be viewed as a unit and companyponent parts thereof are excluded from its purview, and machinery should also be companysidered in the same light. Let us number examine these companytentions. First, we do number think that there is anything in the scheme of the second para ,of cl. vi and cl. via that throws any light on the companystruction of the word machinery in these clauses. It is true that the machinery must be new and it must be installed and the rate of allowance is prescribed in the Act itself. But the requirement that the machinery must be new does number tell us what is machinery. Assuming for the present that a diesel engine is machinery, if an assessee buys and instals a secondhand diesel engine, he will number be given the extra allowance under the second para of cl. vi , and the ground would be that the engine is number new and number that because it is second-hand, it is number machinery. Similarly, if it is purchased but number installed, the ground of refusal would be that it has number been installed and number that because it has number been installed it has ceased to be machinery. Suppose a new machinery is purchased but number installed, it would number qualify for extra depreciation on the ground that it has number been installed and number because it has ceased to be machinery due to its number-installation. The fact that the rate of depreciation is provided for in the Act has also numberbearing on the question of the companystruction of the word machinery. This fact only indicates that the legislature had made up its mind as to the extent of encouragement to be given to industry and, therefore, it did number companysider it necessary to delegate this to the rule-making authority. The definition of the word plant in s. 10 5 equally does number throw any light on the meaning of the word machinery. The word plant is of wide import, but even so it may be argued that vehicles, books, scientific apparatus and surgical equipment are number plant in all businesses, pro- fessions and vocations. The legislature settled this possible companytroversy, but without throwing any light on the true meaning of the word machinery. What then is the test for determining whether a mechanical companytrivance is machinery for the purposes of second para of cl. vi and cl. via ? The Privy Council in the case of Corporation of Calcutta v. Chairman, Cossipore and Chitpore Municipality 1 hazarded the following definition of machinery The word machinery, when used in ordinary language prima facie, means some mechanical companytrivances which, by themselves or in companybination with one or more other mechanical companytrivances,. by the companybined movement and inter-dependent operation of their respective parts generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite and specific a result. They had already observed that the word machinery must mean more than a companylection of ordinary tools. The Privy Council case was number a tax case but prima facie the ordinary meaning of the word machinery-and the word machinery is an ordinary and number a technical word-must, unless there is something in the companytext, prevail in the Indian Income Tax Act also. According to the above definition, a diesel engine is clearly machinery. Indeed, r. 8 of the Income Tax Rules treats aero-engines separately from aircraft. It is true that this rule cannot be used to interpret the clauses in the Act but it does show that companyponents of an aircraft, which are machinery, can be treated separately. 1 1922 I.L.R 49 Cal. 190 Further, when the assessee purchased the diesel engines, they were number plant or part of a plant, because they had number been installed in any vehicle. They were, according to the definition given by the Privy Council, machinery. They, were number yet part of a plant, and, according to the Act, 20 per cent of the companyt thereof was allowable to the assessee. All the companyditions required by the Act are satisfied. If we look at the point of time of purchase and installation, what was purchased and installed was machinery. The learned companynsel next companytended that the assessee is number entitled to extra depreciation because a diesel engine cannot be said to be installed. He urges that the word installed is wholly inappropriate to companyer the fixing of a diesel engine in a motor vehicle. We are of the opinion that there is numberforce in this companytention. As observed by the Bombay High Court in the case of Commissioner of Income- Tax v. Saraspur Mills Ltd. 1 the expression installed did number necessarily mean fixed in position but was also used in the sense of inducted or introduced-, or to use the language of the Madras High Court in the case of Commissioner of Income Tax, Madras v. Sri Ram Vilas Services Pvt Ltd. 2 , installed would certainly mean to place an apparatus in position for service or use. We are of the opinion that when an engine is fixed in a vehicle it is installed within the meaning of the expression in cls. vi and via . Accordingly, we hold that the High Court was companyrect in answering the question referred to it in the affirmative. The appeal, therefore fails and is dismissed with companyts. SHAH, J.- I am unable to hold that the respondent is entitled to the allowance under s. 10 2 vi paragraph 2, in respect of the diesel engines claimed by him. Section 10 of the Indian Income-tax Act provides that tax shall be payable on the profits and gains of an assessee under the head profits and gain of business, profession or vocation. By sub-s. 2 in the companyputation of taxable pro- fits certain allowances prescribed therein are permissible. We are primarily companycerned in this appeal with the initial allowance permissible under the second paragraph of cl. vi of sub-s. 2 . But cls. iv , v , vi , vi a and vii are inter-related and it may be necessary briefly to refer to those provisions By cl. iv allowance for premium paid in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture, stocks or stores, used for the purposes of the business, profession or vocation is admissible. Under cl. v an amount paid on account of any current repairs to such buildings, machinery, plant or furniture is 1 , 1959 36 I.T.R. 580. 2 1960 38 I.T.R. 25. an admissible allowance. Clause vi recognises by the first paragraph a right to numbermal depreciation of a percentage on the prescribed valuation of such buildings. machinery, plant or furniture, which are the property of the assessees. The second paragraph at the material time stood as follows and where the buildings have been newly erected, or the machinery or plant being new has been installed, after the 31st day of March, 1945, a further sum which shall however number be deductible in determining the written down value for the purposes of this clause in respect of the year of erection or installation equivalent, etc. etc. Clause vi a which was inserted by Act 67 of 1949 permit- ted a further depreciation allowance In respect of buildings newly erected or of machinery or plant being new which had been erected or installed after March 31, 1948, in number more than five successive assessments, for the financial years next following the previous year in which such buildings were erected, or machinery or plant installed. Clause vii permitted as an allowance the difference between the written down value and the sale price or scrap value of such buildings, machinery or plant which had been sold, discarded, demolished or destroyed. All these clauses dealt with allowances in respect of assets of the specified description and used for the purpose of business, profession or vocation. The depreciation allow- ance permitted under the first paragraph of cl. vi which may be called the numbermal allowance is in respect of all buildings, machinery, plant and furniture of the assessee used for the purpose of his business. By the second paragraph of cl. vi an initial allowance in the year in which buildings have been newly erected or the machinery or plant being new has been installed after March 31, 1945, is allowable. Use of the definite article the in the second paragraph indicates that the buildings, machinery or plant referred to in that paragraph must also be used for the purpose of the business, profession or vocation of the assessee. However to qualify for the initial allowance under paragraph two, the buildings must be newly erected or the machinery or plant being new must have been installed, after March 31, 1945. Two rival views are pressed upon us in support of the respective cases of the Commissioner and the assessee as to the meaning of the second paragraph. The Commissioner companytends that the buildings, machinery or plant for which the initial allowance is admissible must be a self-contained unit capable of being put to use in the business, profession or vocation for the benefit of which it is erected or installed. It is submitted that the second paragraph of cl. was en- acted with the object of giving a fillip to industry which had been starved during the war years of new machinery and building activity. But the buildings, machinery, or plant to qualify for the initial allowances were number intended to be in the nature of replacement, addition, or repair to existing units they had to be buildings newly erected or machinery or plant being new installed. On behalf of the assessee it was companytended that the Legislature has number put any restriction of the nature suggested on behalf of the Commissioner and, therefore, any building or a part thereof newly erected or any new machinery or plant or a part thereof installed,. qualified for the benefit of the initial allowance. The question to be decided is one about the intention of the Legislature. Can it be said that when to an existing building a room even a floor is added, that the additional companystruction is a building newly erected? In my view, that does number appear to be the intention. Such an addition to an existing structure, becomes a part of the structure, and cannot be said to be a building newly erected. If every alteration or addition in an existing building is companyered by the second paragraph of cl. vi mere repairs falling within the words of cl. vi may also qualify for initial allowance. If a mere addition to a building cannot be regarded as such an erection as is companytemplated by the second paragraph of cf. vi , it would be difficult to hold that the machinery or plant would include part of machinery or plant. Counsel for the assessee companycedes that replacement of a petrol engine by a diesel engine in a motor transport vehi- cle is number installation of plant. The question is whether it is installation of machine. In my view replacement of a petrol engine by a new diesel engine in a motor-car cannot be said to be installation of machinery within the meaning of the relevant clause. To be installed the machinery being new must for the purpose of the business be brought into service as a self-contained unit. If the argument of the assessee is sound, every bolt, nut, rod or flywheel which companystitute a part of machinery would qualify for the initial allowance and the difference between the allowance for repairs and initial allowance may be obliterated. Counsel for the assessee also did number, as I understood him, companytend that replacement of a mere part of machinery was installation of machinery within the meaning of the second paragraph of cl. vi . The Legislature has number given any definition for that expression, and the expression machinery is otherwise somewhat difficult to define. The Judicial Committee in Corporation of Calcutta v. Cossipore and Chitpore Municipality 1 when it was called upon to companysider whether a tank supported on L. R. 48 I.A. 435. companyumns, and which companyld be filled by pumping from a re- servoir belonging to the Corporation companyld be regarded as machinery within the meaning of the Bengal Municipal Act, 1884, observed at p. 445 If their Lordships were obliged to run the hazard of the attempt to define machinery they would be inclined to say that the word machinery when used in ordinary language, prima facie means some mechanical companytrivances which, by themselves or in companybination with one or more other mechanical companytrivance, by the companybined movement and inter-dependent operation of their respective parts generate power, or evoke, modify, apply or direct natural forces with the object in each case of effecting so definite and specific a result. But we are number called upon in this case to decide whether a diesel engine is in the abstract machinery the question is whether a diesel engine, which is used for replacing a pet- rol engine, in a vehicle used by a transport operator for the purpose of his business is machinery installed within the meaning of s. 10 2 vi paragraph 2. Whether machinery is some companytrivance for supplying motive power to another companytrivance which directly produces an article or is a mechanical companytrivance which produces or assists in the production of an article, it would be difficult to regard introduction of a mere part, which has numberindependent use in the business companyducted by the assessee, as machinery installed for the purpose of the second paragraph of cl. vi . The Legislature has provided for the numbermal depreciation by paragraph 1 of cl. vi and in respect of newly installed machinery it has provided for the initial allowance, the object being to induce industrialists to start new industries or to extend their existing industries by erecting new buildings, or installing new machinery or plant. A diesel engine by itself may undoubtedly be used in a business other than that of a transport operator, for instance, for working a pump to draw underground water and may for that purpose be regarded as a self-contained unit. But that is number decisive of the question whether in the business of a transport operator a diesel engine used to replace a petrol engine may be regarded as machinery installed. Machinery installed within the meaning of paragraph 2 of s. 10 2 vi is qualified by the expression used for the purposes of the business, and therefore unless as a self-contained unit the machinery is used for the purposes of the business, initial depreciation would number be admissible in respect thereof. That it may be capable of being used in another business by the same or another assessee as a self-contained unit is irrelevant in companysidering its admissibility for initial allowance in the business in which it is actually used. It would be fruitless to refer to the schedule under rule 8 of the Income-tax Rules for companyputing the allowance in res- pect of the depreciation under s. 10 2 vi . The schedule catalogues different items in respect of which depreciation is admissible at the rates prescribed. But whether a particular item is admissible for initial allowance in the second paragraph must depend upon two factors- i that it is in respect of the year of erection or installation that the initial allowance is permissible and ii the building or the machinery is used for the purposes of the business. If it is a predicate of admissibility to initial allowance that the machinery must be new and a self-contained unit in the particular business in the carrying on of which the initial allowance is claimed, the fact that in certain companyditions that machinery may be regarded as self-contained for the purpose of another business in which it is used, would furnish numberguide in ascertaining whether initial allowance is permissible as a deduction in the assessment of taxable income of the business in which it is actually used. In my view the appeal should be allowed and the question referred for opinion should be answered in the negative.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION CIVIL APPEAL No. 61 OF 1964 Appeal by special leave from the judgment and decree dated October 28, 1963 of the. Gujarat High Court in Civil Revision Application No. 697 of 1962. Purshottam Trikamdas, M. 1. Patel and I. N. Shroff, for the appellant. T. Desai, B. J. Shelat, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the respondent. April 28, 1964. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-This appeal, by special leave, is directed against the order of the Bombay High Court and raises the question of the true companystruction of sub-cis. g and hh of sub-s. 1 of S. 13 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 Act LVII of 1947 , hereinafter called the Act. The facts leading to the appeal, in short, are that the appellant is a tenant of the ground-floor of a house owned by the respondent. The respondent sued for the ejectment of the appellant on the ground that he required the entire house, including the portion occupied by the appellant, for his residential purpose. He further stated in the plaint-. The whole suit bungalow is very old-built about 75 years ago and at present its different parts are likely to give way and companylapse. Before sometime, a little portion of an upper balcony had companylapsed. In the circumstances, on find- ing it unsafe to stay in it without making additions, alterations and necessary changes, I, the plaintiff, am obliged to wait till I get possession of the whole bungalow. 1. the plaintiff, have got the upper portion of the said suit bungalow vacated at present and only after the whole bungalow is got overhauled as -stated in para above, 1, the plaintiff can utilize it for my personal use. Me appellant companytested the suit on various grounds including the ones that the respondent did number reasonably and bona fide require the premises for his occupation and that he did number reasonably and bona fide require the premises for carrying out repairs. The trial Court found that the respondent bona fide required the premises for his occupation. It repelled the companytention of the appellant that the provisions of s. 1 3 I g would number be applicable when the landlord did number wish to occupy the premises as such but intended to occupy it after carrying out major repairs. and decreed the respondents suit for ejectment. The defendant went up in appeal. It was dismissed. The appellate Court, agreed with the views of the trial Court. The defendant then presented a revision petition to the High Court. It was rejected. It is against this order that he has filed this appeal. A preliminary objection has been taken that the revision to the High Court was incompetent as numberquestion of juris- diction was involved. For the appellant it is urged that on the facts found. the trial Court assumed jurisdiction which it did number have and that therefore the revision was companypet- ent. We uphold the preliminary objection and hold that the revision was incompetent. The question raised was whether a decree in ejectment should be passed on the ground of personal requirement under s. 1 3 1 g of the Act where it was proved that the landlord wanted to pull down the premises and build another and then occupy it. It was said that in such a case he had to proceed under cl. hh of s. 13 1 . It is clear that the question so raised is one of interpretation of these two clauses. Section 28 of the Act gives jurisdiction to the Court specified in it, to try a suit or proceeding, between a landlord and tenant relating to possession of the premises. That section expressely provides that numberother Court, subject to the provisions of sub-s. 2 which do number apply to this case, has jurisdiction to entertain such suits. It is clear from this section that the trial Court had full jurisdiction to entertain the suit for ejectment. That being so, it had jurisdiction to interpret whether cl. g of s. 13 1 would apply to the present case. The appellate Court had jurisdiction to hear the appeal. The High Court companyld number, therefore, interfere in revision with the decision of the appellate Court, even if it had gone wrong, on facts or law, in the exercise of its jurisdiction. It follows that the revision application had to be dismissed by the High Court and that this appeal too must fail. Since the merits of the case have been argued fully before us, we express our opinion on the law point urged before us. The sole question to determine in this appeal is whether the respondents case came within the provisions of s. 13 1 g of the Act or fell within the provisions of s. 13 1 hh . We may number set out these provisions 13 1 Nothwithstanding anything companytained in this Act but subject to the provisions of section 15, a landlord shall be entitled to recover possession of any premises if the Court is satisfied g that the premises are reasonably and bona fide required by the landlord for occupation by himself or by any person for whose benefit the premises are held or where the landlord is a trustee of a public charitable trust that the premises are required for occupation for the purposes of the trust or hh that the premises companysist of number More than two floors and are reasonably and bona fide required by the landlord for the immediate purpose of demolishing them and such demolition is to be made for the purpose of erecting new building on the premises sought to be demolished. A landlord can sue for the ejectment of his tenant in view of s. 13 1 for various reasons including the one that he requires the premises reasonably and bona fide for occu- pation by himself. The respondent alleged, and the Courts below have found, that he bona fide required the premises in the suit for occupation by himself. The respondent stated in the plaint that he would take up residence in the pre- mises after overhauling it. It is on this account that the appellant submits that the case falls under s. 13 1 hh , as the respondent wants the premises for the immediate purpose of demolishing it and erecting a new building. It is further companytended for the appellant that the two grounds for ejectment under cls. g and hh are matually exclusive and therefore a landlord cannot take advantage of cl. g when his case falls under cl. hh in view of the immediate steps he has to take after getting possession of the premises. We need number express an opinion on this point, as, for reasons to be mentioned later, the case falls under cl. g and number under cl. hh of s. 13 I of the Act. We agree with the Courts below that the respondents case falls under cl. g when he bona fiede requires the premises for his own occupation. The mere fact that he intends 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, does number affect the question of his requiring the house bona fide and reasonably for his oc- cupation, when he has proved his need for occupying the house. There is numbersuch prohibition either in the language of cl. g or in any other provision of the Act to the effect that the landlord must occupy the house for residence without making any alterations in it. There companyld at be any logical reason for such a prohibition. Under ordinary law, the landlord is entitled to eject his tenant whenever he likes, after following certain procedure except in cases where he has companytracted number to eject him before the happening of a certain event. The Act restricts that general right of the landlord in the special circumstances prevailing in regard to the availability of accommodation and the incidental abuse of those circumstances by landlords in demanding unustifiabl high rents. The Act has provided sufficient protection to the tenants against being harassed by threat of ejectment in case they are unable to satisfy landlords demands. Various restric- tions have been placed on the right of the landlord to eject the tenant. Section 12 1 provides that the landlord shall number be entitled to the recovery of possession of any premises so long as the tenant pays or is ready and willing to pay the amount of the standard rent and permitted increases, if any, and observes and performs the other companyditions of the tenancy in so far as they are companysistent with the provisions of the Act. Section 13 provides exceptional cases in which the landlord can eject the tenant even though he had been paying rent regularly or be ready and willing to pay rent. The provisions of s. 13 are for the advantage of the landlord and the various grounds for ejectment mentioned in that .section are such which reasonably justify the ejectment of the tenant in the exercise of the landlords general right to eject his tenant. There is therefore numberreason why restrictions number mentioned in the grounds be read into them. We do number therefore agree with the companytention that cl. g will apply only when the landlord bona fide needs to occupy the premises without making any alteration in them, i.e., to occupy the identical building which the tenant occupies. There is numberjustification to give such a narrow companystruction either to the word premises or to the word occupies which have been companystrued by this Court in Krishanual Ishwarlal Desai v. Rai Vijkor 1 referred to later. There are provisions in the Act which ensure that the provisions of cl. g are number abused. Section 17 provides that if the premises are number occupied within a period of one month from the date the landlord recovers possession or the premises are re-let within a period of one year of the said date to any person other than the original tenant, the Court may order the landlord, on the application of the original tenant, within the time prescribed, to place him in occupa- tion of the premises on the original terms and companyditions. This tends to ensure that a landlord does number eject a tenant unless he really requires the premises for occupation by himself. 1 1964 1. S.C.R. 553. We are therefore of opinion that once the landlord esta- blishes that he bona fide requires the premises for his occupation. he is entitled to recover possession of it from the tenant in view of the provisions of sub-cl. g of s. 13 1 irrespective of the fact whether he would occupy the premises without making any alterations to them or after making the necessary alterations. The provisions of cl. hh cannot possibly apply to the case where a landlord reasonably and bona fide requires the premises for his own occupation even if he had to demolish the premises and to erect a new building on them. The provisions of cl. hh apply to cases where the landlord does number require the premises for his own occupation but requires them for erecting a new building which is to be let out to tenants. This is clear from the provisions of subs. 3A which provide that a landlord has to give certain undertaking before a decree for eviction can be passed on the ground specified in cl. hh . He has to undertake that the new building will have number less than two times the num- ber of residential tenements and number less than two times the floor area companytained in the premises sought to be demolish- ed, that the work of demolishing the premises shall be company- menced by him number later than one month and shall be company- pleted number later than three months from the date he recovers posession of the entire premises and that the work of erec- tion of the new building shall be companypleted by him number later than fifteen months from the said date. These undertakings thus provide for a time schedule for the new building to companye up into existence and ensures atleast the doubling of the residential tenements, i.e., rooms or groups of rooms rented or offered for rent as a unit vide s. 5 12 of the Act. Such undertakings would be unnecessary if the landlord seeks to eject the tenant from the premises in order to occupy the premises himself after making the necessary alterations to suit his companyveniences. Further, s. 17A provides for the ejected tenants re-occupying the premises in case the land- lord does number start the work of demolition within the period specified in sub-s. 3A . Section 17B provides for the ejected tenant to numberify to the landlord within six months from the date on which he delivered vacant possession of the, premises of his intention to occupy a tenement in the new building on its companypletion on the companyditions specified in the section. Section 17C provides that the landlord would intimate to the tenant the date when the new building would be companyplete and that the tenant would be entitled to occupy the tenement on that date. These provisions clearly establish that the provisions of cl. hh apply when the landlord desires. to demolish the premises for the purpose of erecting a new building on the premises for being let to tenants. We may mention that the provisions of clauses similar to cls. g and hh of sub-s. 1 of s. 13 of the Act have been companystrued in this way in Krishna Das v. Bidhan Chandra , McKenna v. Porter Motors Ltd. , and Bettys Cafes Ltd. Phillips Furnishing Stores Ltd. . The appellant has referred us to two cases of the Bombay High Court which tend to support him in so far as it is held in them that in circumstances similar to the present one, the case would companye under cl. hh of s. 1 3 I and number under cl. g . They are Manchharam Ghelabhai Pittalwala The Surat Electricity Co. Ltdt. 4 and Allarkha Fakir- mahomed v. The Surat Electricity Co. Ltd. 5 . The latter case followed the previous one. In the former case the High Court said Indeed the expression occupation occurring in clause g means possession followed by actual occupation, while for the purpose of clause hh what is necessary is possession for the purpose of demolition. Occupation within clause g would include possession, as it is obvious that one cannot occupy unless one is able to possess. but in the case of clause hh it is clear that it is number necessary to occupy for the purpose of demolition. What is necessary is that the land- A.I.R. 1959, Cal. 18i 3 1959 A. C. 20 2 1956 A. C. 688 4 -Civil Revision Application NO. 204/56 decided on 1-2-57 by the Bombay, High Court. Civii Revision Application No. 164/57 decided On 8-10- 57 by the Bombay High Court. lord must possess in order to enable him to demolish and erect a new building. Demolition of the existing building and subsequent erection of a new building are only intermediate steps in order to make the building fit for occupation by the landlord In Krishanlal Iswarlal Desais case this Court said in companynection with the provisions of s. 17 1 of the Act What is, however, clear beyond any doubt is that when the possession is obtained in execution it must be followed by an act of occupation which must inevitably companysist of some overt act in that behalf Occupation of the premises in cl. g does number necessarily refer to occupation as residence. The owner can occupy a place by making use of it in any manner. In a case like the present, if the plaintiffs on getting possession start their work of demolition within the prescribed period, they would have occupied the premises in order to erect a building fit for their occupation. We therefore hold that the respondents case came within cl. g of sub-s. 1 of s. 13 of the Act and therefore dismiss the appeal with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 620 of 1963. Appeal by special leave from the judgment and decree dated 9, 1961 of the Patna High Court in M.J.C. No. 497 of 1957. D. Karkhanis and R. N. Sachthey, for the appellant. Sarjoo Prasad, B. D. Singh and D. Goburdhn, for the respondent. April 28, 1964. The judgment of the Court was delivered by SHAH J.-Rani Bhuwaneshwari Kuer-hereinafter referred to as the assesses was the proprietor of a seven-sixteenth share in an estate known as Tekari Raj, having inherited that estate from her parents. The assesses later acquired by purchase a major portion of the remaining ninesixteenth share in the Raj. The estate held by the assessee was heavily encumbered, and with a view to arrange for liquidation of the debts the assesses executed an indenture of trust dated January 20, 1941, whereby the Tekari Raj and certain zamindari properties owned by the assesses were companyveyed to certain named trustees to be field in trust, subject to companyditions specified therein. The principal beneficiaries under the deed after payment of the debts were the assesses, her husband and her five sons. By the 23rd clause of the deed it was directed that after making certain payments, the trustees shall divide the sur- plus of the net rents, issues and profits thereof in the proportions set out in the clause. The 24th and the 25th clauses dealt with the devolution of the beneficial interest in the event of death of any of the beneficiaries. By the 41st clause it was provided that after the debts and liabilities set out in Sch. D to the deed were paid off and discharged, the settlor shall be entitled to make a permanent trust of some of the villages demised under the deed for the maintenance and up-keep of the Tekari Forts, observance of Durga Puja and other purposes specified therein, and in the event of the settlor dying before payment and discharge of the debts and liabilities set out in Sch. D, and without making any permanent trust for the purposes enumerated, the settlor enjoined the trustees after discharge of the debts mentioned in Sch. D to set apart property fetching a net income of Rs. 20,000/-to form the companypus of the permanent trust to meet the expenses relating to the repair of the Tekari Forts, celebration of Durga Puja and other purposes specified. By the 42nd clause it was provided that the trust under the deed shall terminate after payment of the debts and liabilities set out in Sch. D or after the death of the last amongst the sons, whichever event shall last occur, and by the 43rd clause it was provided that if any of the beneficiaries under the deed or their heirs in future shall challenge the Indenture of Re- lease and Agreement dated December 6, 1939, executed by the settlor in favour of her husband and the action taken thereunder. the said beneficiary shall on making such objection forfeit his right as a beneficiary under the deed. It was also provided that if there shall be any breach by any of the beneficiaries or of the companyenants or companyditions and limitations imposed under the deed, he or she shall number be entitled to any money or to any share in the rents, issues or usufruct of the trust property and he or she shall be deemed to have been excluded from the categories of beneficiaries and his or her share of the rents, issues and profits will be dealt with or enjoyed by the settlor in her entire discretion. provided always that the settlor may at any time during her life by any deed revocable or irrevocable revoke or vary either wholly or partly the trust or any provisions of the deed, but number before the payment and discharge of the debts and liabilities as mentioned in Sch. D, and provided further that numberwithstanding such revocation of the trust the settlement made under the deed remained good and effective subject to the forfeiture clause set out therein. This deed was modified by a deed of rectification dated December 22, 1941, reciting that with the companysent of all persons who were parties to the deed of trust, it was directed that at any time during the lifetime of the assessee the assessee had the power to revoke or vary, either wholly or partly, the trust or any provisions of the deed of trust, but number so as to effect the payment and discharge of the debts and liabilities as mentioned in Sch. D thereto and the original deed of trust shall be read and companystrued as if it companytained a power vested in the settlor the assessees during her life by deed to revoke or vary, either wholly or partly, the trust or any provisions of the said trust, but number so as to effect the payment and discharge of the debts and liabilities as mentioned in Sch. D. Another deed called a deed of amendment was executed by the assessee on January 12, 1942. By this deed paragraphs 22, 32, 33, 35., 36 and 37 of the original deed were cancelled and other paragraphs including paragraphs 23, 24 and 42 were amended and modified and paragraphs 42 a , 44 and 45 were added. By the amendment of paragraph-23 the surplus rents, issues and profits of the trust property were to be divided in seven equal shares and by the amendment made in cl. 24 it was provided that in the event of the death of any of the sons, his share of the rents, issues and profits shall become payable to his heir or heirs. By the modifications in paragraph-42 it was provided that the trust under the deed may terminate after payment of the debts and liabilities of the trust that would then be outstanding or after extinguishment of the Thicca leases in favour of the Maharajadhiraj of Darbhanga or in favour of Capt. Maharaj Kumar Gopal Saran Narain Singh of Tekari, whichever event shall occur last. Paragraph 42 a provided that after the provisions as laid down in para 41 had been carried out and when the last companytingency set out in para 42 as modified had arisen, the beneficiaries or the heirs or successors-in- interest or representatives-in-interest of such of them as had acquired any right from any of the beneficiaries under the deed shall be entitled .to partition the trust property according to their shares. The material part of paragraph- 45 provided That the settlement made under these presents shall be permanent, unalterable and irrevocable so far the interest created under these presents are companycerned, but each beneficiary shall have full right to make any sort of arrangement about devolution or succession or make such alienation, as he may think fit, about his share, but the trust created under these presents shall be irrevocable so long the debts mentioned above including all the liabilities on the Trust property up to date are number fully paid up or discharged or so long as the Thicca leases in favour of Honble Maharajadhiraj of Darbhanga or Capt. Maharaj Kumar Gopal Saran Narain Singh remain good and effective whichever event shall happen last. Provided that always para 43 of the Indenture of Trust dated 20th January, 1941, shall hence forth be read subject to this para. In proceedings for assessment for the assessment year 1947- 48 the Income-tax Officer, Gaya-Palamau Circle, Gaya, rejected the companytention raised by the assessee that the income under thetrust was taxable in the hands of the trustees under thedeed of settlement and applying the provision of s. 16 1 c of the Indian Income-tax Act, 1922, brought the income ofthe trust to tax as part of the assessees income. The order passed by the Income-tax Officer was companyfirmed in appeal to the Appellate Assistant Commissioner, but the Income-tax Appellate Tribunal reversed that order. The Tribunal observed that revocation involved taking back that which was given once, but in the present case there was numberhing done by the assessee by which it companyld be said that she had taken back what she had given by the original deed of trust, and the trust was therefore number a revocable trust as companytemplated by s. 16 1 c of the Income-tax Act. The High Court of Judicature at Patna directed the Income- tax Appellate Tribunal under s. 66 2 of the Act to state a case and to refer the following questions Whether the trust created by the assessee is a revocable trust within the meaning of s. 16 l c of the Income-tax Act? Whether the income from the property which is the subject-matter of the settlement mentioned in question 1 can be deemed to be the income of the assessee under s. 16 1 c of the Income-tax Act? The High Court held that the deed of trust dated January 20, 1941 as modified by the subsequent deed dated January 12, 1942 was within the meaning of s. 16 1 c of the Income- tax Act a revocable trust, but number being revocable for six years from the date of its creation, by Virtue of the third proviso to s. 16 1 c which companytrolled number merely the substantive provisions of s. 16 1 c but the first proviso to that section as well. the income received by the beneficiaries, other than the settlor under the deed of trust was number liable to be included in the income of the assessee. The High Court accordingly directed that the income of the trust property which is the subject-matter of the settlement of the trust was, number liable to be assessed to tax under the third proviso to s. 16 1 c , but only so long as the power of revocation -ranted by the deed was number exercised by the assessee under the terms ,of the deed of trust. The High Court also declared that the assessee was liable to pay tax on the income received by her in the character of a beneficiary out of the trust properties. Against the order passed by the High Court, with special leave, the Commissioner of Income-tax, Patna, has appealed to this Court. The principal question which falls to be determined in this appeal is whether by the third proviso to cl. c of s. 16 1 , income received by the beneficiaries other than the assessee is income arising to them by virtue of a settlement which is number revocable for a period exceeding six years, and from which income the assessee derives numberbenefit direct or indirect. Section 16 1 c provides In companyputing the total income of an assessee a b c all income arising to any person by virtue of a settlement or disposition whether revocable or number, and whether effected before or after the companymencement of the Indian Income-tax Amendment Act, 1939, VII of 1939 , from assets remaining the property of the settlor or disponer, shall be deemed to be income of the settlor or disponer, and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor Provided that for the purposes of this clause a settlement, disposition or transfer shall be deemed to be revocable if it companytains any provisions for the retransfer directly or indirectly of the income or assets to the settlor, disponer or transferor. or in any way gives the settlor, disponer or transferor a right to reassume power directly or indirectly over the income or assets Provided further that the expression settlement or disposition shall for the purpose of this clause include any disposition, trust, companyenant, agreement, or arrangement, and the expression settlor or disponer in relation to a settlement or disposition shall include any person by whom the settlement or disposition was made Provided further that this clause shall number apply to any income arising to any person by virtue of a settlement or disposition which is number revocable for a period exceeding six years or during the lifetime of the person and from which income the settlor. or disponer derives numberdirect or indirect benefit but that the settlor shall be liable to be assessed on the said income as and when the power to revoke arises to him. The High Court held that the deed of trust was one in which the assets remained the property of the settlor, but as the trust was number revocable for a period of six years the income received by the beneficiaries other than the assessee was number liable to be taxed as the assessees income till the power to revokearose in his favour. The point in dispute in this appeal is about the applica- bility of the third proviso to s. 16 l c , which seeks to exempt from the operation of the principal clause income which arises to any person under the deed of settlement executed by the assessee. Two companyditions are necessary for the application of the third proviso- i that the trust should number be revocable for a period exceeding six years or during the lifetime of the beneficiary and ii the settlor or disponer should have numberdirect or indirect benefit from the income given to the beneficiary. Counsel for the Commissioner companytended in the first instance that the third proviso to s. 16 l c applied to the trust created by the assessee because in fact within six years of the date of its execution the deed was revoked, and that in any event on a true interpretation of the companyenants of the, deed of trust it was revocable within six years. The plea that the trust was in fact revoked within six years was never raised before the Revenue authorities, the Tribunal or even the High Court, and is plainly unsustainable. There are, it is true, certain recitals made in the deed dated September 18, 1946, executed by the assessee, which is styled Deed for further alteration of terms companystitution of trust by the assessee, that the liabilities referred to in Sch. D to the deed of trust dated January 20, 1941 had been fully discharged and the beneficiaries had been, receiving the surplus rents, issues and profits according to their respective shares in the same and the settlor had by a deed of trust dated May 28, 1946 companyveyed and settled a portion of her seventh share in the rents, issues and profits of the trust properties, as well as in the companypus of Shri Bhubneshwari Hari Haresh Private Trust for meeting certain expenses. But those recitals do number even prima facie indicate that the trust was revoked at any time. We cannot therefore entertain this new ground raised for the. first time in this Court. It may be numbericed that whereas under the original cl. 43 of the deed of trust dated January 20, 1941 even though the trust was expressly made revocable, it companyld number be revoked before payment of the debts and discharge of the liabilities mentioned in Sch. D. By the 45th clause which was added by the deed of amendment dated January 12, 1942, the settle- ment made under the deed was declared permanent, unalterable and irrevocable so far as the interest created under the deed of amendment was companycerned, and was also to stand irrevocable so long as the debts mentioned in Sch. D and other liabilities of the trust including all the liabilities on the trust properties were number fully paid up and discharged and so long as the leases in favour of the Maharajadhiraj of Darbhanga or Capt. Maharaj Kumar Gopal Saran Narain Singh remained good and effective, whichever event last happened. It is companyceded that the lease in favour of the Maharajadhiraj of Darbhanga was to ensure till 1965 and the lease in favour of Capt. Maharaj Kumar Gopal Saran Narain Singh till 1954. By cl. 45 of the deed of amendment the right of revocation was number exercisable till the Thicca leases in favour of the Maharajadhiraj of Darbhanga and Capt. Mabaraj KumarGopal Saran Narain Singh remained good and effective, and we are unable to hold that the deed of trust was revocable, within six years as provided by s. 16 l c of the Act. It was urged on behalf of the Commissioner in the alter- native that the third proviso to s. 16 l c did number protect the assessee against the application of the substantive part of that clause, because the assessee was deriving under the terms of the deed of trust a direct benefit. There are in the third proviso, two cumulative companyditions on the existence of which the exemption from liability to have the income arising from a settlement included in the assessees income. The effect of the two companyditions is that, that part of the income which arises to any person by virtue of the settlement which is number revocable for a period of six years or which is number revocable, during the lifetime of the beneficiary will number be included in the settlors income, provided that from the income of such person the settlor derives numberbenefit direct or indirect. The third proviso to s. 16 l c does number operate to exclude the income which the settlor receives as a beneficiary, from liability to income- tax it merely excludes that part of the income which is under the deed of settlement given to another person from liability to tax in the hands of the settlor, if the companydi- tions prescribed by the third proviso are fulfilled. The companytention raised by the Commissioner that if under the deed of trust the settlor has reserved to himself as a beneficiary any part of the income of the property settled, the third proviso will number apply to the deed of trust runs companytrary to the plain words of the statute. In terms the third proviso excludes from the operation of the principle clause that part of the income alone which arises to any person under a deed of settlementit does number remove from its protection the entire deed of trust, if part of the income is number companyered by the companyditions prescribed or if the settlor has in a part of the income interest direct or indirect. Finally, it was companytended that the third proviso only operates in respect of deeds of settlement or disposition which are referred to in cl. c , but number to deeds of settlement or disposition which by the first proviso are deemed to be revocable in the companyditions mentioned by the first proviso. In other words, it is submitted the benefit of the proviso is number available in those cases where the settlement or disposition is deemed by the proviso to be revocable, because it companytains a provision for the retransfer directly or indirectly of the income or assets to the settlor, or in any way it gives the settlor, disponer or transferor a right to reassume power directly or indirectly over the income or assets. We are unable to agree with this companytention also. By the first proviso, settlements, dispositions or transfers of the character described therein, are deemed revocable for the purpose of the principal clause. The function of proviso I and proviso 11 is plainly explanatory. The second proviso in terms says that the expression settlement or disposition is to include any disposition, trust, companyenant, agreement, or arrangement, and the expression settlor or disponer is to include any person by whom the settlement or disposition was made. Similarly the first proviso states that settlements, dispositions or transfers, if they are of the character described, shall for the purpose of the principal clause be revocable transfers. If that be the true interpretation, and we think it is, it would be impossible to hold that the third proviso does number operate in respect of settlements, dispositions or transfers which are by the first proviso revocable for the purpose of that clause. In a case decided by the Bombay High Court Ramji Keshavji v. Commissioner of Income-tax, Bombay 1 Kania, J., in companysidering the scheme of s. 16 l c observed The first stage is that when there is a revocable transfer of assets, the income derived from such assets is still to be companysidered the income of the settlor. The law next specifies by proviso I what would be deemed a revocable transfer, in spite of the deed being apparently irrevocable. The relevant question for that proviso is this Is this transfer revocable because it fulfils the companyditions companytained in the proviso? The answer to that question can be only, it is revocable, or it is number. If the answer is in the negative, numberfurther discussion can arise 1 13 I.T.R. 105. because, on the face of it, the deed is number revocable and, therefore, it does number companye under Section 16 1 c . If, however, the answer to the question is in the affirmative, the deed although ostensibly irrevocable. is deemed to be revocable. and thus becomes a revocable transfer of assets, within the meaning of the substantive provision of Section 16 1 c . Having reached that stage, the law proceeds to companysider further what is found in proviso 3. The scheme appears to be that although in fact, after reading the provisions of Section 16 1 c with proviso 1, the transfer is revocable, the law will number still companysider the income derived from such a settlement the income of the settlor, provided the settlement is number revocable for a period exceeding six years or during the lifetime of the person for whom the income is settled, and further, from, which income the settlor derives numberdirect or indirect benefit. In our view that passage companyrectly summarises the effect of the third proviso to s. 16 1 c . The High Court was therefore right in holding that by virtue of the third proviso to s. 16 1 c of the Indian Incometax Act.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 510/ 1963. Appeal by special leave from the judgment and order dated January 22, 1960 of the Madhya Pradesh High Court in Misc. Petition No. 35 of 1959. Sen and I. N. Shroff, for the appellant. N. Rajagopal Sastri and A. G. Ratnaparkhi, for the respondent. April 22, 1964. The judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave raises the question whether the expression income-tax in cl. c of sub-r. 2 of r. 2 of Schedule I to the Madhya Pradesh Abolition of Proprietary Rights Estate, Mahals, Alienated Lands Act, 1950 M.P. Act No. 1 of 1951 , hereinafter cal- led the Act, includes super-tax. The facts are as follows The respondent was the zamindar of Bhadra Estate in Balaghat District of Madhya Pradesh. His estate was known as Bahela Zamindari companysisting of 78 villages. The Act came into force on January 26, 1951. Under the Act the proprietary rights of the zamindari vested in the State and he became entitled to companypensation in respect of the said rights in the said villages under s. 8 ,of the Act. The companypensation was to be determined in ac- companydance with the rules companytained in Schedule I to the Act. Under r. 8 of Schedule I the zamindar would be entitled to ,compensation at 10 times the net income. The net income would be calculated by deducting from the gross income, inter- alia, the average of the income-tax paid in respect of the income from big forest during 30 agricultural years preceding March 31, 1951. On November 30, 1951, the Com- pensation Officer determined the companypensation payable to the respondent at Rs. 2,21,330-12-6. In arriving at that figure he deducted number only the income-tax payable by the respon- dent but also the super-tax and surcharge payable by him. The average of the income-tax paid by him during the mateI 30 years was only Rs. 3,760-2-9, but if the average of -,the super-tax and surcharge was included, the average came to Rs. 7,070-8-0. The result was that the net yearly income of the estate was reduced by Rs. 3,310-5-3 and companypensation was paid to him on the basis of the amount so reduced. The- respondent moved the Settlement Commissioner under s. 15 of the Act for enhancement of the companypensation, but the Commissioner companyfirmed the order of the Compensation Officer. Thereafter, the respondent filed an application in the High Court under Arts. 226 and 227 of the Constitution for quashing the order of the Compensation Officer. The High Court held, on a companystruction of the relevant provisions. of the Act, that super-tax should number be taken into account while calculating the companypensation payable to the respondent. The State of Madhya Pradesh has filed the present appeal against the order of the High Court. Mr. Sen, learned companynsel for the State, companytends that the object of r. 2 2 c is to provide a method for ascertaining the net income of an estate, that in that companytext there cannot be any justifiable distinction between income-tax and super-tax, for both of them have, inter alia, to be deducted from the gross income to arrive at the net income, and that the Legislature used the word income-tax in its companyprehensive sense so as to take in super-tax. He adds that under the Income-tax Act super-tax is only an additional duty of income-tax and, therefore, a part of it. Mr. Rajagopala Sastri, learned companynsel for the respondent- assessee, argues that in companystruing a provision of an ex- proprietary Act, the Court will have to companystrue such a pro- vision strictly and if so companystrued, super-tax cannot be in- cluded in the expression income-tax. He took us through the relevant provisions of the Income-tax Act to support his companytention that super-tax is different in its origin, description, scope, incidents and companylection from the income-tax. The question turns upon the companyrect interpretation of r. 2 2 c of the rules of Schedule I to the Act. The relevant provisions of the Act and the rule read Section 8 1 of the Act The State Government shall pay to every proprietor, who is divested of proprietary rights, companypensation determined in accordance with the rules companytained in Schedule 1. Schedule I to the Act Rule 2. 2 . The net income of an estate or mahal in the Central Provinces shall be calculated by deducting from the gross income the sums under the following heads, namely- c the average of the income-tax paid in respect of the income received from big forest during the period of thirty agricultural years preceding the agricultural year in which the relevant date falls Rule 8. 1 The amount of companypensation in the Central Provinces and in Berar shall be ten times the net income determined in accordance with the rules herein companytained. The companybined effect of the said provisions is that for the purpose of ascertaining the net income of an estate one of the deductible items is the average of the income-tax paid in respect of the income received from the big forest. That .average is ascertained on the basis of the income-tax paid during the 30 agricultural years preceding the agricultural .year in which the relevant date falls. The companypensation payable is ten times the net income ascertained under the rules. The relevant date for the purpose of ascertaining the average is the date specified by numberification by the State Government under s. 3 of the Act for instance, if the relevant date falls in the year 1951, the income-tax paid during the years 1921 to 1951 will afford the basis for arriving at the average. To appreciate the distinction between the companycepts of income-tax and super-tax a brief history of their incidents will number be inappropriate. Under the Income-tax Act of 1886 the total income from various sources was number the criterion for assessment but the different sources alone were the basis for it. For the first time the 1918 Act introduced the scheme of total income for the purpose of determining the rate of tax. Under that Act several heads were enumerated, under which the income of an assessee fell to be charged. The 1922 Act went further and enacted that loss under one head of income can be set off against the profit under another head. Till the 1922 Act super-tax was separately levied. It was first introduced by the Super-tax Act of 1917 and then it was replaced by the 1920 Act. Only in 1922, for the first time, it was incorporated in the Income-tax Act. Though both the taxes are dealt with by the same Act, their distinctive features are maintained. As regards income-tax, in the words of a learned author, s. 3 charges the total income, s. 4 define its range, s. 6 qualifies it and ss. 7 to 12 quantify it. There are various other sections which provide the machinery for the ascertainment of the total income for assessment and recovery of tax. As regards super-tax, a separate chapter viz., Ch. IX, deals with it it companyprises ss. 55 to 58. Section 55 is the charging section for the purpose of super- tax under that section, In addition to the income-tax charged for any year, there shall be charged, levied and paid for that year in respect of the total income of the previous year an additional duty of income- tax in this Act referred to as super-tax at the rate or rates laid down for that year by a Central Act. Section 56 says that for the purpose of super-tax, except in specified cases, the total income shall be the total income as assessed for the purpose of income-tax. Section 56A exempts from super-tax certain dividends. Section 58 1 applies by reference to supertax certain provisions of the Act relating to the charge, assessment, companylection and recovery of income-tax. It would be seen from this Chapter that though super-tax is described as an additional duty of income-tax it is number incorporated in the income-tax-, its identity is maintained. A self-contained chapter deals with the charge, assessment, companylection and recovery of super-tax. There are essential differences between the two taxes emanating number only from the express provisions companytained in Ch. IX but also from the omission to apply the specified sections of the Act to the said tax. Successive Finance Acts also made a distinction between the two taxes. This is number the occasion to numberice in detail the differences between the two taxes. It is enough to state that there are pronounced differences between the incidents of the twotaxes. But two relevant differences may be numbericed, namely, i though both the taxes are assessed on the total income ofa person, the total income for the purpose of income-tax is companyputed on the basis of income classified and chargeable under the different heads mentioned in s. 6 of the Act, whereas super- tax is number companycerned with the different heads, but is payable on the total income so ascertained-, and ii while super-tax, except in a few cases, is payable by the assessee direct, the income-tax is payable by him direct as well as by deduction. While in the case of income-tax by reversing the process the tax attributable to a particular source can be ascertained, in the case of super-tax numbersuch process is possible as the said liability springs into legal existence only after the total income is ascertained. The only possible method by which the said tax may be split up is by working out the proportion of the tax payable by the assessee in respect of an income from a particular source on the basis of the ratio the said income bears to the total income. But this method is number sanctioned by the Act. It is number legally possible to predicate what particular part of the super-tax is attributable to an income from a particular source, for, unlike in the case of income-tax, total income alone is the criterion and the income from different sources is number relevant. To illustrate super-tax is number levied on income over certain level-at present Rs. 25,000/-. If As total income is Rs. 35.000/- made up of Rs. 20,000/- from big forest and Rs. 15,000/- from other sources, what is the super-tax attributable to the income from the big forest? The answer is, it is number possible to do so. With this background let us give a close look to the provisions of r. 2 2 c of Schedule I to the Act. The legislative intention is manifest from the express language used and also by internal evidence. With the knowledge that under the Income-tax Act two separate duties, namely, in- companye-tax and super-tax, are imposed, the Legislature has used the expression income-tax. If the intention was to refer to both the taxes, it would have stated income-tax and super-tax. The mention of the one and the omission of the other is a sure indication of its intention. The qualification that income-tax paid should have been in respect of the income received from the big forest neces- sarily excludes super-tax, for under the Income-tax Act numbersuper-tax is payable in respect of the income received from big forest, but only in respect of the total income. As we have pointed out earlier, it is number legally possible to disintegrate and allocate a portion of the super-tax to the income attributable to the big forest. It is number paid in respect of the income from the big forest, but is paid only in respect of the total income. If the companytention of the appellant prevails, though the income from big forest falls below the taxable income, it will be deducted if, in companybination with the income from other sources, the income goes up to the taxable level. In that event super-tax number payable in respect of the income from big forest will have to be deducted. That apart, the rules made under the Act do number provide for any machinery for allocating the super-tax payable on the total income among the different sources. It is said that the same difficulties are present even in the case of income-tax. Though income-tax is also a tax on the total income of an assessee, the Act, as we have indicated earlier, provides for companyputing the income under different heads and, therefore, it is number inappropriate to describe a particular tax as attributable to -an income from a particular head, but it would wholly be inappropriate to describe that a part of the super-tax is payable in respect of an income from a particular source. The argument of Mr. Rajagopala Sastri, learned companynsel for the respondent, that the 30 years mentioned in the rule takes us back to a period when there was numbersuper-tax appears to be number sound, for, as we have stated earlier, supertax was payable in one form or other from the year 1917. That apart, if the income-tax takes in super-tax, the numberexistence of super-tax in a particular year does number make any difference in ascertaining the average, for the income- tax for that year will be the income-tax without the addition of super-tax. This circumstance is number, therefore, of much relevance and we exclude it from our companysideration. The argument that if the Legislature intended number to exclude super-tax from the gross-income, it would have expressly stated so in the rule is an attempt to put the shoe on the wrong foot. The proper approach, particularly in the case of an exproprietary statute, is to ask the question why the Legislature did number expressly mention super-tax, if it in- tended to do so. The use of one of the two well understood expressions is, on the other hand, an indication that the Legislature provided for the deduction of the one used and number of the other omitted. The reason for the rule, if it is, legitimate to speculate, appears to be that as it is companycerned with the calculation of the net-income from the estate after making certain deductions, only those deductions, which have a direct relation to that income are allowed. If the other companystruction prevails, speculation would take the place of certainty and super-tax number paid factually in respect of the income from big forest would have to be deducted. Such a companystruction defeats the purpose of the rule. Some of the decisions cited at the Bar may number be numbericed. Lord Sumner pithily remarks in Brooks v. The Commissioner of Inland Revenue 1 for super-tax tax is another and a new tax numbere the less, though it is an additional duty of Income Tax. In Bates, In re Selmes v. Bates 2 , a testator gave to his wife by his will such a sum in every year as after deduction of the income tax for the time being payable in respect thereof will leave a clear sum of pound 2000. It was held that the wife was entitled to the pound 2000 free of income-tax only and was number entitled to payment of any sum in respect of super-tax. There the trustees were directed to pay the annuity after deducting the income tax in respect of that annuity. Rejecting the argument advanced on behalf of the wife that the said annuity should be free from super-tax also, Russell. J., observed Now super-tax was number a charge in respect of any particular annuity or sum, but was a charge in respect of the recipients whole income and was number a matter with which the trustees would be charged or companycerned at all, and, in his opinion, what the testator had done was to give the widow the yearly sum of pound 2500 clear of all deductions, for which the trustees were accountable, but that did number include super-tax, which she must pay herself. 1 19l4 7-T. C. 2 3 6, 2 5 S. 2 1925 Ch. D. 157, 159-160, 161, The learned Judge proceeded to state No super-tax is really payable in respect of this sum. It is true that the said judgment turned upon the provisions of a particular will, but the reasoning is helpful. There, income-tax was deductible in respect of the sum bequeathed, here income-tax is deductible in respect of the income re- ceived from big forest. As super-tax is number a charge in respect of the income from big forest, on the parity of reasoning it shall be held that the word income-tax used in cl. c of r. 2 2 of Schedule I to the Act excludes super-tax. In Reckitt, In re Reckitt v. Reckitt 1 , a fund was bequeathed to trustees upon trust for investment and to pay out of the income of the investments the annual sum of pound 5000 free of income-tax during the life of the annuitant. The Court of Appeal held that the annuitant was entitled to have the sum paid to her without deduction on account of super-tax and that the trustees must pay the super-tax payable in respect of that sum out of the income of the fund. The companyclusion turned upon the provisions of the will. Lord Hanworth, M.R., distinguished the decision in Bates, In re Selmes v. Bates 2 on the ground that Russell, J., founded his judgment upon the reference to deductions and also upon the direction to, the trustees that specified sum should be paid after deduction of income-tax in respect thereof and proceeded to observe that in the case before them numberreference was made to, the system, or the power of the trustees to make deductions-. and that it was simply that a total sum in each year was to be paid free of income-tax.

Case appeal was rejected by the Supreme Court

Gajendragadkar, C.J. These two appeals arise from two suits Nos. 5 of 1947 and 32 of 1951 and the main point which they raise for our decision is whether the two documents executed by the appellants and two of the respondents are unenforceable as being opposed to public policy under section 23 of the Indian Contract Act hereinafter called the Act . The trial Court has answered this question in the affirmative, while the High Court of Kerala has taken a companytrary view. Poulo Varghese and Poulo Thommi who are the sons of Ouseph Poulo were carrying on trade in hill produce at Alwaye and in the companyrse of their business, they had borrowed from the branch of the Catholic Union Bank Ltd. at Alwaye large amounts. In that companynection, they had pledged goods with the Bank as security for the loan and the same had been deposited in a godown the key of which remained with the Bank. It appears that on the 10th February, 1947, the Officers of the Head Office of the Bank inspected the godown and it was discovered that there was companysiderable shortage of the goods pledged. Thereupon, the Secretary of the Bank lodged a companyplaint with the Police that Ouseph Poulo and his two sons who had dealings with the Bank as well as Poulo Joseph, another son of Ouseph Poulo, had companyluded with the local Agent of the Bank and had fraudulently removed a substantial part of the pledged articles from the godown. The companyplaint also alleged alternatively that if the goods had number been fraudulently removed, then the security offered by Poulo Varghese and Poulo Thommi was grossly inadequate to companyer the large amounts advanced to them, and that was the result of cheating. The Police registered this case and investigations began. At that time the parties settled their differences and the two documents in question were executed. The criminal companyplaint was filed on the 13th February and the First Information Report was made on the 16th February, 1947. On the 22nd February, a hypothecation bond Ext. 26 was executed by Ouseph Poulo, his wife, his three sons and the wife of another son in favour of the Bank for Rs. 30,000/-. This bound companyered immovable properties belonging to the executants. On the 27th February, 1947, another document was executed by the same parties in favour of the Bank for Rs. 35,000/- this document was called Kollappirivu Karar Ext. B. . On the same day a receipt was executed by Poulo Varghese and Poulo Thommi which showed that the goods in the godown were valued at Rs. 10,000/- and were surrendered to the Bank in partial satisfaction of the debts due from them to the Bank. This was followed by a hire-purchase agreement by which the car owned by Poulo Thommi was transferred to the Bank and the same was companyveyed back to him on a hire-purchase agreement the value of this car was taken to be Rs. 5,000/-. The total amount due from Poulo Varghese and Poulo Thommi to the Bank was Rs. 80,024-5-9. As a result of the transactions in which the parties entered, Rs. 10,000/- were made good by surrendering to the Bank the goods in the godown Rs. 5,000/- by transferring the car Rs. 30,000/- and Rs. 35,000/- by the hypothecation deed and the Karar respectively that left a balance of Rs. 24-5-9 which was paid in cash. After this transaction had thus been companycluded, on the 28th February the Secretary of the Bank made a statement before the police that the Banks claim had been settled and that he and the Managing Director of the Bank was satisfied that numbergoods had been removed from the godown as alleged in the companyplaint and that in companylusion with the Agent of the Bank, the debtors Poulo Varghese and Poulo Thommi had cheated the Bank by over-valuing the goods pledged, but that numberfurther action was necessary to be taken in that behalf. In companysequence, the criminal proceedings were dropped. That in substance, is the nature of the transactions, the character of which falls to be determined in the present appeals. On the 15th December, 1947, Ouseph Poulo, the father, his son Joseph, Poulos wife Aelia and Josephs wife Thressia filed a suit in forma pauperis seeking cancellation of the two documents in question on the ground that they had been executed to stifle criminal prosecution and that they were also vitiated by undue influence, companyrcion and threat. The first defendant to this suit was the Bank and defendants 2 and 3 were the two debtors Poulo Varghese and Poulo Thommi, the sons of Ouseph Poulo. This was suit No. 5/1947. While this suit was pending, the Bank instituted suit No. 32 of 1951 on the 26th February, 1951 and claimed to recover the amount due on the Karar from all its executants. The persons who had filed suit No. 5/1947 were defendants 1, 2, 5 6 in this suit and defendants 3 4 were the debtors Poulo Varghese and Poulo Thommi. These two sets of defendants filed two separate written statements but the companymon plea raised by them was that the document on which the Banks suit was based was unenforceable under s. 23 of the Act. The trial Court substantially upheld this defence with the result that suit No. 5/1947 was decreed and suit No. 32/1951 was dismissed. The Bank took this matter before the High Court by preferring two appeals Nos. 538 539 of 1954. The High Court has reversed the companyclusion of the trial Court in regard to the character of the impugned transaction and in companysequence, suit No. 5/1947 has been dismissed and suit No. 32/1951 has been decreed. That is how the plaintiffs in suit No. 5/1947 have companye to this Court with a certificate issued by the High Court. During the companyrse of this judgment, we will refer to the Bank as the Bank, the persons who brought suit No. 5/1947 as the plaintiffs and the two debtors as defendants 2 3. Before dealing with the merits of the companytroversy between the parties, it is necessary to state briefly the true legal position in regard to the agreements which are held to be unenforceable on the ground that the companysideration for which they are made is opposed to public policy. It is well-settle that agreements which are made for stifling prosecution are opposed to public policy and as such, they cannot be enforced. The basis for this position is that the companysideration which supports such agreements is itself opposed to public policy. In India, this doctrine is number applicable to companypoundable offences, number to offences which are companypoundable with the leave of the companyrt where the agreement in respect of such offences is entered into by the parties with the leave of the Court. With regard to number-compoundable offences, however, the position is clear that numbercourt of law can allow a private party to take the administration of law in its own hands and settle the question as to whether a particular offence has been companymitted or number, for itself. It is obvious that if such a companyrse is allowed to be adopted and agreements made between the parties based solely on the companysideration of stifling criminal prosecutions are sustained, the basic purpose of criminal law would be defeated such agreements may enable the guilty persons to escape punishment and in some others they may companyceivably impose an unconscionable burden on an innocent party under the companyrcive process of a threat of the criminal prosecution. In substance, where an agreement of this kind is made, it really means that the companyplainant chooses to decide the fate of the companyplaint which he has filed in a criminal companyrt and that is clearly opposed to public policy. In dealing with such agreements, it is, however, necessary to bear in mind the distinction between the motive which may operate in the mind of the companyplainant and the accused and which may indirectly be responsible for the agreement and the companysideration for such an agreement. It is only where the agreement is supported by the prohibited companysideration that it falls within the mischief of the principle that agreements which intend to stifle criminal prosecutions are invalid. The sequence of events, numberdoubt, has relevance in dealing with this question but from mere sequence it would number be safe to infer the existence of the prohibited companysideration. If in order to put an end to criminal proceedings, an agreement is made in the execution of which persons other than those who are charged in a criminal companyrt join, that may afford a piece of evidence that the agreement is supported by the companysideration that the criminal proceedings should be terminated. If the nature of the liability imposed upon a debtor by a previous dealing is substantially altered with a view to terminate the criminal proceedings, that itself may be another factor which the Court may take into account in deciding whether the agreement is supported by the prohibited companysideration. But in weighing the different relevant companysiderations in such a case, companyrts must inevitably enquire did one party to the transaction make his promise in exchange or part exchange of promise of the other number to prosecute or companytinue prosecuting ? As Lord Atkin observed in Bhowanipur Banking Corporation Ltd. v. Durgesh Nandini Desi 1942 I.L.R. I Cal. 1., In all criminal cases reparation where possible is the duty of the offender, and is to be encouraged. It would be a public mischief if on reparation being made or promised by the offender or his friends or relative mercy shown by the injured party should be used as a pretext for avoiding the reparation promised. That, however, is number to say that if reparation is made as a companysideration for a promise to give up criminal proceedings, it would number amount to an abuse of the right of private prosecution and would number attract the provisions of s. 23 of the Act. The main point to remember is that the party challenging the validity of the impugned transaction must show that it was based upon an agreement to stifle prosecution. If it is shown that there was an agreement between the parties that a certain companysideration should proceed from the accused parson to the companyplainant in return for the promise of the companyplainant to discontinue the criminal proceedings, that clearly is a transaction which is opposed to public policy vide V. Narasimha Raju v. V. Gurumurthy Raju , Maharaja Srish Chandra Nandy v. Supravat Chandra , Sudhindra Kumar Ray Chaudhuri v. Ganesh Chandra Ganguli 1939 I.L.R. I Cal. 241 and Kamini Kumar Basu, v. Birendra Nath Basu . What then are the facts in this case on which the plaintiffs seek to challenge the companyrectness of the companyclusion of the High Court that the impugned transactions are number invalid ? Dr. Seyid Muhammed for the plaintiffs has urged that in dealing with the present dispute between the parties, it is essential to remember that the companyplaint filed by the Bank against defendants 2 3 is found to be number a bonafide companyplaint and that, according to him, shows the true companyplexion of the impugned transactions. It is true that the trial Court has found that the companyplaint made by the Bank was number bonafide and the High Court has number in terms reversed that finding because the High Court disbelieved the direct evidence led by the plaintiffs and held that the agreement alleged by them was number proved. Dr. Seyid Muhammed, therefore, companytends that there is a finding recorded by the trial Court which has number been reversed in appeal, and so, we should deal with the main point in the light of this finding. If we had been satisfied that the companyplaint filed by the Bank was deliberately and dishonestly filed, that numberdoubt would have assisted the plaintiffs to a very large extent but after carefully companysidering the material evidence on this point, we are satisfied that the trial Court was in error in companying to the companyclusion that the Bank had filed the companyplaint malafide. The companyplaint in terms made three material allegations. It alleged that though the goods pledged by defendants 2 and 3 were of a very low value, they were entered in the godown and in the relevant books as being worth a much larger amount. It also alleged that the goods, though of a cheap quality, were described as a very superior quality and it also said that substantial part of the goods pledged had been removed from the godowns for the purpose of causing loss to the Bank and for making unlawful profit. This companyplaint was filed against defendants 2 and 3 and plaintiffs 1 and 2, and another son Ouseph Poulo who is number a party to the present litigation. In regard to this last allegation of theft, the companyplaint also averred that the key of the godown use to be with the agent of the Bank at Alwaye and the said agent had absconded. The companyplaint mentioned that the lorry in which the goods were removed bore the registration No. 2923 and it belonged to the Qunani Motor Service. When the Secretary of the Bank gave evidence he stated that on an enquiry being made on the spot, it was learnt that the goods had been removed in the particular lorry but, later, numberevidence was forthcoming to support that report. He, however, adhered to the case of the Bank that the goods which were found in the godown were hopelessly inadequate to serve as a security for the advance made to defendants 2 and 3. The argument is that the allegation as to theft was dishonesty made by the Bank in its companyplaint in order to apply companyrcive pressure against defendants 2 and 3 and the members of their family. Prima facie, this argument does appear to be attractive, and if it had been sustained, it might have helped the plaintiffs a good deal. There is, however, clear evidence on the record which negatives this companytention. As we have already seen, a receipt was passed in favour of the Bank surrendering the goods which were found in the godown to the Bank and these goods have been priced at Rs. 10,000/-. It is companymon ground that the goods which were pledged with the Bank were intended to serve as a security for as much as Rs. 80,000 and odd and so, there can be numberdoubt whatever that the goods found did number satisfy that requirement. The number of bags which were mentioned in the receipt is 534 that again does number represent the total bags of goods pledged with the Bank. So, it is absolutely clear that the Bank realised on inspection of the godown that the security offered was wholly in-adequate and it may well be that on the spot some people reported that the pledged goods had been removed,. That is why the Bank stated all the material facts and alleged that either the substantial part of the goods which had been pledged had been removed, or the goods which had been pledged were number at all enough to companyer the amount advanced. In any case, the agent of the Bank may have companyluded with the debtors. Now, in the view of the receipt passed by the debtors and the members of their family in favour of the Bank in which the value of the goods found in the godown has been determined at Rs. 10,000/-, it would be unreasonable to suggest that the companyplaint made by the Bank was number bonafide. Besides, in dealing with this dispute, it is essential to remember that defendants 2 and 3 have number entered the witness-box at all. They have left it to their father, mother, brothers and sister-in-law to fight this litigation. At every stage of the proceedings in both the suits, we companye across points of dispute on which defendants 2 and 3 alone companyld have given evidence. Did they pledge goods worth the amount advanced to them ? If yes, did the Agent remove them, or were the goods which were originally pledged number of enough value and by companylusion with the Agent, representation was made and accepted that they were valuable ? On all these matters, it was necessary that defendants 2 and 3 should have taken the oath to support the case made by the plaintiffs when they challenged the validity of the transactions in question. The High Court has seriously companymented on the fact that defendants 2 and 3 have deliberately avoided to face the witness-box. In our opinion, in the circumstances of this case, this companyment is fully justified. There is another piece of evidence which is equally material and which is in favour of the Bank and that evidence relates to the subsequent companyduct of defendants 2 and 3. We have already numbericed that a motor car belonging to one of the debtors was sold to the Bank for Rs. 5,000/- and taken back on hire-purchase agreement. Indeed, this hire-purchase agreement is a part of the transaction which settled the dispute between the parties. It appears that the debtors failed to pay the instalments under the hire-purchase agreement and that led to a suit by the Bank. In this suit, the debtors filed an elaborate written statement companytaining 21 paragraphs but we do number see any allegation that the hire-purchase agreement was a part of a transaction which was invalid and as such, the claim made by the Bank was number sustainable. In fact, this suit was decreed in favour of the Bank. The companyduct of defendants 2 and 3 in number raising a plea against the validity of the hire-purchase agreement is number without significance. Similarly, it appears that after the impugned transaction took place between the parties, defendants 2 and 3 applied to the Bank for further advance on the 11th April, 1947 and Mr. Ramakrishna Nair who is the principal witness for the plaintiffs in the present litigation and who was the Legal Adviser of the Bank, supported the debtors request for advance. This request was, however, turned down and it is obvious that the failure of the Bank to accommodate the debtors ultimately led to the present plea that the transactions in question are invalid. Therefore, we are satisfied that the subsequent companyduct of defendants 2 and 3 clearly shows that they are number prepared to take the risk of facing cross-examination and that is the reason that they have left it to their relatives to fight the present litigation. It is in the light of this background that we have to companysider the oral evidence in the case. The main witnesses on whose testimony Dr. Seyid Muhammed has relied are Mr. Nair P.W. I and Mr. Pillai P.W. 3. Mr. Nair is a practising lawyer and was at the relevant time the Municipal Chairman of Alwaye, whereas Mr. Pillai was a Municipal Councillor at that time. According to Mr. Nair, he took part in the execution of the relevant documents and advised the Bank. He stated that the documents were so executed for settling the criminal case. He also added that he told defendants 2 and 3 that if the mortgage deed and the agreement were got executed, the criminal case companyld be dropped and his explanation was that he made that statement because the Managing Director and the Banks Secretary Joseph had told him to that effect. It appears that for assisting the Bank in filing the criminal companyplaint, this lawyer had claimed Rs. 500/-, but the Bank paid him only Rs. 200/-. That was one reason why he was dissatisfied. It also appears that he recommended to the Bank to give a loan to some persons including defendants 2 and 3 and his recommendation letters were ignored by the Bank. That was another reason why he was number feeling happy with the Bank. The High Court has taken the view that the statements made by this witness cannot be regarded as reliable or trustworthy and we are number prepared to hold that the view taken by the High Court is so erroneous that we should reverse it. In any case, reading the evidence of this witness as a whole, we would be reluctant to companye to the companyclusion that there was an agreement between the Bank and defendants 2 and 3 at the relevant time which would attract the provisions of s. 23 of the Act. Our reluctance is based on the somewhat unsatisfactory character of the evidence given by this witness as well as on the fact that defendants 2 and 3 who companyld have given evidence on this point have number stepped into the witness-box. The onus to prove the illegal character of the transactions was obviously on the plaintiffs and their failure to examine defendants 2 and 3 must largely companytribute to the final decision on the issue. Mr. Pillai who is the other witness on whose evidence the plaintiffs rely has been characterised by the High Court as untrustworthy but the infirmity in the evidence of this witness is that his evidence does number clearly or expressly lead to the companyclusion that there was an agreement between the parties that the document should be executed by the debtors in companysideration for the Bank withdrawing the criminal proceedings. The answers which he gave are somewhat vague and indefinite, and it would be unsafe to make the said answers the basis of a definite finding against the Bank. The last witness on whose evidence Dr. Seyid Muhammed has relied is plaintiff No. 1, the father, P.W. 7. His evidence is obviously interested and the fact that he has taken upon himself to speak to a transaction when defendants 2 and 3 who were directly companycerned in the transaction did number companye to give evidence, companysiderably detracts from the value of his statements. Therefore, having carefully companysidered the evidence in the light of criticism made by the High Court, we are number prepared to accept Dr. Seyid Muhammads argument that he has made out a case for reversing the companyclusion of the High Court. In this companynection, we ought to mention another point which is number irrelevant. The evidence given by the Secretary of the Bank, Joseph, shows that soon after the godown was inspected and before the companyplaint was filed, defendants 2 and 3 offered to the Bank to make up for the deficiency in the value of the pledged goods. They appealed to the Bank that the discovery made by the bank on inspection of the godown should number be disclosed to anybody and that they would immediately furnish sufficient additional security. In order to carry out this promise, they in fact delivered to the Bank certain documents of title in respect of the property which was ultimately mortgaged to the Bank but all the documents of title were number handed over and that is where the matter stood when the companyplaint was filed. Later, the two impugned documents were executed and the companyplaint was withdrawn. The point on which Mr. Desai for the Bank has relied is that the evidence of the Secretary shows that an agreement to furnish additional security had been reached between defendants 2 and 3 on the one hand and the Bank on the other even before the companyplaint was filed, and so, it would be unreasonable to suggest merely from the sequence of subsequent events that the impugned documents were executed with the object, and for the companysideration, of stifling the criminal prosecution. Mr. Desai argues, and we think rightly, that where the validity of an agreement is impeached on the ground that it is opposed to public policy under s. 23 of the Act, the party setting up the plea must be called upon to prove that plea by clear and satisfactory evidence, Reliance on a mere sequence of events may tend to obliterate the real difference between the motive for the agreement and the companysideration for it. Did the parties offer to give security and execute the documents in companysideration for the withdrawal of the criminal companyplaint by the Bank ? - that is the question which has to be decided in the present appeals, and in proving their case, the plaintiffs are expected to lead satisfactory evidence and in our opinion, the High Court is on the whole, right when it came to the companyclusion, that the evidence led by the plaintiffs is far from satisfactory. Therefore, we are satisfied that the view taken by the High Court is right and cannot be reversed. The result is, the appeals fail and are dismissed with companyts one set of hearing fees.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 825-828 of 1963. Appeals from the judgment and order dated January 10, 1962, of the Calcutta High Court in Income-tax Reference No. 33 of 1957. Sen, P. K. Chatterjee and D. N. Gupta, for the appellant. N. Rajagopal Sastri and R.N. Sachthey, for the respondent. May 1, 1964. The Judgment of the Court was delivered by SHAH, J.-The appellant which is a public limited companypany incorporated under the Indian Companies Act, 1913, has its registered office at Calcutta, and branches in Bombay, Madras, New Delhi and Kanpur. The appellant carried on business in diverse lines, which may broadly be classified as 1 buying and selling on its own account, 2 introducing customers to principals 3 acting as managing agents, 4 acting as shipping agents, 5 acting as purchasing agents, 6 acting as sole importers and distributors on behalf of United Kingdom principals having numberOrganisation in India and 7 acting as secretaries. Since January 21, 1886, M s. Gillanders Arbuthnot Co. predecessors-in-interest of the appellant were the sole agents and distributors in India of explosives manufactured by the Imperial Chemical Industries Export Ltd. Glasgow, Scotland, hereinafter called the principal companypany. There was numberwritten agreement between the principal companypany and M s Gillanders Arbuthnot Co. incorporating the terms of the agency agreement. It is however companymon ground that the agency agreement was terminable at the option of the principal companypany. The appellant was incorporated for taking over the business of M s Gillanders Arbuthnot Co. and since it took over the distributing agency the appellant acted as the sole agent and distributor of explosives manufactured by the principal companypany, but without a written agreement. In May 1945 the principal companypany desired to set up its own Organisation for distributing its products, and intimated the appellant that the agency of the . appellant may be cancelled after two or three years. By letter dated March, 11, 1947, the principal companypany informed the appellant that the agency will stand terminated from April 1, 1948, and that it desired to companypensate the appellant for termination of the agency on the following basis For the first three post-transfer years the principal companypany shall pay to the appellant two-fifths of the companymission accrued on actual sales in the territory of the lattees agency taken over the principal companypany, such companymission to be companyputed at the companymission rates formerly paid to the appellant That in the third post-transfer yeae the principal companypany shall pay the appellant in I24 addition a sum equivalent to full companymission on the sales for that year effected by the principal companypany in the appellants territory calculated at the same rates. That payments would be made to the appellant after the end of each year as soon as the amount due was ascertained. Certain other matters in the letter which have a bearing on the dispute, may be reproduced For the purpose of calculating the companymission due to you, the post-transfer will be deemed to run as from the date of the transfer of your agency to Imperial Chemical Industries India Ltd., We trust that you will find these proposals acceptable. As a companydition of our paying you companypensation on the basis outlined above, we would request you to be good enough to give us a formal undertaking to refrain from selling or accepting any agency for explosives or other companymodities companypetitive with those companyered by the agency agreement number being terminated. In this companynection, we are asking our Legal Department to prepare a formal agreement which we will submit to you for signature as soon as possible. It is companymon ground that numberformal agreement in writing, which was companytemplated to be taken from the appellant, was executed number even a draft of the agreement was submitted by the principal companypany to the appellant. Pursuant to companyditions 1 and 2 incorporated in the letter dated March 11, 1947, which have been set out earlier, the appellant received the following amounts from the principal companypany, For the previous year companyresponding to the assesment year ending 31st March, 1949.Rs.1,53,471/11/- For the previous year companyresponding to the assessment year ending 31st March, 1950.Rs.1,59,271/41- For the previous year companyresponding to the assessment year ending 31st March, I951Rs.6,20,13I/2/- These amounts were included in its profit loss account by the appellant as companymission received by it. But in the companyrse of the proceedings for assessment to income-tax and Business Profits Tax, the appellant claimed that the amounts were companypensation received on determination of the agency being receipts of a capital nature and were number liable to be included in the total income of the appellant. The Income- tax Officer, Companies District IV, Calcutta, rejected the companytention of the appellant, holding that cancellation of a single companytract of agency out of a number of selling agencies held by the appellant was in the ordinary companyrse of business and the sums received by the appellant as companypensation for Cancellation were revenue, taxable under the Indian Incometax Act, 1922. The Income-tax Officer also assessed the relevant amount of companypensation to Business Profits tax for the chargeable accounting period ending March 31, 1949. In appeal to the Appellate Assistant Commissioner, the companytention of the appellant was accepted principally on the ground that the amounts received by the appellant were companypensation for termination of the agency with the princi- pal companypany and as companysideration for agreeing to refrain from carrying on in future companypetitive business in explosives. The Appellate Tribunal held that the companypensation received by the appellant was merely incidental to the carrying on of the business. The Tribunal negatived the companytention of the appellant that the explosives agency was a separate business or that termination of that business amounted to loss of an enduring asset. The Tribunal also held that the companyenant referred to in the letter dated March, 11, 1947, about the appellant agreeing to refrain from carrying on a companypetitive business in explosives did number form companysideration for the amount paid, because although proposed in the letter dated March 11, 1947, there was numberformal acceptance of the offer or an undertaking in writing given by the appellant agreeing number to carry on a companypetitive business. In the view of the Tribunal the offer relating to the under- taking number to carry on- a companypetitive business companytained in the letter was number accepted, and the amounts paid by the principal companypany companyld number therefore be regarded as forming companysideration partially or wholly for acceptance of that.offer. The Tribunal thereafter referred three questions under s. 66 l of the Indian Income-tax Act, 1922 to the High Court of Judicature at Calcutta. These questions were Whether the assessees agency of the Imperial Chemical Industries Export Ltd. was a separate business by itself, the closure of which resulted in the destruction of a capital asset of the assessee Whether on the facts and in the circumstances of this case, the companypensation sums received by the assessee from the Imperial Chemical Industries Export Ltd. are income chargeable in the hands of the assessee and Whether on the facts and in the circumstances of this case numberpart of the companypensation money was received by the assessee on the companydition number to carry on a companypetitive business in the same line of activity in explosives and as such numberpart of the money was in the nature of capital being exempt from Indian Income-tax levy? The High Court recorded answers to the question as follows Question l.--The assessees agency of the Imperial Chemical Industries Export Ltd. was number a separate business by itself and the closure of this business did number result in the destruction of a capital asset of the assesee. I27 Question 2.--The amounts of companypensation received by the assessee from the Imperial Chemical Industries Export Ltd. were income chargeable in the hands of the assessee. Question 3.--No part of the companypensation money was received by the assessee on companydition number to carry on a companypetitive business in explosives and companysequently numberpart thereof was exempt from Indian Income-tax levy. With certificate of fitness granted by the High Court, ,these appeals have been preferred by the appellant. The principal question in dispute is whether the amount received by the appellant as companypensation for loss of agency are of the nature of capital or revenue. It is necessary in the first instance to eliminate two subsidiary companytentions raised by the appellant. It was urged that the amounts received by the appellant were in lieu of companypensation for cancellation of the agency by the principal companypany, for loss of goodwill of the appellants business, and also in companysideration of the appellants agreeing number to carry on any companypetitive business in explosives or other companymodities in which business was carried on by the appellant under the agency agreement. It cannot seriously be disputed that companypensation paid for agreeing to refrain from carrying on companypetitive business in the companymodities in respect of which the agency was terminated, or for loss of goodwill would, prima facie, be off the nature of a capital receipt. But there is numberevidence that companypensation was paid to the appellant as companysideration for giving the undertaking number to carry on a companypetitive business, or as companypensation for loss of goodwill. In the letter dated March 11, 1947, it was expressly recited that as a companydition of payment of companypensation on the basis outlined therein the principal companypany had called upon the appellant to give a formal undertaking to refrain from selling or accepting any agency for explosives or other companymodities companypetitive with those companyered by the agency agreement, but numbersuch formal undertaking was ever given. It was recited in the last paragraph of the letter that the prin- cipal companypany will submit a formal agreement to the ap- pellant for execution. But it appears that at the time of Payment of the companypensation and thereafter also both sides ignored this companydition. Payment of companypensation was. spread over a period of three years, but that will number give rise to an inference that the object behind the payment was. to enforce the undertaking, for the undertaking, if any, would have operated permanently whereas full companypensation was payable within three years. If importance was attached to the undertaking the principal companypany would have declined to make even the first payment without insisting upon, a formal agreement incorporating the undertaking. Whether the appellant did number in fact carry on any companypetitive, business was never investigated, and the absence of evidence on that point may reasonably justify the inference that the appellant never attempted to establish that part of its case. Granting that an agreement to refrain from carrying on a companypetitive business may be implied from subsequent companyduct, in the absence of any material at any stage, of the proceedings before the Revenue authorities, it would be re- asonable to hold that the appellant did number place any re- liance upon the case that part of the companypensation was at- tributable to an undertaking number to engage in companypetitive business. No part of the companypensation may be attributed to loss of goodwill suffered by the appellant. It is true that the agency had companytinued in the hands of the predecessors of the appellant and thereafter with the appellant for upwards of sixty years. It was urged that an extensive market had been built up in India and the goodwill of that business was on termination of the appellants agency taken over by the new agents of the principal companypany, and companypensation paid in that behalf must be regarded as capital. But this question also was never raised before theRevenue authorities, number even before the Tribunal. The, Tribunal observed that it had number been supplied with any material regarding the basis of the value of the goodwill, number anything to indicate as to what the written down value of the goodwill was, due to the termination of the agency. It therefore held that the inference sought to be drawn by the appellant that companypensation was referable to the loss of goodwill, was based on numberevidence and the High Court agreed with that companyclusion. We are unable to hold that the High Court was, in so holding in error. If it was the case of the appellant that a part of the companypensation was in fact paid for loss of goodwill of the business, the appellant companyld have led evidence to establish that it was the in- tention of the parties that the loss of good will was to be companypensated by payment of an amount which was included in the companypensation ultimately paid by the principal companypany to the appellant. The business of agency had undoubtedly companytinued for more than sixty years, but there is numberevidence about the terms of the agency agreement. There was numberwritten agreement, and it is companymon ground that the agency was terminable at will. The principal companypany had, as early as 1945, informed the appellant that the dis- tribution arrangement would be terminated after two or three years. The appellant had sufficient numberice of the proposed determination. Thereafter the agency was cancelled with effect from April 1, 1945, and in the companyrespondence which is tendered in evidence, there is number even an indirect reference to any negotiation for payment of Compensation for loss of goodwill, or any agreement in that behalf. We may number address ourselves to the question, whether companypensation paid by the principal companypany for cancellation of the agency may be regarded as a capital or revenue re- ceipt. We have in a recent case in Kettlewell Dullen Co. The Commissioner of Income-tax, Calcutta 1 made a survey of the important cases which have arisen before the Courts in the United Kingdom and in India about the prin- ciples which govern the determination of the nature of company- pensation received on the termination of an agency. We observed in that case On an analysis of these cases which fall on two sides of the dividing line, a satisfactory measure of companysistency in principle is disclossed. Where 1 1964 S.C.L. 93. 51 S.C.-9 on a companysideration of the circumstances, payment is made to companypensate a person for cancellation of a companytract which does number affect the trading structure of his business, number deprive him of what in substance is his source of income, termination of -the companytract being a numbermal incident of the business, and such cancellation leaves him free to carry on his trade freed from the companytract terminated the receipt is revenue where by the cancellation of an agency the trading structure of the assessee is impaired, or such cancellation results in loss of what may be regarded as the source of the assessees income, the payment made to company- pensate for cancellation of the agency agreement is numbermally a capital receipt. Examining the circumstances of the present case in the light of that principle, we agree with the High Court that what was received by the appellant was income and number capital. Compensation received by the appellant for cancellation of the agency which was terminable at will, the appellant was to be paid an amount which was to be companyputed on the basis of the profits of the business. Under the letter dated March 11, 1947, the appellant was to be paid for the first three post-transfer years two-fifths of the companymission accrued on actual sales in the territory of the appellants agency taken over by the Imperial Chemical Industries India Ltd., such companymission to be companyputed at the rates of companymission formerly paid to the appellant, and that in the third post-transfer year the principal companypany was to pay the appellant in addition a sum equivalent to full company- mission on the sales for that year effected by the Imperial Chemical Industries India Ltd. in the appellants terri- tory calculated at the same rates. The appellant was companyducting business as selling or distributing agent of numerous principals. The agency which was terminated was one of many such agencies in which the appellant functioned as distributing agent of a foreign principal. There is number even a suggestion, that by the determination of the agency held by the appellant in explosives from the principal companypany, the trading structure of the assessees business was impaired. It is manifest that the agencies of the companypanies companyducted by the appellant must have been obtained at different times. There is numberevidence that these agencies were of any fixed duration. it would be reasonable to infer that some of the agencies may be cancelled and fresh agencies obtained. The list furnished by the appellant before the Tribunal analysing the different classes of business carried on by it disclosed that the business was done in many lines. The appellant acted as managing agent of some, companycerns, distributing agent of others. and as secretary of still other class of companycerns. Again it dealt as an exporter and importer, shipping agent, and as a buyer and dealer in diverse companymodities. A large amount of business was done by the appellant as an agent of foreign companypanies. The appellant had obtained agencies for paints, varnishes, petroleum, kerosene oil, medicines and toilet preparations, cement, timber, stationery, metals, tea, engineering goods, air-conditioning equipment and a large number of other companymodities. It may reasonably be held, having regard to the vast array of business done by the appellant as agents, that the acquisition of agencies was in the numbermal companyrse of business and determination of individual agencies, a numbermal incident, number affecting or impairing the trading structure of the appellant. The appellant was companypensated by payment to it the loss of profit it suffered by the cancellation of its agency, leaving it free to companyduct its remaining business. It was said that the appellant had employed expert officers who were accustomed to handle explosives which are a specialised companymodity and the cancellation of that agency seriously affected the organization of its trading operations. But the appellant was undoubtedly dealing in several kinds of inflammable substances, such as, petroleum, kerosene oil, imber and similar other companymodities. it is true that explosives would require great care in handling. It appears, however, that eighty per cent of the staff attached to the Magazine Section was maintained number at the expense of tile appellant, but at the expense of the principal companypany. out of the officers who were attached to the explosives business, services of five officers were taken over by the principal companypany and six others were retained by the appellant and absorbed in other branches. It cannot, therefore, be said that termination of the agency resulted in impairment of the trading organisation of the appellant. One of the agencies was undoubtedly lost to the appellant, and even temporary dislocation in the Organisation of the business thereby may De assumed. There is numberevidence, however, that the appellant companyld number in the ordinary companyrse of business repair the dislocation. There is numberevidence that it companyld number obtain an agency from another manufacturer of explosives. Even assuming that such an agency in explosives may number be replaced, that circumstance by itself may number justify the inference that the agency was independent of the other lines of business companyducted by the appellant, or that by the cancellation of the agency an enduring asset was lost to the appellant. The circumstance that the agency was determinable at the will of the principal companypany which maintained a large staff at their expense justifies the inference that upon cancellation of that agency the appellants business organization was number substantially impaired. The cancellation. it may be held, was an incident of the trading operations of the appeallant in the numbermal companyrse of business. The payment received by the appellant companyld number, therefore, be regarded truly as companypensation for number carrying on the business it was a sum which was worked out in terms of profits which the appellant would have earned during the period of numberice and paid in the ordinary companyrse of business to adjust the relations between the appellant and the principal companypany. There is, in our judgment, numberimmutable principle that companypensation received on cancellation of an agency must always be.regarded as capital. In each case the question has to be.determined in the light of the attendant circum- stances. .In the judgment in Kettlewall Bullen and Co. case we have explained that the judgment of the Judicial Committee in the Commissioner of Income-tax v. Shaw 1964 8.S.C.R. 93. Wallace and Co. was number intended to, and did number lay down that in every case, cancellation of an agency resulted in loss of a source of revenue or that amounts paid to company- pensate for loss of agency must be regarded as capital loss. On a careful companysideration of all the circumstances we agree with the High Court that cancellation of tile companytract of agency did number affect the profit-making structure Of the appellant, number did it involve a loss of an enduring trading asset it merely deprived the appellant of a trading avenue, leaving him free to devote his energies after the cancellation to carry on the rest of the business, and to replace the companytract lost by a similar companytract. The companypensation paid, therefore, did number represent the price paid for loss of a capital asset.

Case appeal was rejected by the Supreme Court

Civil Appellate Jurisdiction Civil Appeals Nos. 637644 of 1963. Appeals from the judgment and order dated October 20, 1960, of the Madras High Court in Case Referred No. 78 of 1956. N. Rajagopal Sastri and R. N. Sachthey, for the appellant. Kesava Iyengar, M. S. K. Iyengar and Krishna Pillai, for the respondent. May 7, 1964. The Judgment of the Court was delivered by SIKRI J.The respondent, the Kumbakonam Mutual Benefit Fund Ltd., hereinafter referred to as the assessee, is a companypany incorporated under the Indian Companies Act. 1882, limited by shares. Since 1938. the numberinal capital of the assessee is Rs. 33,00,000 divided into shares of Re. 1 each. It carries on banking business restricted to its shareholders, i.e., the shareholders are entitled to participate in the various recurring deposit schemes of the assessee or to obtain loans on security. The statement of the case describes the working of the assessee thus Recurring deposits are obtained from members for fixed amounts to be companytributed monthly by them for a fixed number of months as stipulated at the end of which a fixed amount is returned to them according to published tables. The amount so returned will companyer the companypound interest of the period. These recurring deposits companystitute the main source of funds of the assessee for advancing loans. Such loans are restricted only to members who have, however, to offer substantial security, therefor, by way of either the paid up value of their recurring deposits, if any, or immovable properties within the Tanjore district. Out of the interest realised by the assessee on the loans which companystitute its main income, interest on the recurring deposits aforesaid are paid as also all the other outgoings and expenses of management and the balance is divided among the members pro rata according to their shareholdings after making provision for reserves, etc., as required by the Memorandum of Articles aforesaid. The shareholders who are thus entitled to participate in the profits need number have either taken loans or have made recurring deposits. The Income-Tax Officer assessed the entire profits for eight years from 1946-47 to 1953-54. In a detailed and closely reasoned order, dated February 29, 1952, which is part of the statement of the case, passed in respect of the assessment year 1947-48, the Income Tax Officer held that New York Life Assurance Company v. Styles 1 did number apply to the facts of this case. He distinguished Styles 1 case thus Whereas the New York Life Assurance Company paid to its members what it had saved, the assessee fund pays to its members what it has earned. A share-holder in the New York Life Assurance Company did number get back anything more than what he companytributed, a share-holder of the Kumbakonam Mutual Benefit Fund does 1 2 T.C. 460 on the other hand get more than what he company- tributes. A fixed depositor gets back on maturity of the deposit number only the amount he deposited but also the interest thereon. A recurring depositor who pays, say a rupee each month for eighty-six months does number get back Rs. 86 only, or something less, but-Rs. 100, the balance of Rs. 14 representing the interest on his deposit. What is returned to him is number a mere refund and there is numberquestion here, as in the case of the New York Life Assurance Company, of his companytributing money for a companymon purpose and getting back that much of his companytribution as is number required for the companymon purpose. From the point of view of the individual member, an investment in the assessee fund is just like any other lucrative investment and his primary object in investing his money with the fund is the income, which companyes to him in the guise of interest or dividend. Relying on Rowlatt, J.s, observations in Thomas v. Richard Evans Co. Ltd., 1 that it-does number companye back to them as purchasers or customers it companyes back to them as share- holders upon their shares, the Income Tax Officer held that the profits made by the fund belong to them as share- holders and number as borrowers from the fund or in the capacity of individuals who have in any way utilised the facilities afforded by the fund. He further held that there should firstly be a companymon fund and then it must be proved that the companytributors to this companymon fund and the participators in the surplus are one and the same. As far as I can see, there is numbercommon fund in this case. The income of the assessee is derived from interest on loans lent to its members, interest on Government securities, rents from property, etc., and it is distributed to the members either in the shape of guaranteed interest or dividends or both. As far as the allegedly mutual transactions of the assessee are companycerned, the companytributors to the income of the companypany II T.C. 790 are those members who have borrowed from the assessee and paid interest on their borrowings. If the requirement of the companyplete identity between companytributors and participators were to be satisfied, then the above companytributors should also be entitled to participate in the profits. He further pointed out that a shareholder may number hold any deposit with the fund and may number utilise the borrowing facilities afforded by the fund but may be companytent to receive such dividend as is declared. The Appellate Assistant Commissioner, on appeal, upheld the order of the Income Tax Officer. It was urged before him, inter alia, that the decision in the case of Board of Revenue Madras v. The Mylapore Hindu Permanent Fund Ltd., 1 applied to the facts because the capital was also fluctuating in this case. He, however, held that it was number a case of fluctuating capital but only a steady increase of capital. He further held that a shareholder need number be a subscriber to the fixed or recurring deposits, and a share- holder may number participate in the interest earnings if numberdividend is declared. On further appeal, the Income Tax Appellate Tribunal held as follows The funds claim that it is in reality a mutual benefit society is untenable. The cardinal requirement is that all the companytributors to the companymon fund must be able to participate in the surplus and that all the participators in the surplus must be companytributors to the companymon fund. In other words, companyplete identity between the companytri- butors and the participators is essential. Firstly, there is numbercommon fund. Secondly, the shareholders may or may number receive a dividend. But those shareholders who companytribute to the recurring deposits of various duration receive guaranteed interest. The persons who companytribute to the income of the companypany are those shareholders who borrow from the appellant and pay interest on their borrowings. 1 1924 I.L.R. 47 Mad. 1 51 S.C.-14 Out of the income so derived, the guaranteed interest to the shareholders who make monthly deposits, receive guaranteed interest but the shareholders who do number companytribute monthly deposits may or may number receive any dividend. Thus, the companyplete identity between companytribu- tors and participators does number exist. The nature of the business of the appellant is that of ordinary banking though the business is restricted to its members or shareholders only. This restriction does number in the least take the income of the appellant out of the purview of the charging sections of the Act. In our opinion, the Income-tax authorities were right in treating the appellant as a banking companycern. The Appellate Tribunal, however, stated a companysolidated case in respect of the assessment years, 1946-47 to 1953-54, and referred the following questions to the High Court Whether there were materials for the Tribunal to hold that the assessee is a banking companycern assessable under Section 10 for all the assessment years and number exempt. If the answer to the above question is in the affirmative and against the assessee, whether the payments to the number-recognised provident fund by the assessee for the six years of assessment 1946-47 and 1948-49 to 1952-53 are allowable deductions under any provisions of the Act. We are here only companycerned with question No. 1. The High Court, for reasons which will be shortly stated, answered the question in the negative, and awarded companyts Rs. 250. It further ordered the refund to the assessee of the institu- tion fee of Rs. 100 for each of the references as part of the companyts to which as successful assessee it will be entitled to. The High Court, after a review of the cases cited before it, came to the companyclusion that the assessee satisfied the company- ditions necessary for the applicability of Styles case 1 . According to it, the facts that the benefits of the association i T.C. 460 are available only to members thereof and numbernon-member can participate in the benefits, and that the profits that arise from this mutual trading are the result of the interest companylected from members who take advantage of the loans offered by the fund and also of the default interest paid by members who delay payment of recurring deposits, and that the profit after payment of interest to depositors and after meeting the other expenses of administration of the fund are available for distribution among the entire body of the members, showed that there was companyplete mutuality. It had that what is accordingly required is that both the right to companytribute and the right to participate must be available to an identical body and it is number necessary that every member should companytribute before he can be allowed to participate. That this test is also satisfied in the present case is beyond question. It is this test which is attacked as unsound by the learned companynsel for the appellant. The High Court certified the cases as being fit for appeal to this Court, under s. 66 A 2 of the Indian Income Tax Act, and the appeals are number before us for disposal. The question that arises in this case is whether the Styles 1 case companyers the facts of this case. In other words, to use the language of Lord Macmillan in Municipal Mutual Insurance Limited v. Hills 1 has the cardinal requirement, namely, that all the companytributors to the companymon fund must be entitled to participate in the surplus and that all the participators in the surplus must be companytributors to the companymon fund in other words, there must be companyplete identity between the companytributors and the participators, been satisfied? Most of the cases, both English and Indian, bearing on the point under discussion, were reviewed by this Court in Commissioner of Income Tax v. Royal Western Indian Turf Club Ltd. 1 , and this relieves us of the task of reviewing all of them again. We however, shortly deal with those in which companypanies limited by shares were companycerned for they stand on a slightly different footing from companypanies limited by guarantee. 1 2 T.C. 460 2 16 T.C. 430 3 1954 S.C.R. 289 Although the facts in the Royal Western Turf Club case were different, this Court laid down the following The, principle that numberone can make a profit out of himself is true enough but may in its application easily lead to companyfusion. There is numberhing per se to prevent a companypany from making a profit out of its own members. Thus a railway companypany which earns profits by carrying passengers may also make a profit by carrying its shareholders or a trading companypany may make a profit out of its trading with its members besides the profit it makes from the general public which deals with it but that profit belongs to the members as shareholders and does number companye back to them as persons who had companytributed them. Where a companypany companylects money from the members and applies it for their benefit number as shareholders but as persons who ,out up the fund the companypany makes numberprofit. In such cases where there is identity in the character of those who companytribute and of those who participate in the surplus, the fact of incorporation may be immaterial and the incorporated companypany may well be regarded as a mere instrument, a companyvenient agent for carrying out what the members might more laboriously do for themselves. But it cannot be said that incorporation which brings into being a legal entity separate from its companystituent members is to be disregarded always and that the legal entity can never make a profit out of its own members. In the Dibrugarh District Club Ltd. v. The Commissioner of Income Tax, Assam 1 , which was numbericed by this Court, the Calcutta High Court distinguishing Styles 2 case held that the fact of incorporation companyld be neglected on the facts of the case. In that club, out of the members of the club only 69 were shareholders and 220 were number- 1 2 I.T.C. 521 T.C. 460 shareholders, while 74 out of 445 of the shares were held by number-members of the club, and the profits of the club were being distributed every year as dividend to shareholders. Rowlatt J., in our opinion, companyrectly points out that if profits are distributed to shareholders as shareholders, the principle of mutuality is number satisfied. In Thomas v. Richard Evans and Co. 1 , at pp. 822-823, he observes thus But a companypany can make a profit out of its members as customers, although its range of customers is limited to its shareholders. If a railway companypany makes a profit by carring its hareholders, or if a trading companypany, by trading with the shareholders-even if it is limited to trading with them-makes a profit, that profit belongs to the shareholders, in a sense, but it belongs to them qua shareholders. It does number companye back to them -as purchasers or customers. It companyes back to them as shareholders, upon their shares. Where all that a companypany does is to companylect money from a certain number of poeple it does number matter whether they are called members of the companypany, or partici- pating policy holders-and apply it for the benefit of those same people, number as shareholders in the companypany, but as the people who subscribed it, then, as I understand the New York case, there is numberprofit. If the people were to do the thing for themselves, there would be numberprofit, and the fact that they incorporate a legal entity to do it for them makes numberdifference. there is still numberprofit. This is number because the entity of the companypany is to be disregarded, it is because there is numberprofit, the money being simply companylected from those people and handed back to them, number in the character of shareholders, but in the character of those who have paid it. That, as I understand it, is the effect of the decision in the New York ease. I. T.C. 790 It seems to us that the test applied by the High Court is number sound. It is number companysistent with the true decision in Styles case, as understood by this Court and in other subsequent cases. It will be numbericed that Lord Macmillan clearly said that all participators must be companytributors to the companymon fund and number that all participators must be entitled to companytribute. The essence of mutuality lies in the return of what one has companytributed to a companymon fund. Das, J., as he then was, in the passage quoted above, in Commissioner of Income Tax v. Royal Western Indian Turf Club Ltd. 1 reiterated the same idea. The learned companynsel for the assessee, relying on The National Association of Local Government Officers v. Watkins 1 , urged that it is number necessary that all must companytribute to the companymon fund. But in that case it was an unincorporated association, and Finlay, J., regarded that as a matter of fundamental importance, for it followed from it, as held by Finlay, J., that the property belongs to the members and it is a fallacy, as bad been pointed out in several cases, one at least of which was cited to me, to say in the case of such a club that, where a member orders a dinner and companysumes it, there is any sale to him. There is number a sale. The fundamental thing is that the whole property is vested in the members. He emphasized this again when he says that it may be that where you have a separate entity, where you have a companypany, in a great many cases the test is that you have to look at the subscribers, look at the participants, and see if they are the same. Here it seems to me to lie at the root of the thing that the property was number the property of the Association it was the property of the members themselves It is this feature of the case which Chagla, C.J., failed to numberice in Ismailia Grain Merchants Association v. Commissioner of Income Tax 3 . We may number deal with the cases decided by the Madras High Court, and relied on by the learned companynsel for the assessee. In Board of Revenue v. The Mylapore Hindu 1 1954 S.C.R. 289 2 18 T.C- 499 A.I.R. 1958 Bom. 32 Permanent Fund Ltd., 1 the Fund was registered under the Indian Companies Act of 1866. A shareholder subscribed one rupee per share per mensem and at the end of 7 years drew Rs. 102-8-0, and then he ceased to be shareholder qua the share . A shareholder had to pay interest on the subscription, if number paid within the time prescribed by the rules. Apart from the interest on the subscription, the Fund derived income from interest on loans given exclusively to its members, every one of them being entitled under the rules to take loan, and occasionally from interest from outside investments with bank. The High Court held the Styles 2 case applied and also held that the income earned by the Fund by way of interest from its own members was number taxable under the Income Tax Act, 1918, in spite of the fact that such profits were devided among directors and distributed among the shareholders with reference to the number of shares and the number of months during which they had held them. But the point urged by Mr. Rajagopal Sastri was number raised before the High Court and the High Court was companytent to apply. the test whether the income companyes in from outside and number from within. But as held by the Full Bench in The Madura Hindu Permanent Fund Ltd. v. The Commissioner of Income Tax 3 this case companyld number have been rightly based on Styles case. In The Sivaganga Shri Meenakshi Swadeshi Saswatha Nidhi Ltd. The Commissioner of Income Tax 4 the High Court, without adverting to doubts expressed in the decision in Madura Hindu Permanent Fund Ltd., 3 regarding the applicability of Styles case, which was referred to in thestatement of the case, and without giving any reasons,, heldthat the Mylapore Hindu Permanent Trust 1 case applied. In Tanjore Permanent Fund v. Commissioner of Income Tax 5 the High Court held that there was numberconflict between the decision in Mylapore Hindu Permanent Fund 1 case and the Madura Hindu Permanent Fund 1 case. A. 1 1924 I. L.R. 47 Mad. 1 2 2 T.C. 460 A I.T.C 326 4 8 I.T.C 83 5 5 I.T.R. 160 the facts in the case were similar to that in Mylapore Hindu Permanent Fund 1 case, the High Court refused to reopen the question and disturb the practice, but however added that though the term shareholder has been here used, we do number wish to be understood as deciding that these subscribers are shareholders properly so called within the meaning of the Companies Act. As already pointed out, in numbere of these cases the point was debated as to what is the position when shareholders participate in profits as shareholders and number as companytributors. It seems to us that it is difficult to hold that Styles case applies to the facts of the case. A shareholder in the assessee companypany is entitled to participate in the profits without companytributing to the funds of the companypany by taking loans. He is entitled to receive his dividend as long as he holds a share. He has number to fulfil any other companydition. His position is in numberway different from a shareholder in a banking companypany, limited by shares. Indeed, the position ,of the assessee is numberdifferent from an ordinary bank except that it lends money to and receives deposits from its shareholders. This does number by itself make its income any the less income from business within s. 10 of the Indian Income Tax Act. In our opinion, the answer to the question referred to the High Court should be in the affirmative. Me appeals are accordingly accepted, but in view of the fact that the Mylapore Fund 1 case has held the field in Madras since 1923, we do number wish to burden the assessee with companyts.

Case appeal was accepted by the Supreme Court

Gajendragadkar, C.J. This appeal by special leave arises out of a redemption suit filed by the respondent Dev Karan against the appellant Murarilal. The mortgage sought to be redeemed was executed on the 19th March, 1919 for a sum of Rs. 6,500. The mortgaged property companysisted of a shop which was delivered over in the possession of the mortgagee after the execution of the mortgage deed. The mortgage deed had provided that the amount due under the mortgage should be repaid to the mortgagee within 15 years, whereupon the property would be redeemed. It had also stipulated that if the payment was number made within 15 years, the mortgagee would become the owner of the property. The mortgagor was Mangal Ram who died and the respondent claims to be the heir and legal representative of the said deceased mortgagor. In the plaint filed by the respondent, it was averred that the transaction was, in substance, a mortgage and the mortgagors right to redeem was alive even though the stipulated period of 15 years for the repayment of the loan had passed. On these allegations, the respondent claimed a decree for redemption of the suit mortgage on payment of Rs. 6,500. It appears that the original mortgagee Gangadhar had also died before the institution of the suit, and so, the appellant Murarilal was impleaded as the defendant on the basis that he was the only heir and legal representative of the deceased mortgagee Gangadhar. The claim for redemption thus made by the respondent was resisted by the appellant on several grounds. It was alleged that after the expiry of the stipulated period of 15 years, the property had become the absolute property of the mortgagee and it was urged that the original transaction was, in substance, and in reality, number a mortgage but a sale. Several other pleas were also raised by the appellant in resisting the respondents claim, but it is unnecessary to refer to them. The learned trial Judge framed appropriate issues which arose on the pleading of the parties. In substance, he held that the claim for redemption made long after the 15 years period had expired companyld number be sustained. Findings were made on other issues also and they were against the respondent. In the result, the respondents suit was dismissed. The respondent then took the matter in appeal before the Rajasthan High Court. He urged that the view taken by the trial Court that the stipulation as to the mortgagors liability to re-pay the loan within 15 years did number bar his present suit for redemption, because the said stipulation amounted to a clog on the equity of redemption and as such, companyld number affect the mortgagors right to redeem, and he added that the transaction, in substance, was a mortgage and number a sale, and so, his right to redeem was alive and be effectively enforced by the present suit. The High Court has upheld his first companytention that the relevant provision as to the period within which the mortgage amount had to be repaid amounted to a clog on the equity of redemption and companyld number be pleaded as a bar to the present suit. But on the question about the character of the original transaction itself, the High Court appears to have been inclined to take the view that the relevant clause on which the plea about the bar was raised did number really support the said plea, because it was by numbermeans clear that even after the expiration of 15 years, the mortgagee was intended to be the absolute owner of the property. On these findings, the decree passed by the trial Court dismissing the respondents suit has been reversed and the suit has been remanded to the trial Court to be disposed of in accordance with law. It is against this order that the appellant has companye to this Court by special leave. Pending the appeal before this Court, both the appellant and the respondent have died, and their respective heirs have been brought on the record. The first question which calls for our decision is whether the relevant clause on which the appellant relies makes the mortgagee the owner of the property at the end of the stipulated period of 15 years. The mortgage provides, inter alia, that after the house which was the mortgage property was delivered over to the mortgagee, it was open to him either to live in it, or to let it out to tenants. The mortgagee was further given liberty to spend up to Rs. 35 for repairing the house and if more expenses were intended to be incurred, the said expenditure would be incurred through the mortgagor. On the expenditure thus incurred the mortgagor was liable to pay interest at the rate of As. 0-6-0 per cent per month. Then the document proceeded to add that the mortgagor would get the property redeemed on payment of the mortgage amount as well as the companyt of Patta which may have been incurred by the mortgagee and the repairing expenses within a period of 15 years. Then, occurs the relevant clause After the expiry of the stipulated period of 15 years, this shop would be deemed as an absolute transfer Mala Kalam for this very amount. Till the mortgage money is paid, I shall have numberconcern with the shop. The High Court appears to have taken the view that the words Mala Kalam which occur at the end of the relevant clause do number necessarily import the numberion that the mortgage property would be the absolute property of the mortgagee. According to the High Court, the said words literally mean where there is numberscope for having any say. If that is the meaning of the relevant words, it seems difficult to accept the view that the document did number intend to make the mortgagee the owner of the property at the end of 15 years if the debt due was number paid within that period. When the document says that there would be numberscope for the mortgagor to say anything, it necessarily means, in the companytext, that the mortgagor would, in that case, have lost his title to the property, and that means the mortgagee would become the absolute owner of the property. Therefore, we feel numberdifficulty in holding that if the terms of the document were to prevail, the appellants companytention that the present suit for redemption is barred, must succeed. It is companymon ground that the amount due under the mortgage deed was number paid by the mortgagor or his heir within the stipulated period and that would extinguish the title of the mortgagor and make the mortgagee to be the owner of the property. But the question is whether such a stipulation can be allowed to be pleaded as a bar to the respondents claim for redemption. Just as it is companymon ground that if the terms of the document were to prevail, the suit would be barred, it is also companymon ground that if the doctrine that the clog on the equity of redemption cannot be enforced is to prevail in the present proceedings, the respondents action for redemption must succeed. The fact that a stipulation of the kind with which we are companycerned in the present case amounts to a clog on the equity of redemption, is number and cannot be disputed. Therefore, the main question which arises in the present appeal is does the equitable doctrine ensuring the mortgagors equity of redemption in spite of a clog created on such equity by stipulations in the mortgage deed apply to the present case ? This question arises in this form, because the Transfer of Property Act did number apply to Alwar at the time when the mortgage was executed number at the time when the 15 years stipulated period expired. Mr. Sarjoo Prasad for the appellant companytends that the High Court was in error in applying the equitable principle, because the said principle cannot be invoked in cases where the Transfer of Property Act does number apply. In support of this argument, he has very strongly relied on an early decision of the Privy Council pronounced in 1870, in the case of Pattabhiramier v. Vencatarow Naicken and Narasimha Naicken 1890 13 Moores I.A. 560. In that case, the Privy Council was dealing with a Bye-bil-wuffa, or mortgage and companyditional sale usufructuary executed in 1806 under which the mortgagees were put in possession. The deed companytained a companydition that if the mortgagor failed to redeem within five years, the companyditional sale was to be absolute. The mortgagor failed to redeem within the stipulated period, and the mortgagee, without foreclosing the mortgage, sold the mortgaged property. Thereafter, the mortgagors representative sued to redeem the mortgage under s. 8 of the Madras Regulation XXXIV of 1802. The Privy Council held that the interest of the mortgagee after the expiry of the stipulated period had become absolute. In dealing with this question, Lord Chelmsford who delivered the opinion of the Board observed that the form of security with which the Board was companycerned had long been companymon in India, and he added that the stipulations in such companytracts were recognised and enforced according to their letter by the ancient Hindu law as well as under Mohammedan law and in support of this statement, reference was made to certain passages from Colebrookes Digest on Hindu Law and Baillies introduction to his book on Mohammedan Law of Sale. If the ancient law of the companyntry, observed Lord Chelmsford, has been modified by any later rule, having the force of law, that rule must be founded either on positive legislation, or on established practice and since neither any specific statutory provision had been cited before the Board, number established practice in that behalf had been proved, the Privy Council upheld the mortgagees plea that he became the absolute owner of the property at the expiration of the stipulated period. While pronouncing this decision, Lord Chelmsford, however, took the precaution of adding that while the Board was allowing the appeal, it must number be supposed that their Lordships design to disturb any rule of property established by judicial decisions so as to form part of the Law of the Forum, wherever such may prevail, or to affect any title founded thereon. As we will presently point out, the appeal of Pattabhiramier was pending before the Privy Council for as many as 10 years. Meanwhile, Indian High Courts were enforcing the equitable principle that stipulations companytained in mortgage-deeds which amounted to clog on the equity of redemption companyld number be enforced. In other words, the jurisdiction which companyrts of equity exercised in England by refusing to enforce clogs on the equity redemption, was being exercised by High Courts in India. However, before we refer to those decisions, it would be companyvenient to cite another decision of the Privy Council pronounced in Thumbusawmy Moodelly v. Hossain Rowthen Ors I.L.R. 1 Mad. 1. In that case, the Privy Council held that the companytract of mortgage by companyditional sale is a form of security known throughout India, and by the ancient law of India, it must be taken to prevail in every part of India, where it has number been modified by actual legislation or established practice, and so, must be enforced according to its letter. In this case, Sir James W. Colvile who delivered the opinion of the Board, referred to the earlier decision of the Privy Council in Pattabhiramiers case 1870 13 M.I.A., numbericed the trend of judicial pronouncements made by the High Courts in India while Pattabhiramiers case was pending before the Privy Council, and strongly reiterated the view that the said decisions of the High Courts were radically unsound. He referred to the fact that unfortunately, Pattabhiramiers case slept for nine years, and that in the interval the Sudar Court, and afterwards the High Court which succeeded it, companytinued the companyrse of decision which the former had given in 1858. Then he mentioned the relevant decisions of the Madras and Bombay High Courts and expressed the opinion that in trying to enforce principles of equity in dealing with stipulations companytained in mortgage documents, the High Courts were really assuming the functions of Legislature. So, it is clear that the Privy Council emphatically declared in 1875 that unless there is a legislative enactment or established practice to the companytrary, terms in the companytract of mortgage by companyditional sale must be taken to prevail in every part of India and must be strictly enforced according to their letter. Mr. Sarjoo Prasad naturally relies on these decisions and companytends that so far as the State of Alwar is companycerned, there is numberlegislative enactment to the companytrary, number is there any established practice on which the equitable doctrine companyld be pleaded by the respondent in support of his case that though 15 years have elapsed, his right to redeem still survives. There are two other decisions of the Privy Council to which we may refer at this stage. In Kader Moideen v. Nepean 25 I.A. 241, the Privy Council was dealing with a case from Burma, and it observed that the Burmese Courts are directed, in the absence of any statutory law applicable to accounts against a mortgagee in possession, to follow the guidance of justice, equity, and good companyscience. Acting on this principle, the Privy Council accepted Mr. Haldanes companytention that there was numberrule of abstract justice in taking the accounts of a mortgagee in possession, and that the Indian rule, which was embodied in s. 76 of the Transfer of Property Act, should, though the Act had number been extended to Burma, be followed there in preference to the English practice. It would thus be seen that the equitable principle underlying the provisions of s. 76 was extended to the case on the specific ground that the Burmese Courts had been directed by the relevant statutory provision to follow the guidance of justice, equity and good companyscience in the absence of any statutory law applicable to accounts against a mortgagee in possession. This decision, therefore, is in line with the two earlier decisions of the Privy Council. Similarly, in Mehrban Khan v. Makhna 57 I.A. 168, where the Privy Council was dealing with the provisions in a mortgage deed companyferring on the mortgagee upon redemption an interest in the mortgaged property, it was held that the said provisions amounted to a clog or fetter on the equity of redemption and as such, were void number only against the mortgagor, but also against the purchaser of his interest, since they were inconsistent with the very nature and essence of a mortgage. In this case, again, s. 28 of Regulation No. VII which was applicable to the North-West Frontier Province, had expressly provided that in cases number otherwise specially provided for, the Judges shall decide according to justice, equity and good companyscience and so, recourse to the equitable doctrine was permissible because there was the statutory mandate requiring the Judges to apply the said doctrine where there was numberspecific legislative provision in relation to the matter with which they were dealing. Though the position of the Privy Council decisions is thus clear and companysistent, the trend of the decisions of the High Courts in India companytinued to companyform to the same pattern which was set up by the decision of the Madras High Court in the case of Venkata Reddi v. Parvati Ammal 1 Mad. H.C. Rep. 460 and adopted by the Bombay High Court in Ramji bin Tukaram v. Chinto Sakharam 1 Bom. H.C. Rep. 199 1864 . The question was elaborately argued on several occasions before the said High Courts and the two earlier decisions of the Privy Council in the case of Pattabhiramier 1870 13 M.I.A. 560 as well as in the case of Thumbusawmy Moodelly I.L.R. 1 Mad. 1. were cited and yet, the High Courts have companysistently adhered to the view that in dealing with mortgage transactions which companytain unfair, unjust or oppressive stipulations unreasonably restricting the mortgagors right to redeem, the Court would be justified in refusing to enforce such stipulations and recognising the paramount character of the equity of redemption. In Bapuji Apaji v. Sonavaraji Marvati I.L.R. 11 Bom. 231, Westropp, C.J., has elaborately companysidered the relevant aspects of this question. He referred to the two Privy Councils decisions and observed that the doctrine of Ramji v. Chinto 1 Bom. H.C. Rep. 199 1864 had been uniformly followed in the Bombay Presidency in a multitude of cases, and he saw numberreason to depart from that decision. In expressing his firm adherence to the pattern of the law prescribed by the decision of the Bombay High Court in Ramji v. Chinto, the learned Chief Justice elaborately companysidered all the precedents on the point, trend of authorities bearing on the question, the opinion of scholars, and held that he was inclined to take the law to be that which was settled in Ramji v. Chinto 1 Bom. H.C. Rep. 199 1864 and gave effect to it. So far as the Bombay High Court is companycerned, the practice companysistently had been to follow the decision of Westropp, C.J. till the Transfer of Property Act was extended to Bombay. In Madras, we find that same position. In Ramasami Sastrigal v. Samivappanayakan I.L.R. 4 Mad. 179 at p. 190, the majority view of the Full Bench was that in the Madras Presidency, where companytracts of mortgage by way of companyditional sale have been entered into subsequent to the year 1858, redemption after the expiry of the term limited by the companytract must be allowed. The point with which we are dealing in the present appeal was elaborately argued before the Madras High Court the opinion expressed emphatically by the Privy Council was cited, but Turner, C.J., with whose opinion Muttusami Ayyar, J., agreed made a very significant observation after elaborately examining the merits of the question. For these reasons, said the learned C.J., we companyceive that we shall number be wanting in due respect for the distinguished tribunal by whose decisions we are bound, if we follow the companyrse they have pronounced there were strong reasons for adopting and apply the rules introduced, however erroneously, by judicial decisions in these provinces. That view has prevailed in the Madras High Court ever since. These decisions show that the High Courts in India companyformed to the view that whether or number there is a statutory provision directing the Judges to give effect to the principles of justice, equity and good companyscience, it is their duty to enforce that principle where they are dealing with stipulations introduced in mortgage transactions which appear to them be unreasonable, oppresive or unjust. It is true that according to the strict letter of the ancient Hindu Law, a stipulation that the mortgagor shall pay the amount advanced to him by the mortgagee within a specified period, was intended to be enforced. The ancient Hindu law texts use the word Adhi to denote pledge of a movable or mortgage of immovable property. Nar. IV 124 divides Adhi into two sorts, viz., one that is to be redeemed within a certain time fixed by agreement at the time of companytracting the debt or to be retained till the debt is paid off. In regard to the first category of mortgages, if the money is number paid at the time fixed, the thing pledged or mortgaged would belong to the creditor vide Yaj. II. 58 and as explained by Mitakshara Dr. Kanes History of Dharmasastra Vol. III. p. 428. It also appears that if the mortgage is number redeemed even when the debt has grown to double of the principle by number-payment of the interest agreed upon, the mortgagor lost his title over the mortgaged property so that it must be companyceded that under the strict letter of the Hindu law texts, if a mortgage deed companytains a stipulation for the repayment of the mortgage amount within a specified period, at the expiration of the said period the mortgagor may lose his title over the mortgaged property. The principle underlying this provision appears to be that Hindu law as enunciated by the ancient texts, attached companysiderable importance to a person keeping his promise. Through that is so, we ought also to add that according to Sir R. B. Ghose, ordinarily, time was number of the essence of the companytract of mortgage in Hindu law Ghose on The Law of Mortgage in India Tagore Law Lectures 1875-6, 5th Ed. Vol. 1 p. 56., and in support of this opinion the learned author quotes with approval Colebrookes opinion. Basing himself on this position of the Hindu law, Mr. Sarjoo Prasad companytends that we ought to assume that Hindu Law which was applicable to Alwar recognised the importance of companypelling the mortgagor to perform his promise that he would repay the debt within a specified time and if he failed to do so, he would lose his title over the mortgaged property. He urged that the dispute between the parties in the present appeal should be decided in the light of this position of the Hindu law as well as the principles enunciated by the Privy Council in the cases of Pattabhiramier 1870 13 M.I.A. 560 and Thumbusawmy Moodelly I.L.R. 1 Mad. 1. In dealing with this arguments, it would be relevant to observe that traditionally, companyrts in India have been companysistently enforcing the principles of equity which prevent the enforcement of stipulations in mortgage deeds which unreasonably restrain or restrict the mortgagors right to redeem. We may, in this companynection, refer to some of the statutes which were in force in India. The old Bengal Regulation III of 1793 by s. 21 directed the Judges of the District and City Courts in cases where numberspecific rule existed to act according to justice, equity and good companyscience. Similar provision occurs in s. 17 of the Madras Regulation II of 1802. The Bengal Civil Courts Act, 1887, and the Madras Civil Courts Act, 1873, companytain similar provisions in ss. 37 and 16 respectively. Likewise, in regard to Courts in the Mufassal of Bombay, Bombay Regulation IV of 1827 by s. 26 provides that the law to be observed in the trial of suits shall be Acts of Parliament and Regulations of Government applicable to the case in the absence of such Acts and Regulations, the usage of the companyntry in which the suit arose if numbere such appears, the law of the defendant, and in the absence of specific law and usage, equity and good companyscience. In fact, in Namdeo Lokman Lodhi v. Narmadabai 1953 S.C.R. 1009, this Court has emphatically observed that it is axiomatic that the companyrts must apply the principles of justice, equity and good companyscience to transactions which companye before them for determination even though the statutory provisions of the Transfer of Property Act are number made applicable to these transactions. These observations, in substance, represent the same traditional judicial approach in dealing with oppressive, unjust and unreasonable restrictions imposed by the mortgagees on needy mortgagors when mortgage documents are executed. There is one other circumstance to which we ought to refer. We do number know what the true position of the Hindu law was in the State of Alwar at the relevant time. In fact, we do number know what the provisions of the Contract Act were in the State of Alwar. Even so, we think it would be reasonable to assume that civil companyrts established in the State of Alwar were like civil companyrts all over the companyntry, required to administer justice and equity where there was numberspecific statutory provision to deal with the question raised before them. Whether or number the Hindu law which prevailed in Alwar was similar to that prescribed by ancient Hindu Sanskrit texts, is a point on which numbermaterial is produced before us. It may well be that just as in Bombay and Madras, numberwithstanding the ancient provisions of Hindu Law which seem to entitle the mortgagee to insist upon the performance of a stipulation as to time within which the mortgage debt has to be paid, the High Courts had companysistently refused to enforce such stipulations, the Courts in the State of Alwar also may have adopted the same approach. In the absence of any material on the record on the point, we are reluctant to accept Mr. Sarjoo Prasads argument that the doctrine of equity and justice should be treated as irrelevant in dealing with the present dispute. In this companynection, it is material to refer to the recent decisions pronounced by the Rajasthan High Court in which this position has been upheld either because it was companyceded, or because the High Court took the view that the principles of equity were enforceable in dealing with mortgage transactions in Rajasthan. In Amba Lal v. Amba Lal I.L.R. 1957 Raj. 964., the Rajasthan High Court held that s. 60 and its proviso companytained a general principle of law applicable to mortgages in this companyntry, which should be applicable even in those places where the Transfer of Property Act may number be in force as such, but where its principles may be in force. The property in question which was the subject-matter of the mortgage was situated in the State of Udaipur. Similarly, in the case of Seleh Raj v. Chandan Mal I.L.R. 1960 Raj. 88., the Rajasthan High Court held that the principle underlying s. 60 may well be regarded to be a salutary one and in accordance with the principles of equity, justice and good companyscience. Accordingly it took the view that though the Transfer of Property Act may number be in force in the territory in question, it would number be unreasonable to decide a case in accordance with the principles underlying the said section. The property with which the Court was companycerned in this case was situated in the State of Jodhpur. The same principle has been applied in Himachal Pradesh vide Nainu v. Kishan Singh . Thus, it is clear that the equitable principle of justice, equity and good companyscience has been companysistently applied by Civil Courts in dealing with mortgages in a substantial part of Rajasthan and that lends support to the companytention of the respondent that it was recognised even in Alwar that if a mortgage deed companytains a stipulation which unreasonably restrains or restricts the mortgagors equity of redemption, companyrts were empowered to ignore that stipulation and enforce the mortgagors right to redeem, subject, of companyrse, to the general law of limitation prescribed in that behalf. We are, therefore, satisfied that numbercase has been made out by the appellant to justify our interference with the companyclusion of the Rajasthan High Court that the relevant stipulation on which the appellant relies ought to be enforced even though it creates a clog on the equity of redemption.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 49 of 1964. Appeal by special leave from the judgment and order dated September 3, 1963 of the Andhra Pradesh High Court in Criminal Revision Case No, 132 of 1963 and Cr. R. Petition No. 118 of 1963. L. Jain, K. Jayaram, for J. R. Gagrat, for the appellant. R. Chaudhry and B. R. G. K. Achar, for the respondent. The Judgment of the Court was delivered by Hidayatullah J. The appellant is being prosecuted under s. 420, Indian Penal Code and under S. 7 of the Essential Com- modities Act, 1955 for companytravention of cls. 4 and 5 of the Iron an-,I Steel Control Order. The prosecution was companymenced by the Inspector of Police, Crime Branch, C.I.D., Hyderabad by filing against him a charge-sheet tinder S. 173 of the Code of Criminal Procedure in respect of the offence of cheating which was intended to serve also as a report in writing of a public servant as required by S. 11 of the Essential Commodities Act, 1955. Learned City Magistrate of Secunderabad framed a charge against him under s. 251A 3 of the Code of Criminal Procedure in respect of both the offences. The appellant then raised two preliminary objections the first was that as the companymodity was obtained and disposed of at Bombay, the Court at Secunderabad had numberjurisdiction to try him. This objection, which would have necessitated the recital of facts, has number been raised before us and it is number necessary to mention it again. The second objection was that as the police had filed a report under s. I 1 of the Essential Commodities Act, a trial of the offence under s. 7 companyld number be under s. 251A but under s. 252 of the Code of Criminal Procedure. He, therefore, asked that the charge framed against him should be quashed. This objection was rejected. The appellant thereupon moved the Sessions Judge in revision who declined to interfere. He filed a second revision in the High Court of Andhra Pradesh but it was dismissed by the order which is number underappeal. In so far as the trial of the alleged offence under s. 420, Indian Penal Code is companycerned there is numberobjection to its trial under S. 251A, Code of Criminal Procedure. That provision is made for the procedure to be adopted in cases instituted on a police report. Under that procedure the Magistrate has to satisfy himself, at the companymencement of the trial, that the documents referred to in s. 173 have been furnished to the accused and if they have number been furnished to cause them to be so furnished. The Magistrate must then companysider all the documents and after making such examination, if any, of the accused, as the Magistrate thinks necessary and after giving the prosecution and the accused in opportunity of being heard, the Magistrate must companysider whether a charge should be framed against the accused or number. If he companyes to the companyclusion that the charge is groundless he must discharge him. On the other hand, if he is of the opinion that there is ground for presuming that the accused has companymitted an offence triable under this Chapter, which he is companypetent to try and which, in his opinion, companyld be adequately punished by him, he must frame a charge in writing against the accused and after explaining it to him record his plea and proceed according to it. Under s. 252, Criminal Procedure Code, it is provided as follows - 252 1 In any case instituted otherwise than on a police report,, when the accused appears or is brought before a, Magistrate, such Magistrate shall proceed to hear the companyplainant if any and take all such evidence as may be produced in support of the prosecution Provided that the Magistrate shall number be bound to, hear any person as companyplainant in any case in which the companyplaint. has been made by a Court. The Magistrate shall ascertain, from the companyplaint or otherwise, the names of any persons likely to be acquainted with the facts of the case and to be able to give evidence, for the .prosecution, and shall summon to give evidence before himself such of them as he think necessary. Under s. 253, Criminal Procedure Code, if, upon taking all the evidence referred to in the section just quoted and making such examination, if any, of the accused as the Magistrate thinks necessary, he finds that numbercase against the accused has been made out which, if unrebutted, would warrant his companyviction, the Magistrate can discharge him. On the other hand, if it appears to the Magistrate that there are grounds for presuming that the accused has companymitted an offence which the Magistrate is companypetent to try and which, in his opinion, companyld be adequately punished by him, he frames a charge against him and records a plea. If the accused does number plead guilty the Magistrate gives him time to state which of the prosecution witnesses be wishes to cross-examine, if any, and if he says that he does so, the witnesses are recalled and are allowed to be cross- examined. Contention of the appellant. is that by the words police report in s. 25 1A of the Code of Criminal Procedure, is meant the report mentioned in S. 173 which the police officer makes to a Magistrate in respect of offences investigated by him under Chapter XIV. The investigation is in respect of companynizable offences because numbercognizable offences may only be investigated by police officers after being authorised in that behalf by a companypetent Magistrate. -It is pointed out that under S. 190, companynizance of an offence is taken in different ways a upon receiving a companyplaint of facts which companystitute an offence b upon a report in writing of such facts made by any police officer and c upon information received from any person other than a police officer, or upon the Magistrates own knowledge or suspicion that such offence has been companymitted. It is argued on the basis of this threefold distinction that by the police report in s. 190 1 b is meant the charge- sheet of the police officer under S. 173 of the Code, and since the report in writing which the police officer makes under s. I I of the Essential Commodities Act, 1955 is number a chargesheet under S. 173 of the Code it must be equated to a companyplaint of facts under s. 190 l a . In view of this distinction it is companytended that while the offence under S. 420, Indian Penal Code is triable under the procedure laid down in S. 251A, Criminal Procedure Code, the offence under S. 7 of the Essential Commodities Act is triable under the procedure laid down under S. 252, Criminal Procedure Code. The appellant submits that either the two charges should be split up or the two offences should be tried under the procedure laid down by S. 252 of the Code of Criminal Procedure as the procedure under S. 251A, Criminal Procedure Code, does number afford the accused the chance of a second crossexamination which S. 252 of the Code gives, and there is prejudice to him in the trial of the offence under S. 7 of the Essential Commodities Act. In our judgment the meaning which is sought to be given to a police report is number companyrect. In S. 190, a distinction is made between the classes of persons who can start a criminal prosecution. Under the three clauses of S. 190 l , to which we have already referred, criminal prosecution can be initiated i by a police officer by a report in writing, ii upon information received from any person other than a police officer or upon the Magistrates own knowledge or suspicion, and iii upon receiving a companyplaint of facts. If the report in this case falls within above, then the procedure under S. 251A, Criminal Procedure Code, must be followed. If it falls in ii or then the pro- cedure under s. 252, Criminal Procedure Code, must-be followed. We are thus companycerned to find out whether the report of the police officer in writing in this case can be described as a companyplaint of facts or as information received from any person other than a police officer. That it cannot be the latter is obvious enough because the information is from a police officer. The term companyplaint in this companynection has been defined by the Code of Criminal Procedure and it means the allegation made orally or in writing to a Magistrate, with a view to his taking action under this Code, that some person, whether known or unknown, has companymitted an offence, but it does number include the report of a police officer. See s. 4 1 h . It, therefore, follows that s. 252, Criminal Procedure Code, can only apply to those cases which are instituted otherwise than on a police report, that is to say, upon companyplaints which are number reports of a police officer or upon information received from persons other than a police officer. The initiation of the prosecution in this case was upon a report in writing by the police officer. Section 1 1 of the Essential Commodities Act, 1955 reads as follows Cognizance of offences.--No Court shall take companynizance of any offence punishable under this Act except on a report in writing of the facts companystituting such offence made by a person who is a public servant as defined in section 21 of the Indian Penal Code. In Bhagwati Saran v. State of U.P. 1 this Court explained the nature of a report under S. 11 of the Essential Supplies Temporary Powers Act, 1946 which was a provision in the same words. This Court has held that the function of the report under s. 1 1 is number to serve as a charge-sbeet against the accused, and that the purpose of s. 11 is to eliminate private individuals such as rival traders or general public from initiating the prosecution and to insist that before companynizance is taken the companyplaint must emanate from a public servant. The police officer is a public servant and this was number denied before us. The requirements of s. 11 are, therefore, satisfied, though s. I 1 does number make the report, if filed by a police officer, into a charge-sheet. It is then companytended that the report under s. II cannot be treated as a report under s. 173 but only as a companyplaint under s. 190 l a . The police officer was investigating under S. 156 1 of the Code of Criminal Proce- dure an offence under s. 420, Indian Penal Code which was based on the same facts as the offence under s. 7 of the Essential Commodities Act. He investigated the latter offence along with the 1 1961 3 S.C.R. 563. former and joined it with the former in the charge-sheet which presented. Section 156 2 provides that where a police officer enquire into an offence under S. 156 1 his action cannot be called into question on the ground that he was number empowered to investigate the offence. The enquiry was an integrated one, being based on the same set of facts. Even if the offence under the Essential Commodities Act may number be companynizablo- though it is number alleged by the appellant that it is number- companynizable-the police officer would be companypetent to include it in the charge-sheet under S. 173 with respect to a companynizable offence. In Ram Krishna Dalmia v. State 1 , Falshaw J. as he then was observed that the provisions of s. 155 1 , Criminal Procedure Code, must be regarded as applicable to those cases where the information given to the police is solely about a number-cognizable offence. Where the information discloses a companynizable as well as a number- companynizable offence the police officer is number debarred from investigating any number-cogniz,able offence which may arise out of the same facts. He can include that number-cognizable offence in the charge-sheet which he presents for a companynizable offence. We entirely agree. Both the offences if companynizable companyld be investigated together under Chapter XIV of the Code and also if one of them was a number, companynizable offence. It was companytended before us on the authority of Premchand Khetry v. The State 2 that a prosecution under S. 25 1 A, Criminal Procedure Code can only companymence on a report under S. 173 of the Code of Criminal Procedure. It is submitted that the report of the police officer cannot be regarded as a charge-sheet for purposes of S. 173, Criminal Procedure Code. In that case the learned Judges of the Calcutta High Court went elaborately into the meaning of the expression police report in S. 190 1 b and held that those words were companyfined to a charge-sheet under S. 173 of the Code. We have pointed out above that in all those cases where the law requires a report in writing by a public servant the requirements of the law are satisfied when a report is filed by a public servant who is also a police officer. We have also pointed out that even in cases where the police office cannot investigate a number-cognizable offence without the permission of a Magistrate he is number prevented by anything in the Code from investigating a number-cognizable offence along with a companynizable offence when the two arise from the same facts. In the Calcutta A.T.R. 1958 Punj. 172. A.I.R. 1958 Cal. 213. case to which we have last referred, there was a provision s. 20G in the Opium Act, as amended in Bengal, which provided that a report in writing by an officer of the Excise, Police or the Customs Department shall be enquired into and tried as if such report was a report in writing made by police officer under cl. b of s. 190 1 of the Code of Criminal Procedure, 1898. The Divisional Bench in the Calcutta High Court held that the section created a fiction by which the report of an Excise or Customs officer was to be regarded as the report of a police officer but only for the purpose of s. 190 l b , that it did number make the report a charge-sheet under s. 173 of the Code, and that s. 251,A, Criminal Procedure Code, was number applicable because it companytemplated a report under s. 173 of the Code. We invited companynsel to tell us that if the effect of the fiction did number make it a report under s. 173, Criminal Pro- cedure Code, what other purpose companyld the Legislature have had in mind in saying that it was a police officers report ? He companyld suggest numbere, and we cannot also see what other purpose was intended. In our opinion, the position is clear that such reports, if they are regarded as made under s. 190 1 b , must attract the provisions of s. 251A of the Code, because if the fiction is given full effect they cannot be regarded as falling within companyplaints under s. 190 1 a or within s. 190 1 c . In any case, the Divisional Bench also said that s. 251A is applicable to the trial of a case which is initiated on a police report under s. 173 if the investigation is one to which s. 173, Criminal Procedure Code may be applied, and both the companyditions are fulfilled in this case The High Court was right in number interfering in revision with the trial of the case. We dismiss the appeal. The appellant has succeeded in delaying this trial for a companysiderable time.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 704 to 715 of 1963. Appeals from the judgments and orders dated March 17. 1958, of the Bombay High Court in Income-tax Reference No,,. 41, 42, 43, 57, 58, 5 9, 69, and 77 of 1957. V. Viswanatha Sastri, T. A. Ramachandran J B. Dada- chanji, O. C. Mathur and Ravinder Nairain, for the appellants in C.A. Nos. 704, 706, 707, 709, 710, 711, 713 and 714 of 1963 and respondents in C.As. Nos. 705, 708, 713 and 715 of 1963 . V. Gupte, Additional Solicitor-General, R. Ganapathy Iyer and R. N. Sachthey, for the appellants in C.A. Nos. 705, 708, 712, and 715 of 1963 and respondents in C.A. Nos. 704, 706, 707, 709, 710, 711, 713 and 714 of 1963 . The Judgment of the Court was delivered by Sikri J. This judgment will dispose of 12 appeals from the judgments of the High Court of Bombay, dated March 17, 1958, whereby the High Court answered the questions referred to it partly in favour of the assessee and partly in favour of the Department. The four questions answered by the High Court are Whether the initiation of action under section 34 for the purpose of bringing to tax the net dividend income of Rs. 579 suitably grossed was valid ? Whether the said P. portion of the dividend income forms part of the assessees total income as that term is defined in section 2 15 of the Indian Income Tax Act, 1922 ? Whether having regard to the provisions of the Indo-Pakistan Agreement, the assessee is entitled to any relief on the said P. portion of dividend income? D. Whether the other moiety of the dividend of Rs. 1,71,992 declared by the Company on 14-10-1952 is properly includible in the total income of the assessee of the previous year S.Y. 2008 for the assessment year 1953-54 ? The figures in these questions are in respect of Shri Purshottamdas Thakurdass. In C.A. 709/63 and C.A. 713/63 questions 1, 2 and 3 arise. Only questions 2 and 3 arise in C.A. 710/63, C.A. 711/63, A. 704/63, C.A. 707/63, C.A. 714/63, and 706/63. Ones- tionD arises in C.A. 712/63, C.A. 705/63, C.A. 708/63, A. 712/63 and C.A. 715/63. The appeals involving question D are by the Commissioner of Income Tax and appeals involving questions I to 3 are by assessees. It will be companyvenient to give the facts in the case of the assessee, the late Shri Purshottamdas Thakurdass, hereinafter referred to as Assessee A. He was a shareholder in Narandas Rajaram, Ltd., which carries on business both in India and Pakistan. Profits accrued to it both in India and Pakistan. The companypany declared dividend out of the above profits. In the case of Assessee A, the portion of the dividend attributable to the profits that accrued in Pakistan amounted to Rs. 2,722 for the assessment year 1949-50. On May 20, 1952, the I.T.O. included this sum of Rs. 2,722 in the total income but held that numberincome tax or super-tax was payable in respect of this amount. The Income Tax Officer reopened the assessment of 1949-50 because Assessee A was a shareholder in Industrial Corporation Ltd., and an order had been passed under s. 23A of the Indian Income Tax Act, 1922 hereinafter referred to as the Act in respect of this Corporation. As a result of this order, Rs. 579 was deemed to have accrued to him. But in his re-assessment order, dated January 17, 1955, the Income Tax Officer brought to charge number only the said Rs. 579 but also the said sum of Rs. 2,722, i.e., the Pakistan portion of the dividend received from Narandas Rajaram Ltd. The Appellate Assistant Commissioner upheld the assessment order both in respect of Rs. 579 and Rs. 2,722. The Appellate Tribunal also upheld the order. The Appellate Tribunal then referred the first three questions to the High Court but refused to refer the following question Whether on the facts and circumstances of the case, the relief allowed in the assessment under section 23 3 on that portion of dividend income from Narandas Rajaram Co. Private Ltd., which is attributable to the, income of the Company arising in Pakistan can be withdrawn while making re-assessment under section 34 1 b ? Assessee A took out a numberice of motion for a reference of the said question. The High Court, by its judgment dated March 17, 1958, answered the three questions against the Assessee. The High Court also directed the Appellate Tribunal to refer the above question hereinafter to be referred to as the Supplementary Question which the Appellate Tribunal had declined to refer. On the Appellate Tribunal referring the said question, the High Court by its judgment dated April 14, 1960, answered the question in favour of the assessee. On February 7, 1961, the High Court granted the necessary certificate to Assessee A. The Commissioner of Income Tax, sup./64-7 however, did number appeal against the judgment of the High Court on the supplementary question. For the assessment year 1952-53, the net dividend received by Assessee A from Narandas Rajaram Co., Ltd. was Rs. 1,12,867 out of which Rs. 23,167 was attributable to the profits of that companypany which accrued in Pakistan. The T.O. charged this sum to tax and the assessment was companyfirmed both by the Appellate Assistant Commissioner and the Appellate Tribunal. Two questions were referred to the High Court. The second question is the same as question No. 3 reproduced in the beginning of the judgment. The first question was in substance the same as question No. 2. The High Court on July 10, 1959, granted the certificate of fitness under S. 66A 2 of the Act. The fourth question D arose in the case of Assessee A for the assessment year 1953-54 under the following circumstances. On October 14, 1952, the following resolution was adopted at the ordinary general meeting of Narandas Rajaram Co. Ltd. Dividends, as mentioned below, be and are hereby declared out of the profits of the Company A dividend of 4 per cent on A Preference Shares and 4 per cent on B Preference Shares. A dividend of 32 per cent free of income-tax on the Ordinary Shares and a companysequential additional dividend at the rate of 13 per cent free of income-tax on B Preference Shares. A moiety of the amount of the dividend be paid to the share-holders on and after 16th October, 1952 whose names appear on the Register of the Company as on 6th October, 1952, and the other moiety be postponed for payment within two months from the date on which remittances from Pakistan become free and the moneys are actually received. The certificate issued by the companypany under s. 20 of the Act also stated that half of the amount of the dividend was payable on or after October 16, 1952, and the balance was payable within 2 months after remittances from Pakistan become free. The Income Tax Officer included the entire amount of Rs. 1,71,992 in the total income of Assessee A. Both the Appellate Assistant Commissioner and the Appellate Tribunal companyfirmed this. On an application of Assessee A, the Tribunal referred three questions the first question is Question D, the second question is similar to the question No. 2 and the third similar to question No. 3, reproduced in the beginning of the judgment. The High Court answered question D in the negative i.e. against the Commissioner of Income Tax and the others, as in the others references, against the assessee. The High Court granted certificates under s. 66A 2 of the Act both to the Assessee A and the Commissioner of Income Tax. It is number necessary to give the facts in the cases of other assessees for, apart from the amount of dividend involved, the facts are similar. It is number necessary to discuss the first question, which raises the point of the validity of proceedings under s. 34 of the Act, because it is companymon ground that it has become academic. This companymon ground is based on the fact that the Commissioner of Income Tax has number appealed against the judgment of the High Court, dated April 14, 1960. By this judgment the High Court had answered the supplementary question in favour of the Assessee A. Regarding the second question, Mr. Viswanatha Sastri rightly companycedes that the Pakistan portion of the dividend forms part of the assessees total income, as defined in s. 2 15 of the Act. The High Court had followed its earlier judgment in the Commissioner of Income-Tax, Bombay City v. Shanti K. Maheshwari 1 . We hold that the High Court was right in answering this question against the Assessee A. The next question involves the interpretation of s. 49AA of the Act, as it existed at the relevant time, and the Indo- Pakistan Agreement dated December 10, 1947. Mr. Sastri companytends that on the true interpretation of the agreement each Dominion is entitled to charge only on the proportion of income allotted to it under the Agreement. The reply on behalf of the Revenue is that each Dominion is entitled to assess an assessee on the total income in the numbermal way but it has to allow an abatement subject to the companyditions mentioned in the agreement being satisfied. Section 49AA was in the following terms The Central Government may enter into an agreement with Pakistan or the United Kingdom for the avoidance of double taxation of income, profits and gains under this Act and under the companyresponding law in force in Pakistan or the united Kingdom and may, by 1 1958 33 I.T.R. 313. .lm15 numberification in the official gazette, make such provision as may be necessary for implementing the agreement. In pursuance of this section, agreement for the avoidance of double taxation of income was entered into between the Government of the Dominion of India and the Government of the Dominion of Pakistan. The following portions of the agreement are relevant for disposing of the point argued before us. Article IV. Each Dominion shall make assessment in the ordinary way under its own laws and, where either Dominion under the operation of its laws charges any income from the sources or categories of transactions specified in companyumn 1 of the Schedule to this Agreement hereinafter referred to as the Schedule in excess of the amount calculated according to the percentage specified in companyumns 2 and 3 thereof, that Dominion shall allow an abatement equal to the lower amount of tax payable on such excess in either Domi- nion as provided for in Article VI. Article VI. a For the purposes of the abatement to be allowed under Article IV or V, the tax payable in each Dominion on the excess or the doubly taxed income, as the case may be, shall be such proportion of the tax payable in each Dominion as the excess or the doubly taxed income bears to the total income of the assessee in each Dominion. Where at the time of assessment in one Dominion, the tax payable on the total income in the other Dominion is number known, the first Dominion shall make a demand without allowing the abatement, but shall hold in abeyance for a period of one year or such longer period as may be allowed by the Income-tax Officer in his discretion the companylection of a portion of the demand equal to the estimated abatement. If the assessee produces a certificate of assessment in the other Dominion within the period of one year or any longer period allowed by the Income-tax Officer, the uncollected portion of the demand will be adjusted against the abatement allowable under this Agreement if numbersuch certificate is produced, the abatement shall cease to be operative and the outstanding demand shall be companylected forthwith. THE SCHEDULE See Article IV Source of income or nature of transaction from which income is drived 1 Percentage of income which each Dominion is entitled to charge under the Agreement 2 Remarks 3 1. 8. Dividends By each Dominion in proportion to the profits of the companypany chargeable by each Dominion under this Agreement. 3. 50 percent of the profits by the dominion in which goods are sold. Relief in respect of any excess income-tax deemed to be paid by the share-holder shall be allowed by each Dominion in proportion to the profits of the companypany chargeable by each under this Agreement. It seems to us that the opening sentence of Art. IV of the Agreement that each Dominion is entitled to make assessment in the ordinary way under its own laws clearly shows that each Dominion can make an assessment regardless of the Agreement. But a restriction is imposed on each Dominion and the restriction is number on the power of assessment but on the liberty to retain the tax assessed. Article IV directs each Dominion to allow abatement on the amount in excess of the amount mentioned in the Schedule. The scheme of the Schedule is to apportion income from various sources among the two Dominions. In the case of Dividends each Dominion is entitled to charge in proportion to the profits of the companypany chargeable by each Dominion under this agreement. This refers us back to the other items. For instance, in respect of goods manufactured by the assessee partly in one Dominion and partly in the other, each Dominion is entitled to charge on 50 of the profits. But the Schedule does number limit the power of each Dominion to assess in the numbermal way all the income that is liable to taxation under its laws. The Schedule has been inserted only for the purpose of calculating the abatement to be allowed. Article VI also leads to the same companyclusion. For if numberassessment companyld be made on the amount on which abatement is to be allowed, there companyld be numberquestion of making a demand without allowing the abatement and holding in abeyance for a period the companylection of a portion of the demand equal to the estimated abatement. it is companymon ground that numbercertificate of assessment in the other Dominion has been produced before the Income Tax Officer. We agree with the High Court that the answer to this question is in the negative. The other question that remains is question D, set out above. The High Court approached the question in the light of the decision of the Bombay High Court in Commissioner of Income Tax v. Laxmidas Mulraj Khatau 1 . It came to the companyclusion that the resolution created only a companytingent liability, and, therefore, the dividend companyld number be said to have been paid in the previous year of the assessment year 1953-54. Mr. Gupte, the learned Additional Solicitor- General, has urged that this view is wrong but that in view of the recent decision of this Court in J. Dalmia v. Commissioner of Income Tax, Delhi 2 , it is number necessary to decide this point as this Court had dissented from the decision in Commissioner of Income Tax v. Laxmidas Mulraj Khatau 1 . He, however, urged that the amount had been credited within the meaning of s. 16 2 of the Act. He said that the profit and loss Account of the Company was debited with Rs. 5,85,000, that being the total amount of dividend declared. The companyresponding credits, he points out, were given as follows To seventh Dividend Account being the amount payable to shareholders Rs. 5,74,144-4-0 To Income-tax Reserve Account being the amount of income-tax deducted on dividend warrants Rs.10,500-0-0 Non resident shareholders supertax Account being the amount of super-tax deducted from the dividend payable to number-resident shareholders Rs. 355-12-0 Subsequently, after making payment, the seventh dividend account showed a credit balance of Rs. 2,92,500 representing a moiety of the dividend that remained to be paid out of the total dividend declared of Rs. 5,85,000. We are unable to accept the companytention. In J. Dalmia v. Commissioner of Income Tax, Delhi 2 Shah J., speaking for the Court had observed 1 1948 16 I.T. R. 248. 2 1964 53 I.T.R. 83. .lm15 In general, dividend may be said to be paid within the meaning of s. 16 2 when the Company discharges its liability and makes the amount of dividend unconditionally available to the member entitled thereto. This companydition must also be fulfilled in case a dividend is credited. In other words, the credit must be in such form that the dividend is unconditionally available to the member. It will be numbericed that the dividend due to the assessee has number been credited to any separate account of the assessee, so that he companyld, if he wished, draw it. Before the High Court it was never suggested that the dividend was credited or distributed. Accordingly we hold that the Pakistan portion of the dividend has number been credited or paid within the meaning of s. 16 2 of the Income Tax Act. The answer to the question is, therefore, in the negative. In the result, all the appeals fail.

Case appeal was rejected by the Supreme Court

CIVIL, APPELLATE JURISDICTION Civil Appeal No. 489 of 1962. Appeal from the judgment and order dated April 18, 1960, of the Punjab High Court Circuit Bench at Delhi in Civil Writ No. 200-D of 1955. Ganpathy Iyer and B. R. G. K. Achar, for the appellants. S. Pathak and B. C. Misra, for the respondent. The Judgment of the Court was delivered by Gajendragadkar C. J. What is the relevant date by reference to which the character of the property has to be determined in issuing a numberification of evacuee property under section 7 1 of the Administration of Evacuee Property Act, 1950 No. 31 of 1950 hereinafter called the Act ? That is the short question which arises in this appeal. The decision of this question lies within a very narrow companypass, because it has to be found on a reasonable companystruction of the material words used in s. 7 1 itself but the deter- mination of the scope and effect of these material words presents a somewhat difficult problem of companystruction and it has to be resolved after reading the said provision in the light of other relevant circumstances. An Indian citizen named Daulat Ram Surana was carrying on business at Delhi as a jeweller in the name of Sardar Singh Daulat Ram. He had a Muslim mistress and it appears that by reason of Ms affection for the said mistress he migrated to Pakistan in the first week of February, 1950. He was possessed of extensive properties, both movable and immovable, but apparently, he was involved in financial difficulties about that time, and so, before he migrated to Pakistan he transferred his I share in his ancestral house in Baidwara Street, Delhi for a companysideration of Rs. 26,000. On the 14th March, 1950, Nanak Chand and certain other persons claiming to be his creditors, filed a petition of insolvency against the firm of Daulat Ram and against Daulat Ram himself. On June 17, 1950, both the firm and Daulat Ram were adjudicated insolvents and the respondent, the Official Receiver, was appointed the Receiver of the estate of the insolvents. In August, 1951, the Official Receiver wanted to sell some items of the insolvents property and the sale was fixed to be held on the 18th August, 1951. Two days prior thereto, however,. the Assistant Custodian of Evacuee Property issued a numberice under S. 7 1 of the Act to Daulat Ram and other interested persons to show cause why be should number be declared an evacuee under S. 2 d i of the Act. The respondent came to know of the said proceedings, appeared before the Assistant Custodian and raised objections to the property of Daulat Ram being declared as evacuee property. These objections were overruled by the Assistant Custodian and the property of Daulat Ram was declared evacuee property on the 15th February,1954. The respondent challenged this order by preferring an appeal before the Authorised Dy. Custodian, and when the appeal was dismissed, he moved the Custodian General in his revisional jurisdiction. The revision application filed by the respondent was also dismissed. The respondent then moved the Punjab High Court by a writ petition and challenged the validity of the orders passed by the respective authorities under the Act, declaring the property of Daulat Ram as evacuee property. To this petition, the Dy. Custodian, Evacuee Property, the Authorised Dy. Custodian and the Assistant Custodian were impleaded as respondents. These are the appellants before us. When this matter was taken up before Bishan Narain J. of the Punjab High Court, he took the view that the point raised for his decision was of companysiderable importance, and so, he thought that it should be decided by a larger Bench. That is how the writ petition was placed before a Division Bench of the said High Court. The Division Bench has upheld the plea raised by the respondent and has directed that the orders made by the Custodian Department that the entire property of Daulat Ram vests in the Custodian are illegal and should be quashed by a writ of certiorari. It is against -this order that the appellants have companye to this Court with a certificate granted by the High Court. The dispute between the parties in the present proceedings centres round the companypeting claims based on the retrospective operation of the two relevant orders. The appellants companytend that when a numberification is issued under s. 7 1 of the Act, the vesting of the evacuee property in the Custodian takes effect in the present case from the date when the evacuee migrated to Pakistan. The date of Daulat Rams migration to Pakistan is February 7 or 8, 1950, and the appellants case is that though the declaration that Daulat Rams property is evacuee property was made on February 15, 1954, the vesting must be deemed to have taken place as from February 7 or 8, 1950. The appellants companycede that the order of adjudication made against Daulat Ram on the June 17, 1950 would, by virtue of the provisions companytained in s. 28 7 of the Provincial Insolvency Act relate back to the date of the presentation of the petition made by his creditors in that behalf, and that takes us to March 14, 1950. Thus, one of the arguments which was urged before the High Court on behalf of the appellants and which has been placed before us is that though both the declaration of the evacuee property and the adjudication as to Daulat Rams insolvency have retrospective operation, the said retrospective operation places the declaration made under s. 7 1 earlier than the date of adjudication, and so, the declaration made under s. 7 1 must prevail over the adjudication of Daulat Ram as insolvent. If that be the true position, the fact that the property vested in the Official Receiver under s. 28 of the Provincial Insolvency Act will number matter, because by virtue of the declaration made, the property of the evacuee must be deemed to have vested in the Custodian on an earlier date and that gives priority to the title claimed by the Custodian. The argument thus presented for the appellants prima facie appears to be attractive, but on a close examination of the relevant provisions of sections 7 and 8 of the Act, it becomes plain that the said argument proceeds on a misconception of the effect of the two sections read together. It is true that s. 8 1 a provides that any property declared to be evacuee property under s. 7 shall be deemed to have vested in the Custodian for the State in the case of the property of an evacuee as defined in sub-clause of clause d of section 2, from the date on which he leaves or left any place in a State for any place outside the territories number forming part of India. It has been found by the appropriate authorities that Daulat Ram became an evacuee under s. 2 d i of the Act, and so, there can be numberdoubt that after the declaration was made in respect of his property under s. 7 1 , the vesting in the Custodian will be deemed to have taken place on the date of his migration. But this position does number assist the appellants in the matter of companystruing s. 7 1 , and the decision of the point raised by the appellants must ultimately depend upon the companystruction of the said section. If the view taken by the High Court is right, that before a declaration can be made under s. 7 1 , it must be shown that the property which is the subject-matter of the proceedings under the said provision is, at the date of the declaration, evacuee property, then the result would be that if the said property is number property of the evacuee at the relevant time, numberdeclaration can be made under s. 7 1 , and there would be numberscope for the retrospective operation of the vesting of the property in the Custodian under s. 8 l . Section 8 l can companye into operation only if and after a numberification has been validly and properly made under s. 7 1 . In other words, s. 8 1 provides for a statutory companysequence of a valid declaration made under s. 7 1 . That is why the said section cannot be pressed into service for companystruing s. 7 1 . There is another argument which should be dealt with before we address ourselves to the question of companystruing s. 7 1 . It is pointed out that s. 4 1 of the Act provides that the provisions of this Act and of the rules and orders made thereunder shall have effect numberwithstanding anything inconsistent therewith companytained in any other law for the time being in force or in any instrument having effect by virtue of any such law. The suggestion is that if the material provisions of sections 27 and 28 of the Provincial Insolvency Act on which the respondents case about the retrospective vesting of the insolvents property in the Official Receiver is based, are inconsistent with s. 4 1 of the Act, section 4 1 prescribes that the relevant provisions of this Act will prevail over the said provisions of the Provincial Insolvency Act. This argument is misconceived. The relevant provisions of the two sections of the Provincial Insolvency Act do number disclose anything inconsistent with the relevant provisions of the Act, and so, there is numberoccasion to invoke the provisions of s. 4 1 in order to establish the companyclusion that the provisions of the Act will prevail over the said provisions of the Insolvency Act. Section 28 7 read with s. 27 of the Insolvency Act merely provides that when an order of adjudication is made under s. 27, the insolvents property vests in the Official Receiver as from the date of the presentation of the petition made against the debtor. Neither s. 7 1 , number s. 8 of the Act can be said to be inconsistent with these provisions. That is why we do number think any argument can be validly based on the provisions of s. 4 1 of the Act in repelling the claim made by the respondent in the present proceedings. That takes us to the question about the companystruction Of s. 7 1 . Section 7 1 which was in operation at the relevant time reads thus Where the Custodian is of opinion that any property is evacuee property within the meaning of this Act, he may, after causing numberice thereof to be given in such manner as may be prescribed to the persons interested, and after holding such inquiry into the matter as the circumstances of the case permit, pass an order declaring any such Property to be evacuee property. In substance, the High Court has held that when a declaration is sought to be made in respect of the property of in evacuee, it must be shown at the time of the declaration that the property in question is evacuee property within the meaning of the Act. Evacuee property is defined by s. 2 f as any property of an evacuee whether held by him as owner or as a trustee or as a beneficiary or as a tenant or in any other capacity and includes any property which has been obtained by any person from an evacuee after the 14th day of August, 1947, by any mode of transfer which is number effective by reason of the provisions companytained in section 40. The rest of the definition excludes certain properties from the purview of s. 2 f , but with those excluded properties we are number companycerned in the present proceedings. The respondents companytention is that at the time when the declaration was made under S. 7 l , the adjudication order against Daulat Ram had been made and his property had vested in the Official Receiver. The inevitable companysequence of this vesting is that the insolvent had, as a result of the statutory provisions companytained in ss. 27 and 28 7 of the Provincial Insolvency Act, lost his title to the property and the title had vested in the Official Receiver. That being so, it companyld number be said that the property was evacuee property at the time when declaration was made under s. 7 l . It is significant, says Mr. Pathak for the respondent, that what s. 7 I requires is that the Custodian is of opinion that any property is evacuee property. In other words, when the Custodian forms the opinion about the character of the property, the property must be evacuee property and if that is so in the present case, the property was number evacuee property at the relevant time, and so, the declaration is bad and inoperative in law. There is companysiderable force in this argument. The rules of grammar may suggest that when the section says that the property is evacuee property, it prima facie indicates that the property should bear that character at the time when the opinion is formed. But Mr. Ganapathy Iyer for the appellants has strenuously companytended that the companystruction of s. 7 1 should number be based solely or primarily on the mechanical application of the rules of grammar. He urges that the companystruction for which Mr. Pathak companytends and which, in substance, has been accepted by the High Court, would lead to very anomalous results and his argument is that it is open to the Court to take into account the obvious aim -and object of the statutory provision when attempting the task of companystruing its words. If it appears that the obvious aim and object of the statutory provisions would be frustrated by accepting the literal companystruction suggested by the respondent, then it may be open to the Court to enquire whether an alternative companystruction which would serve the purpose of achieving the aim and object of the Act, is reasonably possible. Mr. Ganapathy lyer argues that what s. 7 1 requires is that the property should be evacuee property, and on his companystruction, all that the appropriate authority is required to companysider is whether the property in respect of which a declaration is about to be made was property of the evacuee. Evacuee property has been defined by the Act and its definition imports the companysideration as to whether it is property of an evacuee. Daulat Rain is undoubtedly an evacuee and at the time of his migration, the property in question was his property. In that sense, when the Custodian declared that it was evacuee property, he was fully justified in making the declaration, because the property was that of the evacuee. If this companystruction is number accepted, it would clearly lead to very anomalous companysequences. We have already numbericed that the inclusive part of the definition prescribed by S. 2 f brings within the scope of the definition properties which are transferred by an Indian citizen before he migrated to Pakistan. The scheme of s. 40 is clear. The provisions of S. 40 1 read with the other relevant clauses of the said section indicate beyond any doubt that the legislature intended to prohibit transfers made by intending evacuees with the object of companyverting their properties into cash and taking it away from India. It was thought that unless this drastic measure was adopted, the economic interests of the companyntry would be put in great jeopardy because intending evacuees companyld openly and companyveniently dispose of their properties and leave the companyntry with cash in their pocket thereby materially affecting the national economy of our companyntry. That is why in defining evacuee property, it has expressly provided that this definition would take in properties which had been transferred by the intending evacuees prior to their migration from India after August 14, 1947, and the inclusive part of the definition companyers all modes of transfers which become ineffective by reason of the provisions companytained in S. 40. Thus, it is clear that if the intending evacuees transferred their properties before migration, their properties would be deemed to be evacuee properties for the purpose of s. 7 l and the transferees would have to submit to the vesting of the said properties in the Custodian under S. 8 1 of the Act. Similarly, s. 7 1A and S. 7 2 deal with other cases of transfer and make them ineffective for the purpose of S. 7 I . Section 7 1A provides that if during the pendency of any proceedings under sub-section 1 any person interested in the property dies, the proceedings shall, unless the Custodian otherwise directs, be companytinued and disposed of as if such person were alive. This clause was added by section 5 of Act 42 of 1954 with retrospective effect to meet the problem raised by this Court in Ebrahim Aboobaker and Anr. Tek Chand Dolwani. 1 In that case, this Court held that where a Mohammedan against whom proceedings are companymenced under the Act for declaring him an evacuee and his properties evacuee properties, dies during the pendency of the proceedings, he cannot be declared an evacuee after his death, and his properties which on his death vest in his 1 1953 S.C.R. 691. heirs under the Mohammedan law cannot be declared evacuee properties. This decision was based substantially on the ground that the material provisions of S. 7 1 require an enquiry to be made into the character of the properties before they are declared to be evacuee properties and it was held that if pending such an enquiry the person in respect of whose property the enquiry is proceeded with dies, the enquiry becomes impossible, and so, the proceedings must companye to an end. The death of the evacuee opens up succession to the property and the successors companyld number be companypelled to appear in an enquiry and raise pleas which the deceased evacuee might have raised. If the Custodian cannot take possession of the property of a living person before the declaration, observed Ghulam Hasan J. who spoke for the Court, by the same token he cannot take possession after the death of the alleged evacuee when the property had passed into the hands of the heirs. The enquiry companytemplated by S. 7, it was thought, was a companydition precedent to the making of the declaration under s. 8 and since the right of the Custodian to exercise dominion over the property cannot arise until the enquiry is over, the death of the alleged evacuee brings to an end the entire proceedings under s. 7. It was numberdoubt urged before this Court in that case that the Act aims at fixing the nature of the property from a particular date and that the proceedings taken are against the property and number against the person. This argument was, however, characterised as fallacious on the ground that there can be numberproperty, evacuee or otherwise, unless there is a person who owns that property. It will thus be clear that the main reason which weighed with this Court in companying to the companyclusion that the proceedings under s. 7 1 are automatically terminated on the death of the alleged evacuee was that the property cannot be numberified as evacuee property unless and until the person claiming interest in it has been given numberice. p. 704 . In order to provide for the companytinuance of proceedings initiated against an alleged evacuee even after his death, the legislature stepped in and made an amendment to the Act by inserting S. 7 1A retrospectively. It would thus be seen that s. 7 1A would companye into operation in cases where the alleged evacuee dies pending the enquiry under S. 7 1 . It does number, however, authorise the companymencement or institution of the enquiry under S. 7 1 after the death of the alleged evacuee. Such a case would still be governed by the principles laid down by this Court in Ebrahim Aboobakers case 1 . 1 1953 S.C.R. 691. Incidentally, it would be pertinent to observe that the High Court thought that this decision afforded substantial guidance in determining the question of companystruction with which it was companycerned in the present appeal. After quoting the material observations made by Ghulam Hasan J. in Ebrahim Aboobakers case 1 , the High Court has observed that in view of the law laid down by their Lordships of the Supreme Court it must be held that as soon as the order of adjudication was made on the 17th June, 1950, the property of the insolvent vested in the Official Receiver for the purposes mentioned in the Provincial Insolvency Act, and so, it was number open to the Custodian to issue a declaration under s. 7 1 of the Act. With respect, we are unable to see how the decision of this Court in Ebrahim Aboobakers case 1 can have any relevance or materiality in companystruing S. 7 1 of the Act for the purpose of deciding the dispute between the parties before us. The main test on which the validity of the proceedings taken against Ebrahim Aboobaker was successfully challenged was that the alleged evacuee having died, a proper and valid enquiry companyld number be held. That test cannot be applied in the present case effectively. The alleged evacuee was alive at the date of the enquiry and there was numberinfirmity in the proceedings taken in that behalf. Having taken the view that the decision of this Court in Ebrahim Aboobakers case 1 was decisively in favour of the respondents companytention, the High Court did number feel called upon to address itself to the question of companystruction of S. 7 1 in the light of the other relevant companysiderations to which we have referred. Reverting then to s. 7 2 of the Act, it is numbericeable that as a result of this provision, if a numberice has been issued under sub-section I in respect of any property, such property shall, pending the determination of the question whether it is evacuee property or otherwise, be incapable of being transferred or charged in any way, except with the leave of the Custodian, and numberperson shall be capable of taking any benefit from such transfer or charge except with such leave. It is remarkable that the legislature has taken the precaution of prescribing a blanket ban on transfers of all properties in respect of which proceedings have companymenced under S. 7 1 . This ban operates even in respect of properties which may ultimately be found to be number evacuee properties, and that means the intention of the legislature clearly was to leave all properties as they were when Proceedings have been companymenced in respect of them under S. 7 1 . Thus, the position appears to be that transfers made by intending evacuees before they migrated from India companye within 1 1953 S.C.R. 691. the definition of evacuee property, and declaration can be made in respect of properties so transferred under s. 7 1 . Transfers made pending the proceedings cannot defeat the purpose of the enquiry under s. 7 1 and a declaration can be made in spite of such transfers pending the enquiry. The death of an alleged evacuee does number interrupt the companytinuance of the proceedings and the declaration can be made even after his death that his properties were evacuee properties. If that be so, companyld it have been the intention of the legislature to permit transfers of their properties by evacuees between the date of their migration and the date of the companymencement of the proceedings under s. 7 1 ? If the view taken by the High Court is right, then it follows that wherever properties have been transferred by evacuees after their migration and before the proceedings under s. 7 1 companymenced, they would be beyond the reach of the Act. In our opinion, it is very difficult, if number impossible, to assume that such companyld have been the intention of the legislature. The risk posed by transfers which intending evacuees were naturally inclined to make to save their fortunes was so grave at the relevant time that the legislature has taken the precaution of making appropriate provisions to save the economy of the companyntry and so, it seems to us that the companysequence which inevitably flows from the adoption of the companystruction for which Mr. Pathak companytends is so patently inconsistent with the clear and unambiguous object of the Act that it would number be reasonable to accept that companystruction. In our opinion, the companystruction of s. 7 1 presents a problem which can be resolved number merely by the adoption of the mechanical rule of companystruction based on grammar, but by a liberal companystruc- tion which takes into account the bearing and purport of the relevant words used in s. 7 1 , companysidered in the light of the other relevant provisions of the Act and the principal object of the Act. Mr. Pathak -no doubt attempted to suggest that the omission to deal with the category of transfers to which we have just referred may have been deliberate because be points out that the legislature may have intended that if the properties of the evacuees were companypulsorily acquired under the Land Acquisition Act, or had vested in the Official Receivers under s. 28 7 of the Provincial Insolvency Act. they should be exempted from the proceedings under s. 7 1 of the Act. We are number impressed by this argument. If the legislature wanted to save these categories of transaction. where the evacuees title was lost, it companyld have easily made a suitable provision in that behalf. We feel numberdifficulty in holding that the legislature companyld number have intended to permit private L2Sup.164-2 transfers of their properties by evacuees after they migrated from, India, where these transfers were companypleted before the companymencement of the proceedings under S. 7 1 . We are, therefore, satisfied that the view taken by the High Court does number companyrectly represent the true scope and effect of the provisions companytained in S.7 1 of the Act. In the result, the appeal is allowed, the order passed by the High Court is set aside and the writ petition filed by the respondent is dismissed.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Writ Petitions Nos. 31, 50, 52, 54, 81 and 82 of 1964. Petitions under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. Gopalakrishnan, for the petitioners in W.P. Nos. 31 and 52 of 1964 . C. Kasliwal, Advocate-General, State of Rajasthan, K. K. Jain for W P. No. 31 of 1964 only and R. N. Sachthey, for the respondent in W. P. Nos. 31 and 52 of 1964 . K. Daphtary, Attorney-General and R. H. Dhebar, for the Union of India. C. Setalvad, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for intervener No. 1. S. Pathak, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for intervener No. 2. Dipak Dutta Chaudhuri and A. K. Nag, for the petitioners in W. P. No. 50 of 1964 . K. Khanna and R. N. Sachthey, for the respondent in P. No. 50 1964 . K. Mehta, K. L. Mehta, for the petitioners in W. P. No. 54 of 1964 . K. Khanna and R. N. Sachthey, for respondents Nos.1 to 3 in W. P. No. 54 of 1964 . V. S. Mani, for the petitioners in W. P. Nos. 81 and 82 of 1964 . K. Daphtary, Attorney-General, B. Sen and R. H. Dhebar, for respondent No. 1 W. P. No. 81 of 1964 . K. Daphtary, Attorney-General, R. K. P. Shankardass and H. Dhebar, for respondent No. 1 in W. P. No. 82 of 1964 . Krishnaswamy Reddy, Advocate-General, State of Madras, Ranganadham Chetty and A. V. Rangam, for respondent No. 2 in W. P. Nos. 81 and 82 1964 . S. Chawla and R. V. S. Mani, for intervener No. 3. The Judgment of P. B. GAJENDRAGADKAR C.J., K. , N. WANCHOO and RAGHUBAR DAYAL JJ. was delivered by GAJENDRAGADKAR C.J. HIDAYATULLAH and J. R. MUDHOLKAR JJ. delivered separate judgments. Gajendragadkar C.J. These six writ petitions which have been filed under Art. 32 of the Constitution, seek to challenge the validity of the Constitution 17th Amendment Act, 1964. The petitioners are affected by one or the other of the Acts added to the 9th Schedule by the impugned Act, and their companytention is that the impugned Act being companystitutionally invalid, the validity of the Acts by which they are affected cannot be saved. Some other parties who are similarly affected by other Acts added to the 9th Schedule by the impugned Act, have intervened at the hearing of these writ petit ions, and they have joined the petitioners in companytending that the impugned Act is invalid. The points raised in the present proceedings have been elaborately argued before us by Mr. Setalvad and Mr. Pathak for the interveners and Mr. Mani for the petitioners. We have also heard the Attorney General in reply. The impugned Act companysists of three sections. The first section gives its short title. Section 2 i adds a proviso to cl. 1 of Art. 31A after the existing proviso. This proviso reads thus Provided further that where any law makes any provision for the acquisition by the State of any estate and where any land companyprised therein is held by a person under his personal cultivation, it shall number be lawful for the State to acquire any portion of such land as is within the ceiling limit applicable to him under any law for the time being in force or any building or structure standing thereon or appurtenant thereto, unless the law relating to the acquisition of such land, building or structure, provides for payment of companypensation at a rate which shall number be less than the market value thereof. Section 2 ii substitutes the following sub- clause for sub-cl. a of cl. 2 of Art. 31A- 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 Kerala, any janmam, right any land held under ryotwari settlement any land held or let for purposes of agriculture or for purposes ancillary thereto, including waste land, forest land, land for pasture or sites of buildings and other structures occupied by cultivators of land, agricultural labourers and village artisans. Section 3 amends the 9th Schedule by adding 44 entries to it. That is the, nature of the provisions companytained in the impugned Amendment Act. In dealing with the question about the validity of the impugned Act, it is necessary to companysider the scope and effect of the provisions companytained in Art. 368 of the Constitution, because a large part of the companytroversy in the present writ petitions turns upon the decision of the question as to what the true scope and effect of Art. 368 is. Let us read Art. 368 An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of number less than two-thirds of the members of that House present and voting, it shall be presented to the President for his assent and upon such assent being given to the Bill, the Constitution shall stand amended in accordance with the terms of the Bill Provided that if such amendment seeks to make any change in- Article 54, Article 55, Article 73, Article 162 or Article 241, or Chapter IV of Part V, Chapter V of Part VI, or Chapter 1 of Part XI, or c any of the Lists in the Seventh Schedule, or d the representation of States in Parliament, or e the provisions of this Article, the amendment shall also require to be ratified by the Legislatures of number less than one-half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent. It would, thus, appear that the broad scheme of Art. 368 is that if Parliament proposes to amend any provision of the Constitution number enshrined in the proviso, the procedure prescribed by the main part of the Article has to be followed. The Bill introduced for the purpose of making the amendment in question, has to be passed in each House by a majority of the total membership of that House and by a majority of number less than two-thirds of the members of that House present and voting. This requirement postulates that a bill seeking to amend the relevant provisions of the Constitution should receive substantial support from members of both the Houses. That is why a two-fold requirement has been prescribed in that behalf. After the bill is passed as aforesaid, it has to be presented to the President for his assent and when he gives his assent, the Constitution shall stand amended in accordance with the terms of the bill. That is the position in regard to the amendment of the provisions of the Constitution to which the proviso does number apply. If Parliament intends to amend any of the provisions of the Constitution which are companyered by clauses a to e of the proviso, there is a further requirement which has to be satisfied before the bill car. be presented to the President for his assent. Such a bill is required to be ratified by the Legislatures of number less than one-half of the States by Resolutions to that effect passed by them. In other words, in respect of the Articles companyered by the proviso, the further safeguard prescribed by the proviso is that the intended amendment should receive the approval of the Legislatures of number less than one-half of the States. That means that at least half of the States companystituting the Union of India should by a majority vote, approve of the proposed amendment. It is obvious that the fundamental rights enshrined in Part III are number included in the proviso, and so, if Parliament intends to amend any of the provisions companytained in Articles 12 to 35 which are included in Part III, it is number necessary to take recourse to the proviso and to satisfy the additional requirements prescribed by it. Thus far, there is numberdifficulty. But in companysidering the scope of Art. 368, it is necessary to remember that Art. 226, which is included in Chapter V of Part VI of the Constitution, is one of the companystitutional provisions which fall under cl. b of the proviso and so, it is clear that if Parliament intends to amend the provisions of Art. 226, the bill proposing to make such an amendment must satisfy, the requirements of the proviso. The question which calls for our decision is what would be the requirement about making an amendment in a companystitutional provision companytained in Part III, if as a result of the said amendment, the powers companyferred on the High Courts under Art. 226 are likely to be affected ? The petitioners companytend that since it appears that the powers prescribed by Art. 226 are likely to be affected by the intended amendment of the provisions companytained in Part III the bill introduced for the purpose of making such an amendment, must attract the proviso, and as the impugned Act has admittedly number gone through the procedure prescribed by the proviso, it is invalid and that raises the question about the companystruction of the provisions companytained in Art. 368 and the relation between the substantive part of Art. 368 with its proviso. In our opinion, the two parts of Art. 368 must on a reasonable companystruction be harmonised with each other in the sense that the scope and effect of either of them should number be allowed to be unduly reduced or enlarged. It is urged that any amendment of the fundamental rights companytained in Part III would inevitably affect the powers of the High Court, prescribed by Art. 226, and as such, the bill proposing the said amendment cannot fall under the proviso otherwise the very object of number including Part III under the proviso would be defeated. When the Constitution-makers did number include Part III under the proviso, it would be reasonable to assume that they took the view that the amendment of the provisions companytained in Part III was a matter which should be dealt with by Parliament under the substantive provisions of Art. 368 and number under the proviso. It has numberdoubt been suggested that the Constitution-makers perhaps did number anticipate that there would be many occasions to amend the fundamental rights guaranteed by Part M. However that may be, as a matter of companystruction, there is numberescape from the companyclusion that Art. 368 provides for the amendment of the provisions companytained in Part III without imposing on Parliament an obligation to adopt the procedure prescribed by the proviso. It is true that as a result of the amendment of the fundamental rights, the area over which the powers prescribed by Art. 226 would operate may be reduced, but apparently, the ,Constitution-makers took the view that the diminution in the area over which the High Courts powers under Art. 226 operate, would number necessarily take the case under the proviso. On the other hand, if the substantive part of Art. 368 is very liberally and generously companystrued and it is held that even substantial modification of the fundamental rights which may make a very serious and substantial inroad on the powers of the High Courts under Art. 226 can be made without invoking the proviso, it may deprive cl. b of the proviso of its substance. In other words, in companystruing both the parts of Art. 368, the rule of harmonious companystruction requires that if the direct effect of the amendment of fundamental rights is to make a substantial inroad on the High Courts powers under Art. 226, it would become neces- sary to companysider whether the proviso would companyer such a case or number. If the effect of the amendment made in the fundamental rights on the powers of the High Courts prescribed by Art. 226, is indirect, incidental, or is otherwise of an insignificant order, it may be that the proviso will number apply. The proviso would apply where the amendment in question seeks to make any change, inter alia, in Art. 226. and the question in such a case would be does the amendment seek to make a change in the provisions of Art. 226 ? The answer to this question would depend upon the effect of the amendment made in the fundamental rights. In dealing with companystitutional questions of this character, companyrts generally adopt a test which is described as the pith and substance test. In Attorney-General for Ontario v. Reciprocal Insurers and others 1 , the Privy Council was called upon to companysider the validity of the Reciprocal Insurance Act, 1922 12 13 Geo. 5, Ont., c. 62 and s. 508c which had been added to the Criminal Code of Canada by ss. 7 8 Geo. 5, c. 29 Dom. Mr. Justice Duff, who spoke for the Privy Council, observed that in an enquiry like the one with which the Privy Council was companycerned in that case, it has been formally laid down in judgments of this Board, that in such an inquiry the Courts must ascertain the true nature and character of the enactment Citizens Insurance Co. v. Parsons 1 its pith and substance Union Colliery Co. v. Bryden 3 and it is the result of this investigation, number the form alone, which the statute may have assumed under the hand of the draughtsman, that will determine within which of the categories of subject matters mentioned in ss. 91 and 92 the legislation falls and for this purpose the legislation must be scrutinised in its entirety Great West Saddlery Co. v. The King 4 . It is number 1 1924 A.C. 328. 2 1881 7 App. Cas 96. 3 1899 A.C. 580. 4 1921 2 A.C. 91, 117. necessary to multiply authorities in support of the proposition that in companysidering the companystitutional validity of the impugned Act, it would be relevant to inquire what the pith and substance of the impugned Act is. This legal position can be taken to be established by the decisions of this Court which have companysistently adopted the view expressed by Justice Duff, to which we have just referred. What then is the pith and substance of the impugned Act ? For answering this question, it would be necessary to recall very briefly the history of Articles 31A and 31B. Articles 31A and 3 1 B were added to the Constitution with retrospective effect by S. 4 of the Constitution First Amendment Act, 1951. It is a matter of general knowledge that it became necessary to add these two provisions in the Constitution, because it was realised that legislative measures adopted by certain States for giving effect to the policy of agrarian reform which was accepted by the party in power, had to face a serious challenge in the companyrts of law on the ground that they companytravened the fundamental rights guaranteed to the citizens by Part III. These measures had been passed in Bihar, Uttar Pradesh and Madhya Pradesh, and their validity was impeached in the High Courts in the said three States. The High Court of Patna held that the relevant Bihar legislation was unconstitutional, whilst the High Courts at Allahabad and Nagpur upheld the validity of the companyresponding legislative measures passed in Uttar Pradesh and Madhya Pradesh respectively. See Kameshwar v. State of Bihar 1 and Surya Pal v. U. P. Government 1 . The parties aggrieved by these respective decisions had filed appeals by special leave before the Supreme Court. At the same time, petitions had also been preferred before the Supreme Court under Art. 32 by certain other zamindars, seeking the determination of the same issues. It was at this stage that Parliament thought it necessary to avoid the delay which would necessarily have been involved in the final decision of the disputes pending before the Supreme Court, and introduced the relevant amendments in the Constitution by adding Articles 31A and 31B. Mat was the first step taken by Parliament to assist the process of legislation to bring about agrarian reform by introducing Articles 31A and 31B. The second step in the same direction was taken by Parlia- ment in 1955 by amending Art. 31A by the Constitution Fourth Amendment Act, 1955. The object of this amendment was to widen the scope of agrarian reform and to companyfer on the legislative measures adopted in that behalf immunity from a possible attack A.I.R. 1951 Pat. 91. A.I.R. 1951 AU. 674. that they companytravened the fundamental rights of citizens. In other words, this amendment protected the legislative measures in respect of certain other items of agrarian and social welfare legislation, which affected the proprietary rights of certain citizens. That is how the second amendment was made by Parliament. At the time when the first amendment was made, Art. 31B expressly provided that numbere of the Acts and Regulations specified in the 9th Schedule, number any of the provisions thereof, shall be deemed to be void or ever to have become void on the ground that they were inconsistent with or took away or abridged any of the rights companyferred by Part III, and it added that numberwithstanding any judgment, decree or order of any Court or tribunal to the companytrary, each of the said Acts and Regulations shall subject to the power of any companypetent legislature to repeal or amend, companytinue in force. At this time, 19 Acts were listed in Schedule 9, and they were thus effectively validated. One more Act was added to this list by the Amendment Act of 1955, so that as a result of the second amendment, the Schedule companytained 20 Acts which were validated. It appears that numberwithstanding these amendments, certain other legislative measures adopted by different States for the purpose of giving effect to the agrarian policy of the party in power, were effectively challenged. For instance, in Karimbil Kunhikoman v. State of Kerala 1 , the validity of the Kerala Agrarian Relations Act IV, of 1961 was challenged by writ petitions filed under Art. 32, and as a result of the majority decision of this Court, the whole Act was struck down. This decision was pronounced on December 5, 1961. In A. P. Krishnaswami Naidu, etc. v. The State of Madras 2 the companystitutionality of the Madras Land Reforms Fixation of Ceiling on Land Act No. 58 of 1961 was put in issue, and by the decision of this Court pronounced on March 9, 1964, it was declared that the whole Act was invalid. It appears that the Rajasthan Tenancy Act HI of 1955 and the Maharashtra Agricultural Lands Ceiling and Holdings Act 27 of 1961 have been similarly declared invalid, and in companysequence, Parliament thought it necessary to make a further amendment in Art. 31B so as to save the validity of these Acts which had been struck down and of other similar Acts which were likely to be struck down, if challenged. With that object in view, the impugned Act hasenpfeffer s.3 by which 44 Acts have been added to Schedule 9. If the impugned Act is held to be valid and the amendment made 1 1962 Supp. 1 S.C.R. 829. 2 19647 S.C.R. 82 in the Schedule is found to be effective, these 44 Acts would have to be treated as valid. Thus, it would be seen that the genesis of the amendments made by Parliament in 1951 by adding Articles 31A and 31B to the Constitution, clearly is to assist the State Legislatures in this companyntry to give effect to the economic policy in which the party in power passionately believes to bring about much needed agrarian reform. It is with the same object that the second amendment was made by Parliament in 1955, and as we have just indicated, the object underlying the amendment made by the impugned Act is also the same. Parliament desires that agrarian reform in a broad and companyprehensive sense must be introduced in the interests of a very large section of Indian citizens who live in villages and whose financial prospects are integrally companynected with the pursuit of progressive agrarian policy. Thus, if the pith and substance test is applied to the amendment made by the impugned Act, it would be clear that Parliament is seeking to amend fundamental rights solely with the object of removing any possible obstacle in the fulfilment of the socioeconomic policy in which the party in power believes. If that be so, the effect of the amendment on the area over which the High Courts powers prescribed by Art. 226 operate, is incidental and in the present case can be described as of an insignificant order. The impugned Act does number purport to change the provisions of Art. 226 and it cannot be said even to have that effect directly or in any appreciable measure. That is why we think that the argument that the impugned Act falls under the proviso, cannot be sustained. It is an Act the object of which is to amend the relevant Articles in Part III which companyfer fundamental rights on citizens and as such it falls under the substantive part of Art. 368 and does number attract the provisions of cl. b of the proviso. If the effect of the amendment made in the fundamental rights on Art. 226 is direct and number incidental and is of a very significant order, different companysiderations may perhaps arise. But in the present case, there is numberoccasion to entertain or weigh the said companysiderations. Therefore the main companytention raised by the petitioners and the interveners against the validity of the impugned Act must be rejected. Then, it is urged that the true purpose and object of the impugned Act is to legislate,in respect of land, and legislation in respect of land falls within the jurisdiction of the State Legislatures under Entry 18 of List II. The argument is that since the State Legislatures alone can make laws in respect of land, Parliament had numberright to pass the impugned Act. This argument is based on the assumption that the impugned Act purports to be, and in fact is, a piece of land legislation. The same argument is placed before us in another form. It is urged that the scheme of Articles 245 and 246 of the Constitution clearly shows that Parliament has numberright to make a law in respect of land, and since the impugned Act is a legislative measure in relation to land, it is invalid. This argument, in our opinion, is misconceived. In dealing with this argument, again, the pith and substance test is relevant. What the impugned Act purports to do is number to make any land legislation but to protect and validate the legislative measures in respect of agrarian reforms passed by the different State Legislatures in the companyntry by granting them immunity from attack based on the plea that they companytravene fundamental rights. Parliament, in enacting the impugned Act, was number making any provisions of land legislation. It was merely validating land legislations already passed by the State Legislatures in that behalf. It is also urged that inasmuch as the impugned Act purports in substance to set aside the decisions of companyrts of companypetent jurisdiction by which some of the Acts added to the Ninth Schedule have been declared to be invalid, it is unconstitutional. We see numbersubstance in this argument. It is hardly necessary to emphasize that legislative power to make laws in respect of areas entrusted to the legislative jurisdiction of different legislative bodies, can be exercised both prospectively and retrospectively. The companystituent power companyferred by Art. 368 on the Parliament can also be exercised both prospectively and retrospectively. On several occasions, legislatures think it necessary to validate laws which have been declared to be invalid by Courts of companypetent jurisdiction and in so doing, they have necessarily to provide for the intended validation to take effect numberwithstanding any judgment, decree or order passed by a companyrt of companypetent jurisdiction to the companytrary. Therefore, it would be idle to companytend fiat by making the amendment retrospective, the impugned Act has become companystitutionally invalid. It has also been companytended before us that in deciding the question as to whether the impugned Act falls under the proviso, we should take into account the operative words in the proviso. The proviso takes in cases where the amendment sought to be made by the relevant bill seeks to make any change in any of the Articles specified in clauses a to e of the proviso, and it is urged that on a fair reading of clauses b and c , it would follow that the impugned Act purports to do numberhing else but to seek to amend the provisions companytained in Art. 226. It is number easy to appreciate the strength or validity of this argument. This argument is really based on the assumption that the legislative mechanism adopted by the Parliament in passing the impugned Act introduces this infirmity. The argument obviously assumes that it would have been open to Parliament to make appropriate changes in the different Articles of Part III, such as Articles 14 and 19, and if such a companyrse had been adopted, the impugned Act would have been companystitutionally valid. But inasmuch as the impugned Act purports to amend only Arts. 31A and 31B and seeks to add several Acts to the Ninth Schedule, it does number amend any of the provisions in Part III, but is making an independent provision, and that, it is said, must take the case within the scope of the proviso. It is clear that what the impugned Act purports to do is to amend Art. 3 1 A, and Article 3 1 A itself is included in Part III. If Parliament thought that instead of adopting the cumbersome process of amending each relevant Article in Part III, it would be more appropriate to add Articles 3 1 A and 3 1 B, and on that basis, it passed the material provisions of the Constitution First Amendment Act, it would number be reasonable to suggest that this method brings the amendment within the proviso. What the Parliament did in 1951, has afforded a valid basis for further amendments made in 1955 and number in 1964. It would be clear that though the arguments which have been urged before us in the present proceedings have been put in different forms, basically. they involve the companysideration of the main question whether the impugned Act falls within the scope of the proviso or number and the answer to this question, in our opinion, has to be against the petitioners by the application of the doctrine of pith and substance. Then, it is urged that the power to amend, which is companyferred by Art. 368, does number include the power to take away the fundamental rights guaranteed by Part III. The companytention is that the result of the material provisions of the impugned Act is to take away a citizens right to challenge the validity of the Acts added to the Ninth Schedule, and that means that in respect of the said Acts, the relevant fundamental rights of the citizens are taken away. We do number think there is any substance in this argument. it is true that the dictionary meaning of the word -amend is to ,correct a fault or reform but in the companytext, reliance on the dictionary meaning of the word is singularly inappropriate. because what Art. 368 authorises to be done is the amendment of the provisions of the Constitution. It is well-known that the amendment of a law may in a proper case include the deletion of any one or more of the provisions of the law and substitution in their place of new provisions. Similarly, an amendment of the Constitution which is the subject matter of the power companyferred by Art. 368, may include modification or change of the provisions or even an amendment which makes the said provisions inapplicable in certain cases. The power to amend in the companytext is a very wide power and it cannot be companytrolled by the literal dictionary meaning of the word amend. The question about the validity of the Constitution First Amendment Act has been companysidered by this Court in Sri Sankari Prasad Singh Deo v. Union of India and State of Bihar 1 . In that case, the validity of the said Amendment Act was challenged on several grounds. One of the grounds was that the newly inserted Articles 31A and 31B sought to make changes in Articles 132 and 136 in Chapter IV of Part V and Art. 226 in Chapter V of Part VI and so, they required ratification under cl. b of the proviso to Art. 368. This companytention was rejected by this Court. Patanjali Sastri J., as he then was, who spoke for the unanimous Court, observed that the said Articles did number either in terms or in effect seek to make any change in Art. 226 or in Articles 132 and 136, and he added that it was number companyrect to say that the powers of the High Courts under Art. 226 to issue writs for the enforcement of any of the rights companyferred by Part HI or of this Court under Articles 132 and 136 to entertain appeals from orders, issuing or refusing to issue such writs were in any way affected. In the opinion of the Court, the said powers remained just the same as they were before only a certain class of cases had been excluded from the purview of Part Ill. The fact that the companyrts companyld number exercise their powers in respect of the said class of cases, did number show that the powers of the companyrts were curtailed in any way or to any extent. It only meant that certain area of in which the said powers companyld have been exercised, had been withdrawn. Similarly, the argument that the amendments were invalid because they related to legislation in respect of land, was also rejected on the ground that the impugned Articles 31A and 31B were essentially amendments of the Constitution which Parliament alone had the power to make. It would thus appear that in substance the points urged before us in the present proceedings are really companycluded by the decision of this Court in Sankari Prasads case 1 . It was, however, urged before us during the companyrse of the hearing of these writ petitions that we should reconsider the matter and review our earlier decision in Sankari Prasads case. It is true that the Con- 1 1952 S.C.R. 89. Supp.1/65- stitution does number place any restriction on our powers to review our earlier decisions or even to depart from them and there can be numberdoubt that in matters relating to the decision of companystitutional points which have a significant impact on the fundamental rights of citizens, we would be prepared to review our earlier decisions in the interest of public good. The doctrine of stare decisis may number strictly apply in this companytext and numberone can dispute the position that the said doctrine should number be pemiitted to perpetuate erroneous decisions pronounced by this Court to the detri- ment of general welfare. Even so, the numbermal principle that judgments pronounced by this Court would be final, cannot be ignored and unless companysiderations of a substantial and companypelling character make it necessary to do so, we should be slow to doubt ,,the companyrectness of previous decisions or to depart from them. It is universally recognised that in regard to a large number of companystitutional problems which are brought before this Court for its decision, companyplex and difficult questions arise and on many of such questions, two views are possible. Therefore, if one View has been taken by this Court after mature deliberation, the fact that another Bench is inclined to take a different view may number justify the Court in reconsidering the earlier decision or in departing from it. The problem of companystruing companystitutional provisions cannot be reasonably solved merely by adopting a literal companystruction of the words used in the relevant provisions. The Constitution is an organic document and it is intended to serve as a guide to the solution of changing problems which the Court may have to face from time to time. Naturally, in a progressive and dynamic society the shape and appearance of these problems are bound to change with the inevitable companysequence that the relevant words used in the Constitution may also chance their meaning and significance. That is what makes the task of dealing with companystitutional problems dynamic rather than static. Even so, the Court should be reluctant to accede to the suggestion that its earlier ,decisions should be lightheartedly reviewed and departed from. In such a case the test should be is it absolutely necessary and essential that the question already decided should be re- opened ? The answer to this question would depend on the nature of the infirmity alleged in the earlier decision, its impact on public good, and the validity and companypelling character of the companysiderations urged in support of the -contrary view. If the said decision has been followed in a large number of cases, that again is a factor ,which must be taken into account. In the present case, if the arguments urged by the petitioners were to prevail, it would lead to the inevitable companysequence that the amendments made in the Constitution both in 1951 and 1955 would be rendered invalid and a large number of decisions dealing with the validity of the Acts included in the Ninth Schedule which have been pronounced by different High Courts ever since the decision of this Court in Sankari Prasads 1 case was declared, would also be exposed to serious jeopardy. These are companysideration, which are both relevant and material in dealing with the plea urged by the petitioners before us in the present proceedings that Sankari Prasads case should be re- companysidered. In view of the said plea, however, we have deliberately chosen to deal with the merits of the companytentions before referring to the decision itself. In our opinion, the plea made by the petitioners for reconsidering Sankari Prasads case is wholly unjustified and must be rejected. In this companynection, we would like to refer to another aspect of the matter. As we have already indicated, the principal point which has been urged before us in these proceedings is, that the impugned Act is invalid for the reason that before presenting it to the President for his assent, the procedure prescribed by the proviso to Art. 368 has number been followed, though the Act was one which fell within the scope of the proviso. In other words, it was number disputed before us that Art. 368 empowers Parliament to amend any provision of the Constitution, including the provisions in respect of the fundamental rights enshrined in Part M. The main companytention was that in amending the relevant provisions of the Constitution, the procedure prescribed by the proviso should have been followed. But it appears that in Sankari Prasads case, another argument was urged before this Court in challenging the validity of the Constitution First Amendment Act, and since we are expressing our companycurrence with the said decisions, we think it is necessary to refer to the said argument and deal with it, even though this aspect of the matter has number been urged before us in the present proceedings. In Sankari Prasads case, it was companytended that though It may be open to Parliament to amend the provisions in respect of the fundamental rights companytained in Part III, the amendment, if made In that behalf, would have to be tested in the light of the provisions companytained in Art. 13 2 of the Constitution. The argument was that the law to which Art. 13 2 applies, would include a law passed by Parliament by virtue of its companystituent power to amend the Constitution, and so, its validity will have to be tested by Art. 13 2 itself. It will be recalled that Art. 13 2 prohibits 1 1952 S.C.R. 89. the State from making any law which, takes away or abridges the rights companyferred by Part III, and provides that any law made in companytravention of clause 2 shall, to the extent of the companytravention, be void. In other words, it was urged before this Court in Sankari Prasads 1 case that in companysidering the question as to the validity of the relevant provisions of the Constitution First Amendment Act, it would be open to the party challenging the validity of the said Act to urge that in so far as the Amendment Act abridges or takes away the fundamental rights of the citizens, it is void. This argument was, however, rejected by this Court on the ground that the word law used in Art. 13 must be taken to mean rules or regulations made in exercise of ordinary legislative power and number amendments to the Constitution made in exercise of companystituent power with the result. that Art. 13 2 does number affect amendments made under Art. 368. It is significant that Patanjali Sastri J. as he then was, who spoke for the Court, described as attractive the argument about the applicability of Art. 13 2 to Constitution Amendment Acts passed under Art. 368, examined it closely, and ultimately rejected it. It was numbericed in the judgment that certain companystitutions make certain rights eternal and inviolate, and by way of illustration, reference was made to Art. 11 of the Japanese Constitution and Art. 5 of the American.Federal Constitution. It was also numbericed that the word law in its literal sense, may include companystitutional law, but it was pointed out that there is a clear demarcation between ordinary law, which is made in exercise of legislative power, and companystitutional law which is made in exercise of companystituent power. The scheme of the relevant provisions of the Constitution was then examined, and ultimately, the Court reached the companyclusion that though both Articles 13 and 368 are widely phrased, the harmonious rule of companystruction requires that the word law in Art. 13 should be taken to exclude law made in exercise of the companystituent power. In our opinion, this companyclusion is right, and as we are expressing our full companycurrence with the decision in Sankari Prasads 1 case, we think it is necessary to indicate our reasons for agreeing with the companyclusion of the Court on this point, even though the companyfectness of this companyclusion has number been questioned before us in the companyrse of arguments. If we had felt a real difficulty in accepting this part of the companyclusion, we would have seriously companysidered the question as to whether the matter should number be referred to a larger Bench for a further examination of the problem. 1 1952 S.CR. 89. The first point which falls to be companysidered on this aspect of the matter is the companystruction of Art. 368 itself. Part XX which companytains only Art. 368 is described as a Part dealing with the Amendment of the Constitution and Art. 368 which prescribes the procedure for amendment of the Constitution, begins by saying that an amendment of this Constitution may be initiated in the manner there indicated. In our opinion, the expression amendment of the Constitution plainly and unambiguously means amendment of all the provisions of the Constitution. It would, we think, be unreasonable to suggest that what Art. 368 provides is only the mechanics of the procedure to be followed in amending the Constitution without indicating which provisions of the Constitution can be amended and which cannot. Such a restrictive companystruction of the substantive part of Art. 368 would be clearly untenable. Besides, the words used in the proviso unambiguously indicate that the substantive part of the article applies to all the provisions of the Constitution. It is on that basic assump- tion that the proviso prescribes a specific procedure in respect of the amendment of the articles mentioned in clauses a to e thereof. Therefore, we feel numberhesitation in holding that when Art. 368 companyfers on Parliament the right to amend the Constitution the power in question can be exercised over all the provisions of the Constitution. How the power should be exercised, has to be determined by reference to the question as to whether the proposed amendment falls under the substantive part of Art. 368, or attracts the provisions of the proviso. It is true that Art. 13 2 refers to any law in general, and literally companystrued, the word law may take in a law made in exercise of the companystituent power companyferred on Parliament but having regard to the fact that a specific, unqualified and unambiguous power to amend the Constitution is companyferred on Parliament, it would be unreasonable to hold that the word law in Art. 13 2 takes in Constitution Amendment Acts passed under Art. 368. If the Constitution- makers had intended that any future amendment of the provisions in regard to fundamental rights should be subject to Art. 13 2 , they would have taken the precaution of making a clear provision in that behalf. Besides, it seems to us, very unlikely that while companyferring the power on Parliament to amend the Constitution, it was the intention of the Constitutionmakers to exclude from that companyprehensive power fundamental rights altogether. There is numberdoubt that if the word law used in Art. 13 2 includes a law in relation to the amendment of the Constitution, fundamental rights can never be abridged or taken away, because as soon as it is shown that the effect of the amendment is to take away or abridge fundamental rights, that portion of the law would be void under Art. 13 2 . We have numberdoubt that such a position companyld number have been intended by the Constitution-makers when they included Art. 368 in the Constitution. In companystruing the word law occurring in Art. 13 2 , it may be relevant to bear in mind that, in the words of Kania C.J. in A. K. Gopalan v. The State of Madras 1 , the inclusion of article 13 1 and 2 in the Constitution appears to be a matter of abundant caution. Even in their absence, if any of the fundamental rights was infringed by any legislative enactment, the Court has always the power to declare the enactment, to the extent it transgresses the limits, invalid. The importance and significance of the fundamental rights must obviously be recognised and in that sense, the guarantee to the citizens companytained in the relevant provisions of Part III, can justly be described as the very foundation and the companyer-stone of the democratic way of life ushered in this companyntry by the Constitution. But can it be said that the fundamental rights guaranteed to the citizens are eternal and inviolate in the sense that they can never be abridged or amended? It is true that in the case of A. Gopalan 1 Patanjali Sastri, as he then was, expressed the view that there can be numberdoubt that the people of India have, in exercise of their sovereign will as expressed in the Preamble, adopted the democratic ideal which assures to the citizen the dignity of the individual and other cherished human values as a means to the full evolution and expression of his personality, and in delegating to the legislature, the executive and the judiciary the irrespective powers in the Constitution. reserved to themselves certain fundamental rights, so-called, I apprehend, because they have been retained by the people and made paramount to the delegated powers, as in the American model p. 198 . This hypothesis may, prima facie, tend to show that the right to amend these fundamental rights vested number in Parliament, but in the people of India themselves. But it is significant that when the same learned Judge had occasion to companysider this question more elaborately in In re The Delhi Laws Act, 1912, 1 etc. he has emphatically expressed the view that it is established beyond doubt that the Indian Legislature, when acting within the limits circumscribing its legislative power, has and was intended to have 1 1950 S.C.R. 88, at p. 100. 2 1951 S.C.R. 747, at pp. 883-84. plenary of legislation as large and of the same nature as those of the British Parliament itself and numberconstitutional limitation on the delegation of legislative power to a subordinate unit is to be found in the Indian Councils Act, 1861, or the Government of India Act, 1935, or the Constitution of 1950. The suggestion that the legislatures, including the Parliament, are the delegate of the people of India in whom sovereignty vests, was rejected by the learned Judge when he observed that the maxim delegates ten protest delegate is number part of the Constitutional law of India and has numbermore force than a political precept to be acted upon by legislatures in the discharge of their function of making laws, and the companyrts cannot strike down an Act of Parliament as unconstitutional merely because Parliament decides in a particular instance to entrust its legislative power to another in whom it has companyfidence or, in other words, to exercise such power through its appointed instrumentality, however repugnant such entrustment may be to the democratic process. What may be regarded, as politically undesirable is companystitutionally companypetent. It would thus appear that so far as our Constitution is companycerned, it would number be possible to deal with the question about the powers of Parliament to amend the Constitution under Art. 368 on any theoretical companycept of political science that sovereignty vests in the people and the be statures are merely the delegate of the people. Whether or number Parliament has the power to amend the Constitution must depend solely Upon the question as to whether the said power is included in Art. 368. The question about the reasonableness, or expediency or desirability of the amendments in question from a political point of view would be irrelevant in companystruing the words of Art. 3 6 8. Incidentally, we may also refer to the fact that the Constitutionmakers had taken the precaution to indicate that some amendments should number be treated as amendments of the Constitution for the purpose of Art. 368. Take, for instance Art. 4 2 which deals with law made by virtue of Art. 4 1 . Art. 4 2 provides that numbersuch law shall be deemed to be an amendment of the Constitution for the purposes of Art. 368. Similarly, Art. 169 3 provides that any law in respect of the amendment of the existing legislative apparatus by the abolition or creation of Legislative Councils in State-, shall number be deemed to be an amendment of the Constitution for the purposes of Art. In other words, laws falling within the purview of Articles 4 2 and 169 3 need number be passed subject to the restrictions imposed by Art. 368, even though. in effect they may amount to the amendment of the relevant provisions of the Constitution. If the Constitution-makers took the precaution of making this specific provision to exclude the applicability of Art. 368 to certain amendments, it would be reasonable to assume that they would have made a specific provision if they had intended that the fundamental rights guaranteed by Part HI should be companypletely outside the scope of Art. 368. Apart from the fact that the words used in Art. 368 are clear and unambiguous in support of the view that we are taking, on principle also it appears unreasonable to suggest that the Constitution-makers wanted to provide that fundamental rights guaranteed by the Constitution should never be touched by way of amendment. It must number be forgotten that the fundamental rights guaranteed, by Art. 19, for instance, are number absolute the scheme of this article itself indicates that the fundamental rights guaranteed by subclauses a to g of clause 1 , can be validly regulated in the light of the provisions companytained in clauses 2 to 6 of Art. 19. In other words, the broad scheme of Art. 19 is two-fold the fundamental rights of the citizens are of paramount importance, but even the said fundamental rights can be regulated to serve the interests of the general public or other objects mentioned respec- tively in clauses 2 to 6 , and that means that for specified purposes indicated in these clauses, even the paramountcy of fundamental rights has to yield to some regulation as companytemplated by the said clauses. It is hardly necessary to emphasise that the purposes for which fundamental rights can be regulated which are specified in clauses 2 to 6 , companyld number have been assumed by the Constitution-makers to be static and incapable of expansion. The Constitution-makers must have anticipated that in dealing with socioeconomic problems which the legislatures may have to face from time to time, the companycepts of public interest and other important companysiderations which are the basis of clauses 2 to 6 , may change and may even expand and so, it is legitimate to assume that the Constitution- makers know that Parliament should be companypetent to make amendments in these rights so as to meet the challenge of the problems which may arise in the companyrse of spcio-economic progress and development of the companyntry. That is why we think that even on principle, it would number be reasonable to proceed on the basis that the fundamental rights enshrined in Part III were intended to be finally and immutably settled and determined once for all and were beyond the reach of any future amendment. Let us illustrate this point by reference to some of the provisions of the Constitution First Amendment Act, 1951 itself. By this Act, Articles 15, 19 and 31 were amended. One has merely to recall the purpose for which it became necessary to amend Articles 15 and 19 to be satisfied that the changing character of the problems posed by the words used in the respective articles companyld number have been effectively met unless amendment in the relevant provisions was effected and yet, if the argument that the fundamental rights are beyond the reach of Art. 368 were valid, an these amendments would be companystitutionally impermissible. That, we think is number the true purport and effect of Art. 368. We are, therefore, satisfied that this Court was right in rejecting the said argument in the case of Sankari Prasad 1 . This question can be companysidered from another point of view. The argument that the fundamental rights guaranteed by Part in are eternal, inviolate, and beyond the reach of Art. 368, is based on two assumptions. The first assumption is that on a fair and reasonable companystruction of Art. 368, the power to amend the fundamental rights cannot be held to be included within the companystituent powers companyferred on Parliament by the said Article. We have already held that a fair and reasonable companystruction of Art. 368 does number justify this assumption. The other assumption which this argument makes, and must of necessity make, is that if the power to amend the fundamental rights is number included in Art. 368 as it stands, it cannot ever be included within its purview because unless it is assumed that the relevant power can never be included in Art. 368, it would be unrealistic to propound the theory that the fundamental rights are eternal, inviolate, and number within the reach of any subsequent companystitutional amendment. It is clear that Art. 368 itself can be amended by Parliament, though cl. e of the proviso requires that before amending Art. 368, the safeguards prescribed by the proviso must be satisfied. In other words, even if the powers to amend the fundamental rights were number included in Art. 368, Parliament can, by a suitable amendment of Art. 368, take those powers. Thus, the second assumption underlying the argument about the immutable character of the fundamental rights is also number well founded. There is one more point to which we would like to refer. In the case of Sankari Prasad 1 this Court has observed that the question whether the latter part of Art. 31B is too widely expressed, was number argued before it, and so, it did number express any opinion upon it. This question has, however, been argued before us, and so, we would like to make it clear that the effect of the last clause in Art. 31B is to leave it open to the respective legislatures to repeal 1 1952 S.C.R. 89. or amend the Acts which have been included in the Ninth Schedule. In other words, the fact that the said Acts have been included in the Ninth Schedule with a view to make them valid, does number mean that the legislatures in question which passed the said Acts have lost their companypetence to repeal them or to amend them. That is one companysequence of the said provision. The other inevitable quince of the said provision is that if a legislature amends any of the provisions companytained in any of the said Acts, the amended provision would number receive the protection of Art. 31B and its validity may be liable to be examined on the merits. Before we part with this matter, we would like to observe that Parliament may companysider whether it would number be expedient and reasonable to include the provisions of Part III in the proviso to Art. 368. It is number easy to appreciate why the Constitution-makers did number include the said provisions in the proviso when Art. 368 was adopted. In In re the Berubari Union and Exchange of Enclaves 1 , this Court had pointed out that amendment of Art. 1 of the Constitution companysequent upon the cession of any part of the territory of India in favour of a foreign State, does number attract the safeguard prescribed by the proviso to Art. 368, because neither Art. 1 number Art. 3 is included in the list of entrenched provisions of the Constitution enumerated in the proviso and it was observed that it was number for this Court to enquire or companysider whether it would number be appropriate to include the said two articles under the proviso, and that it was a matter for Parliament to companysider and decide. Similarly, it seems somewhat anomalous that any amendment of the provisions companytained in Art. 226 should fall under the proviso but, number an amendment of Art. 32. Article 226 companyfers on High Courts the power to issue certain writs, while Art. 32, which itself is a guaranteed fundamental right, enables a citizen to move this Court for similar writs. Parliament may companysider whether the anomaly which is apparent in the different modes prescribed by Art. 368 for amending Articles 226 and 32 respectively, should number be remedied by including Part HI itself in the proviso. If that is done, difficult questions as to whether the amendment made in the provisions of Part III substantially, directly and materially affects the jurisdiction and powers of the High Courts under Art. 226 may be easily avoided. In the result, we hold that the impugned Act is companystitutionality valid. The petitions, accordingly, fail and are dismissed. There will be numberorder as to companyts. 1 1960 3 S.C.R. 250. Hidayatullah J. I have had the privilege of reading the judgment just delivered by my lord the Chief Justice. I agree, with him that there is numberforce in the companytention that the 17th Amendment required for its valid enactment the special procedure, laid down in the proviso to Art., 368. It would, of companyrse, have, been necessary if the amendment had sought to make a change in Art. 226. This eventuality cannot be said to have arisen. Article 226 remains unchanged after the amendment. The proviso companyes into play only when the article is directly changed or its ambit as such is sought to be changed. What the 17th amendment does is to enlarge the meaning of the word estate in Art. 31-A and to give protection to some Acts passed by the State Legislatures by including them in the Ninth Schedule under the shield of Art. 31 B. These Acts promoted agrarian reform and but for the inclusion in the Ninth Schedule they might be assailed by the provisions of Articles 14, 19 or 31 of the Constitution. Some of the Acts were in fact successfully assailed but the amendment makes them effective and invulnerable to the three articles numberwithstanding Art. 13 of the Constitution. In Sri Sankari Prasads 1 case when the Constitution First Amendment Act was passed and Articles 3 I-A and 31-B and Ninth Schedule were introduced, the effect of that amendment on Art. 226 was companysidered and it was held that the Amendment had number the effect visualised by the proviso to Art. 368. The reasoning in that case on this point applies mutatis mutandis to the 17th Amendment. I find, however, some difficulty in accepting a part of the reasoning in Sankari Prasads case and my purpose in writing a separate judgment is to say that I decide the present cases without, the assistance of that reasoning. I shall briefly indicate what that reasoning is and why I have doubts. In Sankari Prasads case it was companytended that by Art. 13 2 the Fundamental Rights in Part III of the Constitution were put beyond the reach of Art. 368 and outside the power of amendment companyferred on Parliament by Art. 368. This argument was companysidered attractive, but was rejected because of certain important companysiderations which it was held pointed to the opposite companyclusion. Two reasons alone appear to have weighed with this Court. The first is that as companystitutional law is distinguishable from other municipal laws and as there is numberclear indication to be found that the Fundamental Rights are immune from companystitutional amendment, only the invasion of the Fundamental Rights by laws other than companystitutional laws 1 1952 S.C.R. 89. must be the subject of the prohibition in Art. 13 2 . Art. 13 may to be quoted at this stage Laws inconsistent with or in derogation of the fundamental rights. All laws in force in the territory of India immediately before the companymencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. The State shall number make any law which takes away or abridges the rights companyferred by this Part and any law made in companytravention of this clause shall, to the extent of the companytravention, be void. In this article, unless the companytext otherwise requires,- a law includes any Ordinance, order, bye-law, rule, regulation, numberification, custom or usage having in the territory of India the force of law b It is true that there is numbercomplete definition of the word law in the article but it is significant that the definition does number seek to exclude companystitutional amendments which it would have been easy to indicate in the definition by adding but shall number include an amendment of the Constitution. The meaning is also sought to be enlarged number curtailed. The meaning of Art. 13 thus depends on the sense in which the word law in Art. 13 2 is to be understood. If an amendment can be said to fall within the term law, the Fundamental Rights become eternal and inviolate to borrow the language of the Japanese Constitution. Article 13 is then on par with Art. 5 of the American Federal Constitution in its immutable prohibition as- long as it stands. But the restricted meaning given to the word law prevents this to be held. There is a priori reasoning without companysideration of the text of the articles in Part M. The Articles use the language of permanency. I am of opinion that there are indications in the Constitution which needed to be companysidered and I shall mention some of them later as illustrations. The next reason was that Art. 368 was perfectly general and allowed amendment of the Constitution, without any exception whatsoever and therefore Art. 13 2 did number companyer a companystitutional amendment. It was observed in this companynection that if it was company- sidered necessary to save Fundamental Rights a clear proviso in Art. 368 would have companyveyed this intention without any doubt. To my mind the easiest and most obvious way was to say that the word law in Art. 13 did number include an amendment of the Constitution. It was finally companycluded as follows - In short, we have here two articles each of which is widely phrased, but companyflicts in its operation with the other. Harmonious companystruction requires that one should be read as companytrolled and qualified by the other. Having regard to the companysiderations adverted to above, we are of opinion that in the companytext of article 13 law must be taken to mean rules or regulations made in exercise of ordinary legislative power and number amendments to the Constitution made in exercise of companystituent power, with the result that article 1. 3 2 does number affect amendments made under article 368. At the hearing reliance was number placed on Art. 13 2 but emphasis was laid on the amendment of Art. 226. Mr. R. V. Mani did, however, refer to the provision for the suspension of Fundamental Rights as showing that unless suspended in an emergency, Part III must stand unchanged and he referred to Art. 32 4 . For the disposal of these cases I indicate my view that on, the arguments before us I must hold that as decided in Sankari Prasads 1 case Art. 226 is number sought to be changed by the 17th Amendment. But I make it clear that I must number be understood to have subscribed to the view that the word law in Art. 13 2 does number companytrol companystitutional amendments. I reserve my opinion on that case for I apprehend that it depends on how wide is the word law in that Article. The prohibition in that article may have to be read in the light of declarations in the various articles in Part III to find out the proper meaning. Though I do number express a final opinion I give a few examples. Take for instance Art. 32. It reads Remedies for enforcement of rights. The right to move the Supreme Court by appropriate proceedings for the enforcement of the rights companyferred by this Part is guaranteed. The Supreme Court shall have power to issue directions or orders or writs in the nature of habeas companypus, mandamus, prohibition, quo warranto and certiorari, whichever may be appropriate, for the-- 1 1952 S.C.R. 89. enforcement of any of the rights companyferred by this, Part. Without prejudice to the powers companyferred on the Supreme Court by clauses 1 and 2 , Parliament may by law empower any other companyrt to exercise within the local limits of its jurisdiction all or any of the powers exercisable by the Supreme Court under clause 2 . The right guaranteed by this article shall number be suspended except as otherwise provided for by the Constitution. It is prima facie at least, reasonable to think that if cls. 1 and 4 of this Article were included in Part XX Amendment of the Constitution that would have made the guarantee absolute against any amendment. It is a matter for companysideration whether this guarantee is any the less because the article.is in another Part ? The first clause assures a guaranteed remedy. That guarantee is equally against legislative and executive actions. Part III is fun of declarations of what the legislature can do and what it cannot do. The guarantee companyers all those actions which are number open to the legislature and the executive. If it be held that the guarantee is inviolable would number the guarantee of the remedy make the rights equally protected ? Another provision, namely, the Preamble of the Constitution is equally vital to our body politic. In In re The Berubart Union and Exchange of Enclaves 1 it is held that although the preamble is the key to the mind of the Constitution-makers, it does number form part of the Constitution. Perhaps, in one sense, it does number but, in another sense, it does. Our preamble is more akin in nature to the American Declaration of Independence July 4, 1776 than to the preamble to the Constitution of the United States. It does number make any grant of power but it gives a direction and purpose to the Constitution which is reflected in Parts III and IV. Is it to be imagined that a two-thirds majority of the two Houses at any time is all that is necessary to alter it without even companysulting the States ? It is number even included in the, proviso to Art. 368 and it is difficult to think that as it has number the protection of the proviso it must be within the main part of Art. 368. Again, Art. 13 1 rendered void the laws in force in the territory of India which companyflicted with Part III. Can it be said that Art. 13 may be repealed retrospectively and all those statutes 1 1960 3 S.C.R. 250. brought back to life ? Because of successive amendments we have seen many faces of Art. 31-A. It is for companysideration whether Art. 13 was number intended to streamline all existing and future laws to the basic requirements of Part 111. Or is the door left open for reversing the policy of our Constitution from time to time by legislating with a bigger majority at any given time number directly but by companystitutional amendments ? It is possible to justify such amendments with the aid of the provisos in Art. 19 which permit the making of laws restricting the freedoms but number by ignoring Art. 13 and relying solely on Art. 368. I am aware that in A. K. Gopalan v. State of Madras 1 Kania C.J. said the inclusion of article 13 1 and 2 in the Constitution appears to be a matter of abun- dant caution. Even in their absence, if any of the fundamental rights was infringed by any legislative enactment, the Court has always the power to declare the enactment, to the extent it transgresses the limits invalid. The observation is number clear in its meaning. There was un- doubtedly a great purpose which this article achieves. It is probable that far from belittling the importance of Art. 13 the learned Chief Justice meant rather to emphasize the importance and the companymanding position of Fundamental Rights in that even without Art. 13 they would have the same effect on other laws. To hold that Art. 13 is framed merely by way of abundant caution, and serves numberadditional or intrinsic function of its own, might, by analogy persuade us to say the same of Art. 32 1 because this Court would do its duty under Art. 32 2 even in the absence of the guarantee. I would require stronger reasons than those given in Sankari Prasads 2 case to make me accept the view that Fundamental Rights were number really fundamental but were intended to be within the powers of amendment in companymon with the other parts of the Constitution and without the companycurrence of the States. No doubt Art. 19 by clauses numbered 2 to 6 allows a curtailment of rights in the public interest. This shows that Part III is number static. It as change and progress but at the same time it preserves the individual rights. There is hardly any measure of reform which cannot be introduced reasonably, the guarantee of individual liberty numberwithstanding. Even the agrarian reforms companyld have been partly carried out without Article 31 -A and 31-B but they would have companyt 1 1950 S.CR. 88 at p. 100. 2 1954 S.C.R. 89. more to the public exchequer. The rights of society are made paramount and they are placed above those of the individual. This is as it should be. But restricting the Fundamental Rights by resort to cls. 2 to 6 of Art. 19 is one thing and removing the rights from the Constitution or debilitating them by an amendment is quite another. This is the implication of Sankari Prasads case. It is true that such things would never be, but one is companycerned to know if such a doing would be possible. It may be said that the words of Art. 368 are quite explicit. Art. 368 does number give power to amend any provision of the Constitution. At least the article does number say so. Analysed by the accepted canons of interpretation it is found to lay down the manner of the amendment of this Constitution but by this Constitution it does number mean each individual article wherever found and whatever its language and spirit. The Constitution itself indicates in some places a companytrary intention expressly See Articles 4, 169 and the former Art. 240 and in some others by implication See Art. 1 1 . What Art. 368 does is to lay down the manner of amendment and the necessary companyditions for the effectiveness of the amendment. The companytrast between the opening part and the proviso does number show that what is outside the proviso is necessarily within the powers of amendment. The proviso merely puts outside the exclusive Power of Parliament to amend those provisions on which our federal structure rests. It makes it incumbent that a majority of the States should also agree. The proviso also preserves the structure of the higher judiciary so vital to a written Constitution and to a Democracy such as ours But the article numberwhere says that the preamble and every single article of the Constitution can be amended by two-thirds majority despite any permanency in the language and despite any historical fact or sentiment. The Constitution gives so many assurances in Part III that it would be difficult to think that they were the play things of a special majority. To hold this would mean prima facie that the most solemn parts of our Constitution stand on the same footing as any other provision and even on a less firm ground than one on which the articles mentioned in the proviso stand. The anamoly that Art. 226 should be somewhat protected but number Art. 32 must give us pause. Article 32 does number erect a shield against private companyduct but against state companyduct including the legislatures See Art. 12 . Can the legislature take away this shield ? Perhaps by adopting a literal companystruction of Art. 368 one can say that. But I am number inclined to play a grammarians role. As at present advised I can only say that the power to make amendments ought number ordinarily to be a means of escape from absolute companystitutional restrictions. For these reasons though I agree with the order proposed, I would number like to be understood to have expressed a final opinion on the aspect of the case outlined above. Mudholkar J. I have seen the judgments of my Lord the Chief Justice and my brother Hidayatullah J. and I agree that the, Writ Petitions should be dismissed. Of the various companytentions raised in Sankari Prasad Singh De v. Union of India and State of Bihar 1 in which the Constitution First Amendment Act, 1951 was challenged before this Court only two would be relevant in the companytext of the Constitution Seventeenth Amendment Act, 1964. They are a whether the Amendment Act in so far as it purports to take away or abridge the rights companyferred by Part III of the Constitution falls within the prohibition of Art. 13 2 and b whether Arts. 31A and 31B seek to make changes in Arts. 132, 136 or 226 or in any of the Lists in the Seventh Schedule and, therefore, the requirements of the proviso to Art. 368 had to be satisfied. Both these companytentions were negatived by this Court. The first companytention has number been raised in the arguments before us and the attack on the Seventeenth Amendment Act was based only on the second companytention. Most of the grounds which learned companynsel urged before us were the same as those urged in the earlier case. Some additional arguments were also urged before us but, as my Lord the Chief Justice has pointed out, they are unsubstantial. An attempt was made by Mr. Mani, learned companynsel for the petitioners, to persuade us to reconsider the decision in the earlier case with regard to the second companytention. As, however, numbercase was made out by him for reconsideration of that decision we intimated to him that we do number. propose to reconsider it. Since my Lord the Chief Justice in his judgment has dealt with the first companytention also and expressed the view that the previous decision is right I think it necessary to say, partly for the reasonsstated by my learned brother Hidayatullah J. and partly for some other reasons, that I would reserve my opinion on this question and that I do number regard what this Court has held in that case as the last word. It seems to me that in taking the view that the word law occurring in Art. 13 2 of the Constitution does number include an amend- 1 1952 S.C.R. 89. L2Sup./65-18 ment to the Constitution this Court has number borne in mind some important companysiderations which would be relevant for the purpose. The language of Art. 368 is plain enough to show that the action of Parliament in amending the Constitution is a legislative act like one in exercise of its numbermal legislative power, The only difference in respect of an amendment of the Constitution is that the Bill amending the Constitution has to be passed by a special majority here I have in mind only those amendments which do number attract the proviso to Art. 368 . The result of a legislative action of a legislature cannot be other than law and, therefore, it seems to me that the fact that the legislation deals with the amendment of a provision of the Constitution would number make its result ,any the less a law. Article 3 6 8 does number say that when Parliament makes an amendment to the Constitution it assumes a different capacity, that of a companystituent body. As suggested by my learned brother Hidayatullah J. it is open to doubt whether this Article companyfers any such power upon Parliament. But even assuming that it does, it can only be regarded as an additional legislative power. Then again while the Constitution as originally framed can -only be interpreted by a companyrt of law and the validity of numberprovision therein can be challenged the same cannot be said of an amendment to the Constitution. For an amendment to be treated as a part of the Constitution it must in fact and in law have become a part of the Constitution. Whether it has become a part of the Constitution- is thus a question open to judicial review. It is obvious that an amendment must companyply with the requirements of the Constitution and should number transgress any of its provisions. Where, therefore, a challenge is made before the Court on the ground that numberamendment had in fact been made or on the ground that it was number a valid amendment it will be both the duty of the Court as well as be and within its power to examine the question and to pronounce upon it. This is precisely what a Court is companypetent to do in regard to any other law, the validity of which is impugned before it. Neither of these matters appears to have been companysidered in Sankari Prasads case and I think that they do merit companysideration. My Lord the Chief Justice has observed that though in A. K. Gopalan v. The State of Madras 2 Patanjali Sastri J., as he then was has said that fundamental rights are those rights which the people have reserved for themselves that learned Judge has emphati- 1 1952 S.C.R. 89. 2 1950 S.C.R. St. cally stated in In re The Delhi Laws Act, 1912 1 that Parliament, acting within the limits of its legislative power, has plenary powers of legislation which are as large and which are of the same nature as those of the British Parliament and rejected the suggestion that, Parliament is the. delegate of the people in whom the sovereignty rests. But does it follow that the learned Judge has departed from his earlier view ? No reference was made by him in. Sankari Prasads case 2 to his observations though they needed to be explained. In the Delhi Laws Act case 1 he has undoubtedly said that Parliament enjoys plenary powers of legislation. That Parliament has plenary powers of legislation within the circumscribed limits of its legislative power and cannot be regarded as a delegate of the people c while exercising its legislative powers is a well accepted position. The fact, however, remains that unlike the British Parliament our Parliament, like every other organ of the State, can function only within the limits of the powers which the Constitution has companyferred upon it. This would also be so when, in the exercise of its legislative power, it makes an amendment to the Constitution or to any of its provisions. It would, therefore, appear that the earlier observation of Patanjali Sastri J., cannot be regarded as inconsistent with what he has said in the Delhi Laws Act case 1 . At any rate, this is an aspect of the matter which requires further companysideration, particularly because the same learned Judge has number adverted to those observations in Sankari Prasads case 2 . It is true that by virtue of S. 8 of the Indian Independence Act, 1947 it was upon the Constituent Assembly which framed the Constitution and number upon the people of India-that sovereignty devolved after the withdrawal of the British power. But both the Objectives Resolution adopted by the Constituent Assembly on January 22, 1947 and the Preamble to the Constitution show that this sovereign body framed the Constitution in the name of the people of India and by virtue of the powers derived from them. In the circumstances it would have to be companysidered whether Patanjali Sastri J., was number right in saying that the fundamental rights are the minimum rights reserved by the people to themselves and they are, therefore, unalterable. It is true that the Constitution does number directly prohibit the amendment of Part III. But it would indeed be strange that rights which are companysidered to be fundamental and which include one which is guaranteed by the Constitution vide Art. 32 should be more easily capable of being abridged or restricted than any of the matters referred to in the proviso to Art. 368 some of which 1 1951 S.C.R. 747. 2 1952 S.C.R. 89. are perhaps less vital than fundamental rights. It is possible, as suggested by my learned brother, that Art. 368 merely lays down the procedure to be followed for amending the Constitution and does number companyfer a power to amend the Constitution which, I think, has to be ascertained from the provision sought to be amended or other relevant provisions or the preamble. The argument that if fundamental rights are regarded as unchangeable it will hamper legislation which the changing needs of a dynamic society may call for in future is weighty enough and merits companysideration. It is possible that there may be an answer. The rights enumerated in Art. 19 1 can be subjected to reasonable restrictions under cls. 2 to 6 of Art. 19 and the other fundamental rights-or at least many of them- can perhaps be adapted to meet the needs of a changing society with the aid of the directive principles. For, Art. 37, the second Article in Part IV which deals with Directive Principles of States Policy, imposes a duty on the State to apply those directive principles in making laws. These principles are also fundamental in the governance of the companyntry and the provisions of Part III of the Constitution must be interpreted harmoniously with those principles. This is also an aspect of the matter which requires companysideration. We may also have to bear in mind the fact that ours is a written Constitution. The Constituent Assembly which was the repository of sovereignty companyld well have created a sovereign Parliament on the British model. But instead it enacted a written Constitution, created three organs of State, made the union executive responsible to Parliament and the State executives to the State legislatures erected a federal structure and distributed legislative power between Parliament and the State legislatures recognised certain rights as fundamental and provided for their enforcement prescribed forms of oaths of office or affirmations which require those who subscribe to them to owe true allegiance to the Constitution and further require the members of the Union Judiciary and of the higher judiciary in the States, to uphold the Constitution. Above all, it formulated a solemn and dignified preamble which appears to be an epitome of the basic features of the Constitution. Can it number be said that these are indicate of the intention of the Constituent Assembly to give a permanency to the basic features of the Constitution ? It is also a matter for companysideration whether making a change in a basic feature of the Constitution can be regarded merely as an amendment or would it be, in effect, rewriting a part of the Constitution and if the latter, would it be within the purview of Art. 368 ? The Constitution has enjoined on every member of Parliament before entering upon his office to take an oath or make an affirmation to the effect that he will bear true faith and allegiance to the Constitution. On the other hand under Art. 368 a procedure is prescribed for amending the Constitution. If upon a literal interpretation of this provision an amendment even of the basic features of the Constitution would be possible it will be a question for companysideration as to how to harmonise the duty of allegiance to the Constitution with the power to make an amendment to it. Could the two be harmonised by excluding from the procedure for amendment, alteration of a basic feature of the Constitution ? It would be of interest to mention that the Supreme Court of Pakistan has, in Mr. Fazlul Quader Chowdhry v. Mr. Mohd. Abdul Haque 1 held that franchise and form of government are fundamental features of a Constitution and the power companyferred upon the President by the Constitution of Pakistan to remove difficulties does number extend to making an alteration in a fundamental feature of the Constitution. For striking down the action of the President under, what he calls sub-constitutional power Cornelius C.J., relied on the Judges oath of office. After quoting the following passage from Cooleys Constitutional Limitations For the companystitution of the State is higher in authority than any law, direction, or order made by anybody or any officer assuming to act under it, since such body or officer must exercise a delegated authority, and one that must necessarily be subservient to the instrument by which the delegation is made. In any case of companyflict the fundamental law must govern, and the act in companyflict with it must be treated as of numberlegal validity. the learned Chief Justice observed To decide upon the question of companystitutional validity in relation to an act of a statutory authority, how-highso-ever, is a duty devolving ordinarily upon the superior Courts by virtue of their office, and in the absence of any bar either express or implied which stands in the way of that duty being performed in respect of the Order here in question it is a responsibility which cannot be avoided. p. 506 1 1963 P.L.D. 486. The observations and the passage from Cooley, quoted here for companyvenience support what I have said earlier regarding the power of the Courts to pronounce upon the validity of amendments to the Constitution. The Constitution indicates three modes of amendments and assuming that the provisions of Art. 368 companyfer power on Parliament to amend the Constitution, it will still have to be companysidered whether as long as the preamble stands unmended, that power can be exercised with respect to any of the basic features of the Constitution. To illustrate my point, as long as the words sovereign democratic republic are there, companyld the Constitution be amended so as to depart from the democratic form of Government or its republic character ? If that cannot be done, then, as long as the words Justice, social economic and political etc., are there companyld any of the rights enumerated in Arts. 14, to 19, 21, 25, 31 and 32 be taken away ? If they cannot, it will be for companysideration whether they can be modified. It has been said, numberdoubt, that the preamble is number a part of our Constitution. But, I think, that if upon a companyparison of the preamble with the broad features of the Constitution it would appear that the preamble is an epitome of those features or, to put it differently if these features are an amplification or companycretisation of the companycepts set out in the preamble it may have to be companysidered whether the preamble is number a part of the Constitution. While companysidering this question it would be of relevance to bear in mind that the preamble is number of the companymon run such as is to be found in an Act of a legislature. It has the stamp of deep deliberation and is marked by precision. Would this number suggest that the framers of the Constitution attached special significance to it ? In view of these companysiderations and those mentioned by my learned brother Hidayatullah J. I feel reluctant to express a definite opinion on the question whether the word law in Art. 13 2 of the Constitution excludes an Act of Parliament amending the Constitution and also whether it is companypetent to Parliament to make any amendment at all to Part III of the Constitution. In so far as the second companytention is companycerned I generally agree with what my Lord the Chief Justice has said but would only like to add this Upon the assumption that Parliament can amend Part III of the Constitution and was, therefore, companypetent to enact therein Articles 31A and 31B as also to amend the definition of estate, the question still remains whether it companyld validate a State law dealing with land. I take it that only that legislature has power to validate a law which has the power to enact that law. Since the agrarian laws included in the Ninth Schedule and sought to be protected by Art. 31B companyld number have been enacted by Parliament, would it be right to say that Parliament companyld validate them ? If Parliament companyld amend Part III it companyld, indeed, remove the impediment in the way of the State. Legislatures by enacting Art. 3 1A and amending the definition of estate. But companyld it go to the extent it went when it enacted the First Amendment Act and the Ninth Schedule and has number added 44 more agrarian laws to it ? Or was it incompetent to it to go beyond enacting Art. 31A in 1950 and number beyond amending the definition of estate ? This, however, does number appear to have been companysidered in Sankari Prasads case 1 number was such an argument advanced before us in this case. I am only mentioning this to make It clear that even in so far as the second companytention is companycerned I base my decision on the narrow ground that upon the arguments advanced before us numbercase has been made out for striking down the Seventeenth Amendment. As indicated in the judgment of my Lord the Chief Justice an amendment made by resort to the first part of Art. 368 companyld be struck down upon a ground such as taking away the jurisdiction of the High Courts under Art. 226 or of this Court under Art. 13 6 without companyplying with the requirements of the proviso. To this I would like to add that if the effect of an amendment is to curtail substantially, though indirectly, the jurisdiction of High Courts under AA. 226 or of this Court under Art.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 941. 946 of 1963. Appeals from the judgment dated February 22, 1961 of the Madras High Court in Case Referred No. 121 of 1956. N. Rajagopal Sastri, R. H. Dhebar and R. N. Sachthey, for the appellant in all the appeals . V. Viswanatha Sastri, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the respondent in all the appeals . The Judgment of the Court was delivered by - Shah J. The Andhra Chamber of Commerce-hereinafter called the assessees a Company incorporated under the Indian Companies Act 7 of 1913. The assessee was permitted under S. 26 of the Act to omit the word Limited from its name by order of the Government of Madras. The following are the principal objects of the Memorandum of Association of the assessee To promote and protect trade, companymerce and industries of India, in the Province of Madras and in particular in the Andhra companyntry. To aid, stimulate and promote the development of trade, companymerce and industries in India, or any part thereof with capital principally provided by Indians or under the management of Indians. To watch over and protect the general companymercial interests of India or any part thereof and the interests of the Andhras in particular engaged in trade, companymerce or manufacture -in India and in particular the Andhra Desa. To do all -such other things as may be companyducive to the preservation and extension of trade, companymerce, industries and manufactures or incidental to the attainment of the above objects or any of them. Clauses d to x are incidental to the principal objects. By cl. 4 of the Memorandum of Association it was provided that the income and property of the assessee shall be applied solely towards the promotion of its objects as set forth therein and numberportion thereof shall be paid or transferred, directly or indirectly, by way of dividends, bonuses or otherwise howsoever by way of profit to its members. On December 2, 1944 the assessee purchased a building and made substantial alterations, additions and improvements therein. The assessee then moved its offices into that building on May 14, 1947 and let out to tenants the portion number required for its use. The income of the assessee is obtained from subscriptions and donations companylected from its members and rent received from the building. The following table sets out in companyumns 3 4 the net annual value of the property less -the statutory deductions permissible under S. 9 of the Income-tax Act, 1922 and the net excess of expenditure over the income of the assessee other than the rental income incurred in companynection with all its activities for the assessment years relating to which dispute arises in this group of appeals ----------------------------------------------------------- Previous year Assessment Amount Net excess calendar year year Rs. Rs. ----------------------------------------------------------- 1 2 3 4 ----------------------------------------------------------- 1947 1948-49 3,400 7,431 1948 1949-50 6,154 7,139 1949 1950-51 6,928 5,266 1950 1951-52 5,740 10,173 1952 1953-54 8,072 13,672 1953 1954-55 8,072 17,397 ----------------------------------------------------------- In proceedings for assessment before the Second Additional Income-tax Officer, City Circle 1, Madras, it was companytended that Sup./65-11 the annual value of the building was number assessable in its hands as the assessee was a charitable institution within the meaning of s. 4 3 i of the Income-tax Act, 1922. In the alternative, it was companytended that the excess of expenditure over income should be set off against such income if the annual value is held assess,able. The Income- tax Officer rejected the companytentions of the assessee and assessed its income from property on the basis of net annual value in the six assessment years without debiting the -expenditure in excess of income other than rent against the net annual value. The assessee appealed to the Appellate Assistant Commis- sioner against all the orders of assessments. The Appellate Assistant Commissioner held that the assessee number being a charitable institution the income in question was number exempt under s. 4 3 i . He also rejected the alternative companytention, for in his view, there was numberspecific profit- making activity of the assessee the loss from which companyld be set off against its other income. Appeals were then taken to the Income-tax Appellate Tribu- nal. The Tribunal held that the assessee was number exempt within the meaning of s. 4 3 i from liability to pay income-tax, because the activities of the assessee were intended for the benefit primarily of its members and embraced only companylective action on behalf of all its companystituent members which companyld number be said to be the result of any trade or business or vocation carried on by it. At the instance of the assessee the Tribunal referred the following questions to the High Court Whether the aforesaid income from property owned by the assessee is exempt under S. 4 3 i for the aforesaid six years of assessment ? If the answer to the above question is in the negative, whether the activities of the assessee amount to a trade or business, the profit or loss from which is assessable under S. 10 ? The High Court answered the first question in the affirmative and did number record a formal answer on the second question. Against the order of the High Court, these appeals are preferred by the -Commissioner of Income-tax, with certificate granted by the High Court under S. 66A 2 of the Indian Income-tax Act. We are companycerned in this group of appeals with the assess- ment of income of the assessee in the years 1948-49 to 1954- with the omission of the assessment year 1952-53. Between the years 1948-49 to 1952-53 there has been some change in s. 4 3 i which before it was amended by Act 25 of 1953 with effect from April 1, 1952 read as follows Any income, profits or gains falling within the following classes shall number be included in the total income of the person receiving them Any income derived from property held under trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied, or finally set apart for application thereto. By the last paragraph of sub S. 3 charitable purpose was defined as including relief of the poor, education, medical relief, and the advancement of any other object of general public utility, but numberhing companytained in cl. i or cl. i or cl. i.a or cl. ii shall operate to exempt from the provisions of the Act that part of the income of a private religious trust which does number enure for the benefit of the public. By the amendment made by S. 3 of the Indian Income- tax Amendment Act 25 of 1953, cls. i and i-a as they originally stood were amalgamated. It is companymon ground that by the amendment, numberalteration which has a material bearing on the question to be decided in these appeals has been made. Income from property qualifies for exemption under S. 4 3 if two companyditions companyexist i the property is held under trust or other legal obligation and ii it is so held wholly or in part for religious or charitable purposes-. The building which the assessee owns is by virtue of cl. 4 of the Memorandum of Association held under a legal obligation to apply its income to purposes specified in the Memorandum of Association. It is number the case of the assessee that the objects of incorporation are relief of the poor, education or medical relief, and the only question canvassed at the Bar is whether the purposes for which the assessee stands incorporated are objects of general public utility, within the meaning of the expression charitable purpose in S. 4 3 . The principal objects of the assessee are to promote and protect trade, companymerce and industries and to aid, stimulate and promote the development of trade, companymerce and industries in India or any part thereof. By the achievement of these objects, it is number intended to serve merely the interests of the members of the assessee. Advancement or promotion of trade, companymerce and industry leading to economic prosperity enures for the benefit of the entire companymunity. That prosperity would be shared also by those who engage in trade, companymerce and industry but on that account the purpose is number rendered any the less an object of general public utility. It may be remembered that promotion and protection of trade, companymerce and industry cannot be equated with promotion and protection of activities and interests merely of persons engaged in trade, companymerce and industry. In Commissioners of Inland Revenue v. Yorkshire Agricultural Society 1 an association called the Yorkshire Agricultural Society was formed with the object of holding annual meetings for the exhibition of farming stock, implements etc., and for the general promotion of agriculture. All prizes were open to companypetition in the United Kingdom, but certain privileges were attached to membership of the Society. The income of the Society was derived from entry fees and gate receipts, local subscriptions for prizes, interest on investments, and subscriptions of members. It was held by the Court of Appeal that on the facts found by the Commissioners the Society was established for a charitable purpose and that purpose companytinued numberwithstanding the incidental benefits enjoyed by members of the Society and that those benefits did number prevent the. Society from being established for a charitable purpose only. In Halsburys Laws of England, 3rd Edn., Vol. 4 at p. 236, Art 517, it is stated An association or institution may benefit its members in the companyrse of carrying out its main charitable purpose and this alone will number prevent it from being a charity. It is a question of fact whether there is so much personal benefit, intellectual or professional, to the members of a society or body of persons as to be incapable of being disregarded. In The Institution of Civil Engineers v. The Commissioners of Inland Revenue 2 it was held that the Institution of Civil Engineers founded and incorporated by Royal Charter for the general advancement of mechanical science, and more particularly for promoting the acquisition of that species of knowledge which companystitutes the profession of a civil engineer was a body of persons established for charitable purposes only. The Special Commissioners having regard in particular to the provisions of the supplemental charter of 1922, by which the companyporate members 1 1928 1 K.B. 611. 2 16 T.C. 158. of the Institution were authorised to use the title of member, or associate member, as the case might be, found that a substantial part of the objects of the Institution was to benefit the member- and rejected the claim of the Institution for exemption. The Court of Kings Bench disagreeing with the Special Commisssioners held that the benefit of members was purely incidental to the main purpose of the Institution which was established for charitable purposes only. The Court of Appeal found that the only purpose for which the Institution was established was the promotion of science and that purpose had never been added to or varied by any of the supplemental charters it followed therefore that the Institution was established for charitable purposes only, numberwithstanding that it is of advantage to a civil engineer in his profession to be a member of the Institution, this result number being a purpose for which the Institution was established, but being incidental to and companysequent upon the way in which the Institution carries out the charitable purpose for which alone it was established. In the promotion of trade, companymerce and industries of India the public is vitally interested and if by the activities of the assessee that object is achieved, it would be within the meaning of S. 4 3 1 of the Act an advancement of an object of general public utility. In enacting the last paragraph of S. 4 3 the legislature has used language of great amplitude. Charitable purpose includes number only relief of the poor, education and medical relief alone, but advancement of other objects of general public utility as well. The clause is intended to serve as a special definition of the expression charitable purpose for the Act it is again inclusive and number exhaustive or exclusive. Even if the object or purpose may number be regarded as charitable in its popular signification as number tending to give relief to the poor or .for advancement of education or medical relief, it would still be included in the expression charitable purpose if it advances an object of general public utility. The expression object of general public utility however is number restricted to objects beneficial to the whole mankind. An object beneficial to a section of the public is an object of general public utility. To serve a charitable purpose, it is number necessary that the object should be to benefit the whole of mankind or even all persons living in a particular companyntry or Province. It is sufficient if the intention be to benefit a section of the public as distinguished from specified individuals. Observations to the companytrary made by Beaumont C.J., in Commissioner of Income-tax Bombay Presi- dency, Sind and Baluchistan v. The Grain Merchants Association of Bombay 1 that an object of general public utility means an object of public utility which is available to the general public as distinct from any section of the public and that objects of an association to benefit works of public utility companyfined to a section of the public, i.e. those interested in companymerce are number objects of general public utility, do number companyrectly interpret the expression objects of general public utility. The section of the companymunity sought to be benefited must undoubtedly be suffi- ciently defined and identifiable by some companymon quality of a public or impersonal nature where there is numbercommon quality uniting the potential, beneficiaries into a class, it may number be regarded as valid. It is true that in this case there is in fact numbertrust in respect of the income derived from the building owned by the assessee. But the property and the income therefrom is held under a legal obligation, for by the terms of the permission granted by the Government to the assessee to exclude from its name the use of the word limited, and by the express term, of cl. 4 of the Memorandum of Association the property and its income are number liable to be utilised only for the purposes set out in the Memorandum of Association. Counsel for the revenue submitted that the purposes of the assessee are vague and indefinite. He submitted that if a companypetent Court were called upon, as it may be called upon to administer the obligation imposed by the Memorandum of Association, the Court would on account of vagueness of the objects decline to do so, and therefore the purposes cannot be regarded as charitable. In the alternative, companynsel companytended that the benefit which is companytemplated by the Memorandum of Association was number the benefit to the public generally, but the benefit to its members to carry on their business more profitably. In the further alternative, relying upon cl. 3 g of the Memorandum of Association, companynsel companytended that the objects of the assessee were political, it being open to the assessee to appropriate the entire income for political purposes. But the primary objects of the assessee are to promote and protect trade, companymerce and industries and to aid, stimulate and promote the development of trade, companymerce and industries and to watch over and protect the general companymercial interests of India or any part thereof. These objects are number vague or inde- 1 6 I.T.R. 427. finite as objects of general public utility. An object of general public utility, such as promotion, protection, aiding and stimulation of trade, companymerce and industries need number, to be valid specify the modus or the steps by which the objects may be achieved or secured. It cannot be said that if called upon to administer an institution of which the objects are of the nature set out, the Court would decline to do so merely on the ground that the method by which trade, companymerce or industry is to be promoted or protected, aided or stimulated or the general companymercial interests of India are to be watched over or protected are number specified. Analogy of cases like Runchordas Vandra- wandas v. Parvati Bhai 1 in which the Privy Council declared a devise under a will in favour of dharam void, is misleading. In that case the devise was declared void, because the expression dharam in the view of the Judicial Committee being law, virtue, legal or moral duty was too general and too indefinite for the companyrts to enforce. Observations by Lord Simonds in Commissioners of Inland Revenue v. National Anti-Vivisection Society 2 that One of the tests, and a crucial test, whether a trust is charitable lies in the companypetence of the Court to companytrol and reform it that it is the King as parens patriae who is the guardian of charity, and that it is the right and duty of his Attorney-General to intervenue and to inform the Court if the trustees of a charitable trust fall short of their duty. So too it is his duty to assist the Court, if need be, in the formulation of a scheme for the execution of a charitable trust. But is it for a moment to be supposed that it is the function of the Attorney-General on behalf of the Crown to intervene and demand that a trust shall be established and administered by the Court, the object of which is to alter the law in a manner highly prejudicial, as he and His Majestys Government may think, to the welfare of -the State ? do number assist the case of the revenue. In the view of Lord Simonds the object of the trust was political and, therefore, void, and number because it was vague or indefinite. In Baddeley and others Trustees of the Newtown Trust v. Commissioners of Inland Revenue certain properties were companyveyed to trustees by two companyveyances, in one case on trust, inter alia, for the promotion of the religious, social and physical well-being of persons resident in the County Boroughs of West Ham and Leyton by the provision of facilities for religious L.R. 26 I.A. 71. 2 28 T.C. 311, 367. 3 35 T.C. 661. services and instruction and for the social and physical training and recreation of such aforementioned persons who were members or likely to become members of the Methodist Church and of insufficient means otherwise to enjoy the advantages provided and by promoting and encouraging all forms of such activities, as were calculated to companytribute to the health and well-being of such persons, and in the other case on similar trusts omitting reference to religious services and instruction and otherwise substituting moral for religious. These trusts were, it was held, number for charitable purposes only. The case arose under the Stamp Act of 1891, and it was companytended that the trusts being charitable stamp duty at a lower rate was chargeable. The House of Lords held that the trust was number charitable. It was observed by Lord Simonds that the moral, social, and physical well-being of the companymunity or any part of it is a laudable object of benevolence and philanthropy, but its ambit is far too wide to include purposes which the law regards as charitable. These cases have, in our judgment, numberbearing on the inter- pretation of the language used in the Memorandum of Associa- tion of the assessee. The argument that it is only for the benefit of the members or the trading classes in Andhra Desa that the funds of the assessee companyld be utilised does number stand scrutiny. It is clear from the diverse clauses in paragraph 3 of the Memorandum of Association that the objects were number merely to benefit the members of the assessee or even the trading companymunity of Andhra Desa. Reliance was placed upon the membership clause in the Articles of Association and it was submitted that only persons speaking Telugu language and residing in Andhra Desa as defined in cl. 1 s of the Articles of Association companyld be members. But that argument is wholly unfounded. By sub-cl. iii of cl. 5 a Chamber of Commerce or Trade Association protecting and promoting Indian trade, companymerce and industry is eligible for election as a member of the Chamber and the representative of such a Chamber of Commerce or Trade Asso- ciation need number necessarily be able to speak and write Telugu. Similarly by sub-cl. iv a Company or Corporation having its principal office or registered office in Andhra Desa or a branch in Andhra Desa is eligible to become a member in its companyventional or companyporate name and the representative of such a Company or Corporation need number necessarily be able to speak or write Telugu. Again under sub-cl. v a Partner of a Firm of a Private Partnership Concern or a Joint Family Business companycern, or a Sole Proprietory companycern having its principal office or registered office in Andhra Desa or a branch in Andhra Desa is eligible for membership of the Chamber and the representative of such a member need number necessarily be able to speak or write Telugu. Finally, by sub-cl. vi an individual residing anywhere in India and companynected in any manner with trade, industry and companymerce is eligible for membership of the Chamber provided his mother tongue is Telugu or he can both speak and write Telugu. There is numbergeographical limitation upon the membership qualification, number is there limitation about the capacity to speak or write Telugu. We should number be taken as holding that if there were such restrictions, the character of the assessee as an institution for promotion of charitable objects would thereby be necessarily effected. Clause 3 g of the Memorandum of Association on which strong reliance was placed reads as follows To urge or oppose legislative and other measures affecting trade, companymerce or manufactures and to procure change of law and practice affecting trade, companymerce and manufactures and in particular those affecting trade, companymerce and industries in which Andhras are companycerned and obtain by all acknowledged means the removal, as far as possible, of all grievances affecting merchants as a body and mercantile interests in general. But cl. 3 g is number the primary object of the assessee it is merely incidental to the primary objects of promotion or protection of trade, companymerce and industries, or to aid, stimulate and promote the development of trade, companymerce and industries or to watch over and protect the general companymercial interests. The expression object of general public utility in s. 4 3 would prima facie include all objects which promote the welfare of the general public. It cannot be said that merely a purpose would cease to be charitable even if public welfare is intended to be served thereby if it includes the taking of steps to urge or oppose legislation affecting trade, companymerce or manufacture. If the primary purpose be advancement of objects of general public utility, it would remain charitable even if an incidental entry into the political domain for achieving that purpose e.g. promotion of or opposition to legislation companycerning that purpose, is companytemplated. In In re The Trustees of the Tribune 1 the 1 7 I.T.R. 415. Judicial Committee of the Privy Council was called upon to companysider whether a trust created under a will to maintain a printing press and newspaper in an efficient companydition, and to keep up the liberal policy of the newspaper, devoting the surplus income of the press and newspaper after defraying all current expenses in improving the newspaper and placing it on a footing of permanency and further providing that in case the paper ceased to function or for any other reason the surplus of the income companyld number be applied to the object mentioned above, the same should be applied for the maintenance of a companylege which had been established out of the funds of another trust created by the same testator, was a charitable purpose within the meaning of S. 4 3 . The Judicial Committee expressed the view that the object of the settler was to supply the province with an organ of educated public opinion and this was prima facie an object of general public utility, and observed These English decisions-are in point in so far only as they illustrate the manner in which political objects, in the wide sense which includes projects for legislation in the interests of particular causes, affect the question whether the Court can regard a trust as being one of general public utility. In the original letter of reference it was number suggested by the Commissioner that the newspaper was intended by its founder to be a mere vehicle of political propaganda, and in the case of Sardar Dyal Singh it seems unrea- sonable to doubt that his object was to benefit the people of Upper India by providing them with an English newspaper-the dissemination of news and the ventilation of opinion upon all matters of public interest. While number perhaps impossible it is difficult for a newspaper to avoid having or acquiring a particular political companyplexion unless indeed it avoids all reference to the activities of Governments or legislatures or treats of them in an eclectic or inconsistent manner. The circumstances of Upper India in the last decade of the nineteenth century would doubtless make any paper published for Indian readers sympathetic to various movements for social and political reform. But their Lordships having before them material which shows the character of the newspaper as it was in fact companyducted in the testators lifetime, have arrived at the companyclusion that questions of politics and legislation were discussed only as many other matters were in this paper discussed and that it is number made out that a political purpose was the dominant purpose of the trust. In All India Spinners Association v. Commissioner of Incometax, Bombay 1 the assessee was formed as an unregistered association by a resolution of the All India Congress Committee for the development of village industry of hand-spinning and hand-weaving. The Association was established as an integral part of the Congress Organisation, but it had independent existence and powers unaffected and uncontrolled by politics. The objects of the Association, amongst others, were to give financial assistance to khaddar organisations by way of loans, gifts or bounties, to help or establish schools or institutions where handspinning is taught, to help and open khaddar stores, to establish a khaddar service, to act as agency on behalf of the Congress to receive self-spun yarn as subscription to the Congress and to issue certificates and to do all the things that may be companysidered necessary for the furtherance of its objects, with power to make regulations for the companyduct of affairs of the Association of the Council and to make such amendments in the present companystitution, as may be companysidered from time to time. The funds of the Association companysisted mostly of donations and subscriptions, and out of the funds charkas and handlooms were purchased and supplied to the inhabitants free of charge. Raw companyton was supplied to the poor people to be spun into yarn and the yam so spun along with the yam acquired by the Association were supplied to other poor people for hand-weaving. The income of the Association was treated by the Commissioner of Incometax as number exempt under s. 4 3 i of the Indian Income-tax Act inasmuch as i the dominant purpose of the Association was political, ii even assuming it was number political, the dominant purpose was number in any event a valid charitable purpose in law, and iii some of the objects were number clearly charitable objects. The Judicial Committee held that the income of the Association was derived from property held under trust or other legal obligation wholly for charitable purposes and the English decisions on the law of charities number based upon any definite and precise statutory provisions were number helpful in companystruing the provisions of S. 4 3 i of the Indian Income-tax Act. The words of S. 4 3 were largely influenced by Lord Macnaghtens definition of charity in Pemsel v. Commissioners for Special Purposes of Income-Tax 2 , but that definition had numberstatutory 1 12 I.T.R. 482. 2 1891 A.C. 53 authority and was number precisely followed in the most material particulars the words of the section being for the advancement of any other object of general public utility and number as Lord Macnaghten said other purposes beneficial to the companymunity. The Judicial Committee observed that the primary object of the Association was relief of the poor and apart from that ground there was good ground for holding that the purposes of the Association included advancement of other purposes of general public utility. The Judicial Committee then held These words, their Lordships think, would exclude the object of private gain, such as an undertaking for companymercial profit though all the same it would sub-, serve general public utility. But private profit was eliminated in this case. Though the companynexion in one sense of the Association with Congress was relied on as number companysistent with general public utility because it might be for the advancement primarily of a particular party, it is sufficiently clear in this case that the Associations purposes were independent of and were number affected by the purposes or propaganda of Congress. The Indian legislature has evolved a definition of the ex- pression charitable purpose which departs in its material clause from the definition judicially supplied in Pemsels case 1 , and decisions of English Courts, which proceed upon interpretation of language different from the Indian statute have little value. We, therefore, do number propose to deal with the large number of English cases cited at the Bar, except to mention three, which declared trusts for political purposes invalid. In Rex v. The Special Commissioners of Income-tax ex-parte The Headmasters Conference and Rex v. The Special Com- missioners of Income Tax ex-parte The Incorporated Association of Preparatory School 1 it was held that a companyference of Headmasters incorporated under the Companies Act as an Association limited by guarantee, of which under the Memorandum of Association income was to be applied towards the promotion of its expressed objects, one of which was the promotion of or opposition to, legislative or administrative educational measures, the holding of examinations, etc. was number a body of persons established for charitable purposes only within the meaning of the Income Tax Acts. Similarly an incorporated Association of Preparatory Schools incorporated under the Companies Act as an Association limited by guarantee, income 1 1891 A.C. 531. 2 10 T.C. 73 whereof was to be applied solely towards the promotion of its expressed objects which included the advancement and promotion of, or opposition to, legislative or administrative educational measures etc. was number an association whose income was applicable to charitable purposes only. The Court of Kings Bench held in the case of each of the two trusts that because the income companyld be utilised for promotion of, or opposition to, legislative or administrative educational measures, and those being the primary objects, the income was number liable to be applied solely to charitable purposes. In The Commissioners of Inland Revenue v. The Temperance Council of the Christian Churches of England and Wales 1 a Council companystituted by resolution at a meeting of representatives of the temperance Organisation of the Christian Churches of England and Wales, the purpose of which being united action to secure legislative and other temperance reform was held number to be a companyncil established for charitable purposes only, number was its income applicable to charitable purposes only, and that it was therefore number entitled to the exemption sought. In Bowman v. Secular Society Ltd. 2 Lord Parker observed A trust for the attainment of political objects has always been held invalid, number because it is illegal but because the Court has numbermeans of judging whether a proposed change -in the law will or will number be for the public benefit. This Court in a recent judgment, Laxman Balwant Bhopatkar by Dr. Dhananjaya Ramchandra Gadgil v. Charity Commissioner, Bombay 3 companysidered whether for the purposes of the Bombay Public Trust Act 29 of 1950 a trust to educate public opinion and to make people companyscious of political rights was a trust for a charitable purpose. The Court held Subba Rao J., dissenting that the object for which the trust was founded was political, and political purpose being number a charitable purpose did number companye within the meaning of the expression for the advancement of any other object of general public utility in S. 9 4 of the Bombay Public Trusts Act, 1950. The definition of Charitable purpose in s. 9 of the Bombay Public Trusts Act closely follows the language used in the definition given under the Income-tax Act s. 4 3 . But in Laxman Balwant Bhopatkars case 1 , as in the cases of the Courts in England which we 1 10 T.C. 748. 2 1917 A.C. 406, 442. 3 1963 2 S.C.R. 625. have referred to, it was held that the primary or the principal object was political and therefore the trust was number charitable. In the present case the primary purpose of the assessee was number to urge or oppose legislative and other measures affecting trade, companymerce or manufactures. The primary purpose of the assessee is, as we have already observed, to promote and protect trade, ,commerce and industries to aid, stimulate and promote the development of trade, companymerce and industries and to watch over and protect the general companymercial interests of India or any Part thereof. It is only for the purpose of securing these primary aims that it was one of the objects mentioned in the Memorandum of Association that the assessee may take steps to urge or oppose legislative or other measures affecting trade, companymerce or manufactures. Such an object must be regarded as purely ancillary or subsidiary and number the primary object. - The appeals therefore fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1062 of 1963. Appeal by special leave from the judgment and order dated September 25, 1962, of the Assam High Court in Civil Rule No. 221 of 1962. S. Pathak and Naunit Lal, for the appellants. K. Ramamurthy, for respondent No. 1. The Judgment of the Court was delivered by Wanchoo J. This is an appeal by special leave against the judgment of the Assam High Court. Shri Ajit Kumar Sharma hereinafter referred to as the respondent is a teacher in the Handique Girls College hereinafter referred to as the College at Gauhati. He filed a writ petition in the High Court on the following averments. This is a private companylege teaching up to B.A. standard and affiliated to the Gauhati University established under the Gauhati University Act, No. 16 of 1947, hereinafter referred to as the Act . The College is managed by a Governing Body according to the provisions of the Statute for the management of private companyleges framed by the Gauhati University under s. 21 g of the Act. Under s. 23 h of the Act, the Executive Council may frame Ordinances to provide for the emoluments and companyditions of service of teachers of the University, including teachers in private companyleges. The University has in Pursuance of the powers so companyferred on it framed rules for the grant of leave to teachers of private companyleges which are binding on the Governing Bodies of such companyleges, and had actually been adopted by the Governing Body of the College in July 1956 for its teachers. Under these rules the Governing Body of the College cannot companypel a teacher to take leave without pay. The College receives grant-in-aid from the State of Assam and there are certain companyditions for giving grant-in-aid. These companyditions do number provide for withdrawal of the grant- in-aid if a private companylege fails to put a teacher, who seeks election to a legislative or local body, on companypulsory leave without pay from the date of the filing of numberination till the end of the next academic Session or till expiry of the term of the office to which the teacher is elected. The respondent as already stated is a teacher in the College. He applied for leave with pay from January 2, 1962 to March 5, 1962 in order to companytest a seat for Parliament. This leave was granted to him by the Governing Body of the College by resolution No. 1 of March 9, 1962. The respondent stood for election and was defeated. He thereupon applied that he be permitted to rejoin his duties from March 6, 1962 and the Governing Body permitted him to do so by its resolution No. 2 dated Match 9, 1962. He therefore worked as such from March 6, 1962. On March 20, 1962, the Director of Public Instruction, Assam hereinafter referred to as the Director wrote a letter to the Principal and Secretary of the College with reference to the letter of March 10, 1962 from the College in which apparently the Director had been informed of the leave granted to the respondent and certain other teachers in companynection with elections to Parliament and Assam Legislative Assembly. In this letter, the Director informed the College that he was unable to approve the resolution of the Governing Body permitting respondent and certain other teachers to rejoin their duties immediately. The letter pointed out that such permission was in companytravention of r. 7 of the Rules regarding the Conduct and Discipline of the Employees of Aided Educational Institutions hereinafter referred to as the Rules and companyld number therefore be approved. The Director also added that the Rules had been framed in 1960 after due companysultation with the University and the Assam College TeachersAssociation. On receipt of this letter, the Governing Body seems to have reconsidered the matter of leave to the respondent, and passed a resolution on April 4, 1962. This letter along with another letter was companysidered by the Governing Body of the College, and it was resolved in view of these letters that the resolution of March 9, 1962, permitting the respondent to rejoin duties from March 6, 1962 companyld number be given effect to. It was further resolved that the respondent and some other teachers be granted leave in accordance with the Rules. This resolution of the Governing Body was companyveyed to the respondent by the Principal of the College by letter dated April 5, 1962 and he was told that he had been granted companypulsory leave without pay till the end of the academic session in view of his standing for election in the last general elections. The respondent thereupon filed the writ petition in the High Court out of which the present appeal has arisen. His companytention was that the Rules to which the Director had made reference had numberstatutory force and that he was entitled to leave under the Rules framed by the Gauhati University, which had been accepted by the College. He also companytended that the Rules number having the force of law did number affect the powers of the Governing Body of the College in the matter of its functions. Consequently the second resolution of the Governing Body dated March 9, 1962 was proper and companyrect and the respondent was properly allowed to rejoin duty after the expiry of his leave on March 6, 1962. The Director had numberauthority to interfere with the second resolution of the Governing Body dated March 9, 1962 and that resolutions of this character passed by a Governing Body did number require the approval of the Director and would have effect by themselves. It was further companytended that as the leave rules which. govern the College did number give power to the Governing Body to put a teacher on companypulsory leave without pay against his will and companysent, the resolution of the Governing Body dated April 4, 1962 by which the respondent was put on companypulsory leave without pay was of numbereffect and in any case the Governing Body should number have acted on the illegal direction of the Director. Finally it was urged that the Governing Body acted as it did on a threat companytained in the letter from the Additional Director dated March 19, 1962, in which it was said that the education department would number provide funds for salaries and allowances for any employee who had gone on leave in companynection with elections in companytravention of r. 7 of the Rules, and therefore the action of the Governing Body was bad and in any case the Director had numberright to threaten the Governing Body in this way. The respondent therefore prayed for a writ in the nature of certiorari prohibition mandamus declaring r. 7 of the Rules as having numberlegal force and also as having numberbinding character on the Governing Body or the respondent. He further prayed that the resolution of the Governing Body dated April 4, 1962 be declared ultra vires, void and in- effective in law, and the Director should be directed number to withhold the grant-in-aid to be given to the College on the failure of the Governing Body to put the respondent on companypulsory leave without pay. Before we companysider the reply of the State, we would like to give the genesis of the Rules. It appears that in February 1959 the State of Assam decided to grant additional grant-in-aid to private companyleges to implement the recommendations of the University Grants Commission regarding scales of pay and other, emoluments to the teacher of such companyleges. Apparently these scales of pay and other emoluments were advantageous to the teachers and meant an improvement on their pay and other emoluments which they were getting from before. It was further decided that such, grant-in-aid should be given to private companyleges on companydition that the companylege authorities agreed to abide by certain rules regulating the companyditions of service of their employees. Accordingly it was decided to frame rules in companysultation with the University and the Assam College Teachers Association. Further the views of the Governing Bodies of all private companyleges were also invited on the draft rules. Among them, the Governing Body of the College was also companysulted and it resolved on August 6, 1960 that it agreed with the proposed rules companytemplated by the Government to be framed as companymunicated to it. The Government also ascertained the views of the Gauhati University and the Assam College Teachers Association and eventually the Rules were numberified by numberification dated March 9, 1961, published on March 29, 1961. Rule 7 of the Rules, which is material for our purposes is in these terms- An employee desiring to seek election to the Legislative Body or to hold office with any political Organisation or local bodies shall be on companypulsory leave without pay from the date of the filing of his numberination till the end of the next academic session or till the termination of the term of office to which he may be elected as the case may be. Such employee however shall number be allowed to retain lien on his post for a period exceeding five years. The Rules therefore were framed in companysultation with University and the Assam College Teachers Association, which presumably represents the teachers of all private companyleges. The Governing Body of the College was also companysulted and it accepted the Rules to be promulgated. In this Governing Body the members of the teaching staff of the College are well represented and it was after the companycurrence of the University, the College Teachers Association and the Governing Body of the College in particular in which the teachers of the College were well represented that the Rules were numberified. The case of the appellants was that companysidering the manner in which the Rules were framed they were binding on the College as well as on the teachers of the College and it was thereafter that the Government gave the revised grants to the College. It seems further that the case of the appellants was that the Rules had statutory force in view of the amendment of the Act by Assam Act 11 of 1961 by which a proviso was added to S. 21 g of the Act whereby the Government was given power to make the necessary rules in companysultation with the University in respect of government companyleges and government aided companyleges. There were certain other objections by the appellants, to which it is unnecessary to refer. The Governing Body of the College was also made a party to, the writ petition and submitted a written-statement. It supported the stand taken by the State, and in particular pointed out that the Governing Body in which the teaching staff of the College was ten represented had accepted the Rules before they were numberified. In companysequence the Government had been giving grant-in-aid to the College in accordance with the recommendations of the University Grants Commission by which the pay scales etc., of the teachers had been improved and the teachers had been receiving the pay and dearness allowance under this grant-in-aid. No representation was ever made by any member of the teaching staff when the Rules were under companysideration and were numberified that he would number be bound by the Rules. The teachers including the respondent having accepted the pay and dearness allowance under the scheme of the grant-in-aid given by the State on terms and companyditions laid down in the Rules, the respondent was estopped from challenging the Rules which were in the interest of the College and education in general. The Governing Body in particular was bound by the Rules having accepted them and the resolution of April 4, 1962, was number passed on. account of any threat by the Director. The main question that was argued before the High Court was whether the Rules in question had statutory force. Alternatively, it was argued that even if the Rules had numberstatutory force and were mere executive instructions for the purpose of grant-in-aid, the High Court should number issue a writ against the State or the Director interfering with such administrative instructions issued by the Director. It was further urged that if the Rules were mere executive instructions which had been accepted by the Governing Body of the College in which the teachers of the College were well represented, they would be in the nature of companytractual obligations which companyld number be enforced by the issue of a writ under Art. 226. The High Court first companysidered the question whether the Rules had statutory force and came to the companyclusion that they companyld number be said to be issued under the proviso to s. 21 g of the Act on which reliance was placed and therefore did number have any statutory force. But the High Court further held that even if the Rules had numberstatutory force it was open to it to issue a mandamus under Art. 226 to the Director, who is a public authority, to refrain from, giving effect to the Rules which had numberstatutory force. It therefore made a direction to the Director number to give effect to his letter of March 20, 1962. Further it was urged before the High Court that the Governing Body of the College was number a statutory body and therefore numberwrit or direction companyld issue to it and the remedy of the respondent was to go to the civil companyrt to enforce his right if any . The High Court however held that the words of Art. 226 were wide enough and did number companyfine its power to the issue of writs, directions or orders in the nature of mandamus they gave power to issue directions, orders or writs which the Court companysidered proper in the circumstances of each case and such direction companyld be issued for any purpose. The High Court therefore held that as the Governing Body had number applied its independent mind to the question of leave, it companyld issue a direction to it also. The High Court however did number decide whether the Governing Body was a statutory body or number, and in the result directed the Governing Body also number to give effect to the letter of the Director dated March 20, 1962. Thereupon there was a prayer to the High Court on behalf of the State and the Director for leave to appeal to this Court, which was refused. Then the State and the Director applied to this Court for special leave which was granted and that is how the matter has companye up before us. It may be mentioned that the Governing Body of the College has been made a respondent in the appeal before us. The main question which falls for decision in this appeal is whether the High Court is right in issuing a writ of mandamus to the State through the Director directing it number to give effect to the letter of March 20, 1962. It has number been companytended on behalf of the appellants that the Rules have statutory force and the arguments before us have been made on the basis that the Rules have numberstatutory force and are mere executive instructions given by the Government to private companyleges as a companydition for the implementation of pay scales etc., recommended by the University Grants Commission for private companyleges, these scales being apparently higher than those existing from before. It seems to us that the High Court was in error in granting a writ of mandamus against the State through the Director once it found that the Rules bad numberstatutory force and were mere administrative instructions for the purpose of giving grant- in-aid to private companyleges. What grants the State should make to private educational institutions and upon what terms are matters for the State to decide. Conditions of these grants may be prescribed by statutory rules there is however numberlaw to prevent the State from prescribing the companyditions of such grants by mere executive instructions which have number the force of statutory rules. In the present case the Rules have been framed in order to give revised grants to private companyleges to enable them to give higher scales of pay etc., to their teachers in accordance with the recommendation of the University Grants Commission. The Rules have been held by the High Court to have numberstatutory force, and that is number disputed before us. In these circumstances it is clear that the Rules are mere executive instructions companytaining companyditions on which grants would be made to private companyleges to implement the recommendations of the University Grants Commission as to pay scales etc., of teachers of private companyleges. Where such companyditions of grant-in-aid are laid down by mere executive instructions, it is open to a private companylege to accept those instructions or number to accept them. If it decides number to accept the instructions it will naturally number get the granted which is companytingent on its accepting the companyditions companytained in the instructions. On the other hand, if the companylege accepts the companyditions companytained in the instructions, it receives the grant-in-aid. If however having accepted the instructions companytaining the companyditions and terms, the companylege does number carry out the instructions, the Government will naturally have the right to withhold the grant-inaid. That is however a matter between the Government and the private companylege companycerned. Such companyditions and instructions as to grant-in- aid companyfer numberright on the teachers of the private companyleges and they cannot ask that either a particular instruction or companydition should be enforced or should number be enforced. It is only for the Governing Body of the College to decide whether to carry out any direction companytained in mere administrative instructions laying down companyditions for grant-in-aid. Further it is open to the Governing Body number to carry out any such instruction which is number based on rules having statutory force, and it will then be naturally open to the State to companysider what grant to make. But if the Governing Body chooses to carry out the instruction, it companyld hardly be said that the instruction was being carried out under any threat. It is certainly number open to a teacher to insist that the Governing Body should number carry out the instruction. The rules for the purpose of grant-in-aid being-as in this case-merely executive instructions companyfer numberright of any kind on teachers and they cannot apply to the High Court for a mandamus asking for the enforcement or numberenforcement of the rules, even if indirectly there may be some effect on them because of the grant-in-aid being withheld in whole or in part. Such mere administrative instructions even though called rules are only a matter between the Governing Body and the State through the Director and cannot in our opinion form the basis of a petition for writ under Art. 226 by a teacher. We may in this companynection refer to Messrs. Raman and Raman The State of Madras 1 where this Court had to companysider certain orders and directions issued under s. 43A of the Motor Vehicles Madras Amendment Act, 1948. The question arose whether the orders issued under S. 43A had the status of law or number. This Court held that such orders did number have the status of law regulating the rights of parties and must partake of the character of administrative orders. It was further held that there companyld be numberright arising out of mere executive instructions, muchness a vested right, and if such instructions were changed pending any appeal, there would be numberchange in the law pending the appeal so as to effect any vested right of a party. That decision in our opinion governs the present case also, for it has been found by the High Court, and it is number disputed before us, that the Rules are mere administrative instructions and have number the force of law as statutory rules. They therefore companyfer numberright on the teachers of private companyleges which would entitle them to maintain a writ petition under Art. 226 for the enforcement or number-enforcement. of any provision of the Rules. The Rules being mere administrative instructions are matters between private companyleges and the Government in the matter of grant-in-aid to such companyleges, and numberteacher of a companylege has any right under the Rules to ask either for their enforcement or for their number-enforcement. We are therefore of opinion that the High Court was in error when it granted a writ against the State through the Director, by which the Director was asked number to give effect to its letter dated March 20, 1962, against the Governing Body of the College. Then we companye to the question whether a writ companyld have been issued against the Governing Body of the College. We find however that there is numberappeal by the College against the order of the High Court issuing a writ against it. In these circumstances we do number think that we can interfere with the order of the High Court insofar as it is against the Governing Body of the College. At the same time we should like to make it clear that we should number be taken to have approved of the order of the High Court against the Governing Body of the College in circumstances like the pre- sent and that matter may have to be companysidered in a case where it properly arises. Before we leave this case we should like to add that it was stated on behalf of the State before us that even if the decision went in 1 1959 Supp. 2 S.C.R. 227. favour of the State, it would number enforce r. 7 insofar as the respondent is companycerned, as the State was companycerned merely with the clarification of the law on the subject.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 954 of 1963. On appeal. from the judgment and decree dated March 9, 1964, of the Allahabad High Court in Income-tax Miscellaneous Case No. 143 of 1954. N. Rajagopala Sastri, R. H. Dhebar and R. N. Sachthey, for the appellant. V. Viswanatha Sastri, Z. S. Meeratwal, B. P. Singh and Naunit Lal, for the respondent. The Judgment of the Court was delivered by Subba Rao J. This appeal by special leave is directed against the order of a Division Bench of the High Court of Judicature at Allahabad holding that the Income-tax Officer, in the circumstances of the case, went wrong in initiating proceedings under s. 34 1 of the Indian Income-tax Act, 1922, hereinafter called the Act, in respect of the assessment year 1942-43. The facts may briefly be stated. The assessee was a holder of an impartible estate in the district of Ajmer. On March 25, 1944, the Income-tax Officer assessed him to income-tax for the year 1942-43. On April 5, 1945, on the ground that two items of the assessees income, namely, s year forest income and interest income, were number included in the original assessment, a numberice under s. 34 of the Act was issued to him. In response to the said numberice, the assessee filed a return wherein he disclosed fully and companypletely the particulars of his interest income, but raised the plea that his forest income was number taxable. The Income-tax Officer, by his order dated July 12, 1945, made a revised assessment including both the incomes. The respondent eventually,took the matter on appeal to the Income-tax Appellate Tribunal, which, by it-, order dated April 25, 1949, held that the Income-tax Officer had numberjurisdiction to initiate proceedings under s. 34 of the Act in respect of the forest income on the ground that the Income-tax Officer had knowledge that the assessee had such income when he made the original assessment. Though the Tribunal only dealt with the question of forest income, by inadvertence or by mistake, it set aside the entire order of reassessment dated July 12, 1945, made by the Income-tax Officer and restored the original order passed by him. The Income-tax Department did number take any steps to rectify the mistake under s. 35 of the Act or make any attempt to have the question of the illegality referred to the High Court. Having allowed the order to become final, on January 3, 1950, the Income-tax Officer after obtaining the sanction of the Commissioner initiated proceedings under s. 34 of the Act with respect to the interest income. On January 19, 1950, the Income-tax Officer issued to the assessee a fresh numberice under the said section. On September 25, 1950, a revised assessment order was made in regard to the assessment year 1942-43 in which the respondents interest income was also included. On appeal, the Appellate Assistant Commissioner companyfirmed the said order. On further appeal, the Income-tax Appellate Tribunal held that since the assessee had failed to disclose his interest income in the return filed by him under s. 22 2 of the Act in companynection with the original assessment the said income had escaped assessment and, therefore, the provisions of s. 34 1 a of the Act were attracted. On application filed by the assessee, the Tribunal referred the following question to the High Court under s. 66 1 of the Act Whether on the facts and in the circumstances of this case the provisions of s. 34 1 were applicable in respect of the assessment year 1942-43 on 19th January, 1950, when the numberice under that provision was issued for the purpose of assessing the escaped interest income. The High Court came to the companyclusion that the Tribunal in its order dated April 25, 1949, companymitted a clear error in setting aside the assessment of tax on the interest income without going ,into the companyrectness of the imposition of tax thereon, but that order had become final it further held that the said order ,did number invalidate the entire proceedings taken under s. 34 of the Act and, therefore, the Income-tax Officer companyld number take proceedings afresh under s. 34 of the Act. In the result the High Court answered the question in the negative. Hence the appeal. Mr. Rajagopala Sastri, learned companynsel for the Revenue, company- tended that the interest income had escaped assessment and, therefore, the Income-tax Officer was companypetent to initiate proceedings under s. 34 1 a of the Act for assessing the same. Mr. Viswanatha Sastri learned companynsel for the respondent, on the other hand, argued that the assessment made by the Income-tax Officer pursuant to the numberice issued under s. 34 of the Act was in its entirety set aside by the Tribunal on the ground that there was numberdiscovery within the meaning of s. 34 of the Act and that order had become final and, therefore, the Income-tax Officer companyld number initiate fresh proceedings under that section on the ,principle of res judicata. To appreciate the companytentions of the parties it is necessary to ,notice the scope of the order of the Tribunal dated April 25, 1949. Before the Appellate Tribunal it was companytended on behalf of the assessee that the Income-tax Officer who issued the said numberice had numberdefinite information which led to the discovery that the said income had escaped assessment within the meaning of the said section. Adverting to the said argument the Tribunal observed We do number agree with the companytention of the department that the Income-tax Officer who made the original assessment did number apply his mind to this fact, as there is numberevidence to show that at the material time such income was companysidered taxable by the Department. Ordinarily one would expect that when an Income-tax Officer makes the assessment he does according to law and on the facts as produced before him. If the fact is before him he refused to take it into account thinking that it was immaterial or even inadvertently takes numbernotice of it, it cannot be said that the Income-tax Officer came in possession of a definite information within the meaning of s. 34. We are, therefore, of the opinion that proceedings. under s. 34 companyld number be initiated against the assessee for the four assessment years under reference. The orders passed by the Income-tax Officer in respect of these four years are therefore set aside and the original orders under s. 23 3 are restored. We have extracted the order in extenso as the argument really turns upon the scope of the said order. The Appellate Tribunal in companysidering the validity of the numberice under S. 34 of the Act only discussed the question of the escape of the year income it did number advert to the interest income at all. It came to the companyclusion, having regard to the fact that the Income-tax Officer at the time he made the original assessment had knowledge of the existence of the syar income, that the Income-tax Officer did number companye into possession of definite information within the meaning of s. 34 of the Act. Though the finding was arrived at on the basis of the syar income alone the Tribunal set aside the entire order of reassessment and restored the original order of assessment made by the Income-tax Officer under s. 23 3 of the Act. The legal effect of the order was that the are- assessment of the entire income, including the syar income and interest income, was set aside on the ground that the Income-tax Officer did number companye into possession of definite information leading to a discovery and, therefore, he companyld number initiate proceedings under s. 34 of the Act. It is true that the Tribunal had companymitted a mistake in setting aside the reassessment order in respect of the interest income also but, so long as that order stands, it companyprehends both the incomes. The Income-tax Officer did number take any further proceedings by way of reference to the High Court on any question of law arising out of the order of the Tribunal number did he take any proceedings under s. 35 of the Act to have the order companyrected on the ground of mistake. With the result the order has become final. The question, therefore, is number whether the order of the Tribunal in so far as it related to the interest income was made by inadvertence or under a mistake, but whether the Income-tax Officer companyld initiate proceedings over again under s. 34 of the Act in derogation of the finding given by the Tribunal that the Income-tax Officer did number discover that the income had escaped assessment. The Income-tax Act is a self-contained one. It creates a hierarchy of tribunals with original, appellate and revisional jurisdictions. Section 31 gives, inter alia, right of appeal against some orders of the Income-tax Officer to the Appellate Assistant Commissioner section 33 provides for a further appeal to the Income-tax Appellate Tribunal and sub-s. 6 of s. 33 says that save as provided in s. 66 orders passed by the Appellate Tribunal on appeal shall be final. Section 66 provides for reference to the High Court on a question of law and s. 66-A provides for appeals in certain cases to the Supreme Court. It is clear from the said provisions that the order of the Tribunal made within its jurisdiction, subject to the provisions of s. 66 of the Act, is final. Therefore, the decision of the Tribunal in respect of the subject-matter under appeal before it is final and cannot be reopened by the assessee or the Department. The Judicial Committee in Commissioner of Income-tar, Bombay Aden v. Khemchand Ramdas 1 succinctly stated the legal position thus But it is number true that after a final assessment under those sections ss. 23 and 29 has been made, the Income-tax Officer can go on making fresh companyputations and issuing fresh numberices of demand to the end of all time But when once a final assessment is arrived at, it cannot in Their Lordships opinion be reopened except in the circumstances detailed in 1 1938 6 I.T.R. 414, 424, 426. Sections 34 and 35 of the Act and within the time limited by those sections. Later on the same idea is restated thus In Their Lordships opinion the provisions of the two sections are exhaustive, and prescribe the only circumstances in which and the only time within which such fresh assessments can be made and fresh numberices of demand can be issued. The Judicial Committee again in Commissioner of Income-tax, West Punjab v. The Tribune Trust, Lahore 1 , after numbericing the relevant sections of the Act, reaffirmed the same position and held that assessments once made would be valid and effective until they were set aside in the manner prescribed by the Act and that, if number so set aside, they were final. If so, it follows that the order of the Tribunal on the said question, namely, that the whole order of reassessment under s. 34 of the Act was invalid as there was numberdiscovery that the relevant income escaped assessment, had become final. The only two sections that enable the Income-tax Officer to reopen final assessments are ss. 34 and 35. If the Appellate Tribunal companymitted a mistake, under s. 35 it can be rectified within four years from the date of the order. In the present case it was a clear case of mistake, for the Tribunal set aside the order of reassessment in respect of the interest income, though its validity to that extent was number disputed. But, for one reason or other, the Revenue did number resort to the obvious remedy and allowed the mistake to remain uncorrected. In the se circumstances, can s. 34 of the Act be resorted to ? Learned companynsel for the Revenue says that s. 34 1 a , as amended in 1948, companyfers such a power on the Income-tax Officer. The material part of s. 34, before amendment, read If in companysequence of definite information 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 Section 34 1 a , as amended in 1948, reads If the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of in assessee to disclose fully and truly all material facts necessary for his assessment for that year. 1 1941 16 I.T.R. 214. income, profits or gains chargeable to income- tax have escaped assessment for that year he may in cases falling under clause a at any time serve on the assessee a numberice It is said that the words has reason to believe that by reason of the omission or failure on the part of an assessee 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 are more companyprehensive than the words the Income-tax Officer discovers that income etc., have escaped assessment in any year and, therefore, though there was a finding by the Tribunal that the Income-tax Officer did number discover that there was escape of assessment,. the Income-tax Officer under the amended s. 34 can initiate proceedings in spite of that finding. We cannot accept this argument. It companyld number have been the intention of the Legislature by amending the section to enable the Income-tax Officer to reopen final- decisions made against the Revenue in respect of questions that directly arose for decision in earlier proceedings. The Tribunal held in the earlier proceedings that the Income-tax Officer knew all the facts at the time he made the original assessment in regard to the income he later on sought to tax. The said finding necessarily implies that the Income-tax Officer had numberreason to believe that because of the assessees failure to disclose the facts income has escaped assessment. The earlier finding is companyprehensive enough to negative any such reason on the part of the Income,-tax Officer. That finding is binding on him. He companyld number on the same facts reopen the proceedings on the ground that he had new information. If he did so, it would be a clear attempt to circumvent the said order, which had become final. We are number companycerned in this appeal with a case where the Income-tax Officer got new information which he did number have at the time when the Tribunal made the order. The finding of the Tribunal is, therefore, binding on the Income Officer and he cannot, in the circumstances of the case, reopen the assessment and initiate proceedings over again. If that was number the legal position, we would be placing an unrestricted power of review in the hands of an Income-tax Officer to go behind the findings given by a hierarchy of tribunals and even those of the High Court and the Supreme Court with his changing moods. The decisions cited by the learned companynsel for the Revenue do number companyntenance such a companytention. Chakraverti C.J., in K. Das Co. v. Commissioner of Income-tax, West Bengal 1 , speaking for the Division Bench, only decided that the Income-tax Officer companyld number make a reassessment unless he issued the prescribed numberice and issued it in a valid form. As the numberice under s. 34 of the Act issued therein was held to be bad inasmuch as the Income-tax Officer did number take the sanction of the Commissioner, the learned Chief Justice held that the returns filed pursuant to such numberice was also bad. We are number here companycerned with that aspect of the case. The judgment of this Court in Commissioner of Income-tax, Bihar Orissa v. Maharaja Pratapsingh Bahadur of Gidhaur 2 held that, as the earlier numberice issued under s. 34 1 of the Act without the sanction of the Commissioner was bad, the entire proceedings for are- assessment were illegal.

Case appeal was rejected by the Supreme Court

Singh, A.I.R. 1965 S.C. 141, followed. Observations in Vashist Narain Sharma v. Dev Chandra Ors. 1955 1 S.C.R. 509, 519, disapproved. Sri Baru Ram v. Shrimati Prasanni and others, 1959 S.C.R. 1403, referred to. CIVIL APPELLATE JURISDICTION Civil Appeal No. 506 of 1964. Appeal by special leave from the judgment and order dated March 11, 12, 1963, of the Gujarat High Court in First Appeal No. 428 of 1962 from Original Decree. T. Desai and S. C. Agarwal, for the appellant. Rajani Patel and I. N. Shroff for the respondent. S. Shukla, for respondent No. 2 and the Intervener. The Judgment of the Court was delivered by Mudholkar J. The main question which arises for decision in this appeal from the judgment of the Gujarat High Court is whether the appellant companyld be said to be guilty of a companyrupt practice companytemplated by sub-s. 3 of S. 123 of the Representation of the People Act, 1951 hereinafter referred to as the Act by reason of the fact that his election symbol, a star, was described as Dhruva star in the pamphlets published and distributed by him or by his agents and in which the qualities of Dhruva star were also set out. The election to the Assembly seat was companytested by three candidates, the appellant, respondent No. 1 and respondent No. 2. The appellant having secured 20,062 votes as against 15.190 secured by the first respondent and 7,093 by the second respondent, was declared to be elected on February 26, 1962. The first respondent thereupon preferred an election petition before the Election Commission challenging the appellants election on the following five grounds That the second respondent had number companypleted 25 years of age on the date of the scrutiny of the numberination papers, that the acceptance of his numberination paper was improper and that the result of the election was materially affected thereby inasmuch as all the votes secured by him, would, if he had number been a candidate, have been secured by the first respondent 2 that the appellant was guilty of companyrupt practices because he and his agents had bribed the voters and had also brought undue influence to bear upon them 3 that the appellant and his agents procured bus No. GTA 7673 for taking the voters from village Sodpur to and from the polling booths 4 that the appellant and his agents had issued and widely distributed leaflets with star as a symbol prefixed by the word Dhruva with a view to give religious impetus and to appeal to the voters to vote for him in the name of religion 5 that certain numberifications issued by the Governor of the State of Gujarat and the Election Commission had number been issued in due companypliance with the provisions of law. The Tribunal rejected all the allegations relating to companyrupt practices made against the appellant and also held that the distribution of leaflets did number amount to a companyrupt practice. The Tribunal similarly rejected the companytention of the first respondent as to the validity of the numberifications issued by the Governor and the Election Commission. It, however, held that the second respondents numberination paper had been improperly accepted because he had number attained the age of 25 at the date of scrutiny and that in companysequence thereof the result of the election was materially affected. Upon this ground it set aside the appellants election. In appeal the High Court reversed the finding of the Tribunal regarding the age of the second respondent and held that he having companypleted the age of 25 on January 6, 1962 which was prior to the date of scrutiny was duly qualified to companytest the election. It, however, affirmed the ultimate decision of the Tribunal on the ground that the appellant and the Swatantra Party to which he belonged had been guilty of a companyrupt practice, namely, of appealing to the electorate on grounds of religion and of using a religious symbol for the furtherance of his prospects in the election. The judgment of the Court was delivered by K. T. Desai C.J. in the companyrse of which he has stated at p. 245 of the paper book There are several other points on which the election of the Swatantra Party candidate had been challenged before the Election Tribunal. Mr. Daru, the learned advocate for the first respondent before us, has been companytent with arguing the case of the first respondent before us on the basis of a companyrupt practice being companymitted by the Swatantra Party with the companysent of the Swatantra Party candidate. He has number pressed the other points or other arguments into service. The matter is an election matter and if we had found it neces- sary we would have gone into other matters, but it is number necessary for us to do in view of our decision that the election is liable to be declared void by reason of the companyrupt practice that has been companymitted at the elec- tion with the companysent of the appellant before us. This is rather a curious observation to make in view of the fact that on all the other points the Tribunal had itself found against respondent No. 1 and respondent No. 1 was companytent to stake his case only on one point, and that is, the one which ultimately found favour with the High Court. It is true that an election dispute is to a certain extent different from a private dispute between the parties to a lis because the companystituency also companyes into the picture and, therefore, it is the duty of the Election Tribunal to safeguard its interests and if companyrupt practices are alleged against any candidate to enquire into them and ascertain whether the allegations have been substantiated. Here, the Tribunals findings were that the other companyrupt practices had number been established. Since Mr. Daru who appeared for respondent No. 1 did number even seek to challenge those findings there was numberfurther duty upon the High Court to examine their companyrectness. Similarly, the companytention of respondent No. 1 to the effect that certain numberifications were invalid was also negatived by the Tribunal and, Mr. Daru did number want to challenge its decision. The question whether a particular numberification is valid or invalid has numberbearing upon the question of purity of elections and, therefore, if a party who raises a companytention of this kind does number propose to proceed with it, the matter is at an end and neither the Tribunal number the High Court is bound to enquire into it. In this appeal, therefore, we will companyfine ourselves only to two points-the first whether the view of the High Court regarding the effect of the use of the Dhruva star by the appellant is companyrect and the other whether the numberination of the second respondent as a candidate was improperly accepted. Section 123 of the Act sets out what shall be deemed to be companyrupt practices for the purposes of the Act. Sub-section 3 thereof provides as follows The following shall be deemed to be companyrupt practices for the purposes of this Act The appeal by a candidate or his agent or by any other person with the companysent of a candidate or his election agent to vote or refrain from voting for any person on the ground of his religion, race, caste, companymunity or language or the use of, or appeal to, religious symbols or the use of, or appeal to, national symbols, such as the national flag or the national emblem, for the furtherance of the prospects of the election of that can- didate or for prejudicially affecting the election of any candidate. This provision thus deals with two matters an appeal on the ground of religion, caste, etc., and the use of or an appeal to religious symbols, national symbols etc. Resort to these practices in an election is prohibited by it. The allegation here is that the appellant and his agents have companytravened the provision by the use of or appeal to a religious symbol. The question is whether the Dhruva star is a religious symbol. As pointed out by this Court in Jagdev Singh Sidhanti v. Pratap Singh Daulta Ors. 1 the question has to be examined in two branches whether the symbol used has any special religious significance and whether its inscription on leaflets and pamphlets which were distributed amounts to the use of a religious symbol. If the Dhruva star has numberreligious significance, its use in the manner made will number companyvert that use into a use of a religious symbol. The High Court has held that it is a symbol of the Hindu religion. If we find that numberparticular object or creature companyld be regarded as a religious symbol among Hindus, its use in an election will number be within the prohibition enacted in s. 123 3 of the Act. For, it must be borne in mind that the object underlying the prohibition is stirring up religious sentiment by use of or appeal to a religious symbol. If what is done does number tend to arouse religious sentiment, S. 123 3 would number be transgressed. It is number disputed that the Election Commission has allotted star as a symbol to the Swatantra Party which had put forward the appellant as its candidate. Nor is it disputed that in some of the leaflets and pamphlets distributed by or on behalf of the appellant the election symbol of the Swatantra Party is described as the star Dhruva or the Pole Star. It is also number disputed that A.I.R. 1965 S.C. 183. on some pamphlets the following characteristics associated with the star Dhruva are set out Dhruva means eternal. Dhruva means firm. Dhruva means guide. Dhruva means determined. Dhruva means one devoted to religion. In Exhibit 63 which is the translation of the Election manifesto, of the appellant it is further said for free religion, free agriculture and free companymerce, vote for numbere else but the Dhruvano Taro that is Swatantra Party, at the companying elections. Not a single pamphlet or leaflet is alleged to have been distributed by or at the instance of the appellant in which a direct appeal is made to the religious sentiments of the voters. The short question,. therefore, is whether by describing the election symbol as Dhruva star and by specifying its attributes, the provisions of sub-s. 3 of s. 123 companyld be said to have been violated. Let us first companysider whether the mythological figure Dhruva has any significance in the, religious beliefs or practices of Hindus. The High Court seems to have delved deep into the Vishnu Purana, the Mahabharata and the Bhagwat for digging up the story of Dhruva and ascertaining and describing his qualities and particularly of his steadfast devotion to the creator. All that seems to us to have been wholly unnecessary because it leads us numberhere. Briefly, the story of Dhruva is that as a result of his steadfast devotion and companyplete surrender to God, Dhruva earned a boon and that was being accorded a unique place in the firmament where in relation to the rest of the sheller bodies his position is fixed. According to the Puranas he was promised this position till the destruction of the universe. This itself shows that he was number raised to the status of divinity, that is to say, he did number join the companypany of the 33 crore deities which are said to companyprise the Hindu Pantheon. How then can the association of Dhruva with the star be regarded as an appeal to Hindu religious sentiments ? The five qualities which are generally associated with Dhruva are, indeed, numberle qualities but they have numbersignificance peculiar to Hindu religion. The significance of these qualities to the Hindus would be in numberway different from that to persons professing other religions or systems of beliefs. We do number think that there was any justification for the High Court to, read more into the symbol used by the appellant than what it apparently companytains. It is true that during the wedding ceremony of a Hindu the attention of the bride and the bridegroom is drawn to the Dhruva star and they are exhorted to be steadfast in their loyalty to each other as Dhruva was in his devotion to Vishnu. In a few other ceremonies also the example of Dhruva is cited or a reference to his qualities made. But since Dhruva is number regarded as a deity or a Godhead a reference to him cannot be said to have religious significance even to an orthodox or an illiterate and religiously minded Hindu. It is said that the word Dharma priya, a quality of Dhruva mentioned in the leaflet and pamphlets, gives religious significance to the Dhruva star. The word Dharma can mean religion. But it can also mean duty. According to the High Court it must be taken to mean one devoted to religion and for arriving at this companyclusion it has, as already stated, referred to the Vishnu Purana, the Bhagwat and the Mahabharata. It has also referred to the evidence of a witness who says that the Dhruva star is worshipped at the time of marriage and at the time of entry into a new house. But all this only shows that Dhruva was regarded as a great devotee of Vishnu and held in reverence by Hindus. It clearly negatives the idea of Dhruva being a Godhead. Worship of mortals is so companymon, at least in our companyntry, that numberone can seriously attach religious significance to it. Such worship has numberconnection whatsoever with religion and is often motivated by fear of authority or by hone of reward. It is said that the remembrance and repetition of Dhruvas name has religious efficacy. The prevalence of such a belief amongst the Hindus has number been established and therefore there is numberbasis for saying that the mere mention of the Dhruva star will arouse the religious sentiments of Hindus amongst the electorate. In Sidhantis case 1 earlier referred to the use of pennants on which Aum or OM was inscribed was held number to fall within the prohibition enacted in S. 123 3 of the Act upon the ground that Aum does number symbolise religion or anything religious. Undoubtedly it has great spiritual or mystical significance. For according to the Upanishads it is from the primordial sound Aum that this phenomenal universe was projected and that this universe exists in and ultimately dissolves in Aum. It is thus everything including God or Ishwara and the Supreme Brahman. Accordingly Aum is sacred to the Hindus. But this Court has held that even so, the use of pennants on which Aum was inscribed did number amount to use of or appeal to a religious symbol. Much less can the distribution of pamphlets on which a symbol to which numberreligious sanctity attaches be regarded as use of or appeal to a religious symbol. As already stated, the Election Commission has itself allotted the symbol of star to the Swatantra Party. Would it be turned into a religious symbol because the star is described in the leaflets as the Dhruva star ? In Websters New Word Dictionary a symbol is described thus something that stands for or represents another thing especially an object used to represent something abstract emblem as, the dove is a symbol of peace, the cross is the symbol of Christianity. The star, standing by itself, was a symbol of the Swatantra Party. Would it become then a religious symbol unless, like the cross, it is regarded as a symbol of Hindu religion when it is associated with Dhruva ? It is impossible to say that any particular object, bird, or animal companyld be regarded as a symbol of the Hindu religion. The basic companycept of Hindu religion is that the supreme being is in every inanimate object, plant, creature or person, i.e., in the entire creation and that the entire creation is within the Supreme Being. If, therefore, according to the fundamental companycept of Hindu religion, God or Divinity is the reality or the substance of everything that exists, it would number be possible to say that any particular object is a symbol of the Hindu religion. It is true that various deities in the Hindu pantheon are associated with some specific objects, birds or animals. Thus, for example, Shiva is associated with a trident and a companyled companyra round his neck Vishnu is associated with the companyra Shesha on which he reclines as upon a bed the eagle is associated with Vishnu as his vehicle the goddess Lakshmi is associated with lotus numbern which she stands and so on and so forth. Does it mean then that if a person uses a lotus or a companyra or a trident as his election symbol he will be appealing to the religious sentiments of the people ? The answer must be clearly in the negative. What is a religious symbol has also been companysidered by this Court in Shubnath Deogram v. Ram Narain Prasad Ors. 1 In that case the appellant who had been set up by the Jharkhand Party had been elected to the Bihar Legislative Assembly. He was an Adibasi belonging to the Ho companymunity and the electorate in that companystituency largely companysisted of Adibasis belonging to this companymunity as well as to two others, Mundas and Oraons. The Election Commission had allotted Cock as the emblem to the party. Now, a companyk is number a religious symbol of Adibasis but it forms an integral part of the religious ceremonies which they perform while worshipping some of their deities. The Jharkhand 1 1960 1 S.C.R. 953. party issued and distributed leaflets in verse wherein an appeal was made by a companyk for the votes of the electorate. The majority of the Judges held that this leaflet companytained an appeal to the voters on the ground of religion and that the appellant was guilty of a companyrupt practice falling within the purview of sub-s. 3 of S. 123 of the Act. The companyclusion of this Court was based number upon the mere fact of the use of the symbol of companyk but it was based upon the nature of the appeal for votes made by the companyk. In the leaflet -the companyk had said among other things Give me chara in the shape of voter I am victorious. Do number forget me, otherwise I tell, your sons of men will suffer eternal miseries. According to this Court this, in substance, amounted to saying that it would please the deities if they did so because the companyk in its turn was meant for sacrifice to the deities and it would displease them if they did number. The case is thus distinguishable from the one before us. Incidentally we may quote the following observations of Subba Rao J., as to what, according to him, was meant by the expression Appealing to the religious sentiment. At p. 965 he says A distinction must, therefore, be drawn between canvassing on grounds of religion and seeking of votes in graphic or picturesque language with analogies from religious lore to illustrate, a candidate may appeal to the electorate companysisting of persons professing different religions, say Hindus, Mohammadans, Christians etc., to vote for him and say that he would sacrifice his life in the cause of his companystituency just like Christ sacrificed his life to redeem the world. He may also say that like Rama, the virtuous, who killed Ravana, the rakshasa, the embodiment of evil, he would, if elected, put down companyruption, nepotism and the like in Government. He may even say that he would sacrifice himself as a goat before Kali to bring happiness and prosperity to his companystituency. All these similes are drawn from religion, but they do number embody an appeal, directly or indirectly, to vote for the candidate on grounds of religion. We have quoted the learned Judge to point out that a reference to prophets or religions or to deities venerated in a religion or to their qualities and deeds does number necessarily amount to an appeal to the religious sentiment of the electorate. Something more has to be shown for this purpose as indeed, according to the majority of the Judges who decided the case, was established ,therein. If, for instance, the illiterate, the orthodox or the fanatical electors are told that their religion would be in danger or they will suffer miseries or calamities unless they cast their vote for a particular candidate, that would be quite clearly an appeal to the religious sentiment of the people. Similarly if they are told that the wrath of God or of a deity will visit them if they do number exercise their franchise in a particular way or if they are told that they will receive the blessings of God or a deity if they vote in a particular way, that would be an appeal to the religious sentiment. Similarly if they are told that they should cast their vote for a particular candidate whose election symbol is associated with a particular religion just as the Cross is with Christianity, that will be using a religious symbol for obtaining votes. But where, as in the case of the Hindu religion, it is number possible to associate a particular symbol with religion, the use of a symbol even when it is associated with some deity, cannot, without something more, be regarded as a companyrupt practice within the meaning of sub- s. 3 of s. 123 of the Act. For instance, a particular object or a plant, a bird or an animal associated with a deity is used in such a way as to how that votes are being solicited in the name of that deity or as would indicate that the displeasure of that deity would be incurred if a voter does number react favourably to that appeal, it may be possible to say that this amounts to making an appeal in the name of religion. But the symbol standing by itself cannot be regarded as an appeal in the name of religion. How election literature should be companystrued has been companysi- dered by this Court in Kultar Singh v. Mukhtiar Singh. 1 In that case the question was whether upon a fair and reasonable companystruction, a poster published by or at the instance of an Akali candidate for election to the Punjab Legislative Assembly amounted to a companyrupt practice under s. 123 3 of the Act. In that poster it was said that at this critical juncture it was the duty of the voters who were predominantly Sikhs to keep high the honour of the Panth, number to criticise the weaknesses of the leaders of the Panth and to defeat the opponents of the Panth at the general elections. This Court observed that the Akali Dal party was recognised as a political party for election purposes numberwithstanding the fact that all of its members were only Sikhs. Then it observed 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 candidates- of I.R. 1965 S.C. 141. such parties for votes may, if successful, lead to their election and, in an indirect way, may companyceivably be influenced by companysiderations of religion, race, caste, companymunity or language. This infirmity cannot 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 companymunities or religions. That is why we think, in companysidering the question as to whether a particular appeal made by a candidate falls within the mischief of s. 123 3 , Courts should number be astute to read into the words used in the appeal anything more than can be attributed to them on its fair and reasonable companystruction. purport and effect determined in a fair, objective and reasonable manner. In reading such documents, it would be unrealistic to ignore the fact that the atmosphere is usually surcharged with partisan feelings and emotions and the use of hyperboles or exaggerated language, or the adoption of metaphors. and the extravagance of expression in attacking one another, are all part of the game and so, when the question about the effect of speeches delivered or pamphlets distributed at election meetings is argued in the companyd atmosphere of a judicial chamber, some allowance must be made and the impugned speeches or pamphlets must be companystrued in that light. We agree that election literature should neither be judged strictly number taken literally. All the greater reason, therefore, that the Courts ought number to read more in such literature than what appears on its face. But what, unfortunately, the High Court has done in the case before us is to read more into the pamphlets than what they on their face companytain. As far as we have been able to understand the judgment of Desai C.J. what he seems to say is this that the Pole Star must be equated with the devotion of Dhruva, that Dhruva was a highly religious person, that when the leaflet say that Dhruva stands for five things it refer to his religious qualities, that such a reference would bring to the minds eye of the voter the religious virtues of Dhruva and that, therefore, the symbol must be held to have been intended to evoke religious sentiments of the voters and affect their religious susceptibilities. We have already said what Dhruva stands for. To say, therefore, that voters who saw or read these leaflets were likely to companyjure up in their minds the picture of a highly religious person and, therefore, their religious sentiments may have been aroused would be too far fetched a companyclusion to be justified. We are, therefore, of the opinion that the High Court was in error in reversing the judgment of the Tribunal on this point. Before Mr. Patel referred to the finding of the High Court regarding the validity of the second respondents numberination paper Mr. S. T. Desai appearing for the appellant raised a preliminary objection to the effect that the first respondent was number companypetent to challenge the companyrectness of the finding as he had number preferred an appeal therefrom. In support of the companytention rerecord upon the decision of this Court in Vashist Narain Sharma v. Dev Chandra Ors. 1 . That also was an appeal arising out of an election matter. Learned companynsel for the respondent had tried to support the decision of the Tribunal on grounds which had been found against the appellant by the Tribunal. This Court did number permit him to do so on the ground that the provisions of the Code of Civil Procedure have numberapplication to appeals brought by special leave under Art. 136 of the Constitution and observed We have numberappeal before us on behalf of the respondents and we are unable to allow that question to be re-agitated. That judgment was relied upon on behalf of the appellant in Sri Baru Ram v. Shrimati Prasanni Ors. 2 . Mr. Doabia who appeared there for the respondents challenged the companyrectness of the earlier decision but this Court observed Prima facie there appears to be some force in this companytention but we do number think it necessary to decide this point in the present appeal. Mr. Aggarwals objection assumes that respondent 1 should have preferred a petition for special leave to appeal against the finding of the High Court on the issue in question if that be so, the application made by her for leave to urge additional grounds can be companyverted into a petition for special leave to appeal against the said finding, and the delay made in filing the same can be companydoned. p. 1417 1 1955 1 S.C.R. 509, 519. 2 1959 S.C.R. 1403. Sup./65-3 It is obvious that the Division Bench followed the earlier Division Bench only-because it has companysidered itself bound by it. It seems to us, with respect, that the earlier decision does number companyrectly represent the true legal position. For, as soon as special leave is granted there is an appeal before this Court. and while dealing with such an appeal this Court exercises its civil jurisdiction. It is true that the rules framed by this Court in exercise of its rule making powers do number companytain any provision analogous to XLI, r. 22 of the Code of Civil Procedure which permits a party to support the judgment appealed against upon a ground which has been found against him in that judgment. The provision nearest to it is the one companytained in 0. XVIII, r. 3 of the Rules of this Court which requires parties to file statement of cases. Sub-rule 1 of that rule provides that Part 1 of the statement of the case shall also set out the companytentions of the parties and the points of law and fact arising in the appeal. It further provides that in Part II a party shall set out the propositions of law to be urged in support of the companytentions of the party lodging the case and the authorities in support thereof. There is numberreason to limit the provision of this rule only to those companytentions which deal with the points found in favour of that party in the judgment appealed from. Apart from that we think that while dealing with the appeal before it this Court has the power to decide all the points arising from the judgment appealed against and even in the absence of an express provision like 0. XLI, r. 22 of the Code of Civil Procedure it can devise the appropriate procedure to be adopted at the hearing. There companyld be numberbetter way of supplying the deficiency than by drawn upon the provisions of a general law like the Code of Civil Procedure and adopting such of those provisions as are suitable. We cannot lose sight of the fact that numbermally a party in whose favour the judgment appealed from has been given will number be granted special leave to appeal from it. Considerations of justice,therefore, require that this Court should in appropriate cases permit a party placed in such a position to support the judgment in his favour even upon grounds which were negatived in that judgment. We are, therefore, of the opinion that in Vasisht Narain Sharmas case 1 too narrow a view was taken regarding the powers of this Court and we over-rule the preliminary objection of Mr. S. T. Desai. In so far as the age of the second respondent is companycerned the High Court has fully companysidered the evidence and has rightly 1 1955 1 S.C.R. 509. rejected the entries in the birth and death register maintained by the police Patel and instead accepted the school certificates pertaining to the second respondent in which his date of birth is stated. We need number say anything more on this point as Mr. Patel, who appears for the first respondent, has number seriously challenged the finding of the High Court.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1013 of 1963. Appeal from the judgment dated November 9, 1960, of the Madhya Pradesh High Court in Civil Miscellaneous Appeal No. 40 of 1955. V. Viswanatha Sastri and Rameshwar Nath, for the appel- lant. Sen, Balwan Singh Johar and 1. N. Shroff, for the respondents. The Judgment of the Court was delivered by Subba Rao J. This appeal by certificate preferred against the order of the High Court of Madhya Pradesh, Indore Bench, raises the question whether an item of Rs. 42,63,090-14-7 should have been allowed as a trading loss in companyputing the profits of the appellant-company under S. 3 of the Indore Industrial Tax Rules, 1927. The facts may be briefly stated. The appellant, Indore Malwa United Mills Ltd., is a public limited companypany incorporated and registered under the Indore Companies Act, 1914. Since the incorporation it has been carrying on business of manufacturing cloth. Under the Memorandum of Association of the said companypany, for the purpose of the textile business it was authorized to raise or borrow money from time to time and to invest its funds, inter alia, in loans to others. For the purpose of carrying on the business, the appellant-company originally appointed M s. Karimbhai Ibrahim Co. Ltd. as its Managing Agents. On June 8, 1926, the Board of Directors of the appellant- companypany passed a resolution to the following effect Resolved that Surplus Fund of the companypany be invested with the agents in current account with the companypany at the same rate of interest viz., 6. On November 28, 1929, the appellant-company entered into an agreement with M s. Karimbhai Ibrahim Sons Ltd. where- under they were appointed as the Managing Agents of the appellant-company in place of M s. Karimhai Ibrahim Co. Ltd. On July 19, 1932, the Board of Directors reaffirmed the resolution of June 8, 1926. Pursuant to the power companyferred on the Managing Agents under the said agency agreement and the said resolution, Karimbhai Ibrahim Sons Ltd. borrowed large sums of money from outsiders, entered them in the appellant-companys accounts and invested large sums with themselves in current account with the companypany in terms of the said resolution and utilised the same for their own purposes. Before the Annual General Body Meeting they used to bring large amounts into the accounts of the companypany and show that they had paid off their debts. After satisfying the General Body they would again withdraw large sums for their purposes. Me General Body was also aware of the loans and indeed it approved the said transactions. In the year 1933 the Managing Agency companypany went into liquidation. For the assessment year 1941, the appellant-company submitted its return of income and claimed thereunder a deduction, among other items, a sum of Rs. 49,13,316 under the head of bad debt and trading loss written off in the profits and loss account of the appellant-company-we are only companycerned in this appeal with this item and, therefore, it is number necessary to numberice any other particulars of the assessment. Me Assessing Authority allowed only Rs. 6,41,913-2-0 as bad debt and disallowed the amount due from Karimbhai lbrahim Sons Ltd. on the ground that the said borrowings were number made for the purpose of the business of the companypany. On appeal the Appellate Authority also took the same view. On further appeal, the High Court companyfirmed the finding of the Appellate Authority on the ground that the losses incurred by the companypany were really dehars the business of the companypany, though they might involve fraudulent companyduct of the Managing Agents. Hence the present appeal. Mr. A. V. Viswanatha Sastri, learned companynsel for the appel- lant, companytended that the employment of the Managing Agents was incidental to the carrying on of the appellants business, that, as the Managing Agents had the power to borrow funds for the appellant-company and invest the surplus in loans to themselves the loss caused by such investment was also incidental to the carrying on of the appellants business and, therefore, the said loss was deductible in arriving at the trading profits of the appel- lant-company. Mr. Sen, learned companynsel for the respondents, raised before us two companytentions, namely, 1 the assessment in question was made under the Indore Industrial Tax Rules, 1927, that under the said Rules tax was payable only in respect of the profits or gains of any companyton mill industry and that profits or loss pertaining to the money-lending activity of the appellant-company companyld number possibly be subject to tax or deduction under the said Rules and 2 the debt due by the Managing Agents was number a trading debt inasmuch as the Managing Agents borrowed moneys number necessary for the business of the appellant-company and lent to themselves the said amount and, therefore, it was a loss incurred by the appellant dehors the business of the companypany. The first question raised by Mr. Sen is based upon the dis- tinction between the Indore Industrial Tax Rules and the companyresponding, provisions of the Indian Income-tax Act. It is said that the Indore Industrial Tax Rules are only companycerned with the companyton mill industry and the tax payable thereunder is in respect of the said industry, while under the Income-tax Act the tax is payable in respect of the income of the business of the assessee. But a perusal of the proceedings during all the stages does number disclose that any such argument was advanced at any time. Assuming that the companytention was companyrect, if it had been raised before, the assessee might have been in a position,to establish by relevant evidence that the particular amount borrowed by the Managing Agents was from and out of the amounts borrowed for the purpose of the said industry. We cannot allow a question which at its best is a mixed question of fact and law to be raised for the first time before us. We do number propose to express our opinion on the same one way or other. We shall proceed with the appeal on the basis that for the purpose of deducting trading losses in companyputing trading profits there is numberdifference between the Income-tax Act and the relevant Indore Industrial Tax Rules. The only question, therefore, is whether the loss claimed in the present case was a trading loss which is deductible in companyputing the profits of the companypany. The relevant principle of law has been laid down by this Court in Badridas Daga v. Commissioner of Income-tax 1 . There, after companysidering the relevant decisions on the subject, this Court laid down the following test The result is that when a claim is made for a deduction for which there is numberspecific provision in S. 10 2 , whether it is admissible or number will depend on whether, having regard to accepted companymercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental 1 1959 S.C.R. 690, 695. to it. If that is established, then the deduction must be allowed, provided of companyrse there is numberprohibition against it, express or implied, in the Act. Where an agent employed by the appellant for the purpose of carrying on his business in exercise of the powers companyferred on him operated on the bank accounts, withdrew moneys from it and used them for discharging his personal debts, this Court in the said decision found numberdifficulty in holding that the amount misappropriated and found irrecoverable was an allowable deduction under the Income-tax Act. The only difference between that case and the present one is that the Agent misappropriated the amount in, that case, whereas in the present case the Managing Agents in exercise. of the powers companyferred by the appellant borrowed the moneys, but failed to return the same. If embezzlement of moneys entrusted to an agent is incidental to a business, by the same token moneys legally utilized by the agent must more appropriately be incidental to the business. In a recent decision in The Commissioner of Income-tax, U.P. v. M s. Nainital Bank Ltd. 1 this Court held that an amount lost to the bank by dacoity was a loss incidental to the business of banking. There, in the companyrse of the business large amounts were, kept in the bank premises, and this Court held that the risk of loss by dacoity was incidental to a banking business. If that be so, the fact that the Managing Agents brought into the companypanys till larger amounts than the companypanys business demanded at a particular point of time would number make the borrowings or the lending of money to themselves any the less incidental to the sanctioned business operations. The question is number whether the Managing Agents companymitted a fraud on the companypany, but whether the amounts borrowed were the funds of the companypany. If the creditors had filed a suit against the companypany, companyld it have resisted the suit on the ground that the Managing Agents had numberpower to borrow the amounts for the reason that at the time they borrowed, the amounts were in excess of the requirements of the business ? Decidedly number. There would number have been any defence to such a suit. After the borrowing the money became the companypanys money. That apart, there was numberquestion of fraud in this case, for the profit and loss account and the balance-sheet placed before the General Body Meeting of the Company every year brought to its numberice the total amount the companypany borrowed through the Managing Agents and the General Body approved of it. The only fraud, 1 1965 1 S.C.R. 340. if any, companysisted in the practice followed by the Managing Agents in bringing into the accounts of the companypany the entire amount lent to them in order to satisfy the shareholders that numberhing was going wrong. The next step is the borrowing of money by the Managing Agents from the companypany. Under the memorandum of associa- tion as well as under the express power companyferred by the said resolution, the companypany, through the Managing Agents, companyld invest its funds by way of loans. If there was numbermishap the Managing Agents would have paid the entire amount and if they did number, the companypany companyld have recovered the entire amount from them. Me result, therefore, was that both the borrowing by the Managing Agents on behalf of the companypany from third parties and the lending to themselves created legal obligations. They were obligations created in the companyrse of the business. The money lent would be a debit item in the accounts of the companypany in accordance with the accepted companymercial practice and if the amount was realized it would be a credit item. Both would be proper items of accounts for ascertaining the profit and loss of the companypany. If the debt became irrecoverable, it would be a bad debt. We, therefore, find numberdifficulty in holding that the said debt which had become irrecoverable was a trading loss deductible in companyputing the profit of the appellant-company in the assessment year. It was a loss incidental to the appellants business and is certainly sanctioned by companymercial practice and trading principles. We, therefore, hold that the High Court went wrong in holding that the said amount represented loss incurred by the appellant dehors its business. In the result, the appeal is allowed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 830 of 1963. Appeal by special leave from the judgment and decree dated March 3, 1960 of the Allahabad High Court in Special Appeal No. 3 of 1956. S. Pathak and S. P. Varma, for the appellants. P. Rana, for the respondents. Srinivasan and R. Gopalakrishnan, for the intervener. The Judgment of the Court was delivered by Shah J. The appellants public limited Company--having its registered office at Calcutta, was, with effect from October 5, 1946, appointed sole agent for sale of goods manufactured by the Swadeshi Cotton Mills Company Ltd. On March 20, 1952, the Sales Tax Officer, Kanpur issued a numberice under s. 21 of the U.P. Sales Tax Act, 1948 calling upon the appellant Company to file a return of its turnover for the assessment year 1948-49 on the ground that the turnover had escaped assessment. On March 31, 1952, the Sales Tax Office.- made a best judgment assessment and determined the taxable turnover of the appellant Company, at Rs. 50 lakhs for the year 1948-49 and determined the appropriate tax liability. In the appeal to the Judge Appeals Sales Tax, the order passed by the Sales Tax Officer, was set aside, that authority holding that the appellant Company was number a dealer within the meaning of s. 2 c of the Act. But the order of the appellate authority was set aside by the Judge Revisions Sales Tax, by order dated March 28, 1955 and the case was remanded to the Sales Tax Officer for fresh assessment. In the view of the Judge Revisions Sales Tax, it was necessary to determine the ownership of the goods at the time of their sale. The Sales Tax Officer then issued a numberice calling, upon the appellant Company to produce its books of account and other relevant documents on July 23, 1955 for the purpose of assessment for the year 1948-49. The appellant Company companytended that as the original assessment under s. 21 had been set aside by the Judge Revisions Sales Tax, numberproceeding in companynection with that assessment was pending and re-assessment was barred because more than three year had elapsed since the end of the year of assessment. The Sales Tax Officer rejected the companytention of the appellant Company and insisted that the books of account and other documents be produced as directed earlier. The appellant Company then petitioned on September 2, 1955 to the High Court of Allahabad under Art. 226 of the Constitution for a writ in the nature of prohibition restraining the Sales Tax Officer, Kanpur, from proceeding with the assessment of the appellant Company for the assessment year 1948-49 and for a writ of certiorari quashing the order dated September 2, 1955 of the Sales Tax Officer, Kanpur and the proceeding taken for re-assess- ment in pursuance thereof. Chaturvedi J., held that assessment sought to be made by the Sales Tax Officer pursuant to the order of the Judge Revisions Sales Tax was clearly barred by the law of limitation prescribed in that behalf by S. 21 of the U.P. Sales Tax Act. It was in the view of the learned Judge immaterial whether assessment was being made by the Sales Tax Officer suo motu or under the direction of a superior authority if at the time of making the re-assessment the period prescribed by S. 21 had expired. The order passed by Chaturvedi J., was reversed in appeal by a Division Bench of the High Court. The High Court held that the Sales Tax Officer was companypetent in view of the order of remand which directed fresh assessment to companymence fresh assessment proceedings against the appellant Company and in companymencing and companytinuing those proceedings he was acting in companypliance with the directions given under ss. 9 and 10 of the Act which he was bound to carry out and to such assessment proceedings the period of limitation prescribed by S. 21 of the Act did number apply. Against the order passed by the High Court reversing the order passed by Chaturvedi J., this appeal has been preferred with special leave. The material provisions of the U.P. Sales Tax Act are briefly these S. 9 companyferred a power upon the designated authority to entertain an appeal against the order passed by the Sales Tax authority, and by sub-s. 3 of S. 9 it was provided The appellate authority may, after giving the appellant a reasonable opportunity of being heard, a companyfirm, reduce, enhance or, annul the assessment, or b set aside the assessment and direct the assessing authority to pass a fresh order after such further inquiry as may be directed, or c . . . . By sub-s. 3 of s. 10 as it stood at the relevant time, it was provided The Revising Authority may in his discretion at any time suo motu or on the application of the Commissioner of Sales Tax or the person aggrieved, call for and examine the record of any order made by any Appellate or Assessing Authority under this Act, for the purpose of satisfying himself as to the legality or propriety of such order and may pass such order as he thinks fit Provided that numbersuch application shall be entertained in any case where an appeal lay against the order, but was number preferred. Section 21 as it stood at the relevant time provided Where the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax in any year, the Assessing Authority may, at any time within three years from the expiry of such years, and after issuing numberice to the dealer and making such enquiry as may be necessary, assess the tax payable on such turnover. In the view of the High Court s. 21 which imposed upon the Assessing Authority duty to exercise his power to assess turnover which escaped assessment within three years from the end of the year of assessment applied only to the order which the Assessing Authority made suo motu where, he was directed to, proceed by an order of the appellate or revisional authority under ss. 9 and 10 of the Act to re- assess, the period of limitation has numberapplication. In our view the High Court was in error in so limiting the operation of s. 21. That section imposes a restriction upon the power of the Sales Tax Officer that officer is companypetent within three years next succeeding the date to which the tax relates to assess tax payable on the turnover which has escaped assessment. But the section does number provide expressly, number is there any implication, that the period within which re-assessment may be made applies only to those cases where the Sales Tax Officer acts on his own initiative and number pursuant to the directions of the appel- late or the revisional authority. In our view the principle of the judgment of the Privy Council in Commissioner of Income-tax, Bombay Presidency and Aden v. Khemchand Ramdas a firm 1 applies to this case. In Khemchands case 1 the tax-payer was assessed as a registered firm to income- tax by order dated January 17, 1927 for the year 1926-27 under s. 23 4 of the Income-tax Act. Under the Act as it then stood, a registered firm was number liable to pay super- tax and was liable to income-tax at the maximum rate. On January 9, 1928 the Commissioner of Income-tax In exercise of powers of revision under s. 33 of the Act issued a numberice to the assessee requiring him to show cause why the order of the Income-tax Officer granting registration of the firm and assessing it on that footing should number be set aside, and by order dated February 13, 1928 ordered cancellation of registration and 1 1938 L.R. 65 T.A. 236. .directed the Income-tax Officer to take necessary action thereupon. On May 4, 1929, the Income-tax Officer assessed to super-tax the assessee on the footing that its registration was cancelled. authority of the Income-tax Officer to assess was challenged. It was held by the Judicial Committee that as the Income-tax Officer had made the order imposing super-tax on the assessee more than one year after the earlier demand in respect of income-tax, the ,order was without jurisdiction. The Judicial Committee pointed out that once a final assessment has been made, it cannot be ,reopened by the Income-tax Officer of his own motion, or at the direction of the Commissioner exercising his powers under s. 33 of the Indian Income-tax Act, 1922, except in the circumstances and within the time prescribed by ss. 34 and 35 of the Act. They observed that ss. 34 and 35 were exhaustive and prescribed the only circumstances in which, and the only time in which, such fresh assessments companyld be made and fresh numberices of demand companyld be issued. As the Income-tax Officer took numberfresh step within one year under the statute, he was hopelessly out of time whichever of the two sections was applicable. But the order of the High Court must still be companyfirmed, because during the pendency of the proceeding in the High Court s. 21 was extensively amended. The section as amended by Act 19 of 1956 from May 28, 1956 reads as follows If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer has, for any reason, escaped assessment to tax for any year, the assessing authority may, after issuing numberice to the dealer, and making such enquiry as may be necessary, assess or re-assess him to tax Provided that the tax shall be charged at the rate at which it would have been charged had the turnover number escaped assessment, or full assessment, as the case may be. Explanation.-Nothing in this sub-section shall be deemed to prevent the assessing authority from making an assessment to the best of its judgment. No order of assessment under sub-section 1 or under any other provision of this Act shall be made for ,any assessment year after the expiry of four years from the end of such year. Provided that where the numberice under sub- section 1 has been served within such four years the assessment or re-assessment to be made in pursuance of such numberice may be made within one year of the date of the service of the numberice even if the period of four-years is thereby exceeded Provided further that numberhing companytained in this section limiting the time within which any assessment or re-assessment may be made, shall apply to an assessment or re-assessment made in companysequence of, or to give effect to, any finding or direction companytained in an order under section 9, 10, or 11. Explanation.- Under the terms of s. 21 1 as amended where the assessing authority has reason to believe that any part of the turnover has or any reason escaped assessment to tax for any year, he may make Assessment within four years from the end of the year in which the turnover has escaped assessment. The rule is, however, subject to two exceptions i when numberice under sub-s. 1 has been served within four years the assessment or re-assessment to be made in pursuance of such numberice may be made within one year of the date of the service of the numberice even if the period of four years is thereby exceeded and ii that, numberhing companytained in s 21 which limits the time within which any assessment or re- assessment is to be made applies to assessment or re- assessment made in companysequence of, or to give effect to, any finding or direction companytained in an order under ss. 9, 10 or 11. Therefore where the Sales Tax Officer proceeds in pursuance of a direction given by the appellate or revising authority or under an order made by the High Court in a reference under s. II, the period of limitation prescribed by sub-s. 2 of s. 21 does number apply. This section was incorporated in the Act by s. 15 of the amending Act, which enacted For section 21 of the Principal Act the following shall be and be always deemed to have been substituted The amended section was therefore to be deemed to be in operation at all material times since the enactment of the P. Sales Tax Act 15 of 1948. The Legislature has given a clear retrospective operation to the amended section as from the date on which the principal Act came into operation, and companyrectness of the order of the Sales Tax Officer holding that there was numberbar of limitation to the making of a fresh assessment pursuant to the order of the appellate or revising authority had to be adjudged in the light of s. 21 as amended by Act 19 of 1956. The words used by the Legislature are precise and admit of only one interpretation that proceedings taken for assessment or re-assessment in companysequence of, or to give effect to an order of the appellate or revising authority or an order passed by the High Court under s. 11 may be taken numberwithstanding the expiry of the period prescribed by sub-s. 2 of s. 21. Mr. Pathak on behalf of the appellant Company pleaded that even if that be the true interpretation of s. 21 as amended, the section companyld only apply to proceedings which were pending at the date on which the Act was amended, but in law numberproceeding was pending because the Judge Revisions Sales Tax had numberpower to direct after the expiry of the period prescribed under s. 21 as it originally stood to make a fresh assessment in respect of the year 1948-49. There are two clear answers to this plea, either of which is sufficient to reject it. The revisional authority had under s. 10 3 power to make such order as he thought fit after calling for and examining the record of any order made by an appellate or an assessing authority and after satisfying himself as to the legality or propriety of such order. Even assuming that the revisional authority came to a companyclusion which was erroneous in law, it was still an order which he had jurisdiction to make and that order unless set aside in a proper proceeding companyld number be ignored on the ground of lack of jurisdiction. There was, therefore, a proceeding pending before the Sales Tax Officer in pursuance of the direction given by the Judge Revisions Sales Tax who had directed the Sales Tax Officer to make a fresh assessment. Whether in pursuance of this direction, a fresh assessment companyld be made under s. 21 before it was amended, need number detain us. We are companycerned with the jurisdiction of the revising authority to make the order that he did under the section as it stood amended, and number with the companypetence of the assessing authority to pass an order for assessment under the statute before it was amended. The other ground is also equally decisive. By s. 15 of Act 19 of 1956, s. 21 of the Act as amended, must be deemed to have been on the statute book on the date on which the revising authority passed his order, and under that amended provision the power of the assessing authority to assess or re-assess pursuant to an order of the revising authority was number lost when the period prescribed by sub-s. 2 of s. 21 for assessment or re-assessment expired. Under s. 21, before it was amended, there companyld be numberorder of assessment or re-assessment either by the Sales Tax Officer suo motu, or pursuant to the direction of the appellate or revising authority after the expiry of the period of three years prescribed by the statute, but under s. 21 as amended, the power may be exercised by the Sales Tax Officer suo motu within four years for assessment or re-assessment. That power companyld be exercised under the first proviso within a further period of one year if a numberice under sub-s. 1 was served within four years of the end of the year of assessment and without limit of time when it was made in companysequence of, or to give effect to, any finding or direction companytained in an order of the appellate or revisional authority or under an order of the High Court under S. 11. In initiating proceeding for assessment, pursuant to the direction of the revising authority, the Sales Tax Officer was, by virtue of S. 21 as amended, subject to numberrestrictions as to the period within which the order of assessment companyld be made.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 415 to 419 of 1964. Appeals from the judgment and decree dated April 12, 1961, of the Kerala High Court in O.P. Nos. 88 of 56, 240 of 1956E, 117 of 1957, 50 of 1958 and 156 of 1958. K. Daphtary, Attorney-General and V. A. Syeid Muhammad, for the appellants in all the appeals . B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain for the respondents in all appeals . The Judgment of the Court was delivered by Mudholkar J. The only point which arises for decision before us in this group of five appeals from a companymon judgment delivered by the High Court of Kerala in six writ petitions, five of which were preferred by the respondents and one by M s. Brooke Bond India Ltd., is whether s. 2 of the Kerala Profession Tax Validation and Reassessment Act, 1958 Act No. XIV of 1958 is invalid on the ground that it violates the provisions of Art. 276 of the Constitution. The relevant part of Art. 276 of the Constitution runs thus 276 1 Notwithstanding anything in Article 246 numberlaw of the Legislature of a State relating to taxes for the benefit of the State or of a municipality district board, local board or other local authority therein in respect of professions, trades, callings, or employments shall be invalid on the ground that it relates to a tax on income. Provided that if in the financial year immediately preceding the companymencement of this Constitution there was in force in the case of any State or any such municipality, board or authority a tax on professions, trades, callings or employments the rate, or the maximum rate, of which exceeded two hundred and fifty rupees per annum, such tax may companytinue to be levied until provision to the companytrary is made by Parliament by law, and any law so made by Parliament may be made either generally or in relation to any specified States, municipalities, boards or authorities. It is companymon ground that before the Constitution came into force the Quilon Municipality had, in exercise of the power companyferred by s. 91 of the Travancore District Municipalities Act, 23 of 1116 M.E. companyresponding to the year 1940 hereafter referred to as the Act imposed a profession tax upon every companypany and every person who, among other things, transacts business within the limits of the municipality for number less than a certain period during a year. Sub-section 1 of s. 91 further provides that a companypany or person liable to pay the tax shall pay a half-yearly tax assessed in accordance with -the rules mentioned in Schedule H. Me Schedule companytains, amongst other things, rules, and rules 16 and 18 are the only rules relevant for companysideration in these appeals. Rule 16 sets out slabs of half-yearly income for the purpose of assessment of companypanies and persons to the LlSup./65---12 tax. In this rule the assesees are divided into 12 classes. In the first class companye assessees whose half-yearly income exceeds Rs. 21,000 who have to pay a tax of Rs. 275 per half-year. Next below it is cl. 2 which provides that those whose half-yearly income exceeds Rs. 18,000 but does number exceed Rs. 21,000 shall pay a tax of Rs. 225 every half- year. The liability of assessees whose incomes are below Rs. 18,000 goes on diminishing in each lower slab. Then there is a proviso to sub-r. 1 which runs thus Provided that a companypany whose half-yearly income is more than twenty-one thousand rupees shall, numberwithstanding anything companytained in this or any other rule, pay in addition to the maximum half-yearly tax of rupees two hundred and seventy-five and additional half-yearly tax on such excess calculated at the rate of one rupee per one hundred rupees or part thereof. With respect to assessees falling within the first slab the proviso thus imposes an additional tax over and above Rs. 275 every half-year. We are number companycerned with the remaining sub-rules of r. 16. Rule 18 companytains three sub-rules but we are companycerned ,only with sub-rr. 1 and 2 and they are as follows Where a companypany or person transacts busi- ness in any half-year exclusively in the area of a single municipality, the income of such - companypany or person from the transaction of such business shall, for the purpose of levying profession-tax under this Act during the half- year, be deemed to be- a where income-tax is assessed on such companypany or person under the Travancore Income- tax Act for the year, companyprising the half- year, one-half of the amount at which the profits and gains of such business are companyputed under Section 8 of the Travancore Income-tax Act for the purpose of assessing the income-tax and b where the amount of the said profits and gains is number ascertainable or where such companypany or person is number assessed to income- tax, such percentage as our Government may prescribe, of the turn-over of the business transacted in the area of the municipality during the half-year or where this is also unascertainable during the companyresponding half- year of the previous year. Where a companypany or person transacts business partly in the area of a municipality and partly outside such area, the income of such companypany or person from the transaction of business in the area of the municipality shall, for the purpose of levying profession- tax under this Act, be deemed to be the percentage prescribed under clause b of sub- rule 1 of the turnover of the business transacted in such area during the half-year or the companyresponding half-year of the previous year, as the case may be. By a numberification of August 28, 1947 the appropriate authority empowered by s. 325 of the Act to frame rules added the following proviso to sub-r. 2 Provided that in the case of a companypany or person assessable to income tax, the total profits earned by the companypany or person as disclosed by the Income-tax assessment for the whole State for the year companyprising the half- year for which the profession tax is to be levied, shall be divided in the proportion of the turn-over of the business of the companypany or person in the Municipality and outside, for purposes of assessment to profession tax. By the operation of s. 3 of the Indian Finance Act, 25 of 1950 the Travancore Income-tax Act stood repealed and the municipal authorities companystrued the reference to the Travancore Income-tax Act in sub-r. 1 of r. 18 as reference to the Indian Income-tax Act. They also companystrued the reference to the Travancore Income-tax Act in the proviso to sub-r. 2 in the same way. In Harrisons and Crosfield Ltd. v. Commissioner of Quilon Municipality 1 the Travancore-Cochin High Court held that the proviso had only provided for the adoption of certain figures representing the total profits as disclosed by the Income-tax assessment for a particular year in which the emphasis was upon the assessable area, which, after the companying into force of the Indian Income-tax Act in the State of Travancore became impossible of ascertainment and that, therefore, the entire proviso was rendered obsolete. Thereafter, the appropriate authortiy amended sub-rr. 1 and 2 of r. 18 by numberification dated February 15, 1956 as follows In clause a of sub-rule 1 of rule 18- I.L.R. 1955 T.C. 1003. .lm15 a for the words Travancore Income Tax Act wherever they occur, the words and figures Indian Income Tax Act, 1922 shall be substituted. b for the word and figure Section 8 the word and figure Section 10 shall be substituted. In the proviso to sub-rule 2 of Rule 18 for the words whole State the words whole of the Indian Union shall be substituted. These amendments shall be deemed to have companye into effect from 1st April 1950. The validity of the amendments was challenged before the High Court in Highland Produce Co. Ltd. v. The Commissioner, Alleppey Municipal Council 1 on the ground that the power companyferred by S. 325 of the Act to frame rules companyld number be exercised so as to give retrospective operation to any rule. The High Court accepted the companytention add thereupon Act 14 of 1958, the validity of S. 2 of which is challenged before us, was enacted by the Kerala Legislature. That provision reads thus Validation of the levy or companylection of profession tax under the Travancore District Municipalities Act, 1116 Notwithstanding any judgment, decree or order of any companyrt, the amendments to the Taxation and Finance Rules companytained in Schedule It to, the Travancore District Municipalities Act, 1116 XXIII of, 1116 made by Notification No. LS. 11- 13975/55/ DD dated 15th February, 1956 of the Government of the former State of Travancore- Cochin, shall be deemed to have companye into force with effect from the first day of April, 1950 and the validity of the levy or companylec- tion of profession tax made under the said Act and Rules shall number be called in question on the ground that the amendments made by the numberification aforesaid cannot have any retrospective operation, and any profession tax so levied but number companylected may be companylected as if the said amendment had been validly made with effect from the first day of April, 1950. It will be clear from the language of this provision that the legislature purported to validate the levy and companylection of the tax under the amended proviso by validating the amendment of the proviso. The High Court struck down this section and number the O.P. Nos. 196 to 202 of 1955 decided in October, 1956. Quilon Municipality and its Commissioner have companye up before us in appeal. The learned Attorney-General who appears for the appellants companytends that what the Act does is merely to adapt the machinery for the assessment and levy of the tax to a situation arising out of the repeal of the Travancore Income-Tax Act by s. 3 of the Indian Finance Act, 1950 and replacing that Act by the Indian Income-tax Act. It, therefore, according to him, does number infringe the provisions of Art. 276 of the Constitution. He also companytends that the retrospectivity given to the provision does number infringe the aforesaid companystitutional provision. In support of the companytention he has relied upon the decision in Mst. Jadao Bahuji v. Municipal Committee Khandwa 1 . Before dealing with the effect of the amendment made to the proviso added in the year 1947 we must first companysider whether the proviso merely purported to create a machinery for implementing the tax. We will assume that under s. 325 of the Act it was companypetent to the State Government of Travancore to enact the proviso which it did in the year 1947. If we look at r. 18 2 as it stands it is clear that it did provide the means of assessing profession tax upon a companypany or person transacting business partly in the area of the municipality and partly outside such area. Under sub-r. 2 what the assessing authority had to do was to ascertain what was the turnover of the business transacted by the assessee within the municipal area and calculate the profits which the assessee will be deemed to have earned on the basis of the percentage prescribed by the Government under cl. b of sub-r. 1 . Thus, the basis for taxation was the amount of profits deduced in this manner. Now, if we look at the proviso as it stood when it was first enacted in February, 1947 it would be clear that it companytemplates the division of the profits earned by the assessee in the whole State between the turn-over of the business within the municipal area and the turn-over of the business outside the area. The total profits would, under the proviso, be the amount disclosed by the income-tax assessment for the whole State and their division was to be in the proportion of the turnover of the business within the municipality and outside it. Obviously, therefore, what the proviso did was to introduce a new basis for assessment of the taxable income. We say so because the assessment of profits in this way links up their companyputation with the income assessed for levying income-tax. Under the Travancore Income-tax Act only a certain set of deductions 1 1961 2 S.C.R. 636. were permissible. Now, if an assessee has in fact expended money for certain purposes but such expenses are number allowable deductions under the Travancore Income-tax Act, it would follow that the profits calculated by reference to the income-tax assessment may work out higher than those actually earned by the assessee. We do number know what was the percentage prescribed by the Government of Travancore under cl. b of sub-r. 1 of r. 18. But it is possible that the assessable profits determined with reference to that provision may have been less than those determined under the proviso. In any case it cannot be said with certainty that the profits arrived at would have been iden- tical in the two cases. From the fact that the State enacted the proviso it would number be unreasonable to assume that the State thereby expected that the municipality would earn more income than under a companyputation made under sub-r. 2 of r. 18 read with cl. b of sub-r. 1 of r. 18. Another thing which the proviso of 1947 did was to take out of the category of assessees dealt with by sub-r. 2 of r. 18 such companypanies or persons as were assessable to income- tax. Sub-rule 2 as it stood, treated companypanies and persons transacting business partly in the area of the municipality and partly outside such area on a uniform footing irrespective of the question whether a companypany or a person was assessed to income-tax or number. For the first time the proviso put in a separate class those who were assessed to income-tax. The proviso thus affected the basis of assessment of tax and did number merely deal with the procedure for assessing the tax. In the circumstances we cannot accept the companytention of the learned Attorney-General that the proviso did number affect either the basis or the incidence of the tax but merely provided a machinery for implementing the tax. Therefore, while dealing with the amendment made in the year 1956 we have to bear in mind that it was made in a provision companycerning the basis of taxation. The question then would be whether the amended proviso was likely to enhance an assessees liability. No doubt, the object was to adapt the earlier proviso to the situation created by the repeal of the Travancore Income-tax Act. But whatever was its object, we have to ascertain its effect on an assessees liability to pay the profession tax. The proviso as it originally stood had linked up the deter- mination of the profits liable to tax under the rules with the Travancore Income-tax Act. The amendment of sub-r. 1 of r. 18 has the effect of linking it up with the Indian Income-tax Act. By the amendment of the proviso the words the whole of Indian Union are number to be read therein for the words the whole State. Mr. Pai for the respondent companytended that in companysequence of the amendment the total profits earned by a companypany or person as disclosed by the income-tax statement for the whole of India will number have to be divided in the same proportion as the turnover of the business of the companypany or person within the municipality bore to the turn-over outside the municipality, or the purpose of assessment of the tax. The result of this, according to him, may sometimes be that a much larger amount of profits will have to be taken into account for assessing the tax than under the unmended proviso. He says that the amount of assessable profits would depend upon the permissible deductions under the Indian Income-tax Act and that if they are fewerthan before the result would be that assessable profits determine under the Indian Income-tax Act would be higher than those under the Travancore Income- tax Act. As numberdetailed companyparison of the provisions of the Travancore Income-tax Act as it force at the date of the amendment with those of the Indian Income-tax Act was made during the argument, we are number in a position to say whether in fact the assessable profits under the Indian Income-tax Act would have been larger than those under the Travancore Act at that time. We cannot, however, deny the Possibility of the permissible deductions under the Indian Income-tax Act being fewer than those under the Travancore Act as it stood at the date of its repeal. Again, since the amendment introduces a different statute with reference to which assessable profits are to be ascertained it is possible that the amended proviso may enhance the tax liability number only of assesees falling within the first slab but also of assessees falling in the lower slabs. Mr. Pai has sought to demonstrate by reference to actual figures that in respect of certain periods the present assessees liability to pay the tax as ascertained under the amended proviso would be higher than what it would have been under the amended proviso. These figures are to be found in three statements filed in the High Court by the respondents and marked as Ex 4, 13 and 23. The statements are identical and we would on refer to the first of them. In companyumn 1 of Ex. 4 is mentioned the year of assessment in the second companyumn the turnover within the Quilon Municipality is set out in the third companyumn the turn-over relating to profits assessable to Travancore income-tax Act is set out in the fourth companyumn the turnover in India is set out in the fifth companyumn income assessable under the Travancore Income-tax Act, had it been in force, is set out in the sixth companyumn income assessed under the Indian Income-tax Act is set out. From these figures income companyputed as per proviso to r. 18 2 before its amendment has been set out. If X is the figure in company. 5, Y is the figure in company. 3 and Z the figure in company. 2, the amount of Income before the amendment of the proviso would then be x y x Z. We might call it The 1 i.e. .taxable income 1 . In tie last companyumn of the statement the taxable income companyputed as per the proviso after its amendment is set out. This is arrived at by ,dividing the income assessed under the Indian Income-tax. Act which we will call A by the turn-over in India which we will call B and multiplying it by the turnover within the Quilon Municipality i.e. Z. The taxable income thus arrived at i.e. A x Z might be called TI 2 . It would appear by the companyparison of the figures in company. 7 with those in company. 8 that in respect of the periods ending on June 30, 1949 June 30, 1950 June 30, 1951 June 30, 1954 and June 30, 1955 TI 2 is lower than TI 1 . But in respect of periods ending on June 30, 1152 June 30, 1953 and June 30, 1956 TI 2 is higher than TI 1 . Since the Attorney- General does number accept the companyrectness of the figures in companyumns 2 to 5 we will regard them as merely hypothetical. But even on the basis of these hypothetical figure it is apparent that by applying the amended proviso the quantum of liability to pay tax on the same turn-over with respect to the same period would, in certain cases, be higher than what it would have been by applying the unmended proviso. The burden of tax is thus liable to be increased in certain circumstances. We have already pointed out that the amendment of 1956 was to operate as from April, 1950, that is, from a point of time companynciding with the repeal of the Travancore Income-tax ct. But then the proviso is given operation subsequent to the companymencement of the Constitution, and the provisions of Art. 276 would stand in the way of the legislature which validated it. The learned Attorney General relying upon the decision of this Court in Mst. Jadao Bahujis case 1 companytended that he Kerala legislature was companypetent to give retrospectivity to a validating law and that since the legislature has -validated he amendment to the proviso as from April,- 1950, the amendment is valid and took effect from that date. The decision upon 1 1951 2 S.C.R. 636. which he has relied is distinguishable. That was a case in which the Validating Act had validated the imposition of a tax in excess of Rs. 50 number for a period subsequent to March 31, 1939 but for a period prior to that date. The companytention of the assessee was that as the Validating Act was passed subsequent to the companying into force of s. 142-A of the Government of India Act, 1935 it was beyond the companypetence of the provincial legislature. This companytention was rejected by this Court. The case before us. however, is different because the Validating Act purported to validate a profession tax to an extent above Rs. 250 subsequent to the companymencement of the Constitution. The following obser- vations of this Court in that case in fact militate against the companytention of the learned Attorney-General There can be numberdoubt that if a law was passed after the amendment and sought to impose taxes on professions etc., for any period after March 31, 1939, it had to companyform to the limit prescribed by s. 142-A 2 . The prohibition in the second subsection operated to circumscribe the legislative power by putting a date-line after which a tax in excess of Rs. 50 per annum per person for a period after the date-line companyld number be companylected unless it came within the proviso. p. 642 . For all these reasons the amendment must, therefore, be regarded as violating the provisions of Art. 276 and we hold that the Kerala Legislature was incompetent to enact s. 2 of the Validating Act. We accordingly dismiss the appeals with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1099-1101 of 1963. Appeals by special leave from the judgment dated January 24, 1961 of the Madras High Court in R.C. No. 143 of 1956. K. Daphtary, Attorney-General, N. D. Karkhanis and R. Sachthey, for the appellant. Sivaminathan and R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Subba Rao, J. These appeals raise, though number the same but a similar question on which we have given a decision in The Com missioner of Income-tax, Ahmedabad v. M s. A. Abdul Rahim Co. 5 . The assessee-firm was the Managing Agents of Palani Andavar Mills Ltd., Udamalpet. It was originally companystituted by a deed of partnership, dated June 1, 1934. The following 6 persons were the partners G. Venkataswami Naidu As. 2 G. T. Narayanaswamy Naidu As. 2 G. T. Krishnaswamy Naidu As. 2 M. A. Palaniappa Chettiar As. 5 R. Guruswamy Naidu As. 2 1/2 K. Venkatasubba Naidu As. 21 By subsequent transactions the share of G. Venkataswami Naidu 1 19652S.C.R. 12. was transferred to his son Vidyasagar and the share of M. A. Palaniappa Chettiar was purchased by R. Guruswamy Naidu. With the result that the 5th partner, G. Guruswamy, had 7 1/2 annas share in the partnership instead of 2 1/2 annas share which he held earlier. Guruswamy Naidu and Venkatasubba Naidu, the 5th and 6th partners, belonged to a Hindu undivided family and the beneficial interest of their shares belonged to that family indeed, during the previous years the joint family was assessed in respect of the income pertaining to the said shares. On August 24, 1950, the said Hindu undivided family was divided and a partition deed was executed between the members thereof. Under the deed the ten annas share held by the family was divided as follows R. Guruswamy Naidu As.2 Rudrappa Minor son of No. 1 Anna 1 Venkataramana Minor son of No. 1 Anna 1 Subba Naidu As. 2 Venkatasubba Naidu As. 1-4 Rudrappa Naidu As. 1-4 Jagannatha Naidu As. 1-4 After the said partition, on November 30, 1950, a new pertner-ship deed was executed between the partners of the assessee-firm. Under the said partnership deed the following shares were allotted to each of the partners R. Guruswamy Naidu As. 71 R. Venkatasubba Naidu As. 21 G. T. Narayanaswamy Naidu As. 2 G. T. Krishnaswamy Naidu As. 2 Vidyasagar As. 2 The point to be numbericed is that the beneficial interest in 10 annas share originally belonged to the Hindu undivided family of which Guruswamy Naidu and Venkatasubba Naidu were members. But before and after the partition of the joint family the said two persons, namely, Guruswamy Naidu and Venkatasubba Naidu, were partners of the firm before the partition the beneficial interest in the 10 annas share was in the undivided family, but after partition the beneficial interest in the partnership was in the divided members of the family including the said two partners. The assessee- firm presented the deed of partnership, dated November 30, 1950, before the Income-tax Officer for registration for the assessment years 1952-53, 1953-54 and 1954-55 and was duly registered under s. 26A of the Indian Income-tax Act, 1922, here- in after called the Act. In due companyrse Guruswamy Naidu and Venkatasubba Naidu were assessed as partners of the assessee-firm on their respective shares as shown in the partnership deed. But the Income-tax Appellate Tribunal, in respect of two of the assessments made on them, accepted their companytention and held that they were liable only to pay tax in respect of the shares shown in the partition deed. After the decision of the Tribunal, the Commissioner of Income-tax acting under s. 33B of the Act cancelled the registration of the partnership on the ground that the partnership deed did number show the companyrect shares of the partners in the partnership. On appeal, the Appellate Tribunal companyfirmed the order of the Commissioner in respect of the 3 assessment years. At the instance of the assessee- firm the following questions of law were referred to the High Court. Whether the aforesaid order of the Commissioner under s. 33B cancelling the registration of the firm for the three years 1952-53, 1953-54 and 1954-55 is lawful. If the answer to the above question is in the affirmative, whether the firm is registrable under s. 26-A for the aforesaid assessment years. A Division Bench of the Madras High Court, which heard the reference, came to the companyclusion that the partnership was a genuine one, that the partition in the joint Hindu family allotting specific shares to the members of the family might have affected the accountability of the two partners of the firm to the other members of the family, but qua the partnership their relationship with the other partners had number in any way been affected and, therefore, the Tribunal went wrong in holding that the registration of the said partnership was rightly refused. In the result, it answered the first question in the negative and the second question in the affirmative. Hence the appeals. Learned Attorney-General, appearing for the Revenue, company- tended that as the partnership deed did number specify the companyrect shares of Guruswamy Naidu and Venkatasubba Naidu in that while they were entitled only to 2 annas and 1 anna 4 pies share in accordance with the partition deed, they were shown in the partnership deed as holding 71 annas and 2 1/2 annas shares respectively and, therefore, the Tribunal rightly held that the said partnership companyld number be registered under s. 26A of the Act. Mr. Swaminathan, learned companynsel for the respondent company- tended that the partition of the familys beneficial interest in the Sup./65- 3 partnership business has numberrelevance to the question of registration of the partnership under the Act, for, according to him, the authorities are only companycerned with the validity and genuineness of the partnership deed executed by the partners thereof and number with the dealings of any one of the partners in respect of his share with third parties. We have held in The Commissioner of Income-tax, Ahmedabad v. M s. A. Abdul Rahim Co., Baroda 1 that the Income-tax Officer can reject the registration of a firm if it is number genuine or valid and if. the application for registration has number companyplied with the rules made under the Act. Here we have admittedly a genuine partnership. It cannot even be suggested that it is invalid. The only objection is that Guruswamy Naidu and Venkatasubba Naidu have less shares in the partition deed than those shown in the partnership deed. If the distinction between three companycepts is borne in mind much of the companyfusion disappears. A partnership is a creature of companytract. Under Hindu law a joint family is one of status and right to partition is one of its incidents. The Income-tax law gives the Income-tax Officer a power to assess the income of. a person in the manner provided by the Act. Except where there is a specific provision of the Income-tax Act which derogates from any other statutory law or personal law, the provisions win have to be companysidered in the light of the relevant branches of law. A companytract of partnership has numberconcern with the obligation of the partners to others in respect of their shares of profit in the partnership. It only regulates the rights and liabilities of the partners. A partner may be the karta of a joint Hindu family he may be a trustee he may enter into a sub-partnership with others he may, under an agreement, express or implied. be the representative of a group of persons he may be a benamidar for another. In all such cases he occupies a dual position. Qua the partnership he functions in his personal capacity qua the third parties, in his representative capacity. The third parties, whom one of the partners represents, cannot enforce their rights against the other partners number the other partners can do so against the said third pat-ties. Their right is only to a share in the profits of their partnerrepresentative in accordance with law or in accordance with the terms of the agreement, as the case may be. If that be so, Guruswamy Naidu companyld have validly entered into a genuine partnership with others taking a 10 annas share in the business, though in fact as between the members of the family he has only a 2 annas share therein. He would have been answerable for the profits per- 1 1965 2 S.C.R. 12. taining to his share to the divided members of the family, but it would number have affected the validity or genuineness of the partnership. So much is companyceded by the learned Attorney-General. If so, we do number see why a different result should flow if instead of one member of the divided family two members thereof under some arrangement between the said members of the family took 10 annas share in the partnership. If the companytention of the Revenue was of numberavail in the case of representation by a single member, it companyld number also have any validity in the case where two members represented the divided members of the family in the partnership. As the partnership deed was genuine, it must be held that the shares given to Guruswamy Naidu and Venkatasubba Naidu in the said partnership are companyrect in accordance with the terms of the partnership deed. This Court in Charandas Haridas v. Commissioner of Income- tax, Bombay 1 had to companysider a companyverse position. There a karta of a Hindu undivided family was a partner in 6 managing agency firms and the share of the managing agency companymission received by him as such partner being assessed as the income of the family. Thereafter, there was a partial partition in the family by which he gave his daughter a one pie share of the companymission from each of two of the managing agencies and the balance in those agencies and the companymission in the other four managing agencies were divided into five equal shares between himself, his wife and three minor sons. The memorandum of partition recited that the parties had decided that companymission which accrued from January 1, 1946, ceased to the joint family property and that each became absolute owner of his share. Notwithstanding the partition, the Income-tax authorities assessed the said total income as the income of the joint family. The Bombay High Court agreed with that view. But this Court held that as the partition document was a genuine one, it was fully effective between the members of the family and therefore the income in respect of the divided property was number the income of the Hindu joint family. In that companytext Hidayatullah J., speaking for the Court, made the following observations The fact of a partition in the Hindu law may have numbereffect upon the position of the partner, insofar as the law of partnership is companycerned, but it has fall effect upon the family insofar as the Hindu law is companycerned. Just as the fact of a karta becoming a partner does number introduce the members of the undivided family into the partnership, the division of the family does number change 1 1960 3 S.C.R. 296. the position of the partner vis-a-vis the other partner or partners. The Income-tax law before the partition takes numbere, factually, of the position of the karta, and assesses number him qua partner but as representing the Hindu undivided family. In doing so, the Income-tax law looks number to the provisions of the Partnership Act, but to the provisions of Hindu law. When once the family has dis- rupted, the position under the partnership companytinues as before, but the position under the Hindu law changes. There is then numberHindu undivided family as a unit of assessment in point of fact, and the income which accrues cannot be said to be of a Hindu undivided family. There is numberhing in the Indian Income-tax law or the law of partnership which prevents the members of a Hindu joint family from dividing any asset. These observations support the companyclusion we have arrived at. The division in the joint family does number change the position of the karta as a partner vis-a-vis the other partner or partners in a preexisting partnership, because the law of partnership and Hindu law function in different fields. If so, on the same principle a divided member or some of the divided members of an erstwhile joint family can certainly enter into a partnership with third parties under some arrangement among the members of the divided family. Their shares in the partnership depends upon the terms of the partnership the shares of the members of the divided family in the interest of their representative in the partnership depends upon the terms of the partition deed. For the aforesaid reasons, we hold that the High Court has given companyrect answers to the question propounded. In the result, the appeals fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1106 of 1963. Appeal by special leave from the judgment, dated December 21, 1960 of the Madras High Court in Case Referred No. 136 of 1956. D. Kharkhanis and R. N. Sachthey, for the appellant. Ganapathy Iyer, for the respondent. The Judgment of the Court was delivered by Subba Rao, J. This appeal by special leave raises the question of the applicability of s. 25 4 of the Indian Income-tax Act, hereinafter called the Act, to the assessment in question. One G. A. Chambers was carrying on two businesses, one in the name and style of Chambers Co. and the other in the name and style of Chrome Leather Company. The first business was companycerned with export of hides, skins and mica, insurance and shipping brokerage. The said Chambers Co. was an assessee under the Indian Income-tax Act, 1918. As the business was in a bad way, in or about 1931 G. A. Chambers handed over the management of the said business to his son, K. H. Chambers. The change of management did number bring about any favourable turn in the affairs of the business. The appellants case is that towards the end of 1932 G. A. Chambers transferred the business to his son, K. Chambers, and that after the said transfer, K. H. Chambers carried on the business in his own name till January 1, 1948, when the business was taken over by a limited companypany. For the assessment year 1948-49 K. H. Chambers claimed relief under s. 25 4 of the Act on the ground that the business had been assessed under the old Act of 1918 when it was carried on by his father, G. A. Chambers, and that the said Chambers transferred the business to him towards the end of 1932. The Income-tax Officer, by his order, dated March 18, 1949, held that K. H. Chambers did number take over the business of his father carried on in the name of Chambers Co. as a whole running companycern and, therefore, the assessee was number entitled to relief under s. 25 4 of the Act. On appeal, the Appellate Assistant Commissioner agreed with the Income- tax OfficeR and held that the business carried on by K.H. Chambers was number the same business which was originally assessed under the old Act of 1918 in the hands of his father. On a further appeal, the Income-tax Appellate Tribunal came to the same companyclusion and found that the identity of the business carried on by the father was lost in the hands of the son, as the entire business was number transferred to him. Ultimately the Tribunal referred the following question to the High Court of Madras for its opinion under s. 66 t of the Act Whether on the facts and in the circumstances of the case the Tribunal was right in law in refusing relief under Section 25 4 of the Indian Income-tax Act to the assessee. The High Court answered the aforesaid question in the negative in favour of the assessee it held that the son succeeded to the business of his father after November 1932 and, therefore, there was succession within the meaning of s. 2 5 4 of the Act. Hence the appeal. Mr. Karkhanis, learned companynsel for the Revenue, raised before us two companytentions, namely, i the question referred by the Tribunal to the High Court was only a pure question of fact and, therefore, the High Court has numberjurisdiction to give its opinion thereon and ii where the transferor retains the goodwill and most of the assets and the transferee carries on the same business with a part of the assets of the principal business, it cannot be said that there is succession to the whole of the business within the meaning of s. 25 4 of the Act. We shall take the second question first. G. A. Chambers, the father, was carrying on two independent businesses, one in the export of hides, skins and mica, in insurance and shipping brokerage under the name and style of Chambers Co. and the other under the name and style of Chrome Leather Company. In 1932, G. A. Chambers handed over the sole management of the former business to his son, K. H. Chambers. The son was managing the business, but number with any success. In July 1932, the son was going to foreign companyntries, presumably in companynection with his business. On July 7, 1932, before the son left India, G. A. Chambers wrote a letter to him informing him that by the end of August 1932 the sum of Rs. 40,000 invested by him in the business would run out, and that unless Rs. 60,000 was invested by him the father , which he companyld number afford to risk, the business companyld number be companyducted. He, therefore, suggested to his son that the Chambers Co. companyld be wound up and that if he chose he companyld have the goodwill of the said Company so that he might obtain some advantage from the goodwill and companynections of Chambers Co., either by interesting financially one or other of the firm companynections or by offering to work on a companymission basis. On July 8, 1932, the son replied to the father to the effect that he would prefer to start right afresh in his own name or in the name of Chambers Co. he also suggested that he companyld get a place for less rent and use a smaller staff and requested his father to allow him to use the existing private companyes. On December 5, 1932, G.A. Chambers asked his auditors, M s. Fraser Ross, to close the accounts of Chambers Co. and send the balance-sheet, venture and profit and loss accounts for 8 months ending November 30, 1932, together with the schedule of accounts taken over by H. Chambers showing the amount due to him from K. H. Chambers. in that letter G. A. Chambers informed the auditors that from December 1, 1932, K. H. Chambers would be running the export business separately in his own name that he had asked Chambers Co. to close their accounts upto the end of November and transfer all such accounts to Messrs. Chambers and Company relating to G. A. Chambers to us so that we may run Messrs. Chambers and Companys account at Chromepet. This letter was signed by G. A. Chamebrs on behalf of the Chrome Leather Company. This letter shows that from December 1, 1932, K. Chambers would run the export business and that the accounts, of G. A. Chambers in the Chambers Co. would be transferred to the accounts of Chrome Leather Co. From that date the export business which K. H. Chambers was running earlier as manager would be companytinued by him in his own name that is, instead of as manager, as its own proprietor. Pursuant to the instructions given by G. A. Chambers, M s. Fraser Ross, the auditors, prepared a balance-sheet of the Chambers Co. and also the individual accounts of G. A. Chambers and K. H. Chambers. The balance-sheet shows that A. Chambers was given assets valued at Rs. 5,67,485- 10-2 and liabilities valued at Rs. 5,95,433-12-3K. H. Chambers was given assets valued at Rs. 55,214-2-3 and liabilities valued at Rs. 27,266-0-2. The liabilities given toK. H. Chambers includes the amount representing the difference between the value of the assets and liabilities given to G. A. Chambers. Broadly stated, the father had taken over the liabilities of the Company and assets, including buildings and machinery sufficient to discharge the liabilities, while the son was given the stock in trade and a small amount of debts. After this allotment, it is companyceded that K. H. Chambers companytinued to operate the same lines of business as was carried on by Chambers Co. taking over all the companystituents of that business, using the same premises, the same telephone number, Post Box No., private companyes and trade marks and the important sections of the staff that belonged to Chamber Co. On May 23, 1933. G. A. Chambers wrote to the Liverpool and London and Globe Insurance Company, Calcutta, wherein he stated We companyfirm our companyversation with your representative that inasmuch as we have transferred all our export business to Mr. K. H. Chambers, who is number running the business in his own name and at his own risk and responsibility, we shall be pleased if you will transfer the agency of your firm to him. It is also companyceded by the Department that G. A. Chambers utilized his good offices in getting the Liverpool and London and Globe Insurance Company to transfer the agency of that companypany to Chambers Co. run by K. H. Chambers. From the aforesaid documents and admissions the following facts emerge G. A. Chambers was companyducting two businesses, one under the name and style of Chambers Co. and the other under the name and style of Chrome Leather Company. The Chambers Co. was doing ,export business. Some months prior to July 7, 1932, K. H. Chambers invested a sum of Rs. 40,000 in the business companyducted by Chambers Co. and was actually managing the same. The business was running at a loss and the father was number anxious to companytinue the business and, therefore, he made some alternative suggestions to his son. But the son was anxious to companytinue the business independently. The changeover was effected after the accounts were audited and the balance-sheet was prepared by the Companys auditors and the father took over the old liabilities and assets sufficient to discharge them and the business was handed over to the son. Thereafter the son was carrying on the business of Chambers Co. in his own name, in the same pre- mises, taking over all the companystituents of Chambers Co., using the same companyes and trade marks and the important members of the staff of the Company. It is true that the name of Chambers Co. was retained by the father, but all the advantages of that name, as aforesaid, were transferred to the son. It is also true that some substantial assets of Chambers Co. were number transferred to the son, but they were retained by the father only for discharging the debts in order to help the son to carry on the transferred business without being burdened with heavy debts. The taking over of the assets and liabilities by the father was number for the purpose of companytinuing to do a business of his own in the same lines, but to facilitate the carrying on of the transferred business by the son effectively and profitably. On these facts, can it be held that there was numbersuccession to the business within the meaning of S. 25 4 of the Act ? Though there is numberclear and exhaustive definition of the expression succession, decided cases and textbooks throw some light on the subject. In Simons Income Tax, Vol. 2, 2nd Edn., it is stated at pp. 137-138 .lm15 In particular, argument from decided cases has resulted in the acquisition by the word succession of a somewhat artificial meaning. In order to companystitute a succession there must be, broadly speaking, a taking over of the whole of the business companycerned But if a business is taken over as a whole, the fact that minor assets of the business are omitted from the transfer will number prevent there being a succession. The fact that the purchaser already has a similar business is number a material fact in establishing succession. The purchase of a business with a view to closing it down would number appear to companystitute succession. Other questions which have been used as tests are 1 whether a similar trade has been carried on after the transfer 2 whether goodwill or other intangible assets are included in the transfer 3 whether staff is taken over 4 the treatment on transfer of the stock and debts of the transferor 5 whether there was an interval in the carrying on of the trade as a result of the transfer. Briton Ferry Steel Co., Ltd. v. Barry, 1940 1 B. 463, 476 . In Reynolds, Sons Co., Ltd. v. Ogston H. M. Inspector of Taxes 1 , Lord Hanworth, M. R., accepted the following tests laid down by Rowlatt, J., to ascertain whether there was a succession, namely You want to measure the income of the successor by the past history of the business, it is therefore essential that there should be a very close identity between the business of the former proprietorship and the business in the present proprietorship. The Rangoon High Court in Commissioner of Income-tax, Burma N. N. Firm 2 had to companysider the meaning of the word succeeded in S. 26 2 of the Income-tax Act. Page, C.J., giving the opinion of the Court, observed In order that a person should be held to have succeeded another person in carrying on a business, profession or vocation, it is necessary that the person succeeding should have succeeded his predecessor in carrying on the business as a whole. The Rangoon High Court again in The Commissioner of Income- tax, Burma v. A. L. V. R. P. Firm 3 reiterated the same principle. What is the meaning of the expression whole business has been the subject of other decisions. A Division Bench of the Patna High Court in Jittanram Nirmalram v. Commissioner of Income-tax, Bihar Orissa, 4 after companysidering the relevant decisions, both English and Indian, said that it was sufficient if there was substantial identity or similarity in the nature and extent of the activities carried on between the two firms i.e., the transferor and the transferee firms. The Court observed therein For the application of Section 26 2 or Section 25 4 it is number essential in every case that the successor 1 1929 15 T.C. 501, 527. 2 1934 2 I.T.R. 85, 87, 88. 3 1940 8 I.T.R. 531. 4 1953 23 I.T.R. 288, 296. firm should have mathematically the same extent of business as the predecessor firm or that it should have taken over the same extent of trade or the same line or set of customers as belonging to the predecessor firm number does it mean that the successor firm should have taken over all the different businesses which the predecessor firm had carried on. In Malayalam Plantations, Ltd. v. Clark H. Inspector of Taxes 1 the appellant- companypany therein, by an agreement dated March 28, 1928, acquired from another companypany, as from April 1, 1928, a rubber estate in India together with plantations. nurseries, factories, plant etc., and the benefit of companytracts and engagements whether with companylies or others, but did number take over any book debts or the vendors selling Organisation. It was companytended that there had been numbersuccession to a trade. In rejecting that companytention, Finlay, J., observed The substance of what was done, I think, clearly was this The thing was taken over as a going companycern, taken over with the things growing on it, and with the companylies employed to work the estate. I am number going into it any further because it is essentially a question of fact, but I cannot avoid the view that there was material upon which the Commissioners might arrive at the companyclusion that there was a succession. This is an authority for the position that if a business was taken over as a going companycern the mere fact that some assets, which were number required by the successor for carrying on of the business, were number transferred to him would number make it anytheless a succession in law. It is number necessary to multiply decisions. Succession involves change of ownership that is, the transferor goes out and the transferee companyes in it companynotes that the whole business is transferred it also implies that substantially the identity and the companytinuity of the business are preserved. If there is a transfer of a business, any arrangement between the transferor and the transferee in respect of some of the assets and liabilities number with a view to enable the transferor to run a part of the business transferred but to enable the transferee to run the business unhampered by the load of debts or for any other appropriate companylateral purpose cannot detract from the totality of succession. In the present case, the export business of the father was carried on by the son. The whole of the business was transferred, 1 1935 19 T.C. 314, 323. the identity was preserved and the same business was companytinued. The father reserved for himself some assets for the purpose of discharging the debts. He did so number for the purpose of running the same business by himself but only to help the son to carry on the same business more effectively. If so, it follows that on the facts found or admitted there is a clear case of succession in the present case. Learned companynsel for the Revenue argued that whether there was succession or number was a pure question of fact and the High Court had numberjurisdiction to question the companyrectness of the finding given by the Tribunal to the effect that there was numbersuccession to the business. This Court in Meenakshi Mills, Madurai v. The Commissioner of Income-tax, Madras 1 laid down the following propositions which are relevant to the question number raised before us Where an ultimate finding on an issue is an inference to be drawn from the facts found, on the application of any principle of law, there is a mixed question of law and fact, and the inference from the facts found is, in such a case, a question of law and is open to review by the Court. Where the final determination of the issue does number involve an application of any principle of law, an inference from the facts is a pure inference of fact although it is drawn from other basic facts. The proposition that an inference from proved facts is one of law is therefore companyrect in its application to mixed questions of law and fact, but number to pure questions of fact. In the case of pure questions of fact, the in- ference from proved facts being itself a question of fact can be attacked as being erroneous in law only if there is numberevidence to support it or if it is perverse. This distinction between a question of law and a question of fact was also brought out by some of the English decisions cited at the Bar. In Bell Surveyor of Taxes v. The National Provincial Bank of England, Ltd. 2 the Master of the Rolls observed The finding of the Commissioners upon that part of the case is this The Commissioners were of opinion 1 1956 S.C.R. 691. 2 1903 5 T.C. 1, 10, 12. that there was numbersuccession within the meaning of the said 4th Rule. That is, as my brother Mathew has pointed out, number a finding in fact that there was numbersuccession, but that the particular kind of succession which took place in this case was number a succession within the meaning of the 4th Rule. That is number a finding of fact, but a finding of law and companystruction based upon the fact that one existing Bank did acquire and take over, number for the purpose of extinction, but for the purpose of development, the existing business of another Bank existing in another place. So too, Mathew, L.J., stated No succession say the Commissioners within the meaning of the said 4th Rule. That is the proposition of law we have to decide as distinguished from fact, and we are entitled to differ from that view. In Wilson and Barlow v. Chibbett H. M. Inspector of Taxes 1 Rowlatt, J., observed The question was whether here there was a succession, which is a primary question of fact upon which, of companyrse, it is possible the Commissioners might take a wrong view of the law and apply false law. The learned Judge companycluded thus All I can say is that I do number see my way to say that can discern any sort of error in law here in the way in which the Commissioners have dealt with the case These observations imply that if companyrect tests are number applied in, companying to a companyclusion whether there is succession or number in a particular case, it can be re-opened by the High Court. In Malayalam Plantations, Ltd. v. Clark M. Inspector of taxes 2 , Finlay, J., after companysidering at some length the facts placed before him, refused to go further into the matter because the finding of succession was essentially a question of fact. But the facts in that case disclosed that the companyrect tests were applied and, therefore, numberillegality was companymitted by the Commissioners. The said decisions did number lay down that in every case the finding of succession is one of fact. Indeed, the first two decisions, 1 1929 14 T.C. 407, 412, 1 3. 2 1935 19 T.C. 314,323. clearly maintained that a finding on a question whether a succession is one within the meaning of a particular provision or whether it is vitiated by any error of law is number final. The English view is also in accord with that expressed by this Court. The question, therefore, is whether a finding that a person succeeded another in his business within the meaning of s. 25 4 ,of the Act is a finding of fact. The expression succession, as stated by Simon in his book on Income-tax, has acquired a somewhat artificial meaning. The cases we have companysidered supra ,and similar others have laid down some tests, though number exhaustive, to ascertain whether there is succession in a given case or number. The tests of change of ownership, integrity, identity and companytinuity of a business have to be satisfied before it can be said that a person succeeded to the business of another. Unless the facts found by the Tribunal satisfy the said tests, the finding cannot be companyclusive. The tests crystallized by decisions have given a legal companytent to the expression succession within the meaning of S. 25 4 of the Act and whether facts proved satisfy those tests is a mixed question of law and fact. If so, it follows that a question of law arose out of the Tribunals order and the High Court has jurisdiction to ascertain the companyrectness of the finding given by the Tribunal on the question of succession.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 464 of 1964. Appeal by special leave from the Award dated the September 29, 1962 of the Third Industrial Tribunal in Case No. VIII- 197 of 1960. V. Viswanatha Sastri, Anand Prakash and D. N. Gupta, for the appellant. C. Chatterjee, D. L. Sen Gupta and Janardan Sharma, for the respondent. The Judgment of the Court was delivered by Hidayatullah, J. The Dunlop Rubber Co. Ltd. was granted on January 21, 1963 special leave to appeal against the award of the Third Industrial Tribunal, West Bengal dated September 29, 1962. By that award the Tribunal set aside the dismissal from service of twelve workmen of the Company and ordered their reinstatement with companytinuity of service but awarded only 25 per cent of the back wages etc. during the period they were out of employment treating the period as leave. This dispute was referred by the Government of West Bengal on July 20, 1960 under s. 10 of the Industrial Disputes Act, 1947. The workmen were dismissed after a domestic enquiry companymenced on February 4, 1960 which was carried on exparte because these workmen did number choose to be present. The Tribunal held that the enquiry was number proper and some of the witnesses were re-examined before the Tribunal whose verdict was against the Company and hence this appeal. Eleven of these workmen belonged to what is known as the Dual Auto Mill and the twelfth was working on what is described as the Baby Mill. These workmen and several others stopped work from January 21, 1960 and they were placed under suspension on 25/27th January. Ten other workmen were also dismissed but they were taken back on the intercession of the Government of Bengal. The incident arose in the following circumstances In the processing of rubber which is used in the manufacture of rubber goods by the Company, a number of departments have to work in sequence. The Banbury Section prepares a mixture of rubber and chemicals and it is passed on to the Dual Auto Mill which, after further processing, turns out blocks of rubber called batches. Each batch is of about 1250 lbs. There were at the material time two Dual Auto Mills and they were working in three shifts and as each auto mill required the attendance of two workmen, twelve such workmen were employed to look after the two mills. Each shift was of 8 hours with half an hours rest for meals and an extra 20 minutes for emergencies. It was expected to produce and was, in fact, producing 17 batches till January 12, 1960. There was another mill called the Baby Mill but what it was used for is number quite clear on the record of the case. One of the dismissed workmen S. R. Sen Gupta--Check No. 252 was working on the Baby Mill and he was a protected worker. The workmen in this Company are grouped under three Unions the most numerous is Union No. 4145 which goes under the name of Dunlop Workers Union. This Union was registered but it was number recognised by the Company. Another Union which bears No. 729 and goes under the, name of Dunlop Rubber Factory Labour Union was recognised by the Company We need number refer to the third Union which does number figure in these proceedings. It appears that Union No. 4145, which came into existence in 1957, managed to capture all the elective seats open to the workmen by defeating the candidates set up by Union No. 729. There was great rivalry between the two Unions and the dismissed workmen belonged to Union No. 4145. It appears that Union No. 4145 had raised a demand for revision of wages etc. which was being resisted by the Company. The Baby Mill, the Banbury Mill and the Dual Auto Mills were manned by the workmen belonging to Union No. 4145, except one Raghunandan Das, Check No. 100, who belonged to Union No. 729 and was teamed with Chandramma Chaube one of the dismissed workmen. Raghunandan Das was absent on leave from January 12 to January 19, 1960. From January 12, there was a fall in the output of the Dual Auto Mills at all the three shifts. The number of batches fell from 17 to 15 and later still further. On January 15, 1960 warnings were issued to these workmen that they were going slow and that go slow action was misconduct under cl. 10 XVI of the Companys Standing Orders for operators and under cl. 18 C of the Labour Union Agreement for operators. They were told that if they did number immediately return to their numbermal output the Company would be forced to take disciplinary action against them. All the workmen were served with such letters. On January 19, Raghunandan Das joined his duties and was teamed again with Chandramma Chaube. It seems that Raghu- nandan Das found that Chandramma Chaube was number giving the full output and was taking more than the required time over the mixing operations. Chandramma Chaubes case, on the other hand, was that Raghunandan Das was number allowing sufficient technical time for the mixtures and he Chandramma Chaube was objecting to it. It may be pointed out that the workmen were. paid extra if they turned out more than the expected quota of batches and Raghunandan Das was anxious to earn more, if possible. Be that as it may, it seems that these two workmen quarreled on January 21 and Raghunandan Das abused Chandramma Chaube and also Union No. 4145. Immediately the members of 4145 Union threatened to stop work unless Raghunandan Das was removed from the Dual Auto Mill and transferred to another Department. The officers of the Company promised an enquiry but asked the workmen to go back to work. The workmen belonging to the 4145 Union refused to do this. As a result the Dual Auto Mills either remained closed or worked much below their capacity. The workmen were again and again requested and ultimately on 25/27th January they were called to the office so that they companyld be served with charge- sheets. They declined to accepted the charge-sheets and were there and then placed under suspension. The suspended workmen included these twelve workmen and ten others as already stated. One Mr. P. K. Maitra companymenced enquiry into the charges in the presence of Mr. R. M. Bhandari, an observer. At the companymencement of the enquiry each of the workmen asked for a representative of Union No. 4145 who was companyversant with the art of cross-examination to be present. Under the Standing Orders of this Company representation companyld only be by a member of a recognised Union but as Union No. 729 was anathema to the members of Union No. 4145 they would number avail of the services of any member of that Union. They elected to remain absent except R. Sen Gupta who, though their leader, appeared at the enquiry against himself and made a statement clearing himself but took numberfurther part in the enquiry. As a result of the enquiry, which was ex parte, Mr. Maitra held that these workmen were going slow and that they were guilty of the charge brought against them. He recommended the punishment of dismissal. The Company accordingly ordered their dismissal seeking at the same time the permission of the Tribunal under s. 33 of the Industrial Disputes Act and tendering one months wages to each workman. Later, the Government of West Bengal took interest in the matter and at the intercession of the Government the Company agreed to take back 10 of the workmen leaving it to Union No. 4145 to select the persons who should be taken back. All the workmen of the Banbury Mill were taken back and the 1 1 workmen of the Dual Auto Mill and Sen Gupta of the Baby Mill remained dismissed. The Tribunal in reaching the companyclusion that the dismissal was improper and that the workmen should be reinstated held that the Company had number really charged the workmen with go slow action but had found them guilty of that charge. It held that the Company was showing favours to Union No. 729 and was trying to put down the Union of the dismissed workmen. The Tribunal, however, held that the stoppage of work by the workmen amounted to strike as there were proceedings pending before the Tribunal, but since the strike was peaceful and number- vident it was only technically illegal. The Tribunal blamed the Company for companytributing to the strike by its refusal to shift Raghunandan Das from his place of work. In view of these findings the Tribunal held that the punishment of dismissal was number justified and the order number impugned was accordingly passed. The Tribunal was wrong in almost all its companyclusions. It was wrong in holding that the workmen were number charged with go slow action and therefore companyld number be dismissed on the finding that they were guilty of go slow. Under the Standing Orders of the Company go slow is a major misconduct. Clauses VIII and XVI of Standing Order 10 deal with insubordination or disobedience or failure whether alone or in companybination with others, to carry out any lawful and reasonable or proper order of a Superior cl. VIII and engaging or inciting others to engage in irregular or unjustified or illegal strikes malingering or slowing down of work cl. XVI . The charge-sheet stated as follows - You are hereby asked to show cause why disciplinary action should number be taken against you for the following misconduct under Operators Standing orders Clauses 10 VIII and XVI . The two clauses of Standing Order 10, as pointed out above, deal with insubordination and inter alia with going slow. It was companytended before us that the words go slow did number figure in this charge as they did in the charges against workmen in the Banbury AM. It is to be remembered that on January 15, 1960 these workmen had been expressly warned that they were going slow and that go slow action was misconduct under cl. 10 XVI of the Companys Standing Orders for Operators. No doubt Mr. Lobo, who drew up the charge, had number mentioned go slow in these charges as he had done in the charges framed against the workmen of the Banbury Mill, but it is nevertheless clear that these charges refer to go slow and indeed the workmen in their replies to the charge denied that they were going slow. It may be pointed out that Mr. Lobo had stated before the Enquiry Officer that the charge was go slow. The log books also showed that from January 12, 1960 against the Dual Auto Mills the remark was slow work. It is clearly established by the records produced that instead of 17 batches 15 batches or less were turned out at each shift. This proves that there was a deliberate go slow numbersooner Raghunandan Das left on leave and the Dual Auto Mills came into the exclusive hands of Union No. 4145. This Union thought that the opportunity was too good to be wasted to force their demand for increase of wages by the tactics of go slow. The explanation of the workmen that the mixture received from the Banbury Mill was too companyd and had to be reheated before it companyld be processed in the Dual Auto Mills was false. They attributed the companyling of the mixture to the working of a new machine called the festooner from the 12th of January. It is clear that this machine was tried for three months before it was put into operation and had worked for three months prior to January 12, 1960 and so such companyplaint had been made by the workmen. It is possible that the Banbury Mill operators, who were also suspended and dismissed, were companyling the mixture unduly by means of their blower to delay operation. But whether the Banbury Mill companyled it and the Dual Auto Mills were required to reheat it or the Dual Auto Mills delayed the operations, it is clear that the motivating force behind it was the action of Union No. 4145 to force the hands of the Company in support of their demands. It is sufficient to say that after the new workmen had got trained in the working of the Dual Auto Mills the production again reached the same number of batches and after the figure was even better though the festooner companytinued in operation. We are satisfied that the workmen were going slow from January 12, 1960, that the charge of go slow was incorporated in the charge-sheet read with the warning letter and that it was fully substantiated. This amounted to misconduct under Standing Order No. 10 and was number a minor offence as companytended before us by their learned companynsel. The minor offences deal with companyduct of a very different kind. The Tribunal was also wrong in thinking that there was a denial of natural justice because the workmen were refused the assistance of a representative of their own Union. Under the Standing Orders it is clearly provided that at such enquiries only a re-presentative of a Union which is registered under the Indian Trade Union Act and recognised by the Company can assist. Technically, therefore, the demand of the workmen that they should be represented by their own Union companyld number be accepted. It has been ruled by this Court in Kalindi Ors. v. Tata Locomotive Engineering Co. Ltd. 1 and Brook Bond India P Ltd. v. Subba Raman 2 that there is numberright to representation as such unless the Company by its Standing Orders recognises such a right. 1 1960 3 S.C.R. 407. 2 1961 11 L.L.J. 417. Refusal to allow representation by any Union unless the Standing Orders companyfer that right does number vitiate the proceedings. It is true that only the rival Union was recognised and there was hostility between the two Unions. The quarrel itself which sparked off the strike was also between two representatives of the rival Unions. In such circumstances it is idle to expect that these workmen would have chosen to be represented by a member of the rival Union and the Company might well have companysidered their demand to be represented by any other workman of their choice. The workmen, however, insisted that the representation should be in the capacity of a representative of their own unrecognised Union. In other words, they were desiring recognition of their Union in an indirect way. The dispute, therefore, was carried on by these workmen with the twin object of achieving their demand for increased wages and also for the recognition of their Union. The implication of their demand that they should be represented by a member of their own Union was number lost upon the Company and the refusal to allow representation on these terms cannot be characterised as a denial of natural justice or amounting to unfair play. If the Company had been asked that the workmen wished to be represented by a workman of their own choice without the additional qualification about Union No. 4145 it is possible that the Company might have acceded to the request. We think, the Company might have asked the workmen to delete all reference to Union No. 4145 and allowed them to have a representative of their own choice in the special circumstances of this dispute. But we cannot say that the action of the Enquiry Officer was for that reason illegal or amounted to a denial of natural justice. In this companynection, we have repeatedly emphasised that in holding domestic enquiries, reasonable opportunity should be given to the delinquent employees to meet the charge framed against them and it is desirable that at such an enquiry the employ should be given liberty to represent their case by persons of their choice, if there is numberstanding order against such a companyrse being adopted and if there is numberhing otherwise objectionable in the said request. But as we have just indicated, in the circumstances of this case, we have numberdoubt that the failure of the Enquiry Officer to accede to the request made by the employees does number introduce any serious defect in the enquiry itself, and so, we have numberhesitation in holding- that the result of the said enquiry cannot be successfully challenged in the present proceedings. It follows that the two main reasons for interfering with the order of dismissal do number really exist. The charge was under cls. VIII and XVI of Standing Order No. 10. It said so and its meaning was quite clear to the workmen who, according to plan, were definitely going slow from January 12, 1960 when the Dual Auto Mills passed into the companytrol of workmen belonging to Union No. 4145. The demand of the workmen, companyched as it was, companyld number be granted by the Enquiry Officer, because the Standing Orders did number permit representation by a member of any but a recognised Union. The additional reasons given by the Tribunal that later the demands of this Union were accepted in respect of wages can hardly justify the action of these workmen in going on an illegal strike and in declining to resume work unless what they demanded was done. There was thus justification for the order passed by the Company. It is on record that the Dual Auto Mills perform a key operation and numberrubber goods can be produced without the batches being available. By their action these workmen slowed down production of every category and by their refusal to work when asked to g0 back to work cause enormous loss to the Company. The motive underlying the action is more deep seated than a mere quarrel between Chandramma Chaube and Raghunandan Das or the abuses which Raghunandan Das is alleged to have showered on Chandramma Chaube and his Union. It is companytended that there was discrimination between the Banbury Mill and the Dual Auto Mills because workmen of the Banbury Mill were reinstated but number the workmen of the Dual Auto Mills. The discrimination, if any, was made by Union No. 4145 which numberinated those who should be taken back in service. There must be some reason why the Banbury Mill workmen were treated differently and if we are to hazard a guess, it seems that those workmen were number sending out a companyd mixture as alleged but that the Dual Auto Mill workmen were taking more time on their own operation. The production was slowed down number by the Banbury Mill operators but by the Dual Auto Mill operators. In other words, the Banbury Mill workmen, though they joined in the strike, did number probably join in the go slow, but the Dual Auto Mill workmen number only started go slow but also led the strike affecting a large number of workmen. In any event the workmen chosen for reinstatement. were chosen by their own Union and it cannot be said that the Company made any discrimination. We are satisfied that in this case the Tribunal was number justified in interfering. It has acted as a companyrt of appeal in scrutinizing the evidence and in reaching companyclusions of its own. We are also satisfied that the companyclusions reached by it were number justified on the evidence in the case. In these circumstances, we think that the order passed by the Tribunal should be vacated and the order passed by the Company ought to be accepted. It is a pity that these workmen, who, on their own admission were better paid than in any other Organisation should lose their job in an attempt to get an indirect recognition of their Union. But it cannot be helped because the Company must have a free hand in the internal management of its own affairs. No outside agency should impose its will unless the action of the Company is lacking in bona fides or is manifestly perverse or unfair. There is numberhing to indicate this. At the same time we must say that existence of Union No. 4145 which has a larger membership than Union No. 729 which is the only recognised Union, has in a great measure companytributed to this dispute. We have often numbericed that Companies favour one Union out of several and thus create rivalry which disturbs industrial peace. It often turns out that this has adverse effect on Company itself. Since Union No. 729 was formed in 1950 and Union No. 4145 in 1957 we cannot say that the number-recognition of Union No. 4145 was deliberate. But as that Union seems to be the stronger of the two Unions the Company should seriously companysider whether Union No. 4145 should number also be recognised. The appeal must succeed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 56 of 1962. Appeal by special leave from the judgment and decree dated March 3, 4, 1958 of the Bombay High Court in Appeal No. 27 of 1957. Purshattam Tricumdas, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. N. Sanyal, Solicitor-General, N. P. Nathwani, AtiqurRehman and K. L. Hathi, for respondents Nos. 1-3, 5, 6, 8-17, 19 and 20. The Judgment of the Court was delivered by Ayyangar, J. This appeal, by special leave, raises for company- sideration a very short point regarding the proper companystruction of bye-law 137-B of the Bombay Bullion Association Ltd., which will hereafter be referred to as the Association and in particular whether on the facts established in this case the requirements of the said bye- law has been satisfied. The appellant is a member of the first respondent-the Association and carries on business as a bullion merchant. By a numberification dated March 14, 1949, the Government of Bombay in exercise of the powers companyferred by s. 6 of the Bombay Forward Contracts Control Act, 1947 Bombay Act LXIV of 1947 sanctioned by the bye-laws framed by the Association. Under the said Act the members of the Association were permitted to carry on forward dealings in bullion subject to the said bye-laws. The appeal is companycerned with the regularity of a purchase effected by the Association purporting to act under its bye-laws, of a quantity of silver at the risk of the appellant, on the footing that he had defaulted in performing his companytract as a seller on February 3, 1953 which was a settlement day. The Association made this purchase treating the appellant as a defaulter and claimed from him the difference which amounted to Rs. 1,37,880-12-0. The appellant paid this sum when demanded on the 5th February under protest but on the next day he filed the suit out of which the present appeal arises against the Association and its Directors for its refund on the ground that the purchase at his risk by the Association was invalid as companytrary to the bye-laws and was, therefore, number binding on him. The appellant did number dispute that he defaulted in performing his obligation to tender the bullion of which he was the forward seller on the settlement day as he was bound to do under the relevant bye- laws but the point on which he attacked the purchase was that numberpurchase companyld be made unless the forward purchasers for that settlement had fulfilled the terms of their obligations under the bye-laws and that as they had failed to do so, the Association had numberright to effect a purchase on behalf and for the benefit of such defaulting purchasers. The suit was tried before Coyajee J. on the Original Side of the Bombay High Court. The learned Judge recorded a finding that there had been numberdefault on the part of the purchasers and he, therefore, dismissed the suit. An appeal preferred by the appellant to a Division Bench also failed and it is the companyrectness of this decision of the High Court that is challenged in this appeal. Though the evidence went into minute details as to the things that happened on the Vaida day-February 3, 1953 and in particular whether the several parties who figured as purchasers on the Vaida day had or had number paid in their cheques into the Clearing House of the Association on February 3, 1953 as they were bound to do under the bye- laws, it is number necessary for us to go into this matter because there is a companycurrent finding of fact of both the Courts that each one of the cheques of the several purchasers was, paid into the Clearing House on February 3, 1953, though it is number clear from the evidence that entries in regard to some of these transactions which took place on February 3, 1953 were made by the receiving bank or by the Clearing House only on the 4th. It is on the basis of this finding which companyld number be and was number challenged before us that we propose to deal with the points urged before us in this appeal. There is also one other matter which is referred to in the pleadings as well as in the judgments of the High Court which also we are putting aside. This relates to a plea by the appellant that the Director-, of the Association had acted mala fide in permitting certain infractions of bye- laws on the 3rd February by purchasers who would otherwise be in default and treating them is if they had fulfilled their obligations. The suggestion was that some of the members of Board of Directors had, in their individual capa- city, figured as purchasers at the said settlement and that it was this personal interest of theirs that led to their favouring the group of purchasers as against the sellers at this Vaida. There was numberhing in the evidence in support of this plea and Coyajee, J. having negatived it, the same does number appear to have been pressed before the Division Bench. Mr. Purshotam-learned Counsel for the appellant did number seek to reagitate this matter, as indeed he companyld number, and hence this aspect also might be excluded from companysideration. This leads us to the main question which it would be apparent from the above narrative is whether those who made forward purchases for this Vaida had fulfilled their obligations under the bye-laws. Now, the first matter that requires to be numbericed is that the settlement for the Maha Vaida was originally fixed to February 2, 1953. Bye-law 32 of the Association empowers the Board to fix the days of settlement in these terms 32. 1 The settlement days shall be fixed by the Board or the Sub-Committee appointed by it keeping in mind the provisions or these Rules and bye-laws. but el. 3 of the same bye-law empowers the Board if of opinion that circumstances exist which require an alteration of days so fixed by cl. 1 the Board -may postpone such settlement day for a period number exceeding 5 days. It was in exercise of this power that the Vaida day was postponed from February 2, 1953 to February 3, 1953. No dispute was raised by the appellant regarding the companypetence of the Board to effect this change of date or to the validity of the change effected thereby. Bye-law 120 makes provision for the establishment of a Clearing House for effecting a settlement on the Vaida days. This bye-law reads Clearing House -A Clearing House shall be established under the jurisdiction of the Board to act as an ordinary agent of the members for settling forward transactions effected between members in gold, silver and sovereigns by exchanging delivery orders as also for making payment of the amounts of difference through the Clearing House. Under the powers thus companyferred the Bank of Baroda which opened a branch at the premises of the Association were appointed as the Clearing House. Bye-law 125 provides for the appointment of a Clearing House Committee by the Board of Directors of the Association. Bye-law 127 specifies the powers and duties of the Clearing House Committee and this runs Powers and duties of the Clearing House Committee - The Clearing House Committee shall settle forms of clearing sheets, delivery forms, Kaplis slips relating to payment of differences and delivery of goods and other necessary documents for being used for the work relating to the Clearing House and every member shall have to use the said forms or other forms of the same size and with similar writing. The said Committee shall from time to time fix charges for the said forms. It shall issue instructions with regard to the work of the Clearing House and every member shall act according to the same. If any member does number act according to any such instructions or companymits any error or mistake in filing in any form or other document or writes so illegibly that it cannot be deciphered or makes delay in submitting, any such form or document to the Clearing House, then in every such case, the Clearing House Committee can impose on any member a penalty number exceeding Rs. 500. Sub-Committee can be appointed for attending to the work relating to this sub- clause. It shall fix Havala rates in respect of outstanding transactions transactions, which are number squared up between two members and all members shall enter Havalas in respect of such outstanding transactions which are number squared up at these rates and also prepare statement of differences at those rates. Delivery orders also shall be issued at these very rates. The Havala rates in respect of transactions are given to facilitate the settlement. That does number in any way reduce the liability in respect of transactions. The Clearing House Committee may declare any member as a defaulter and for that purpose, it shall have power to pass such resolutions and orders as it deems proper and necessary. If, in companynection with any forward settlement, the Clearing House-- finds, it difficult to make settlement on the days fixed for settlement, then the Clearing House Committee shall have power to make a change of 48 hours at the maximum in all or any settlement days relating to that forward settlement. Bye-law 134 1 reads 134. 1 The member who wants to have his transactions settled through the Clearing House shall have to send to the Clearing House a clearing sheet in the settled form form No. 1 on the days fixed for that purpose which day will hereafter be known as he Clearance Day . Bye-law 137 specifies the obligations of members of the Association who give delivery and it reads The member who has to give delivery shall have to submit to the clearing house as many delivery orders signed by him as there would be, upon a calculation on the basis of every delivery order being either for five bars of silver or for 1,000 tolas of gold bar, or for 1,000 sovereigns. If any member has sent delivery orders without signing he shall attend the Clearing House at 10 A.M. in the morning on the date fixed for giving delivery orders by the Clearing House and shall sign the delivery orders. If the Clearing House finds it necessary it can call for further delivery orders from any member, and the member shall have to furnish the same forthwith but if the goods are with a bank he shall have to give delivery orders on the bank directly as mentioned above. Bye-law 137-A 1 deals with theobligations of a member whose clearance sheet shows outstanding sales and it reads 137-A 1 . A member whose Clearance Sheet shows outstanding sales shall submit to the Clearing Housewith hisdelivery orders a companyplete list of bars gold or silver in his possession or in the possession of his Banker inBombay with their number and marks, to bedelivered against such delivery orders. As stated earlier, it is number companymon ground that the appellant did number carry out his obligations under this bye- law. Bye-law 137-B whose proper companystruction is raised by this appeal deals with the obligations of members whose Clearance Sheet shows outstanding purchases. It reads 137-B. A member whose Clearance Sheet shows outstanding purchases will submit to the Clearing House with his Clearance Sheet a cheque certified good for payment or a demand draft on a Bank or a Banks payslip or cash for an amount sufficient to pay for all his outstanding purchases at the rate fixed by the Association. Failing payment as aforesaid the purchases outstanding in the Clearance Sheet or a part thereof will be auctioned at the purchasers risk on the same day. The cheques, demand drafts etc., so received by the Clearing House will be paid into the Clearing House Account in the Bank of Baroda Ltd., Bullion Hall Subbranch, and crossed cheques payable to bearer or payslips of the said Bank in favour of the sellers whose delivery orders are given by the Clearing House to the purchasers will be handed over by the Clearing House to the said purchasers. The sellers shall give delivery of the goods companyered by the delivery order to the said purchasers against such cheques or payslip issued by the said bank. Refusal by a seller to give delivery of goods companyered by his delivery order to the purchaser against such a cheque or payslip during the time fixed for giving delivery, will amount to failure to give delivery and companysequences in Bye-law 147 will ensue. It was number companytested that if by the transactions to which we shall refer presently, members whose Clearance Sheets showed outstanding purchases had fulfilled their obligations under Bye-law 137-B, the Association was entitled to effect the purchases at the risk and companyt of the appellant under the succeeding bye-laws which companyfer upon the Association this power to effect purchases or sales to square the transactions of defaulting members. An analysis of the bye-law 137-B would show that a member whose Clearance Sheet showed outstanding purchases had, on the Vaida day, to file his Clearance Sheet and to make a payment into the Clearing House of an amount sufficient to pay for all his outstanding purchases at the rate fixed by the Association. This payment had to be made along with the Clearance Sheets and had to be in one of four forms a a cheque certified good for payment, or b a Demand Draft on a bank, or c a banks pay-in-slip, or d cash. The question raised in this appeal, relates to whether certain of the purchasers had made payments into the Clearing House of the amounts payable by them in any of the permitted modes. Before proceeding further we might add that the Bank of Baroda which was the Clearing House admitted that the amounts required to be paid by the several purchaser-members had been received by it on the 3rd and the total amounts represented by these payments were credited to the Association. Before setting out the matters in companytroversy as regards the form of payment adopted by certain purchasers under bye-law 137-B, it is necessary to premise the narrative by a few facts. As already stated, the Bank of Baroda Ltd. had been appointed as the Clearing House of the Association under bye-law 120 in or about 1949 and had been functioning as such ever since. To facilitate payments by and between members the Bank had opened a special branch called the Bullion Hall Sub-branch in the premises of the Association itself. Bye-law 174 3 required every member to open an account in the Bank, so that it might be companyvenient to pay or draw cheques for effecting clearance. All the members had, in pursuance of and in obedience to this bye- law, opened such accounts. The Bank issued special pay-in-slips for doing its business as a Clearing House. These slips were in triple foil, all of which had to be filled in by the member making the payment. When a member made a payment into the Bullion Exchange Branch of the Bank the extreme right of the three parts which recited the payment to the credit of the Clearing House of the Association by the member named and of the amount, also specifying the particulars of the payment would be signed or initialled by the Cashier and Ledger Keeper and be retained with the Bank. The paying-in-slip companysisting of the other two parts in which similar entries were made and bearing the signature or initials of the Bank authorities was handed over to the member making the payment. He had thereafter to present this slip to the Clearing House along with the Valan or the Clearance Sheet, and thereupon the Clearing House department would endorse receipt on the part to the extreme left which would be returned to the member-the other part being retained by the Clearing House. The settlement for the Vaida on February 3, 1963 appears. to have been an exceptionally heavy one on account of the very large volume of sales and purchases for that settlement and there was a total outstanding sale of 1897 bars of silver with, of companyrse, companyresponding purchases of the same number. Sellers of 1,004 bars gave delivery orders as required by bye-laws 137 and 137-A but the appellant who had an outstanding sale of 853 bars failed to submit to the Clearing House the necessary delivery orders. The purchasers of the 1,897 bars had, under the bye-laws, to submit their Clearance Sheets and make payments into the Clearing House in the manner provided by bye-law 137-B of a total sum of Rs. 88,31,050 by February 3, 1953. By reason of the extraordinary situation created by the heavy payments having to be made companypled with a strike of the Clerks of the members on the previous day, the Directors of the Association passed a resolution extending the time for payment and delivery of Clearance Sheets beyond the usual banking hours to 7 P.m. on the 3rd February. The point in companytroversy in the appeal is whether this amount had been paid into the Bank on the 3rd February to the credit of the Clearing House in the manner provided by bye-law 137-B. Out of the Rs. 88,31,050, some amount was paid in cash, Rs. 42,99,400 by cheques drawn by members on their respective accounts with the Bullion Hall Sub-branch of the Bank of Baroda Ltd. in favour of the Associations Clearing House account, Rs. 24,64,050 by four pay slips of other banks in favour of the Bank of Baroda Ltd., Rs. 15,30,150 by transfers by two members from their accounts with the Jhaveri Bazar branch of the Bank of Baroda Ltd., to the Bullion Hall Sub-branch for payment to the Association, Rs. 4,65,000 was by a cheque drawn by a member on his account with the Fort Branch of the Bank of Baroda Ltd., in favour of the Association, Clearing House Account. Of these, the submission of the appellant was that only the cash payment was a proper one and that the rest were number made in accordance with bye-law 137-B. Before dealing with it, however, it might be stated that the Bank of Baroda Ltd. Clearing House submitted a statement on February 4, 1953 stating that all the payments totalling Rs. 88,31,050 had been received by it as a Clearing House and had been credited to the Association. Now, taking first the amounts paid by cheques drawn by mem- bers on their accounts in the Bullion Hall Sub-branch, several points were urged in support of the companytention. The first was this On February 3, 1953 the banking hours ended at 2.30 P.m. and several of the payments into the Clearing House Account by cheques drawn on the Banking account at this branch were made after that hour. It was, therefore, companytended that even if there was enough money in the accounts of the several members to meet the cheques drawn by them, still their cheques companyld number be treated as cash as the banking hours had passed. This was answered by the Division Bench by pointing out that there was numberhing illegal in the bank functioning for the purpose, of the members of the Clearing House after 2.30 P.m. that day. There was evidence before the Court that the ledgers and other books of account in the bank were available for being looked into to ascertain whether a members account had sufficient funds to meet the cheques which had been drawn. There was also evidence that the state of the members account was ascertained before the triplicate form was accepted by the bank and the two left side foils passed on to the depositing member for being handed over to the Clearing House and, as we stated earlier, on the next day the bank submitted a statement acknowledging receipt of the amount of the several cheques and showed their amounts to the credit of the Association. In these circumstances, the learned Judges of the High Court came to the companyclusion that there had been a payment as required by the bye law 137-B on February 3, 1953. L3Sup./65 We entirely agree with the High Court as regards the alleged illegality said to have been caused by the Bank accepting cheques after the close of the usual Banking hours. It would be numbericed that the extension of the banking hours from 2.30 P.m. to 7 p.m. that day was number in companytravention of any statute and whatever the position might have been, if such extension acted to the detriment of a companystituent of the bank, in the case on hand it was really for the benefit of the customer. In those circumstances, there was numberhing illegal and, of companyrse, numberhing improper in the banking business having companytinued so long as the work of the bank as a Clearing House companytinued. There were also other objections raised to support the argument that these payments were companytrary to bye-law 137-B. To appreciate them it would be necessary to state a few more facts. From the analysis that we have made of payments that were made into the Clearing House by the purchasers in satisfaction of the amounts due by them for the settlement, Rs. 42,99,400 were by way of cheques drawn on the Bullion Hall Sub-branch of the bank. We have also stated that the staff of the bank to whom the cheques were presented had endorsed on the slips that there were sufficient funds in the account to enable the cheque to be cleared and that it was after this process that the pay-in-slips were presented to the Clearing House with the Clearance Sheets in fulfilment of their obligations under the bye-law. In regard to these payments by transfer entries to the credit of the Association it was urged That several of the members numbering about 17 or so, did number, in fact, have enough funds in their accounts before 7 P.m. that day to enable the cheques which they drew in favour of the Clearing House to be honoured and that in companysequence numberwithstanding the acceptance of the cheques by the bank, such a payment companyld number be deemed within bye-law 137-B. It was companymon ground that at 2.30 P.m. on the 3rd of February the amount to the credit of several of these members was number sufficient to enable the cheques which they issued later in the day to be cleared. But before the cheques were actually presented the purchaser-members paid into their accounts a refunds which they obtained of margin moneys which they had deposited with the Association and to which they were entitled under the bye-laws and b other cheques in favour of the Bank of Baroda. Taking up first the margin money refunds, purchasers had, under the bye-laws, to pay margin moneys on their purchases and these had to be refunded to them on fulfilment of certain companyditions. Me amounts originally paid as margin by the purchasers had been credited to the Association and when the amount had to be refunded payment orders were made out by the Association on the 3rd of February of the amounts due to be refunded and these refund orders were paid by the respective purchasers to the credit of their accounts and their accounts were so credited with the Bullion Hall Subbranch. It was number the case of the appellant that the members were number entitled to the refund granted by the Association but what was objected to was that the refunds were really number due that day and had been improperly paid over by the Association in advance of the time when it was due Bye-law 33-C 2 deals with the refund of margin money and it reads Where the companyditions described in clause a or b as the case may be, cease to exist, the Association shall return the margin amount to the members companycerned on the day following the next clearance day after making the necessary adjustment. On this the appellants case was that the margin money companyld have been returned only on the 4th and that the Association acted improperly in refunding the amounts to the purchasers on the 3rd itself to enable them to utilise that money for the purpose of making their payments towards the settlement. We do number see any sub. stance in this companyplaint, number do we see any relevance of this to the point number in companytroversy, viz., whether there had been a companypliance with bye-law 137- As already pointed out, the Vaida was originally fixed for the 2nd of February and if that had stood the amount would have been refundable on the 3rd. It was, however, owing to a strike of the Gumashtas of the members that a situation had arisen by reason of which the Vaida had to be postponed by a day. Whether as urged by Mr. Purshottam, that upon the proper companystruction of bye-law 33-C that when a Vaida day is shifted the day fixed for the refund of the margin money also gets shifted or whether it would be payable on the day originally fixed, would, in our opinion, make numberdifference to the result. The bye-law imposes an obligation on the Association to refund the margin money on the day next after the Vaida. On its terms, however, if the companyditions of cls. a b cease to exist, and obviously they ceased to exist in the present case even on the 2nd, there is numberhing in the bye-law to preclude the Association from refunding the margin money. Again, even if the margin money were returned before such refund companyld be legally enforced, the propriety or impropriety of the refund would have numberbearing on the only point for companysideration relevant to the question whether bye-law 137-B was companyplied with or number viz., whether the accounts of the members were in credit at the time the cheques were presented. The next category of objection under this head was in relation to the bank having given credit to one of the members for the amount of a cheque of Rs. 2,00,000/- which was drawn on the Bank of India, Australia and China. Now, the evidence in the case was that this companystituent-Khimji Poonja Co. had to pay Rs. 4,65,000/- as a purchaser. He had a credit balance at 2.30 P.m. on the 3rd of Rs. 1,93,215/13/5. To enable him to meet the cheque for Rs. 4,65,000/- which he drew on the Bullion Hall Sub-Branch he paid into his account Rs. 1,05,500/- as refund of margin money. Besides, he drew a cheque for Rs. 2,00,000/on his account with the Bank of India, Australia China in favour of the Bank of Baroda and paid this cheque to the credit of his account with the Head Office of the Bank of Baroda. The Head Office intimated this credit to the Bullion Exchange Branch and when he presented his cheque for Rs. 4,65,000/- to the Bullion Exchange Branch the same was honoured and the amount credited to the Association. The learned Judges accepted this evidence and the explanation and held that this companystituent had enough funds with the Bank to meet the cheque of Rs. 4,65,000/- which he drew. Mr. Purshottam challenged the credibility of this evidence. We do number, however, propose to go into it for the reason that if, as a matter of fact, the Bank of Baroda as a Banking Institution gave Khimji Poonja Co. credit for Rs. 2 lakhs that was a matter between those two parties and is number a matter which bears upon the validity of the payment for Rs. 4,65,000/- which Khimji made. It is number disputed, or rather it cannot be disputed that the Head Office of the bank credited Khimji Poonja Co. with the sum of Rs. 2,00,000/- and there is evidence as to the intimation of this credit by the Head Office. Of companyrse, the cheque by Khimji on the Chartered Bank was number certified good for payment but that was number a payment under bye-law 137-B. The Head Office accepted it and therefore numberhing follows from their number having insisted on that cheque being certified. The fact remains that the Head Office accepted that cheque we shall take it in anticipation of being cleared, and as a fact it was cleared the next day. With the propriety of the Head Office of the Bank crediting the companystituent with the amount of that cheque before actual realisation neither the Bullion Exchange Branch number the Association to whose account the sum of Rs. 4,65,000/- represented by the cheque drawn in their favour was credited, number the appellant are companycerned. When once the Bank credited that sum into the account there was enough credit for meeting the cheque of Rs. 4,65,000/- which is the only point we are companycerned with. The third head of objection that was raised, and this was the one which was the subject of strenuous companytest in the High Court and before us, was whether the cheques on the Bullion Exchange Sub-branch which were paid in with the Clearance Sheets were certified good for payment within bye-law 137-B. It was urged that only four modes of payment were recognised and that a cheque even on the customers account in the same bank was still a cheque and that unless It was certified good for payment it did number satisfy the requirement of a valid payment within bye-law 137-B. In this companynection it was stressed that having regard to the companysequences flowing from a payment or number-payment on the terms of the bye-laws a strict and literal companystruction of the bye-law was called for and that the Courts should so companystrue the bye-law and hold that a literal and number merely a substantial companypliance with it in the sense of the Clearing House having received payment would satisfy the rule. In companynection with the submission that cheques drawn against the customers account in the same branch of the bank companyld number be cheques certified good for payment even though there were enough funds to meet the cheques, learned Counsel drew our attention to the fact that certification of a. cheque was a well known form of companymercial procedure which bankers adopted for the purpose of clearance by which the certifying and the Clearing bank became bound to each other. Reliance was, in this companynection, placed on the observations of the Privy Council in Gaden v.The Newfoundland Savings Bank 1 where it is stated The only effect of the certifying is to give the cheque additional currency by showing on the face that it is drawn in good faith on funds sufficient to meet its payment, and by adding to the credit of the drawer that of the bank on which it is drawn. Reference was also made to the judgment of Lord Wright in Bank of Baroda v. Punjab National Bank 2 where the histroy of certification or marking of cheques in India is dealt with. We do number, however, derive any assistance from these decisions on the point number in companytroversy. The first thing to be numbericed about this objection as to certification is that there is numberquestion of certification where a cheque drawn on an account in a branch of a bank is paid into the same branch to the credit of another party who has an account in that branch. Certification is a method adopted when a 1 18991 A.C. 281 at p. 285. 2 71 I.A. 124. bank on which a cheque is drawn verifies the customers account on which it is drawn and indicates on the cheque that there are enough funds in his account to meet that cheque. It is obvious that there companyld be numberquestion of such -a certification by a bank of a cheque ,drawn on an account in a branch when the drawer pays it to the credit of a different account in the same branch. The verification of the account of the companystituent for the purpose of ascertaining whether there is enough credit to meet the cheque which precedes a certification takes place at the very moment when the cheque is cleared. There is therefore numberquestion then of two banks-a certifying bank on which the cheque is drawn and a clearing bank into which that cheque is paid. In such circumstances, we should companysider- that the proper view to take of the payment would be that it is really a payment in cash. The Privy Council had, in Arsene Larocque v. Hyacin the Beauchmin, 1 to companysider whether the payment a companypany by receipts given by it on account of the purchase price of the property which they sold was a payment in cash. In dealing with this question Lord Macnaghten quoted with approval the following from the judgment of James L. J. in Spargos 2 case It was said by the Lord Chancellor, and we entirely companycurred with him, that it companyld number be right to put any companystruction upon that section s. 25 of the Companies Act, 1867 which would lead to such an absurd and un- justifiable result as this, than in exchange of cheques would number be payment in cash, or that an order upon a banker to transfer money from the account of a companypany would number be a payment in cash. and another passage from the judgment of Mellish, L.J. It is a general rule of law that in every case where a transaction resolves itself into paying money by A to B and then handing it back again by B to A, if the parties meet together and agree to set one demand against the other, they need number go through the form and ceremony of handing the money backwards and forwards. We companysider these observations apposite and hold that where a payment was made by a cheque drawn on an account with the Bullion Exchange Sub-branch and the amount represented by that cheque was transferred to the Clearing House Account of the Association it is virtually a payment in cash, though in form a payment by cheque. 1 1897 A.C. 358. L.R. 8 Ch. 407. The next transaction to which objection was taken was a payment into the Bullion Hall Sub-branch of a sum of Rs. 4,65,000/- by one Sri Bansilal Sons. The evidence was that the cheque was drawn number on his account on the Bullion Hall Sub-branch of the Bank of Baroda but with the branch of the Bank at the Fort, Bombay. The evidence which the Court accepted was that on the presentation of the cheque the staff ascertained that the companystituent had enough funds in the bank for the cheque to be cleared and accepted it and credited the same to the account of the Bullion Exchange Association. The objection raised to the receipt of this payment was also founded on the cheque number being certified as good for payment. It will be numbericed that the only point of difference between this cheque and the cheques which were drawn on accounts of members with the Bullion Hall branch which we have dealt with just number is, that the cheque for Rs. 4,65,000/was number drawn on the drawers account with the Bullion Hall Subbranch but on an account in the same bank at the Fort branch. For the purpose of companysidering this point it is number necessary to enter on any examination of the question as to what extent the two branches of the same bank are separate entities. There is numberdoubt that a customer cannot claim to draw cheques except on the branch where his moneys are deposited and on the account in respect of which the cheque is issued. But that is number what is in companytroversy in the present case. Here a cheque drawn on the Fort Branch is paid into the Bullion Hall Sub-branch to the credit of the Association. The Bullion Hall Sub-branch of the bank accepts that cheque and credits it to the Association after ascertaining that the drawer of the cheque has enough funds at the Fort branch for meeting that cheque. The only question is whether the payment companyld be treated as by a cheque which is certified as good for payment. We companysider that what we have stated earlier as to the position in regard to a cheque drawn on an account in the same branch would also apply to the present case and that a certificate of the banker that is referred to in the bye-law is a certificate of a bank different from that into which the cheque is being paid. Even if there be any doubt in this matter we are satisfied that when once the staff at the Bullion Hall Sub-branch ascertained that the cheque was backed by sufficient funds to the credit of the customer in the account on which it is drawn, it satisfies the requirements of a cheque certified as good for payment within bye-law 137-B. The learned Judges of the High Court, therefore,, rightly held that this payment was number outside the payments permitted by the said bye-law. The last of the cases companycerns a payment by one Jethalal Sangji Shah of a cheque for Rs. 1.16,250/-. The cheque was made in favour of the Bank of India Ltd. number certified good for payment and was paid into the Bullion Hall Sub-branch. The Clearing House received this cheque from Jethalal Sanagi Shah after obtaining a declaration from him that he had enough credit in his account with the Bank of India for meeting that cheque. It was stated that the Directors of the Association were approached by the Bank as to whether this cheque companyld be received in payment and that it was on their advice that a declaration in the form specified was taken from the member and it was only thereafter that the payment was accepted as companyforming to bye-law 137-B. Mr. Purshottam submitted that this payment companyld certainly number be within bye-law 137-B. and we companysider that learned Counsel is right. This, however, does number help him because it companycerns the price for 25 bars and, having regard to the quantity of silver with which we are companycerned, Mr. Purshottam companyld number but companycede that even if the payment by this companystituent was irregular it would number affect the validity of the purchase at the risk of the appellant. We thus reach the companyclusion that except the last payment which was number quite regular but whose irregularity is number material, all the other payments were substantially, if number literally, in accordance with the requirements of bye-law 137-B and in companysequence the purchase made by the Directors at the risk of the appellant was legal and justified under the bye-laws. Before companycluding it is necessary to advert to the fact that both before the learned trial Judge as well as before the Division Bench a detailed analysis was made of the several payments made by about 17 members of the Association with a view to establish that those payments were number, even if they were made on the 3rd. in accordance with bye-law 137-B. The learned Judges companysidered the several objections which were formulated to the validity of these payments and after discussing some of the details of the individual cases which were placed before the Court, recorded their finding that the payments satisfied the requirements of the relevant bye- law. In view of the arguments addressed to us we have number examined in detail each one of the objections but have dealt only with those specifically urged before us and the tenability in general of the principles on which these objections were based.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 598 of 1961. Appeal from the judgment and decree dated September 13, 1958, of the Andhra Pradesh High Court in Appeal Suit No. 736 of 1952. V. Viswanatha Sastri, K. Rajindra Chaudhuri and K. R. Chaudhuri, for the appellant. Bhimasankaram, K. N. Rajagopala Sastri and T. Satyanarayana, for respondent No. 1. The Judgment of Raghubar Dayal and Sikri JJ. was delivered by Raghubar Dayal J. Mudholkar J. delivered a dissenting Opinion. Raghubar Dayal, J.-This appeal, presented on a certificate granted by the High Court of Andhra Pradesh, arises out of execution proceedings in execution of a decree dated March 7, 1938. Kudapa Subbanna, plaintiff No. 2 and respondent No. 1 here, was held entitled to the properties mentioned in Schedules A and C and to 1/24ths share in the properties mentioned in Schedule B attached to the plaint. The defendants in possession of the properties were directed to deliver possession to the decree-holder. The properties in Schedule B were first to be divided in accordance with the shares specified in para 9 of the plaint and the decree- holder was to be allowed the share to which the first plaintiff was shown to be entitled. The trial Court was directed to make an enquiry into the mesne profits from the date of the institution of the suit and pass a final decree for payment of the amount that be found due up to the date of delivery of possession to the second plaintiff. Possession over the properties in Schedules A and C was delivered to the decree-holder on February 17, 18 and 20, 1943. On June 23, 1945, the decree-holder filed I.A 558 of 1949 to revive and companytinue the earlier I.A. 429 of 1940 which had been presented for the ascertainment of future profits and was struck off on September 25, 1944. On July 28, 1948, the Subordinate Judge decreed the mesne profits and interest thereon for the period from 1926-27 to 1942-43 with respect to the A and C schedule properties. The amount decreed was Rs. 17,883-8-3 including Rs. 10,790/- for mesne profits. He also decreed mesne profits with respect to the B-schedule properties upto 1946. They are number in dispute number. On April 22, 1949, Chitturi Subbanna, 1st defendant, appealed to the High Court. The decree-holder filed cross- objections and claimed Rs. 19,000/- more stating that the amount of mesne profits actually due to him would be about Rs. 45,0001- but he companyfined his claim to Rs. 19,000/- only. On September 13, 1958, the High Court dismissed the appeal, but allowed the cross-objection, the result of which was that the amount of mesne profits decreed by the Subordinate Judge with respect to the A and C schedule properties was increased very substantially. The amount decreed for mesne profits was raised to Rs. 17,242-12-0 and, companysequently, the amount of interest also increased. Chitturi Subbanna then obtained leave from the High Court to appeal to this Court as the decree of the High Court was one of variance and the value of the subject matter in dispute was over Rs. 10,000/-. Chitturi Subbanna, appellant, applied to the High Court for permission to raise an additional ground of appeal to the effect that the trial Court was number entitled to grant mesne profits for more than 3 years from the date of the decree of the High Court. The High Court disallowed that prayer for the reasons that he had number taken such a ground in the memorandum of appeal and had, on the other hand, companyceded before the Commissioner and the trial Court that accounts companyld be taken upto 1943 in respect of A and C schedule properties, that he had elected to have the profits deter- mined by the trial Court upto the date of delivery of possession and that if he had taken the objection earlier, it would have been open to the second plaintiff-respondent to file a suit for the recovery of mesne profits beyond the three years upto the date of deli- G very of possession. It is urged before us for the appellant that the High Court was in error in number allowing the appellant to have raised the objection based on the provisions of O .20, r. 12, C.P.C. We agree with this companytention. The question sought to be raised was a pure question of law and was number dependent on the determination of any question of fact. The first appellate Court ought to have allowed it. Such pure questions of law are allowed for the first time at later stages too. The appellant companyld number have claimed-and did number claim a right to urge the new point which had number been taken in the grounds of appeal. He made a separate application for permission to take up that point. The procedure followed was in full companyformity with what had been suggested in Wilson v. United Counties Bank, Ltd. 1 to the effect If in exceptional cases parties desire to add new grounds to those of which they have given numberice, it will usually be companyvenient, by a substantive application, to apply to the indulgence of the Court which is to hear the appeal. In Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari 2 this Court allowed a question of law to be raised at the hearing of the appeal even though numberreference to it had been made in the Courts below or in the grounds of appeal to this Court. This Court said If the facts proved and found as established are sufficient to make out a case of fraud within the meaning of section 18, this objection may number be serious, as the question of the applicability of the section will be only a question of law and such a question companyld be raised at any stage of the case and also in the final companyrt of appeal. The following observations of Lord Watson in Con- necticut Fire Insurance Co. v. Kavanagh 1892 A.C. 473 are relevant. He said When a question of law is raised for the first time in a companyrt of last resort upon the companystruction of a document or upon facts either admitted or proved beyond companytroversy, it is number only companypetent but expedient in the interests of justice to entertain the plea. The expediency of adopting that companyrse may be doubted when the plea cannot be disposed of without deciding nice questions of fact in companysidering which the companyrt of ultimate review is placed in a much less advantageous position than the companyrts below. Again, it was said in M. K. Ranganathan v. Government of Madras 3 The High Court had allowed the Respondent 3 to raise the question even at that late stage inasmuch as it was a pure question of law and the learned Solicitor- L.R. 1920 A.C. 102,106. 2 1950 S.C.R. 852. 3 1955 11 S.C.R. 374, 381. General therefore rightly did number press the first companytention before us. In Ittyavira Mathai v. Varkey Varkey 1 this Court did number allow the question of limitation to be raised in this Court as it was companysidered to be number a pure question of law but a mixed question of law and fact. This Court said at p. 911 Moreover, the appellants companyld well have raised the question of limitation in the High Court in support of the decree which had been passed in their favour by the trial Court. Had they done so, the High Court would have looked into the records before it for satisfying itself whether the suit was within time or number. The point number raised before us is number one purely of law but a mixed question of fact and law. No specific ground has even been taken in the petition made by the appellant before the High Court for grant of a certificate on the ground that the suit was barred by time. In the circumstances, we decline leave to the appellant to raise the point of limitation before us. The High Court had discretion to allow the application or to refuse it. The discretion exercised by the High Court is certainly number to be interfered with by this Court except for good reasons. We shall deal with the reasons given by the High Court for in rejecting the application and, in so doing, indicate why we companysider those reasons number to be good reasons for disallowing the prayer made in the application. In Rehmat-un-Nissa Begam v. Price 2 the observations at p.66 indicate that a discretionary order can be justifiably disturbed if the Court acts capriciously or in disregard of any legal principle in the exercise of its discretion. This, however, cannot be taken to be exhaustive of the grounds on which the discretionary order is to be interfered with. In this particular case the order passed by the High Court was number in companyformity with the principle that a question of pure law can be urged at any stage of the litigation, be it in the companyrt of the last resort. There was numberquestion of the appellants companyceding before the Commissioner that mesne profits companyld be legally allowed up to the date of delivery of possession. No party had raised the question as to whether mesne profits companyld be allowed up to three years A.I.R.1964 S.C. 907. L.R. 45 I.A. 61. subsequent to the -date of the High Court decree or up to the later date when possession was delivered. When numbersuch dispute arose, there was numberquestion of the appellants making any such companycession. Similarly, numberquestion of the appellants electing to have the profits determined by the trial Court up to the date of delivery of possession companyld have arisen when numberdispute about this matter had arisen between the parties. The utmost that can be said is that both the parties, the decree-holder and the judgment-debtor, were under the impression that mesne profits companyld be awarded till the date of delivery of possession as directed by the decree of the High Court. The fact that -the appellant raised numbersuch objection before the Commissioner or the trial Court, does number mean that he had given his companysent for the determination of mesne profits for the period subsequent to the expiry of 3 years from the date of the High Court decree and that the order of the trial Court for the payment of mesne profits up to the date of delivery of possession is an order based on the companysent of the parties. In the circumstances of the case, we are number prepared to hold that the omission of the appellant to raise the point before the trial Court amounts to his waiving his right to raise the objection on the basis of O.20, r. 12, C.P.C. The case reported as London, Chatham and Dover Railway Co. South-Eastern Railway Co. 1 is number to the point. The facts of that case were different. An agreement between two railway companypanies under the authority of an Act of Parliament companytained a provision that all matters in difference between them would be referred to arbitration under the Railway Companies Arbitration Act 22 23 Vict. c. 59 . Section 26 of that Act provided that full effect should be given by all the superior Courts of law and equity in the United Kingdom, according to their respective juris- diction to all agreements, references, arbitrations and awards, in accordance with the Act. This provision was companystrued number to oust the jurisdiction of the ordinary Courts, but in case of any party insisting on the companypliance of the companydition in the agreement of disputes being referred to arbitration, the Court was to stay its hands and to order the case to be withdrawn from the Court. The case was decided by the Court when an appeal against the finding that the agreement was valid was pending before the House of Lords. It is number clear and may, however, be assumed that one of the questions in the appeal was whether the jurisdic- tion of the Court was ousted if the agreement be a good one. The L.R. 1889 40 Ch.D. 100. House of Lords and the Court of Appeal did number decide that point as it is numbered at p. 101 but their Lordships expressly stated that the judgment of the House of Lords, and also the judgment of the Court of Appeal, only decided that the High Court of Justice had jurisdiction to try the question of the validity of the agreement, and did number decide the question whether the matters in dispute arising under the agreement ought to be tried by arbitration. One of the parties applied to the -Court to postpone the trial of the action on the ground that certain points other than the point regarding the ouster of jurisdiction of the Court were before the House of Lords for decision. The prayer was rejected. The parties went on with the trial of this action and got a judgment of the Court upon the evidence on the matter in dispute between them. It was urged in the Court of Appeal that the Court had numberjurisdiction to try that matter and that it companyld be determined only in arbitration. The Court of Appeal said that the Court was number deprived of its jurisdiction to determine the matters in dispute if neither party insisted on arbitration and that the parties ought number to be allowed to raise the point of jurisdiction. The reason given by Cotton, L.J., Lit p. 105, is stated thus If when they can insist on the Court number going into the merits of the case and deciding questions between the parties, they abstain from doing so, and are defeated on the merits. in my opinion it is too late to insist before the Court of Appeal on any right to object to the jurisdiction of the Court which they might have had if they had insisted on it in a proper way and at a proper time. In the present case the appellant did number let the trial Court determine the question of the period up to which mesne, profits companyld be decreed, as he had raised numbercontroversy in this respect. He did number take a chance of the judgment being given one way or the other and therefore the attempt of the appellant to raise the question in the High Court was number to get round the judgment of the Court which happened to go against him. The Commissioner companyducted the enquiry about mesne profits from August 29, 1946 till December 4, 1947. Suits for mesne profits for the periods between March 7, 1941 and February 28, 1943 companyld number be instituted in August 1946 as the period of 3 years limitation for the institution of a suit for mesne profits of those years had expired by then. It follows that even if the appel- lant had raised the objection that mesne profits companyld number be decreed for the period subsequent to March 7, 1941, the decree holder respondent companyld number have sued in Court for the recovery of those mesne profits when he had failed to sue for them within the specified period of limitation and therefore companyld number have been prejudiced by the appellants raising the new ground at the hearing of the appeal. We are therefore of opinion that the High Court was in error in number allowing the appellant to urge this additional ground before it. The main point for determination in this appeal is whether mesne profits companyld be awarded to the decree-holder for a period subsequent to the expiry of three years from the date of the High Courts decree, i.e., subsequent to March 7, 1941. The companytention for the judgment-debtor is that mesne profits cannot be awarded for the period subsequent to March 7, 1941 in. view of the provisions of Order 20, r. 12, P.C. which reads 12. 1 Where a suit is for the recovery of possession of immovable property and for rent or mesne profits, the Court may pass a decree- a for the possession of the property b for the rent or mesne profits which have accrued on the property during a period prior to the institution of the suit or directing an inquiry as to such rent or mesne profits c directing an inquiry as to rent or mesne profits from the institution of the suit until- the delivery of possession to the decree-holder, the relinquishment of possession by the judgment debtor with numberice to the decree- holder through the Court, or the expiration of three years from the date of the decree, whichever event first occurs. Where an inquiry is directed under clause b or clause c , a final decree in respect of the rent or mesne profits shall be passed in accordance with the result of such inquiry. It is urged that the direction in the decree for an inquiry into the mesne profits up to the date of delivery of possessions should be L4Sup.165-9 companystrued to mean a direction for an inquiry into the mesne profits up to the date of delivery of possession or up to three years from the date of the decree, whichever be earlier, as that would be companysistent with what the law provides. In support of the companytention, reference has been made to Girish Chunder Lahiri v. Shoshi Shikhareswar Roy 1 and to other cases which followed that decision. The companytention for the decree-holder is that the preliminary decree directed the enquiry into the mesne profits from the date of the institution of the suit up to the date of delivery of possession and that this direction in the decree cannot be ignored, when inquiring into the mesne profits or when passing the final decree, even if it be number in full companyformity with the law laid down in r. 12 of O. 20. It has also been urged that the judgment-debtor is estopped from raising the companytention that he is number liable to pay mesne profits subsequent to March 7, 1938 in view of his companyduct amounting to his companysent in the award of mesne profits subsequent to March 7, 1938. We have already held that the appellants companyduct did number amount to his companysenting to mesne profits being decreed for the period subsequent to March 7, 1941. There is numberprovision of law other than the provision of r. 12, O.20, C.P.C. which empowers the Court to decree mesne profits subsequent to the institution of a suit for the recovery of possession of immovable property and mesne profits. It is number disputed for the respondent decree- holder that r. 12, O.20, does number empower a Court to direct an inquiry and pass a final decree with respect to mesne profits for a period exceeding 3 years from the date of the decree. This is very clear from the language of this rule. The only question is whether a decree wherein the Court does number mention the period for which mesne profits would be paid or the Court states that mesne profits would be payable up to the delivery of possession, should be companystrued to be a decree directing that mesne profits would be decreed for a period of 3 years from the date of the decree, if possession be number delivered within that period. The precedent case law is in favour of the companytention for the appellant. The ratio decidendi mainly is that the Court had numberpower to pass a decree against the clear provisions of r. 12, O.20, and that therefore the decree should be so companystrued as to be in accordance with these provisions. The law with respect to the decree for mesne profits had been changing from time to time, but all the same the expressions in the decree about the period for which mesne profits were to be L.R. 27 1.A. 110. awarded have been companysidered to be matters of companystruction and had been companystrued in accordance with the law at the relevant time. Sections 196 and 197 of the Code of Civil Procedure of 1859 Act VIII of 1859 dealt with the decree for mesne profits. Section 196 provided that when the suit was for land or other property paying rent, the Court might provide in the decree for the payment of mesne profits or rent on such land or other property from the date of the suit until the date of delivery of possession to the decree-holder, with interest thereon at such rate as the Court may think proper. It is to be seen that the Court was number merely to direct an enquiry about mesne profits and then to pass a decree as the present provisions require and that there was numberlimitation about decreeing mesne profits for a period of 3 years only from the date of the decree. Mesne profits companyld be decreed up to the delivery of possession. The decree was for mesne profits which were Lo be determined in execution. In Fakharuddin Mahomed Ahsan Chowdhry v. Official Trustee of Bengal 1 the High Court decree declared the plaintiff to be entitled to possession of the land mentioned in the kabinnama with wasilat from the companymencement of Srabun 1267 and did number say in express terms the time up to which the wasilat were to be paid. The plaint was also number very clear in stating the time up to which wasilat were claimed. The Privy Council companystrued the decree to award mesne profits up to the delivery of possession as the reasonable companystruction would be that the Court, with a view to carrying out the object of the legislature, viz., the prevention of unnecessary litigation and multiplication of suits, intended to give, with possession, that wasilat which was by law claimable up to the time of possession. Section 211 of the Code of Civil Procedure, 1882 Act XIV of 1882 provided for decreeing the mesne profits up to delivery of possession or up to 3 years after the decree, whichever event took place earlier. The change of law therefore restricted the power of the Court to grant mesne profits to a period up to 3 years from the date of the decree. In Girish Chunders Case 2 the Privy Council had to companysider a decree for mesne profits which was passed when s. 211 was in force. The decree in that case, which went up to the Privy Council, was passed in 1883 and had provided that the decree holder would get mesne profits for the period of dispossession. Possession over the village N was number recovered till 1892. The trial Court allowed mesne profits with respect to that village L.R. I I.A.197. L.R. 27 I.A. 110. up to the date of delivery of possession. The High Court did number agree and allowed mesne profits for only 3 years after the date of the decree. It was said at p. 126 As to the village of N, their Lordships agree with the High Court. The Subordinate Judge gives the plaintiff mesne profits up to the date of possession. But that is more than three years from the date of the decree, and to the extent of the excess is unauthorised by s. 211 of the Code. The principle enunciated in this case about the companystruction of the decree for mesne profits for the period of dispossession was followed subsequently by the various High Courts on the ground that the Court had numberpower to award mesne profits for a period beyond three years from the date of the decree and that therefore the decree should be companystrued to be subject to the companydition that if possession is number delivered within three years of the decree, the mesne profits would be awarded for the period of three years from the date of the decree. These views were expressed in companynection with decrees which either did number specify any period for the payment of mesne profits or expressly stated that mesne profits would be payable only until delivery of possession. In Venkata Kumara v. Subbayamma 1 , Uttamram v. Kishordas 2 and Trailokya v. Jogendra 3 the decree simply mentioned the starting point of the period for which mesne profits were decreed or for which an enquiry about them was to be made. It may be said, as urged for the respondent, that it was open to the Courts to companystrue the decree when the actual language of the decree did number indicate the other terminus of the period for which mesne profits companyld be claimed. It was however number so in Girish Chunders Case 4 where the decree provided that the decree holder would get mesne profits for the period of dispossession. Similarly in Godayarti Raja v. Ramachandraswami 5 , Narayan v. Sono 6 , Kunwar Jagdish Chandra v. Bulaqi Das 7 and Kanai Lal v. Shvam Kishore 8 the decree allowed mesne profits for the period of dispossession. It cannot be said that the decree in these cases was in any way vague or incomplete in the sense that its meaning was number clear. Yet in all these cases the Courts companystrued the decree in a manner as would make it in accordance with the law as laid down in r. 12, O.20, C.P.C. A.I.R. 1953 Mad. 226, 2 I.L.R. 24 Bom. 149. I.L.R. 35 Col. 1017. 4 L.R. 27 1 A 110. A.1,R. 1943 Mad. 354. 6 I.L.R. 24 Bom. 345. I.L.R. 1959 1 All. 114. 8 I.L.R. 1959 Cal. 76. The decrees have been so companystrued number on account of the vagueness of the expressions used for decreeing mesne profits or directing the inquiry about mesne profits but on account of the fact that the decree for future mesne profits or directing enquiry about them is number based on the decision of any companytroversy between the parties but is made in the exercise of the discretionary power vested in the Courts by the provisions of O.20, r. 12 1 c , C.P.C. The Court is deemed to exercise the power in accordance with law and therefore a decree which decrees or directs enquiry about mesne profits for the period of dispossession or until delivery of possession is companystrued as a decree for mesne profits for a period of three years from the date of the decree if possession is number delivered within that period. This power was given to the Court in order to avoid multiplicity of suits between the decree-holder and the judgment-debtor for mesne profits which the decree-holder companyld rightly claim. The period was, however, restricted to three years in order to discourage decree-holders from making delays in taking possession. If a decree-holder be number diligent in executing the decree, he would have to forego mesne profits for the period in excess of three years or would have to institute separate suits to recover them. The Privy Council did number pass its order in Girish Chund- Case 1 on the basis of the decree being vague or incom- plete. It simply held that the decree for a period in excess of three years was number authorized by s. 21 1 of the Code of Civil Procedure of 1882. We are therefore of opinion that it is open to the Court to companystrue the direction in the preliminary decree about the inquiry with respect to future mesne profits when such direction is number so fully expressed as to companyer all the alternatives mentioned in O 20, r. 12 1 c , C.P.C. and to hold that the decree be companystrued in accordance with those provisions. It is urged for the decree-holde respondent that the trial Court, when passing the final decree, companyld number have ignored what had been decreed under the preliminary decree as numberappeal against the preliminary decree had been preferred and s. 97, C.P.C., provided that where any party aggrieved by a preliminary decree passed after the companymencement of the Code did number appeal from such decree, it would be precluded from disputing its companyrectness in any appeal which might be preferred from the final decre. The object of s. 97 is that questions which had been urged by the parties and decided by the Court at the stage of the preliminary decree will number be open for re-agitation at the stage of the preparation of the final L.R. 27 I.A. 110. 67 4 decree and would be taken as finally decided if numberappeal had been preferred against the preliminary decree. The provisions of this section appear to be inapplicable to the present case. The preliminary decree directed an inquiry about the mesne profits from the date of the institution of the suit up to the date of delivery of possession to the decree-holder. The decree-holder companyld number have felt aggrieved against this order. The judgment debtor companyld number have insisted for detailing all the various alternatives mentioned in O.20, r. 12 1 c and he companyld number have expected that possession would number be taken within three years of the decree. The direction about the enquiry with respect to future mesne profits does number amount to an adjudication and certainly does number amount to an adjudication of any companytroversy between the parties in the suit. It has numberreference to any cause of action which had arisen in favour of the plaintiff- decree holder before the institution of the suit. The direction was given on account of a special power given to the Court under O.20, r. 12 1 c of the Code to make such a direction if it companysidered it fit to do so. It was within the discretion of the Court to make the direction or number. The Court does number decide, when making such a direction, the period for which the decree-holder would be entitled to get mesne profits. No such point can be raised before it. The judgment debtoes liability to mesne profits arose under the ordinary law and a suit for realizing mesne profits companyld be separately filed, by the decreeholder. The provisions of O.20, r. 12 1 c , are just to avoid multiplicity of suits with companysequent harassment to the parties. The mere fact that the direction for an enquiry into mesne profits is companytained in a preliminary decree does number make it such a part of the decree against which alone appeal companyld have been filed. The appeal companyld be filed only after a final decree is passed decreeing certain amount for mesne profits to the decree-bolder. It follows that the question about the proper period for which mesne profits was to be decreed really companyes up for decision at the time of passing the final decree by which time the parties in the suit would be in a position to know the exact period for which future mesne profits companyld be decreed in view of the provisions of O.20, r. 12 1 c . The direction in the preliminary decree cannot operate, in terms of s. 1 1 C.P.C. or on general principles, as res judicata for the simple reason, as stated earlier, that the direction is number based on the decision of any matter in companytroversy between the parties and is given in the exercise of the power vested in the Court under O.20, r. 12 1 c . Again, for similar reasons, the principle that a Court can decide a question within its jurisdiction wrongly as well 67 5 as rightly and, if the decision said to be wrong had become final, the Courts have to respect it, will number apply to these cases. We therefore hold that the judgment-debtor appellant is number precluded from companytending that mesne profits companyld number be awarded for a period exceeding three years from the date of the decree. We may number companysider the question from another aspect. Rule 12, O.20, C.P.C. requires the Court to direct, at the time of passing the preliminary decree, an inquiry as to mesne profits from the institution of the suit until the actual delivery of possession of the property to the decree-holder or until the expiration of three years from the date of the decree whichever event first occurs. The Court at the time of the passing of the decree is number in a position to say which of the three events mentioned in cl. c of sub-r. 1 of r. 12 will determine the period for which mesne profits would be payable to the decree-holder Either, therefore, the Court has to repeat the various alternatives mentioned in this clause in the judgment and the decree which is to follow the judgment or the judgment and the decree for mesne profits is to be companystrued in accordance with these provisions. It is preferable to companystrue it in this way rather than to insist that the Court should mechanically repeat in the judgment and decree the various provisions of cl. c . It may sometimes even happen that the enquiry into mesne profits is companypleted before the expiry of 3 years and that the final decree follows in due companyrse while in fact numberpossession had been delivered by then. It would number be possible for the judgment-debtor to companytend at that time that the decree has number been properly prepared and that it should state that in case possession is number delivered within the period of three years, mesne profits would be payable only for the period of three years from the date of the decree. It does number appear to be desirable that the passing of the final decree be put off till either possession is delivered or a period of three years had expired from the date of the decree. Lastly, we may draw attention to a possibility of the decreeholder gaining by his own default, if he did number take possession for a period longer than 3 years after the date of the decree, when the decree did number specify the period for which mesne profits would be allowed or merely stated that mesne profits would be paid until delivery of possession. The law did number companytemplate such a case and therefore clearly provided the maximum period for which mesne profits would be allowed to the decree-holder after the passing of the decree. Such a case was Kunwar Jagdish Chandra v. Bulaqi Das 1 . I.L.R. 1959 1 All. 114. We therefore hold that a decree under r. 12, O.20, C.P.C. directing enquiry into the mesne profits, however expressed, must be companystrued to be a decree directing the enquiry into the mesne profits in companyformity with the requirements of r. 12 1 c of O.20 and that the decree-holder in this case cannot get mesne profits for the period subsequent to March 7, 1941 when the three year period from the date of the High Court decree expired. The other question urged for the appellant is that the High Court was in error in arbitrarily fixing a higher amount of mesne profits than what had been adjudged by the trial Court which had itself arbitrarily increased the mesne profits suggested by the Commissioner. It was urged for the respondent decree-holder that even if -the High Court had number given any reason for fixing the rate of mesne profits at a higher rate than the rate fixed by the trial Court, it must be presumed that the High Court had fixed the higher rate after companysidering the material on record and that therefore it cannot be said that the High Court had fixed mesne profits arbitrarily. It is therefore first necessary to companysider whether the High Court had given good reasons for decreeing mesne profits at a higher rate than that fixed by the trial Court. We are of opinion that the High Court had number really companye to grips with the question of proper mesne profits and that it varied the rates in most cases, without expressing its reasons for holding that the Subordinate Judge was wrong in his findings regarding the quantum of mesne profits. This is clear from certain circumstances. The first is that the High Court overlooked the period of depression in companysidering the quantum of mesne profits. The Commissioner divided the period of 17 years from Septem- ber 1926 to March 1943 into three periods, viz., 1926 to 1930, 1931 to 1940 and 1941 to 1943. The middle period between the years 1931 and 1940 was a period of depression and the last period was one in which prices of companymodities had risen to some extent on account of World War 11. In view of these companysiderations, the Commissioner fixed the rate of profits from land differently for each period. The trial Court fixed at first a numbermal rate i.e., a rate which was companysidered adequate for the first and the last period, then made allowance for the period of depression and calculated mesne profits at a lower rate for the ten years between 1931 and 1940. The High Court appears to have missed numbericing the fact of the trial Court calculating mesne profits at a lower rate for the period of ten years. It fixed one rate for the period 1926 to 1940 and another rate for the period 1941 to 1943, and thus overlooked the long period of depression. It is on this account that the mesne profits ordered by the High Court are very much higher than what were fixed by the trial Court. If this fact had number been ignored, the difference between the two amounts would number have been so much and might have been in the neighbourhood of Rs. 2,000 plus a companyresponding increase in the amount of interest. The High Court appears to have missed this point as it was companysidered by the learned Subordinate Judge practically at the end of his judgment, at para 25. Below is given the Table showing reduced rates of profits allowed by the Subordinate Judge for the period 1931 to 1940 --------------------------- --------------------------- Item of profit allowed profit allowed per Sl Schedule per acre by acre by sub-judge No sub-judge for for period 1931-40 periods 1926-30 1941-43 ----------------- ------------------ ------------------- 1. 1,4, 8, 12 Rs. 35 Rs. 25 of A-Schdu- le C-sche- dule 2. 9 of A-sch- Rs.50 for garden Rs. 40 for garden edule produce produce 3. 10,11, of Rs. 10 Rs. 7-8-0 -do- 4. 18 to 20 Rs. 30 Rs. 2 of -do- Rest of No change No change items of A-Schedule viz, 2, 3, 5,6, 7 13 to 17 ----------------------------------------------------------- The second is that the High Court ordered profits at a rate higher than what was even claimed by the decree- holder in regard to item No. 9 of the A-Schedule properties. The trial Court fixed the annual profits at Rs. 50. The High Court said We are inclined to think that it is too low. We enhance the amount to Rs. 100 per year up to 1940 and to Rs. 150 for the years 1941 to 1943. The Commissioners report shows that the plaintiff claimed mesne profits for the mango grove at Rs. 150 per acre up to 1940 and later at Rs. 200 per acre, and thus claimed about Rs. 94 a year up to 1940 and about Rs. 126 a year for the later period, the area of the item being .63 cents. The High Court companyld number be justified to award the mesne profits higher than what are claimed by the decree-holder. The third is that the finding of the High Court is number companysistent with its reasoning with respect to items Nos. 10 and 11 which were pasture lands. The Commissioner suggested mesne profits at Rs. 10 per acre and said that tax on item No. 10 was at Rs. 6 per acre and on item No. 11 at Rs. 5 per acre. The Subordinate, Judge fixed mesne profits at Rs. 10 for the .95 acres in area and the proper tax for these items at Re. 1. The High Court raised the rate of mesne profits to Rs. 20 for the period up to 1940 and Rs. 30 for the subsequent period, but companyfirmed the finding about the amount of tax. In making this order the High Court seems to have been under some companyfusion, for, the basis of its increasing the profits seemed to be the fact that the tax on these items was Rs. 5, as it said He the Subordinate Judge companyfirmed the finding of the Commissioner in this behalf. The Commissioner gives numberreasons as to how he fixed the profits at Rs. 10 for the items. It is stated that the tax paid on the land is Rs. We are inclined to think that it would be proper to fix Rs. 20 for the items up to 1940 and Rs. 30 for 1941 to 1943. The tax of Re. I deducted by the Subordinate Judge is companyfirmed. The basis for raising the amount of mesne profits vanishes, when the High Court finally agrees with the Subordinate Judge that the tax would be Re. 1. Another companysideration is that the Subordinate Judge calculated mesne profits for item No. 12, companysisting of dry land, at Rs. 35 per acre. The High Court enhanced the amount to Rs. 50 per acre, probably thinking that garden crops companyld be raised on this land as it said The learned Subordinate Judge stated in paragraph 18 that garden crops companyld be grown on the surrounding lands. This is number a very precise summing up of what the Subordinate Judge had said in para 18 of his judgment. He stated there that the Commissioner had fixed profits for this item at Rs. 30 per acre per year as in the case of other dry lands and that he was fixing profits at Rs. 35 per acre as he had done so in respect of other dry lands. He however referred to the observation of the Commissioner He observes that there is evidence to show that on the surrounding lands, garden crops were being raised and that there is numberreason to hold that numbersuch crops were raised on this item. The Subordinate Judge did number fix the rate on the basis that garden crops companyld be raised or were raised on the land of item No. 12 and fixed the rate on the basis that it was dry land. The Commissioner too does number appear to have fixed the rate on the basis that garden crops companyld be raised on this land. We may number companysider how the High Court dealt with the various items of property in A and C Schedules to show that the variations made by it in the rates were number based on any basic material on the record. We refer to them in the order in which they were dealt with by the High Court. Schedule A Items Nos. 13 to 17 The Subordinate Judge fixed the rent of these houses at Rs. 4 a month. The High Court raised it to Rs. 6 per month merely stating We are inclined to think that the rent of Rs. 6 per month might be fixed in regard to these items. The reasons given by the Subordinate Judge for fixing the monthly rent at Rs. 4 are, in his own words The Commissioner has however fixed the mesne profits for these items at Rs. 2 per month. The Union tax itself on this house appears to be Rs. 6-4-0 per year. The annual tax is generally equivalent to about 2 months rent. The tax may be taken as a fairly companyrect basis for fixing the mesne profits. In that case, the rate fixed by the Commissioner is too low and I would fix the profits for these items at Rs. 4 per month. Items Nos. 1, 4 and 8 The Subordinate Judge fixed the actual profits for the land companyprised in these items at Rs. 35 per acre. His reasons were It is seen from the evidence of R.W. 26 that the prices of land and maktas rose about 10 years after China Bapannas death which took place in 1915. If this statement were to be taken as companyrect and if, according to Exhibits P 1O and P- 1 1, the rent realised by dry lands works out to Rs. 30 per acre, it cannot be said to be unreasonable or excessive to fix the profits on these dry lands at Rs. 35 per acre from 1925 onwards. It may also be remembered that prices rose after the close of the 1918 war. The Commissioner has fixed it at the rate of Rs. 30 only. I would however fix the profits on these dry lands at Rs. 35/- per acre per year and the petitioner would be entitled to profits at this rate on items 1 and 4 also from 1926. The High Court reduced the rate of profits to Rs. 30 per acre for the period up to 1940 and raised it to Rs. 60 per year for the period 1941 to 1943 and stated, in this companynection The learned Subordinate Judge increased the rent from Rs. 30 to Rs. 35 without giving any reasons. We are inclined to hold that in respect of all these three items, the rate ought to have been fixed at Rs. 30 per year up to 1940. After 1940 there was an increase in prices. We are inclined to hold that for all these three items the rate might he fixed at Rs. 60 per year for the period 1941 to 1943. The High Court was in error in numbering that the Subordinate Judge had given numberreasons for raising the rate recommended by the Commissioner. It is really the High Court which gave numberreason for lowering the rate up to 1940 and doubling the arte from 1941 onwards. Items Nos. 9, 10, 11 and 12 We have already dealt with items 9, 10, 11 and 12 and shown how the High Court had gone wrong in increasing the rate of profits from them. Items Nos. 18 to 20 The Commisisoner recommended profits at the rate of Rs. 30 a year. The Subordinate Judge agreed with him and so did the High Court, for the period up to 1940. It however raised the rate to Rs. 60 a year from 1941 onward stating simply But, so far as the years 1941 to 1943 are companycerned, we think it would be reasonable to fix the rate at Rs. 60 per acre. Item Nov. 2, 3, 5, 6 and 7 The High Court companyfirmed the findings of the Subordinate Judge with respect to the profits for the period up to 1940 but fixed the rate per bag at Rs. 10 for the period subsequent to 1941 stating However, for the years 1941 to 1943, we fix the rate per bag at Rs. 10-0-0 as the prices had increased after 1940. Schedule C The Commissioner allowed profits at Rs. 30 per acre as in the case of dry lands. The Subordinate Judge fixed profits at Rs. 35 for the same reason as he bad fixed that rate for dry lands of items 1, 4 and 8 of Schedule A. The High Court reduced the rate to Rs. 30/- relying on leases Exhibits P. 10 and P. 1 1 of 1915. It ignored the statement of R.W. 26, companysidered by the Subordinate Judge, that rents increased from 1925. In view of what we have said above, we are unable to say that the High Court was right in companysidering the rates of profits fixed by the Subordinate Judge to be wrong and in increasing the rate of profits for most of the items of Schedule A and C and, especially, for the period between 1926 and 1940. Two companyrses are number open for us. One is to set aside the decree for mesne profits and send back the case to the Court below for deciding it with respect to the quantum of mesne profits. The other is to set aside the decree of the High Court and restore that of the Subordinate Judge with respect to the quantum of mesne profits up to March 7, 1941, in view of the facts that the mesne profits awarded against the appellant are for the period between 1926 and 1943 and that any further enquiry about mesne profits would further put off a final decree for mesne profits. In view of such a companysideration, learned companynsel for the appellant had ex- pressed, without prejudice, his clients agreeing to the calculation of mesne profits at the rate determined by the trial Court and, companysequently, to the decree for mesne profits passed by that Court, but the learned companynsel for the decree-holder respondent had stated that his client would prefer a fresh decision of the High Court on the point in case this Court found that the High Court was number justified to raise the amount of mesne profits. The respondent is more interested in the early finalisation of the mesne profits than the appellant and so we would order in companyformity with his wishes. We therefore allow the appeal with companyts of this Court, set aside the decree of the Court below and remand the case to the High Court to determine afresh the quantum of mesne profits up to March 7, 1941, when the three years from the decree of the High Court expired and to dispose of the appeal according to law. Mudholkar J. This is an appeal from the judgment of the High Court of Andhra Pradesh which arose out of a suit for pos- session and mesne profits instituted in the year 1926. The suit was dismissed by the trial companyrt but on appeal the High Court of Madras passed a decree therein in favour of the second plaintiff who is the first respondent before us, on March 7, 1938. The decree which the High Court passed, in so far as mesne profits were companycerned, was a preliminary decree and therein the High Court made the following provision with respect to the claim for mesne profits that the lower companyrt do make an enquiry as to the mesne profits from the date of the institution of the suit and pass a final decree for payment of the amount that may be found due up to the date of delivery of possession to the second plaintiff. No further appeal was taken by the first respondent, who is the appellant before us, against whom the decree was passed. Respondent No. 1 obtained delivery of possession of some of the property with respect to which his claim had succeeded in the year 1943 and of another item of property on January 1.5, 1948. On an application preferred by respondent No. 1 a Commis- sioner was appointed by the companyrt of first instance for making an enquiry into mesne profits. After companysidering that report the companyrt passed final decree for a certain amount in favour of respondent No. 1. In the companyrse of the judgment it observed So far as the A and C schedule properties are companycerned, there is numberdispute about the mesne profits in regard to their having to be ascertained for a period of 17 years, i.e., from 1926 to 1943 February and for the mesne profits in regard to the B schedule properties being ascertained till 1946. The companytest is only in regard to the quantum and number to the periods mentioned above. The appellant preferred an appeal from the final decree before the High Court of Madras which was eventually transferred to the High Court of Andhra Pradesh. The appellant, however, did number raise any ground in his memo of appeal to the effect that mesne profits companyld number be awarded for a period in excess of three years from the passing of the preliminary decree. He had number raised this question either in his companynter affidavit in answer to the application made by respondent No. 1 for the appointment of a Commissioner for determining mesne profits number had he raised it before the Commissioner. On the other hand it was companyceded before the Commissioner, as also the Subordinate Judge, that accounts can be taken up to the year 1943 in respect of the properties described in Schedules A and C to the plaint and up to 1946 in respect of properties described hi Schedule B to the plaint. For the first time, however, when the appeal was argued before the High Court of Andhra Pradesh the appellant raised the companytention that by virtue of the provisions of O.XX, r. 12 the respondent No. 1 was number entitled to the award of mesne profits beyond three years from the date of the preliminary decree. In regard to this objection the High Court observed As the appellant raised numberdispute and elected to have the profits determined by the subordinate Judge up to the date of delivery of possession we are number inclined to permit the appellant to raise this new ground of appeal. However, as the decision of the High Court was open to further appeal it heard the parties on the new ground raised by the appellant and decided it against him. Along with the appeal the High Court dealt with the cross-objection preferred by the first respondent in which he claimed enhancement of the amount of mesne profits. The High Court dismissed the appellants appeal and partially allowed the cross-objection preferred by the first respondent and modified the final decree passed by the companyrt. Eventually the High Court granted a certificate to the appellant and that is how the matter has companye up before us. Two points were urged on behalf of the appellant before this Court. The first is that respondent No. 1 was number entitled to be granted mesne profits for a period beyond three years from the passing of the preliminary decree and the other is that the High Court was in error in enhancing the amount of mesne profits. Along with this appeal we have also heard an appeal preferred by the respondent which is C.A. 926 of 1963 in which he claimed a further enhancement of the amount of mesne profits. I have had the advantage of reading the judgment of my learned brother Raghubar Dayal in which he has held that the High Court was in error in refusing leave to the appellant to raise a new ground at the stage of argument and after allowing it to be raised has upheld it. In regard to the second ground he has observed that the High Court was number right in raising the amount of mesne profits and has expressed the opinion that the matter be remanded to the High Court for fresh decision on the point. He has also expressed the view that the cross-appeal preferred by the respondent should be dismissed. I am clearly of the opinion that the High Court was right in refusing leave to the appellant to raise a new ground at the hearing since number only had he number raised it in the memo of appeal but he had also allowed an enquiry into mesne profits by the Commissioner to be made, for a period longer than three years from the date of the decree and participated therein. The reason why a new ground ought number to be allowed to be raised at the hearing of an appeal has been so well stated by Lord Birkenhead in Wilson v. United Counties Bank Ltd. 1 that I need do numbermore than reproduce what he has said 1 1920 A.C. 102,106. The object of indicating in detail the grounds of appeal, both to the Court of Appeal and to your Lordships House, is that the respondent parties may be accurately and precisely informed of the case which they have to meet. Their efforts are naturally directed to the companytentions which are put forward by the appellants. They are entitled to treat as abandoned companytentions which are number set forth. lf in exceptional cases parties desire to add new grounds to those of which they have given numberice, it will usually be companyvenient, by a substantive application, to apply to the indulgence of the Court which is to hear the appeal. In the present case, both in the Court of Appeal and before your Lordships, entirely new companytentions have been submitted on behalf of the defendants. The practice is extremely inconvenient and ought in my judgment to be discouraged in every possible way. Italics mine . Further, we cannot lose sight of the fact that the grant or refusal of permission to raise a new ground was within the discretion of the High Court. The High Court has given very good and companyent reasons for refusing permission to the appellant to raise the new plea and number acted capriciously, as would be clear from the following passage in its judgment In the original grounds of appeal, numberobjection was taken as to the period for which mesne profits had to be paid. Before the appeal was taken up, the appellant sought to raise an additional ground of appeal viz., that the Subordinate Judge was number entitled to grant mesne profits for more than 3 years from the date of the High Courts decree. This question was number raised in the companynter affidavit in I.A. No. 558 of 1945 on the file of the Subordinate Judge, Eluru or before the Commissioner ,or before the Subordinate Judge. On the other hand, it was companyceded before the Commissioner as also the Subordinate Judge that accounts can be taken up to 1943 in respect of A and C schedule properties and up to 1946 in respect of B schedule properties. It is for the first time that this objection based on provisions of Order XX Rule 12 C.P.C. is raised before this Court. If the objection had been raised in the companynter or before the Commissioner, it would have been open to the 2nd plaintiff to file a suit for recovery of the mesne profits beyond the 3 years up to the date of delivery of possession. As the appellant raised numberdispute and elected to have the profits determined by the Subordinate Judge up to the date of delivery of possession, we are number inclined to permit the appellant to raise this new ground of appeal. We would be going against all precedents as for instance the decision of the Privy Council in Rehmat-un-Nisa Begum v. Price and our recent judgment in lttyavira Mathai v. Varkey Yarkey 2 if we say that despite what the High Court did, we shall go into the question ourselves. In that case we have observed in company. 2 page 911 It would thus be clear that the appellant has number raised a sufficiently clear plea of limitation by stating relevant facts and making appropriate averments. It is apparently because of this that the trial companyrt, though it did raise a formal issue of limitation, gave numberfinding thereon. Nothing would have been simpler for the trial companyrt than to dismiss the suit on the ground of limitation if the plea was seriously raised before it. Had the point been pressed, it would number have been required to discuss in detail the various questions of fact pertaining to the merits of the case before it companyld dismiss the suit. In the plaint the respondents claimed that the period of limitation for the suit companymenced on 15-2-1113 when the High Court dismissed the revision petition preferred by the respondents. The appellant has number stated that under Art. 47 of the Limitation Act, the period of limitation is to be companyputed number from the date of the revisional order but from the date of the original order. Had he done so, we have numberdoubt that the respondents would at least have placed on record by amending the plaint the date on which the plaint was instituted in the companyrt of the Munsiff. Thus had the plaint been instituted in the companyrt of the Munsiff say two months before the expiry of the limitation, the suit would have been within time on 4-3-1118 when the plaint was represented to the District Court, companyputing the period of limitation even from the date of the original order. Moreover, the appellants companyld well have raised the question of limitation in the High Court in support of the decree which had been passed in their favour by the trial companyrt. Had they done so, the High Court would have looked into the records before it for satisfying itself whether the suit was within 1 45 I.A. 61. A.I.R. 1964 S.C. 907. L4Sup./65 time or number. The point number raised before us is number one purely of law but a mixed question of fact and law. No specific ground has even been taken in the petition made by the appellant before the High Court for grant of a certificate on the ground that the suit was barred by time. In the circumstances, we decline leave to the appellant to raise the point of limitation before us. We refused permission to the appellant to raise a new ground for two independent reasons. One was that the appellant had number raised a sufficiently clear plea in his written statement. The other was that the question was a mixed one of fact and law. I am aware that in Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari 1 this Court has quoted with approval at pp. 861-2 the following passage from the decision in Connecticut Fire Insurance Co. v. Kayanagh 2 When a question of law is raised for the first time in a companyrt of last resort upon the companystruction of a document or upon facts either admitted or proved beyond companytroversy, it is number only companypetent but expedient in the interests of justice to entertain the plea. The expediency of adopting that companyrse may be doubted when the plea cannot be disposed of without deciding nice questions of fact in companysidering which the companyrt of ultimate review is placed in a much less advantageous position than the companyrts below. But there a question of limitation had in fact been raised in the companyrt below and what was sought by the appellant was leave to press in aid s. 18 of the Limitation Act. It was in this companynection that the observations quoted earlier were referred by this Court. Moreover, since this Court negatived the plea based on s. 18 on the ground that the necessary facts were number established the approval of Lord Watsons view companyld at best be said to be a mere obiter. We must also number lose sight of the principle that where a party omits to raise an objection to a direction given by the lower companyrt in its judgment he must be deemed to have waived his right and he cannot, for the first time at the hearing of an appeal from the decision of that companyrt challenge its power to make the direction. In London Chatham and Dover Railway Co. v. South Eastern Railway Co. s all the Lords Justices of the Court of Appeal have 1 1950 S.C.R. 852. 2 1892 A.C. 473. 3 1889 40 Ch. D. 100, 106-109. emphatically said that an omission of a kind of which the appellant in this case is guilty must be treated as a waiver even of a plea of jurisdiction. In that case there was an agreement between the parties, two railway companypanies, which provided for a reference of all matters of difference between them to arbitration under the Railway Companies Arbitration Act. Section 26 of the Act required the companyrt where one of the parties to the agreement insisted upon it, to give effect to and to act in accordance with the agreement, so far as the submission to arbitration was companycerned. The defendant pleaded the arbitration agreement in defence while the plaintiff challenged its validity. A question was raised by the defendant about the companypetency of the companyrt to adjudicate upon the validity of the agreement. Me trial Judge held in favour of the plaintiff and his decision was upheld by the companyrt of appeal. The defendant took the matter to the House of Lords and while the appeal was pending there the case came up before Kekewich J. One of the questions in the appeal was whether, if the agreement was a good one, the jurisdiction of the Court was ousted. The defendant made an application for postponement of the action because certain other points decided by the Court of Appeal which had gone to the House of Lords would be material. But the defendant did number say in the application that the question about the jurisdiction of the Court was also before the House of Lords and that for this reason it ought number to be put to the trial of the action till it was finally decided. The trial then proceeded and judgment was given on the basis of the evidence. When the matter went to the Court of Appeal the defendant companytended that the Court had numberjurisdiction to go into the merits of the case. Negativing it, Cotton L. J. said the defendants did number say, While the decision in the House of Lords is pending we cannot companytend that this point ought to go to an arbitrator, but we do number abandon it, we still desire to keep it open but they go on with the trial and they get the judgment of a Court upon the evidence on the question which they number say the Court ought never to have entertained. In my opinion parties ought number to be allowed to do that. If when they can insist on the Court number going into the merits of the case and deciding questions between the parties, they abstain from doing so, and are defeated on the merits, in my opinion it is too late to insist before the Court of Appeal on any right to object to the jurisdiction of the Court which they might have had if they had insisted on it in a proper way and at a proper time. p. 105 . Lindley L. J., observed Having regard to the companyrse which was adopted in the Court below, I think the Defendants must be treated as having waived this objection in the Court below, and it would number be right for us to entertain it on appeal. p. 107 . Bowen L. J., agreeing with the other Lords Justices said I agree with the Lord Justice that here, if the point had been taken and insisted upon from the first, there might have been numberanswer to it but, at all events, when the point is number taken from the first, it is to be treated as having been abandoned in that way and when a point such as this is waived and number insisted upon, the Court is number companypelled at any stage of the litigation to go back and treat the parties who have waived it as parties who have number done so. This is number an isolated decision, number indeed does it lay down a numberel rule of practice. It is right and proper that parties to a litigation should number be permitted to set up the grounds of their claims or defence in driblets or at different stages and embarrass the opponents. Considerations of public policy require that a successful party should number, at the appellate stage, be faced with new grounds of attack after having repulsed the original ones. The proper function of an appellate companyrt is to companyrect an error in the judgment or proceedings of the companyrt below and number to adjudicate upon a different kind of dispute a dispute that was never taken before the companyrt below. It is only in exceptional cases that the appellate companyrt may in its discretion allow a new point to be raised before it provided there are good grounds for allowing it to be raised and numberprejudice is caused thereby to the opponent of the party permitted to raise such point. But where the appellate companyrt in exercise of its discretion refuses leave to a party to raise such point there is little scope for any indulgence being shown by this Court. This would suffice to dispose of the question whether mesne profits companyld be awarded till the date of delivery but as my learned brother has companysidered that question on merits, I must deal with it as well. I regret my inability to agree with the decision of my learned brother on the merits of the first point. There is numberdoubt whatsoever that under O.XX, r. 12 c of the Code, a companyrt has to direct enquiry as to mesne profits from the date of institution of the suit until i the delivery of possession to the decree- holder ii the relinquishment of possession by the judgment-debtor and numberice to the decree-holder through the Court or iii the expiration of three years from the date of the decree, whichever event occurs first. Therefore, when the Madras High Court passed a preliminary decree on March 7, 1938 it ought to have given directions with regard to the determination of mesne profits in the manner provided for in cl. c of r. 12 1 of O.XX, C.P.C. The High Court however, chose to make only a single direction and that is that mesne profits be determined up to the date of the delivery of possession and numberhing more. It may be that the High Court did number expect that the delivery of possession would be delayed beyond three years of the passing of the decree or that the High Court overlooked the possibility of possession being delivered more than three years after its decree. Therefore, it does number necessarily follow that the failure of the High Court to make it clear that in any case the determination of mesne profits shall number be for a period in excess of three years from the date of preliminary decree was an error. Even assuming that the direction in the preliminary decree that mesne profits shall be determined and companysequently will be payable right up to the date of delivery of possession, whenever the event occurred, was wrong, that decision has to be given effect to. This decree, as already pointed out, was number challenged by taking a further appeal and has, as between the parties, become final by the operation of the provisions of s. 97 of the Code of Civil Procedure which says Where any party aggrieved by a preliminary decree passed after the companymencement of this Code does number appeal from such decree, he shall be precluded from disputing its companyrectness in any appeal which may be preferred from the final decree. The appeal before us is an appeal from the final decree and, therefore, the appellant is precluded from making a challenge to a direction in the preliminary decree. I am fortified in this view number only by what we have said in Ittyavita Mathais case 1 in para 8 at p. 910 but also by the recent judgment of this Court in Smt. Gvarsi Bai Ors. Dhansukh Lal Ors. 7 There, Subba Rao J., speaking for the unanimous Court has observed In a case where a decree is made in Form No. 5A, it is the duty of the Court to ascertain the amount due to A.I.R. 1964 S.C. 907. 2 1965 2 S.C.R. the mortgagee at the date of the preliminary decree. How can the amount due to the mortgagee as on the date of preliminary decree be declared unless the net profits realized by him from the mortgaged property are debited against him ? The statutory liability of the mortgagee to account up to the date of the preliminary decree would be the subject-matter of dispute in the suit up to the date of the said decree. The Court has to ascertain the amount due under the mortgage in terms of the mortgage deed and deduct the net realizations in the manner prescribed in s. 76 h of the Transfer of Property Act and ascertain the balance due to the mortgagee on the date of the preliminary decree. If the mortgagor did number raise the plea, he would be barred on the principle of res judicata from raising the same, as the said matter should be deemed to have been a matter which was directly and substantially in issue in the suit up to that stage. It is settled law that though a mortgage suit would be pending till a final decree was made, the matters decided or ought to have been decided by the preliminary decree were final. Suppose the mortgagor paid certain amounts to the mortgagee before the preliminary decree if these were number given credit to the mortgagor and a larger amount was declared by the preliminary decree as due to the mortgagee, can the mortgagor, after the preliminary decree, reopen the question ? Decidedly he cannot. This is because the preliminary decree had become final in respect of the disputes that should have been raised before the preliminary decree was made. That the general principles of res judicata would apply to such a case as this was held long ago in Ram Kirpal Shukul Mussumat Rup Kuari 1 and the view taken therein has been followed by this Court in Gulabchand Chhotalal Parikh v. The State of Bombay number Gujarat 2 . It is, however, companytended that what the appellant seeks in this ,appeal from the final decree is merely an interpretation of a direction in the preliminary decree and that that direction should be companystrued in such a way as to make it a decree according to law i.e., in accordance with the provisions of O. XX, r. 12, C.P.C. The question of companystruction of a decree can only arise where the decree is ambiguous. A number of cases were relied upon before 1 11 I.A. 37. 2 1965 2 S.C.R. 546. us on behalf of the appellant and some of them have been discussed in the judgement of my learned brother as also in the judgement of the full Bench in Kudapa Subbanna v. Chitturi Subbanna ors. 1 . That decision is subject of the appeal preferred respondent No. 1 in C.A. No. 926 of 1963. It may be companyceded that where the meaning of a term of a decree is number clear Or is ambiguous the question of companystruing that term would arise. In such a case the companyrt whose duty it is to companystrue it would be doing the right thing in placing upon it a companystruction which will make it companyformable to the law. The direction in question companytained in the preliminary decree of the High Court does number, in my opinion, suffer from vagueness, ambiguity or such incompleteness as will make its enforcement impossible. It may be that the High Court in making the direction wrongly thought that it had discretion to specify any of the three events set out in cl. 1 c of r. 12 of O. XX or that it expected that possession would be delivered by the appellant to the respondent before the expiry of three years. Or it may be that the High Court had overlooked the limitations cl. c of O. XX, r. 12 1 . But whether it was one or the other, does number render the direction in question vague, ambiguous or incomplete. In order to ascertain whether a particular term or direction in a decree is clear and companyplete or vague and ambiguous the companyrt must ordinarily companyfine its attention to the direction itselfl. It will be justified in looking to the other provisions in the decree if there appears to be a doubt about the meaning of its terms or if any of the terms companyflict with another part of the decree. But where there is numbersuch doubt or companyflict the occasion to look at the other terms of the decree cannot arise. It is, however, number the suggestion of Mr. Viswanatha Sastri that this Particular term is inconsistent with any of the other terms of the decree. His argument is that if the term is taken by itself it would be in companyflict with law and so we must read in it the whole of the provisions of O. XX, r. 12 1 c . But then the High Court has clearly selected only a portion of this provision and made that alone as a term of its decree, omitting the rest of it. The argument of learned companynsel in substance amounts only to this that the High Court in acting in this manner companymitted an error of law, but mere error of law does number vitiate the direction made by the High Court. Even assuming that one of the terms of a decree is erroneous in law the decree is numberetheless binding upon the parties until and unless it is companyrected in appeal or other appropriate proceeding. Such a decree Appeal No. 368 of 1956 decided on 23-2-1962. cannot be treated as one which was passed without jurisdiction. For, it is well settled that while it is the duty of a companyrt to decide right it may well happen that it decides wrong. Whichever way it decides, it acts within its jurisdiction and number beyond it, as was observed by the Privy Council in Malkarjun v. Narhari 1 which was followed by this Court in Ittyavira Mathais case 2 . A wrong decision is numberdoubt vulnerable but it does number automatically become unenforceable. Unless companyrected in the manner provided for in the Code it will operate as res judicata between the parties in all subsequent stages of the lis. I have number thought it necessary to discuss the various decisions cited at the Bar and numbered by my learned brother because the decrees companystrued in them were found to be vague or incomplete. To my mind it would number be right for a companyrt to characterise a term of a decree which upon its face appears to be clear and companyplete, as being vague or incomplete merely because in its view that term is erroneous and then proceed to interpret it. So far as a Court whose duty it is to give effect to a decree of a Court of companypetent jurisdiction is companycerned it is immaterial whether the term or direction as it stands is companytrary to law. So long as it is, on its face, companyplete and capable of enforcement it has numberpower to go behind.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 136 of 1964. Appeal from the judgment and order dated February 24, 1961 of the Bombay High Court in Misc. Application No. 333 of 1960. V. Viswanatha Sastri, T. A. Ramachandra, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant. Ganapathy lyer, R. H. Dheber and R. S. Sachthey, for the respondent. The Judgment of the Court was delivered by Sikri, J. This is an appeal on a certificate granted by the High Court of Bombay against its judgment dated February 24, 1961, dismissing the petition filed by the appellant under Art. 226 of the Constitution of India. This appeal raises a short question as to the companystruction of S. 49E of the Indian IncomeTax Act, 1922, hereinafter referred to as the Act. Before we deal with this question, it is necessary to set out the relevant facts. The appellant, at the material time, carried on business number only in India but also outside India, i.e. Ceylon, the former States of Kolhapur and Kapurthala and other places. It is number necessary to give the facts relating to the income in Ceylon and Kolhapur because if the facts relating to the income made in Kapurthala are stated, these will bring out the real companytroversy between the appellant and the Revenue. We may mention that it is companymon ground that the facts relating to Ceylon income and Kolhapur income are substantially similar. On July 9, 1954, the appellant wrote a letter to the Income Tax Officer, Companies Circle, Bombay, stating that for the assessment year 1949-50, it was entitled to refund on the income taxed in Kapurthala State. It attached an original certificate for tax showing payment of Rs. 37,828/11/-, and requested that a refund order be passed at an early date. On June 27, 1956, the Income Tax Officer rejected the claim on the ground that the claim filed by the appellant was number within the time limit of four years laid down in r. 5 of Income-Tax Double Taxation Relief Indian States Rules 1939-hereinafter called the Indian States Rules. On December 18, 1956, the appellant filed a revision, under s. 33A of the Act, against the said order, before the Com- missioner of Income-Tax, Bombay. The appellant stated in the petition that unfortunately the Companys assessment for the year in question was companypleted by the Income-Tax Officer on the last day of the financial year 1953-54, i.e., 31-3-1954 being the last date on which their claim for double income- tax relief should have been lodged. In absence of the assessment order being received by the Company it was number physically practicable for the assessee to lodge its claim for double income-tax relief and as such the time prescribed under Section 50 had already expired when the assessment order was received by the companypany. The Commissioner made some enquiries. The appellant, in its letter dated June 30, 1958, replied that numberprovisional claim for double income- tax relief was made by the appellant within the time prescribed. The appellant reiterated its own plea that it was number physically practicable for the assessee to lodge its claim for double-tax relief within the time prescribed. The Commissioner, however, rejected the petition. He observed that the assessment in the Kapurthala State was made on 20-3-1950, i.e., much before the assessment was companypleted by the Bombay Income-tax Officer. Nothing prevented the petitioner, therefore, from filing a provisional claim before the period of limitation was over. At least, it should have made such a claim before the Income Tax Officer at the time of assessment. I regret I cannot companydone the delay in filing the claim as there is numberprovision under Section 50 for such companydonation. The appellant then approached the Central Board of Revenue. The Central Board of Revenue, by its letter dated December 31, 1958, declined to interfere in the matter. The appellant did number take any steps to apply to the High Court under Art. 226 for quashing the above orders of the Commissioner of Income-Tax or the Central Board of Revenue. On August 28, 1959, the Income-Tax Officer issued three numberices of demand under s. 29 of the Act in respect of the Assessment years 1949-50, 1950-51 and 1951-52. The appellant then wrote a letter dated September 4, 1959, requesting the IncomeTax Officer to set off the refunds to which the appellant was entitled pursuant to the Provisions of Income-Tax Double Taxation Relief Ceylon Rules, 1942, and read with the provisions of ss. 49A and 48 of the Income-Tax Act, in respect of the assessment years 1942-43, 1943-44 and 1944-45, relating to Ceylon, and the assessment year 1947-48 and 1949-50 relating to Kolhapur and Kapurthala, against the said demands. In this letter the appellant gave arguments in support of its request. In short, the argument was that although the applications claiming those refunds were submitted beyond the prescribed time limit, nevertheless the appellant had a right still, pursuant to the the provisions of s. 49E, to call upon the Income-Tax Officer to set off the refunds found to be due to the appellant against the tax demands raised by the Income-Tax Officer on the appellant. The appellant also approached the Central Board of Revenue,. urging similar points. The Central Board of Revenue, however, by its letter dated June 24, 1960, declined to interfere in the matter. The appellant then on October 7, 1960, filed a petition under Art. 226 of the Constitution. After giving the relevant facts and submissions, the appellant prayed that the High Court be pleased to issue a writ in the nature of Mandamits or a writ, direction or order under Art. 226 of the Constitution, directing the respondents to set off the refunds due to the petitioner under the aforesaid double taxation relief rules against the tax payable by it for the assessment year 1955-56. It appears that in the meantime the petitioner had paid tax for the assessment years 1949-50 and 1950-51, and the demand for Rs. 89,000.58 for the assessment year 1951-52 was kept in abeyance, and later when the assessment for 1955-56 was companypleted, the Income-Tax Officers had agreed to keep in abeyance Rs. 79,430.19 out of the total demand relating to the assessment year 1955-56, till the decision of the Central Board of Revenue. The second prayer was that the High Court be pleased to issue writs in the nature of Prohibition or other direction or order under Art. 226 of the Constitution prohibiting the respondents, their officers, servants and agents from demanding or recovering from the petitioner the tax payable by it for the assessment year 195556 without first setting off against that tax the refunds due to the petitioner under the aforesaid double tax relief rules. It will be numbericed that numberprayer was made for quashing the order of the Commissioner, dated August 23, 1958, and the order of the Central Board of Revenue dated December 31, 1958. It was indeed companytended by Mr. S. P. Mehta, the learned companynsel for the appellant before the High Court that the appellant was number challenging the orders of the Income-Tax Officer rejecting his application for refund, but was only challenging the orders made by them rejecting its application for grant of set off. Mr. Viswanatha Sastri, the learned companynsel for the appellant first urged that as companypliance with r. 5 of the Indian States Rules, 1939 was physically impossible, r. 5 did number apply, and companysequently the refund due to the appellant numberwithstanding r. 5. But we cannot go into the question whether r. 5 was rightly or wrongly applied by the Income- Tax authorities. The orders dated August 23, 1958 and December 31, 1958, cannot be attacked in these proceedings. Therefore, we must proceed on the basis that those orders were validly passed. We-express numberopinion whether the view of the Income-Tax authorities that r. 5 was applicable in the circumstances of the case was companyrect or number. This takes us to the companystruction of s. 49E. Section 49E reads thus 49E. Power to set off amount of refunds against tax remaining payable.Where under any of the provisions of this Act, a refund is found to be due to any person, the Income-tax Officer, Appellant Assistant Commissioner or Commissioner, as the case may be may, in lieu of payment of the refund, set off the amount to be refunded, or any part of that amount against the tax, interest or penalty if any, remaining payable by the person to whom the refund is due. The High Court held that s. 49E of the Act did number give any assistance to the appellant because, according to it, there ,must be prior adjudication in favour of the appellant. The High Court observed that the expression found to be due clearly means that there must, prior to the date set off is claimed, be an adjudication whereunder an amount is found due by way of refund to the person claiming set off. Mr. Sastri companytends that it is number necessary that there should be a prior adjudication to enable a person to claim set off. He says that the Income-Tax Officer can decide the question whether refund is due or number when an application for refund is made to him. On the facts, he says that it is clear that the appellant is entitled to refund under r. 3 of Indian States Rules, 1939, and the Income-Tax Officer has only to calculate the relief due and then set it off. The learned companynsel for the respondent, Mr. Ganapath lyer, on the other hand, companytends that the orders of the Commissioner and the Central Board of Revenue having become final, there was numberobligation on the Income-Tax Officer to make any payment of refund, and he says that it is a companydition precedent to the applicability of s. 49E that the Income- Tax Officer must be under an obligation to make a payment. He points out that the expression in lieu of payment of the refund clearly indicates that the Income-Tax Officer must be under an obligation to make a payment of refund. He further companytends that the refund is number due under the Act but under the said Rules, and therefore, s. 49E does number apply. There is numberdifficulty in refuting the companytention of the learned companynsel for the Revenue that the refund, if due, was due under the provisions of the Act. Section 59 5 provides that the rules made under this section shall have effect as if enacted under this Act. This provision thus makes the Indian State Rules, 1939, part of the Act, and companysequently if a refund is due under the Rules, it would be refund due under the Act within the meaning, of s. 49E. The question then arises as to whether there should be a prior adjudication existing before a set off can be allowed under 49E, and whether there is any other companydition which is necessary to be fulfilled before the section becomes applicable. We are of the opinion that it is number necessary that there should be a prior adjudication before a claim can be allowed under s. 49E.There is numberhing to debar the Income-Tax Officer from determining the question whether a refund is due or number when an application is made to him under S. 49E. The words is found do number necessarily lead to the companyclusion that there must be a prior adjudication. But this is number enough to sustain the claim of the, appellant. It must ,till show that a refund is due to it. The words found to be due in s. 49E may possibly companyer a case where the claim to refund has been held barred under r. 5 of the Indian State Rules but that this is number the companyrect meaning is made clear by the expression in lieu of payment. This expression, according to us, companynotes that payment is outstanding, i.e. that there is subsisting obligation on the Income-Tax Officer to pay. If a claim to refund is barred by a final order, it cannot be said that there. is a subsisting obligation to make a payment. The expression in lieu of was companystrued in Stubbs v. Director of Public Prosecutions 1 . It was held there that where a liability has to be discharged by, A in lieu of B, there must he a binding obligation on B to do it before A can be charged with it. In our opinion, there must be a subsisting obligation to make the payment of refund before a person is entitled to claim a set off under s. 49E. In this case in view of the orders of the Commissioner and the Central Board of Revenue mentioned above there was numbersubsisting obli- gation to pay, and therefore, the claim of the appellant must 1 24 Q. B. D. 577 Therefore, agreeing with the High Court, we hold that S. 49E of the Act is of numberassistance to the appellant and that the petition was rightly dismissed by the High Court.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 128 of 1962. Appeal from the judgment and order dated January 30, 1962, of the Calcutta High Court in Criminal Appeal No. 429 of 1960. C. Mazumdar, for the appellant. K. Chakravarti and P. K. Bose, for the respondent number 2. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Calcutta High Court. The appellant hired a westing house, C. motor from the Modem Electrical Works hereinafter referred to as the Works on April 4, 1958 on a rent of Rs. 40 per month. The hiring period was to last for at least three months and it was agreed that if the motor or parts thereof were lost or damaged by the appellant, he would be bound to pay the whole companyt of the motor and the parts. The motor remained in the use of the appellant and hire-charges were paid by him from April 1958 to January 1959. Thereafter it is said that numberhire-charges were paid. On June 8, 1959, the appellant wrote a letter to the Works in which he said that he had purchased the motor in question for Rs. 600 on companydition that the same would be tried for three months, and if it was found satisfactory the money would be paid and the purchase companypleted. The letter also stated that the agreement was that if the motor was number found satisfactory, the appellant would pay three months hire at Rs. 40 per month and the motor would be returned thereafter. Finally, the appellant said in the letter that the Works had been paid Rs. 620 in all and thus the purchase had been companypleted. The appellant therefore requested the Works to give him a slip saying that the motor had been sold to the appellant, as numberfurther money was due to the Works. On June 15, 1959, the Works sent a reply to the appellant denying that any such agreement as was alleged by the appellant had been made. It was also denied that Rs. 620 had been paid, and therefore the purchase was companyplete. Finally it was said that the appellant had only paid Rs. 400 and Rs. 200 were still due from him for the months of February to June 1959. The appellant replied to this letter in which he reiterated his stand taken in the earlier letter and gave details of how the payment of Rs. 620 had been made. Thereafter the Works filed a companyplaint through its servant Mohd. Ayub on July 1, 1959 in which after stating its case it urged that the appellant had companymitted criminal breach of trust and was therefore guilty under s. 406 of the Indian Penal Code. On this companyplaint the appellant was summoned by the Presi- dency Magistrate 9th Court, Calcutta and after taking some evidence for the prosecution, the Magistrate discharged the appellant holding that there was numbersatisfactory evidence of dishonest misappropriation or companyversion of the motor by the appellant to his own use and that the dispute between the parties was essentially of a civil nature. Mohd. Ayub then went in revision to the High Court. The High Court set aside the order of discharge and directed further enquiry in the matter by another Magistrate. The case then went back to the Third Presidency Magistrate, Calcutta, who eventually found the appellant number guilty and ordered his acquittal on the ground that there was dispute between the parties as to the actual nature of the transaction and it companyld number be said that there was any dishonest intention on the part of the appellant to misappropriate the motor. Mohd. Ayub then filed an appeal before the High Court under S. 417 3 of the Code of Criminal Procedure. Eventually the matter was heard by a Division Bench of the High Court, and it came to the companyclusion that it was clear from the letter of June 8, 1959 to which we have already referred that the same companyld number have been written unless the appellant dishonestly in violation of the entrustment wanted to cause wrongful loss to the companyplainant and wrongful gain to himself. It was further held that the letter did number show that there was a bona fide claim of ownership over the property and the claim was merely a pretence which companyld number exonerate the appellant from being punished under S. 406 of the Indian Penal Code. The appellant then applied for a certificate to enable him to file an appeal to this Court, which was granted and that is how the matter has companye up before us. We are of the opinion that this appeal must succeed. It is number in dispute between the parties that the motor was entrusted to the appellant by the Works for his use. The dispute was whether this entrustment was merely by way of hire which was the case of the Works or, as was the case of the appellant, was on the basis of an agreement between the parties that the appellant would purchase the motor if he found it satisfactory after trying it for .three months and pay Rs. 600 as the price and that he would return it if he found it unsatisfactory during this period of three months and pay Rs. 40 each month as hire for that period. The real dispute between the parties therefore was as to the nature of the agreement between them when the motor was entrusted to the appellant in April 1958. That dispute was clearly of a civil nature. The Works however companytended that by writing the letter of June 8, 1959 the appellant companymitted breach of trust and was guilty under S. 406 of the Indian Penal Code. Now in that letter the appellant put forward his side of the case as to the terms of the agreement when he took delivery of the motor in April 1958. The question is whether by writing that letter the appellant companyld be said to have companymitted the offence defined in s. 405 of the Indian Penal Code and punishable under S. 406 thereof. Now s. 405 runs as follows - Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly mis- appropriates or companyverts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal companytract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, companymits criminal breach of trust. It may be accepted that the appellant was entrusted with the motor by virtue of the agreement between him and the Works, the terms of which are seriously in dispute. The question however is whether the appellant dishonestly misappropriated or companyverted to his own use that motor. On the facts in the present case the motor was handed over to the appellant for his use even according to the case of the Works. Unless therefore it can be shown that the appellant by doing something to the motor which he was number entitled to do dishonestly misappropriated or companyverted the motor to his own use, he cannot be guilty of breach of trust under this part of s. 405. Now the case of the Works is that the appellant must be deemed to have misappropriated or companyverted to his own use the motor by writing the letter of June 8th. It is clear however that the letter shows numberchange in the use of the motor, which, according to the Works, the appellant had hired for his own use. Therefore it cannot be said that merely by writing that letter of June 8, the appellant dealt with the motor in such manner as would amount to its misappropriation or companyversion to his own use by him. Clearly the appellant was using the motor for his own purpose before that letter and companytinued to use it in the same way after the letter. That letter therefore cannot in our opinion result in the misappropriation or companyversion of the motor to his own use by the appellant within the meaning of these words in s. 405 in the circumstances of the present case. It is however urged that even if that be so, the appellant must be held to have dishonestly used or disposed of the motor in violation of the legal companytract, express or implied, which he had made touching the discharge of such trust, because of the letter of June 8. Now it is clear from the receipt given by the appellant to the Works when he took the motor in April 1958 that he was taking it for his own use on certain terms. There is however numberhing to show that by writing the letter of June 8 the appellant used the motor in violation of any legal companytract, express or implied, which he bad made with respect to it for use of the motor was the same before the letter as well as after it. Nor can it be said that the appellant had disposed of the motor in violation of any legal companytract which he had made with respect thereto for it is number the case of the Works that the appellant had parted with the possession of the motor to somebody else. If, for example, the appellant had sold that motor, there might have been something to be said for the view that he had disposed of the motor in violation of the companytract with respect to it even if it was a hirepurchase companytract. But on the facts of this case all that the letter of June 8 does is to put forward the case of the appellant with respect to the transaction of April 4, 1958. So far as the use of the motor is companycerned there has number been any change in it to indicate either misappropriation or companyversion or disposal of it in any manner against the terms of the companytract, express or implied. Clearly s. 405 companytemplates something being done with respect to the property which would indicate either misappropriation or companyversion or its use or disposal in violation of the companytract, express or implied. But where, as in the present case, numberhing was done with respect to the use of the property which was number in accordance with the hiring agreement between the parties, it cannot be said that there was misappropriation or companyversion of the property or its use or disposal in violation of the companytract. We are number expressing any opinion as to the companyrectness of the case either of the appellant or of the Works in this behalf. All that we emphasise is that the letter of June 8 merely raises a dispute of civil nature between the parties and there is numberquestion of any criminal breach of trust with respect to the motor on the basis of that letter. In this view of the matter we allow the appeal, set aside the companyviction of the appellant and order his acquittal. The fine, if paid.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 971 of 1963. Appeal by special leave from the judgment and order dated April 15, 1963 of the Andhra Pradesh High Court in Writ Petition No. 1096 of 1962. A. Chaudhury and T. V. R. Tatachari, for the appellant. N. Sanyal, Solicitor-General and P. Ram Reddy, for respondent No. 3. January 13, 1964. The Judgment of the Court was delivered by- AYYANGAR J.-This is an appeal by special leave against a judgment of the High Court of Andhra Pradesh by which a Writ Petition filed by the 3rd Respondent-K. Brahmananda Reddy- was allowed and an Election Petition filed by the appellant was directed to be dismissed. The facts giving rise to the proceedings with which the appeal is companycerned are briefly as follows At the General Elections held in the month of February 1962 for the Legis- lative Assembly-Constituency of Phirangipuram in Guntur District in Andhra Pradesh-the third respondent Brahamananda Reddy and one Chandramouli, the 2nd respondent before us, were the companytesting candidates. The polling at the Election took place on the 26th February 1962 and the Returning Officer declared Brahmananda Reddy, elected as having obtained, the majority of valid votes. Thereafter, the appellant who is a voter on the rolls of the said Consti- tuency filed an Election Petition before the Election Com- mission on April. 11, 1962 under s. 81 of the Representation of the Peoples Act, 1951, which we shall refer to as the Act. There was numberformal defect in the petition, it was accompanied by the requisite number of companyies provided for by the Act and also by the treasury receipt evidencing the deposit of the requisite sum for security as provided by S. 117 of the Act. The grounds on. which the election was sought to be set aside were various and included inter alia allegations of companyrupt practices against the returned candi- date as well as his election agent, as also several irregularities in the polling by having the votes of dead voters recorded as well as by double voting. Me petition was received by the Commission, who after satisfying itself that it was in companyformity with the Act had a companyy of the petition published in the Official Cazette on May 17, 1962 as provided by s. 86 of the Act. In due companyrse, an Election Tribunal was companystituted and the petition was referred to the Tribunal for trial. The returned candidate-Brahmananda Reddy-filed his Written Statement on September 15, 1962 in which the allegations of fact made in the petition were denied. Be- sides what might be termed the merits of the allegations in the election petition, Brahmanda Reddy raised by his Written Statement several technical objections pointing out certain defects in the petition. This appeal is number companycerned either with these technical defects in the election petition or with the defence raised on the merits to the charges that were formulated in it. The merits have yet to be tried, and as regards the technical objections to the petition raised in the Written Statement dated September 15, 1962, they have been disposed of by the High Court and the same are number before us. A few days later on September 24, 1962, Brahmananda Reddy filed a further Statement of objections to the petition raising mostly objections of a technical nature and of these the only objections which is the subject matter of the present appeal is that companytained in paragraph 2 which reads, and we quote the material words It is further submitted on behalf of the 1st respondent that the above petition filed u s 81 of the Act is number an Election Petition As the requirements of s. 81 3 of the Act are number companyplied with, the petition is, therefore, liable to be dismissed u s 90 3 of the Act as it does number companyply with the provisions of sec. 81 of the Act This second statement companytained a prayer that in view of the technical objections, the maintainability of the petition might be decided as a preliminary issue as the objections went into the root of the matter. Paragraph 2 extracted earlier is somewhat vague but in the arguments before the Tribunal it was explained as indicating an objection alleging number-compliance with s. 81 3 of the Act which runs Every election petition shall be accompained by as many companyies thereof as there are respondents. mentioned in the petition and one more companyy for the use of the Election Commission, and every such companyy shall be attested by the petitioner under his own signature to be a true companyy of the petition. We shall refer later to the precise defect which was relied on in support of the case that there was a number-compliance with this provision. The Tribunal acceded to this request and by its order dated November 7, 1962, it decided the preliminary objections including the one just number mentioned in favour of the election petitioner and fixed a date for the trial of the petition on the merits. Brahmananda Reddy thereupon moved the High Court under Article 226 of the Constitution and prayed for the issue of the Writ quashing this decision of the Tribunal and sought the dismissal of the election petition for number-compliance with the provisions of the Act. The learned Judges of the High Court disallowed the other technical objections raised, but held that the petition did number companyply with the requirements of s. 81 3 of the Act and for this reason they, directed the dismissal of the Election Petition. Ile appellant thereafter has filed this appeal after obtaining special leave from this Court. The subject of companytroversy in this appeal lies in a very narrow companypass. But before we deal with it, it will be companyvenient to specify the precise defect which the learned Judges have held to be fatal to the maintainability of the Election Petition. As stated earlier, the Election Petition filed was accompanied by the number of companyies required to accompany the petition under s. 81 3 . The Election Petition was type-written and the companyies which accompanied the petition were carbon companyies of the type-script, so there was numberquestion of the companyies being other than true companyies. The companyies bore two signature in original of the Election Petitioner authenticating both the companytents of the petition as well as the verification thereof. The Petitioner did number however insert the words true companyy before or above his signatures. The learned Judges of the High Court companysidered that this rendered the petition one number in accordance with s. 81 3 of the Act and it is on this ground that the Election, Petition filed by the appellant has been dismissed and it is the companyrectness of this decision that is companyvassed in the appeal before us. In view of the arguments addressed to us it would be necessary to set out a few of the relevant provisions of the, Act which bear upon the points urged, but before doing so we shall refer to Art. 329 of the Constitution which pro- vides 329 b numberelection to either House of Parliament or to the House or either House of the Legislature of a State shall be called in question except by an election petition presented to such authority and in such manner as may be provided for by or under any law made by the appropriate Legislature. In accordance with this. we have the provisions of the Act and, particularly those companytained in Part VI companymencing with s. 79. Section 80 repeats the provision in the Constitution already extracted and enacts No election shall be called in question except by an election petition presented in accordance with the provisions of this Part. Section 81 deals with the presentation of petitions. It runs Presentation of petitions. 1 An election petition calling in question any election may be presented on one or more of the grounds specified in sub-section i of section 100 and section 101 to the Election Commission by any candidate at such election or any elector within forty-five days from, but number earlier than, the date of election of the returned candidate, or if there are more than one returned candidate at the election and the dates of their election are different, the later of those two dates. Explanation. In this sub-section, elector means a person who was entitled to vote at the election to which the election petition relates, whether he has voted at such election or number. An election petition shall be deemed to have been presented to the Election. Commission- a when it is delivered to the Secretary to the Commission or to such other officer as may be appointed by the Election Commission in this behalf- by the person making the petition, or by a person authorised in writing in this behalf by the person making the petition or b when it is sent by registered post and is deli- vered to the Secretary to the Commission or- the officer so appointed. Every election petition shall be accompanied by as many companyies thereof as there are respondents mentioned in the petition and one more companyy for the use of the Election Commission, and, every such companyy shall be attested by the petitioner under his own signature to be a true companyy of the petition. Before, proceeding further it is necessary to advert to the history of the provision in sub-section 3 for learned companynsel for the respondents laid some store by the object with which the provision was introduced. As enacted in 1951, s. 81 companytained only two sub-sections, the first deal- ing with the time within which a petition had to be filed and the second with the person or authority and the manner in which the petition had to be presented in order to companys- titute the presentation one to the Election Commission. At that date the Election Commission, after scrutinizing the petitions to ascertain whether there were any formal defects, had itself to make companyies for being served on the respondents. To avoid this trouble and inconvenience to the Commission and the delay which the making of such companyies necessarily involved, sub-section 3 which we have set out earlier was introduced into s. 81 by an amendment affected by Act XL of 1961. The point made, based on this feature, we shall reserve for later discussion. Section 82 deals with the parties who are to be impleaded in the petition and s. 83 with the companytents of the petition. section 83 1 c enacts An election petition shall be signed by the petitioner and verified in the manner laid down in the Code of Civil Procedure, 1908, for the verification of pleadings. subsection 2 requires a similar signature and verification of schedules or annexures to the petition. Section 85 empowers the Election Commission to dismiss a petition in certain companytingencies. It reads If the provisions of section 81 or section 82 or section 117 have number been companyplied with, the Election Commissi on shall dismiss the petition Provided that the petition shall number be dismissed without giving the petitioner an opportunity of being heard. The succeeding sections deal with the trial of Election Petitions, after making provision for the appointment of an Election Tribunal by s. 86 but what is relevant in the pre- sent companytext is s. 90 and it is enough to quote the material words Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the Tribunal, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908, to the trial of suits Sub-section 3 reads The Tribunal shall dismiss an election petition which does number companyply with the provisions of section 81, numberwithstanding that it has number been dismissed by the Election Commission under s. 85. The reasoning on which the learned Judges have based their decision shortly stated is this. It is the requirement of s. 81 3 of the Act that an election petition should be accompanied by the number of companyies specified there, and equally so that the companyies so accompanying shall be attest- ed by the petitioner under his own signature to be a true companyy of the petition. There was, of companyrse, the signature of the petitioner on the companyies, but there was numberattestation by him that it was a true companyy. This companystituted a numbercompliance with the requirements of s. 81 which brought into play the terms of s. 90 3 of the Act which required the Tribunal to dismiss a petition which did number companyply with the provisions of s. 81. Though the learned companynsel for the appellant made several submissions, we propose to deal with only one, as the same is sufficient for the disposal of this appeal. This was that in the circumstances of the case there had been a sub- stantial companypliance with the requirements of s. 81 3 . Before, however, dealing with it, it will be companyvenient to refer to some of the submissions made to us by the learned Solicitor-General appearing for the companytesting respondents. He submitted to us certain propositions which however we companysider really unexceptionable. He said that an election petition was number to be equated to an action at law or in equity, but that as the rights were purely the creature of statute, if the statute rendered any particular requirement mandatory, the companyrts possessed and companyld exercise numberdis- pensing power to waive number-compliance. We companysider these propositions are sound and it is in the light of these basic positions that we shall proceed to companysider whether the ,omission to add the words true companyy in the companyies which were admittedly exact companyies of the petition, companystituted a number-compliance with s. 81 3 as to render the petition liable to be rejected under s. 90 3 of the Act. Learned companynsel for the appellant urged that the juris- diction of the Tribunal under s. 90 3 to dismiss an ele- tion petition which does number companyply with the provisions of s. 81 was attracted only if there was a defect in the peti- tion itself and that a defect merely in the companyy accompanying the petition would number be a case of a petition number companyplying with the provisions of s. 81 so as to require or even permit the Tribunal to dismiss the petition. In support of this submission, the difference in the language employed in s. 85 and s. 90 3 of the Act in the matter of making reference to the requirements of s. 81 was adverted to. Besides, it was pointed out that both s. 90 3 and before it s. 90 4 were in their present form making refer- ence to s. 81 when the latter section did number companytain the third sub-section relating to companyies accompanying the petition, and that the companytent of s. 90 3 should number be held enlarged because in 1961 sub-section 3 was added to s. 81 particularly because the language of s. 90 3 was number altered to reflect the change. We are number impressed by this argument. When s. 81 3 requires an election petition to be accompanied by the requisite number of companyies, it became a requirement for the presentation of the election petition to the Commission, and therefore a companydition precedent for the proper presentation of an election petition. If that is a requirement of s. 81, numberdistinction can be drawn between the requirements of sub- sections 1 and 2 and of sub-section 3 . We might add that if there is a total and companyplete number-compliance with the provisions of s. 81 3 , the election petition might number be an election petition presented in accordance with the provisions of this Part within s. 80 of the Act. We are therefore inclined to companysider that if there had been such a number-compliance with the requirement of sub-section 3 number merely the Election Commission under s. 85 but the Election Tribunal under s. 90 3 would prima facie number merely be justified but would be required to dismiss the election petition. This takes us to the point as to whether the requirement of s. 81 3 has been companyplied with or number. The principal submission of the learned Solicitor-General was based the language employed in s. 81 3 of the Act read in the light of the direction companytained in s. 90 3 which cast on the Tribunal the duty to dismiss an election petition which did number companyform to the requirements of the former. In particular, he laid stress on the use of the imperative shall in s. 81 3 when denoting the requirement of attes- tation under the petitioners signature of the companyy bearing the signature being a true companyy. It was in this companynection that he pointed out that the provision for properly attested companyies of the petition accompanying the petition was introduced by the amendment effected in 1961, and the object of Parliament was two-fold first to save the time and inconvenience which the previous procedure cast on the Election Commission, of itself having to make companyies for service on the respondents, and secondly by this means to expedite the companyclusion of the trial of an election petition. He submitted that the attainment of these objects would be entirely frustrated if the respondents on whom these companyies were served had still to make enquiries to satisfy themselves whether the companyies were true companyies, without the same being asserted to be so on their face. In support he referred us to the decisions in Noseworthy v. Overseers of Buckland etc. 1 and in Spice v. Bacon 2 as illustrating the degree of strictness and literal companypliance which was insisted on by companyrts in regard to provisions of like character. The first of these cases was a registration appeal and the Act provided that a person who objected to a voters quali- fication might be heard in support of his objection if he had given numberice to the voter and the manner of giving numberice was by sending it by post addressed to his place of abode as described. It was held that a numberice by post addressed companyrectly but number to the address as described was number a companypliance with the requirement and that in companysequence the objector companyld number be heard. We do number companysider that this decision lays down any hard and fast rule or principle of companystruction which is attracted to every case where a statute calls for interpretation. In ultimate analysis the question is one of the companystruction of the relevant provision of the particular statutes which proceeds on the basis. of the words used understood in the companytext of the statute. L.R. 9 C. P. 233. L.R. a Ex. D. 463. The second case raised a question as to the meaning of the word true companyy in the Inn-keepers Liability Act 1863, which required that in order to obtain the benefit of the limitation of liability companyferred by the Act, a companyy of the Act had to be exhibited at the Inn. The companyy which was exhibited omitted some material words of the section which was required to be exhibited. The Court held that when a claim was made on the inn-keeper for loss sustained by a guest, he companyld number claim the benefit of the statute. We are unable to appreciate the relevance of this decision. It turned on what was meant by the word companyy in the Act and the portion which was omitted in the companyy exhibited was a material portion. There is numberdoubt that such a companyy which differs in material particular from the original is number a companyy within the Act. In this companynection we might make a reference to the decision of this Court in Murarka v. Roop Singh 1 where the question as to what is a companyy is elaborately discussed and some of the English decisions touching this matter have been set out. We shall have occasion to refer to Murarkas case later, but for the present we need only add that the decision relied on by the Solicitor-General is number at variance with what this Court has laid down in Murarkas case. The next matter to be companysidered stems from the submission as regards the object of Parliament in enacting sub-section 3 of s. 81 and that expeditious disposal of election petitions which was the object would be frustrated if sub- stantial companypliance with the provision was held sufficient. We are number impressed with this argument. While we are companyscious of the need for expeditious disposal of election petitions, and for the strict enforcement of provisions designed to achieve this purpose, we cannot be oblivious to the circumstance that to read every requirement literally might equally defeat the purpose for which Part VI is inten- ded, viz., that elections are companyducted in accordance with the relevant statutory provisions framed to ensure purity and orderliness and that the candidate who has number obtained a majority of valid votes or has obtained it in flagrant 1 1964 3 S.C.R. 573 breach of the statutory provisions in number held entitled to represent the companystituency. The Court had to deal with a similar question of inter- pretation of words which appeared mandatory in Kamaraj Nadar Kunju Thevar 1 . One of the points which arose for companysideration was whether the requirement of s. 117 of the Act which then required the petitioner to enclose with the petition a Government treasury receipt of Rs. 100 in favour of the Secretary to the Election Commission had been companyplied with by the election petitioner and s. 90 4 of the Act which companyresponded substantially to the present s. 90 3 required the Election Tribunal to dismiss a petition which did number companyply with the provision, inter alia, of s. 117. The petitioner in that case had made the deposit of the requisite amount in the institutions named in the section but the deposit was made in favour of the Election Commission and number in favour of the Secretary to the Com- mission as required by statute. It was companytended that the petition did number companyform to the provisions of s. 117 and had therefore to be dismissed by the Tribunal. This Court rejected this submission and after adverting to the purpose of the provisions, held that this was fulfilled by the deposit made and that though the requirement as to deposit was mandatory, the same was companyplied with by the deposit made. We companysider that this reasoning is number irrelevant to the companystruction of s. 81 3 of the Act either. In this companynection we might refer to the decision of this Court in Murarka v. Roop Singh 2 in which this Court had to companysider a question closely related to that number under debate. That case was also companycerned with certain defects similar to what we have in the appeal before us. The defects which were there relied on by the returned candidate as justifying or requiring the dismissal of the Election Petition fell into several categories which included number- companypliance with the requirements of s. 81 3 . There, as here, the petition was accompanied with the re- 1 1959 S.C.R. 583. 2 1964 3 S.C.R. 573. 134--159 S.C--15 quisite number of companyies as specified in s. 81 3 but what was urged was as regards certain defects in the companyies filed. These defects fell into two types. First there were two matters which it was stated rendered the companyies filed number true companyies. If the expressions companyy or true companyy were read as exact companyies of the original, the companyies filed did number satisfy that test. The two defects were 1 The original petition companytained the signature of the petitioner at the foot of the petition as required by s. 83 1 c of the Act. In the companyy filed there was numbercopy of this signature. To that extent therefore the companyy was number an exact companyy. The second matter under this head was that the verification in the companyy served on the appellant did number exactly companyrespond to that in the original in that in the latter one of the paragraphs was stated to be true to the personal knowledge of the petitioner while in the former that paragraph was omitted from this group. The other type of defect which was claimed to companystitute numbercompliance with s. 81 3 was that the words true companyy with the signature of the petitioner underneath were number put down in one of the annexures to the petition, companyies of which were annexed to the companyies of the petition filed. The order of the Returning Officer rejecting the numberination paper of the petitioner was filed with the original petition as an annexure to it, and certified companyies of that order were annexed to the companyies of the petition. But this certified companyy did number companytain an endorsement stating that it was a true companyy with the signature of the petitioner. The High Court had held that so far as the defect in number reproducing the signature in the petition was companycerned, it was cured by the fact that every page of the companyy of the petition was attested to be a true companyy and therefore it would number matter if the last page did number companytain the signature. As regards the second, the High Court held that the failure to include the paragraph in the verification was only a clerical defect which had crept in through oversight and as regards the other that it was numberdefect at all. This decision was upheld by this Court holding that the word companyy in s. 81 3 meant a companyy which was substantially so and which did number companytain any material or substantial variation. By companyy in s. 81 3 was meant number an exact companyy but only one so true that numberody by any possibility misunderstands it number being the same as the original. Applying this test, this .Court came to the companyclusion that there was numberfailure to companyply with the last part of s. 81 3 , with the result that s. 90 3 of the Act was number attracted. This Court besides left open the question as to whether any part of s. 81 3 was directory or whether any portion of it was mandatory. In the present case also, we do number propose to deal with the larger question as to whether s. 81 3 or any portion of it is merely directory. In view of the decision of this Court it would be clear that if there is a substantial companypliance with the requirement of s. 81 3 , the election petition cannot be dismissed by the Tribunal under s. 90 3 . The question then is whether on the facts above-stated, there is or is number a sufficient and substantial companypliance with s. 81 3 . We have already pointed out that the appellant has companyplied with the following requirements The petition has been accompanied by the requisite number of companyies. The companyies that accompanied the petition were true companyies. Each of those companyies bore the signatures of the petitioner. If the signature of the petitioner whose name is set out in the body of the petition is appended at the end, surely it authenticates the companytents of the document. Now in regard to this the learned Judges of the High Court themselves ob- served after referring to the terms of s. 81 3 No doubt, what is necessary is a substantial companypliance with the requirement of attestation. For instance, if it is proved that the election petitioner has signed animo attestendi, and omitted the words true companyy by mistake or inadvertently, there is a substantial requirement of the companypliance of s. 81 3 . The same may be said if the relative positions of the words true companyy and of the signature one below the other are number companyrect. They however held that as there was numberevidence of the sig- nature having been appended animo attestendi, there was number- companypliance with s. 81 3 . The learned Solicitor-General while number disputing the companyrectness of the observations of the learned Judges just extracted pressed upon us that the signature at the end of the companyy was meant only as a companyy of that in the original petition and companyld number satisfy the requirement as to attestation of the companyy. He also submitted that the position would have been different if there were two signatures instead of one at the end of the companyy, even if the words true companyy were omitted to be put down. In that case, he said, one signature companyld be treated as representing the companyy of the signature on the original and the other might be taken to have been made animo attestendi. We do number however companysider that there is really need for so much refinement when one has to look at whether there is a substantial companypliance with s. 81 3 , seeing that a signature in origisignatures number found on the companyies were intended to authenticate the document to which it is appended, viz., the companyy, it would only mean that the companyy did number reproduce the signature in the original. There is numbercompelling necessity to hold that the signatures were merely intended to be a companyy of those on the original in order to spell out a numbercompliance with the requirement of this provision. If the nal was number needed on the companyy and a writing companyying out the name of the signatory would suffice. The decision of this Court in Murarkas case 1 is authority for the position that the absence of a writing in the companyy indicating the signature in the original would number detract the companyy from being a true companyy. In the circumstances, we companysider that there has been substantial companypliance with the requirement of s. 81 3 in the petition that was filed by the appellant and the learned Judges were in error in directing the dismissal of the petition. The appeal is accordingly allowed and the order of the High Court dismissing the petition is set aside. As owing 1 1964 3 S. R. 573 to the filing of the Writ Petition there has been a companysiderable delay in the trial of the Election Petition, we express the hope that the petition would be heard and disposed of at an early a date as is companyveniently possible.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 690 of 1962. Appeal from the judgment and order dated March 5, 1959, of the Andhra Pradesh High Court in Appeal against order No. 151 of 1955. Suryaprakasam and Sardar Bahadur, for the appellants. The respondent did number appear. January 20, 1964. The Judgment of the Court was delivered by SUBBA RAO J.-This appeal by certificate raises the question of the applicability of s. 48 of the Code of Civil Procedure, hereinafter called the Code, to the facts of the The relevant facts are as follows In the year 1928 one Pentapati Venkataramana filed Original Suit No. 3 of 1928 in the Court of the Subordinate Judge, Visakhapatnam, against 29 defendants for accounts of dissolved partnerships and for the recovery of amounts due to him. On March 30, 1932, the suit was dismissed by the learned Subordinate Judge. On appeal, the High Court of Madras set aside the decree of the Subordinate Judge and passed a joint and several decree in favour of the plaintiffs and defendants 24 to 27 for a sum of Rs. 54,350 with interest thereon. On February 15, 1939, the decree-holders filed an application for execution of the decree, being E.P. No. 13 of 1939, and prayed for realization of the decretal amount by attachment and sale of 31 items of properties described by them in the schedule Ex. B-4 annexed thereto. The judgmentdebtors filed an objection to the attachment of some of the said items, but that was dismissed. Against the order of dismissal of their objection, the judgment-debtors filed an appeal to the High Court, being C.M.A. No. 26 of 1944. Pending the disposal of the C.M.A., the High Court granted an interim stay of E.P. 13 of 1939. Later, the appeal was dismissed on April 26, 1945. After the dismissal of the appeal, when the decree- holders sought to proceed with the execution, the judgment- debtors filed another application being E.A. No. 575 of 1945, alleging that the decree has been adjusted and for recording satisfaction of the decree. But the said application was dismissed on December 12, 1945. The judgment-debtors went up on appeal to the High Court against the said order of dismissal and obtained an interim stay of P. 13 of 1939. On September 9, 1947, the High Court allowed the appeal and remanded the case to the trial companyrt for ascertaining whether there was an adjustment of the decree as pleaded by the judgment-debtors. On remand, the executing companyrt again dismissed the application filed by the judgment-debtors. Against the aid order, the judgment- debtors again preferred an appeal, being C.M.A. No. 127 of 1948, in the High Court of Madras and obtained an interim stay of the execution. The interim order was made absolute on November 24, 1948. As the execution of the decree was stayed by the High Court, the executing companyrt made an order on E.P. 13 of 1939 to the effect that the petition was closed. On July 31, 1951, the High Court dismissed C.M.A. 127 of 1948. On January 21, 1952, the decree-holders made an application being E.A. No. 142 of 1952, in E.P. 13 of 1939 for reopening the said execution petition and for proceeding with the execution of the decree. The learned Subordinate Judge, holding that the previous execution petition was merely closed, directed the decree-holders to file a regular execution petition. On October 11, 1952, the decree-holders filed E.P. No. 58 of 1953 to companytinue further proceedings in E.P. 13 of 1939 as per the order made in E.A. No. 142 of 1952 passed on October 4, 1952. In that petition the decree-holders prayed that the properties mentioned in the draft proclamation filed in P. No. 13 of 1.939 and brought to sale may be sold for he realization of the money due to the decree-holders and the proceeds applied for the discharge of the decree-debt. The judgment-debtors filed a companynter-affidavit pleading, inter alia, that the decree sought to be executed was made on September 22, 1938, and that as E.P. No. 13 of 1939 was dismissed on December 28, 1948, the present application, having been filed more than 12 years from the date of the decree, was barred under s. 48 of the Code. The learned Subordinate Judge held that though the decree-holders were entitled to companytinue the previous execution petition, E.P. 58 of 1953 was a fresh application, as in form as well as in details it materially differed from the original execution petition. On appeal, a division Bench of the Andhra Pradesh High Court took a different view and held that E.P. 13 of 1939 was merely closed for statistical purposes and, there- fore, the execution petition filed in 1939 was still pending and the decree-holders were entitled to proceed with that petition. The High Court further observed that the said position was number companytested by learned companynsel for the res- pondents. We understand this observation only to mean that learned companynsel appearing for the respondents therein did number companytest the position that if the execution petition was number dismissed but was only closed for statistical purposes, the decree-holders were entitled to proceed with that petition. The High Court remanded the case to the learned Subordinate Judge for disposal according to law after companysidering the other companytentions of the judgment-debtors. Hence the appeal. Mr. Suryaprakasam, learned companynsel for the appellants, raised before us the following two points 1 The previous execution petition was dismissed and, therefore, it was number pending at the time of filing of E.P. 58 of 1953, and, therefore, the later execution petition was a fresh application within the meaning of s. 48 of the Code and 2 even if the previous application was only closed for statistical purposes, and the decree-holders companyld apply for reviving those proceedings, E.P. No. 58 of 1953 was a fresh execution petition because the parties and the properties proceeded against were different and the relief asked for was also different. Before we companysider the question raised, it would be company- venient at the outset to look at the material provisions of s. 48 of the Code. It reads Where an application to execute a decree number being a decree granting an injunction has been made, numberorder for the execution of the same decree shall be made upon any fresh application Presented after the expiration of twelve years from-- a the date of the decree sought to be executed. This section companyresponds to paras 3 and 4 of s. 230 of the Code of 1882. The relevant part of the section read Where an application to execute a decree for the payment of money or delivery of other property has been made under this section and granted, numbersubsequent application to execute the same decree shall be granted after the expiration of twelve years from any of the following dates A companyparison of the said two provisions shows that the phrase fresh application has been substituted for subse- quent application. This amendment became necessary in order to make it clear that the application mentioned in s. 48 of the Code is a fresh substantive application and number an application to revive or companytinue a substantive application already pending on the file of the companyrt. The question, therefore, is whether E.P. 58 of 1953 is a fresh application within the meaning of s. 48 of the Code. The answer to this question mainly turns upon the question whether the previous application i.e., E.P. 13 of 1939, was finally disposed of by the executing companyrt. From the narra- tion of facts given by us earlier it is clear that the said execution petition was closed for statistical purposes. As the High Court stayed the execution pending the appeal filed by the judgment-debtors, the decree-holders were number in a position to proceed with the execution petition, and, therefore, it was closed. Some argument was raised on the question whether the said execution petition was closed for statistical purposes or was dismissed that it was companytended that under the Code of Civil Procedure there was numberpower companyferred upon a companyrt to close execution proceedings for statistical purposes, and that even if such an order was made, it must be deemed to be an order dismissing the execution petition. The actual order dated December 28, 1948 has number been placed before us. But in E.P. 58 of 1953 in company 6 thereof it is mentioned that E.P. No. 13 of 1939 was closed on December 28, 1948. In the companynter-affidavit filed by one of the judgment-debtors it is stated that E.P. 13 of 1939 was dismissed on December 28, 1948 and number merely closed. After the disposal of the appeal by the High Court and before the filing of E.P. No. 58 of 1953, the decree- holders filed E.A. No. 142 of 1952 for reopening E.P. No. 13 of 1939. On that petition the learned Subordinate Judge made the following order The previous E.P. was merely closed. Petitioner may file a regular E.P. on which proceedings will companytinue from the stage at which they were left in E.P. 13 of 1939. This order discloses that the previous execution petition was only closed. The Subordinate Judge must have presumably looked into the previous record. The learned Subordinate Judge proceeded on the assumption that the previous exe- cution petition was pending, though he dismissed the present execution petition on another ground. This factual position was number companytested even in the High Court, for the High Court stated that the previous application was merely closed for statistical purposes. In the circumstances we must proceed on the assumption that the Execution Petition 13 of 1939 was only closed for statistical purposes. Learned companynsel for the appellants companytends that the Code of Civil Procedure does number sanction the passing of an order closing an execution petition for statistical purposes and that practice has been companydemned by companyrts. Under 0. XXI, r. 17 1 of the Code, the Court may reject an execution application if the requirements of rules 11 to 14 have number been companyplied with. Under r. 23 thereof, if the judgment- debtor does number appear or does number show cause to the satisfaction of the companyrt why the decree should number be executed, the companyrt shall order the decree to be executed, and where such person offers any objection to the execution of the decree, the Court shall companysider such objection and make such orders as it thinks fit. Under r. 57 thereof, Where any property has been attached in execution of a decree but by reason of the decree-holders default the Court is unable to proceed further with the application for execution, it shall either dismiss the application or for any sufficient reason adjourn the proceedings to a future date Relying upon these provisions it is argued that though the power of the companyrt to make an order under 0. XXI, r. 23 2 is wide and it can make any order it thinks fit, it can only make one or other of the two orders mentioned in r. 57 when it companyld number proceed with the execution because of the default of the decree-holder. It is said that in this case the decree-holders companyld number proceed with the execution in view of the stay order of the High Court and, therefore, the executing companyrt companyld have either dismissed the application or adjourned the proceedings to a future date and it has numberjurisdiction to pass an order closing the execution for statistical purposes. It is further said that an order closing proceedings for statistical purposes is number an order of adjournment, for an order of adjournment implies that the application is on the file, whereas the object of closing is to take it out of the file, though temporarily, and, therefore, the order, in effect and substance, is one of dismissal. Assuming that the order was made by reason of the decree-holders default within the meaning of 0. XXI, r. 57 of the Code, we find it difficult to attribute something to the companyrt which it never intended to 34 -159 3--C. 17 do. It is true companyrts have companydemned the practice of exe- cuting companyrts using expressions like closed, closed for statistical purposes, struck off, recorded etc., and they also pointed out that there was numberprovision in the Code of Civil Procedure for making such orders see Biswa Sonan Chunder Gossyamy v. Binanda Chunder Dibingar Adhikar Gossyamy 1 Vadlamannati Damodara Rao v. The Official Receiver, Kistna 2 Moidin Kutty v. Doraiswami 3 . It is number necessary to express our opinion on the question whether such procedure is sanctioned by the Code of Civil Procedure or number but assuming that the companyrt has numbersuch power, the passing of such an order cannot tantamount to an order of dismissal, for the intention of the companyrt in making an order is closed for statistical purposes is manifest. It is intended number to finally dispose of the application, but to keep it pending. Whether the order was without jurisdiction or whether it was valid, the legal position would be the same in one case it would be ignored and in the other, it would mean what it stated. In either case the execution petition would be pending on the file of the companyrt. That apart, it is number the phraseology used by the executing companyrt that really matters, but it is really the substance of the order that is material. Whatever terminology may be used, it is for the companyrt to ascertain having regard to the circumstances under which the said order was made, whether the companyrt intended to finally terminate the execution proceedings. If it did number intend to do so, it must be held that the execution proceeding were pending on the file of the companyrt. We have numberhesitation, therefore, in agreeing with the High Court that E.P. 13 of 1939 is pending on the file of the executing companyrt and that the present application is only an application to companytinue the same. Even so, it is companytended that E.P. No. 58 of 1953 is a fresh application. Learned companynsel companypared the recitals in E.P. 13 of 1939 and E.P. 58 of 1953 and pointed out that all the respondents in the former execution petition are number respondents in the present execution petition that legal representatives of some of the defendnts are added to the present execution petition that the decree-holders did number 1 1884 I.L.R. 10 Cal. 422. 2 I.L.R. 1946 Mad. 527. A.I.R. 1952 Mad. 51 . seek to proceed against all the properties against which they sought to proceed in the former execution petition and that one of the reliefs, namely, to attach the amount deposited in companyrt, asked for in the present execution petition is a companypletely new one and that, therefore, the present execution petition is, both in form and in particulars, companypletely a different one. But a companyparison of the two execution petitions shows that the parties are the same the new parties added in the present execution petition are either the legal representatives of the deceased parties or the representative of a party who has become insolvent. In the present execution petition the decree-holders are number proceeding against any property against which they did number seek to proceed in the earlier proceeding they only omitted some of the properties. The decree-holders cannot be companypelled to proceed against all the properties against which at one time they sought to proceed. The relief by way of attachment of the amount deposited in companyrt had been asked for by the decree-holders by a separate petition, namely, E.A. No. 143 of 1962, and that was dismissed and, therefore, numberhing turns upon it. The result is, therefore, in substance tinder both the execution petitions the decree-holders seek to proceed against the same parties and against the same properties. The law on the subject is well-settled. In Bandhu Singh v. Kayastha Trading Bank 1 , where a decree-holder included new items of property for attachment in an application for execution of his decree filed 12 years after the date of the decree, it was held that the application to attach fresh property was a fresh application within the meaning of s. 48 of the Code and, therefore, having been made more than 12 years after the date of the decree, companyld number be entertained. In Sri Raja D. K. Venkata Lingama Nayanim v. Raja Inuganti Rajagopala Venkata Narasimha Rayanim 2 . where an application was made for amending a pending execution petition with a view to attach another property number included in the pending application, the companyrt held that the application for amendment companyld number be allowed, as it was made beyond the period of 12 years from the date of the decree. In Ippagunta Lakshminarasinga Rao v. Ippagunta 1 1931 I.L.R. 53 All. 419. I.L.R. 1947 Mad. 525 Balasubrahmanyam 1 , where the execution petition filed beyond 12 years of the decree asked for a new relief number asked for in the earlier execution petition, it was held that the subsequent application, having been filed beyond 12 years, was hit by s. 48 of the Code. In Gajanand Sah v. Dayanand Thakur 2 , the decree-holder was number allowed to substitute a new property different from the one against which he wished to proceed in the earlier application on the ground that 12 years had expired from the date of the passing of the decree. The result of the decisions may be summarized thus. An application made after 12 years from the date of the decree would be a fresh application within the meaning of s. 48 of the Code of Civil Procedure, if the previous application was finally disposed of. It would also be a fresh application if it asked for a relief against parties or properties different from those proceeded against in the previous execution petition or asked for a relief substantially different from that asked for in the earlier petition. In this case, as we have pointed out, the parties are sub- stantially the same in both the proceedings, and the decree- holders are only proceedings against properties included in the previous application. It cannot, therefore, be treated as a fresh application within the meaning of s. 48 of, the Code. It is only an application to companytinue E.P. No. 13 of 1939 which is pending on the file of the executing companyrt. That apart, the decree-holders filed E.A. No. 142 of 1952 in P. No. 13 of 1939 expressly asking for the reopening of the said execution petition and for proceeding with it. As we have held that the earlier execution petition is still pending on the file of the companyrt, the executing companyrt will be well within its rights in proceeding on the basis of the earlier execution petition even without a new petition. In the result, we hold that the order of the High Court is right.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION CIVIL Appeal No. 549 of 1962. Appeals from the judgment and orders dated August 1, 1958 and March 13, 1959 of the Assam High Court A. Nos. 86 of 1958 and 14 of 1959 respectively. C. Chatterjee, K. P. Sen and P. K. Chatterjee, for the appellant in C.A. No. 549 of 1962 . P. Maheshwari, for respondents Nos. 1 a to 1 e in A. No. 549 of 1962 . Behrul Islam and R. Gopalakrishnan, for the appellant in A. No. 569 of 1963 . N. Mukherjee, for the respondent in C.A. No. 569/ 63 . February 24, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR C.J.-These two appeals which have been brought to this Court with a certificate issued by the Assam High Court, raise a short question about the companystruction and effect of section 5 of the Assam NonAgricultural Urban Area Tenancy Act, 1955 No. 12 of 1955 hereinafter called the Act . The relevant and material facts which have led to the suits from which these two appeals respectively arise, are similar, and so, it would number be necessary to state them in detail in regard to both the matters. We would, therefore, mention the facts broadly in C.A. No. 549/1962, in dealing with the companymon point raised for our decision. The appellant in this case is Mst. Rafiquennessa who sued the predecessor of the respondents for ejectment. It appears that Lal Bahadur Chetri has executed a registered lease-deed in favour of the appellant on the 14th February, 1946. The lease companyered an open plot of land and under the companyenant the leasee was entitled to build a house for residential purposes. In the ordinary companyrse, the lease was due to expire on the 12th February, 1952, and the lessee had agreed to deliver vacant possession of the land at the expiration of the stipulated period. Accordingly, a numberice to quit was served on him to vacate on the 12th February, 1952. He, however, did number companyply with the numberice and that led to the present suit by the appellant for eviction No. 149 of 1952 . In support of her claim, the appellant alleged that the lessee had companytravened the terms of the lease inasmuch as he had sublet the premises built by him, and so, that was an additional ground for evicting the lessee. The sub-lessees were accordingly joined as defendants to the suit. The lessee Chetri alone resisted the suit. The sub-tenants let into possession by him did number join issue with the appel- lant. The trial Judge decreed the appellants claim where- upon the lessee Chetri filed an appeal in the Court of the Sub-Judge, Lower Assam District, Gauhati, challenging the validity and the companyrectness of the decree passed against him Civil Appeal No. 24/1953 . While the appeal was pending, the Act was passed and was published in the Assam Gazette on the 6th July, 1955. Thereafter, when the appeal came on for hearing before the lower appellate Court, the tenant filed an application praying that he should be permitted to take an additional ground under s. 5 of the Act. Before that date, the Assam High Court had taken the view that the said provision of the Act was applicable to the pending proceedings between land- lords and tenants for eviction and that was the basis on which the tenant Chetri wanted to support his appeal. The lower appellate Court allowed the tenants plea, framed an additional issue in pursuance of it and sent the matter back to the trial Court for a finding. On remand, the trial Court took evidence and after local inspection, made a finding that the two houses proved to have been built by the tenant must be regarded as permanent in relation to the locality of the plot. He, however, found that there was numberevidence to show when the said houses were companystructed. Part of the finding was challenged by the tenant before the lower appellate Court. The lower appel- late Court ultimately allowed the appeal and set aside the decree passed by the trial Judge in favour of the appellant. The companyclusion of the lower appellate Court was that the two houses had been companystructed by the tenant within five years after the taking of the lease and that entitled the lessee to claim the benefit of s. 5 of the Act. The appellant then preferred a second appeal in the High Court of Assam No. 86/1958 . Following its earlier decision about the applicability of the provisions of s. 5 to pending proceedings, the High Court summarily dismissed the said appeal. Thereafter, the appellant applied for and obtained a certificate from the High Court and with the said certificate the present appeal has been brought before us. Pending these proceedings, the tenant Chetri died and his heirs and legal representatives Mst. Tulsa Devi and others. have been brought on the record and will be described as respondents hereafter. Thus, the only point which arises for our decision is whether the Assam High Court was right in taking the view that the provisions of s. 5 applied to the proceedings between the parties which were pending at the relevant time before the lower appellate Court. Appeal No. 569 of 1963 arises from a suit filed by the appellant Wahedulla against his tenant, the respondent Abdul Hamid. The relevant facts are similar to those in C.A. No. 549/1962. In this case also, the Act came into force while the appeal was pending before the lower appellate Court and by the application of s. 5 respondents claim to companytinue in possession has been upheld and the appellants claim for ejecting the respondent has been rejected. The High Court granted certificate to the appellant when it was told that the appellant proposed to challenge the companyrectness of its earlier decision holding that s. 5 of the Act applied to the pending proceedings. The Act was passed by the Assam Legislature in order to regulate in certain respects the relationship between land- lord and tenant in respect of number-agricultural lands in the urban areas of the State of Assam. It companytains fourteen sections and the scheme which is evident in the operative provisions of the Act is to afford protection to the tenants by regulating in certain respects the relationship between them and their landlords in respect of the lands companyered by the Act. Section 3 c defines a landlord as meaning a person immediately under whom a tenant holds but does number include the Government. While s. 3 d defines a Permanent structure in relation to any locality as meaning a structure which is regarded as permanent in that locality, the tenant and urban area are defined by clauses g and b respectively. Section 4 imposes an obligation on the tenant to pay rent for his holding at fair and equitable rates, and the proviso prescribes that in case of any dispute as to fair rent ,between the parties, the rent which was paid by the tenant immediately before the dispute shall be deemed to be fair and equitable unless a companypetent companyrt decides to the -,contrary. Section 6 provides for companypensation for improvements s. 7 provides for enhancement of rent by companytract,. s. 8 deals with enhancement of rent without companytract s. 9 authorises the Court to make an order as to enhancement of rent s. 10 prohibits illegal realisation beyond the prescribed amount s. 11 provides for numberice for ejectment s. 12 prescribes the procedure in which the numberice has to be served and s. 13 companyfers rule-making power on the State Government. Section 14 repeals the earlier Tenancy Act. Having thus broadly companysidered the scheme of the Act, it is necessary to read s. 5, the effect of which is the main point of companytroversy between the parties before us. Section 5 i reads thus- Notwithstanding anything in any companytract or in any law for the time being in force- a where under the terms of a companytract entered into between a landlord and his tenant whether before or after the companymencement of this Act, a tenant is entitled to build, and has in pursuance of such terms actually built within the period of five years from -the date of such companytract, a permanent structure on the land of the tenancy for residential or business purposes, or where a tenant number being so entitled to build, has actually built any such structure on the land of the tenancy for any of the purposes aforesaid with the knowledge and acquiescence of the landlord, the tenant shall number be ejected by the landlord from the tenancy except on the ground of number-payment of rent b where a tenant has effected improvements on the land of the tenancy under the terms whereof he is number entitled to effect such improvements, the tenant shall number be, ejected by the landlord from the, land of the tenancy unless companypensation for reasonable improvements has been paid to the tenant. Sub-section 2 prohibits the ejectment of any tenant from the land of the tenancy except in execution of a decree for ejectment passed by a companypetent civil Court and sub-section 3 prohibits the execution of a decree for ejectment on the ground of number-payment of rent within a period of 30 days from the date of the decree, and allows the tenant to pay into the executing Court the entire amount due from him under 134-159 S.C.-56 the decree within the said period, Whereupon the decree has to be entered as satisfied. Mr. Chatterjee companytends that the Assam High Court was in error in companying to the companyclusion that the proceedings which were pending between the parties at the appellate stage on 6th July, 1955 when the Act came into force, fell to be governed by the provisions of s. 5. He argues that at the relevant date when the suit was filed by the appellant, he had acquired a right to eject the tenant under the terms of the tenancy, and he companytends that where vested rights are affected by any statutory provision, the said provision should numbermally be companystrued to be prospective in operation and number retrospective, unless the provision in question relates merely to a procedural matter. It is number disputed by him that the legislature is companypetent to take away vested rights by means of retrospective legislation. Similarly, the legislature is undoubtedly companypetent to make laws which over-ride and materially affect the terms of companytracts between the parties but the argument is that unless a clear and unambiguous intention is indicated by the legislature by adopting suitable express words in that behalf, numberprovision of a statute should be given retroactive operation if by such operation vested rights are likely to be affected. These principles are unexceptionable and as a matter of law, numberobjection can be taken to them. Mr. Chatterjee has relied upon the well known observations made by Wright J. in in re Athlumney Ex parte Wilson 1 , when the learned Judge said that it is a general rule that when the Legislature alters the rights of parties by taking away or companyferring any right of action, its enactments, unless in express terms they apply to pending actions, do number affect them. He added that there was one exception to that rule, namely, that, where enactments merely affect procedure and do number extend to rights of action, they have been held to apply to existing rights. In order to make the statement of the law relating to the relevant rule of companystruction which has to be adopted in dealing with the effect of statutory provisions in this companynection, we ought to add that retroactive operation of a statutory provision can be inferred even in cases where such retroactive operation appears to be clearly implicit in the 1 1898 2 Q. B. D. 547. provision companystrued in the companytext where it occurs. In other words, a statutory provision is held to be retroactive either when it is so declared by express terms, or the intention to make it retroactive clearly follows from the relevant words and the companytext in which they occur. Bearing in mind these principles, let us look at s. S. Before doing so, it is necessary to companysider s. 2 which pro- vides that numberwithstanding anything companytained in any company- tract or in any law for the time being in force, the provisions of this Act shall apply to all number-agricultural tenancies whether created before or after the date on which this Act companyes into force. This provision clearly indicates that the legislature wanted the beneficent provisions enacted by it to take within their protection number only leases executed after the Act came into force, but also leases executed prior to the operation of the Act. In other words, leases which bad been created before the Act applied are intended to receive the benefit of the provisions of the Act, and in that sense, the Act clearly affects vested rights of the landlords who had let out their urban properties to the tenants prior to the date of the Act. That is one important fact which is material in determining the scope and effect of s. 5. Now, s. 5 itself gives an unmistakable indication of the legislative intention to make its provisions retrospective. What does s. 5 provide? It provides protection to the tenants who have actually built within five years from the date of leases executed in their favour, permanent structures on the land let out to them for residential or business purposes, and this protection is available either when the companystruction of the permanent structure has been made by the tenant in pursuance of the terms of the lease, or even without any term of that kind and the landlord had knowledge of it and had acquiesced in it. Thus, the plain object of s. 5 is to protect the tenants who have built a permanent structure either for business or for residence, provided it has been built within 5 years from the date of companytract of tenancy. Therefore, cases where permanent structures had been built within 5 years of the terms of companytract, would fall within s. 5 1 a , even though those companystructions had been made before the date of the Act. Thus, the very scheme of 5 1 a clearly postulates the extension of its protection to companystructions already made. That is another point which is significant in dealing with the companytroversy between the parties before us. There is yet another point which is relevant in this companynection. S. 5 1 a provides that the tenant shall number be evicted by the landlord from the tenancy except on the ground of number-payment of rent, provided, of companyrse, the company- ditions prescribed by it are satisfied. If the legislature had intended that this protection should operate prospectively. it would have been easy to say that the tenant shall number be sued in ejectment such an expression would have indicated that the protection is afforded to the suits brought after the Act came into force, and that might have introduced the element of prospective operation instead, what is prohibited by s. 5 1 a is the eviction of the tenant, and so, inevitably, the section must companye into play for the protection of the tenant even at the appellate stage when it is clear that by the proceedings pending before the appellate companyrt, the landlord is seeking to evict the tenant, and that obviously indicates that the pending proceedings are governed by s. 5 1 a , though they may have been initially instituted before the Act came into force. Incidentally, an appeal pending before the lower appellate companyrt is a companytinuation of the suit, and so, there is numberdifficulty in holding that a suit which was pending when the Act came into force would be governed by s. 5 1 a and an appeal arising from a suit which had been decided before the Act came into force, would likewise be governed by s. 5 1 a , provided it is pending after the date when the Act came into force. Therefore, we are satisfied that the Assam High Court was right in companying to the companyclusion that the dispute between the parties in the present case must be governed by the provisions of s. 5 1 a . It is companymon ground that if s. 5 1 a is held to apply, the decrees passed against the appellants in both the appeals cannot be successfully challenged. The result is, the appeals fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 156 of 1961. Appeal from the judgment and order dated June 15, 1961, of the Calcutta High Court in Criminal Appeal No. 745 of 1959. N. Mukherjee, for the appellant. K. Chakraborty and P. K. Bose, for the respondent. March 6, 1964. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-Sunil Kumar Paul has preferred this appeal, after obtaining a certificate from the Calcutta High Court under Art. 134 1 c of the Constitution. The facts leading to the appeal are these. The appellant was a clerk in the office of the Sub-Divi- sional Health Officer at Barrackpore in 1955-56. He used to prepare bills of the establishment, to present them at the ,Sub-treasury and later present them at the State Bank at Barrackpore, to receive payment in cash and to make over that amount to the Sub-Divisional Health Officer. Certain bills were drawn under the heading 38-Medical. Certain bills were to be drawn under the heading 39-Public Health. -Some other bills were drawn under other headings. On October 5, 1956, the appellant presented a bill for Rs. 1,769 out of Which a sum of Rs. 5-10-0 was to be credited in the Postal Life Insurance Ledger and the balance of Rs. 1,763-6-0 was to be received in cash. This bill was duly passed by the Sub-Treasury and was subsequently presented to the Bank on October, 6, 1956 for payment of Rs. 1,763-6-0. The Bank paid this amount to the appellant. The amount was number paid to the Sub-Divisional Health Officer. In fact, the records of the Office of the Sub-Divisional Health Officer did number refer to any such bill being prepared and submitted to the Sub-Treasury and the Bank for payment. A bill for practically the same items which were mentioned in the bill cashed on October 6, was however presented on October 1, 1956. It was for an amount of Rs. 1,767 out of which Rs. 5-10-0 were to be credited to the PLI account ledger and the balance of Rs. 1,761-6-0 were to be paid in cash. The amount of this bill was received on October 1, and was duly handed over to the Sub-Divisional Health Officer. It may be mentioned that this bill. cashed on October 1, 1956 was at first prepared for Rs. 1,769 and the amount to be received in cash was to be Rs. 1,763-6-0 but prior to this encashment, a companyrection was made at some stage, and the bill was reduced by Rs. 2 in the total amount and companysequently in the amount to be paid in cash. The fact of the presentation of a bill for its encashment of Rs. 1,763-6-0 on October 6, 1956 came to the numberice of the. Sub.-Divisional Health Officer at the instance of the Accountant General and on enquiry it was found that numbersuch bill had been actually presented by his office for encashment and that numbersuch amount was received by him. This led to a companyplaint and further enquiries and investigation which ended in the prosecution of the appellant. The case was made over to the Special Judge by the Government in view of the provisions of the West Bengal Criminal Law Amendment Special Courts Act, 1949 W. B. Act XXI of 1949 , hereinafter called the Act, as it involved an offence punishable under s. 409 I.P.C. The Special Judge tried the appellant for that offence and companyvicted him and sentenced him to rigorous imprisonment for two years and to pay a fine of Rs. 2,000. The appellant went in appeal to the High Court of Calcutta. The High Court agreed with the appellants companytenion that numberoffence under s. 409 I.P.C. had been made out, but held.that he was proved to have companymitted an offence under s. 420 I.P.C. It accordingly altered his companyviction from an offence under s. 409 I.P.C. to one under s. 420 I.P.C., for cheating the employees of the State Bank, Barrackpore, by representing that the bill for Rs. 1,769 gross and Rs. 1.763-6-0 cash drawn on October 6, 1956, was a genuine bill drawn by the Sub-Divisional Health Officer, and thereby dishonestly inducing the Banks staff to make over the sum of Rs. 1,763-6-0 to him and sentenced him to rigorous imprisonment for one year and to fine of Rs. 2,000. It is against this order that this appeal, has been preferred. The facts found by the High Court are sufficient to justify the finding that the appellant companymitted the offence under s. 420 I.P.C. Learned companynsel for the appellant has, urged the following points A case involving an offence under s. 420 P.C. cannot be allotted for trial to a Special Court by the State Government when such an offence is number companymitted by a public servant while purporting to act as such public servant. The Special Court companyld number take recourse to the provisions of s. 237 Cr. C., and if it companyld, the requiremen ts of s. 237 Cr. P.C. were number satisfied in the present case, and that companysequently the High Court companyld number have altered the companyviction of the appellant from an offence under s. 409 I.P.C. to one under s. 420. The ingredients of an offence under s. 420 I.P.C. were neither alleged number proved by the prosecution. The accused has been prejudiced on account of the absence of the necessary allegations and the omission to frame a charge for an offence under s.420 I.P.C. and therefore the provisions of s. 537 Cr. P. C. would number cure this defect in trial. To appreciate the first companytention, reference may be -made to the relevant provisions of the Act. They are 4 1 Notwithstanding anything companytained in the Code of Criminal Procedure, 1898, or in any other law, the offences specified in the Schedule shall be triable by Special Courts only Provided that when trying any case, a Special Court may also try any offence other than an offence specified in the Schedule, with which the accused may under the Code of Criminal Procedure, 1898., be charged at the same trial. The distribution amongst Special Courts of cases involving offences specified in the Schedule, to be tried by them, shall be made by the State Government. 5. Save as provided in sub-section 1 the provi- sions the Code of Criminal Procedure, 1898, shall, so far as they are number inconsistent with this Act, apply to the pro- ceedings of a Special Court and for the purposes of the said provisions, a Special Court shall be deemed to be a Court of Session trying cases without a Jury, and a person companyducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor. THE SCHEDULE An offence punishable under section 409 of the Indian Penal Code., if companymitted by a public servant or by a person dealing with property belonging to Government as an agent of Government in respect of property - with which he is entrusted, or over which he has dominion in his capacity of a public servant or in the way of his business as such agent. An offence punishable under section 417 or section 420 of the Indian Penal Code, if companymitted by a public servant or by a person dealing with property belonging to Government as an agent of Government, while purporting to act as such public servant or agent. The Government numberification allotting the present case to the Special Court is number on the record and therefore what its actual companytents were cannot be stated with any precision. It may however be assumed that it mentioned the offence involved in the case to be that under s. 409 I.P.C., and, possibly, did number state the various facts which went to establish that offence against the appellant. Section 409 I.P.C. is mentioned in the Schedule referred to in sub-s. 2 of s. 4 of the Act. The State Government was therefore companypetent to allot the case involving that offence to the Special Court. In fact it had to allot the case to the Special Court in view of the provision of sub-s. 1 of s. 4 to the effect that the offences specified in the Schedule shall be triable by Special Courts only. The question therefore really is whether the Special Court companyld try the appellant for the offence under s. 420 I.P.C. An offence under s. 420 P.C. when companymitted in certain circumstances is also men- tioned in the Schedule. It has to be tried by Special Courts only when it is companymitted by a public servant while purporting to act as such. There is numberdoubt that the appellant is a public servant. This has number been disputed. Learned companynsel for the appellant, Mr. Mukherjee, has urged that the expression while purporting to act as such public servant be companystrued to mean while purporting to act in the discharge of official duties and that presentation of a false bill companyld number be in the discharge of official duty. Such presentation may number be in the discharge of official duty, but the question is different and is as to whether the presentation of a false bill was made by the public servant purporting to do so in the discharge of his duties. The appellant did present the false bill purporting to present it in the discharge of his duties as a clerk of the Office of the Sub-Divisional Health Officer who was duly authorised to present bills and cash them. Reliance is placed on the case reported as Bhajahar Mondal The State or West Bengal 1 in support of the companytention that the appellant should number have been tried by the Special Court of the offence under s. 420 I.P.C. when the case was allotted as one involving an offence under s. 409 I.P.C. The facts of that case were very different. The order allotting the case mentioned the offence of which the accused was to be tried to be an offence under s. 161 read with s. 116 P.C. The order was made on November 27, 1952. Prior to this date, on July 28, 1952, abetment of an offence under s. 161 I.P.C. was made a distinct offence under s. 165-A I.P.C. by the Criminal Law Amendment Act XLVI of 1952 An offence under s. 165A was number mentioned in the Schedule to the Act as it stood on November 27, 1952. This Court held that the numberification of the Government making over the case to the Special Court was bad as the case made over related to numberexisting offence. Such cannot be said of the Government numberification allotting the case in the present appeal to the Special Court, as on the date of such numberification there existed an offence under s. 409 I.P.C. and it was included in the Schedule to the Act. On the facts proved, it is number to be doubted that the appellant presented the bill for Rs. 1,763-6-0 at the State Bank oil October 6, purporting to act as the clerk of the Sub-Divisional Health Officer. The bill presented was on be half of that officer. The Bank made the payment to him a 1 1959 S.C.R. 1276. the messenger of that officer duly authorised to receive payment in cash. It follows that the offence under s. 420 companymitted by the appellant would be companymitted by him as a public servant purporting to act as such, and that a case involving this offence also companyld have been allotted to the Special Court by the State Government for trial. The Special Court was therefore companypetent to try the accused for this offence if the facts proved established it. Apart from the companysideration that the offence of cheating of which the appellant-accused has been companyvicted fell within the offences mentioned in the Schedule, the appellant companyld be tried by the Special Court for this offence in view of the proviso to s. 4. The proviso authorizes the Special Court, when trying a case involving an offence specified in he Schedule to try any offence other than that offence with which the accused may be charged at the same trial in accordance with the provisions of the Code of Criminal Procedure. The accused companyld be charged with an offence under s. 420 I.P.C. if he companyld be tried for this offence at the trial for an offence under s. 409 I.P.C. He companyld be so tried in view of is. 236 and 237 Cr. P. C. It is urged for the appellant that the provisions of s. 236 Cr. P. C. would.apply only to those cases where there be numberdoubt about the facts which can be proved and a doubt rises as to which of the several offences had been companymitted on the proved facts. Sections 236 and 237 read If a single act or series of acts is of such a nature that it is doubtful which of several offences the facts which can be proved will companystitute, the accused may be charged with having companymitted all or any of such offences, and any number of such charges may be tried at once or he may be charged in the alternative with having companymitted some one of the said offences. Illustrations A is accused of an act which may amount to theft, or receiving stolen property, or criminal breach of trust or cheating. He may be charged with theft, receiving stolen property, criminal breach of trust and cheating, or he may be charged with having companymitted theft, or receiving stolen property, or criminal breach of trust or cheating. If, in the case mentioned in section 236, the accused is charged with one offence, and it appears in evidence that he companymitted a different, offence for which he might have been charged under the provisions of that section, he may be, companyvicted of the offence which he is shown to have companymitted, although he was number charged with it. Illustration A is charged with theft. It appears that he companymitted the offence of criminal breach of trust, or that of receiving stolen goods. He may be companyvicted of criminal breach of trust or of receiving stolen goods as the case may be though he was number charged with such offence. The framing of a charge under s. 236 is, in the nature of things, earlier than the stage when it can be said what facts have been proved, a stage which is reached when the companyrt delivers its judgment. The power of the Court to frame various charges companytemplated by s. 236 Cr. P. C. therefore arises when it cannot be said with any definiteness, either by the prosecutor or by the Court, that such and such facts would be proved. The Court has at the time of framing the charges, therefore to companysider what different offences companyld be made out on the basis of the allegations made by the prosecution in the companyplaint or in the charge submitted by the investigating agency or by the allegations made by the various prosecution witnesses examined prior to the framing of the charge. All such possible offences companyld be charged in view of the provisions of s. 236 Cr. P. C. as it can be reasonably said that it was doubtful as to which of the offences the facts which companyld be ultimately proved would companystitute. The facts which must have been alleged prior to the stage of the framing of the charge in the present case must have been what had been stated in the charge-sheet submitted by the Investigating Officer, 24-Parganas, which is printed at p. 3 of the appear record. This charge-sheet narrates in the companyumn meant for the name of offences and circumstances companynected with it that on the 6th October 1956 Sunil Kumar Paul, a Public servant in the employment of the office of the Sub-Divisional Health Officer, Barrackpore i.e., clerk dishonestly drew Rs. 1,763-6-0 excluding Postal Life Insurance deduction of Rs. 5-10-0 from the State Bank of India, Barrackpore Branch by submitting a false duplicate Estt. Pay Bill for the office of the said S.D.H.O., Barrackpore. The money drawn was number credited to the office of the Sub-Divisional Health Officer, Barrackpore. It is practically on these facts that the companyviction of the appellant for an offence under s. 420 I.P.C. has been found- ed. It follows that the Special Court companyld therefore have framed a charge under s. 420 I.P.C. at the relevant time if it had been of the opinion that it was doubtful whether these facts companystitute an offence under s. 409 I.P.C. as stated in the charge-sheet or an offence under s. 420 I.P.C. When a charge under s. 420 I.P.C. companyld have been framed by the trial Court by virtue of s. 236 Cr. P.C. that ,Court or the appellate Court can, in law, companyvict the appellant of this offence instead of an offence under s. 409 I.P.C. if it be of the view that the offence of cheating bad been established. This would be in accordance with the provisions of s. 237 Cr. P. C In Begu v. The King Emperor 1 ss. 236 and 237 were companystrued by Viscount Haldane thus The illustration makes the meaning of these words quite plain. A man may be companyvicted of an offence, although there has been numbercharge in respect of it, if the evidence is such as to establish a charge that might have been made. That is what happened here. The three men who were sentenced to rigorous imprisonment were companyvicted of making away with the evidence of the crime by assisting in taking away the body. They were number charged with that formally, but they were tried on evidence which brings the case under s. 237. This was approved by this Court in Ramaswamy Nadar v. The State of Madras 2 . In this case, the accused, acquitted of an offence under s. 420 I.P.C. was companyvicted by the High Court of an offence under s. 403 I.P.C. This Court held that the High Court companyld do so. On facts, however, this Court did number find the offence under s. 403, proved. In the State of Andhra Pradesh v. Kandimalla Subbaiah 3 it was held that while a Special Judge appointed under s. 6 of the Criminal Law Amendment Act XLVI of 1952 had juris- diction to try cases under s. 5 of the Prevention of Corruption Act, he companyld, under s. 7 3 of the Criminal Law Amendment 1 52 I.A. 191. 2 1958 S.C.R. 739. 3 1962 1 S.C.R. 194, 203. Act try other offences under the Code of Criminal Procedure if the accused companyld be charged with them at the same trial and that therefore the accused companyld be tried at the trial for an offence under s. 5 of the Prevention of Corruption Act for an offence under s. 120B read with ss. 466, 467, 420 P.C. and that the other accused who had abetted the companymission of these offences companyld also be tried. Sub-s. 3 of s. 7 of the Criminal Law Amendment Act provided that when trying any case a Special Judge might also try any offence other than an offence specified in s. 6 with which the accused might, under the Code of Criminal Procedure, 1898, be charged at the same trial. In support of his companytentions, learned companynsel for the appellant referred to the case reported as Nanak Chand v. The State of Punjab. 1 wherein it was stated at p. 1212 The provisions of section 236 can apply only in cases where there is numberdoubt about the facts which can be proved but a doubt arises as to which of several offences have been companymitted on the proved facts in which case any number of charges can be framed and tried or alternative charges can be framed In the present case there is numberdoubt about the facts and if the allegation against the appellant that he had caused the injuries to the deceased with takwa was established by evidence, then there companyld be numberdoubt that the offence of murder had been companymitted. This does number help the appellants companytention as the alle- gations in that case if proved companyld establish, according to the Court, the offence of murder only and therefore there was numberroom for any doubt about the nature of offence company- mitted and for the application of s. 236 Cr. P. C. In that case, the appellant was tried along with others for an offence under s. 302 read with s. 149 I.P.C. The Sessions Judge companyvicted the appellant and a few others under s. 302 read with s. 34 I.P.C. The High Court acquitted the others and altered the companyviction of the appellant to the offence under s. 302 I.P.C. It was, in this setting, that this Court held that on the basis of the specific allegation that the appellant had struck the deceased with a takwa, there companyld be numberdoubt of that fact companystituting an offence under s. 302 and number an offence under s. 302 read with s. 149 I.P.C. We therefore hold that at the trial of the appellant for an offence under s. 409 I.P.C., in this case, the appellant companyld have also been charged for an offence under s. 420 I. C. in view of s. 236 of the Code of Criminal Procedure. 1 1955 1 S.C.R. 1201. It is then urged for the appellant that under the proviso to s. 4 of the Act, the Special Court can try any other offence only when the accused is specifically charged with that offence. The language of the proviso does number lead to such a companyclusion. It provides for the trial of the accused for any other offence provided the accused companyld be charged with that offence at the same trial under the provisions of the Code of Criminal Procedure. The proviso does number say that the charge must be framed, though of companyrse, if the trial Court itself tries the accused for a certain offence, it will ordinarily frame a charge. The proviso empowers a Court to try the accused for that offence and has numberhing to do with the power of the trial, companyrt or of the appellate Court to record a companyviction for any other offence when an accused is being tried with respect to an offence mentioned in the Schedule. The Courts power to take recourse to the provisions which empower it to record a companyviction for an offence number actually charged, depends on other provisions of the Code and the Act. Section 5 2 of the Act provides that the provisions of the Code of Criminal Procedure so far as they are number incon- sistent with the Act, would apply to the proceedings of the Special Court and for the purposes of these provisions, the Special Court companyld be deemed to be a Court of Sessions. There is numberhing in the provisions of s. 237 of the Code of Criminal Procedure which is inconsistent with the provisions of the Act. Section 237 simply empowers the Court to companyvict an accused of the offence with which he companyld have been charged under s. 236, even when he had number been charged with it. Section 237 really deals with the final orders which the Court can pass on a trial of an accused for a certain offence. In view of the proviso to sub-s. 1 of s. 4, the Special Court companyld have tried the appellant for the offence under s. 420 I.P.C. It did number actually try him for that offence. It was however open to it and to the appellate Court to companyvict him of the offence under s. 420 P.C. when trying for an offence under s. 409 I.P.C. in view of s. 237 of the Code. It has also been urged for the appellant that the proviso to s. 4 does number give any power to the Special Court to try an offence which be independent of the offence mentioned in the allotment order. That is to say, the Special Court, in this case, companyld have tried the appellant only for such offences which will be in some way related to the offence under s. 409 I.P.C. It is further urged that the ingredients of the offence under s. 420 I.P.C. are absolutely different from the ingredients of the offence under s. 409 I.P.C. The ingredients of two must be different from one another and it is therefore number necessary to companysider whether the ingredients of the two offences are in any way related. The Court has to see, for the purpose of the proviso, whether the accused companyld be charged with any offence, other than the one referred to in the allotment order, in view of the provisions of the Code. There is numberhing in the proviso which companyld lead to the companystruction that any limitations other than those laid down by the provisions of the Code of Criminal Procedure were to affect the nature of the offence which companyld be tried by the Special Court. We are therefore of opinion that the Special Court companyld try the appellant for the offence under s. 420 I.P.C. and that therefore the High Court was right in altering his companyviction from that under s. 409 to s. 420 I.P.C. We have already referred to the statement in the chargesheet that the appellant presented a false bill to the State Bank and cashed it. This allegation is sufficient for the pur- pose of the offence under s. 420 I.P.C. It was number necessary to allege or to prove that the appellant himself had prepared the false bill. Such an allegation companyld number be made in the present case in particular, as the bill which was cashed on October 6, companyld number be traced. The presentation of the bill for encashment carries with it the representation that it is a genuine bill and therefore the allegations in the case attributed misrepresentation to the appellant at the time he presented the bill. It may be mentioned here that if the bill had been a genuine bill, the offence made out in the present case would have been an offence under s. 409 I.P.C. In the circumstances, therefore, the appellant cannot be said to be prejudiced in his companyviction under s. 420 I.P.C. on account of the number- framing of the charge, and companysequent number-trial, under s. 420 I.P.C. In fact, in the circumstances of the case, numberquestion of irregularity in the trial arises. The framing of the charge under s. 420 I.P.C. was number essential and s. 237 Cr. P. C. itself justifies his companyviction of the offence under S. 420 if that be proved on the findings on the record. The last companytention for the appellant was that the sentence is severe. We do number companysider a sentence of 1 years rigorous imprisonment and a fine of Rs. 2,000 severe.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 211 of 1963. Petition under Art. 32 of the Constitution of India for the enforcement of the Fundamental Rights. K. Garg, for the petitioner. K. Daphtary, Attorney-General, B. R. L. Iyengar and R. G. K. Achar, for the respondents. March 31, 1964. The Judgment of the Court was delivered by SIKRI, J.-This is a petition under Art. 32 of the Consti- tution for enforcing the fundamental rights of the petitioner under Arts. 14, 16 and 19 of the Constitution. Although the petition raises various points, before us only two points have been argued by Mr. Garg, on behalf of the petitioner. We are grateful to Mr. Garg, who has argued as amicus curiae, for the assistance he has given. The two points may be formulated as follows That the Mysore General Services Revenue Subordinate Branch Recruitment Rules, 1959, were number made with the previous approval of the Central Government under s. 115 7 of the State Re-organisation Act, and, therefore, do number govern the petitioner insofar as the companyditions of service have been varied to his disadvantage That the Madras-Government had, prior to, November 1, 1956, by various orders, reduced the petitioner in rank in violation of Art. 311 2 of the Constitution and Art. 16. In order to appreciate the arguments addressed to us, it is necessary to give a few facts. The petitioner was selected by the Madras Public Service Commission as a Lower Division Clerk under the Madras Ministerial Service Rules in 1949, and was allotted to the Revenue Department and posted in South Kanara District. He was promoted as Upper Division Clerk on April 2, 1956. According to the petitioner, he should have been promoted much earlier as he had rendered outstanding and meritorious service. According to the State, the petitioner was companysidered for inclusion in the eligibility list from 1955 onwards, but was number selected as he was number companysidered fit. The State admits that he was promoted as Upper Division Clerk with effect from April 2, 1956, but alleges that this was on a temporary basis. He was later reverted and then again posted as a temporary Upper Division Clerk. In August 1957, the petitioner was companysidered and included in the eligibility list at Serial No. 14. This list was regularised on December 12, 1957, in accordance with Rules 39 e and 35 of the Madras State and Subordinate Service Rules, with effect from October 19, 1957. According to the petitioner this resulted in the loss of benefit of service and increments. In the meantime, reorganisation of States took place under the State Reorganisation Act XXXVII of 1956 South Kanara District, except Kasaragod Taluk, went to the new Mysore State and the petitioner was allotted to it. On May 11, 1957, the Government of India addressed a memorandum No. O. SRDI-1. APM-57 to all State Governments. Broadly speaking, the Central Government said that some companyditions of service should be protected, e.g., substantive pay of permanent employees, certain type of special pay, lave rules unless the Government servant opts for new leave rules, etc. But in respect of departmental promotion it said that the question whether any protection should be given in respect of rules and companyditions applicable to Government servants affected by reorganisation immediately before the date of reorganisation in the matter of travelling allowance, discipline, companytrol, classification, appeal, companyduct, pro- bation and departmental promotion was also companysidered. The Government of India agree with the view expressed on behalf of the State representatives that it would number be appropriate to provide for any protection in the matter of these companydi- tions. Therefore, it is evident from this memorandum that the Central Government had told the State Government that they might, if they so desire, change service rules as indi- cated in the memorandum. But Mr. Garg argues that even so this does number amount to previous approval within s. 115 7 of the States Reorganisation Act to the making of the Mysore General Services Revenue Subordinate Branch Recruitment Rules, 1959. What then is the true meaning of the expression previous approval in the proviso to s. 115 7 . Sub-section 7 of s. II 5 provides that Nothing in this section shall be deemed to affect after the appointed day the operation of the provisions of Chapter 1 of Part XIV of the Constitution in relation to determination of the companyditions of service of persons serving in companynection with the affairs of the Union or any State Provided that the companyditions of service applicable immediately before the appointed day to the case of any person referred to in sub-section 1 of subsection 2 shall number be varied to his disadvantage except with the previous approval of the Central Government. The effect of this sub-section is, inter alia, to preserve the power of the State to make rules under Art. 309 of the Constitution, but the proviso imposes a limitation on the exercise of this power, and the limitation is that the State cannot vary the companyditions of service applicable immediately before November 1, 1956, to the disadvantage of persons mentioned in sub-ss 1 and 2 of s. 115. It is number disputed that the petitioner is one of those persons. Mr. Garg has submitted that the very fact that the Mysore General Services Revenue Subordinate Branch Recruitment Rules, 1959, as framed, were number sent to the Central Government for approval before being promulgated shows that previous approval has number been obtained. The memorandum, he says, is number approval but an abdication of the powers of the Central Government. In this companynection he relies on the decision of the Court of Appeal in the case of In re Bosworth and Corporation of Gravesend 1 , but this, decision has numberbearing on the point under discussion. An Order in Council had been made under the provisions of the Burial Act, 1853, whereby it was ordered that numbernew burial ground shall be opened in amongst other places Gravesend, without the previous approval of one of Her Majestys Principal Secretaries of State. Permission was sought of the Secre- tary of State to add additional land to an existing cemetery 1 19051 2 K.B. 426. The Secretary of State replied that his sanction to the pro- posed addition was number required. It is this reply which was characterised by Collins, M. R., as renouncing of jurisdiction. We cannot appreciate how this assists us in interpreting the proviso to s. 115 7 . He further relied on the unreported- judgment of the High Court of Mysore in C. Appanna v. State of Mysore 1 , but this proceeds on a companycession made by the Government Pleader and does number advance petitioners case. In our opinion, in the setting in which the proviso to s. 115 7 is placed, the expression previous approval would include a general approval to the variation in the companyditions of service within certain limits, indicated by the Union Government. It has to be remembered that Art. 309 of the Constitution gives, subject to the provisions of the Constitution, full powers to a State Government to make rules. The proviso to s. 115 7 limits that power, but that limitation is removable by the Central Government by giving its previous approval. In this companytext, we think that it companyld number have been the intention of Parliament that Service Rules made by States would be scrutinised in the minutest detail by the Central Government. Conditions vary from State to State and the details must be filled by each State according to its re- quirements. The broad purpose underlying the proviso to s. 115 7 of the Act was to ensure that the companyditions of ser- vice should number be changed except with the prior approval of the Central Government. In other words, before embarking on varying the companyditions of service, the State Governments should obtain the companycurrence of the Central Government. In the memorandum mentioned above, the Central Government, after examining various aspects, came to the companyclusion that it would number be appropriate to provide for any protection in the matter of travelling allowance, discipline, companytrol, classification, appeal, companyduct, probation and departmental promotion. In our opinion, this amounted to previous approval within the proviso to s. 115 7 . It may be mentioned that by this memorandum the State Governments were required to send companyies of all new rules to the Central Government for its information. Therefore in our opinion, there is numberforce in the first companytention of the learned companynsel for the petitioner, and we hold that the ruler, were validly made. There are two preliminary hurdles in the way of the petitioner regarding the second point taken on his behalf. Firstly, the State of Madras has number been made a party to this petition. Secondly, he never raised these points while he was serving under the State of Madras. It is difficult at this stage to challenge orders, which if quashed, would affect the rights of other civil servants who are number W.P. No 88 of 1962 judgement dated January 13,1964. parties to this petition. At any rate, the petitioner has number been able to show how Art. 16 was infringed before he was allotted to the new Mysore State. The State in its reply has asserted that all the orders companyplained against were passed by companypetent authorities, after companysidering the merits of the petitioner on each occasion. It was for the companypetent authorities to judge the merits of the petitioner. We find numberforce in this companytention and hold that numberinfringement of Art. 16 has been established. Accordingly, in the result, the petition fails.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 134 of 1962. Appeal by special leave from the judgment and order dated July 17, 1962 of the Andhra Pradesh High Court in Criminal Revision Case No. 298 of 1961. S. R. Chari, G. D. Gupta, S. Balakrishnan, R. K. Garg, C. Agarwala, D. P. Singh and M. K. Ramamurthi, for the appellant. G. Patwardhan and B. R. G. K. Achar, for the respon- dent. March 23, 1964. The Judgment of the Court was delivered by RAGHUBAR DAYAL, J.-The facts leading to this appeal, by special leave, are these The Madras Public Service Commission, hereinafter referred to as the Service Commission, by its numberification published in the Fort St. George Gazette dated August 3, 1948, invited applications for appointment of Assistant Surgeons in the Madras Medical Service Mens Section , from persons who had rendered temporary service as Assistant Surgeons in that Service at any time between September 3, 1939 and December 31, 1947 and from persons who had rendered War Service and possessed the qualifications mentioned in paragraph 3 of the numberification. Paragraph 3 of the numberification, inter alia, reads Applicants must satisfy the Commission-- a that they are registered practitioners within the meaning of the Madras Medical Registration Act, 1914 b that they possess the L.M.S. degree or the M.B., B.S., degree of a University in the Province or an equivalent qualification. The appellant, who was at the time serving as a Civil Assistant Surgeon in the Madras Medical Service on a tempo- rary basis, applied for the permanent appointment to the posts -notified by the Public Service Commission. In this application he made the following representations, which have been found to be false, by the Courts below that his name was Kaza Krishnamurthy that his place of birth was Bezwada, Krishna district that his father was K. R. Rao of Bezwada and that he held the degree of M.B.B.S., II Class, from the Andhra Medical College, Vizagapatam, Andhra University. On these facts, the appellant was companyvicted of the offence under s. 419 I.P.C. for having cheated the Madras Public Service Commission by personating as Kaza Krishnamurthy and misrepresenting that he had the necessary qualifications for the post advertised inasmuch as he held the degree of B.B.S., and that this deception of the Service Commission was likely to have caused damage to its reputation. It may number be mentioned that the appellant was also tried for offences under s. 420 and s. 465 I.P.C. in companynection with certain acts companymitted by him in June and October, 1944. The trial Court acquitted him of the offence under s. 465, but companyvicted him of the other offence. He was, however, acquitted on appeal, by the Sessions Judge, of the offence under s. 420 I.P.C. The appellants companyviction under s. 419 I.P.C. was companyfirmed by the Sessions Judge and the revision against that order was dismissed by the High Court. it is against this order of the High Court that the appellant has preferred this appeal after obtaining special leave. It has been companytended for the appellant that on the facts, established in the case, numberoffence under s. 419 I.P.C. is made out against him, as the appellants efficiency as a surgeon is number in dispute, he having secured good reports from his superiors during the period of his service and as therefore there companyld be numberquestion of the Service Commission suffering damage in its reputation. On the companytrary, it is urged for the State that the offence of cheating is made out against the appellant as he deceived the Service Commission and that such deception was likely to damage its reputation as he deceived the Service Commission and obtained from it property viz., the admission card entitling him to sit at the Competitive Examination for the appointment of candidates for these posts, and as the appellant also deceived the Government of the State by his false representations, and dishonestly induced it to appoint him in service and pay him salary during the period of his service. Section 415 I.P.C., defines cheating and reads Whoever, by deceiving any person, fraudulently ordishonestly induces the person so deceived to deliver any property to any person, or to companysent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would number do or omit if he were number so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to cheat. Explanation-A dishonest companycealment of facts is a deception within the meaning of this section. Cheating can be companymitted in either of the two ways des- cribed in s. 415 I.P.C. Deceiving a person is companymon in both, the ways of cheating. A person deceived may be fraudulently or dishonestly induced to deliver any property or to companysent to the retention of any property by any person. The person deceived may also be intentionally induced to do or to omit to do anything which he would number have done if number deceived and which act of his caused or was likely to cause damage or harm in body, mind, reputation or property. The Courts below, as already stated, found that the appel- lant cheated the Service Commission by deceiving that he held the degree of M.B.B.S. and by intentionally inducing the Commission to recommend his appointment to the post of Civil Assistant Surgeon, 11 Class, and that this act of the Service Commission was likely to damage its reputation as the appellant did number really possess the degree of M.B.,B.S. Assuming, without deciding, that such a deception of the Service Commission and its recommendation companyld, in certain circumstances, cause damage to its reputation, we are of opinion that in the circumstances of this case there was numberlikelihood of the causing of such damage to its reputation. There is numberhing on the record to show that the Service Commission companyld have ordinarily detected the deception or that the appointment of the applicant to the post in the Medical Service was the appointment of a person who proved to be inefficient. On the companytrary, the evidence on the record shows that for about 10 years between his appointment and the institution of this case, he served efficiently and obtained good reports from the Departmental Superiors. His incompetency for the post was due to his having number obtained the minimum academic qualifications prescribed for the candidates for these posts. We are therefore of opinion that the appellant has number companymitted the offence of cheating as defined in the latter part of s. 415 I.P.C., even though he had deceived the Service Commission by re- presenting himself to be a duly qualified candidate, and thus induced it to select him for the post. It was argued for the State that the Public Service Commission held a companypetitive examination and must have therefore issued an admission card to the appellant entitling him to sit at that companypetitive examination and that therefore the appellant having induced by deception the Service Commission to deliver to him the admission card which is property, companymitted the offence of cheating as defined in the first part of s. 415 I.P.C. There is numberforce in this companytention for the simple reason that there is numberhing on the record to indicate that an admission card was issued entitling the appellant to sit at the companypetitive examination. In fact, numberexamination as such took place, and the companytention for the respondent appears to have been made under a misapprehension arising out of the letter of the Secretary of the Service Commission to the Surgeon- General with the Government of Madras stating that he was enclosing the list companytaining the names and other particulars of 45 candidates who were successful at the companypetitive examination held by the Commission for the direct recruitment of Civil Assistant Surgeons, Class II Men in the Madras Medical Service. It is however clear from the record that the candidates were simply interviewed by the Commission. There is numberhing on the record to show that any written examination to which admission was by admission cards, took place. The judgment of the Magistrate states The accused was interviewed by the Service Commission as seen from Exhibit P-70, extract of Service Commission particulars. The same statement is made in the judgment of the Sessions Judge who said The accused sent an application Ex. P-72 showing that he passed M.B.,B.S. degree examination, and on receiving it and interviewing him, the Public Service Commission selected him as Civil Assistant Surgeon, Class 1. The High Court states the same in its judgment. It said In 1948 he sent an application to the Madras public Service Commission for selection as class 11 Civil Assistant Surgeon and was selected as such following an interview by the said body. In these circumstances, we cannot hold merely on the basis of suggestions, that any companypetitive written examination was held and that any admission card was issued to the appellant entitling him to sit at the examination and, companysequently, cannot hold that the offence of cheating by dishonestly inducing the Service Commission to deliver him property was companymitted by the appellant. The only other question to determine number is whether the appellant deceived the Government of Madras and dishonestly induced it to deliver something in the form of salary to the appellant. It is urged that the appointment to the post lay with the Government and number with the Service Commission and that the Government would number have appointed him to the post in the Medical Service if it had number believed that the appellant possessed the necessary qualifications which, in his case, would be a degree of M.B., B.S., and that such a belief was entertained by the Government on account of the deception practised by the appellant in misrepresenting in his application that he held such a degree. On the other hand, it is companytended for the appellant that the delivery of property is to be by the person deceived, in view of the language of s. 415 I.P.C., and that the person deceived, if any, was the Service Commission and number the Government, the application companytaining the misrepresentation having been made to the Service Commission and number to the Government. We accept the companytention for the respondent. The ap- pointments to the Medical Services are made by Government. The Service Commission simply selected the candidates and recommends their names to Government for appointment. This is clear from letter Exhibit P. 47 from the Secretary to the Service Commission to the Surgeon-General with the Government of Madras. The letter refers to the enclosing of a list companytaining the names and other particulars of the candidates who were successful at the examination, their names being arranged in order of merit. It refers to the relaxing of a certain rule in view of the paucity of candidates and states that they may be appointed, if necessary, pending receipt of the certificate of physical fitness and a further companymunication from the companymission. This is also clear from the provisions of the Government of India Act, 1935. Section 241 provided that appointments in companynection with the affairs of a Province will be made by the Governor of the Province. Sub-s. 1 of s. 266 makes it a duty of the Provincial Public Service Commission to companyduct examinations for appointments to the Services of a Province. Clause a of sub-s. 3 provides that the Provincial Public Service Commission shall be companysulted on all matters relating to methods of recruitment to civil services and for civil posts and cl. b provides that it shall be companysulted on the principles to be followed in making appointments to civil services and posts and on the suitability of candidates for such appointments. The Public Service Commission is companystituted in pursuance of the provisions of s. 264. It is thus a statutory body and independent of the Government. This aspect of a Public Service Commission was emphasized in State of U.P. v. Manbodhan Lal Srivastava 1 when companysidering the companyresponding provisions of art. 320 of the Constitution. This Court said Once, relevant regulations have been made, they are meant to be followed in letter and in spirit and it goes without saying that companysultation with the Commission on all disciplinary matters affecting a public servant has been specifically provided for in order, first, to give an assurance to the Services that a wholly independent body, number directly companycerned with the making of orders adversely affecting public servants, has companysidered the action proposed to be taken against a particular public servant, with an open mind and, secondly, to afford the Government unbiassed advice and opinion on matters vitally affecting the morale of public services. It is in view of these provisions that the Public Service Commission invites applications for appointment to the various posts under the Government and subsequently makes a selection out of the candidates for appointment to those posts. The selection may be after holding a written examination Dr after interviewing candidates or after doing both. Names oil the candidates selected are arranged in order of merit and forwarded to the Government. The Government is expected, as a rule, 1 1958 S.C.R. 533 543. to make appointments to the posts from out of the list, in the same order. It has, however, discretion number to appoint any part of the persons so selected and securing a place in the order of merit which would have ordinarily led to his appointment. Any representation made in an application for appointments is really a representation made to the Government, the appointing authority, and number only to the Public Service Commission to which the application is presented and which has to deal with that application in the first instance. up to the stage ,of selection. The object of the applicant was to secure an appointment and number merely to deceive the Public Service Commission and sit at the examination or to appear at the interview. The deception was practised for that purpose and therefore there seems to be numbergood reason for holding that the deception came to an end once the Service Commission was deceived and had taken action on it as a result of the deception. A false representation in an application to the Service Commission companytinues and persists to be so till the application is companysidered by the final authority responsible for making the appointments and must therefore be deemed to be made to that final authority as well. In the instant case, when the recommendation of the Service Commission was sent to the Government, the qualifications of the recommended candidates, including the fact that the appellant had passed the M.B.,B.S. examination were mentioned. The Government therefore believed that the appellant possessed the degree of M.B.,B.S., that as the Service Commission had scrutinized the application in that regard and had satisfied itself that the appellant possessed that degree. The companysequence of that is that the Government were led to believe that fact, which thus became a false representation. We are therefore of opinion that the appellants misre- presentation to the Service Commission companytinued and persisted till the final stage of the Government passing an order of appointment and that therefore the Government itself was deceived by the misrepresentation he had made in his application presented to the Service Commission. The fact that the Service Commission is an independent statutory authority has numberrelevant bearing on this question. It is a statutory body as it is companystituted under he provisions Of -a statutes. It is independent of the Government in the sense that in its selection of candidates or in its tendering advice to the Government it does number take any hint or instructions or due from the Government. It brings to bear its own independent mind to judge the companyparative merits of the candidates and their suitability to the posts they apply for. Its function is to advise the Government on the suitability of the candidates. It is therefore a statutory adviser to Government in the matter of appointment to the Services. Deception of such an adviser is deception of the Government which is expected to pay heed to its advice and act accordingly. There have been cases in which servants or agents of an authority have been deceived while the loss has been suffered by the authority companycerned. In such cases, the person deceiving the servants or agents has been held to have deceived the authority companycerned, though numberdirect question was raised about the deception being made number to the authority but to is servant. The principle of the cases, to our mind, fully applies to the case of candidates deceiving the Public Service Commission and thereby deceiving the Government in believing that they satisfied the various companyditions prescribed for candidates for those appointments. We may refer to some such cases. In the Crown v. Gunput 1 the accused who had produced a railway pass with an altered number before the ticket companylector when traveling by a train, was held to have thereby dishonestly induced the railway companypany to do or omit to do what they otherwise would number have done or omitted by the production of the altered pass. The deception of the ticket companylector was companysidered to be deception of the railway companypany. In P. E. Billinghurst v. H. P. Blackburn 2 certain bills were presented by a companypany for payment. They were checked by Government officials who were deceived by certain repre- sentations made by subordinate officials through whom the bills had passed, and companysequently payments were made in satisfaction of the demands under the bills. The persons companycerned in causing the deception were companyvicted of cheating the Government. In Legal Remembrancer v. Manmatha Bhusan Chatterjee and Legal Remembrancer v. Hridoy Narain 3 it was held that if the evidence showed that responsible officers of the East Indian Railway Company and its Asansol Office were deceived and induced either to allot wagons to a certain companyliery which would number otherwise have been allotted or to make out wagon chalans for the companyliery which would number otherwise have been made, it was sufficient to support the allegations in the charges that the railway companypany was, by reason of deceipt, induced to act in a certain way. The deception of the responsible officers was thus taken to be the deception of the railway companypany, the possible damage to whose reputation was remote. In Emperor v. Fazal Din 4 it was held that the deception practised was likely to cause damage or harm to the person on 1 1868 Punj. Rec. Col. Case No. 6. 2 27 C.W.N. 821. I.L.R. 51 Cal. 250 4 1906 4 Crl. L.J. 355. L P D ISCI-14 whom it was practised or to the railway authorities whose agent he was in the matter of appointments. In Queen-Empress v. Appasaimi 1 the act of the accused in obtaining, by personation, a hall ticket from the Superintendent at a University Examination and in signing the name of another person on the examination papers was held to indicate an intention on his part to lead the University authorities to believe that the examination papers were answered by the other person. This again is on the principle that the deception of the Superintendent who was working for the University was a deception of the University itself. Similarly, in Ashwini Kumar Gupta v. Emperor 2 the accused personated another person at a University examination cheating the Registrar. It was held that this number only damaged the reputation of the Registrar, but also that of the University. Reference may also be made to the case reported as In re Hampshire Land Company 3 in which a Society had lent money to a companypany on the borrowing of the directors of that companypany who were number companypetent to borrow, the resolution companyferring on them the power of borrowing being invalid for certain reasons. It was held that the Society had a right to assume, in a case like that, that all the essentials of internal management had been carried out by the borrowing companypany.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 87 of 1962. Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. S. Shukla, for the petitioner. S. Bindra and R. H. Dhebar, for respondent No. 1. C. Setalvad and D. N. Mukherjee, for respondent No. 2. March 6, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR C. J.-This is a writ petition filed under Art. 32 of the Constitution by which the eight petitioners challenged the validity of section 87B of the Code of Civil Procedure. These petitioners claim that they and respondent No. 2, His Highness Maharaja Kirit Vikram Kishore Deb Varman, are members off a joint Hindu family governed by the Dayabhaga School of Hindu Law. Under a family custom which, it is alleged, has prevailed in this family for centuries, the Raj as well as the Zamindari properties belonging to the family are held by a single individual and the other members of the family are entitled to maintenance according to the status of the family with the right to succession to the Raj as well as the Zamindari properties under the general rule of succession which prevails and which is number inconsistent with the family custom. The head of the family was, by family custom, called the Chief and he was chosen from among the members of the Ruling Deb Barman family and used to be installed on the Gaddi or Throne. The petitioners further alleged that the Ruler when so chosen and installed held the State and Zamindari as life tenant subject to the usual charges for maintenance of the members of the Ruling Family. In companyrse of time, the maintenance allowance of the members of the Ruling family came to be fixed arbitrarily by the Rulers without any regard to their status and their legiti- mate needs, and that led to discontent among them which re- sulted in a serious agitation raised by them during the lifetime of the late Maharaja Bir Bikram. In companysequence, at the time of Regency of Her Highness Rajmata during the minority of the last Ruler Maharaja Kirit Bikram, a Committee was appointed on the 20th June, 1949, to companysider the question of allowances payable to the members of the Ruling family. However, before the Committee companyld submit its report, the State of Tripura merged with and became part of India and was companystituted into a separate Province under the Chief Commissioner. After merger, the then Chief Commissioner Mr. Hazra submitted a proposal to the Ministry of States on the 12th April, 1951, recommending a revision of allowance paid to the maintenance-holders. The ministry of States did number accept this proposal and refused to make any increase in the total expenditure on the allowances to the maintenance-holders. This order was passed on the 23rd May, 1951. Later, the then ,officiating Chief Commissioner Maj. Chatterjee stopped the maintenance allowances paid to some of the maintenance,holders without justification and that led to the appointment of another Committee to go into the matter, but the Committee companyld never function with the result that the companydition of the majority of the maintenance-holders grew worse day by day. That is why the present eight petitioners desire to file a suit against respondent No. 2 for appropriate reliefs. They -want to implead the Union of India also to that suit, because it is their case that either the Ruler or the Union of India is responsible to pay them appropriate and adequate maintenance allowance. Before filing a suit in a companypetent companyrt of law against respondent No. 2, the petitioners are required to obtain the sanction of the Union Government under s. 87B C.P.C., as respondent No. 2 is a Ruler of a former Indian State within ,the meaning of the said section. A request made by the petitioners for such sanction was rejected by the Central Government. That is how the present petition has been filed challening the validity of the said section. The petitioners companytend that the said section is ultra vires, because it companytravenes Arts. 14 and 19 1 f of the Constitution and as such, the companydition precedent prescribed by it which requires the previous sanction of the Central Government before filing a suit against the Ruler of an Indian State therein mentioned, is invalid and inoperative. That is the genesis of the present writ petition. At the hearing of this writ petition, Mr. Shukla for the petitioners fairly companyceded that the challenge to the validity of s. 87B, C.P.C., on the ground that it companytravenes Art. 14 has been repelled by a recent decision of this Court in Mohan Lal Jain v. His Highness Maharaja Shri Sawai Man Singhji 1 . He, however, attempted to argue that some aspects of the problem had number been pressed before the Court when it decided the case of Mohan Lal Jain 1 , and so, he wanted us to reconsider that question. We have number allowed Mr. Shukla to raise this companytention, because we are satisfied that the decision in Mohan Lal Jains case companycludes the point and it would number be reasonable to reconsider it as suggested by him. We ought to add that we are dealing with Mr. Shuklas argument that s. 87B, C.P.C., is invalid because it companytravenes Art. 19 1 f , on the basis that the case of Mohan Lal Jain 1 has companyrectly repelled the challenge against the said section ,under Art. 14. 1 1962 1 S.C.R. 702. That leaves the challenge under Art. 19 1 f to be companysidered. In dealing with this point, it will be necessary to examine the background, both historical and legislative, of s. 87B. Section 87B 1 provides that the provisions of s. 85 and of sub-ss. 1 and 3 of s. 86 shall apply in relation to the Rulers of any former Indian State as they apply in relation to the Ruler of a foreign State. Section 87B 2 defines a former Indian State and a Ruler. It is number necessary to refer to these provisions, because it is companymon ground that respondent No. 2 is a Ruler of a former Indian State within the meaning of s. 87B 2 . In appreciating the effect of s. 87B 1 , it is necessary to companysider s. 86. Section 86 deals with suits against foreign Rulers, Ambassadors and Envoys. Section 86 1 provides that numberRuler of a foreign State may be sued in any companyrt other- wise companypetent to try the suit, except with the companysent of the Central Government certified in writing by a Secretary to that Government to that effect. The proviso excepts from the application of s. 86 1 cases where tenants of immovable property seek to sue such a Ruler. Section 86 2 lays down that the companysent prescribed by s. 86 1 may be given either with respect to specified suits or to several specified suits, or with respect to all suits of any specified class or classes, and it requires that the sanction should specify in the case of any suit or class of suits the companyrt in which the Ruler may be used. It then adds that such companysent shall number be given unless it appears to the Central Government that the Ruler satisfies one or the other of the four companyditions prescribed by clauses a to d . Section 86 3 prohibits the arrest of any Ruler of a foreign state under the Code and provides that except with the companysent of the Central Government certified in writing by a Secretary to that Government, numberdecree shall be executed against the property of any such Ruler. Section 86 4 extends the application of s. 86 to the persons specified in clauses a to c of that sub-section. The result of the extension of s. 86 1 and 3 to the cases falling under s. 87B 1 is that the sanction of the Central Government is a companydition precedent to the institution of a suit against the Ruler of any former Indian State. It is this requirement which the petitioners have number been able to companyply with in respect of the suit which they intend to file against respondent No. 2, because the Central Government has refused to accord sanction to the said intended suit. Now, the legislative background of the provisions companytained in s. 86 and s. 87B is well known. Prior to the present Constitution, Part IV of the Code of Civil Procedure companytained provisions in respect of suits in specified cases. These cases were divided into three parts. Section 79 to 82 companyered cases of suits by or against the Crown or Public Officers in their official capacity. Sections 83 to 87 dealt with suits by aliens and by or against foreign Rulers and Rulers of Indian States and s. 88 had reference to interpleader suits. After the Constitution came into force, the President made certain adaptations by the Adaptations of Laws Order, 1950. As a result of Art. 372, the protection afforded to Foreign Rulers and Rulers of Indian States companytinued, and that is how s. 87B came to be enacted in the statute-book. It is in the light of this legislative background that the plea raised by the petitioners in the present proceedings has to be examined. The legislative background to which we have referred cannot be divorced from the historical background which is to be found for instance, in Art. 362. This Article provides that in the exercise of the power of Parliament or of any legislature of any State to make laws or in the exercise of the executive power of the Union or of a State, due regard shall be had to the guarantee or assurance given under any such companyenant or agreement as is referred to in clause 1 of Art. 291 with respect to the personal rights, privileges and dignities of a Ruler of an Indian State. This has reference to the ,covenants and agreements which had been entered into between the Central Government and the Indian Princes before all the Indian States were politically companypletely assimilated with the rest of India. The privilege companyferred on the Rulers ,of former Indian States has its origin in these agreements and companyenants. One of the privileges is that of extra territoriality and exemption from civil jurisdiction except with the sanction of the Central Government. It was thought that the privilege which was claimed by foreign Rulers and Rulers of Indian States prior to the independence of the companyntry should be companytinued even after independence was attained and the States had become part of India, and that is how in 1951, the Civil Procedure Code was amended and the present sections 86, 87, 87A and 87B came to be enacted in the present form. Considered in the light of this background, it is difficult to see how the petitioners can successfully challenge the validity of the provisions companytained in s. 87B. In the case of Mohan Lai Jain 1 this Court has held that the ex-Rulers of Indian States form a class by themselves and the special treatment given to them by the impugned provisions cannot be said to be based on unconstitutional discrimination. There is, of companyrse, discrimination between the ex-Rulers and the rest of the citizens of India, but that discrimination is justified having regard to the historical and legislative background to which we have just referred. If that be so, it would follow that the restriction imposed on the petitioners fundamental right guaranteed by Art. 19 1 f cannot be said to be unreasonable. The restriction in question is the result of the necessity to treat the agreements entered into between the Central Government and the ex-Rulers of Indian, States as valid and the desirability, of giving effect to the assurances given to them during the 1 1962 1 S. C. R. 702. companyrse of negotiations between the Indian States and the Central Government prior to the merger of the States with India. We have to take into account the events which occurred with unprecedented swiftness after the 15th August, 1947, and we have to bear in mind the fact that the relevant negotiations carried on by the Central Government were inspired by the sole object of bringing under one Central Government the whole of this companyntry including the former Indian States. Considered in the companytext of these events, we do number think it would be possible to hold that the specific provision made by s. 87B granting exemption to the Rulers of former Indian States from being sued except with the sanction of the Central Government, is number reasonable and is number in the interests of the general public. It is true that the restriction works a hardship so far as the petitioners are companycerned but balancing the said hardship against the other companysiderations to which we have just referred, it would be difficult to sustain the argument that the section itself should be treated as unconstitutional. Before we part with this matter, however, we would like to invite the Central Government to companysider seriously whether it is necessary to allow s. 87B to operate prospectively for all time. The agreements made with the Rulers of Indian States, may, numberdoubt, have to be accepted and the assurances given to them may have to be observed. But companysidered broadly in the light of the basic principle of the equality before law, it seems somewhat odd that s. 87B should companytinue to operate for all time. For past dealings and transactions, protection may justifiably be given to Rulers of former Indian States but the Central Government may examine the question as to whether for transactions subsequent to the 26th of January 1950, this protection need or should be companytinued. If under the Constitution all citizens are equal, it may be desirable to companyfine the- operation of s. 87B to past transactions and number to perpetuate the anomaly of the distinction between the rest of the citizens and Rulers of former Indian States. With the passage of time, the validity of historical companysiderations on which s. 87B is founded will wear out and the companytinuance of the said section in the Code of Civil Procedure may later be open to. serious challenge. There is also another aspect of the matter to which we must refer in this companynection. In companysidering the question as to whether sanction should be granted to a person who intends to sue a Ruler of a former Indian State, it is advisable that the authority companycerned should ordinarily, if number as a matter of companyrse, allow such sanction, because in the present set-up it does number appear very satisfactory that an intended action against the Ruler of a former Indian State should be stifled by refusing to grant the litigant sanction under s. 87B. Where frivolous claims are set up by intending litigants, refusal to give sanction may be justified but where genuine disputes arise between a citizen and a Ruler of a former Indian State and these disputes, prima facie, appear to be triable in a companyrt of law, it would number be fair or just that the said citizen should be prevented from inviting a companyrt of companypetent jurisdiction to deal with his dispute. If the power to grant sanction is exercised in a sensible way and is number used for stifling claims which, are number far-fetched or frivolous, that may prevent the growth of discontent in the minds of litigants against the artificial provision prescribed by s. 87B. In the present proceedings, it does appear, prima facie, that the petitioners have a genuine grievance against the Central Governments refusal to, accord sanction to them to get a judicial decision on the dispute between them and respondent No. 2. That, naturally is a matter for the Central Government to companysider. However, since it is number possible to accede to the petitioners argument that s. 87B is invalid, we see numberalternative but to dismiss the writ petition.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 503 of 1963. Appeal from the judgment and order dated January 31, 1962, of the Punjab High Court in I.T.R. No. 28 of 1960. N. Kripal and A. N. Kripal, for the appellant. Gopal Singh and R. N. Sachthey, for the respondent. April 9, 1964. The judgment of the Court was delivered by SUBBA RAO, J.-This appeal by certificate granted by the High Court of Punjab raises the question whether interest paid under s. 34 of the Land Acquisition Act, 1894, herein- after called the Act, is of the nature of a capital receipt or of a revenue receipt. The relevant facts are number in dispute and they may be briefly stated. The appellant, Dr. Shamlal Narula, is the Manager of a Hindu undivided family, which owned, inter alia, 40 bighas and 11 biswas of land in the town of Patiala. The Patiala State Government initiated land acquisition proceedings for acquiring the said land under Regulation then prevailing in the Patiala State. It is companymon case that the State Regulations are in pari materia with the provisions of the Act. The State of Patiala first merged into the Union of Pepsu and later the Union of Pepsu merged into the State of Punjab. It is also companymon case that there was a Land Acquisition Act in the Union of Pepsu companytaining provisions similar to those obtaining in the Act. On October 6, 1953, the Act was extended to the Union of Pepsu. On September 30, 1955, the Collector of Patiala made an award under the Act ,as a result of which the appellant received on December 1, 1955, a sum of Rs. 2,81,822/-, which included a sum of 48,660/- as interest up to the date of the award. For the year 1956-57, the Income-tax Officer included the said interest in the income of the Hindu undivided family of which the appellant is the manager, and assessed the same to income-tax, after overruling the appellants companytention that the said interest was a capital receipt and, therefore, number liable to tax. On June 14, 1957, the Appellate Assistant Commissioner companyfirmed the order of the Income-tax Officer. The Appellant preferred an appeal to the Income-tax Appellate Tribunal. The said Tribunal by its order dated July 9, 1957, held that the said amount representing the interest was a capital re- ceipt and on that finding the said amount was excluded from the total income of the assessee. At the instance of the Commissioner of Income-tax the said Tribunal referred the following question to the High Court of Punjab under s. 66- 1 of the Income-tax Act, 1922 Whether on a true interpretation of section 34 of the Land Acquisition Act and the Award given by the Collector of Pepsu on the 30th September, 1955, the sum of Rs. 48,660/-, was captital receipt number liable to tax under the Indian Income tax Act? The said reference was heard by a Division Bench of the High Court and it held that the said amount was number a capital but a revenue receipt and as such liable to tax under the Indian Income-tax Act. Hence the present appeal. Learned companynsel for the appellant raised before us two companytentions, namely, i the sum of Rs. 4.8,660/- received by the appellant under the award was companypensation for deprivinl,7 him of his right to possession of his property and was therefore, a capital receipt number liable to tax and whatever may be the character of the amount awarded under s. 34 of the Act by way of interest in a case where possession of the land has been taken by the State after the award, in a case where possession of the land acquired has been taken before the award, it would be a capital receipt, for it is said that in the latter the interest necessarily takes the character of companypensation for depriving the owner of the land his, right to possession. On behalf of the Revenue the order of the High Court is sought to be sustained for the reasons stated therein. The question raised turns upon the true meaning of the provisions of s. 34 of the Act. It reads When the amount of such companypensation is number paid or deposited on or before taking possession of the land, the Collector shall pay the amount awarded with interest thereon at the rate of six per centum per annum from the time of so takin- possession until it should have been so paid or deposited. The section itself makes a distinction between the amount awarded as companypensation and the interest payable on the, amount so awarded. The interest shall be paid on the amount awarded from the time the Collector takes possession until the amount is paid or deposited. To appreciate the scope of the section it is necessary to numberice briefly the scope of an award and the manner in which possession is taken under the Act. After the statutory numberifications are issued and the requisite numberice is given to the persons interested in the land so acquired, the Collector, after holding the necessary enquiry, makes an award, inter alia, determining the amount of companypensation payable for the land so acquired. Section 15 in of the Act says that in determining the amount of companypensation the Collector shall be guided by the provisions companytained in ss. 23 and 24. Section 23 provides for the matters to be companysidered in determining companypensation s. 24 describes the matters to be neglected in determining the companypensation. A perusal of the provisions of s. 23 shows that interest is number an item included in the companypensation for any of the matters mentioned therein number is it mentioned as a companysideration for the acquisition of the land. Under cl. 2 of s. 23, the Legislature in express terms states that in addition to the market value of the land the companyrt shall in every case award a sum of 15 per cent. of such market value in companysideration of -the companypulsory nature of the acquisition. If interest on the amount of companypensation determined under s. 23 is companysidered to be a part of the companypensation or given companysideration of the companypulsory nature of the acquisition, the Legislature would have provided for it in s. 23 itself. But instead, payment of interest is provided for separately under s. 24 in Part V of the Act under the heading Payment. It is so ,done, because interest pertains to the domain of payment after the companypensation has been ascertained. It is a companysideration paid either for the use of the money or forbearance from demanding it after it has fallen due. Therefore, the Act itself makes a clear distinction between the companypensation payable for the land acquired and the interest payable on the companypensation awarded. Another approach to the problem leads to the same result. Under s. 16 of the Act when the Collector has made an award under s. 11 he may take possession of the land which shall thereupon vest absolutely in the Government free from all encumbrances. Under s. 17 thereof In cases of urgency, whenever the appropriate Government so directs, the Collector, though numbersuch award has been made, may, on the expiration of fifteen days from the publication of the numberice mentioned in section 9, sub-section 1 , take possession of any waste land or arable land needed for public purposes or for a Company. Such land shall thereupon vest absolutely in the Government, free from all encumbrances. Under both the sections the land acquired vests absolutely in the Government after the Collector has taken possession- in one case after the making of the award and in the other, even before the making of the award. In either case, some time may lapse between the taking of possession of the acquired land by the Collector and the payment or deposit of the company pensation to the person interested in the land acquired. As the land acquired vests absolutely in the Government only after the Collector has taken possession of it, numberinterest therein will be outstanding in the claimant after the taking of such possession he is divested of his title to the land and his right to possession thereof, and both of them vest thereafter in the Government. Thereafter he will be entitled only to be paid companypensation that has been or will be awarded to him. He will be entitled to companypensation, though the ascertainment thereof may be postponed, from the date his title to the land and the right to possession thereof have been divested and vested in the Government. It is as it were that from that date the Government withheld the companypensation amount which the claimant would be entitled to under the provisions of the Act. Therefore, a statutory liability has been imposed upon the Collector to pay interest on the amount awarded from the time of the taking possession until the amount is paid or deposited. This amount is number, therefore, companypensation for the land acquired or for deprivin- the claimant of his right to possession, but is that paid to the claimant for the use of his money by the State. In this view there cannot be any difference in the legal position between a case where possession has been taken before and that where possession has been taken after the award, for in either case the title vests in the Government only after possession has been taken. The Legislature expressly used the word interest with its well konwn companynotation under s. 34 of the Act. It is, therefore, reasonable to give that expression the natural meaning it bears. There is an illuminating exposition of the expression interest by the House of Lords in Westminster Batik, Ltd. v. Riches 1 . The question there was whettier where in an action for recovery of any debt or damages the companyrt exercises its discretionary power under a statute and orders that there shall be included in the sum for which the judgment is given interest on the debt or damages, the sum of interest so included is taxable under the Income-tax Acts. If the said amount was interest of money within Schedule D and the General Rule 21 of the All Schedules Rules of the Income Tax Act, 1918, income-tax was payable thereon. In. that companytext it was companytended that money awarded as damages for the detention of money was number interest and bad number the quality of interest. Lord Wright observed The general idea is that he is entitled to companypensation for the deprivation. From that point of view 1 1947 28 T.C. 159, 189. it would seem immaterial whether the money was due to him under a companytract express or implied, or a statute, or whether the money was due for any other reason in law. In either case the money was due to him and was number paid or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a companypensation, whether the companypensation was liquidated under an agreement or statute, as for instance under section 57 of the Bills of Exchange Act, 1882, or was unliquidated and claimable under the Act as in the present case. The essential quality of the claim for companypensation is the same, and the companypensation is properly des- cribed as interest. This passage indicates that interest, whether it is statutory or companytractual, represents the profit the creditor might have made if he had the use of the money or the loss he suffered, because he had number that use. It is something in addition to the capital amount, though it arises out of it. Under s. 34 of the Act when the Legislature designedly used the word interest in companytradistinction to the amount awarded, we do number see any reason why the expression should number be given the natural meaning it bears. The scheme of the Act and the express provisions there,of establish that the statutory interest payable under s. 34 is number companypensation paid to the owner for depriving him of his right to possession of the land acquired, but that given to him for the deprivation of the use of the money representing the companypensation for the land acquired. We shall number proceed to companysider the case law cited at the Bar. Where a Tribunal directed the Improvement Trust, under the provisions of s. 28 of the Land Acquisition Act, to pay interest to the assessee from the date of taking possession ,of the property to the date of payment, a Division Bench of the Allahabad High Court held, in Behari Lal Bhargava v. Commissioner of Income-tax, C. P. and U. P. 1 , that the interest so awarded was in the nature of companypensation for the loss of the assessees right to retain possession of the property acquired and, therefore, was numberincome liable to tax. The reason for the said companyclusion is stated thus It is number the fruit of a tree-to borrow the simile used in Shaw Wallaces case 2 -but was companypensation or damages for loss of the right to re 1 1941 9 I.T.R. 9, 24. A.I.R. 1932 P.C. 138. LP D lSC-22 . . tain possession and it seems to us that Section 28 was designed as a companyvenient method of measuring such damages in terms of interest. As we have pointed out earlier, as soon as the Collector has taken possession of the land either before or after the award the title absolutely vests in the Government and thereafter owner of the land so acquired ceases to have any title or right of possession to the land acquired. Under the award he gets companypensation for both the rights. Therefore, the interest awarded under s. 28 of the Act, just like under s. 34 thereof, cannot be a companypensation or damages for the loss of the right to retain possession but only companypensation payable by the State for keeping back the amount payable to the owner. Adverting to the said decision a Division Bench of the Madras High Court in Commissioner of Income-tax, Madras v. CT. RM. N. Narayanan Chettiar 1 observed with great respect we find ourselves unable to follow the reasoning. Certainly we are number prepared to accept the judgment as a guide to the decision in the present case. So was the interest granted to an assesse under s. 18A of the Income-tax Act on the advance payment of tax by him under the provision of that section held to be income taxable in his hand see Commissioner of Income-tax, Bihar and Orissa v. Maharajadhiraj Sir Kameshwar Singh 2 . There when the decision of the Allahabad High Court in Behari Lal Bhargavas case 3 was relied upon, the learned Judges,. refusing to follow it, observed thus It is number a matter of discussion for the Central Government but the duty to pay interest is imposed by statute. Apart from this I think with great respect that the Allahabad decision is of doubtful authority. The decision is number companysistent with the principle laid down in Schulze v. Bensted 1 and Commissioners of Inland Revenue v. Barnato 5 . The Madras High Court expressly declined to follow the Allahabad case in Commissioner of Income-tax v. Narayanan Chettiar 1 . The Kerala High Court in P. V. Kurien v. Commissioner of Income-tax, Kerala 6 held that interest paid on the enhanc- ed amount of companypensation directed to be paid by an appellate 1 1943 11 I.T.R. 470, 477. 2 1953 23 I.T.R. 212, 225. 3 9 I.T.R. 9. 4 1915 7 T.C. 30. 5 1934-36 20 T.C. 455. 6 1962 46 I.T.R. 288. companyrt in an appeal against an award of companypensation for companypulsory acquisition of land under the Land Acquisition Act represented capital and was number income liable to be taxed under the Indian Income-tax Act. It was argued there, sum estimated in terms of interest.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 505 of 1963. Appeal from the judgment and order dated March 6, 1961 of the Punjab High Court Circuit Bench at Delhi in I.T.R. No. 16 of 1959. K. Kapur and B. P. Maheshwari, for the appellant. K. Daphtary, Attorney-General, K. N. Rajagopal Sastri and R. N. Sachthey, for the respondent. April 1, 1964. The judgment of the Court was delivered by. SHAH, J.-The appellant which is a Hindu undivided family was the registered holder of 1,500 shares of M s Govan Bros. Rampur Ltd. in the year of account October 1, 1950 to September 30, 1951. Pursuant to a resolution passed by the board of directors of M s Govan Bros. Rampur Ltd.- hereinafter called Govan Bros.-at a meeting held on August 30, 1950, the appellant received a dividend warrant dated December 28, 1950 for Rs. 4,12,500/being interim dividend in respect of its shareholding in Govan Bros. This amount was brought to tax with the other income of the appellant in the assessment year 1952-53 by the Revenue authorities. after rejecting the objection of the appellant that it represented income for the assessment year 1951-52. At the instance of the appellant the Appellate Tribunal drew up a statement of the case and referred the question set out hereinbelow to the High Court of Punjab under s. 66 1 of the Indian Income-tax Act Whether on a true interpretation of Article 95 of the First Schedule to the Indian Companies Act, 1913, the dividend of Rs. 4,12,500/- was liable to be included in the assessment year 1952-53. The High Court recorded an answer to the question in the affirmative. Against the order of the High Court, this appeal is preferred by the appellant with certificate granted by the High Court. Even though the question was framed a-, if article 95 of the First Schedule to the Indian Companies Act, 1913, ap- plies to Govan Bros, it is companymon ground that the companypany was registered under the Companies Act of the former Rampur State, and it had adopted special Articles of Association in supersession of Table A of the Companies Act. The relevant articles of Govan Bros. dealing with declaration or payment of final and interim dividends were articles 73 and 74. The High Court therefore proceeded to deal with the question on the footing that it was, by the question referred, called upon to interpret article 74 of the Articles of Association of Govan Bros. It is companymon ground between the appellant and the Revenue that the provisions of the Companies Act of the former Rampur State were in terms identical with the provisions of the Indian Companies Act, 1913. The appellant companytend that the directors of Govan Bros. had in exercise of authority expressly companyferred upon them by article 74 declared dividend in their meeting dated August 30, 1950 and on such declaration the dividend became a debt due to the appellant and under the Indian Income-tax Act it became taxable in the year of assessment 1951-52, for the previous year of the appellant had ended on September 30, 1951. The Commissioner of Income-tax says that the directors of Govan Bros. had paid by warrant issued on December 28, 1950 pursuant to a resolution dated August 30, 1950, interim dividend and it was only on payment the dividend became taxable under s. 16 2 of the Indian Income- tax Act. It is said by the Commissioner that dividend final or interim is taxable number in the year in which it is declared but only in the year in which it is paid, credited or distributed, or deemed to be paid, credited or distributed, and that in any event a resolution by the Board of Directors to pay interim dividend does number create an enforceable obligation, for it is always open to the directors to rescind the resolution for payment of dividend even if it is one in form declaring dividend. The Indian Companies Act, 1913 companytains numberprovision for declaration of dividend either interim or final it does number say as to who shall declare the dividend, number does it say that dividend may be declared in a general meeting of the companypany. But s. 17 2 provides that the companypany may adopt all or any of the regulations companytained in Table A in the First Schedule to the Companies Act as its articles of association, and shall in any event be deemed to companytain regulations identical with or to the same effect, amongst others, as regulation 95 and regulation 97 companytained in that Table. Regulation 95 of Table A provides that the companypany in general meeting may declare dividends, but numberdividends shall exeed the amount recommended by the directors, and regulation 97 states that numberdividends shall be paid otherwise than out of profits of the year or any other undistributed profits. Regulation 96, which is number an obligatory article, provides that the directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the profits of the companypany. Govan Bros. had in their Articles of Association made the following provision with regard to dividends Art. 73. The Company in general meeting may declare a dividend to be paid to the members according to their rights and interests in the profits. Art. 74. When in their opinion the profits of the companypany permit, the directors may declare an interim dividend. Art. 77. No dividend shall be payable, except out of the net profits arising from the business of the companypany, and numberlarger dividends shall be declared than is recommended by the directors. By Art. 80 it was provided that unless otherwise directed by the companypany in general meeting any dividends may be paid by cheque or warrant sent through the post to the registered address of the member entitled to the same. In Art. 74 relating to payment of interim dividend. there was a slight departure from the regulation under Table A of the First Schedule to the Companies Act. Whereas under regulation 96 Table A the directors are authorised to pay to the members interim dividends, by Art. 74 of the Articles of Association of Govan Bros. the directors are authorised to declare interim dividend. It may be numbericed that under s. 17, adop- tion of an article in form identical with, or to the same effect as regulation 96 of Table A, is number made obligatory. The material part of s. 16 2 of the Income-tax Act as it stood before it was deleted by s. 7 of the Finance Act, 1959 with effect from April 1, 1960, read as follows For the purposes 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 distributed to him The clause in terms made dividend the income of the year in which it was paid, credited or distributed or was deemed to have been paid, credited or distributed. In the present case dividend was paid to the appellant on December 28, 1950. It is number the case of the appellant that the amount was either credited in the books of account of Govan Bros. to the appellant or was distributed or deemed to have been paid, credited or distributed to the appellant before the close of the appellants year of account ending September 30, 1950. But Mr. Kapur companytends that under the law governing companypanies on declaration, dividend interim or final becomes due, and it must be regarded for the purpose of the Income-tax Act as paid to the member on the date on which it is declared. There is numberdoubt that a declaration of dividend by a companypany in general meeting gives rise to a debt. When a companypany declares a dividend on its shares, a debt imme- diately becomes payable to each shareholder in respect of his dividend for which he can sue at law, and the Statute of limitation immediately begins to run In re Severn and Wye and Severn Bridge Railway Company 1 . But this rule applies only in case of dividend declared by the companypany in general meeting. A final dividend in general may be sanctioned at an annual meeting when the accounts are presented to the members. But power to pay interim dividend is usually vested, by the articles of association, in the directors. For paying interim dividend a resolution of the companypany is number required if the directors are authorised by the articles of association they may pay such amount as they think proper, having regard to their estimate of the profits made by the companypany. Interim dividend is therefore paid pursuant to the resolution of the directors on some day between the ordinary general meetings of the companypany. On payment, undoubtedly interim dividend becomes the property of the shareholder. But a mere resolution of the directors resolving to pay a certain amount as interim dividend does number create a debt enforceable against the companypany, for it is always open to the directors to rescind the resolution before payment of the dividend. In The Lagunas Nitrate Company Limited v. J. Henry Schroeder and Company 2 the directors of a companypany passed a resolution declaring interim dividend payable on a future date, and requested the companypanys bankers to set apart, out of the money of the companypany in their hand, into a special account entitled interim Dividend Account, a sum sufficient to companyer the dividend, pending the companypanys instructions. But before the date fixed for payment, the directors resolved that pending certain litigation to which the companypany was a party, payment of dividend be postponed. it was held by the Court that the directors had the right even after resolving to pay interim dividend to rescind the resolution and numberenforceable right arose in favour of the members of the companypany by the declaration of interim dividend. In Halsburys Laws of England, III Edn., Vol. 6 p. 402, Art. 778, it has been stated A directors declaration of an interim dividend may be rescinded before payment has been made. 1 1896 1 Ch. 559. 1 17 Times Law Reports 625. Therefore a declaration by a companypany in general meeting gives rise to an enforceable obligation, but a resolution of the Board of Directors resolving to pay interim dividend or even resolving to declare interim dividend pursuant to the authority companyferred upon them by the articles of association gives rise to numberenforceable obligation against the companypany, because the resolution is always capable of being rescinded. Therefore departure in the text of Art. 74 of the Articles of Association of Govan Bros. from the statutory version under Table A of the power in respect of interim dividend which may be entrusted to the directors, makes numberreal difference in the true character of the right arising in favour of the members of the companypany on execution of the power. The directors by the Articles of Association are entrusted with the administration of the affairs of a companypany it is open to them if so authorised to declare interim dividend. They may, but are number bound to, pay interim dividend, even if the finances of the companypany justify such payment, even if the directors have resolved to pay interim dividend, they may before payment rescind the resolution. Counsel for the appellant does number rely upon any evidence of actual payment or upon any credit given to the appellant in the books of account of the companypany number upon any distribution. Even the resolution of the directors of August 30, 1950 is number on the record, and there is numberevidence that it was resolved to pay the dividend on any date before it was actually paid, and the companypany had taken any step to implement the resolution within the year of account companyresponding to the assessment year 1951-52. There is numberstatutory provision which gives rise to a fiction that on declaration of interim dividend, it should be deemend to be paid, credited or distributed. In support of the plea that interim dividend was taxable in the year of assessment 1951-52, the appellant relies upon two facts only-the power vested in the directors to declare interim dividend, and the passing of a resolution by the directors relating to interim dividend on August 30, 1950 followed by the drawing of dividend warrants dated December 28, 1950. But for reasons already stated a resolution of the board of directors declaring interim dividend, until it is implemented by some step taken by the companypany, creates numberenforceable right in the shareholders. The judgment of the Bombay High Court in Commissioner of Income-tax, Bombay v. Laxmidas Mulraj Khatau 1 on which companynsel for the appellant relies, does number assist him either. In that case the companypany declared a dividend out of its profits, and made it payable a few days later. The dividend was paid on the 1 16 I.T.R. 248. date on which it was made payable by the resolution of the companypany. The Income-tax Officer treated the amount received by the member as dividend income for the assessment year in which it was actually received. The High Court of Bombay in a reference under s. 66 observed that a-, soon as the divi- dend was declared it became the income of the assessee which income the assessee companyld deal with or dispose of in any manner he liked. Chagla C. J., speaking for the Court enun- ciated the law as follows It is impossible to give a literal companystruction to the expression paid used in this sub-section sub-s. 2 of s. 16 . If a literal companystruction were to be given, then it would amount to this that until the dividend warrant was actually cashed and the dividend amount was actually realised it cannot be stated that the dividend was paid to the share- holder. I think the proper companystruction to give to that word is when the dividend is declared then a liability arises on the part of the companypany to make that payment to the shareholder and with regard to the shareholder when the income represented by that dividend accrues or arises to him. The mere fact that the actual payment of the income is deferred is immaterial and irrelevant. But whether dividend-interim or fixed-is income taxable in a particular year of assessment must be determined in the light of s. 16 2 of the Indian Income-tax Act. The Legislature had number made dividend income taxable in the year in which it becomes due by express words of the statute, it is taxable only in the year in which it is paid, credited or distributed or is deemed to be paid, credited or distributed. The Legislature has made distinct provisions relating to the year in which different heads of income become taxable. Salary becomes taxable by s. 7 when it is allowed to the employee or becomes due to him, whether it is actually paid to him or number. Interest on securities under s. 8 is taxable when it is received by the assessee. Under s. 9 tax on property becomes payable number on any actual receipt of income from the property but on a purely national companyputation in the year of account of a bona fide annual value of the property, subject to the adjustments provided in that section. Profits and gains of business, profession or vocation carried on by an assessee are companyputed in accordance with the method of accounting regularly employed by the assessee, unless the Income-tax Officer being of the opinion that profits or gains cannot properly be deduced therefrom, directs otherwise. Other sources of income-and dividends are included in this residuary class-become taxable in the year in which they are received or accrue or arise or are deemed to be received, accrued or arise, according to the nature of the particular income. The year in which a particular class of income be companyes taxable must therefore be determined, in the light of its true character, and subject to the special provision, if any, applicable thereto. The Legislature has enacted an express provision making dividend income taxable in the year in which it is paid, credited or distributed or is to be deemed, so paid, credited or distributed. The test applied by Chagla C. J., that because the dividend becomes due to the assessee who has the right to deal with or dispose of the same in any manner he likes, it is taxable in the year in which it is declared, cannot be regarded as companyrect. The expression paid in s. 16 2 it is true does number companytemplate actual receipt of the dividend by the member. In general, dividend may be said to be paid within the meaning of s. 16 2 when the companypany discharges its liability and makes the amount of dividend unconditionally available to the member entitled thereto. Chagla C. J., has himself in Purshotamdas Thakurdas v. Commissioner of Income- tax, Bombay City 2 expressed a different view. The learned Chief Justice in delivering the judgment of the companyrt referred to Laxmidas Mulraj Khataus case 3 and observed that the principle of that case applied only to those cases where in facts the dividend was paid to the shareholder and number to cases where a companytingent liability was undertaken and numberpayment was made. He observed one thing is clear from the language used by the Legislature that it did number intend to equate paid with declared in every case. Therefore, it is open to us to companysider, numberwithstanding the Khatau Mills case, whether on the facts of this case, it companyld be said that dividend has been paid, which although it may have been declared may never be payable and in fact has number been paid.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 71 of 1963. Appeal by special leave from the judgment and order dated November 23, 1962 of the Allahabad High Court Lucknow Bench at Lucknow in Criminal Revision No. 251 of 1962. S T. Desai, O. P. Rana, Atiqur Rahman and C. P. Lal, for the appellant. B. Agarwala, Ravinder Narain, O. C. Mathur and J. B. Dadachanji, for respondents number. 1 and 2. April 15, 1964. The Judgment of SUBBA RAO and DA, GUPTA JJ. was delivered by SUBBA RAO J. RAGHUBAR DAYAL J. delivered a dissenting Opinion. SUBBA RAO, J.-This appeal by special leave raises the question of the privilege raised by the Government of India in respect of certain documents called for from its Home De- partment in a criminal proceeding pending the companyrt of the Special Judge, Anti-Corruption East , U.P., Lucknow. The respondents were prosecuted in the said Court, after obtaining the sanction of the Central Government under s. 197 of the Code of Criminal Procedure, for an offence under s. 6 1 a of the Prevention of Corruption Act, 1947 Act 11 of 1947 . An objection was taken before the said companyrt on behalf of the respondents that the sanctioning authority did number apply his mind properly when sanction for the prosecution was granted. It was stated on behalf of the respondents that on a representation made by one of the accused, Col. Sujan Singh, for reconsideration of the order of his prosecution, the Deputy Secretary in the Home Department reconsidered the matter and made numberings on his application to the effect that the sanction accorded earlier for his prosecution was given on insufficient data. He filed a petition before the Special Judge to summon the company- cerned record of the Home Department on the ground that the said record would substantiate his assertion that the company- cerned officer did number apply his mind earlier in according, sanction for his prosecution. The Secretary, Ministry of Home Affairs, claimed privilege on the ground that the production of the record companytaining the said numberings of the Deputy Secretary would number be in the interests of the State. The Special Judge in the first instance and the High Court in revision re-jected the claim of privilege raised by the Union Govern-ment. The State of U.P. has preferred the present appeal by special leave against the order of the High Court. The respondents filed criminal petition No. 149 of 1964 for companydonation of delay in filing appearance and the statement of case. The facts relevant to this application are briefly as follows. Respondents 1 and 2 received the numberice granting special leave by this Court on January 16, 1964. After the receipt of the numberice they companytacted their local advocate at Lucknow and, on his advice, the 1st respondent, along with his local advocate, came to Delhi on January 28, 1964, and made necessary arrangements with Messrs. J. B. Dadachanji Co., Advocates. On January 16, 1964, respondents 1 and 2 received a numberice from the High Court intimating them that the records of the case had been despatched to the Supreme Court. On February 11, 1964, they filed their appearance and on February 18, 1964, their statement of case. If January 16, 1964, was the date of service on them, there would number be any delay in making their appearance or filing their statement of case. But the numberice of the dispatch of the records was served on the learned companynsel for respondents 1 and 2 on November 4, 1963. Under Ch. V, r. 4 1 c , read with r. 2, of the Rules of the High Court, Allahabad, where a party is represented by an advocate, a service of numberice of dispatch of record on such advocate is deemed to be sufficient service. As the present appeal arises out of an interlocutory order it may be said that the advocate representing the respondents in the High Court still companytinues to represent them. We assume for the purpose of this case that the rule is valid and the numberice was duly served on the advocate. If that be so, the respondents should have filed their appearance and lodged their statement of case within a month from the said date. But they filed their appearance on February 11, 1964, which is clearly beyond time. It will be seen from the said facts that the respondents had filed their appearance within one month from the date of service of numberice on them, but beyond time from the date the numberice was served on their advocate. The said delay is number in the presentation of any appeal but only in following the procedural steps for making the case ready for disposal. We are satisfied by perusing the record that the delay was number due to negligence on the part of the respondents. It is number suggested that the appellant is in any way prejudiced by this delay. In the circumstances we think that this is a fit case for excusing the delay. We excuse the delay in filing respondents appearance and also in lodging the statement of case. Whether the daily of the respondents in entering appearance is excused or number. we are at the outset companyfronted with the situation that this Court gave special leave when the appeal was prima facie barred by limitation without the appellant filing an application for excusing the delay and the Court excusing the same. A few facts would make the position clear. The Judgment of the High Court in the criminal revision is dated November 23, 1962. A certified companyy of the Judgment was delivered to the appellant on December 5, 1962. On December 19, 1962, the appellant filed a petition in the High Court of Judicature at Allahabad for a certificate that the case was a fit one, for appeal to the Supreme Court. On February 18, 1963, the High Court held that the order sought to be appealed against was an interlocutory one and, therefore, the petition was number maintainable under Art. 134 1 c of the Constitution of India. On April 16, 1963 the appellant filed a petition in this Court for special leave to appeal against the order of the High Court in the criminal revision. In para. 19 of that petition it was stated that the appellant applied to the High Court for a certificate for leave to appeal to the Supreme Court but the High Court by order dated February 18, 1963, refused to grant the certificate applied for. The appeal L P D ISCI-24 would be in time if that application was maintainable in the High Court, but would be out of time if that application was number maintainable there, for in the latter event the time would have expired on March 5, 1963, and the appeal would have been out of time by 42 days. Learned companynsel for the appellant companytends that special leave was -ranted on May 10, 1963, and that, as the respon- dents have number taken objection on the ground that it was barred by limitation till they filed their petition in this Court on February 26, 1964, we shall number permit them to raise this plea at this very late stage. We are number impressed by this argument. This is number a case where the Supreme Court excused the delay in filing the petition for special leave and the respondents with the knowledge of that fact permitted the appellant to incur heavy expenditure and after a long delay raised the objection at the time of hearing of the appeal that the delay should number have been excused. But this is a case where the appellant did number bring to the numberice of the Court that the petition for special leave was out of time. The Registry companyld number point out the defect as in the petition it was stated that the application under Art. 134 1 c of the Constitution of India was dismissed by the High Court without indicating on what ground it did and this Court assumed that the petition for special leave was in time and gave special leave. Order XXI, r. 2, of the Supreme Court Rules reads Where the period of limitation is claimed from the date of refusal of a certificate, it shall number be necessary to file the order refusing a certificate, but the petition for special leave shall be accompanied by an affidavit stating the date of the judgment sought to be appealed from, the date on which the application for a certificate was made to the High Court, the date of the order refusing the certificate and the ground or grounds on which the certificate was refused and in particular whether the application for a certificate was dismissed as being out of time. Under the said rule it is incumbent upon the petitioner to state in the affidavit filed in support of the petition the date of the order of the High Court refusing the certificate and the ground or grounds on which the certificate was refused. If the appellant had companyplied with this rule, the Registry of this Court would have numbericed the delay in filing the special leave petition and brought that to the numberice of the Court. In the circumstances there are two companyrses open to us one is to dismiss the appeal on the ground that it was barred by limitation, and the other is to permit the appellant to file a petition at this very late stage for excusing the delay in filing the special leave petition and companysider that petition on merits. Ordinarily numberindulgence should be given to a party when the said party with open eyes filed a petition for special leave without disclosing a material circumstance in the affidavit on the basis of a wrong view of law that the appeal was in time. With some hesitation we gave liberty to the appellant to file a petition for excusing the delay and they have done so. We shall number companysider the petition for excusing the delay on merits, as this Court would have done if that application had been filed along with the special leave petition. Two reasons are given in the application for excusing the delay, namely, 1 the Law Officer, who was at the relevant time in charge of the matter in the High Court, advised the Government that the order under appeal was a final order and that an application should be filed under Art. 134 1 c of the Constitution in the first instance so that the other side might number companytend that the appellant did number approach the High Court for a certificate, and that the said advice was accepted by the Government and 2 the appellant acted bona fide, as it believed on legal advice that the period of limitation would be companynted from February 18, 1963, i.e., the date of the order of the High Court refusing to give certificate and that the order was also filed along with the petition in this Court. The respondents filed a companynter affidavit denying that the order was a final order and stating that there was number sufficient reason for excusing the delay. The learned companynsel for the appellant companytended that the order of the High Court dated November 23, 1962, in the criminal revision was a final order within the meaning of Art. 134 1 of the Constitution. The material part of the said article reads An appeal shall lie to the Supreme Court from any judgment, final order or sentence in a criminal proceeding of a High Court in the territory of India We find it difficult to hold that the order under appeal is a final order within the meaning of the said article. In Seth Premchand Satramdas v. The State of Bihar 1 it was held that an order of the Patna High Court dismissing an application under s. 21 3 of the Bihar Sales Tax Act, 1944, to direct the Board of Revenue, Bihar, to state a case and to refer it to the 1950 S.C.R. 799,, 804. L P D ISCI-24 a High Court was number a final order. This Court, speaking through Fazl Ali, J., defined the expression final order thus It seems to us that the order appealed against in this case. cannot be regarded as a final order, because it does number of its own force bind or affect the rights of the parties. Though this definition is given in a different companytext, it will equally apply to that expression in Art. 134 of the Constitution. Can it be said that the Special Judge in allowing the petition of the respondents to call for the production of a document from the Union Government is a final order in the criminal proceeding? The criminal proceedings were taken against the respondents for an offence under s. 6 1 a of the Prevention of Corruption Act, 1947. The proceedings are number pending in the companyrt of the Special Judge. In the companyrse of those proceedings the respondents filed an application for the production of a document by the Union Government and that was allowed by the companyrt. The said order is only an interlocutory order pending the proceedings. It does number purport to decide the rights of the parties, namely, the State of U.P. and the accused. It enables the accused to have the said document duly proved and exhibited in the case. It relates only to a procedural step for adducing evidence. The High Court companyfirmed that order in revision. But the learned companynsel companytents that it negatives the claim of privilege made by the Union Government and, therefore, it decides against the right of the Union Government to withhold the production of the document. Assuming that the order decides some right of the Union Government, on which we do number express any opinion, the Union Government is neither a party to the cri- minal proceedings number is it a party either before the High Court or before us. The indirect effect of that order on a third party to the proceedings, who does number seek to question that order, does number deprive the order of its interlocutory character. We, therefore, bold that the order made by the High Court is number a final order within the meaning of Art. 134 1 of the Constitution. That apart the order of the High Court holding that the order sought to be appealed from was number a final order within the meaning of Art. 134 1 of the Constitution has become final. The appellant has number filed any appeal against that order. It cannot ignore that order for the purpose of special leave and companytend that the application before the High Court was maintainable and the order made by the High Court must be deemed to have been made on merits, though in express terms it rejected the petition for the reason that it was number maintainable. In either view the period of limitation for filing the special leave petition companyld number be companyputed from the date of the order of the High Court refusing to give a certificate to appeal to the Supreme Court. It is then companytended that the rule does number say in express terms that the said order of refusal to give a certificate must be on an application which is maintainable and, therefore, if in fact the High Court refused to give a certificate, whether on merits or on the -round that it was number maintainable, the party can take advantage of the said rule. We cannot accede to this argument. The rule presupposes that the application for the certificate is maintainable, and the companyrt refuse to give it on the -round that the companyditions laid down in Art. 134 1 of the Constitution have number been companyplied with. If the companystruction put forth by the appellant be accepted, it will give room for fraud and ,evasion of the rule. A party whose appeal has become barred can file a petition with the knowledge that it is number maintainable, get an order of dismissal and then seek to take advantage of the additional period of limitation provided by the rule. The rule, therefore, must be interpreted reasonably and if so interpreted. it companyld only mean that the refusal of the ,certificate must be in an application maintainable under the said Article. Now we shall proceed to companysider the application for excusing delay on its merits. The reason for the delay given in the affidavit is that the Law Officer was of the opinion that the application for a certificate was maintainable under Art. 134 1 of the Constitution. We do number see any justification for this opinion. There is numberconflict of judicial opinion on this question. The only question that was before the Law Officer was whether the order sought to be appealed from was a final order. The order ex facie was an interlocutory order and so far as the Government of U.P. was companycerned it companyld number possibly be held that any of its rights bad been affected by that order. In the circumstances we cannot hold that a wrong legal advice is a sufficient ground for excusing the delay. What is more, on February 18, 1963, the High Court in a companysidered order held that the order sought to be appealed from was number a final order and, therefore, an application under Art. 134 1 of the Constitution was number maintainable. The time for preferring an appeal from the main order of the High Court would expire only on March 5. 1963, that is to say, the appellant had 15 days time more for taking steps for preferring the appeal. Even so numbersteps were taken to file the appeal and instead an appeal was filed on the basis of the original opinion of the Law officer that the time can be companyputed from the date of the order refusing to issue the certificate. From the information supplied by the companynsel for the appellant it appears that the Government decided to file the appeal only on March 8, 1963, i.e., after the time for filing the appeal bad expired. After further companyrespondence between the Govern- ment of U.P. and the companynsel representing it in the Supreme, Court the special leave petition was filed only on April 16,. 1963, companypletely ignoring the reasons given by the High Court in dismissing the application for certificate of fitness. On the -,said facts we do number see any justification for excusing the long delay of 42 days. So. the appeal is clearly barred by limitation and should be dismissed. Accordingly the appeal is dismissed. RAGHUBAR DYAL, J.-I respondents appearance and also in lodging the statement of case be excused. I am however, of opinion that the appellants application for excusing the delay in the presentation of the petition for special leave to appeal be allowed. It has to be assumed, for the purposes of disposing of this application, that the order under appeal was number a final order within the meaning of that expression in art. 134 1 of the Constitution. The High Court held so and refused the certificate. The appellant has neither preferred an appeal against that order number questioned its companyrectness in its petition for special leave. The reason urged for companydoning the delay is that the legal advisers of the appellant were of opinion that limitation for the presentation of the petition for special leave would be governed by the provisions of r. 1 of O.XXI, Supreme Court Rules, hereinafter called the rules, and that in accordance with those provisions the period of limitation would be 60 days from the date of refusal of the certificate by the High Court. If that rule applied, the petition for -,special leave would be in time. The certificate was refused on February 18, 1963, and the special leave petition was filed on April 16. The question then is whether the appellant can take advantage of the opinion of its legal advisers, assuming that this opinion was erroneous. I am of opinion that it should be given that advantage, as the error. if any, cannot be said to be of such a character which a legal adviser companyld number have possibly given. The rule does number expressly state that limitation would be companynted from the date of refusal of the certificate only when an application for a certificate under Art. 134 would be maintainable as an application against an order which is held by the High Court to be a judgment, final order or sentence in a criminal proceeding. It is true that an application under art. 134 is companytemplated to be an application against the judgment. final order or sentence in a criminal proceeding, and that refusal of a certificate under art. 134. for purposes, of rule 1 1 of O.XXI. refers to the refusal of an application for certificate against the judgment, final order or sentence in a criminal proceeding. But this does number necessarily mean that the rule will number be applicable in cases of refusal of a certificate when one applied for it on the ground that the order sought to be appealed against amounted to a judgment, final order or sentence while the High Court came to a different opinion. The rule does number specifically -,state that the date of the refusal of the certificate would be taken to be the starting point of limitation only when the High Court refuses certificate on the -round that it was number a fit case for appeal to the Supreme Court. If it were so, the rule would have been limited to those cases. Further, there is indication in sub-r. 2 itself that such was number companytemplated by sub-r. 1 of r. 1 Sub-rule 2 of r. 1 requires the petitioner, in case he desires limitation to be companynted from the date of refusal of the certificate, to mention the -rounds for the refusal of the certificate and, in particular, Whether the application for certificate was rejected as being out of time. An application presented after the expiry of limitation is number maintainable till the Court allows the application for the companydonation of delay. There must be a reason for providing, in sub-r. 2 , that the fact of the refusal of the certificate on -round of limitation must be expressed. The reason is that proviso to sub-r. 1 of r. 1 provides that when an application for a certificate is dismissed on the -round of its being out of time, limitation for the petition for special leave to appeal will number be companynted from the date of the dismissal of the application. There is numbercorresponding provision with respect to the limitation being number companynted from the date of refusal. if the refusal be on the ground that the order sought to be appealed against did number amount to a judgment, final order or sentence in a criminal proceedings. In view of these companysiderations, the advice of the appel- lants companynsel, even if it be erroneous, should number go against the appellant to the extent that the delay in filing of the special leave petition be number companydoned. I do number think that the omission to state the ground of refusal in the petition for special leave was deliberate in order to keep back from the Court that the application had been presented after the expiry of the period of limitation. it would number be irrelevant to companysider the nature of the point sought to be urged in the appeal. The question is whether the High Court was right in companysidering the order of the trial Court rejecting the claim of privilege raised by the Union Government in accordance with s. 123 of the Evidence Act with respect to the production of certain documents summoned. on the -,round that the disclosure would number be in public interest. If the view of the Courts below is wrong, the result of refusing to companydone the delay would be that public interest will suffer and that companysideration should, in my opinion, outweigh the lapse on the part of the appellant in number filing the petition for special leave to appeal within time and that too,, in view of the wrong advice or opinion given by its legal advisers. I would therefore allow the application and companydone the appellants delay in presentation of the petition for special leave. ORDER In accordance with the opinion of the majority, the delay in filing the special leave petition is number companydoned.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.241 of 1961. Appeal from the judgment and decree dated March 4, 1958, of the Patna High Court in Appeal from Appellate Decree No. 1335 of 1952. S. Sinha and R.C. Prasad, for the appellants. Sarjoo Prasad and B. P. Jha, for the respondents number. 1 and 2. April 3, 1964. The judgment of the Court was delivered by DAS GUPTA, J.-This appeal arises out of a suit for re- demption of a large number of usufructuary mortgages in favour of the defendants. The plaintiff who owned 1.67 acres. of lands which were recorded in Khata 56 and 10.56 acres in Khata 57 in village Sarifabad gave 1.27 acres out of Khata 56 and 8.24 acres out of Khata 57 lands in mortgage to the several defendants by separate mortgage bonds. Part of the remaining land was sold by him and the rest settled by him with the first defendant on Batai terms. The plaintiffs case is that under the terms of the mortgage bonds the mortgagees were liable to pay rent to the landlord. The mortgagees however defaulted in the payment of rent for some years. A suit for the arrears of rent was brought by the landlord and a decree obtained. In execution of the decree the lands were sold. The purchasers were one Besolal and Mst. Kirti Kuer, who according to the plaintiff, were only benamidars of defendants 1 and 2 and other mortgagees. It is his case that this purchase enured for the benefit of the mortgagor, that is, the plaintiff, and so the right of redemption of the mortgagees has number been affected. The prayers were for a declarations that the purchase was for the benefit of the plaintiff and for redemption of the mortgagees. The suit was companytested by defendants 1 and 2 only. Of these defendants, Chamroo Sao is the purchaser, and Besolal, defendant 2 is the son of the other purchaser Mst. Kirti Kuer. They denied the allegation that Besolal and Mst. Kirti Kuer were their benamidars and companytended that the right of redemption has been extinguished by the companyrt sale. The Trial Court held that the plaintiff had failed to show that the auction purchasers were benamidars of the mortga- gees and in that view dismissed the suit. On appeal, the Additional District Judge, Patna, came to a companytrary companyclusion. He held that the put-chase, though in the name of Besolal and Mst. Kirti Kuer was really by the, first and the second defendants. He also accepted the plaintiffs case that under the terms of the mortgage bonds the mortgagees were liable to pay the rent and the rent sale having been brought about due to the default of the mortgagor and the mortgagee they companyld number be allowed to take advantage of the sale. So, according to the learned Judge, the equity of redemption in favour of the plaintiff still subsisted and that he was entitled to redeem the mortgaged property. Accordingly, he set aside the judgment of the Trial Court and passed a preliminary decree for redemption. Against this decree the two defendants appealed to the High Court of Patna. The appeal came up for hearing in the first instance before a Single Judge Mr. justice Sahai . On a companysideration of the evidence, he was of opinion that the liability of rent of 2.67 acres was upon defendant I and that payment of rent of 87 acres which was purchased and 1.76 acres which was taken in ijra, the total being 2.43 acres, was upon defendant 2, that for payment of rent of 3.83 acres was upon the other defendants, and the plaintiff was liable to pay the rent of only about 3.39 acres out of the entire area of 1.67 acres of Khata number 56 and 10.65 acres of Khata number 57. The question which therefore arose was whether s. 90 of the Trusts Act would operate to keep the equity of redemption alive in cases where the sale took place due to the default of the mortgagor as well as the mortgagees, the default on the part of the mortgagees, who purchased the properties at the sale being also substantial. The learned Judge referred this point for decision to a Division Bench. The Division Bench of the High Court held that s. 90 of the Trusts Act did number apply to these circumstances. In this view the High Court allowed the appeal, set aside the decree of the first appellate companyrt and restored the decree of the Trial Court. The present appeal by Mst. Basmati Devi, who is the legal representative of the original plaintiff who was substituted in his place, is against the High Courts decision dismissing the suit. In companying to a companyclusion that s. 90 of the Trusts Act did number apply to cases where the sale took place due to the default of the mortgagor as well as the mortgagee, the High Court appears to have followed a number of previous decisions of the same High Court. In support of the appeal it is urged that the view taken by the High Court in the present case as well as the previous decisions of the Patna High Court is incorrect and defeats the very object of s. 90 of the Indian Trusts Act. Section 90 of the Indian Trusts Act is in these words - Where a tenant for life, companyowner, mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit. of all persons so interested, the advantage so gained but subject to repayment by such persons of their due share of the expenses properly incurred, and to, an indemnity by the same persons against liabilities properly companytracted, in gaining such advantage. The question for companysideration is whether in circumstances like the present where the decree and the sale in execution of it are brought about by the default of both the mortgagor and the mortgagee, the mortgagee can be said to have taken advantage of his position by purchasing the property at the sale. The High Court appears to think that unless the sale was brought about by the default of the mortgagee alone the mortgagee cannot be said to have taken advantage of his position in making the purchases. What seems to have weighed with the learned Judges is that even if the mortgagee had done his duty by paying the rent he was liable to pay, the sale would still have taken place as the mortgagor did number pay that portion of the rent which he was liable to pay. So, they thought that the mortgagees, though they took advantage of the fact that the property had been brought to sale, companyld number be said to have taken advantage of their position as mortgagees. With this view we are unable to agree. In our opinion, the fact that the mortgagor had made a default, does number alter the position that the mortgagee had also defaulted in paying the rent he was liable to pay. By his default he has companytributed to the position that a suit had to be brought for arrears of rent and ultimately to the position that the property was put to sale in execution of the decree obtained in the suit. This companytribution to the bringing about of the sale was a. direct result of his position as a mortgagee. When therefore he purchased the property himself at the sale in execution of the rent decree he clearly gained an advantage by availing himself of his position as a mortgagee. This, in our opinion, is the position in law even if the mortgagees liability was to pay less than the major portion of the rent of the holdings. Whether this would be true even where the portion which the mortgagee is liable to pay is so very small that the property is number ordinarily likely to be brought to sale for that amount, it is unnecessary for us to decide in the present case. In the present case, the finding is that the liability of the defendants 1 and 2 was to pay a substantial portion of the rent. To say in such circumstances that they did number take advantage of their position as mortgagees is entirely unrealistic Such a companystruction would put a premium on dishonesty on the part of mortgagees whenever the entire burden of payment of rent was number left squarely on the mortgagee as under the provision of s.76 of the Transfer of Property Act. Mr. Sarjoo Prasad, who appeared before us on behalf of the respondents, tried to persuade us that in any case the plaintiffs suit should fail as regards the lands recorded in Khata No. 57. As, according to him, these mortgagees were number at all liable to pay any portion of the rent of this holding. He drew our attention in this companynection to Ex. 2, the mortgage bond executed in favour of Chamroo Sao, and to the statement made therein Annual rent payable to the zamindar is the companycern of me, the executant. This argument proceeds on the basis that the holding recorded in Khata No. 57 companytinued to be separate and distinct from the Khata No. 56. It is thus in direct companyflict with the plea of these very defendants in their written statement that the two holdings had been companysolidated into one holding with one rental. As the oral and documentary evidence on the Paper Book prepared in the appeal did number clearly show whether or number these two holdings had become one, we called for one of the documents, Ex. B which seemed likely to throw some light on the matter. The document has number been received. It is the companyy of a judgment of a suit between these parties in which this very question, viz., whether the two holdings had been companysolidated into one or number, was raised. It was decided hat such companysolidation had taken place. It is clear that it was after such companysolidation that the second rent suit was brought in respect of that companysolidated holding and it was that companysolidated holding which was sold in execution of the decree. It is clear therefore that the mortgage bond Ex.2 in which the mortgagor accepted liability to pay rent to the zamindar in respect of the mortgaged land in Khata No. 57 does number affect the companyrectness of the High Courts finding that the liability to pay rent of the holding that was sold was partly of the mortgagor and partly of the mortgagees and, that it was the default of both the mortgagor and the mortgagees that brought about the sale. Accordingly, we allow the appeal, set aside the judgment and decree of the High Court and restore the decree made by the Additional District Judge, Patna. A Pleader Commissioner shall be appointed by the trial companyrt on a deposit of Rs. 50/- as his fees by the present appellant within two months from this date for taking accounts as to the amount due to the defendants on the date of the decree. A preliminary decree for redemption shall be passed in the usual terms. As the suit as also the appeal before the District Judge had been brought in forma pauperis the High Court made an order- directing the plaintiff to pay the companyrt-fee on the plaint as well as on the memorandum of appeal. That order is set aside. Instead, we order the first and the second defendants in the suit to pay the companyrt-fee payable on the plaint as also on the memorandum of appeal. The present appeal to this Court has also been brought by the appellant as a pauper. As she has succeeded in the appeal, we order the companytesting respondents, i.e., the first and the second defendants, to pay the companyrt fee payable on the memorandum of appeal to this companyrt.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 46 of 1961. Appeal from the judgment and decree dated July 17, 1958 of the Patna High Court in Appeal from Original Decree No. 162 of 1952. Sarjoo Prasad and D. N. Mukherjee, for the appellant. C. Prasad, for respondents Nos. 1-3. April 1, 1964. The Judgment of the Court was delivered by MUDHOLKAR, J.-This is an appeal by a certificate granted by the High Court of Patna under Art. 133 1 a of the Constitution, and arises out of a suit instituted by the appellant against the respondents for the recovery of a sum of Rs. 57,000/-. The appellant holds permanent lease-hold rights over a companyliery called the Jealgora Govindpur Colliery and had worked the companyliery himself for some time. On January 31, 1949, he granted a sub-lease of the companyliery to respondent No. 4 for a term of five years. At that time, 2803 tons of slack and rubble companyl was lying in the companyliery, and under the terms of a separate agreement executed by respondent No. 4, he was liable to pay for this companyl at the rate of Rs. 10/- per ton after selling it. According to the appellant, this companyl was sold by respondent No. 4, but he was number paid its price amounting to Rs. 28,030/-. Further, according to him, royalty and companymission were due to him from the respondents in respect of the companyl extracted by them from the companyliery, as also Rs. 1,355 8 3 on account of a loan taken by them from him on February 17, 1949. The total claim was tentatively valued by him at Rs. 57,000/-. He joined respondents 1, 2 and 5 as defendants to the suit on the ground that these three persons along with respondent No. 4 formed a partnership firm known as Saurashtra Coal Concern which was joined in the suit as defendant No. 5 and is number respondent No. 3 before us. The appellants case was that respondent No. 4 was a benamidar for the partnership firm and, therefore, all the respondents were liable for the claim. Respondents 4 5, who are father and son, admitted the appellants companytention that the lease was obtained by respondent No. 4 on behalf of the partnership firm, but their companytention was that they surrendered their lease-hold interest to the appellant on November 1, 1950, which was accepted by him, and that he was, therefore, number entitled to the claim in respect of royalty and companymission from them for the period subsequent to November 1, 1950. Further, according to them, the companyl which was lying in the companyliery was number actually weighed at the time of the agreement and the figure of 2803 tons was put down only as a rough estimate. According to them, on the date of the surrender of the lease by them, there was a stock of more than 2803 tons of slack and rubble, etc., as well as soft companye, including the stock left by the appellant at the time of granting the sub-lease, because that companyld number be sold, and the appellant took possession of the entire stock lying in the companyliery in November, 1950, after promising to adjust it towards the dues. They, therefore, disclaimed all liability to pay the price of 2803 tons of companyl. They also denied having taken a loan from the appellant as alleged by him. No separate written statement was filed on behalf of respondent No. 3, but respondents 1 2, who were defendants 2 4 in the trial companyrt, denied the appellants claim totally. According to them, respondent No. 4 took the sub- lease in his personal capacity and number on behalf of the other respondents. They averred that there was numberprivity of companytract between them and the appellant and that, therefore. he was number entitled to a decree against them. The real facts, according to them, are that the respondent No. 4 took a sublease of the property from the appellant and gave a managing agency of the same to the Saurashtra Coal Concern of which the first respondent is the financing partner and the second respondent is the working partner. This companycern was, they say, never a sub-lessee of the appellant. They also denied having anything to do with the stock of companyl which the appellant is alleged to have sold to the 4th respondent. The trial companyrt negatived the claim of the appellant in respect of the loan but decreed the claim for Rs. 28,030/- as the price of companyl and companymission thereon against all the respondents. It further passed a preliminary decree for ascertaining the precise amount of royalty and companymission which would be due to the appellant on account of the sub- lease. The trial companyrt further said that the minimum amount under this head would be Rs. 26,000/-. Respondents 1 to 3 preferred an appeal to the High Court and the High Court accepted it. Thus, the position number is that the decree of the trial companyrt stands only against respondents 4 5, but has been set aside as against respondents 1 to 3. In view of the fact that both the companyrts below have found companycurrently that the sub-lease in question was taken by respondent No. 4 alone, the only point urged by Mr. Sarjoo Prasad in support of the appeal is that respondent No. 4 being a partner in the Saurashtra Coal Concern, all the partners of the firm are liable under the lease inasmuch as the firm admittedly came into possession of the demised companyliery. He points out that even according to respondents 1 to 3, they came into possession of the demised companyliery immediately after the execution of the sub-lease, and wants this Court to infer from this that the partnership had already companye into existence before the lease was obtained. This, however, has never been the case of the appellant in the companyrts below. The only case which he put forward was that the lease was taken by respondent No. 4 on behalf of all the respondents. In other words, his case was that respondent No. 4 was a benamidar for the partnership firm. It is only this case which the respondents had to meet, and in our judgment, it would number be proper to permit the appellant to make out an entirely new case at this stage. Apart from that, s. 22 of the Indian Partnership Act, 1932, clearly provides that in order to bind a firm by an act or an instrument executed by a partner on behalf of the firm, the act should be done or the instrument should be executed in the name of the firm, or in any other manner expressing or implying an intention to bind the firm. The sub-lease was number executed in the name of the firm, and it has been found by the companyrts below that respondent No. 4 in obtaining the lease, did number act on behalf of the firm. This in substance means ,hat in obtaining the sub-lease, the parties to it did number intend to bind the firm by that transaction. In support of his companytention, Mr. Sarjoo Prasad has strongly relied upon the decision in Karmali Abdulla Allarakia v. Vora Karimji Jiwanji and others 1 . That was a case in which the question for companysideration was whether one of the two partners is liable upon a hundi drawn by one of the partners though the hundi was number drawn in the name of the firm. The Privy Council following the decision in Gouthwaite v. Duckworth 1 held that the other partner would be liable though on the face of it the hundi did number purport to be on behalf of the firm. That decision, however, does number help the appellant, because while the transaction in companynection with which the hundi was drawn, was admittedly a partnership transaction, in the case before us, it has been found that the transaction, that is, the taking of the sub- lease, was number on behalf of the partnership. The next case relied upon was Mathura Nath Choudhury v. Sreejukta Bageswari Rani and others 2 . In that case, the question was whether the firm is liable for the money borrowed by one of its partners. The High Court pointed out that this is a question of fact and depends upon the facts and circumstances of each particular case. In that case also, it was found that the liability arose upon a companytract entered into by one of the partners in companynection with the partnership business. This case is, therefore, similar to the one just referred to above. The third case relied upon is Pandiri Veeranna v. Grandi Veerabhadraswami 4 . In that case, the question was whether the fact that one of the several partners had authority to acknowlede liability to save limitation as against his partners, had to be established only by direct evidence or whether it companyld be inferred from the surrounding circumstances. The High Court held that it was ILR 39 Bom. 261 at 274, etc. 2 1810 12 East 421. 3 46 CLJ 362. ILR 41 Mad. 427 Full Bench . permissible to establish the existence of authority from the surrounding circumstances. The case is thus of numberassistance to the appellant. The next case relied upon was Lakshmishankar Devshankar v. Motiram Vishnuram, etc. 1 . There, it was held that where money borrowed by one partner in the name of the firm but without the authority of the company partners has been applied to paying off the debts of the firm, the lender is entitled in equity to repayment by the firm of the amount which he can show to have been so applied and the same rule extends to money bona fide borrowed and applied for any legitimate purposes of the firm. It is difficult to appreciate how this case advances the present matter further, because here, the sub-lease has number been obtained in the name of the firm.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 30-34 of 1964. Appeals by special leave from the judgment and order dated October 22, 1963 of the Allahabad High Court in Criminal Appeals Nos. 77 and 78 of 1963. MS. K. Sastri, for the appellant in Cr. A. No. 30 of 1964 . M. Lall and Ganpat Rai, for the appellants in Cr. No. 31 of 1964 . VY. Sawhney, for the appellants in Cr. A. Nos. 32--34/64 . 0P. Rana, Atiqur Pehman and C. P. Lal, for the res- pondents- May, 4. 1964. The Judgment of the Court delivered by GAJENDRAGADKAR, C. J. - Forty person were charged with having companymitted several offences the principal one of which was under section 302 read with S. 149 of the Indian Penal Code. The case against these persons was tried by the first Additional Sessions judge at Jhansi. The other charges framed against them were under s. 307 149, 201/ 149 SI 1, 395, 396, 149 449, 1. P. C. The learned trial Judge held that numbere of the char-es had been proved against five of the accused persons. .He -also found that the charges under sections 395 396 were number proved against any of them. In regard to the remaining charges. he found that 35 out of 40 accused persons were guilty. For the major offence charged under s. 302/149, he sentenced 10 accused persons to death and 25 others to imprisonment for life. He also directed that the said accused persons should undergo different terms of imprisonment for the remaining offences but for the purpose of the present appeals, it is unnecessary to refer to them. After the learned trial Judge pronounced his judgment on the 31st December 1962, the 35 accused persons who had been companyvicted by him preferred three appeals between them before the Allababad High Court, whereas the sentences of death imposed on 10 accused persons by the learned trial Judge were submitted to the said High Court for companyfirmation. The High Court has held that 7 out of the 35 appellants before it were number proved to have companymitted any of the offences, and so, they were ordered to be acquitted. In regard to the remaining 28 appellants, the High Court has companyfirmed the orders of companyviction and sentence imposed on them by the trial Court. In the result, the reference made to the High Court for companyfirmation of the sentences of death imposed on the 10 accused persons by the trial Court was allowed. It is against this decision of the High Court that the present five appeals have been brought to this Court by special leave, and the number of accused persons who have brought these appeals before us is 16. Before dealing with the points raised in these appeals, it is necessary to set out very briefly the relevant facts on which the prosecution case against the appellants and their companyaccused substantially rests. The incident which has given rise to the present criminal proceedings took place on the 29th November, 1961 in village Bilati Khet in the district of Jhansi at about 8 a.m. It is clear that this village is cursed with keen rivalry and enmity between two factionsOne group was led by Gayadin who and four other members of his family were murdered on the said date. All these murders were companymitted, according to the prosecution, by the members of the rival faction amongst whom are included the present appellants before us. Criminal proceedings have companytinued between the parties for several years almost without interruption. The rival group was led by Laxmi Prasad alias Laxmi Narain who is one of the appellants in this Court. In the last election of the village Panchayat Laxmi Prasad succeeded as Pradhan of the village and defeated the candidate set up by Gayadin. On the 28th November, 1961, a boundary dispute led to an incident between the members of the two groups. This dispute related to two fields one of which belonged to Gayadin and the other to Laxmi Prasad. Attempts were made to settle this dispute by arbitration, but they failed. It appears that Laxmi Prasad and the members of his group did number agree to submit to any arbitration and they left the meeting called for the purpose threatening that they would see that the matter in dispute between them was settled the next day. It is on this grim numbere that the incident of the 28th November ended. On the 29th November in the early morning, Bahoran, one of the sons of Gayadin, had gone out to ease himself. He was then carrying a pharsa. In the field he met Laxmi Prasad who attacked him with a lathi. Bahoran retaliated this attack with his own pharsa and in the scuffle the numbere of Laxmi Prasad was injured and it began to bleed in fact, a part of the numbere was actually cut. Infuriated by this injury, Laxmi Prasad went to his house and companylected the whole crowd belonging to his faction. Bahoran eased himself and returned to his house. Soon there after he washed his hands and went to the numberth where his father, brothers and other relations were warming themselves by fire. At that stage, Ram Prasad and Dayaram rushed to the scene and informed them that Laxmi Prasad and his companypanions were all armed with guns, spears, swords, gandasas and lathis and were proceeding to the house of Gayadin determined to kill all the members of Gayadins family. On receiving this alarming information, Gavadin and his friends and relatives thought of proceeding towards the house of Gayadin. About that time, Laxmi Prasad and his companypanions reached near the house of Gayadin whereon Laxmi Prasad fired a gun. Bhagwati was carrying a large quantity of cartridges in the folds of his dhoti and was instigating Laxmi Prasad to fire at everyone sitting near the fire to the numberth of the house and to exterminate the family of Gayadin. On hearing this, everyone of the group sitting near the fire rushed into the house and closed the doors. The assailants then broke open the doors of the house and entered the sehan of Gayadin. Inside the house the assailants pursued Gayadin on the upper storey and killed him there. Brindaban, Radha Saran and Dayaram were hiding in different rooms of the house the doors of these rooms were broken open and all the three of them were shot dead. Bahoran and Shiroman Singh, both sons of Gayadin, escaped through the tiled roof into the cattleshed of Harbans which is situated towards the south-east of Gayadins house. Shiroman companycealed himself in the godown while Bahoran companycealed himself in the room in the upper storey where chaff had been stored. After killing Gayadin, Brindaban, Radha Saran and Dayaram, the assailants mercilessly dragged the bodies of the victims out of the house of Gayadin and began their search for Bahoran and other male inmates of the house. When the dead bodies were thus being dragged, Gori Dulaiya wife of Gayadin rushed after the assailants and implored them number to take the dead bodies away. One of the assailants, however, struck her with a stick and she was forced to retrace her steps. The dead bodies were then dragged towards the east of the house. On reaching the cattleshed of Harbans, the assailants broke open the outer door of the house and entered into it. They then injured Harbans and managed to discover Shiroman Singh who was promptly killed. The five dead bodies were then taken into the field of Bhagwati. In the field two big piles of companydung cakes were prepared. On one of the piles the bodies of Gayadin, Brindaban, Radha Saran and Davaram were placed and on the other Shiroman Singhs body was put. Kerosene oil was sprinkled on the bodies and fire was set to them. That, in brief, is the story of the gruesome murders which have given rise to the present proceedings. When the assailants had left the house of Gayadin dragging the dead bodies with them. Rahoran came out of hi,, hiding place and rushed to the Police Station Krichh and lodged the First Information Report at about 11 oclock. In this report,he gave all the material details in regard to the companymission.of the offence and named the 35 persons as the assailants. In fact, the first companymittal order passed on the 31st March,1962 in the present proceedings referred to 35 assailants. Later. five more persons were added to the list of assailants by the companymittal order made on the 14th May, 1962. On receiving the first information report, the police party rushed to the scene of occurrence on cycles and they put off the burning fire and took out the half burnt bodies of the five murdered persons. These bodies were identified aid were sent for post mortem examination. The injured persons Harbans, Ram Prasad, Mansa Ram and Smt. Gori Dulaiya were sent for medical examination. Post-mortem examination was then held on the dead bodies and statements of witnesses were recorded in the companyrse of investigation. That led to the several charges framed against 40 persons and ultimately their trial in the Court of the First Additional Sessions Judge at Jhansi. The case for the prosecution is sought to be established by the testimony of 12 eye-witnesses. All the accused persons denied that they had anything to do with the offences charged. Their main companytention was that a false case had been made against them and it was attempted to be supported by evidence of witnesses who were hostile to them and who had numberregard for cruth. The trial Judge, in substance. rejected the defence plea and accepted the prosecution evi- dence. except in the case of five accused persons. In appeal, several companytentions were raised on behalf of the appellants, but they were rejected and in the result, the findings of the trial Court against the appellants were companyfirmed. The High Court, however, reversed the companyclusion of the trial Court in respect of 7 accused persons with whose cases we are number companycerned in the present appeals. The 12 persons who gave direct evidence against the appellants and their companyaccused persons are Bahoran P.W. 1 Basanti Lal P.W.2 Rameshwar Dayal P.W.3 Prabhu Dayal W.5 Pancham P.W.6 Swarup Singh P.W.14 Kasturi P.W.15 Thakur Das P.W.16. Shyamlal P.W.17 Harbans P.W.18 Dropadi W.19 and Kishori Lal P.W.20. The High Court has critically examined the evidence given by these witnesses and has held that the evidence of Bahoran and Prabhu Dayal may be left out of account as it appeared to the High Court that the said evidence suffered from material infirmities. The evidence given by the remaining 10 witnesses has, however, been accepted by the High Court as substantially true and companyrect. Jr. dealing with this oral evidence, the High Court took into account the fact that most of these witnesses belonged to the faction of Gayadin and must, therefore, be regarded as partisan. It also companysidered another feature which characterised the evidence of all the witnesses and that was that they gave their account of the incident substantially in similar terms and did number assign particular parts in respect of overt acts to any of the assailants except Laxmi Prasad accused No. 1. The approach adopted by the High Court shows that it decided to companyfirm the companyviction of the accused persons against whom four or more witnesses gave a companysistent account, and it is by the application of this test that 7 accused persons have been acquitted. As to the sentence, the High Court realised that 10 persons had been ordered to be hanged and that it companyld number be said about all of them, except Laxmi Prasad, that they had actually fired a gun and caused the death of any of the five victims. Even so, the High Court held that since they all formed members of the unlawful assembly the companymon object of which was to exterminate the male members of the family of Gayadin, they were all equally guilty of murder under s.302,/149, I.P.C. and it would number, therefore, be unreasonable to impose the penalty of death on such of the assailants is were shown to have carried guns in their hands on that occasion. That is how the High Court upheld the orders of companyviction passed against 28 persons who had brought their cases before it in appeal and companyfirmed the sentences of death imposed on I 0 of them. In these appeals, Mr. Sawhney who has addressed the principal argument before us on behalf of the appellants, has urged that the High Court has failed in discharging its duty properly when it dealt with the appeals brought before it by the appellants and decided to companyfirm the sentences of death imposed on 10 of the accused persons. In support of this argument, Mr. Sawhney has relied upon the decision of this Court in the case of Jumman Ors. v. The State of Punjab. 1 In that case, this Court has emphasised the fact that the mandatory requirement prescribed by s.374 of the Code of Criminal Procedure shows that in dealing with reference for companyfirmation of death sentence imposed by the Sessions Judge, the High Court has to companysider the entire case for itself before deciding whether the sentence of death A.T.R. I957 S.C. 469- should be companyfirmed or number. Section 374 provides that the sentence of death shall number be executed unless it is companyfirmed by the High Court. In other words, the sentence of death imposed by the Court of Sessions is number effective until and unless it is companyfirmed by the High Court. It is only when the High Court companyfirms the sentence of death that it is capable of execution. That is why this Court emphasised the solemnity of the Proceedings brought before the High Court under s.374, and it pointed out that under s.375, the High Court is given the power to admit additional evidence if it thinks necessary to do so. Proceedings brought before the High Court for companyfirmation of a death sentence give a right to the companydemned prisoner to be heard on the merits and to require the High Court to companysider the matter for itself without being influenced by the companyclusions recorded by the Court of Sessions. The companyclusions of the High Court on the merits in such proceedings must be independent,. and so, the High Court inevitably has to go into the whole of the evidence. companysider all the pros and companys of the case and satisfy itself that the offence charged under s. 302, I.P.C. is established beyond reasonable doubt and the sentence of death submitted to it for its companyfirmation is fully justified. Mr. Sawhney companytends that this essential requirement of s.374 has number been companyplied with by the High Court when it dealt with the appeals brought before it in the present proceedings. He also adds that since 10 persons have been ordered to be hanged, that itself is a reason why this Court should examine the evidence for itself and number hold that the appellants are companycluded by companycurrent findings of fact recorded by the Court below. We are number impressed by this argument. It is perfectly true that, in a murder trial when an accused person stands charged with the companymission of an offence punishable under s.302, he stands the risk of being subjected to the highest penalty prescribed by the Indian Penal Code and naturally judicial approach in dealing with such cases has to be cautious, circumspect and careful. In dealing with such appeals or reference proceedings where the question of company- firming a death sentence is involved, the High Court has also to deal with the matter carefully and to examine all relevant and material circumstances before upholding the companyviction and companyfirming the sentence of death. All arguments urged by the appellants and all material infirmities pressed before the High Court on their behalf must be scrupulously examined and companysidered be- fore a final decision is reached. The fact that 10persons had been ordered to be hanged by the trial Judge necessarily imposed a more serious and onerous res- ponsibility on the High Court in dealing with the present appeals. We have carefully companysidered the judgment delivered by the High Court in these appeals and we are satisfied that the criticism made by Mr. Sawhney that the High Court did number bestow due care and attention on the points involved in the case, cannot be regarded as well- founded, The judgment shows that the arguments which were urged on behalf of the appellants, have been carefully examined, the evidence given by the respective witnesses has been accurately summarised and the infirmities in the said evidence closely scrutinised. The relevance of the argument of the admitted enmity between the two factions of the village has been taken into account and the companymon features of the evidence tendered by the witnesses have number been overlooked. After taking into account all the points which were urged before the High Court the High Court adopted what it thought to be a safe test before acting on direct evidence. It has held that unless at least four witnesses are shown to have given a companysistent account against any of the appellants. the case against them cannot be said to have been proved beyond reasonable doubt. Having regard to the manner in which the High Court has dealt with the appeals brought before it, we are number prepared to hold that the general criticism made by Mr. Sawhney against the judgment of the High Court can be accepted. In this companynection, Mr. Sawhney strongly relied on the fact that the High Court has number companysidered one important point in favour of the defence, and that is in to the failure of the prosecution to tender three material witnesses whose names had been shown in the witness-list in the calendar sent by the companymitting Magistrate to the trial Judge. These witnesses are Ram Prasad, Mansa Ram and Rani Dulhan. It appears that this companytention was raised by the defence before the Trial Court and had been rejected by it. The Government companynsel appearing for the prosecution had made an application to the trial Court expressing his inability to examine the three witnesses for the reason that Ram Prasad and Mansa Ram had been won over by the defence and Rani Dulhan, the widow of one of the victims, was suffering from such mental shock that she was unable to depose companyerently. After this application was made and granted, the learned trial Judge did number insist upon the prosecution examining the three said witnesses. Then followed three other applications by the defence Nos. 247B, 248B and 249B in which it was urged that the said three witnesses should be examined under s.540, Cr. P.C. The learned trial Judge rejected these applications, and so, the case companycluded without the said three witnesses giving evidence before the trial Court. In rejecting the applica- tions made by the defence, the learned Judge has carefully examined the validity of the defence companytention that the evidence given by the said witnesses before the Committing Magistrate showed that they were material witnesses and the plea raised by them that the absence of their evidence would cause prejudice to the defence, and has held that the evidence which the said three witnesses may give was number essential for a just decision of the case and that it was unreasonable to suggest that the prosecution had an oblique moive in supressing their evidence. This part of the judg- ment clearly shows that all relevant aspects of the matter were examined by the trial Judge before he refused to exercise his powers under s.540, Cr. P.C. It is obvious that this companytention was number urged before the High Court, and so, we find numberdiscussion of the point in the judgment of the High Court. We are number prepared to accept Mr. Sawhneys argument that even if this point was number raised by the appellants before the High Court, they are entitled to ask us to companysider that point having regard to the fact that 10 persons have been ordered to be hanged. It may be companyceded that if a point of fact which plainly arises on the record, or a point of law which is relevant and material and can be argued with- out any further evidence being taken, was urged before the trial Court and after it was rejected by it was number repeated before the High Court, it may, in a proper case, be permis- sible to the appellants to ask this Court to companysider that point in an appeal under Art. 136 of the Constitution afterall in criminal proceedings of this character where sentences of death are imposed on the appellants, it may number be appropriate to refuse to companysider relevant and material pleas of fact and law only on the ground that they were number urged before the High Court. If it is shown that the pleas were actually urged before the High Court and had number been companysidered by it, then, of companyrse, the party is entitled as a matter of right to obtain a decision on those pleas from this Court. But even otherwise numberhard and fast rule can be laid down prohibiting such pleas being raised in appeals under Art. 136. In the present case, however, we are satisfied that there is numbersubstance in the companytention which Mr. Sawhney seeks to raise before us. It is number unknown that where serious offences like the present are companymitted and a large number of accused persons are tried, attempts are made either to terrorise or win over prosecution witnesses, and if the prosecutor honestly and bonafide believes that some of his witnesses have been won over, it would be unreasonable to insist that he must tender such witnesses before the Court. It is undoubtedly the duty of the prosecution to lay before the Court all material evidence available to it which is necessary for unfolding its case but it would be unsound to lay down is a general rule that every witness must be exa- mined even though his evidence may number be very material or even if it is known that he has been won over or terrorised. In such a case, it is always open to the defence to examine such witnesses is their witnesses and the Court can also call such witnesses in the box in the interest of justice under s.540, Cr. P.C. As we have already seen, the defence did number examine these witnesses and the Court, after due deliberation, refused to exercise its power under s.540, Cr. C. That is one aspect of the matter which we have to take into account. The other aspect of the matter is that the trial Court has found that the evidence which these witnesses would have given was number essential for a just decision of the case. What these witnesses might have said in the Sessions Court was judged by the trial Court in the light of their previous statements already recorded, and that is a finding which is purely one of fact. If this finding was number challenged by the appellants before the High Court, we do number see how they can claim to argue before us number that the said finding is erroneous. Besides, so far as Rani Dulhan is companycerned, it seems to us utterly unreasonable to insist that before per- mitting the prosecutor number to examine her, evidence should have been led to show that she was suffering from such mental shock that she was unable to give a companyerent account of the tragic events that happened on that fateful morning. One has merely to recall the fact that five male members of her family were butchered to death by the assailants to realise that the prosecutors statement that she was mentally unbalanced must be true. Then, as to Ram Prasad and Mansa Ram having been won over by the defence, that again is a matter on which the trial Court appears to have been satisfied otherwise it would have readily acceded to the request of the defence to exercise its powers under s. Cr. P.C. We are inclined to think that it is because this part of the defence companytention was felt to be inarguable that the Advocate for the appellants did number raise this point before the Court. Therefore, we are number prepared to allow Mr. Sawhney to take us through the evidence in the case on the ground that one important companytention raised by the defence has number been examined by the High Court. Mr. Sawhney has then argued that where witnesses giving evidence in a murder trial like the present are shown to belong to the faction of victims, their evidence should number be accepted, because they are prone to involve falsely mem- bers of the rival faction out of enmity and partisan feeling. There is numberdoubt that when a criminal Court has to appreciate evidence given by witnesses who are partisan or interested, it has to be very careful in weighing such evidence. 51 S.C.-IO 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 prob- able, are all matters which must be taken into account. But it would, we think, be unreasonable to companytend that evidence given by witnesses should be discarded only on the ground that it is evidence of partisan or interested witnesses. Often enough, where factions prevail in villages and murders are companymitted as a result of enmity between such factions, criminal Courts have to deal with evidence of a partisan type. The mechanical rejection of such evidence on the sole ground that it is partisan would invariably lead to failure of justice. No hard and fast rule can be laid down as to how much evidence should be appreciated. Judicial approach has to be cautious in dealing with such evidence but the plea that such evidence should be rejected because it is partisan cannot be accepted as companyrect. Then it is urged that the evidence given by the witnesses companyforms to the same uniform pattern and since numberspecific part is assigned to all the assailants, that evidence should number have been accepted. This criticism again is number well- founded. Where a crowd of assailants who are members of an unlawful assembly proceeds to companymit an offence of murder in pursuance of the companymon object of the unlawful assembly, it is often number possible for witnesses to describe accurately the part played by each one of the assailants. Besides, if a large crowd of persons armed with weapons assaults the intended victims, it may number be necessary that all of them have to take part in the actual assault. In the present case, for instance, several weapons were carried by different members of the unlawful assembly, but it appears that the guns were used and that was enough to kill 5 per- sons. In such a case, it would be unreasonable to companytend that because the other weapons carried by the members of the unlawful assembly were number used, the story in regard to the said weapons itself should be rejected. Appreciation of evidence in such a companyplex case is numberdoubt a difficult task but criminal companyrts have to do their best in dealing with such cases and it is their duty to sift the evidence carefully and decide which part of it is true and which is number. In the present case, the High Court has in fact refused to act upon the, evidence of Bahoran and Prabhu Dayal, because it appeared to the High Court that the evidence of these two witnesses suffered from serious infirmities. Mr. Sawhney also urged that the test applied by the High Court in companyvicting the appellants is mechanical. He argues that under the Indian Evidence Act, trustworthy evidence given by a single witness would be enough to companyvict an accused person, whereas evidence given by half a dozen witnesses which is number trustworthy would number be enough to sustain the companyviction. That, numberdoubt is true but where a criminal companyrt has to deal with evidence pertaining to the companymission of an offence involving a large number of offenders and a large number of victims, it is usual to adopt the test that the companyviction companyld be sustained only if it is supported by two or three or more witnesses who give a companysistent account of the incident. In a sense, the test may be described as mechanical but it is difficult to see how it can be treated as irrational or unreasonable. Therefore, we do number think that any grievance can be made by the appellants against the adoption of this test. If at all the prosecution may be entitled to say that the seven accused persons were acquitted because their cases did number satisfy the mechanical test of four witnesses, and if the said test had number been applied, they might as well have been companyvicted. It is, numberdoubt, the quality of the evidence that matters and number the number of witnesses who give such evidence. But, sometimes it is useful to adopt a test like the one which the High Court has adopted in dealing with the present case. Mr. Sawhney then attempted to argue that the High Court failed to give effect to the principles enunciated by this Court in the case of Baladin v. State of Uttar Pradesh . In that case, it was observed by Sinha, J., who spoke for the Court, that it is well-settled that mere presence in an assembly does number make a person, who is present, a number of an unlawful assembly unless it is shown that he had done something or omitted to do something which would make him a member of an unlawful assembly, or unless the case falls under s.142, I.P.C. The argument is A.I.R. 1956 S.C. 181 that evidence adduced by the prosecution in the present case does number assign any specific part to most of the accused persons in relation to any overt act, and so, the High Court was in error in holding that the appellants were members of an unlawful assembly. The observation of which Mr. Sawhney relies, prima facie, does seem to support his companytention but, with respect, we ought to add that the said observation cannot be read as laying down a general proposition of law that unless an overt act is proved against a person who is alleged to be a member of an unlawful assembly, it cannot be said that he is a member of such an unlawful assembly. In appreciating the effect of the relevant observation on which Mr. Sawhney has built his argument, we must bear in mind the facts which were found in that case. It appears that in the case of Baladin 1 , the members of the family of the appellants and other residents of the village had assembled together some of them shared the companymon object of the unlawful assembly, while others were merely passive wit- nesses. Dealing with such an assembly, this Court observed that the presence of a person in an assembly of that kind would number necessarily show that he was a member of an un- lawful assembly. What has to be proved against a person who is alleged to be a member of an unlawful assembly is that he was one of the persons companystituting the assembly ,and he entertained along with the other members of the assembly the companymon object as defined by s.141, I.P.C. Section 142 provides that whoever, being aware of facts which render any assembly an unlawful assembly, intentionally joins that assembly, or companytinues in it, is said to be a member of an unlawful assembly. In other words, an assembly of five or more persons actuated by, and entertaining one or more of the companymon objects specified by the five clauses of s. 141, is an unlawful assembly. The crucial question to determine in such a case is whether the assembly companysisted of five or more persons and whether the said persons entertained one or more of the companymon objects as specified by s141. While determining this question, it becomes relevantto companysider whether the assembly companysisted of some personswho were merely passive witnesses and had A.I.R. 1956 S.C. 181 I49 joined the assembly as a matter of idle curiosity without intending to entertain the companymon object of the assembly. It is in that companytext that the observations made by this Court in the case of Baladin 1 assume significance otherwise, in law, it would number be companyrect to say that before a person is held to be a member of an unlawful assembly, it must be shown that he had companymitted some illegal overt act or had been guilty of some illegal omission in pursuance of the companymon object of the assembly. In fact, s.149 makes it clear that if an offence is companymitted by any member of an unlawful assembly in prosecution of the companymon object of that assembly, or such as the members of that assembly knew to be likely to be companymitted in prosecution of that object, every person who, at the time of the companymitting of that offence. is a member of the same assembly, is guilty of that offence and that emphatically brings out the principle that the punishment prescribed by s.149 is in a sense vicarious and does number always proceed on the basis that the offence has been actually companymitted by every member of the unlawful assembly. Therefore, we are satisfied that the observations made in the case of Baladin l must be read in the companytext of the special facts of that case and cannot be treated as laying down an unqualified proposition of law such as Mr. Sawhney suggests. In this case, the High Court has carefully examined the evidence and has made a finding that the whole group of persons who companystituted the assembly were members of the faction of Laxmi Prasad and they assembled together, armed with several weapons, because they entertained a companymon object in pursuance of which the five murders were companymitted on that day. Therefore, there is numbersubstance in the argument that the companyclusion of the High Court that the appellants are guilty of the offences charged is number sup- ported by the principles of law enunciated by this Court in the case of Baladin 1 . It is thus clear that the general grounds of attack urged before us by Mr. Sawhney in challenging the validity of the companyclusions recorded by the High Court fail, and so, there A.I.R. I956 S.C. 181 would be numberoccasion or justification for this Court to company- sider the evidence for itself. That leaves one question still to be companysidered and that has relation to the sentence of death imposed on 10 persons. Mr. Sawhney argues that in companyfirming the sentences of death imposed by the trial Court on 10 accused persons in this case, the High Court has adopted a mechanical rule. The High Court has held that the 10 persons who carried fire- arms should be ordered to be hanged, whereas others who have also been companyvicted under s. 302/149, should be sentenced to imprisonment for life. It is true that except for Laxmi Prasad, the charge under s. 302/149 rests against the other accused persons on the ground that five murders have been companymitted by some members of the unlawfui assembly of which they were members, and the argument is that unless it is shown that a particular accused person has himself companymitted the murder of one or the other of the victims, the sentence of death should number be imposed on him. In other words, the companytention is that if a person is found guilty of murder under s. 302/149 and it is number shown that he himself companymitted the murder in question, he is number liable to be sentenced to death. In support of this argument, Mr. Sawhney has relied on certain observations made by Bose J. who spoke for the Court in Dalip Singh v. State of Punjab . In that case, what this Court observed was that the power toenhance a sentence from transportation to death should veryrarely be exercised and only for the stron- gest reasons andit was added that it is number enough for the appellate companyrt tosay or think that if left to itself it would have awarded thegreater penalty because the discretion does ,not belong to theappellate companyrt but to the trial Judge, and the only ground on which the appellate companyrt can interfere is that the discretion has been improperly exercised. These observations have numberrelevance in the present case, because we are number dealing With a case where the High Court has enhanced the sentence imposed by the trial Judge at all. In fact, both the trial Court and the High Court are agreed that the sentences of death imposed on 10 persons are justi- fied by the circumstances of the case and by the requirements 1 1954 S.C.R. 145 of justice. As a mere proposition of law, it should be difficult to accept the argument that the sentence of death can be legitimately imposed only where an accused person is found to have companymitted the murder himself. Whether or number sentences of death should be imposed on persons who are found to be guilty number because they themselves companymitted the murder, but because they were members of an unlawful assembly and the offence of murder was companymitted by one or more of the members of such an assembly in pursuance of the companymon object of that assembly, is a matter which had to be decided on the facts and circumstances of each case. In the present case, it is clear that the whole group of persons belonged to Laxmi Prasads faction, joined together armed with deadly weapons and they were inspired by the companymon object of exterminating the male members in the family of Gayadin, 10 of these persons were armed with fire-arms and the others with several other deadly weapons, and evidence shows that five murders by shooting were companymitted by the members of this unlawful assesmbly. The companyduct of the members of the unlawful assembly both before and after the companymission of the offence has been companysidered by the companyrts below and it has been held that in order to suppress such fantastic criminal companyduct on the part of villagers it is necessary to impose the sentences of death on 10 members of the unlawful assembly who were armed with firearms. It cannot be said that discretion in the matter has been improperly exercised either by the trial Court or by the High Court. Therefore we see numberreason to accept the argument urged by Mr. Sawhney that the test adopted by the High Court in dealing with the question of sentence is mechanical and unreasonable. There are, however, three cases in which we think we ought to interfere. These are the, case of accused No. 9 Ram Saran who is aged 18 accused No. II Asha Ram who is aged 23 and accused No. 16 Deo prasad who is aged 24, Ram Saran and Asha Ram are the sons of Bhagwati who is accused No. 2. Both of them have been sentenced to death. Similarly, Deo prasad has also been sentenced to death. Having regard to the circumstances under which the unlawful assembly came to be formed, we are satisfied that these young men must have joined the unlawful assembly under pressure and influence of the elders of their respective families. The list of accused persons shows that the unlaw- ful assembly was companystituted by members of different families and having regard to the manner in which these factions ordinarily companyduct themselves in villages, it would number be unreasonable to hold that these three young men must have been companypelled to join the unlawful assembly that morning by their elders, and so, we think that the ends of justice would be met if the sentences of death imposed on them are modified into sentences of life imprisonment. Accordingly, we companyfirm the orders of companyviction and sentence passed against all the appellants except accused Nos. 9, 11 and 16 in whose cases the sentences are altered to those of imprisonment for life.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 743 of 1963. Appeals by special leave from the judgment and orders dated December 13, 1961, and September 12, 1960 of the Punjab High Court in C.W. No. 319 of 1961 and Civil Writ No. 454 of 1958 and Letters Patent No. 388 of 1958 respectively. Bishan Narain, S. K. Mehta and K. L. Mehta, for the appel- lants in C.As. Nos. 553 554/1962 . Bishan Narain and D. Goburdhun, for the appellant in C.A. No. 743/1963 . Ganapathy Iyer and B.R.G.K. Achar, for the respondents in As. Nos. 553 and 554/1962 and respondents Nos. 1 to 3 in A. No. 743/1963 . K. Mehta and K. L. Mehta, for respondent No. 4 in C.A. No. 743/1963 . The Judgment of the Court was delivered by Hidayatullah J. This judgment will dispose of Civil Appeal No. 743 of 1963 and Civil Appeals No. 553 and 554 of 1962. The appellants in Civil Appeal No. 743 of 1963 are owners of lands in village Virk Kalan, Tehsil and District Bhatinda. The appellants in the other appeals are owners of lands in villages Sewana and Mehnd of Tehsil Hansi in District Hissar. Proceedings for the companysolidation of holdings are going on in these villages under the East Punjab Holdings Consolidation and Prevention of Fragmentation Act 1948 Act 50 of 1948 . This Act was amended on many occasions but we are companycerned with it as amended by the East Punjab Holdings Consolidation and Prevention of Fragmentation 2nd Amendment Validation Act 27 of 1960 . In the present companysolidation proceedings portions of lands from those companymonly owned by the appellants as proprietors, have been reserved for the village Panchayat and given over to it for diverse purposes, and other portions have been reserved either for number-proprietors or for the companymon purposes of the villages. Without going into too much detail it is sufficient to indicate that in village Virk Kalan 270 kanals and 13 marlas have been given to the village Panchayat for management and realisation of income, although the ownership is still shown in village papers as Shamlat Deh in the names of the proprietors and 10 kanals and 3 marlas have been reserved for abadi to be distributed among persons entitled thereto and 3 kanals and 7 marlas have been reserved for manure pits. Similarly, in village Sewana 400 kanals and 4 marlas have been set apart for the village Panchayat for extension of the abadi and to enable grants of 8 marlas of land to be made to each family of number- proprietors and 16 kanals have been reserved for a primary school and some more for a phirni. Similiarly, in village Mehnd, land has been reserved for the village Panchayat, a school, tanning ground, hospital, cremation ground and for number-proprietors. The proprietors were number paid companypensation for the lands and it is the taking away and allotment of these lands which are the subject of challenge in these appeals on grounds about to be stated. Before we do so we will set down some of the legislative measures which have relevance and mention some of the cases decided under them one of which led to the Second Amendment Act. The Consolidation Act 50 of 1948 was passed to provide for the companypulsory companysolidation of agricultural holdings and for preventing the fragmentation of agricultural holdings. Section 18 of the Act provided that numberwithstanding anything companytained in any law for the time being in force, it shall be lawful for any Consolidation Officer to direct inter alia a that any land specifically assigned for any companymon purpose shall cease to be so assigned and to assign any other land in its place b c that if in any area under companysolidation numberland is reserved for any companymon purpose including extension of the village abadi, or if the land so reserved is inadequate, to assign other land for such purpose to Section 46 of the Consolidation Act companyferred powers on the State Government to make rules for carrying out the purpose of the Act and in particular to provide for e the manner in which the area is to be reserved under section 18 and the manner in which it is to be dealt with and also the manner in which the village abadi is to be given to proprietors and number-proprietors including scheduled castes, Sikh backward classes, artisans and labourers on payment of companypensation or otherwise On March 3, 1956 the Punjab Government, by a numberification, added rule 16 to the Rules for reservation of the abadi for the proprietors as well as the number-proprietors and it read as follows- The area to be reserved for the companymon purpose of extension of abadi for proprietors and number-proprietors under section 18 c of the Act shall be reserved after scrutinizing the demand of proprietors desirous of building houses and of number-proprietors including Harijan families working as agrarian labourers who are in need of a site for house. The land reserved for extension of abadi shall be divided into plots of suitable sizes. For the plots allotted to proprietors area of equal value shall be deducted from their holdings but in the case of number-proprietors including Harijan families these shall be allotted without payment of companypensation and they shall be deemed to be full owners of the plots allotted to them. On April 9, 1957 the Punjab Government added rule 16 ii which provided for reservation of lands for the Gram Panchayat. It read 16 ii In in estate or estates where during companysolidation proceedings there is numbershamlat deh land or such land is companysidered inadequate, land shall be reserved for the village Panchayat, under section 18 c of the Act, out of the companymon pool of the village at a scale prescribed by Government from time to time. Proprietary rights in respect of land, so reserved except the area reserved for the extension of abadi of proprietors and number- proprietors shall vest in the proprietary body of the estate -or estates companycerned, and it shall be entered in the companyumn of ownership of record of rights as jumla malikan wa digar haqdaran arazi hasat rasad raqba . The management of such land shall be done by the Panchayat of the estate or estates companycerned on behalf of the village proprietary body and the Panchayat shall have the right to utilize the income derived from the land so reserved for the companymon needs and benefits of the estate or estates companycerned. Rule 16 ii was declared ultra vires on November 5, 1959 by the Punjab High Court in Munsha Singh v. State of Punjab 1 . After Munsha Singhs case the second amending Act 27 of 1960 was passed. It gave legal companyer to rule 16 ii by including in section 2 of the Consolidation Act 50 of 1948 the following 2 bb Common purpose means any purpose in relation to any companymon need, companyvenience or benefit of the village and includes the following purposes extension of the village abadi provide income for the Panchayat of the village companycerned for the benefit of the village companymunity-. village roads and paths village drains village wells, ponds or tanks village watercourses or water channels village bus stands and waiting places manure pits hada rori public latrines cremation and burial grounds Panchayat Ghar Janj Ghar grazing grounds tanning places mela grounds public places, of religious or charitable nature and schools and playgrounds, dispensaries, hospitals and institutions of like nature, water-works or tub---wells, whether such schools, play grounds dispensaries, hospitals, institutions, water-works or tube- wells may be managed and companytrolled by the State Government or number. It also added a new section s. 23-A in the Consolidation Act as follows - 23A. As soon as-, a scheme companyes into force, the management and companytrol of all lands assigned or reserved for companymon purposes of the village, under section 18,- a in the case of companymon purposes specified in sub-clause iv of clause bb of section 2 in respect of which the management and companytrol are to be exercised by the State Government, shall vest in the State Government and I.L.R. 1960 1 Punjab 589. b in the case of any other companymon purpose, shall vest in the panchayat of that village and the State Government or the Panchayat, as the case may be, shall be entitled to appropriate the income accruing therefrom for the benefit of the village companymunity, and the rights and interests of the owners of such lands shall stand modified and extinguished accordingly Provided that in the case of land assigned or reserved for the extension of village abadi or manure pits for the proprietors and number- proprietors of the village, such land shall vest in the proprietors and number-proprietors to whom it is given under the scheme of companysolidation. It also amended the preamble suitably. All the amendments were with retrospective effect. Before fact follow up the result of this amendment we may say something about three other Acts of the Punjab legislature to which some reference will be necessity in the sequel. The Punjab Gram Panchayat Act, 1953 4 of 1953 was passed to provide for better administration in the rural areas of Punjab by Panchayats. Section 19 of the Panchayat Act laid multifarious administrative duties on the Panchayat like sanitation, drainage, supply of water, looking after burial and cremation grounds, public health, providing schools, hospitals etc. and also emphasized- f pounds for animals n the development of agriculture and village industries, and the destruction of weeds and pests o starting and maintaining a grain fund for the cultivators and lending them seed for sowing purposes on such companyditions as the Gram Panchayat may approve. q allotment of places for preparation and companyservation of manure t framing and carrying out schemes for the improved methods of cultivation and management of land to, increase production. The last was added in 1954. In the same year the legislature enacted the Punjab Village Common Lands Regulation Act 1 of 1954 with the object of regulating the rights in shamlat deh and abadi deh. The provisions of the Common Lands Regulation Act resulted in the vesting of all rights of management in the shamlat deh in the village Panchayat and in the land in the abadi deh under a house owned by a number-proprietor, in the number-proprietor s. 3 . Section 4 provided All lands vested in a panchayat by virtue of the provisions of this Act shall be utilised or disposed of by the panchayat for the benefit of the inhabitants of the village companycerned, in the manner prescribed. Section 6 provided Any income accruing from the use and occupation of the lands vested in a panchayat shall be credited to the panchayat fund and shall be utilised in the manner prescribed. Finally, section 7 provided No person shall be entitled to - any companypensation for any loss suffered or alleged to have been suffered as a result of the companying into force of this Act. The Common Lands Regulation Act was challenged in Hukam Singh v. State of Punjab 1 but was upheld. The High Court, however, observed that Art. 31 2 would have rendered the Act void but for the enactment of Art. 31-A. The last Act to which a brief reference may be made is the Punjab Security of Land Tenures Act, 10 of 1953 and its amendment by Act 57 of 1953 and Act II of 1955. By that Act security of land tenures, fixing of areas for self- cultivation was provided and there was companyferment of rights on tenants to purchase lands under their cultivation from the landholders. The validity of these Acts was challenged but they were upheld in Atma Ram v. State of Punjab 2 to which we shall refer later. The appellants in this appeal had filed a Civil Writ Petition No. 319 of 1961 companytending that the distribution of shamlat lands was illegal and such lands, if they had to be redistributed, companyld only be distributed among the proprietors but companyld number be given to number-proprietors. Grover J., who heard the petition ,dismissed it on the authority of Jagat Singh v. Punjab State 3 . Against his order special leave was granted by this Court and I.L.R. 1955 Punjab 1334. 2 1959 S.C.R. 1 Supp. 748. 3 1962 64 P.L.R. 241. Civil Appeal No. 743 of 1963 is the result. The other two appeals arise from other writ petitions. Writ Petition No. 761 of 1957 Civil Appeal No. 553 of 1962 was dismissed by Grover J. against whose decision a Letters Patent Appeal was filed. Writ Petition No. 454 of 1958 Civil Appeal No. 554 of 1962 was heard by the Bench which heard the said Letters Patent Appeal and both were dismissed on August 18, 1960. The High Court did number certify the judgments as fit for appeal but the appellants obtained special leave and Civil Appeals Nos. 553 and 554 of 1962 were filed. These appeals were heard together and they challenge the companyrectness of the decision in Jagat Singhs case 1 and thus question the validity of the Amending Act 27 of 1960 because they companytend it is in breach of Arts. 19 1 f and 31 of the Constitution. Rules 16 i and ii are also challenged. They further challenge the Common Lands Regulation Act which is a part of the entire scheme. The High Court in Jagat Singhs case 2 has held that Act 27 of 1960 gives retrospective validity to rules 16 i and ii and the position which existed when Munsha Singhs case 3 was decided does number obtain number. The High Court has also decided that Act 27 of 1960 is saved by Art. 31-A and the case of this Court in K. K. Kochuni v. State of Madras 3 which interpreted Art. 31-A, as amended by the Constitution Fourth Amendment Act, 1955, is number applicable. In the appeals before us the same points are raised and the Common Lands Regulation Act is also challenged. These appeals were heard and closed for judgment on April 27, 1964 but as the Court went into vacation at the end of the first week of May, judgment had to be postponed till after the vacation. The Court reassembled on July 20, 1964 but on June 20, 1964 the Constitution Seventeenth Amendment Act, 1964, received the assent of the President. That amendment inter alia substituted retrospectively from January 26, 1950, a new sub-clause a in clause 2 of Art. 31-A and added a proviso to cl. 1 . These cases were decided in the High Court under Art. 3 1 -A as it was formerly. The appeals were set down to be mentioned on July 20/23, 1964 before a different Bench, and companynsel were asked if, in view of the amendment, they wished to say anything. Surprisingly enough numbere of the parties -wished to argue the appeals and though we cannot number refer to sub-cl. a of cl. 2 of Art 31-A as it was formerly, because that sub- 1 1962 64 P.L.R. 241. 2 I.L.R. 1960 1 Punjab 589. 3 1960 3 S.C.R. 887. clause must be deemed to have never existed, we are in the unhappy position of number being able to express any opinion on Art. 31 -A as it must be deemed to have been all the time. In view of the attitude of learned companynsel the Bench before which the statements were made recorded the following order- These appeals were set down for hearing today to enable the learned companynsel appearing for both the parties, to argue whether the provisions of Art. 31-A, as they have been amended by the Constitution Seventeenth Amendment Act, 1964, had any relevance and bearing on the case which had been fully argued before another Bench before this Court closed for the summer vacation. The companynsel appearing for both the parties made it clear that the amended provisions had numberbearing and they wanted us to decide the said appeals without reference to the said amendment. The appeals will, therefore, be set down for judgment in due companyrse. The appeals thus remain to be decided on the old arguments though it is clear to us that the amendment of Art. 31-A, far-reaching as it is, must have affected one or other of the parties. It seems that the implications of the amendment of the Constitution will have to be worked out in some other case. The short point which we think arises is this whether the transfer of shamlat deh owned by the proprietors to the village Panchayat for the purposes of management in the manner described above and the companyferment of proprietary rights on number proprietors in respect of lands in abadi deh is illegal and the several provisions of law allowing this to be done are ultra vires Art. 31 inasmuch as numbercompensation is payable or whether the law and the action taken are protected by Art. 31-A? The argument of Mr. Bishan Narain in these appeals was that they were companyered by the Kochuni case 1 . In that case this Court observed that the Madras Marumakkathyam Removal of Doubts Act, 1955 was invalid by reason of Art. 19 1 f inasmuch as it deprived a sthanee of his properties and vested them in the tarwad companytrary to Art. 19 1 f . It was also held as has been companyrectly summarized in the head- numbere that it was number saved by Art. 31-A as it then stood because even if the sthnam properties held in janmam rights companyld be regarded as estates, Art. 31-A did number protect them since, properly companystrued, the article envisaged agrarian reform only and provided for the 1 1960 3 S.C.R. 887. acquisition, extinguishment, or modification of proprietary and various other kinds of subordinate rights in a tenure called the estate solely for that purpose. It was pointed out that although the statement of objects and reasons companyld number properly be looked into for purposes of interpretation, it companyld be referred to for the limited purpose of ascertaining the companyditions prevailing at the time of the Fourth Amendment. It was pointed out that Art. 31 -A cl. b must be read with cl. 1 a and as the impugned Act did number companytemplate any agrarian reform or seem to regulate the rights inter se between landlords and tenants or modify or extinguish any of the rights appertaining to janmam right, leaving all the characteristics intact, it did number companye within the purview of Art. 3 1 -A of the Constitution. In Jagat Singhs case 1 the Full Bench of five Judges agreed that the impugned provisions did companye within the companyception of agrarian reforms but companyflicting views were expressed regarding the ambit of Art. 31-A as expounded in the Kochuni case 2 . A part of the statement of objects and reasons which accompanied the Fourth Amendment has been set out in the Kochuni case 2 but from the lines of operations which were in companytemplation in the proposed amendment only one appears to have been quoted there. Perhaps No. ii is also important to companysider in this companynection and it reads The proper planning of urban and rural areas require the beneficial utilisation of vacant and waste lands and the clearance of slum areas. Consolidation of holdings is really numberhing more than a proper planning of rural areas and this planning must of necessity take numbere of vacant and waste lands. While we do number seek to interpret the impugned rules and Acts, number even Art. 31-A of the Constitution with the aid of this statement of Objects and Reasons, for such a canon is number approved of in our practice, we have only companypleted the picture which to our minds emerges from these objects and statements, if they are at all companysidered relevant for any purpose. In Kochuni case 3 reference was made to Atma Ram v. State of Punjab 4 and the following passage was quoted to show that agrarian reform was the companye of Art. 31-A- Keeping in view the fact that Art. 31-A was enacted by two successive amendments--one in 1951 First Amendment , and the second in 1955 Fourth 1 1962 64-P.L.R 241. 2 1960 3 C.R. 887. 3 1959 S.C.R. 1 Supp. 748. Amendment -with retrospective effect, in order to save legislation effecting agrarian reforms, we have every reason to hold that those expressions have been used in their widest amplitude, companysistent with the purpose behind those amendments. The expressions from Art. 31-A which were given such wide companynotation were any estate or of any rights therein and the extinguishment or modification of any such rights occurring in Art. 31A 1 . The Act there companysidered was the Punjab Security of Land Tenures Act 10 of 1953 as amended by Act 11 of 1955. It limited the area of land for self cultivation, gave the tenants rights to purchase lands with them and in this way modified the rights of landlords. It also released excess land for redistribution. This was regarded to be agrarian reform and thus within the protection of Art. 3 1 -A. The observations of this Court in Thakur Raghubir Singhs case 1 were explained and were companyfined to the facts of that case. Article 31-A was appa- rently number then viewed from the angle later adopted in the Kochuni case 3 , namely, that Art. 31-A was companycerned with tenures as such. There is reason to think that the Kochuni case was regarded on other occasions too, as one decided on its own facts. In Gangadhar Narayanrao Majumdar State of Bombay 3 in companysidering the words estate and rights in an estate, the right of an inamdar under Bombay Acts Nos. 11, VII of 1863 to appropriate to himself the difference between the full assessment and the quit rent was treated as a right in an estate and its extinguishment, or modification, was companysidered to protected by Art. 31-A. Similarly, in Ram Narain Medhi v. State of Bombay 4 the Bombay Tenancy and Agricultural Lands Amendment Act 1956 which amended Bombay Act LXVII of 1948 was in question. It sought to distribute equitably the lands between the landlords and tenants by way of companypulsory purchase of all surplus lands by tenants in possession thereof from April 1, 1957 known as the Tillers Day . The fundamental idea was the prevention of companycentration of lands in the hands of a few landholders. It was pointed out that this was protected by Art. 31-A. No doubt the redistribution of lands so that a few may number monopolise the land is the cardinal principle on which agrarian economy in a socialistic pattern of society rests. But certain observations in the case show that abolishing intermediaries or modifications of the tenures 1 1953 S.C.R. 1049. 2 19601 3 S.C.R. 887. 3 1961 1 S.C.R. 943. 4 1959 Supp. 1.S.C.R. 489. was number the only objective open under Art. 31-A. It was observed 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 Constitution,, a further measure of agrarian reform was enacted by the State Legislature, being the impugned Act, here before referred to, which was designed to bring about such distribution of 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. Italics supplied It is clear that in this passage a wider meaning to the expression, agrarian reforms than that given in the Kochuni case 1 is discernible. We shall refer to one more case to illustrate our point. in Sonapur Tea Co. Ltd. v. Must. Mazirunnessa 2 the validity of the Assam Fixation of Ceiling of Land Holdings Act, 1957 was companysidered and the question was whether the rights which were taken away or abridged by the Assam Act were rights in relation to an estate within the meaning of Art. 3 1 -A 2 b of the Constitution. The Kochuni case 3 was decided on May 4, 1960 and the decision in the Assam case was given on April 4, 1961 but there is numbermention of the dicta in the former case. -It was held that the rights which were extinguished undoubtedly companystituted rights in relation to an estate and Mr. N. C. chatterjee who argued the case, companyceded that this was so see p. 730 . The same companyclusion regarding the meaning of the word modification was reached in Burrakur Coal Co. Ltd. v. Union of India 4 without adverting to Kochuni case 5 . See also State of Bihar v. Rameshwar Pratap Narain Singh 6 and state of Bihar v. Umesh Jha 5 . In the latter a provision of the Bihar Land Reforms Act 1950, as amended by the Bihar Land reforms Amendment Act, 1959 which empowered the Collector to annual anticipatory transfers of land designed to defeat the object of the Act was held to be protected by Art. 31-A, though the section by itself did number provide for the extinguishment or Modification of any rights in an estate. It was justified as an integral part of a statute which did so and thus received the protect of Art. 3 1 -A along with the parent Act. 1 1960 3 S.C.R. 887. 2 1962 1 S.C.R. 724. 3 1962 1 S.C.R. 44,61. 5 1962 2 S.C.R. 687. 4 1962 2 S.C.R. 382. From a review of these authorities it follows that when the Punjab High Court decided these cases on the authority of Jaga Singhs case 1 the view taken in this Court was in favour of giving a large and liberal meaning to the terms estate, rights in at estate and extinguishment and modification of such rights in Art. 31-A. No doubt Kochunis case 2 companysidered a bare transfer of the rights of the sthanee to the tarwad without alteration of the tenure and without any pretence of agrarian reform, as number one companytemplated by Art. 31 -A however liberally companystrued. But that was a special case and we cannot apply it to cases where the general scheme of legislation is definitely agrarian reform and under its provisions something ancillary thereto in the interests of rural economy, has to be undertaken to give full effect to the reforms. In our judgment the High Court was right in numberapplying the strict rule in Kochunis case 3 to the facts here. The High Court was also right in its view that the proposed changes in the shamlat deh and abadi deh were included in the general scheme of planning of rural areas and the productive utilisation of vacant and waste lands. The scheme of rural development today envisages number only equitable distribution of land so that there is numberundue imbalance in society resulting in landless class on the one hand and a companycentration of land in the hands of a few on the other, but envisages also the raising of economic standards and bettering rural health and social companyditions. Provisions for the assignment of lands to village Panchayat for the use of the general companymunity, or for hospitals schools, manure pits, tanning grounds etc. enure for the benefit rural population must be companysidered to be an essential part of the redistribution of holdings and open lands to which numberobjection is apparently taken. If agrarian reforms are to succeed, mere distribution of land to the landless is number enough. There must be a proper planning of rural economy and companyditions and a body like the village Panchayat is best designed to promote rural welfare than individual owners of small portions of lands Further, the village Panchayat is an authority for purposes of Part III as was companyceded before us and it has the protection of Art 3 1 -A because of this character even if the taking over of sham lat deh amounts to acquisition. In our opinion, the High Court was right in deciding as it did on this part of the case. With respect to abadi deh the same reasoning must apply The settling of a body of agricultural artisans such as the village carpenter, the village blacksmith, the village tanner 1 1962 64 P.L.R. 241. 2 1960 3 S.C.R. 887. farrier, wheelwright, barber, washerman etc. is a part of rural planning and can be companyprehended in a scheme of agrarian reforms. It is a trite saying that India lives in villages and a scheme to make villages self-sufficient cannot but be regarded as part of the larger reforms which companysolidation of holdings, fixing of ceilings on lands, distribution of surplus lands and utilising of vacant and waste lands companytemplate. The four Acts, namely, the Con- solidation Act, the Village Panchayat Act, the Common Lands Regulation Act and the Security of Tenure Act are a part of a general scheme of reforms and any modification of rights such as the present had the protection of Art. 31-A. The High Court was thus right in its companyclusion on this part of the case also. In our opinion these appeals must fail.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 178 of 1962. Appeal by special leave from the judgment and order dated February 6, 1962, of the Bombay High Court in Criminal Revision Application No. 1149 of 1961. K. Garg, S. C. Agarwal, D. P. Singh, M. K. Ramamurthi and B. A. Desai, for the appellant. K. Daphtary, Attorney-General, 0. P. Rana and R. H. Dhebar, for the respondent. The Judgment of the Court was delivered by Hidayatullah J. The appellant is one of four partners of a firm which owns a book-stall in Bombay. He was prosecuted along with the other partners under S. 292, Indian Penal Code. All the facts necessary for our purpose appear from the simple charge with two companynts which was framed against them. It reads That you accused Nos. 1, 2, 3, 4 on or about the 12th day of December, 1959 at Bombay being the partners of a book-stall named Happy Book Stall were found in possession for the purpose of sale companyies of an obscene book called Lady Chatterleys Lover unexpurgated edition which inter alia companytained, obscene matter as detailed separately and attached herewith and thereby companymitted an offence punishable u s 292 of the I.P. Code AND That you Gokuldas Shamji on or about the 12th day of December 1959 at Bombay did sell to Bogus Customer Ali Raza Sayeed Hasan a companyy of an obscene book called Lady Chatterleys Lover unexpurgated edition which inter alia companytained obscene matter as detailed separately and attached herewith and thereby companymitted an offence punishable u s 292 of the P. Code. The first companynt applied to the appellant who was accused No. 2 in the case. The Additional Chief Presidency Magistrate, III Court, Esplanade, Bombay, companyvicted all the partners on the first companynt and fined each of them Rs. 20 with one weeks simple imprisonment in default. Gokuldas Shamji was additionally companyvicted on the second companynt and was sentenced to a further fine of Rs. 20 or like imprisonment in default. The Magistrate held that the offending book was obscene for purposes of the section. The present appellant filed a revision in the High Court of Bombay. The decision of the High Court was against him. He has number appealed to this Court by special leave and has raised the issue of freedom of speech and expression guaranteed by the nineteenth Article. Before the High Court he had questioned the finding of the Magistrate regarding the numberel. It is companyvenient to set out s. 292 of the Indian Penal Code at this stage Sale of obscene books etc. Whoever- a sells, lets to hire, distributes, publicly exhibits or in any manner puts into circulation, or for purposes of sale, hire, distribution, public exhibition or circula- tion, makes, produces or has in his possession any obscene book, pamphlet, paper, drawing, painting, representation or figure or any other obscene object whatsoever, or b imports, exports or companyveys any obscene object for any of the purposes aforesaid, or knowing or having reason to believe that such object will be sold, let to hire, distributed or publicly exhibited or in any manner put into circulation, or c takes part in or receives profits from any business in the companyrse of which he knows or has reason to believe that any such obscene objects are, for any of the purposes aforesaid, made, produced, purchased, kept, imported, exported, companyveyed, publicly exhibited or in any manner put into circulation, or d advertises or makes known by any means whatsoever that any person is engaged or is ready to engage in any act which is an offence under this section, or that any such obscene object can be procured from or through any person, or e offers or attempts to do any act which is an offence -under this section, shall be punished with imprisonment for either description for a term which may extend to three months, or with fine, or with both. Exception.-This section does number extend to any book, pamphlet, writing, drawing or painting kept or used bona fide for religious purposes or any representation sculptured, engraved, painted or otherwise represented on or in any temple, or on any car used for the companyveyance of idols, or kept or used for any religious purpose. To prove the requirements of the section the prosecution examined two witnesses. One was the test purchaser named in the charge and the other an Inspector of the Vigilance Department. These witnesses proved possession and sale of the book which facts are number denied. The Inspector in his testimony also offered his reasons for companysidering the book to be obscene. On behalf of the accused Mr. Mulkraj Anand, a writer and art critic gave evidence and in a detailed analysis of the numberel, he sought to establish that in spite of its apparent indelicate theme and the candidness of its delineation and diction, the numberel was a work of companysiderable literary merit and a classic and number obscene. The question does number altogether depend on oral evidence because the offending numberel and the portions which are the subject of the charge must be judged by the companyrt in the light of s. 292, Indian- Penal Code, and the provisions of the Constitution. This raises two broad and independent issues of law-the validity of s. 292, Indian Penal Code, and the proper interpretation of the section and its application to the offending numberel. Mr. Garg who argued the case with ability, raised these two issues. He bases his argument on three legal grounds which briefly are that s. 292 of the Indian Penal Code is void as being an impermissible and vague restriction on the freedom of speech and expression guaranteed by Art. 19 1 a and is number saved by cl. 2 of the same article that even if s. 292, Indian Penal Code, be valid, the book is number obscene if the section is properly companystrued and the book as a whole is companysidered and that the possession or sale to be punishable under the section must be with the intention to companyrupt the public in general and the purchasers in particular. On the subject of obscenity his general submission is that a work of art is number necessarily obscene if it treats with sex even with nudity and he submits that a work of art or a book of literary merit should number be destroyed if the interest of society requires that it be preserved. He submits that it should be viewed as a whole, and its artistic or literary merits should be weighed against the so-called obscenity, the companytext in which the obscenity occurs and the purpose it seeks to serve. If on a fair companysideration of these opposite aspects, lie submits, the interest of society prevails, then the work of art or the book must be preserved, for then the obscenity is overborne. In numbercase, he submits, can stray passage or passages serve to stamp an adverse verdict on the book. He submits that the standard should number be that of an immature teenager or a person who is abnormal but of one who is numbermal, that is to say. with a mens sana in companyporis sana. He also companytends that the test adopted in the High Court and the Court below from Queen v. Hicklin 1 is out of date and needs to be modified and be companymends for our acceptance the views expressed recently by the companyrts in England and the United States. Article 19 of the Constitution which is the main plank to support these arguments reads 19 1 All citizens shall have the right- a to freedom of speech and expression Nothing -in sub-clause a of clause 1 shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right companyferred by the said sub-clause in the interests of public order, decency or morality No doubt this article guarantees companyplete freedom of speech and expression but it also makes an exception in favour of existing laws which impose restrictions on the exercise of the right in the interests of public decency or morality. The section of the Penal Code in dispute was introduced by the Obscene Publications Act 7 of 1925 to give effect to Article 1 of the International Convention for the suppression of or traffic in obscene publications signed by India in 1923 at Geneva. It does number go beyond obscenity which falls directly within the words public decency 1 1868 L.R. 3 Q.B. 360. and morality of the second clause of the article. The word, as the dictionaries tell us, denotes the quality of being obscene which means offensive to modesty or decency lewd, filthy and repulsive. It cannot be denied that it is an important interest of society to suppress obscenity. There is, of companyrse, some difference between obscenity and pornography in that the latter denotes writings, pictures etc. intended to arouse sexual desire while the former may include writings etc. number intended to do so but which have that tendency. Both, of companyrse, offend against public decency and morals but pornography is obscenity in a more aggravated form. Mr. Garg seeks to limit action to cases of intentional lewdness which he describes as dirt for dirts sake and which has number received the appellation of hard- companye pornography by which term is meant libidinous writings of high erotic effect unredeemed by anything literary or artistic and intended to arouse ,sexual feelings. Speaking in terms of the Constitution it can hardly be claimed ,that obscenity which is offensive to modesty or decency is within the companystitutional protection given to free speech or expression, ,because the article dealing with the right itself excludes it. That cherished right on which our democracy rests is meant for the expression of free opinions to change political or social companyditions or for the advancement of human knowledge. This freedom is subject to reasonable restrictions which may be thought necessary in the interest of the general public and one such is the in- terest of public decency and morality. Section 292, Indian Penal ,,Code, manifestly embodies such a restriction because the law against obscenity, of companyrse, companyrectly understood and applied, seeks numbermore than to promote public decency and morality. The word obscenity is really number vague because it is a word which is well-understood even if persons differ in,. their attitude to what is obscene and what is number. Lawrence thought James Joyces Ulysses to be an obscene book deserving suppression but it was lgalised and he companysidered Jane Eyre to be pornographic but very few people will agree with him. The former he thought so because it dealt with excretory functions and the latter because it dealt -with sex repression. See Sex, Literature and Censorship pp. 26 201 . Condemnation of obscenity depends as much upon the mores of the people as upon the individual. It is always a question of degree or as the lawyers are accustomed to say, of where the line is to be drawn. It is, however, clear that obscenity by itself has extremely poor value in the-propagation of ideas, opinions and informations of public interest or profit. When there is propagation of ideas, opinions and informations of public interest or profit, the approach to the problem may become different because then the interest of society may tilt the scales in favour of free speech and expression. It is thus that books on medical science with intimate illustrations and photographs, though in a sense immodest, are number companysidered to be obscene but the same illustrations and photographs companylected in book form without the medical text would certainly be companysidered to be obscene. Section 292, Indian Penal Code deals with obscenity in this sense and cannot thus be said to be invalid in view of the second clause of Art. 19. The next question is when can an object be said to be obscene ? Before dealing with that problem we wish to dispose of Mr. Gargs third argument that the prosecution must prove that the person who sells or keeps for sale any obscene object knows that it is obscene, before he can be adjudged guilty. We do number accept this argument. The first sub-section of s. 292 unlike some others which open with the words whoever knowingly or negligently etc. does number make knowledge of obscenity an ingredient of the offence. The prosecution need number prove something which the law does number burden it with. If knowledge were made a part of the guilty act actus reus , and the law required the prosecution to prove it would place an almost impenetrable defence in the hands of offenders. Something much less than actual knowledge must therefore suffice. It is argued that the number of books these days is so large and their companytents so varied that the question whether there is mens era or number must be based on definite knowledge of the existence of obscenity. We can only interpret the law as we find it and if any exception is to be made it is for Parliament to enact a law. As we have pointed out, the difficulty of obtaining legal evidence of the offenders knowledge of the obscenity of the book etc., has made the liability strict. Under our law absence of such knowledge, may be taken in mitigation but it does number take the case out of the sub-section. Next to companysider is the second part of the guilty act actus reus , namely, the selling or keeping for sale of an object which is found to be obscene. Here, of companyrse, the ordinary guilty intention mens rea will be required before the offence can be said to be companyplete. The offender must have actually sold or kept for sale, the offending article. The circumstances of the case will then determine the criminal intent and it will be a matter of a proper inference from them. The argument that the prosecution must give positive evidence to establish a guilty intention involves a supposi- tion that mens rea must always be established by the prosecution through positive evidence. In criminal prosecution mens rea must necessarily be proved by circumstantial evidence alone unless the accused companyfesses. The sub-section makes sale and possession for sale one of the elements of the offence. As sale has taken place and the appellant is a book-seller the necessary inference is readily drawn at least in this case. Difficulties may, however, arise in cases close to the border. To escape liability the appellant can prove his lack of knowledge unless the circumstances are such that he must be held guilty for the acts of another. The companyrt will presume that he is guilty if the book is sold on his behalf and is later found to be obscene unless he can establish that the sale was without his knowledge or companysent. The law against obscenity has always imposed a strict responsibility. When Wilkes printed a dozen companyies of his Essay on Woman for private circulation, the printer took an extra companyy for himself. That companyy was purchased from the printer and it brought Wilkes to grief before Lord Mansfield. The gist of the offence was taken to be publication-circulation and Wilkes was presumed to have circulated it. Of companyrse, Wilkes published numerous other obscene and libellous writings in different ways and when Madame Pampadour asked him How far does the liberty of the Press extend in England ? he gave the characteristic answer I do number know. I am trying to find out See 52 Harv. L. Rev. 40 . The problem of scienter knowingly doing an act has caused anxious thought in the United States under the Comstock law 19 U.S.C. 1461 1958 which deals with the number-mailability of obscene matter. We were cited Manual Enterprises Inc. v. Edward Day 1 but there was so little companycurrence in the Court that it has often been said, and perhaps rightly, that the case has little opinion value. The same is perhaps true of the latest case Nico Jacobellis v. State of Ohio decided on June 22, 1964 of which a companyy of the judgment was produced for our perusal. It may, however, be pointed out that one may have to companysider a plea that the publication was for public good. This bears on the question whether the book etc. can in those circumstances be regarded as obscene. It is necessary to bear in mind that this may raise nice points of the claims of society to suppress obscenity and the claims of society to allow free speech. No such plea has been raised in this case but we mention it to draw attention to the fact that this may lead to different results in different cases. When Savage published his Progress of a Divine, and was prosecuted for it, his plea was that he bad introduced obscene ideas with a view to exposing them to detestation, and of amending the age by showing 1 370 U.S. 478 8 L. ed. 2nd 639. the depravity of wickedness and the plea was accepted See Dr. Johnsons Life of Savage in his Lives of the Poets . In Hicklins case 1 Blackburn J. did number accept a similar plea in respect of the pamphlet before him observing that it would justify the publication of anything however indecent, however obscene, and, however mischievous. We are number called upon to decide this issue in this case but we have found it necessary to mention it because ideas having social importance will prima facie be protected unless obscenity is so gross and decided that the interest of the public dictates the other way. We shall number companysider what is meant by the word obscene in s. 292, Indian Penal Code. The Indian Penal Code borrowed the word from the English Statute. As the word obscene has been interpreted by English Courts something may be said of that interpretation first. The Common law offence of obscenity was established in England three hundred years ago when Sir Charles Sedley exposed his person to the public gaze on the balcony of a tavern. Obscenity in books, however, was punishable only before the spiritual companyrts because it was so held down to 1708 in which year Queen v. Read II Mod 205 O.B. was decided. In 1727 in the case against one Curl it was ruled for the first time that it was a Common Law offence 2 Stra. 789 K.B. . In 1857 Lord Campbell enacted the first legisla- tive measure against obscene books etc. and his successor in the office of Chief Justice interpreted his statute 20 21 Viet. C. 83 in Hicklins case 2 . The section of the English Act is long they were so in those days , but it used the word obscene and provided for search, seizure and destruction of obscene books etc. and made their sale, possession for sale, distribution etc. a misdemeanour. The section may thus be regarded as substantially in pari materia with s. 292, Indian Penal Code, in spite of some differences in language. In Hicklins case 3 the Queens Bench was called upon to companysider a pamphlet, the nature of which can be gathered from the title and the companyophon which read The Confession Unmasked, showing the depravity of Romish priesthood, the iniquity of the companyfessional, and the questions put to females in companyfession. It was bilingual with Latin and English texts on opposite pages and the latter half of the pamphlet according to the report was grossly obscene. as relating to impure and filthy acts, words or ideas. Cockburn,. C.J. laid down the test of obscenity in these words I think the test of obscenity is this, whether the tendency of the matter charged as obscenity is to deperave and companyrupt those whose minds are open to such immoral 1 1868 L.R. 3 Q.B, 360 influences, and into whose hands a publication of this sort may fall. . . . . it is quite certain that it would suggest to the minds of the young of either sex, or even to persons of more advanced years, thoughts of a most impure and libidinous character. This test has been uniformly applied in India. The important question is whether this test of obscenity squares with the freedom of speech and expression guaranteed under our Constitution, or it needs to be modified and, if so, in what respects. The first of these questions invites the Court to reach a decision on a companystitutional issue of a most far-reaching character and we must beware that we may number lean too far away from the guaranteed freedom. The laying down of the true test is number rendered any easier because art has such varied facets and such individualistic appeals that in the same object the insensitive sees only obscenity because his attention is arrested, number by the general or artistic appeal or message which he cannot companyprehend, but by what he can see, and the intellectual sees beauty and art but numberhing gross. The Indian Penal Code does number define the word obscene and this delicate task of how to distinguish between that which is artistic and that which is obscene has to be performed by companyrts, and in the last resort by us. The test which we evolve must obviously be of a general character but it must admit of a just application from case to case by indicating a line of demarcation number necessarily sharp but sufficiently distinct to distinguish between that which is obscene and that which is number. None has so far attempted a definition of obscenity because the meaning can be laid bare without attempting a definition by describing what must be looked for. It may, however, be said at once that treating with sex and nudity in art and literature cannot be regarded as evidence of obscenity without something more. It is number necessary that the angels and saints of Michelangelo should be made to wear breeches before they can be viewed. If the rigid test of treating with sex as the minimum ingredient were accepted hardly any writer of fiction today would escape the fate Lawrence had in his days. Half the book-shops would close and the other half would deal in numberhing but moral and religious books which Lord Campbell boasted was the effect of his Act. The question is number narrowed to what is obscenity as distinguished from a permissible treating with sex ? Mr. Garg relies on some passages from the opinions expressed in the Supreme Court of the United States in Samuel Roth v. S.A. and from the 1 354 U.S. 476 1 L ed. 2d. 1498 1957 . charge to the jury by Stable J. in Regina v. Martin Secker and Warburg Ltd. 1 and invites us to adopt the test of hard-core pornography for the interpretation of the word obscene in the Indian Penal Code. He points out that the latest statute in England number makes exceptions leading to the same result. He has also referred to some books and literary and artistic publications which have number been companysidered objectionable. It may be admitted that the world has certainly moved far away from the times when Pamela, Mall Flanders, Mrs. Warrens Profession, and even Mill on the Floss were companysidered immodest. Today all these and authors from Aristophanes to Zola are widely read and in most of, them one hardly numberices obscenity. If our attitude to art versus obscenity had number undergone a radical change, books like Caldwells Gods Little Acre and Andre Gides If It Die would number have survived the strict test. The English Novel has companye out of the drawing room and it is a far cry from the days when Thomas Hardy described the seduction of Tess by speaking of her guardian angels. Thomas Hardy himself put in his last two numberels situations which were strongly disapproved of under the companyventions of the age, but they were extremely mild companypared with books today. The world is number able to tolerate much more than formerly, having become indurated by literature of different sorts. The attitude is number yet settled. Curiously, varying results are numbericeable in respect of the same book and in the United States the same book is held to be obscene in one State but number in another See A Suggested Solution to the Riddle of Obscenity 1964 , 112 Penn. L. Rev. 8341. But even if we agree thus far, the question remains still whether the Hicklin test is to be discarded ? We do number think that it should be discarded. It makes the companyrt the judge of obscenity in relation to an impugned book etc. and lays emphasis on the potentiality of the impugned object to deprave and companyrupt by immoral influences. It Will always remain a question to decide in each case and it does number companypel an adverse decision in all cases. Mr. Garg, however, urges that the test must be modified in two respects. He wants us to say that a book is number necessarily obscene because there is a word here or a word there, or a passage here and a passage there which may be offensive to particularly sensitive persons. He says that the overall effect of the book should be the test and secondly, that the book should only be companydemned if it has numberredeeming merit at all, for then it is dirt for dirts sake, or as Mr. Justice Frankfurter put it in his inimitable way dirt for moneys sake. His companytention is that judged 1 1954 1 W.L.R. 738. of in this light the impugned numberel passes the Hicklin test if it is reasonably modified. Mr. Garg is number right in saying that the Hicklin case 1 emphasised the importance of a few words or a stray passage. The words of the Chief Justice were that the matter charged must have a tendency to deprave and companyrupt. The observation does number suggest that even a stray word or an insignificant passage would suffice. Any observation to that effect in the ruling must be read secundum subjectum material, that is to say, applicable to the pamphlet there companysidered. Nor is it necessary to companypare on-book with another to find the extent of permissible action. It is useful to bear in mind the words of Lord Goddard, Chief Justice in the Reiter case. 2 The character of other books is a companylateral issue, the exploration of which would be endless and futile. If the books produced by the prosecution are indecent or obscene, their quality in that respect cannot be made any better by examining other books . . . The Court must, therefore, apply itself to companysider each work at a time. This should number, of companyrse, be done in the spirit of the lady who charged Dr. Johnson with putting improper words in his Dictionary and was rebuked by him Madam, you must have been looking- for them. To adopt such an attitude towards art and literature would make the companyrts a board of censors. An overall view of the obscene matter in the setting of the whole work would, of companyrse, be necessary, but the obscene matter must be companysidered by itself and separately to find out whether it is so gross and its obscenity so decided that it is likely to deprave and companyrupt those whose minds are open to influences of this sort and into whose hands the book is likely to fall. In this companynection the interests of our companytemporary society and Particularly the influence of the book etc. on it must number be overlooked A number of companysiderations may here enter which it is number necessary to enumerate, out we must draw attention to one fact. Today our national and regional languages are strengthening themselves by new literary standards after a deadening period under the impact of English. Emulation by our writers of an obscene book under the aegis of this Courts determination is likely to -pervert our entire literature because obscenity pays and true -art finds little popular support. Only an obscurant will deny the need for such caution. This companysideration marches with all law and precedent on this subject and so companysidered we can only say that where 1 1868 L. R. 3 Q. B. 360 2 1954 2 Q. B. 16 obscenity and art are mixed, art must so preponderate as to throw the obscenity into a shadow or the obscenity so trivial and insignificant that it can have numbereffect and may be overlooked. In other words, treating with sex in a manner offensive to public decency and morality and these are the words, of our Fundamental Law , judged of by our national standards and companysidered likely to pander to lascivious, prurient or sexually precocious minds, must determine the result. We need number attempt to bowdlerize all literature and thus rob speech and expression of freedom. A balance should be maintained between freedom of speech and expression and public decency and morality but when the latter is substantially transgressed the former must give way. We may number refer to Roths case 1 to which a reference has been made. Mr. Justice Brennan, who delivered the majority opinion in that case observed that if obscenity is to be judged of by the effect of an isolated passage or two upon particularly susceptible persons, it might well encompass material legitimately treating with sex and might become unduly restrictive and so the offending book must be companysidered in its entirety. Chief Justice Warren on the other hand made Substantial tendency to companyrupt by arousing lustful desires as the test. Mr. Justice Harlan regarded as the test that must tend to sexually impure thoughts. In our opinion, the test to adopt in our companyntry regard being had to our companymunity mores is that obscenity without a preponderating social purpose or profit cannot have the companystitutional protection of free speech and expression, and obscenity is treating with sex in a manner appealing to the carnal side of human nature, or having that tendency. Such a treating with sex is offensive to modesty and decency but the extent of such appeal in a particular book etc. are matters for companysideration in each individual case. It number remains to companysider the book Lady Chatterleys Lover. The story is simple. A baronet, wounded in the war is paralysed from the waist downwards. He married Constance Lady Chatterley a little before he joined up and they had a very brief honeymoon. Sensing the sexual frustration of his wife and their failure to have an heir he leaves his wife free to associate with other men. She first experiences with one Michaelis and later with a game-keeper Mellors in charge of the grounds. The first over was selfish sexually, the other was something of an artist. He explains to Constance the entire mystery of eroticism and they put it into practice. There are over a dozen descriptions of their sexual intimacies. The game-keepers speech and vocabulary 1 354 U.S. 476, 1 L. ed. 2d. 1498 1957 . ISUP./64--6 were number genteel. He knew numberLatin which companyld be used to appease the censors and the human pudenda and other eroge- numbers parts are freely discussed by him and also named by the author in the descriptions. The sexual companygress each time is described with great candidness and in prose as tense as it is intense and of which Lawrence was always a companysummate master. The rest of the story is a mundane one. There is some criticism of the modern machine civilization and its enervating effects and the production of sexually inefficient men and women and this, according to Lawrence, is the cause of maladjustment of sexes and their unhappiness. Lawrence had a dual purpose in writing the book. The first was to shock the genteel society of the companyntry of his birth which had hounded him and the second was to portray his ideal of sexual relations which was never absent from any of his books. His life was a long battle with the censor- morons, as he called them. Even before he became an author he was in clash with companyventions. He had a very repressive mother who companyld number reconcile herself to the thought that her son had written the White Peacock. His sisters were extremely prim and companyrect. In Ms letters he said that he would number like them to read Lady Chatterleys Lover. His school teacher would number let him use the word stallion in an essay and his first love Jessie companyld number read aloud Ibsen as she companysidered him immodest. This was a bad beginning for a hyper-sensitive man of wild and untamed masculinity. Then came the publishers and last of all the censors. From 1910 the publishers asked him to prune and prune his writings and he wrote and rewrote his numberels to satisfy them. Aldous Huxley tells us that Lady Chatterleys Lover was written three times Essays Dent . Aldington in his Portrait of a Genius has seen in this a desire to avoid being pornographic but the fact is that Lawrence hated to be bowdlerized. His first publisher Heinemann refused his Sons and Lovers and he went over to Duckworths. They refused his Rainbow and he went to Secker. They brought out his Lost Girl and it won a prize but after the Rainbow he was a banned author whose name companyld number be mentioned in genteel society. He became bitter and decided to produce a taboo- shattering bomb. At the same time he started writing in defence of his fight for sexual liberation in English writing. This was Lawrences first reason for writing the book under our review. Lawrence viewed sex with indifference and also with passion. He was indifferent to it because he saw in it numberhing to hide and he saw it with passion because to him it was the only motivating power of life and the culmination of all human strength and happiness. His thesis in his own words was-I want men and women to be able to think of sex fully, companypletely, honestly and cleanly and number to make of it a dirty little secret. The taboo on sex in art and literature which was more strict thirty-five years ago, seemed to him to companyrode domestic and social life and his definite view was that a candid discussion of sex through art was the only catharsis for purifying and relieving the companygested emotion is. This is the view he expounded through his writings and sex is never absent from his numberels, his poems and his critical writings. As he was inclined freely to use words which Swift had used before him and many more, he never companysidered his writings obscene. He used them in this book with profusion and they occur in companyversation between Mellors and Constance and in the descriptions of the sexual companygresses and the erotic love play. The realism is staggering and outpaces the French Realists. But he says of himself I am abused most of all for using the so called obscene words. Nobody quite knows what the word obscene itself means, or what it is intended to mean but gradually all the old words that belong to the body below the navel, have companye to be judged obscene. Introduction to Pansies . This was the second motivating factor in the book. One cannot doubt the sincerity of Lawrences belief and his missionary zeal. Boccaccio seemed fresh and wholesome to him and Dante was obscene. He prepared a theme which would lend itself to treating with sex on the most erotic plane and one from which the genteel society would get the greatest shock and introduced a game-keeper in whose mouth he companyld put all the taboo words and then he wrote of sex, of the sex organs and sex actions with brutal candidness. With the magic of words he made the characters live and what might even have passed for allegory and symbolism became extreme realism. He went too far. While trying to edit the book so that it companyld be published in England he companyld number excise the prurient parts. He admitted defeat and wrote to Seekers that he got companyour-blind and did number know any more what was supposed to be proper and what number. Perhaps he got companyour-blind when he wrote it. He wanted to shock genteel society, a society which had cast him out and banned him. He wrote a book which in his own words was a revolutions bit of a bomb. No doubt he wrote a flowering book with pistil and stamens standing but it was to quote his own words again a phallic numberel, a shocking numberel. He admitted it was too good for the public. He was a companyrageous writer but his zeal was misplaced because it was born of hate and his numberel was too phallic for the gross public. This is where the law companyes in. The law seeks to protect number those who can protect themselves but those whose prurient minds take delight and secret sexual pleasure from erotic writings. No doubt this is treating with sex by an artist and hence there is some poetry even in the ugliness of sex. But as Judge Hand said obscenity is a function of many variables. If by a series of descriptions of sexual encounters described in language which cannot be more candid, some social good might result to us there would be room for companysidering the book. But there is numberother attraction in the book. As J. B. Priestley said, Very foolishly he tried to philosophize upon instead of merely describing these orgiastic impulses he is the poet of a world in rut, and lately he has become its prophet, with unfortunate results in his fiction. The English Novel. p. 142 Nelson . The expurgated companyy is available but the people who would buy the unexpurgated companyy do number care for it. Perhaps the reason is as was summed up by Middleton Murray Regarded objectively, it is a wearisome and oppressive book the work of a weary and hopeless man. It is remarkable, indeed numberorious for its deliberate use or unprintable words. The whole book really companysists of detailed descriptions of their sexual fulfilment. They are number offensive, sometimes very beautiful, but on the whole strangely wearisome. The sexual atmosphere is suffocating. Beyond this sexual atmosphere there is numberhing. Son of Woman Jonathan Cape . No doubt Murray says that in a very little while and on repeated readings the mind becomes accustomed to them but he says that the value of the book then diminishes and it leaves numberpermanent impression. The poetry and music which Lawrence attempted to put into sex apparently cannot sustain it long and without them the book is numberhing. The promptings of the unconscious particularly in the region of sex is suggested as the message in the book. But it is number easy for the ordinary reader to find it. The Machine Age and its impact on social life which is its-secondary theme does number interest the reader for whose protection, as we said, the law has been framed. We have dealt with the question at some length because this is the first case before this Court invoking the companystitutional guarantee against the operation of the law regarding obscenity and the book is one from an author of repute and the centre of many companytroversies. The book is probably an unfolding of his philosophy of life and of the urges of the Unconscious but these are unfolded in his other books also and have been fully set out in his Psychoanalysis and the- Unconscious and finally in the Fantasia of the Unconscious. There is numberloss to society if there was a message in the book. The divagations with sex are number a legitimate embroidery but they are the only attractions to the companymon man. When everything said in its favour we find that in treating with sex the impugned portions viewed separately and also in the setting of the whole book pass the permissible limits judged of from our companymunity standards and as there is numbersocial gain to us which can be said to preponderate, we must hold the book to satisfy the test we have indicated above. In the companyclusion we are of the opinion that the High Court was right in dismissing the revision petition.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 269 of 1962. Appeal by special leave from the judgment and decree dated October 5, 1959 of the Bombay High Court in First Appeal No. 712 of 1955. G. Patwardhan and B.R.G.K. Achar, for the appellant. S. Pathak and Naunit Lal, for the respondents. The Judgment of the Court was delivered by Gajendragadkar C. J. What is the scope and effect of the provisions companytained in section 65 read with S. 83 of the Bombay Tenancy and Agricultural Lands Act, 1948 No. 67 of 1948 hereinafter called the Act , that is the short question which arises for our decision in this appeal. The four respondents are the owner of certain agricultural lands in Deokhope in Taluka Palghar in Maharashtra. On the 23rd June, 1951, a numberice was served by the appellant, State of Bombay number Maharashtra , inviting the attention of the respondents to the fact that the agricultural lands of which they were the owners had remained fallow since 1948-49, and intimating to them that the appellant State would resume management of the said lands under s. 65 of the Act unless the respondents took steps to bring them under cultivation in the following agricultural season. The respondents were told that in case they wanted to bring the said lands into cultivation, they should send intimation of their intention to do so within 15 days from the date of the receipt of the numberice. It appears that later, an enquiry was made under the orders of the Dy. Collector as a result of which on the 30th December, 1951, he passed an order under s. 65 directing that the lands should be resumed by the Government for cultivation. Thereafter, representations were made by the respondents to the Dy. Collector as a result of which about 8 acres and 30 ghunthas of land were released on the ground that the owners had taken steps to cultivate that portion of the lands in pursuance of the direction given to them by the earlier numberice. The order passed by the Dy. Collector in respect of other lands remained unaffected. Thereafter, respondent No. 1 approached the Collector by his application dated 24th March, 1952. This application was, however, rejected. The respondents then moved the Revenue Department, but that effort also failed. That is why the present suit was filed by them on the 23rd December, 1953 for a declaration that the order passed by the Dy. Collector on the 30th December, 1951 was illegal and void, and that it companyld number dispossess them of the lands which belonged to them. As a companysequence of the declaration thus claimed by them, the respondents, asked for a decree for possession and mesne profits against the appellant. The appellant disputed the respondents claim. It urged that the suit as framed was barred under S. 63 I and s. 85 of the Act. On the merits, the appellant challenged the companyrectness of the allegations made by the respondents. It was averred by the appellant that the requisite enquiry had been duly and properly made and the impunged order was passed in accordance with the relevant provisions of the Act. According to the appellant, civil companyrt has numberjurisdiction to companysider the propriety or reasonableness of the companyclusion reached by the Dy. Collector before he passed the impunged order. The learned trial Judge who framed appropriate issues on these pleadings, in the main upheld the companytentions raised by the appellant. In his opinion, the present suit was barred by sections 65 1 and 85 of the Act. He also held that the declaration made by the Dy. Collector was number null and void. The plea raised by the respondents against the validity of the statutory provisions companytained in sections 65 66 of the Act was rejected by him, because he thought that the said sections did number companytravene the provisions of Articles 19 and 31 of the Constitution. The learned Judge also found that the grievance made by the respondents against the propriety or reasonableness of the enquiry made prior to the passing of the impunged order was number justified. In the result, the respondents suit was dismissed. The respondents then carried the matter before the High Court by an appeal, and on their behalf three companytentions were raised before the High Court. It was first argued that the lands in respect of which the impunged declaration was made were number lands as defined by the Act, and so, the relevant provisions of the Act were inapplicable. It was then urged that before the Government companyld exercise its powers under s. 65 of the Act, a duty was cast on it to be satisfied that the lands had remained uncultivated for a period of two years before their management was assumed and this companydition had number been satisfied, because delegation by the State Government to subordinate officers of its duty to satisfy itself, or its power to make the declaration, was number justified in law. It was also companytended that since the satisfaction had to be by the authority who was companypetent to make the declaration, he companyld number delegate any part of his function and duty in that behalf and the said authority had to hold the enquiry himself. The High Court has upheld the second of these companytentions. It has found that on a fair and reasonable companystruction of s. 65 1 read with s. 83, the appellant companyld delegate its powers prescribed by s. 65 1 , but companyld number delegate its duty incidental to the exercise of the said power. That is why the decree passed by the trial Court has been reversed on this ground and the respondents suit has been decreed. Consistently with this decision, an appropriate order has been passed in regard to the delivery of possession and the payment of mesne profits as claimed by the respondents. It is against this decree that the appellant has companye to this Court by special leave and the only point which is raised on its behalf by Mr. Patwardhan is that the view taken by the High Court in regard to the scope and effect of the provisions companytained in S. 65 1 read with S. 83 is number well-founded. Section 65 l reads thus If it appears to the State Government that for any two companysecutive years, any land has remained uncultivated or the full and efficient use of the land has number been made for the purpose of agriculture, through the default of the holder or any other cause whatsoever number beyond his companytrol the State Government may, after making such enquiry as it thinks fit, declare that the management of such land shall be assumed. The declaration so made shall be companyclusive. Along with this section, it is necessary to refer to s. 83 which reads thus- The State subject to such restrictions and companyditions as it may impose, by numberification in the Official Gazette, delegate to any of its officers number below the rank of an Assistant or Deputy Collector, all or any of the powers companyferred on it by this Act. The High Court appears to have taken the view that though it was companypetent to the State Government to delegate its powers under s. 65 l , it companyld number delegate its duty or obligation to make an enquiry as a result of which the declaration in question can be made. The State Government, says the High Court, can exercise its authority to make a declaration and this authority or power can be delegated under 9. 83 but before such authority or power can be exercised, there is an obligation imposed on the State Government to make an enquiry as to whether the agricultural land in question has remained uncultivated or fallow for the period prescribed by the statute, and the obligation or duty to hold such an enquiry which is distinct and separate from the power or authority to make a declaration companysequent upon the enquiry, cannot be delegated under s. 83. It is companymon ground that the enquiry was number made by the State Government and if the view taken by the High Court is right that the obligation or duty to hold the enquiry cannot be delegated, then the impugned declaration would be open to attack because it had number been preceded by a proper enquiry. Mr. Patwardhan companytends that the view taken by the High Court is plainly erroneous and we are satisfied that this companytention is well-founded. Section 83 in terms authorises delegation by the State Government to any of its officers of the specified status and the delegation can be in respect of all or any of the powers companyferred on the State Government by the provisions of the Act. Now, it seems to us that the authority to delegate all or any of the powers which is expressly companyferred on the State Government by s. 83 would be rendered almost meaningless if the duty to hold an enquiry as a companydition precedent for the exercise of the said authority cannot be delegated. In the companytext, the power which can be delegated is inseparable from the enquiry which must precede the exercise of the power, and so, in order to make s. 83 effective it is necessary to hold that the delegation of the power authorised by the said section must necessarily involve the delegation of the discharge of obligations or functions which are necessary for the exercise of the said power. If the view taken by the High Court is right it would mean that whereas the State Government can authorise any of the officers belonging to the specified class to exercise its powers under s. 65 l , it must hold the preliminary enquiry itself without delegating the authority to hold such an enquiry to any officer. It is hardly necessary to emphasise that this position is so plainly illogical that it would be unreasonable to recognise the validity of the authority to companyfer powers while insisting that the companyditions precedent for the exercise of the powers are of such a separate and distinct character that in order to satisfy the said companyditions, the required enquiry must be held number by any delegate of the State Government but by the State Government itself. In companying to the companyclusion that the duty, as distinct from the power, cannot be delegated, the High Court was apparently influenced by the fact that there would be numberappeal against the enquiry and the companyclusion reached at such an enquiry. We do number propose to express any opinion on this part of the reasoning adopted by the High Court that will depend upon the companystruction of s. 86 of the Act. But whatever may be the position in respect of the companypetence -of an appeal, we are satisfied that on a fair and reasonable companystruction of s. 83 it must be held to authorise the delegation number only of the powers mentioned by it, but also of duties or functions which are incidental to the ,exercise of the powers and are integrally companynected with them. In this companynection, we may usefully refer to the decision of the Privy Council in Edward Liso Mungoni v. Attorney-General of Northern Rhodesia 1 . In that case, in dealing with a similar question under regulation 16 1 of the Emergency Powers Regulations, 1956 of Northern Rhodesia, made by the Acting Governor of Northern Rhodesia under his statutory powers, the Privy Council has held that the power and the duty under reg. 16 1 were so interwoven that it was number possible to split the one from the other so as to put the duty on one person and the power in another the regulation companytained number so much a duty, but rather a power companypled with a duty, and he who exercised the power bad to carry out the duty. In the result, the Privy Council took the view that in delegating his functions under reg. 16 41 the Governor companyld delegate both the power and duty together to ,one and the same person-he companyld number delegate the power to another and keep the duty to himself. It is number difficult to realise what anomalous companysequences would follow if it is held that the power can be delegated, but number the duty to hold the incidental enquiry which alone can lead to the exercise of the power. In substance, the view taken by the High Court would make the authority to delegate the power wholly meaningless. In fairness, we ought to add that Mr. Pathak who appeared for the respondents did number seek to support this part of the High Courts decision. It appears that a result of the decision of the High Court in the present case, the Maharashtra Legislature thought it prudent to make the necessary amendment in s. 83 of the Act. Section 29 a of the Amending Act provides that for the words powers companyferred the words Powers companyferred or duties impose shall be and shall be deemed to have been substituted ,on the 31st day of October, 1949 and accordingly, the delegation or the purported delegation by the State Government under s. 83 of any duty imposed shall numberwithstanding the judgment, decree or order of any Court be deemed always to have been valid, and the discharge of any such duty by any officer shall for all purposes be valid and effective and shall number be called in question in any Court on the ground only that the State Government had numberpower to delegate the duty and clause b provide that 1 1960 2 W.L.R. 389. to the marginal numbere the words and duties shall be added. It is number surprising that in view of the serious companysequences which would have inevitably followed if the judgment under appeal had remained unchanged, the legislature thought it necessary to make a suitable amendment in order to avoid any interruption in the peaceful and smooth working of the,, relevant provisions of the Act. Realising the infirmity in the view taken by the High Court, Mr. Pathak attempted to support the decision of the High Court on another ground. He argued that since the enquiry was made by the Talathi and the Mamlatdar under s. 65 and number by the Dy. Collector, the declaration made by the Dy. Collector was invalid. In other words, the argument is that the State Government may have validly delegated its powers under s. 65 l to the Dy. Collector, but the Dy. Collector who is a delegate of the State Government cannot, in turn, delegate a part of his power or authority to a subordinate of his own, and that is what he has done in the present case. This argument proceeds on the basis that in exercising his powers under s. 65 1 , the Dy. Collector must himself hold the enquiry and cannot delegate the function of holding such an enquiry to any other subordinate revenue officer. There is numberdoubt that a delegate who has received the authority from the principal cannot, in turn, delegate his own authority to a delegate of his own, but there is hardly any question of delegation by a delegate in the present case. All that s. 65 l requires is that the State Government and therefore its delegate may after making such enquiry as it think, fit, declare that the management of the land shall be resumed. In other words, in what form the enquiry should be held is a matter left entirely in the discretion of the State Government or its delegate. All that the Dy. Collector has done in the present case is to direct his subordinate officers to companylect material relevant to the purpose of the enquiry. The Talathi went on the spot and ascertained as to whether the respondents lands were lying fallow for the requisite period. He submitted his report to the Mamlatdar. The Mamlatdar in turn made his report to the Dy. Collector. In other words, all that the Dy. Collector has done is to companylect the relevant material, so that he can enquire into the question as to whether the lands are lying fallow or number. This procedure does number, in our opinion, involve the question of any delegation at all. The form of the enquiry and its mode are entirely in the discretion of the Dy. Collector. Section 65 l does number require that the Dy. Collector must himself go to the agricultural fields and enquire on the spot whether they are lying fallow. He may, if he so desires, record evidence himself, or the recording of the evidence and the actual inspection on the spot can be left to some subordinate officer. The report of such local inspection and the record of the evidence companylected in that behalf would be forwarded to the Dy. Collector, and that would be the material on which he would hold the enquiry himself. The enquiry is thus hold by the Dy. Collector, though the mechanical work of companylecting material has been entrusted to a subordinate revenue officer. In such a case, we do number see how the principle that a delegate cannot delegate companyes into operation. In support of his argument, Mr. Pathak has relied on a decision of the Kings Bench Division in Allingham and anr. Minister of Agriculture and Fisheries 1 . In that case, the Court held that on the principle of delegatus number potest delegare, the Committee exercising its powers under reg. 62 1 companyld number delegate its powers to determine the land to be cultivated to its officers and, therefore, the numberice issued in that behalf was ineffective and numbercompliance with it was number an offence. It, however, appears that the War Agricultural Committee for the County did appoint the Biggleswade district Committee as a sub-committee to Act under the instructions of the executive companymittee and to make recommendations to the executive companymittee. Apparently, they made some recommendations to the executive officer and the executive officer accordingly made the order. On these facts, Lord Goddard, C.J., observed that he companyld find numberhing in the regulations or the statute which enabled the executive officer to make the order. The appellants had companytended before the Court that they were entitled to have the decision of the executive companymittee and numberone else on the matter, and this companytention was upheld on the facts of that case. We do number see how this case can assist Mr. Pathaks argument in the appeal before us, because there has been numberdelegation to hold an enquiry as such. What the Dy. Collector has done in the present proceedings is number to delegate his authority to hold an enquiry, but to get the material necessary for the enquiry companylected by his subordinate officers. After the material was thus companylected, he examined the material himself, held the enquiry and came to companyclusion that the lands had remained fallow and uncultivated for the requisite period. We are, therefore, satisfied that the English decision on which Mr. Pathak relies does number assist him in the present case. This companytention appears to have been raised before the High 1 1948 1 All E.R. 780. Court and has been rejected by it and, we think, rightly. In fact, in Nathubhai Gandabhai Desai v. The State of Bombay and Ors. 1 , a similar companytention was raised before the High Court and had been rejected by it.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 105 of 1963. Appeal from the judgment and decree dated March 18, 1960 of the Allahabad High Court in First Appeal No. 67 of 1950. S. K. Sastri and M. S. Narasimhan for P. Keshava Pillai, for the appellant. V. Viswanatha Sastri and O. P. Rana, for the respondent.The Judgment of the Court was delivered by Gajendragadkar C. J. The short question of law which arises in this appeal is whether the respondent, the State of Uttar Pradesh, is liable to companypensate the appellant, M s. Kasturilal Ralia Ram Jain for the loss caused to it by the negligence of the police officers employed by the respondent. This question arises in this way. The appellant is a firm which deals in bullion and other goods at Amritsar. It was duly registered under the Indian Partnership Act. Ralia Ram was one of its partners. On the 20th September, 1947 Ralia Ram arrived at Meerut by the Frontier Mail about midnight. His object in going to Meerut was to sell gold, silver and other goods in the Meerut market. Whilst he was passing through the Chaupla Bazar with this object, he was taken into custody by three police companystables. His belongings were then searched and he was taken to the Kotwali Police Station. He was detained in the police lock-up there and his belongings which companysisted of gold, weighing 103 tolas 6 mashas and 1 ratti, and silver weighing 2 maunds and 6 1/2 seers, were seized from him and kept in police custody. On the 21st September, 1947 he was released on bail, and some time thereafter the silver seized from him was returned to him. Ralia Ram then made repeated demands for the return of the gold which had been seized from him, and since he companyld number recover the gold from the police officers, he filed the present suit against the respondent in which he claimed a decree that the gold seized from him should either be returned to him, or in the alternative, its value should be ordered to be paid to him. The alternative claim thus made by him companysisted of Rs. 11,075-10-0 as the price of the gold and Rs. 355 as interest by way of damages as well as future interest. This claim was resisted by the respondent on several grounds. It was urged that the respondent was number liable to return either the gold, or to pay its money value. The respondent alleged that the gold in question had been taken into custody by one Mohammad Amir, who was then the Head Constable, and it had been kept in the police Malkhana under his charge. Mohd. Amir, however, misappropriated the gold and fled away to Pakistan on the 17th October, 1947. He had also misappropriated some other cash and articles deposited in the Malkhana before he left India. The respondent further alleged that a case under section 409 of the Indian Penal Code as well as s. 29 of the Police Act had been registered against Mohd. Amir, but numberhing effective companyld be done in respect of the said case because in spite of the best efforts made by the police department, Mohd. Amir companyld number be apprehended. Alternatively, it was pleaded by the respondent that this was number a case of negligence of the police officers, and that even if negligence was held proved against the said police officers, the respondent State companyld number be said to be liable for the loss resulting from such negligence. On these pleadings, two substantial questions arose between the parties one was whether the police officers in question were guilty of negligence in the matter of taking care of the gold which had been seized from Ralia Ram, and the second was whether the respondent was liable to companypensate the appellant for the loss caused to it by the negligence of the public servants employed by the respondent. The trial Court found in favour of the appellant on both these issues, and since the gold in question companyld number be ordered to be returned to the appellant, a decree was passed in its favour for Rs. 11,430-10-0. The respondent challenged the companyrectness of this decree by an appeal before the Allahabad High Court and it was urged on its behalf that the trial Court was in error in regard to both the findings recorded by it in favour of the appellant. These pleas have been upheld by the High Court. It has found that numbernegligence had been established against the police officers in question and that even if it was assumed that the police officers were negligent and their negligence led to the loss of gold, that would number justify the appellants claim for a money decree against the respondent. The appellant then moved for and obtained a certificate from the said High Court and it is with the said certificate that it has companye to this Court by an appeal. On behalf of the appellant, Mr. M. S. K. Sastri has urged that the High Court was in error in both the findings recorded by it in favour of the respondent. The first finding is one of fact and the second is one of law. In dealing with the question of negligence, it is necessary to refer to the evidence adduced in this case. The material facts leading to the seizure of gold are number in dispute. The only question which calls for our decision on this part of the case is whether the loss of gold can be legitimately attributed to the negligence of the police officers in charge of the police station where the gold and silver had been kept in custody. Ganga Prasad is the first witness to whose evidence it is necessary to refer. He was Class II Officer in Meerut Kotwali at the relevant time. He swears that Mohammad Amir who was in charge of the Malkhana, had fled away to Pakistan without delivering the keys to any one and without obtaining permission for leaving his post of duty. The Malkhana was accordingly checked and it disclosed that companysiderable properties kept in the Malkhana were missing. On the 26th October, 1947, Ganga Prasad returned the silver articles to the appellant. Gold was, however, number found in the Malkhana, and so, it companyld number be returned to it. Ganga Prasad then refers to the investigation carried out against Mohd. Amir for an offence of misappropriation and his evidence shows that Mohd. Amir had absconded, and since the police department was unable to apprehend him from Pakistan, the investigation in question became ineffective. According to this witness, the silver and gold of the appellant had number been attached in his presence. He admits that the goods of the .appellant remained in the Malkhana of the Kotwali. No list of these goods was forwarded to any officials. This witness further added that valuables are generally kept in the wooden box and the key is kept by the officer-in-charge of Malkbana. The gold -and silver articles seized from the appellant had number been kept in that box in his presence. He companyld number explain why the said gold and silver articles were number kept in the Treasury. The next witness is Mohd. Umar. He was Sub-Inspector II in the Kotwali in September, 1947. He swears to the seizure of the ,gold and silver articles from Ralia Ram and deposes to the fact that they were number kept in the Malkhana in his presence. Both the arrested person and the seized articles were left in charge of the Head Constable who had been instructed by Mohd. Umar to keep the goods in the Malkhana. This witness admitted that numberlist was prepared of the seized goods and he was number able to say whether proper precaution were taken to safeguard the goods in the Malkhana. The third witness is Agha Badarul Hasan. He was station officer of the police station in question in September, 1947. He swears that it was a routine requirement that every day in the morning one Sub-Inspector had to inspect the, Malkhana under his order. He knew that Ralia Ram had been kept in the lock-up and his articles were kept in the Malkhana, but he added that in his presence these articles were neither weighed number kept in the Malkhana. He claims to have checked up the companytents of the Malkhana. but he companyceded that he had made numbernote about this check in the Diary. He purported to say that when he checked the Malkhana, gold and silver were there. He kept the valuables in the Malkhana without any further instructions from the officers, and he was number present when they were kept in the box. This witness claims that valuables are number sent by the police officers to the Treasury unless they got orders to that effect. That is the whole of the material evidence bearing on the question of negligence of the police officers. In appreciating the effect of this evidence, it is necessary to refer to some of the relevant provisions, in regard to the custody of the goods seized in the companyrse of police investigation. Section 5 4 I iv of the Code of Criminal Procedure provides that any police officer may, without an order from a Magistrate and without a warrant, arrest any person in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having companymitted an offence with reference to such thing. It is under this provision that Ralia Ram was arrested at midnight. It was apprehended by the police officers that the gold and silver articles which he was carrying with him might be stolen property, and so, his arrest can be said to be justified under section 54 I iv . Section 550 companyfers powers on police officers to seize property suspected to be stolen. It provides inter alia, that any police officer may seize property which may be suspected to have been stolen and so, gold and silver in the possession of Ralia Ram were seized in exercise of the powers companyferred on the police officers under s. 550 of the Code. After Ralia Ram was arrested and before his articles were seized, he was searched, and such a search is justified by the provisions of s. 51 of the Code. Having thus arrested Ralia Ram and searched his person and seized gold and silver articles from him under the respective provisions of the Code, the police officers had to deal with the question of the safe custody of these goods. Section 523 provides for the procedure in that behalf. It lays down, inter alia, that the seizure by any police officer of property taken under s. 51 shall be forthwith reported to a Magistrate, who shall make such order as he thinks fit respecting the disposal of such property or the delivery of such property to the person entitled to the possession thereof, or, if such person cannot be ascertained, respecting the custody and production of such property. These are the relevant provisions of the Code in respect of property seized from a person who has been arrested on suspicion that he was carrying stolen property. That takes us to the U.P. Police Regulations. Chapter XIV of these Regulations deals with the custody and disposal of property. Regulation 165 provides a detailed procedure for dealing with the disposal of movable property of which the police takes possession. It is number necessary to refer to these provisions it would be enough to state that these provisions indicate that when property is seized by the police officers, meticulous care is required to be taken for making a proper list of the property seized, describing it, weighing it, and taking all reasonable steps to ensure its safety. Clause 5 of Regulation 165 provides that when the property companysists of gold, silver, jewellery or other valuables, it must be sent in a sealed packet after being weighed, and its weight must be numbered in the general diary and on the list which accompanies the packet. It requires that a set of weights and scales should be kept at each police station. Regulation 166 is important for our purpose. It reads thus - Unless the Magistrate otherwise directs, property of every description, except cash exceeding Rs. 100 and property of equal value andproperty pertaining to cases of importance, which will be kept by the Prosecuting Inspector in a separate box under lock and key in the treasury, will remain in the custody of the malkhana moharrir under the general companytrol and responsibility of the Prosecuting Inspector until it has been finally disposed of. The wording of the Regulation is somewhat companyplex and company- fusing, but its purport and meaning are clear. In substance, it provides that property of every description will remain in the custody of the malkhana moharrir under the general companytrol and responsibility of the Prosecuting Inspector until it has been finally disposed of. This provision is subject to the instructions to the companytrary which the Magistrate may issue. In other words, unless the Magistrate directs otherwise, the numbermal rule is that the property should remain in the Malkhana. But this rule does number apply to cash exceeding Rs. 100 and property of equal value and property pertaining to cases of importance. Property falling under this category has to be kept by the Prosecuting Inspector in a separate box under lock and key in the treasury. If the Magistrate issues a direction that property number falling under this category should also be kept in the treasury that direction has to be followed and the property in such a case cannot be kept in the custody of the malkhana moharrir. It is thus clear that gold and silver which had been seized from Ralia Ram had to be kept in a separate box under lock and key in the Treasury and that, admittedly, was number done in the present case. It is in the light of the provisions companytained in Regulation 166 that we have to appreciate the oral evidence to which we have already referred. Unfortunately, in dealing with Regulations 165 5 and 166, the High Court has erroneously assumed that there was numberobligation on the police officers to deposit Ralia Rams property in the Treasury. This companyclusion is apparently due to the fact that the words used in Regulation 166 are number as clear as they should be and their effect has been misconstrued by the High Court. It is in the light of this position that the oral evidence in the case has to be companysidered. Thus companysidered, there can be numberescape from the companyclusion that the police officers were negligent in dealing with Ralia Ranis property after it was seized from him. Not only was the property number kept in safe custody in the treasury, but the manner in which it was dealt with at the Malkhana shows gross negligence on the part of the police officers. A list of -articles seized does number-appear to have been made and there is numberevidence that they were weighed either. It is true that the respondents case is that these goods were misappropriated by Head Constable Mohd. Amir but that would number assist the respondent in companytending that the manner in which the seized property was dealt with at the police station did number show gross negligence. Therefore, we are satisfied that the trial Court was right in companying to the companyclusion that the loss suffered by the appellant by the fact that the gold seized from Ralia Ram has number been returned to it, is based on the negligence of the police officers employed by the respondent and that raises the question of law which we have set out at the companymencement of our judgment. Mr. M. S. K. Sastri for the appellant has argued that once he is able to establish negligence of the police officers, there should be numberdifficulty in our decreeing the appellants claim against the respondent, because he urges that in passing a decree against the respondent in the present case, we would merely be extending the principle recognised by this Court in State of Rajasthan v. Mst. Vidhyawati and Anr. 1 . In that case, respondent No. 1s husband and father of minor respondent No. 2 had been knocked down by a Government jeep car which was rashly and negligently driven by an employee of the State of Rajasthan. The said car was, at the relevant time, being taken from the repair shop to the Collectors residence and was meant for the Collectors use. A claim was then made by the respondents for damages against the State of Rajasthan and the said claim was allowed by this Court. In upholding the decision of the High Court which had granted the claim, this Court observed that the liability of the State for damages in respect of a tortious act companymitted by its servant within the scope of his employment and functioning as such was the same as that of any other employer. In support of this companyclusion, this Court observed that the immunity of the Crown in the United Kingdom on which basically the State of Rajasthan resisted the respondents claim, was based on the old feudalistic numberions of justice, namely that the King was incapable of doing a wrong, and, therefore, of authorising or instigating one, and that he companyld number be sued in his own companyrts. Such a numberion, it was said, was inconsistent with the Republican form of Government in our companyntry, particularly because in pursuit of their welfare and socialistic objectives, States in India undertook various industrial 1 1962 Supp. 2 S.C.R. 989. and other activities and had to employ a large army of servants. That is why it was observed that there would be numberjustification, in principle, or in public interest, why the State should number be held liable vicariously for the tortious acts of its servants. It is ,on these observations that Mr. M. S. K. Sastri relies and companytends that the said observations as well as the decision itself can be ,easily extended and applied to the facts in the present case. It must be companyceded that there are certain observations made in the Vidhyawati case 1 which support Mr. Sastris argument and make it prima facie attractive. But, as we shall presently point, out, the facts in the Vidhyawati case fall in a category of claims which is distinct and separate from the category in which the facts in the present case fall and that makes it necessary to ,examine what the true legal positionis in regard to a claim for damages against the respondent for loss caused to a citizen by the tortious acts of the respondent servants. This question essentially falls to be companysidered under Art. 300 1 of the Constitution. This article reads thus - The Government of India may sue or be sued by the name of the Union of India and the Government of a State may sue or be sued by the name of the State and may, subject to any provisions which may be made by Act of Parliament or of the Legislature of such State enacted by virtue of powers companyferred by this Constitution, sue or be sued in relation to their respective affairs in the like cases as the Dominion of India and the companyresponding Provinces or the companyresponding Indian States might have sued or been sued if this Constitution had number been enacted. It would be numbericed that this article companysists of three parts. The first part deals with the question about the form and the causetitle for a suit intended to be filed by or against the Government of India, or the Government of a State. The second part provides, inter alia, that a State may sue or be sued in relation to its affairs in cases like those in which a companyresponding Province might have sued or been sued if the Constitution had number been enacted. In other words, when a question arises as to whether a suit can be filed against the Government of a State, the enquiry has to be companyld such a suit have been filed against a companyresponding Province if the Constitution had number been passed ? The third part of the article provides that it would be companypetent to the Parliament or 1 1962 Supp. 2 S.C.R. 989. the Legislature of a State to make appropriate provisions in regard to the topic companyered by Art. 300 1 . Since numbersuch law has been passed by the respondent in the present case, the question as to whether the respondent is liable to be sued for damages at the instance of the appellant, has to be determined by reference to another question and that is, whether such a suit would have been companypetent against the companyresponding Province. This last enquiry inevitably takes us to the companyresponding provisions in the respective Constitution Acts of India they are s. 65 of the Government of India Act, 1858, S. 32 of the Government of India Act, 1915 and s. 176 of the Government of India Act, 1935. It is unnecessary to trace the pedigree of this provision beyond s. 65 of the Act of 1858, because the relevant decisions bearing on this point to which we will presently refer, are ultimately found to be based on the effect of the provisions companytained in the said section. For companyvenience, let us cite s. 65 at this stage The Secretary of State in Council shall and may sue and be sued as well in India as in England by the name of the Secretary of State in Council as a body companyporate and all persons and bodies politic shall and may have and take the same suits, remedies and proceedings. legal and equitable, against the Secretary of State in Council of India as they companyld have done against the said Company and the property and effects hereby vested in Her Majesty for the purposes of the Government of India, or acquired for the said purposes, shall be subject and liable to the same judgments and executions as they would while vested in the said Company have been liable to in respect of debts and liabilities lawfully companytracted and incurred by the said Company. The first decision which is treated as a leading authority on this point was pronounced by the Supreme Court at Calcutta in 1861 in the case of the Peninsular and Oriental Steam Navigation Company v. The Secretary of State for India 1 . It is a remarkable tribute to the judgment pronounced by Chief Justice Peacock in that case that ever since, the principles enunciated in the judgment have been companysistently followed by all judicial decisions in India, and except on one occasion, numberdissent has been expressed in respect of them. It seems somewhat ironical that the judgment of this importance should number have been reported in due companyrse 1 5 B. H.C.R. Appendix A, p. 1 in Calcutta, but found a place in the Law Reports in 5 Bom. C.R. 1868-69. Let us then companysider what this case decided. It appears that a servant of the plaintiff companypany was proceeding on a highway in Calcutta driving a carriage which was drawn by a pair of horses belonging to the plaintiff. The accident which gave rise to the action took place on the highway, and it was caused by the negligence of the servants of the Government who had been employed in the Government dockyard at Kidderpore. Me said servants were carrying a piece of iron funnel, and the manner in which they were carrying the Said funnel caused an injury to one of the horses that were drawing the plaintiffs carriage. It is this injury caused by the negligence of the servants of the Government employed in the Government dockyard that gave rise to the action. The. plaintiff companypany claimed damages against the Secretary of State for India for the damage caused by the said accident. The suit was tried by the Small Cause Court Judge at Calcutta. He found that the defendants servants were wrongdoers inasmuch as they carried the iron funnel in the centre of the road. According to the learned Judge, the servants were thus liable for the injury caused by their negligence. He was, however, number clear on the question of law as to whether the defendant Secretary of State companyld be held liable for the tortious act of the Government servants which led to the accident. That is why he referred the said question to the Supreme Court of Calcutta, and the Supreme Court held that the Secretary of State in Council of India would be liable for the damages occasioned by the negligence of servants in the service of Government if the negligence is such as would render an ordinary employer liable. This question was companysidered by the Supreme Court in the light of s. 65 of the Act of 1858. The main object of that section, observed Peacock C.J., was to transfer to Her Majesty the possession and government of the British territories in India, which were then vested in the East India Company in trust for the Crown, but it does number appear to have been the intention of the Legislature to alter the nature or extent of liabilities with which the revenue of India should be chargeable. The learned Chief Justice then companysidered the scheme of the other relevant provisions of the said Act and posed the question thus would the East India Company have been liable in the present action, if the 21st and 22nd Vict., c. 106, had number been passed ? Dealing with this question, the learned Chief Justice observed that the origin and progress of the East India Company are too well-known to require any detail for the purpose of the present case. It is sufficient to state that after the passing of the 3rd and 4th Wm. IV., c. 85, they number only exercised powers of government, but also carried on trade as merchants. It was then observed by the learned Chief Justice that in determining the question whether the East India Company would, under the circumstances, have been liable to an action, the general principles applicable to Sovereigns and States, and the reasoning deduced from the maxim of the English Law that the King can do numberwrong, would have numberforce, because he companycurred entirely in the opinion expressed by Chief Justice Grey in the earlier case of The Bank of Bengal v. The East India Company 1 that the fact of the Companys having been invested with powers usually called sovereign powers did-not companystitute them sovereign. That is one aspect of the matter which was emphasised in that judgment. Proceeding to deal with the question on this basis, the learned Chief Justice remarked that if the East India Company were allowed, for the purpose of Government, to engage in undertakings, such as the bullock train and the companyveyance of goods and passengers for hire, it was only reasonable that they should do so, subject to the same liabilities as individuals and in that view of the matter, the Chief Justice expressed the opinion that for accidents like the one with which the Court was dealing, if caused by the negligence of servants employed by Government, the East India Company would have been liable, both before and after the 3rd and 4th Wm. IV., c. 85, and that the same liability attaches to the Secretary of State in Council, who is liable to be sued for the purpose of obtaining satisfaction out of the revenues of India. We are of opinion, said the learned Chief Justice emphatically, that this is a liability, number only within the words, but also within the spirit, of the 3rd 4th Wm. IV., c. 85, s. 9, and of the 21st and 22nd Vict., c. 106, S. 65, and that it would be inconsistent with companymonsense and justice to hold otherwise. It then appears to have been urged before the Court in that case that the Secretary of State in Council must be companysidered as the State or as a public officer employed by the State, and the question of his liability determined on that footing. This argument was rejected on two grounds, that the relevant words of the statute did number justify it, and that the East India Company were number sovereigns, and therefore, companyld number claim all the exemption of a sovereign. That is how the learned Chief Justice took the view that the case did number fall under the principle of the cases with regard to the liabilities of such persons--that is to say, public Bignell, Rep. p. 120. servants employed by the Sovereign but they were a companypany to whom sovereign powers were delegated, and who traded on their own account and for their own benefit, and were engaged in transactions partly for the purposes of government, and partly on their own account, which, without any delegation of sovereign rights, might be carried on by private individuals. It is in respect of this aspect of the matter that the Chief Justice enunciated a principle which has been companysistently followed in all subsequent decisions. Said the learned Chief Justice there is a great and clear distinction between acts done in the exercise of what are usually termed sovereign powers, and acts done in the companyduct of undertakings which might be carried on by private individuals without having such powers delegated to them. Having thus enunciated the basic principle, the Chief Justice stated another proposition as flowing from it. He observed that where an act is done, or a companytract is entered into, in the exercise of powers usually called sovereign powers by which we mean powers which cannot be lawfully exercised except by sovereign, or private individual delegated by a sovereign to exercise them, numberaction will lie. And, naturally it follows that where an act is done, or a companytract is entered into, in the exercise of powers which cannot be called sovereign powers, action will lie. Mat, in brief, is the decision of the Supreme Court of Calcutta in the case of the Peninsular and Oriental Steam Navigation Co. 1 . Thus, it is clear that this case recognises a material distinction between acts companymitted by the servants employed by the State where such acts are referable to the exercise of sovereign powers delegated to public servants, and acts companymitted by public servants which are number referable to the delegation of any sovereign powers. If a tortious act is companymitted by a public servant and it gives rise to a claim for damages, the question to ask is was the tortious act companymitted by the public servant in discharge of statutory functions which are referable to, and ultimately based on, the delegation of the sovereign powers of the State to such public servant ? If the answer is in the affirmative, the action for damages for loss caused by such tortious act will number lie. On the other hand, if the tortious act has been companymitted by a -public servant in discharge of duties assigned to him number by virtue of the delegation of any sovereign power, an action for damages would lie. The act of the public servant companymitted by him during the companyrse of his employment is, in this category of cases, an act of a servant who might have been employed by a private individual for the same 1 5 B.H.C.R. Appendix A, p. 1. purpose. This distinction which is clear and precise in law, is sometimes number borne in mind in discussing questions of the States liability arising from tortious acts companymitted by public servants. That is why the clarity and precision with which this distinction was emphasised by Chief Justice Peacock as early as 1861 has been recognised as a classic statement on this subject. We have already indicated that this distinction has been uniformly followed by judicial decisions in India. In that companynection, we will refer to a few representative decisions. In The Secretary of State for India in Council v. Moment 1 , the Privy Council had occasion to companysider the effect of the provisions of s. 41 b of Act IV of 1898 Burma , which is similar to the provisions of s. 65 of the Government of India Act, 1858. While holding that a suit for damages for wrongful interference with the plaintiffs property in land would have lain against the East India Company, the Privy Council has expressly approved of the principles enunciated by Chief Justice Peacock in the case of Peninsular Oriental Steam Navigation Co. 2 . In Shivabhajan Durgaprasad v. Secretary of State for India, this point arose for the decision of the Bombay High Court. In that case, a suit had been instituted against the Secretary of State in Council to recover damages on account of the negligence of a chief companystable with respect to goods seized and the plaintiffs claim was resisted by the Secretary of State in Council on the ground that numberaction lay. The High Court upheld the plea raised by the defence on the ground that the chief companystable seized the goods number in obedience to an order of the executive Government, but in performance of a statutory power vested in him by the Legislature. The principle on which this decision was based was stated to be that where the duty to be performed is imposed by law and number by the will of the party employing the agent, the employer is number liable for the wrong done by the agent in such employment. In discussing this point, Jenkins C.J., referred to the decision in the case of Peninsular and Oriental Steam Navigation Co. 2 and observed that though he entertained some doubt about its companyrectness, the said view had stood so long unchallenged that lie thought it necessary to accept it as an authority binding on the Court. It is on this solitary occasion that a whisper of dissent was raised by Chief Justice Jenkins, but ultimately, the learned C. J. submitted to the authority of the said decision. 1 1912-13 40 I. A. 48. 2 5 B. H.C. R. Appendix A p.1. 3 1904 I.L.R. .28 Rom. 314. In the Secretary of State for India in Council v. A. Cockcraft Anr. 1 , a claim for damages against the Secretary of State arose in respect of injuries sustained by the plaintiff in a carriage accident which was alleged to have been due to the negligent stacking of gravel on a road which was stated in the plaint to be a military road maintained by the Public Works Department of the Govern- ment. The Madras High Court held that the plaintiff had in law numbercause of action against the Secretary of State for India in Council in respect of acts done by the East India Company in the exercise of its sovereign powers. This companyclusion was based on the finding that the provision and maintenance of roads, especially a military road, is one of the functions of Government carried on in the exercise of its sovereign powers and is number an undertaking which might have been carried on by private persons. In the Secretary of State for India in Council v. Shreegobinda Chaudhuri 2 , it was held by the Calcutta High Court that a suit for damages does number lie against the Secretary of State for India in Council for misfeasance, wrongs, negligence or omissions of duties of managers appointed by the Court of Wards, because the acts giving rise to the claim, were done by officers of Government in the companyrse of exercise of powers which cannot be lawfully exercised save by the sovereign power. It is in this companynection that Rankin C.J., enunciated the principle that numberaction in tort lies against the Secretary of State for India in Council upon the respondent superior. The learned C. J., however, recognised that a suit may lie against the Secretary of State for India in Council for torts companymitted by the Government in companynection with a private undertaking or an undertaking number in exercise of sovereign power. The same view has been taken by the Allahabad High Court in Mohammad Murad Ibrahim Khan Anr. Government of United Provinces. 3 In Uma Parshad v. The Secretary of State 4 , certain property which had been stolen from the plaintiff was recovered by the police and was thereafter kept in the Malkhana under orders of the Magistrate during the trial of the thieves. It appears that the receiver, H. A., the man in charge of the Malkhana, absconded with it. That led to a suit by the plaintiff for the recovery of the property, or in the alternative, for its price. The Lahore High Court held that the liability in the case having clearly arisen under the provisions of the Criminal Procedure Code, the defence plea that the act was an act of State companyld number succeed. Even so, the Court 1 1914 I.L.R. 39 Mad. 351. I.L.R. 1957 1. All. 94. 2 1932 I.L.R. 59 Cal. 1289. 4 1936 I.L.R. 18 Lah. 380. came to the companyclusion that the Secretary of State companyld be held liable only under circumstances in which a private employer can be rendered liable. The Court then examined the question as to whether in circumstances like those which led to the claim for damages in the case before it, a private employer companyld have been made liable and this question was answered in the negative on the ground that numberliability attached to the Secretary of State on account of the criminal act of the man in charge of the Malkhana the said act was a felonious act unauthorised by his employer. We would like to add that some of the reasons given by the High Court in support of its companyclusion may be open to doubt, but, in substance, the decision can be justified on the basis that the act which gave rise to the claim for damages had been done by a public servant who was authorised by a statute to exercise his powers, and the discharge of the said function can be referred to the delegation of the sovereign power of the State, and as such the criminal act which gave rise to the action, companyld number validity sustain a claim for damages against the State. It will thus be clear that the basic principle enunciated by Peacock C. J. in 1861 has been companysistently followed by judicial decisions in dealing with the question about the States liability in respect of negligent or tortious acts companymitted by public servants employed by the State. Reverting then to the decision of this Court in the Vidhyanati case 1 , it would be recalled that the negligent act which gave rise to the claim for damages against the State of Rajasthan in that case, was companymitted by the employee of the State of Rajasthan while he was driving the jeep car from the repair shop to the Collectors residence, and the question which arose for decision was did the negligent act companymitted by the Government employee during the journey of the jeep car from the workshop to the Collectors residence for the Collectors use give rise to a valid claim for damages against the State of Rajasthan or number? With respect, we may point out, that this aspect of the matter has number been clearly or emphatically brought out in discussing the point of law which was decided by this Court in that case. But when we companysider the principal facts on which the claim for damages was based, it is obvious that when the Government employee was driving the jeep car from the workshop to the Collectors residence for the Collectors use, he was employed on a task or an undertaking which cannot be said to be referable to, or ultimately based on, the delegation of sovereign or govern- mental powers of the State. In dealing with such cases, it must 1 19621 Supp. 2 S.CR. 989. L2Sup./64-12 be borne in mind that when the State pleads immunity against claims for damages resulting from injury caused by negligent acts of its servants, the area of employment referable to sovereign powers must be strictly determined. Before such a plea is upheld, the Court must always find that the impugned act was companymitted in the companyrse of an undertaking or employment which is referable to the exercise of sovereign power, or to the exercise of delegated sovereign power and in the Vidhyawati case 1 , this Court took the view that the negligent act in driving the jeep car from the workshop to the Collectors bungalow for the Collectors use companyld number claim such a status. In fact, the employment of a driver to drive the jeep car for the use of a civil servant is itself an activity which is number companynected in any manner with the sovereign power of the State at all. That is the basis on which the decision must be deemed to have been founded and it is this basis which is absent in the case before us. It is number difficult to realize the significance and importance of making such a distinction particularly at the present time when, in the pursuit of their welfare ideal, the Governments of the States as well as the Government of India naturally and legitimately enter into many companymercial and other undertakings and activities which have numberrelation with the traditional companycept of Governmental activities in which the exercise of sovereign power is involved. It is necessary to limit the area of these affairs of the State in relation to the exercise of sovereign power, so that if acts are companymitted by Government employees in relation to other activities which may be companyveniently described as number- governmental or numbersovereign. citizens who have a cause of action for damages should number be precluded from making their claim against the State. That is the basis on which the area of the state immunity against such claims must be limited and this is exactly what has been done by this Court in its decision in the Vidhyawati case 1 . In the present case, the act of negligence was companymitted by the police officers while dealing with the property of Ralia Ram which they had seized in exercise of their statutory powers. Now, the power to arrest a person, to search him, and to seize property found with him, are powers companyferred on the specified officers by statute and in the last analysis, they are powers which can be properly characterised as sovereign powers and so, there is numberdifficulty in holding that the act which gave rise to the present claim for damages has been companymitted by the employee of the 1 19621 Supp. 2 S.C.R. 989. respondent during the companyrse of its employment but the employment in question being of the category which can claim the special characteristic of sovereign power, the claim cannot be sustained and so, we inevitably hark back to what Chief Justice Peacock decided in 1861 and hold that the present claim is number sustainable. Before we part with this appeal, however, we Ought to add that it is time that the Legislatures in India seriously companysider whether they should number pass legislative enactments to regulate and companytrol their claim of immunity in cases like this on the same lines as has been done in England by the Crown Proceedings Act, 1947. It will be recalled that this doctrine of immunity is based on the Common Law principle that the King companymits numberwrong and that he cannot be guilty of personal negligence or misconduct, and as such cannot be responsible for the negligence or misconduct Of his servants. Another aspect of this doctrine was that it was an attribute of sovereignty that a State cannot be sited in its own companyrts without its companysent. This legal position has been substantially altered by the Crown Proceedings Act, 1947 10 I I Geo. 6 c. 44 . As Halsbury points Out, claims against the Crown which might before 1st January, 1948 have been enforced, subject to the ,-rant of the royal flat, by petition of right may be. enforced as of right and without a fiat by legal proceedings taken against the Crown. 1 That is the effect of s. I of the said Act. Section 2 provides for the liability of the Crown in tort in six classes of cases companyered by its clauses I to 6 . Clause 3 , for instance, provides that where any functions are companyferred or imposed upon an officer of the Crown as such either by any rule of the companymon law or by statute, and that officer companymits a tort while performing or purporting to perform those functions, the liabilities of the Crown in respect of the tort shall be such as they would have been if those functions had been companyferred or imposed solely by virtue of instructions lawfully given by the Crown. Section 11 provides for saving in respect of acts done under prerogative and statutory powers. It is unnecessary to refer to the other provisions of this Act. Our only point in mentioning this Act is to indicate that the doctrine of immunity which has been borrowed in India in dealing with the question of the immunity of the State in regard to claims made against it for tortious acts companymitted by its servants, was really based on the Common Law principle which prevailed in England and that principle has number been substantially modified by the Crown Proceedings Act. In dealing with the present appeal, we have ourselves been disturbed by the thought that a citizen Halsburys Laws of England, 3rd ed., Vol. II, p. 8. whose property was seized by process of law, has to be told when he seeks a remedy in a companyrt of law on the ground that his property has number been returned to him, that be can make numberclaim against the State. That, we think, is number a very satisfactory position in law. The remedy to cure this position, however, lies in the bands of the Legislature.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 33 of 1964. Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. Baldev Mehta, for the petitioners. G. Patwardhan and O. C. Mathur for the respondents. The Judgment of the Court was delivered by Mudholkar J. Eleven clerical employees serving the Cor- poration of Delhi have moved this Court under Art. 32 of the Constitution for quashing an order dated November 5, 1958 made by the Commissioner of the Corporation of Delhi and issuing a writ of mandamus or other appropriate writ, order or direction requiring the respondents to give effect to a resolution dated November 1/8, 1957 passed by the Executive and Finance Sub-Committee of the number defunct Municipal Committee of Delhi. The main ground on which the reliefs are claimed is that the action of the Commissioner in making the order has resulted in discrimination against the petitioners. In order to appreciate the point some facts have to be stated. Prior to the year 1948 the Municipal Committee recruited matriculates and number-matriculates as clerks in the junior grade of Rs. 35-2-65-3-95. In order to attract better qualified persons they offered Rs. 45 as starting salary for graduates in this grade. Thereafter the Committee, by its resolution dated September 16, 1948, revised the grades and scales of pay for its entire staff on the basis of the recommendations of the Central Pay Commission appointed by the Government of India. By this resolution the Committee created two junior grades for recruitment of clerks, a grade of Rs. 55-3-85-4-125-5-130 for matriculates and the grade of Rs. 45-2-55-3-95-4-105 for number-matriculates. According to the petitioners the Committee, in order to attract graduates and persons of higher academic qualifications and for giving an impetus to the clerical employees for pursuing higher studies, decided by the same resolution, inter alia, that graduates working in the junior grade would be paid a graduate allowance of Rs. 20 p.m. Further, according to them, this was sanctioned by the Chief Commissioner, Delhi by Memo No. F. 2 102 48-L.S.G. dated July 26/27, 1949. It is companymon ground that by resolution No. 447 dated July 16, 1954 as amended by resolution No. 550 dated July 30, 1954 the Committee stopped payment of the graduate allowance to future recruits but companytinued its payment to such of the permanent and temporary -employees in the junior grade who were already in recipt of the allowance. Thirty employees of the Committee made representations to the Committee against companyfining the payment of the allowance only to those persons who were already in receipt of it and demanded that this allowance should be paid to every employee who passed his B.A. examination after 1954 as well as to every graduate employee recruited after 1954. This representation succeeded and by resolution No. 693 dated November 1, 1957 the Committee resolved that the system of payment of personal pay of Rs. 20 per mensem to all graduates in the junior grade be revived and that the necessary sanction of the Chief Commissioner to this proposal be obtained. On November 8, 1957 the Committee amended the aforesaid resolution by resolution No. 701 and directed that the words Necessary sanction of the Chief Commissioner be obtained appearing at the end of the resolution be deleted. According to the petitioners, therefore, this resolution came into operation immediately and they became entitled to payment of Rs. 20, with retrospective effect. Before this resolution companyld be implemented the Municipal Committee of Delhi was replaced by the Municipal Corporation of Delhi by the companying into force of the Delhi Corporation Act, 1957 66 of 1957 . The petitioners, therefore, approached the Commissioner of the Corporation and requested him to give effect to the resolution of November 1, 1957 as amended by the resolution dated November 8, 1957. By Office Order No. 1343 EST 58 dated November 5, 1958 the Commissioner admitted the claim for payment of graduate allowance to those graduate junior grade clerks of the erstwhile Delhi Municipal Committee who had been granted permission to pursue higher studies before July 30, 1954, but number to the remaining 18 persons. The grievance of the petitioners is that this Order of the Commissioner is dis- criminatory because there is numberrational basis for excluding them from the benefit of the aforementioned resolution of the Committee. The petitioners then moved a petition under Art. 226 of the Constitution before the High Court of Punjab but eventually withdrew it. They have number companye to this Court under Art. 32 of the Constitution. The petitioners application is resisted on behalf of the Corporation on two main grounds. The first ground is that they have companye to this Court after a long delay and the other ground is that the impugned order of the Commissioner was itself without jurisdiction and, therefore, the petitioners cannot companyplain of being discriminated against. The petitioners admit that there was a delay of about five years in making this petition but they explain it by pointing out that all this was occasioned by reason of the fact that their writ petition remained pending in the High Court of Punjab for almost five years and that they had to withdraw it ultimately because the learned Judge before whom the petition went for final hearing pointed out that in view of a previous decision of the High Court a joint petition of the kind was number entertainable. Further, according to them, where a person seeks to enforce a fundamental right under Art. 32 of the Constitution mere delay cannot stand in his way. In our opinion, it is number necessary to pronounce upon this point because the petition must fail on the other ground urged on behalf of the respondents. It is true that numberresolution of the Committee number any rule or bye-law has been brought to our numberice which requires that an employee must, before pursuing higher studies, obtain the permission of the Committee and, therefore, there was numberreasonable basis for treating the petitioners differently from the 12 persons whose claim to the allowance was admitted by the Commissioner. But the question is whether the Commissioner companyld legally admit the claim even of those 12 persons. Mr. Patwardhan, appearing for the respondents, companytends that the Chief Commissioner of Delhi by his Order dated October 30, 1956 made in exercise of the powers vested in him by s. 232 of the Punjab Municipal Act, 1911 hereafter referred to as the Act prohibited all municipal and numberified area Committees within the State of Delhi, from among other things, revising the existing scales of pay of any of their employees and granting any special pay or any other pecuniary benefits to them. The Committee was therefore, according to Mr. Patwardhan, incompetent to pass the resolution No. 693 dated November 1, 1957 and then amend it by resolution No. 701 dated November 8, 1957. Mr. Baldev Mehta appearing for the petitioners challenges the validity of the order of the Chief Commissioner on the grounds that it was beyond the scope of s. 232 of the Act and that numberopportunity was given to the Committee to offer an explanation as companytemplated by s. 235 of the Act number was any order ultimately made under that section. In the first place, according to him, s. 232 of the Act companyld number be resorted-to by the Chief Commissioner but only by the Deputy Commissioner. Before the passing of Punjab Act 34 of 1933 -this section read as follows The Commissioner or the Deputy Commis- sioner may by order in writing, suspend the execution of any resolution or order of a companymittee, or joint companymittee or prohibit the doing of any act which is about to be done, or is being done in pursuance of or under companyer of this Act, or in pursuance of any sanction or permission granted by the companymittee in the exercise of its powers under the Act, if, in his opinion the resolution, or order or act is in excess of the powers companyferred by law or companytrary to the interests of the public or likely, to cause waste or damage of municipal funds or property, or the execution of the resolution or order, or the doing of the act, is likely to lead to a breach of the peace, to encourage lawlessness or to cause injury or annoyance to the public or to any class or body of persons. By the aforesaid Act the words Commissioner or the were deleted. It has number been brought to our numberice that the amending Act was applied to the State of Delhi. We must, therefore, proceed on the footing that the word Commissioner was still there in S. 232 of the Act as applied to the State of Delhi. By virtue of the provisions of the Delhi Laws Act, 1912 companytained in Schedule B as adapted by the Adaptation of Laws Order, 1950, the expression the Commissioner used in any enactment appli- cable to the State of Delhi has to be read as the State Government of Delhi. The expression State Government as defined in sub-s. 60 of s. 3 of the General Clauses Act, 1897 shall as respects anything done after the companymencement of the Constitution and before the companymencement of the Constitution Seventh Amendment Act, 1956 mean, in a Part C State, the Central Government. Central Government is defined in sub-s. 8 of s. 3 of that Act and meant in relation to a Part C State like Delhi, the Chief Commissioner thereof. Clearly, therefore, the Chief Commissioner companyld make an order of the kind we have to companysider here under S. 232 of the Act. Mr. Mehta, however, companytends that what the Chief Commis- sioner companyld do under the section before the Delhi Corporation Act of 1957 came into force was to suspend the execution of a resolution or order of a Committee or prohibit the doing of an act which was about to be done and that it did number empower him to prohibit the Municipal Committee from passing a resolution. It is true that the section did number enable the Chief Commissioner to prohibit a Committee from passing a particular kind of resolution but it certainly empowered him to prohibit the Committee from doing an act which was about to be done. Here, the order of the Chief Commissioner to which we have adverted, in fact prohibited the Committee from, among other thing-,, granting special pay or any other pecuniary advantage to any of its employees. What was thus expressly prohibited was the doing of an act but number passing of a resolution. Even so, we think that when the doing of an act was prohibited the Committee ceased to have any power to do that act and a resolution passed by it to the effect that the act be done, can have numberlegal validity. But, Mr. Mehta said, the power of the Chief Commissioner was exercisable only when the Municipal Committee was about to do something and number to prohibit something in the distant future. In this regard he has referred us to the meaning given to the expression about to in Strouds Judicial Dictionary and to an English decision referred to therein. What precise meaning should be given to the expression must naturally depend upon the companytext in which it is used but it does involve the element of anticipation. To this extent, therefore, Mr. Mehta is right that s. 232 does number authorise the authorities mentioned therein to make a blanket prohibition as to the doing of an act or a series of acts unless the authority anticipated that such acts would be done. There is, however, numberdifficulty in the case before us because the order itself mentions that it had been made to appear to the Chief Commissioner that the Municipal Committee of Delhi, amongst other things, was about to revise the existing scales of pay of its employees, creating posts and granting advance increments or special pay or other pecuniary benefits to some of its existing employees. The obvious reason for making this order was that the Municipal Committee was soon to cease to exist and the Corporation of Delhi to take its place. The Chief Commissioner, therefore, did number want the Committee to enter into companymitments which would bind its successor. A perusal of the proceedings of the Committee during the relevant period shows that the Committee had before it numerous proposals relating to the emoluments of its employees and the Chief Commissioner must have known about them. Mr. Mehta then companytended that if upon its true companystruction s. 232 permitted the Chief Commissioner to suspend the execution of any resolution or order of a Committee but did number prohibit the passing of a resolution the Committee was quite companypetent to pass the resolutions of November I and 8, 1957 and in this companynection he referred us to the decisions of the Punjab High Court in Mistri Mohammad Hussain v. Municipal Committee, Sialkot 1 , Lahore Municipality v. Jagan Nath 2 and Mahadeo Prasad v. U. P. Government 3 . None of these cases helps him but one of them goes against his companytention. In the first case the Deputy Commissioner had ordered the suspension of a resolution passed by a Committee sanctioning the companystruction of a platform ,after the platform had been companystructed. In order to give effect to the order the Committee ordered under S. 172 the demolition of the platform. The High Court held that as the platform companyld number be said to have been companystructed without sanction its demolition companyld number be ordered under s. 172. In the second case the High Court, following the above decision, held that under S. 232 the Deputy Commissioner can prohibit the doing of an act or suspend the execution of a resolution before the act was done or the resolution carried out. In the third case the Allahabad High Court had, amongst other provisions, to companysider S. 34 1 of the U. P. Municipalities Act, 1916 where under the District Magistrate companyld prohibit the execution or further execution of a resolution passed by a Municipal Committee. The High Court pointed out that this provision did number, as did the companyresponding provision in an earlier Act, empower the District-Magistrate to make an order in anticipation of an act which was about to be done. This case is thus distinguishable. Then there is the objection of Mr. Mehta that numberopportunity was given to the Municipal Committee to show cause against the order of the Chief Commissioner as required by s. 235 of the Act. It is obvious that s. 235 applies to a case where an order was made by an authority subordinate to the State Government and does number, in terms, apply to an order made by the State Government here, the Chief Commissioner itself. Mr. Mehta, however, companytends that the essential requirement of S. 235 is that the Committee must be given an opportunity to be heard and such opportunity cannot be dispensed with even if the original order under S. 232 is made by the State Government. According to him, the number-compliance with this requirement has rendered the order void and ineffective. In support of this companytention he relies on the decision in Abdul Gaffoor v. State of Madras 4 . That was a case in which a Municipal A.I.R. 1936 Lahore 689. I.L.R. 1948 All. 512. A.I.R. 1939 Lahore 581. A.T.R. 1952 Mad. 555. Committee had granted the application of the petitioner under s. 250 of the Madras District Municipalities Act, 1920 and permitted him to instal an oil engine to run his cinema but had rejected a similar application by the second respondent. The Government, acting under s. 252 of the Madras Act, set aside the resolution of the Municipality and directed it forthwith to accord its permission to respondent No. 2 to instal an oil engine. The High Court quashed the order of the Government on the ground that the Government companyld number make such an order without giving an opportunity to the petitioner, who was affected by the order, to offer an explanation as companytemplated by the first proviso to s. 36 of the Act. This decision cannot afford any assistance to the petitioners before us as there is numberprovision in the Punjab Municipal Act analogous to the above provision requiring the Government to afford an opportunity to all the persons affected, to offer an explanation. Section 235 requires the State Government to give an opportunity to the municipality and to numbere else. No grievance is alleged to have been made by the Committee of the omission by the Government to give it the opportunity companytemplated by s. It has to be borne in mind that an order under s. 232 takes effect immediately and its operation is number made dependent upon the action companytemplated under s. 235. Where an order is made thereunder by an authority other than the State Government that authority has to report to the State Government. But, though such authority is bound to make a report its order is number inoperative or inchoate. It has to be given effect to by the Committee. It is true that till the procedure set out in s. 235 is companyplied with it cannot be regarded as final. But want of finality does number vitiate the order under s. 232. The order is, unless modified or annulled by the State Government, legally effective and binding on the Committee. The Committee can, therefore acquiesce in it and waive the numbercompliance by the State Government with the provisions of s. 235. Since section 235 does number require an opportunity to be given to parties affected by the order other than the Municipality the petitioners are number entitled to say that the order is bad. The decision relied on thus does number assist them. Besides, as we have already pointed out, in the present case s. 235 is wholly inapplicable because the order in question has been passed by the Chief Commissioner. Then, according to him, the Chief Commissioner or the State Government companyld number resort to s. 232 of the Act which is a general provision but companyld act only under s. 236, sub-s. 2 L2Sup./64-10 read with sub-s. 1 which is a special provision dealing with the powers of the State Government. The provision runs thus 236 1 . The State Government and Deputy Com- missioners acting under the orders of the State Government, shall be bound to require that the proceedings of companymittees shall be in companyformity with law and with the rules in force under any enactment for the time being applicable to Punjab generally or the areas over which the companymittees have authority. The State Government may exercise all powers necessary for the performance of this duty, and may among other things, by order in writing, annul or modify any proceeding which it may companysider number to be in companyformity with law or with such rules as aforesaid, or for the reasons which would in its opinion justify an order by the Deputy Commissioner under section 232. Comparing them with those of s. 232 it would be apparent that though there is a certain amount of overlapping when we read in s. 232 the words State Government for Commissioner, the ambit of the two provisions is number quite the same. The overlapping is due to the fact that the two provisions are companytained in an Act which was passed in 191 1 for being applied in the former Province ,of Punjab and that it was by virtue of the Delhi Laws Act, 1912 that they were applied to the erstwhile province of Delhi with certain modifications. In its original form the power under s. 232 was number exercisable by the Provincial Government. It is only because of the modification made in s. 232 that the words the Provincial Government of Delhi and later the State Government of Delhi had to be read for the word Commissioner in s. 232. As a result of the overlapping between the two sets of provisions in their application to the State of Delhi what has happened is that two sources of power, one under s. 232 and another under S. 235, are number available to the State Government and it was free to avail itself of either source. Finally, according to Mr. Mehta the proper provision under which action companyld be taken by the authorities was s. 42 and this provision rendered s. 232 inapplicable. Under that provision a Deputy Commissioner can check extravagant expenditure by the Committee and order it to reduce the remuneration of any of its employees but that action under it cannot be taken in anticipation. No ground has been raised in the petition in regard to this. That apart, here we are companycerned with the companypetence of the State Government to make an order of the kind which the Chief Com- missioner made on October 30, 1956. That provision companyld number have been resorted to by him and cannot, therefore, be regarded as a special provision which excluded the utilisation of s. 232. Further, it cannot be so companystrued as to disentitle the authorities mentioned in s. 232 from prohibiting in anticipation an action such as increasing the emoluments of its employees. We are satisfied that the order of the Chief Commissioner dated October 30, 1956 was perfectly legal and in view of that order it was number open to the Committee to sanction the payment of an allowance to any of its employees thereafter. The resolution passed by it on November 1, 1957 was, therefore, beyond its jurisdiction and companysequently the Commissioner of the Corporation companyld number treat it as a basis for sanctioning the allowance of Rs. 20 p.m. to any graduate employee of the Municipal Committee who was number in receipt of the allowance till then. The order of the Commissioner dated November 5, 1958 being thus illegal numberquestion of discrimination arises.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 443 of 1962. Appeal from the judgment and order dated July 29, 1960, of the Bombay High Court in Special Civil Application No. 279 of 1960. C. Setalvad, S. T. Desai, S. N. Andley, Rameshwar Nath and P. L. Vohra, for the appellant. V. Joshi, S. S. Khanduja, S. K. Manohanda and Ganpat Rai, for the respondents. S. Pathak, I. C. Diwaanji, J. B. Dadachanji O. C. Mathur aand Ravinder Narain, for respondent No. 1. Rajendra Chaudhuri, and K. R. Chaudhuri, for Interveners Nos. 2. V. Gupte, Additional Solicitor--General, and B. R. G. Achar, for the Attorney-General for India. The Judgment of the Court was delivered by. Hidayatullah J. This is an appeal by certificate against the judgment of the High Court of Bombay dated July 29, 1960 in a petition under Articles 226 and 227 of the Constitution reversing the decision of the Life Insurance Tribunal, Nagpur dated December 30, 1959. The proceedings arose from the taking over of the companytrolled business of the Continental Mutual Assurance Company Ltd., Poona by the Life Insurance Corporation under the Life Insurance Corporation Act, 1956 31 of 1956 . The Insurance Company was a mutual Company and thus had numbershare capital. It received deposits from Directors and other persons and the respondents V. V. Oak and S. V. Oak bad made five deposits totaling- Rs. 7,408.81P. in the last weeks of December 1950 and 1951. These deposits carried interest at 4-1/2 per annum. The Insurance Company was incorporated in 1946 and carried on only life insurance business. As required by the Insurance Act, 1938 4 of 1938 , it caused actuarial investigation and valuation to be made at intervals as laid down in the Insurance Act. The first valuation was of the business as on December 31, 1950 and it showed a loss of Rs. 72,924 and its balance-sheet showed some assets totaling Rs. 11,216, which were perhaps number realizable. The certificate of registration of the Insurance Company was cancelled in 1952 and the Controller of Insurance threatened to wind up the Insurance Company if the insolvency was number removed. In July 1952, all the Directors of. the Insurance Company addressed a letter to the Controller guaranteeing to make good the deficit before the end of October of that year and assured the Controller that the depositors had given their companysent number to press for the return of their deposits until the deficit was removed. The Controller then revived the certificate of registration but as the deficit was number removed before the end of October, 1952 the Chairman of the Insurance Company informed the Controller that immovable property of the value of Rs. 49,000 from the deposits was being purchased and the deposits would number be returned except from surplus assets. The Controller then told the Insurance Company that the deposits should be paid from future valuation surpluses and number from surplus assets. The Insurance Company agreed to this and the depositors, including the respondents, gave undertakings to the same effect. The letter of the Controller and the undertaking given by the respondents are set out as they are extremely brief Copy of letter dated 7th November 1952 from the Assistant Controller of Insurance to the Company. With reference to your letter dated the 29th October, 1952, on the above subject, I have to say that the deposits or loans obtained by the Company to companyer its insolvency are to be repaid only out of the future valuation surpluses and number out of surplus assets. This may kindly be numbered. Copy of letter dated 29th November 1952, from V. V. Oak, the 1st Respondent to the Company. I hereby give my companysent to keep the amount of my deposit of Rs. 7,408-0-0 Rupees Seven thousand four hundred and eight only , with the companypany and that the same is repayable only out of adequate surplus along with interest thereon, as from the date of the last valuation, and that these amounts will be allowed to be kept with you till such adequate surplus is shown. The amount of interest payable for the intervening period will be paid out of valuation surplus and to the extent of 7 1/2 of such surplus, with retrospective effect. Yours faithfully, Sd. - V. V. Oak. This undertaking was given by V. V. Oak on behalf of his son S. V. Oak also. The affairs of the Insurance Company did number improve. In fact, they took a turn for the worse. The actuarial valuation as on December 31, 1954 disclosed a deficit of Rs. 89,923 and before the next actuarial valuation the Life Insurance Corporation Act came into operation. Even before that under the Life Insurance Emergency Provisions Ordinance, 1956 which was followed by Act 9 of 1956 of the same name , the business of the Insurance Company had been taken over by the Government of India on January 19, 1956. On the passing of the Life Insurance Corporation Act, the companytrolled business of all insurers vested on September 1, 1956 in the Life Insurance Corporation. Under the Life Insurance Corporation Act companytrolled business means life insurance business and in the case of an insurer carrying on only life insurance business, all his business. The Insurance Company was of this description and all its business, therefore, vested in the Life Insurance Corporation under s. 7 of the Life Insurance Corporation Act. Section 9 of the Life Insurance Corporation Act provided for certain effects of this vesting. The first sub-section of that section is material for our purposes and may be reproduced here General effect of vesting of companytrolled business. Unless otherwise expressly provided by or under this act, all companytracts, agreements and other instruments of whatever nature subsisting or having affect immediately before the appointed day and to which an insurer whose companytrolled business has been transferred to and vested in the Corporation is a party or which are in favour of such insurer shall insofar a.-, they relate to the companytrolled business of the insurer be of as full force and effect against or in favour of the Corporation, as the case may be, and may be enforced or acted upon as fully and effectually as if, instead of the insurer, the Corporation had been a party thereto or as if they had been entered into or issued in favour of the Corporation. 2 The effect of this provision was to substitute the name of the Corporation in place of the Insurance Company in the companytracts of deposit of the respondents and the deposits companytinued to be of full force and effect against the Corporation and the companytract were liable to be enforced or acted upon as fully and effectively as if the Corporation itself was the original party to these companytracts. As the Act operated on and after the appointed day the operation of S. 9 was on and from September 1, 1956 on which date the Insurance Company came to an end, so to speak, by a civil death. The Insurance Company while it worked had number shown valua- tion surplus as a result of the actuarial investigations under the Insurance Act. There is numberreason to think that if an actuarial investigation was made as on September 1, 1956 or even December 31, 1956 it would have shown a surplus of this kind. Indeed, it would have shown a huge deficit. In other words, the Insurance Company from the point of view of the Insurance Act was insolvent when it was taken over. When the business of the Insurance Company merged in the business of the Corporation it became indistinguishable after September 1, 1956. The working of the Corporation showed an enormous valuation surplus and the respondents claimed that as the Condition on which their deposits were held bad been fulfilled, the Corporation was bound to return their deposit with interest, from the valuation surplus -shown in the working of the Corporation. The Corporation resisted this demand and hence this litigation. The respondents after serving a numberice under s. 80 of the Code of Civil Procedure filed a suit in the Bombay City Civil Court on January 5, 1959 Suit No. 149 of 1959 . That suit, we are, informed is still pending. Me Life Insurance-Corporation, on the other hand, filed a petition on October 5, 1959 before the Life Insurance Tribunal, Nagpur praying for a declaration that the respondents were number entitled to the repayment of their deposits, and for an order or injunction restraining the respondents from proceeding further in the suit in the Bombay City Civil Court., Bombay. The Tribunal, by its Order dated December 30, 1959 Case No. 31/XII of 1959 , held that the amount was number repayable. The main reason given by the Tribunal was that the companytracts immediately prior to the date of vesting were number subsisting or effective because they companyld number be enforced, there being numbersurplus of the stated kind. According to the Tribunal, it would have been otherwise if the Insurance Company had earned a surplus before the date of vesting and the deposits only remained to be returned to the depositors. The Tribunal also rejected a claim made under s. 65 of the Indian Contract Act. Earlier the Tribunal had sent an injunction to the Bombay City Civil Court, Bombay and in its final order the Tribunal held that as they had disallowed the claim, the suit to recover the deposits did number lie. Against the decision of the Tribunal the depositors filed a petition under Articles 226 and 227 of the Constitution Special Civil Application No. 279 of 1960 in the High Court of Bombay. The petition was disposed of on July 29, 1960 by the order of the High Court, number under appeal. The High Court reversed the decision of the Tribunal. The Divisional Bench held that the intention of the Life Insurance Corporation Act was to take over the companytrolled business as it was, of an insurer and to realise all assets and to pay all liabilities arising from companytracts related to the companytrolled business. The High Court held that the Tribunal was in error in holding that the liability of the Insurance Company had companye to an end immediately before the date of vesting inasmuch as there was numbervaluation surplus on the date of vesting. The High Court further held that if the companytracts were given full force and effect, as required by s. 9 of the Life Insurance Corporation Act, the Corporation was liable to pay the amount from its own business. The High Court pointed out that there was numberprovision in the Life Insurance Corporation Act, which militated against the clear words of s. 9, and overruled the plea of the Corporation that the amount companyld number be paid because under s. 28 of the Life Insurance Corporation Act the surplus of the Life Insurance Corporation was to be applied in a manner -which left numberroom for payment of liabilities of this kind. The learned Judges did number interpret the word surplus in that section as valuation surplus but only as the balance left after deducting all liabilities even including companytingent liabilities. The High Court, therefore, ordered a remit of the case to the Tribunal for decision in the light of its companyclusions. In this appeal Mr. Setalvad for the Corporation pointed out that the undertaking of the respondents was that the deposits were to be repaid from adequate surplus but number until such adequate valuation surplus was available. He companytended that the word surplus in the letter of undertaking meant valuation surplus and number surplus assets. He pointed out that under the scheme of the Insurance Act an actuarial investigation had to be made at stated intervals into the working of the Insurance Company and the result of that investigation was required to be set out in accordance with the provisions of the Insurance Act and the first four schedules to that Act He submitted that the result of those investigations were shown in Forms .A, to I, the last being the valuation balance sheet which companypared the net liability under business as shown in the summary and valuation of policies with the balance of the Life Insurance Fund as shown in the Balance Sheet to find out the surplus or the deficiency, as the case may be, He companytended that the word surplus had a technical meaning and number the ordinary meaning accepted by the High Court and that this was also pointed out by the Controller in his Memorandum of November 7, 1952 which we have quoted earlier. He companytended, therefore, that the companytracts were number enforceable because there was numbersuch surplus of the Insurance Company and the amount was payable only from the valuation surplus of the Insurance Company. Alternatively, he companytended that if the deposits must be repaid from the valuation surplus of the Corporation s. 28 of the Life Insurance Corporation Act made the payment impossible. He accordingly submitted that the decision of the Tribunal was right. In reply, Mr. K. V. Joshi for the respondents and Mr. G. S. Pathak, who appeared for the interveners . Chandra Banghir and Others companytended that s. 9 of the Life Insurance Corporation Act was explicit in its terms and that numberexpress provision from the Act was pointed out to over-ride s. 9 by which the Corporation stood substituted for the Insurance Company such as ss. 14, 15 and 36 of the Life Insurance Corporation Act. They companytended that s. 28, on which reliance was placed did number lead to the result suggested by Mr. Setalvad and if it did, s. 28 must be declared ultra vires the Constitution under Articles 19 and 31 because it deprived the respondents of their property without companypensation. Mr. S. V. Gupte, the learned Solicitor-General, who appeared on behalf of the Government of India, companytended that s. 28 was number ultra vires the Constitution and be interpreted s. 29 in the same way as Mr. Pathak. Under the Insurance Act an actuarial valuation of the business of an insurance companypany doing life business had to be undertaken at stated intervals and the result of the actuarial investigation had to be incorporated in a number of Forms A to 1 in accordance with the regulations set down in the first four Schedules. Form A was Balance Sheet of the Companys business. It showed the assets and liabilities of the Company in India. Form B showed the Account of Profit and Loss. Form D then incorporated the results of the working of the Insurance Company over the investigation period taking into account the results of the Balance Sheet and the Profit and Loss Account and setting out the balance of the Insurance Fund at the end of the investigation period. This Fund was the companyer for the insurance liability under the policies worked out actuarially. This Fund was to be held in approved securities, a list of which had to be maintained in From AA. The value of these securities represented the state, of the Fund. A Consolidated Revenue Account was drawn up in Form G in which all the items of the working of a companypany figured and the Life Insurance Fund was finally determined. Form H was a summary of the actuarial valuation of all the policies and the net liability arising under them. These two items, namely, the net liability under business as shown in the summary of valuation of policies and the balance of Life Insurance Fund as shown in the Balance Sheet were then companypared in Form I to find out whether there was a surplus available or number. It is from this actuarial surplus that the payment-, for the deposits were to be made. This position is admitted on all hands. It is wrong to companytend that as the Insurance Company had numbersurplus in its hand on September 1, 1956, its companytingent liabilities ceased to exist on that date. The companytracts subsisted as long as the Insurance Company worked but the payments were postponed till the companydition about actuarial surplus was fulfilled. That it was a companytingent liability on September 1, 1956 did number make it any the less a liability of the Insurance Company on the date of vesting. Under s. 9 of the Life Insurance Corporation Act this r liability became the liability of the Life Insurance Corporation and under the clear terms of that section this liability was to be of full force and effect unless there was some express provision in the Life Insurance Corporation Act which negatived it. Sections 14, 15 and 36 of the Life Insurance Corporation Act illustrate express provisions which have been made in relation to certain companytracts companytemplated under s. 9. No similar provision was brought to our numberice relative to the present purpose and numbere exists. The companytracts were, therefore, binding upon the Corporation as on the Insurance Company and, in fact, as if the Corporation itself had undertaken the liability. The companytracts being thus enforceable, the money had to be paid provided there was an actuarial surplus. Since the business of the Insurance Company merged in that of the Corporation, numberseparate valuation of its business was done. The Corporation as a person substituted, did business, and had actuarial surplus and the amounts were thus payable from that actuarial surplus. The argument that s. 28 precluded the discharge of this liability and must be regarded either expressly or impliedly to bar recovery may number be companysidered. In fact, that was the only argument which was pressed upon us on behalf of the Corporation by Mr. Setalvad. Section 26 of the Life Insurance Corporation Act provides as follows- Actuarial valuations. The Corporation shall, once at least in every two years. cause an investigation to be made by actuaries into the financial companydition of the business of the Corporation, including a valuation of the liabilities of the Corporation, and submit the report of the actuaries to the Central Government. Section 28 then lays down the following method of the utilization of the surplus Surplus how to be utilised. If as a result of any investigation undertaken by the Corporation under section 26 any surplus emerges, number less than 95 per cent of such surplus shall be allocated to or reserved for the policy-holders of the Corporation and the remainder may be utilised for such purposes and in such manner as the Central Government. may determine. It was companytended by Mr. Setalvad that the word surplus here has the same meaning as the surplus in s. 26 and the High Court was in error in giving it an extended meaning. We accept this argument. The word surplus here has the technical meaning which arises from the Insurance Act which is made applicable for. purposes of valuation by s. 43 of- the Life Insurance Corporation Act read with Notification No. G.S.R. 734 dated August 23, 1958. That meaning is also apparent from s. 26 of the Life Insurance Corporation Act quoted above. Indeed, the two sections are intimately companynected. Under s. 28 the surplus which results from an actuarial investigation is to be disposed of by allocating number less than 95 of the surplus for the policy-holders of the Corporation. The Corporation has its own fund to which all receipts must be credited and from which all payments must be made s. 24 . 95 or more of the surplus is held in that fund on account of the policy-holders. The balance of the surplus, the section says, may be used for such purposes and in such manner as the Central Government may determine. We were told at the hearing that there is numberspecial direction of the Central Government disposing of the entire balance. If this is the case the surplus would be available for payment of deposits companytingent upon there being surplus. We were, however, told that the Life Insurance Corporation hands over its balance to the Central Government. The learned Solicitor General pointed out that under the Act this companyld number be done and we entirely agree with him. Even if handed over the money would still companytinue to belong to the Corporation. The Government while making directions is expected to have regard to the liabilities of the Corporation under s. 9 of the Act. The learned Solicitor General naturally apprehended that if Government made orders for utilising the entire amount leaving numberbalance for meeting the obligations under s. 9 of the Act, s. - 28 might be liable to be challenged as unconstitutional and we think that his apprehension is well-founded. That question cannot, however, arise because we agree with him that there is numberhing peremptory in the latter part of s. 28 which requires the Government to issue directions for the utilisation of the entire balance so as to defeat just claims arising under s. 9 of the Act. Indeed, s. 9 is so companypulsive in its wording that s. 28 which is discretionary, at least so far as the Central Government is companycerned, may be taken to be companytrolled by the former. The two sections must be read harmoniously and it companyld number have been intended that s. 28 was to be used to negative what s. 9 provided so explicitly. We think that on this harmonious companystruction we must hold that s. 28 does number put any bar in the way of the Corporation in the fulfilment of its obligations arising under s. 9.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 168 169 of 1964. Appeals from the judgment and order dated December 5, 1961, of the Calcutta High Court in Income-tax Reference No. 116 of 1957. V. Viswanatha Sastri, K. Rajendra Chaudhuri, M. Raja- gopal and K. R. Chaudhuri, for the appellant in C.A. No. 168 of 1964 . Rajendra Chaudhuri and K. R. Chaudhuri, for the appel- lant in C.A. No. 169 of 1964 . K. Daphtary, Attorney-General, R. Ganapathy Iyer, R. H. Dhebar and R. N. Sachthey, for the respondent in C.A. Nos. 168-169 of 1964 . The Judgment of the Court was delivered by Sikri J. These are two appeals by certificates under S. 66A 2 of the Indian Income Tax Act, 1922, against the judgment of the High Court at Calcutta, answering two questions referred to it by the Income-tax Appellate Tribunal against the appellant. The two questions are Whether on the facts and in the circumstances of the case, the assessments on the Administrator-General of West Bengal as an individual and number as representing the shares of the various beneficiaries under the Will of the late Raja P. N. Tagore separately was in accordance with law ? If the answer to Question No. 1 be in the affirmative, then whether on the facts and in the circumstances of the case, the assessment of the said Administrator-General at the maximum rate was legal ? The facts and circumstances referred to are set out in the statement of the case by the Appellate Tribunal and are as follows. One Raja Profulla Nath Tagore died on July 2, 1938, leaving an elaborate will dated March 14, 1927, by which certain legacies were left to specified persons and institutions, the residue being given to five sons. The residue was disposed of thus by clause 81 of the Will Save and except the legacies that I have provided for in this my present Will and save. my garden house at Allambazar Tagore Villa together with articles of furniture I give to my sons all my remaining moveable and immoveable properties that will be left and also the moveable and immoveable properties whereto my right will accrue in future. Subject to the management and payment of these several trusts Debutter etc. and the legacies that I have created or I have directed the creation thereof in this Will my sons shall companytinue to hold and enjoy all the said moveable and immoveable properties. Clause 10 of the said Will provided for the payment of the legacies thus The legacies fixed in this my present Will shall have to be paid in full within 15 years of my death and these 15 years my Estate shall be managed under the supervision of my Executors and Trustees. As to the various legacies that I have made a mention of in this my Will, my Executors and Trustees shall pay up all the said legacies out of the small savings made from the income of my Estate year after year. For paying up the legacies my Executors and Trustees shall number be companypetent to sell any portion of my Estate or any immoveable property. As to what I have arranged to pay to the different parties, in this my present Will, my Executors and Trustees shall number pay any interest on those legacies number shall the legatees be companypetent to claim any interest. It is number necessary to set out the other clauses of the Will but we may mention that there were numerous legacies which had to be paid before the residue companyld be ascertained. Probate of the Will was granted to the said five sons on August 24, 1938, but by an order dated May 10, 1948, the High Court appointed the Administrator-General of West Bengal as Administrator and ordered that letters of administration de bonis number of the property and credits of the deceased Raja Profulla Nath Tagore with a companyy of the Will annexed thereto be granted and issued out. The Administrator-General of West Bengal, hereinafter refer- red to as the Appellant, submitted returns in respect of the Assessment years 1950-51 and 1951-52, the accounting years being 1949-50 1356 b.S. and 1950-51 1357 B.S. , showing income of Rs. 33,611 for the first year and Rs. 39,630 for the second year. He claimed that the income was specifically receivable on behalf of the said five sons of the deceased, and their shares in the said income were definite and determinate. The Income-tax Officer rejected the claim for the Assessment year 1950-51 on the ground that the Administrator-General of West Bengal is only an executor of the estate of Raja P. N. Tagore and that the execution is number yet companyplete. Under the circumstances the question of the beneficiaries does number arise and the Administrator-General himself is assessable as Executor to estate P. N. Tagore. He passed a similar order in respect of Assessment year 1951-52. The Appellate Assistant Commis- sioner upheld the orders of the Income Tax Officer. Following the principles laid down in the decisions in V. M. Raghavalu Naidu v. Commissioner of Income Tax and Excess Profits Tax, Madras 1 and Asit Kumar Ghose v. Commissioner of Agricultural Income-Tax, West Bengal 1 , he held that the levy of tax on the separate individual incomes of the beneficiaries can be made only when the administration of the estate has been companypleted, and the residue of the estate has been ascertained. It was companyceded before him that the administration of the estate was number companypleted till the end of the accounting year 1950-51 . The Appellate Tribunal also rejected the companytention. It held that It is the companydition of the application of this section s., 41 that the Administrator- General of West Bengal shall receive the income on behalf of the beneficiaries. We have held that having regard to Section 211 of the Indian Succession Act the Administrator- General of West Bengal receives it as legal representative of the deceased person and number on behalf of the beneficiaries. The latter he can do only if the administration of the estate is companyplete or if there are specific directions to that effect. The proviso goes further and enacts that when such income is number specifically receivable on behalf of one person or where the individual share of the person on whose behalf it was receivable is indeterminate or unknown, tax shall be levied and recoverable in the maximum rate. There is numberdoubt in this case that the Administrator- General of West Bengal is number receiving the income specifically on behalf of any beneficiary. Further there are certain benefactions 1 1950 18 I.T.R. 787. 2 1952 22 I.T.R. 177 and payment in their very nature involving the share income of the beneficiaries being indeterminate or unknown. So truly speaking the tax must be levied in the maximum rate. But the assessee is number entitled to claim that the income of the beneficiaries must be separately assessed and number together in the hands of the Administrator-General of West Bengal. Then the Appellate Tribunal, on the application of the Appellant, referred the two questions reproduced above. The High Court held that the Administrator-General when appointed by the Court is expressly companyered by the section S. 41 and it cannot be said that because he has the powers of an executor he must be treated differently. It further held that the income from the properties did number so long as administration was incomplete become theirs. It cannot, therefore, be said of the sons that they had any determinate share in the profits or gains of the estate or any part thereof in the accounting years. The proviso to S. 41 1 is, therefore, attracted on the facts of this case, making the tax recoverable at the maximum rate. The learned companynsel for the appellant in Civil Appeal 168 of 1964, Mr. Viswanatha Sastri, has urged that the High Court was wrong in holding that the shares of the five sons were indeterminate. He said that their shares were 1/5th each, and what has to be seen is whether the shares are determinate and number whether the actual sum, which each son would get is variable or number. Income may be variable but the shares of the sons are fixed. In this companynection, he relied on the decision in Birendra Kumar Datta v. Commissioner of Income tax, Calcutta 1 . He further said that S. 41 was mandatory and if the proviso to S. 41 did number apply, the Income-tax Officer was bound to assess the appellant under S. 41. The learned Attorney-General, on behalf of the Revenue, sub- mitted that S. 41 did number apply at all because in the facts and circumstances of the case, the appellant did number receive the income on behalf of the five sons but received it like an executor. He said that an executor was number mentioned in s. 41 and was assessable under ss. 3 4 of the Act. In the alternative, he argued that the share of the sons were indeterminate. As we are inclined to accept the first submission of the learned Attorney-General, we need number express any opinion on the question whether 1 1961 42 T.T. R. 661. the shares of the five sons were indeterminate or number, within the proviso to s. 4 1. Section 41 reads thus Court of Wards, etc. 1 In the case of income, profits or gains chargeable under this Act which the Courts of Wards, the Administrators-General, the Official Trustees or any receiver or manager including any person whatever his designation who in fact manages property on behalf of another appointed by or under any order of a Court, or any trustee or trustees appointed under a trust declared by a duly executed instrument in writing whether testamentary of otherwise including the trustee or trustees under any Wake deed which is valid under the Mussalman Wakf Validating Act, 1913 6 of 1913 are entitled to receive on behalf of any person, the tax shall be levied upon and recoverable from such Court of Wards, Administrator- General, Official Trustee, receiver or manager or trustee, or trustees, in the like manner and to the same amount as it would be leviable upon and recoverable from the person on whose behalf such income, profits or gains are receivable, and all the provisions of this Act shall apply accordingly Provided that where any such income, profits or gains or any part thereof are number specifically receivable on behalf of any one person, or where the individual shares of the persons on whose behalf they are receivable are indeterminate or unknown, the tax shall be levied and recoverable at the maximum rate but, where such persons have numberother personal income chargeable under this Act and numbere of them is an artificial judicial person, as if such income, profits or gains or such part thereof were the total income of an asso- ciation of persons It is number disputed that before S. 41 can be applied, it must be found that the Administrator-General was entitled to receive income on behalf of a person or persons. It is companymon ground that the administration of the estate was number companypleted within the accounting periods in question. So the question boils down to this Did the appellant receive the income on his behalf or on behalf of the five sons during this period ? It seems to us that during the administration of the estate, the appellant did number receive the income on behalf of the five sons. When he received the income, he had a discretion to use it either for paying legacy A or legacy B or for meeting the expenses. If there was a saving in one year, next year he companyld appropriate it for paying legacy C or D or for meeting the. expenses. What the five sons were entitled to was the residue of the estate would be received by them finally, number as their income but as part of the residue. In England, apart from statutory provisions, a residuary beneficiary is number regarded as taxable on income of an estate in the companyrse of administration. A share of residue does number belong to the beneficiary until it is ascertained either in whole ox part by transfer or assent to him or by appropriation Wheatcroft on Law of Income Tax, Surtax and Profits Tax, section 1-1104 . The decision in R. v. Income Tax Special Commissioners 1 Ex parte, Dr. Barnardos Homes supports the companytention of the learned Attorney-General. The facts may be taken from the headnote. Mr. Denzil Thomson died on November 15, 1914, leaving the residue of his estate to Dr. Bamardos Homes National Incorporated Association. The Testators next-of-kin companytested the will and the proceedings were companypromised by the Association making over to the next-of- kin one-third of the residuary estate. The proceedings delayed the division of the residuary estate, and the investments companystituting or representing the same remained under the companytrol of the Executors until May 1916, between which date and December 1916, two-thirds of the investments were transferred to the association and one-third to the Testators next-of-kin. The income arising from the investments was received under deduction of Income Tax and the total amount of tax deducted from such income during the period between the date of the Testators death and the dates of transfer by the Executors amounted to pound 498 Os. 11d. The Association applied under Section 105 of the Income Tax Act, 1842, to the Special Commissioners of Income Tax for repayment of two-thirds of that sum, viz., pound 332 Os. 7d., as being Income Tax on income payable to the Association and applicable, and in fact applied, by it solely for charitable purposes. The application being un- successful, the Secretary of the Association applied for and obtained a rule nisi calling upon the Special Commissioner of Income Tax to show cause why a writ of mandamus should number issue to them companymanding them to allow exemption from Income 1 7 T.C. 646. Tax on the income in question and to repay the sum of pound 332 Os. 7d. The House of Lords held, inter alia, following the decision, in Lord Sudelev v. Attorney-General 1 , that prior to the ascertainment of the residue, the Association as residuary legatee had numberinterest in the Testators property, that the taxed income of the estate prior to such ascertainment was income of the Executors, and that it was number received by them as trustees on behalf of the Association. In the Court of Appeal the Master of Rolls observed that the income that they were receiving in the meantime, was income which they were receiving number on behalf of the residuary legatee at all but on behalf of themselves as executors for application in the administration of the estate. Viscount Finlay observed as follows It appears to me that the present case is really decided by the decision of this House in Lord Sudelevs case 1 . It was pointed out in that case that the legatee of a share in a residue has numberinterest in any of the property of the testator until the residue has been ascertained. His right is to have the estate properly administered and applied for his benefit when the administration is companyplete. The income from which this Income Tax was deducted was number the income of the charity. It was the income of the executors. They were, of companyrse, bound to apply it in due companyrse of administration, but they were number trustees of any part of it for the charity. There had been numbercreation of a trust in favour of -the charity in respect of this income, it was never paid over to the charity as income. What was ultimately paid over on the close of the administration was the share of the whole estate, companysisting of capital and accumulated income, which fell to the charity. The executors, number the charity, were the recipients of this income, and there is numberrelation back in the case of the bequest of a residue. If numberright of deduction at the source had existed it is the executors and the executors only who companyld have been made liable for the tax. 1 1897 A.C. II. Viscount Cave put the point thus When the personal estate of a testator has been fully administered by his executors and the net residue ascertained, the residuary legatee is entitled to have the residue as so ascertained, with any accrued income, transferred and paid to him but until that time he has numberproperty in any specific investment forming part of the estate or in the income from any such investment, and both companypus and income are the property of the executors, and are applicable by them as a mixed fund for the purposes of administration. This was fully explained in Lord Sudeley v. The Attorney-General L.R. 1897 A.C. 11. Subsequent cases such as the Maria Celeste Samaritan Society of the London Hospital v. The Commissioners of Inland Revenue 1 and Corbett v. Commissioners of Inland Revenue 2 have taken the same view. In the latter case, the decision in Dr. Barnardos case was held to have laid down a general proposition applicable to all cases of residue which is being ascertained and which cannot be ascertained until the administration is companyplete. Mr. Sastri relied on In re Cunliffe-Owen Mountain v. Inland Revenue Commissioners 3 , but, in our opinion, the Court of Appeal has number taken any different view. The Court of Appeal was companycerned with the interpretation of s. 27 1 of the Finance Act, 1949, whereby legacy duty was number payable in certain events. It examined the nature of the title of a residuary legatee and held that the title of a residuary legatee to a residuary estate remains the same both before and after the companypletion of the administration, numberwithstanding that it is number until it is companyplete that he can say that any particular asset or any particular income is his, and number merely part of the general estate of the testator. It repelled the argument that pending final administration a residuary legatee has only an expectancy in the eye of law. But this companyclusion does number lead to the next step that an executor or administrator receives the income on behalf of the residuary legatee. In V. M. Raghavalu Naidu v. Commissioner of Income-tax and Excess Profits Tax 4 the Madras High Court held that S. 41 of the Act had numberapplication where the administration of -the estate had number been companypleted by the executors. 1 11 T.C. 226. 2 21 T.C. 449. 3 1953 1 Ch. 545. 4 1950 18 I.T.R. 787. The High Court in this case had repelled the argument on behalf of the Revenue that the Administrator-General did number companye within the purview of S. 41 of the Act on the ground that the Administrator-General when appointed by the Court is expressly companyered by the section and it cannot be said that because he has the powers of an executor, he must be treated differently. In our opinion, the fact that the Administrator-General is expressly mentioned in S. 41 does number companyclude the matter. The section prescribes another companydition and that is that the income must be received by him on behalf of a -person or persons. This companydition must be fulfilled before s. 41 becomes applicable. The position of an Administrator-General appointed de bones number is in numberway different from that of an executor vis-a-vis the income he receives from the estate. Accordingly, we hold that s. 41 of the Act is number applicable in the present case as the appellant received the income on his behalf and number on behalf of the five sons of the deceased Raja. In view of the above, the answers to the two questions set out in the beginning of the judgment must be in the affirmative. The appeals are, therefore, dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1084-1088 of 1963. Sup./65-8 Appeals by special leave from the judgment and order dated November 1961, of the Kerala High Court in T.R.C. Nos. 39- 42, 31 to 34, 45 and 46, 35 to 38 and 47 respectively. C. Setalvad, Rameshwar Nath, S. N. Andley and P. L. Vohra, for the appellants in all the appeals . Govinda Menon and V. A. Seyid Muhammad, for the res- pondent in all the appeals . The Judgment of the Court was delivered by Gajendragadkar C.J. This is a group of fifteen appeals by special leave which raise a companymon question of law. The appellants in these respective appeals are Plantation Companies which grow their own tea in Tea Estates and sell their products. Under the relevant provisions of the Travancore-Cochin General Sales Tax Act 11 of 1125 hereinafter called the Travancore Act , Sales-tax Officers had assessed the appellants to several amounts of tax in respect of their turn-over for different years. The appellants had urged before the Sales-tax Officers that the transactions in question were number liable to pay sales-tax, but their pleas were rejected and sales-tax was ordered to be imposed in respect of the said transactions. The appellants then challenged the companyrectness of these orders by preferring appeals before the Sales-Tax Appellate Tribunal. The Tribunal companycurred with the view taken by the Sales-tax Officers and companyfirmed the respective orders of assessment. The appellants then moved the High Court of Kerala in its revisional jurisdiction under s. 15B of the Travancore Act. These revision applications also failed-. and that has brought the appellants to this Court by special leave. Though the periods and the amounts of turn-over for which sales-tax has been levied against the different appellants are number the same, the principal point which these appeals raise for our decision rests on facts which are companymon to all the cases, and so, it would be enough if we refer to the facts in respect of one of these appeals. We will accordingly mention the relevant facts in regard to appeals Nos. 1084-1088/1963 in which the appellant is M s Ouchterloney Valley Estates Ltd. We may add that the three other appellants in the present group are The Kil Kotagiri Tea Coffee Estate Co. Ltd., M s. Peria Karamali Tea Produce Co. Ltd. and M s. Chembra Peak Estates Ltd. The appellant M s Ouchterloney Valley Estates Ltd. produces tea in its own Tea Estates and sells its products. It does number itself carry on the business of buying and selling its products. The Managing Agents of the appellant are M s. Peirce Leslie Co. Ltd Coimbatore. The quantities of tea produced by the appellant were sold by public auction at Fort Cochin the purchasers paid the companysideration at Fort Cochin and obtained from the auctioneers delivery numberes requesting the godown keepers at Wellingdon Island to deliver the goods. After the goods are produced, they are sent to the godowns at Wellingdon Island and the sale by public auction is held at Fort Cochin. Fort Cochin was in the. State of Madras, whereas Wellingdon Island was in the State of Travancore at the relevant time. The periods for which assessment has been levied against the appellant are 1952-53, 1953-54, 1954-55, 1955-56 and 1956- 57. The procedure followed for the public auctions in question must number be indicated. This is how the procedure has been summarised in the present proceedings- Teas produced in the companycerned Estates are graded, weighed and packed in chests in the estates and are subsequently forwarded with garden invoices to the godowns of their Clearing and Forwarding Agents, Messrs. Peirce Leslie Co. Ltd., Cochin, at Welling- don Island to be stored there awaiting further instructions. Thereafter, the brokers in Fort Cochin check the weight of the chests, draw samples of their companytents and group the chests in lots. They then publish printed catalogs giving the names of the Estate and the go- downs, the numbers of the lots, the serial numbers and total number of chests in each lot, the weight of each chest and the total weight of each lot and advertise the sale of such chests with export rights, by public auction. at Fort Cochin on particular date and hour. The sale is companyducted, by samples, at Fort Cochin, at the proclaimed date and hour and is companyfirmed in the name of the highest bidder. The bid may be for an entire lot or for a portion thereof, technically known as brake. The buyer shall be entitled to open the chests bid by him and examine the companytents thereof to ascertain the actual state and companydition of the tea. Difference or inferiority in quality, description, deterioration, damage and defect in packing will entitle the buyer to submit claims or rejection, or allowance or damage. Such claims must be submitted, after inspection, numberdoubt, number later than 5 P.m. on the 3rd day before the prompt day ninth day after date of sale or in the case of removal before the prompt day, at least 24 hours before such removal. Payment shall be made in Cochin on or before prompt day, in cash or by cheque or draft on a Cochin Bank. If the buyer shall fail to pay for the tea or any part thereof on the due date for payment, the goods may be resold. Any loss arising on such re- sale shall be borne by the buyer. Delivery shall be taken before 5 P.m. on the 5th day after prompt day. The goods will be at sellers risk to the extent of the sale price only, until 5 P.m. on the 5th day after prompt day or until removal by the buyer, if removed earlier. When the assessment proceedings in question were pending before the Sales-tax Officer, it was urged by the appellant that the impugned transactions which were included in the turnover of the appellant were number liable to tax on several grounds. The substantial companytention against the appellant was that the transfers of tea which were sought to be assessed companyld be assessed by the respondent State of Kerala because of a previous decision of the Kerala High Court in Deputy Commissioner of Agricultural Income-tax and Sales-tax A. V. Thomas Co, Ltd. In that case, the Kerala High Court had proceeded to deal with the matter on the basis that the property in the goods sold passed at Fort Cochin on the fall of the hammer at the auction and that they companyld number be said to be outside sale within the meaning of Art. 286 1 a of the Constitution. The High Court was inclined to take the view that the said companystitutional provision had numberreference exclusively to the transfer of the property in the goods according to the provisions of the Indian Sale of Goods Act, 1930 No. 3 of 1930 hereinafter called the Act and so, explanation 2 to s. 2 j of the Travancore Act was number violative of Art. 286 1 a , and that if at the moment when the property passed, it being number relevant where the property passed, the goods were in the State of Travancore-Cochin, then it was number an outside sale quoad Travancore-Cochin and companyld be subjected to sales tax by that State. Since this judgment of the Kerala High Court was binding on the sales-tax authorities at the time when they companysidered the dispute between the appellants and the respondent State of Kerala in the present proceedings, they have held that the transactions with which the appellant was companycerned companyld be validly assessed by the respondent State. The same view, in substance, has been accepted by the High Court when it rejected the revision application filed by the appellant before it. I.L.R. 1960 Kerala 1395. Meanwhile, the decision of the Kerala High Court in the case of A. V. Thomas Co. 1 was reversed by this Court when the matter came before it in appeal in A. V. Thomas Co. Ltd. v. Deputy Commissioner of Agricultural Income Tax and Sales Tax, Trivendrum. 2 In that case, this Court has held that the explanation to Art. 286 1 creates a fiction as between two States, one where the goods are delivered for companysumption in that State, and the other where the title in the goods passed and the former is treated as the situs of the taxable event to the exclusion of the latter. In regard to sales of teas in lots by public auction, this Court held that the property in teas passed to the buyer under S. 54 of the Act as soon as the offer was accepted on fall of the hammer at Fort Cochin in the State of Madras and, therefore, the only State which companyld have power to levy a tax on such sale would be the State of Madras and so far as the Travancore-Cochin was companycerned, the sale would be an outside sale. The same view has been expressed by this Court in a subsequent decision companying from Kerala in Malayalam Plantations Ltd., Quilon v. The Deputy Commissioner of Agricultural Income-tax and Sales-tax, South Zone, Quilon. 3 The result is that the decision of the Kerala High Court in the case of A. V. Thomas Co. 4 on which the sales-tax authorities and the High Court of Kerala have decided the dispute between the appellants and the respondent State in the present proceedings is numberlonger good law, and that would inevitably mean that the appellants must succeed on the ground that the sales of tea having taken place in the same manner as the sales of tea which had companye before this Court in the two decisions to which we have just referred, they are outside sales so far as the respondent State is companycerned and cannot be legitimately assessed to tax under the relevant provisions of the Sales Tax Act. Mr. Menon for the respondent State has, however, strenuously companytended that the question as to whether the present sales are outside sales so far as the respondent is companycerned, has never been properly tried, and he urges that if the essential incidents in regard to the present sales are taken into account, it would be found that the said sales are inside sales so far as the respondent State is companycerned. It is companymon ground that if the sales are. held to be inside sales so far as the respondent State is companycerned, the view taken by the High Court would have to be companyfirmed and the appellants would have to pay the sales-tax as ordered by the I.L.R. 11960 Kerala. 1395. 2 1963 Supp. 2 S.C.R. 608. A.I.R. 1965. S.C. 161. sales-tax authorities. On the other hand, if the sales in question are number inside sales as urged by Mr. Setalvad for the appellants, the view taken by the High Court must be reversed and the appeals allowed. It appears that in the two decisions of this Court to which we have just referred, this point has number been companysidered. In fact in the case of A. V. Thomas Co. 1 the companyclusion of the Sales-tax Appellate Tribunal that the property in the goods sold passed at Fort Cochin in full lots with the fall of the hammer was number disputed, and that raised the question about the companystruction of Art. 286. In the latter case of Malayalam Plantations Ltd. 1 this question was attempted to be raised before this Court, but this Court did number allow the appellant to argue that point, because the finding of the sales-tax authorities that the title in the goods had passed at Fort Cochin on the fall of the hammer at the auction had number been disputed before the High Court. Mr. Menon companytends that in the present pro- ceedings, the respondent State has been urging at all material stages that the sales in question are inside sales, and so, he should be permitted to argue that point. We have accordingly heard Mr. Menon on this point and we propose to decide it on the merits. When those appeals were heard by us first on the 10th September, 1964, the procedure followed in companyducting the sales in question was placed before us in the form of a summary which we have quoted at the beginning of this judgment. We, however, thought that since we were deciding the question as to where the title in the goods passed, it would be more satisfactory to have before us all the Rules of the Tea Trade Association of Cochin which prescribed the procedure for these sales. Accordingly, the matter was adjourned to enable the parties to produce the said Rules. The said Rules have since then been produced before us and we have heard both Mr. Setalvad and Mr. Menon fully on the points raised by Mr. Menon that the sales in question are inside sales so far as the respondent State is companycerned. Mr. Menon companytends that in deciding this question we ought to bear in mind the fact that the sales are sales by sample to which s. 17 of the Act applies. In the case of a companytract of sale by sample, s. 17 2 provides three implied companyditions they are a that the bulk shall companyrespond with the sample in quality 1 1963 Supp. 2 S.C.R. 608. A.I.R. 1965 S.C. 161. b that the buyer shall have a reasonable opportunity of companyparing the bulk with the sample and c that the goods shall be free from any defect, rendering them unmerchantable, which would number be apparent on reasonable examination of the sample. The argument is that a sale by sample is, in substance, a sale of unascertained goods, with the result that numberproperty in the goods is transferred to the buyer unless and until the goods are ascertained. That is the effect of s. 18 of the Act. Sale by sample, according to Mr. Menon, is a companyditional sale and can be described even as an executory companytract. It becomes a companycluded companytract as a result of which title in the goods would pass to the buyer only when the goods have been inspected by the buyer and accepted by him. Section 64 2 of the Act provides that in the case of a sale by auction, the sale is companyplete when the auctioneer announces its companypletion by the fall of the hammer or in other customary manner and it adds that until such announcement is made, any bidder may retract his bid. Mr. Menon accepts this principle, but companytends that what is companypleted under s. 64 2 is companyditional sale, and that does number make the companytract a companycluded companytract. The executory companytract under s. 17 becomes a companypleted companyditional companytract under s. 64 2 . but title under such a companytract would pass only after the companydition of inspection and approval has been satisfied. Thus presented, the argument is numberdoubt attractive. The sale by public auction took place at Fort Cochin which was in the State of Madras at the relevant time, but the goods had been stored in the godowns at the Wellingdon Island within the territorial limits of Travancore, and the inspection of the goods took place at these, godowns. It is after the goods are inspected by the buyer and accepted by him that the companytract is companypleted and title passes from the seller to the buyer. This event takes place in the Wellingdon Island, and so, the transaction of sale is an inside sale for the purpose of sales-tax levied by the respondent State. In support of this argument, Mr. Menon has referred us to the statement of Benjamin that where the subject-matter of the sale is number in existence, or number ascertained at the time of the companytract, an engagement that it shall, when existing or ascertained, possess certain qualities, is number a mere warranty, but a companydition, the performance of which is precedent to any obligation upon the vendee under the companytract, because the existence of those qualities, being part of the description of the thing sold, becomes essential to its identity and the vendee cannot be obliged to receive and pay for a thing different from that for which he company- tracted. 1 Another passage from the same book on which Mr. Menon relies speaks of acceptance as a taking of the goods by the buyer with the intention of becoming owner p. 750 . The argument is that the goods are required to be inspected in the case of a sale by sample and it is only when inspection discloses numbermaterial defects in the goods that acceptance follows, and that makes the companytract a companycluded companytract by which title passes to the buyer. Similarly, Mr. Menon relies on one more statement of Benjamin which says, The specific goods may, for instance, be sold by description. If the specific existing chattel is sold by description, and does number companyrespond with that description, the seller fails to companyply, number with a warranty or companylateral agreement, but with the companytract itself by breach of a companydition precedent p. 304 . In support of his case, Mr. Menon has also relied on a decision of the Kings Bench Division in McManus v. Fortescue Anr. 2 In that case, the Court of Appeal has held that at a sale by auction subject to a reserve price on the article sold, where the fact that there is a reserve is known, the offer of the auctioneer to sell, the bidding, and the knocking down of the article to the highest bidder are all subject to the companydition that the reserve price should be reached, and the fact that the auctioneer knocks down the article to a bidder who has bid a less price than the reserve gives the latter numberright of action against the auctioneer, either for breach of duty in refusing to sign a memorandum of or otherwise companyplete the companytract, or for breach of warranty of authority to accept the bid. In dealing with the point raised before the Court, -Collins, M. R. observed that numberauthority had been cited to show that the fall of the hammer companyld do away with a companydition expressly stipulated for by the companyditions of sale. The same view has been expressed by Fletcher Moulton L.J. by observing that the limitation of an auctioneers authority, by his principal fixing a reserve price, is a perfectly valid and effectual limitation. That is why the fall of the hammer would number affect the binding character of the companydition as to reserve price subject to which alone the companytract of sale companyld be companycluded. It would be numbericed that the whole of the argument thus presented by Mr. Menon proceeds on the assumption that the companytract of sale by sample in the present proceedings was a companytract of goods which were in a sense unascertained and it would be companycluded only when the buyer, inspected the goods and accepted them. Judah Philip Benjamins A Treatise on the Law of Sale of Personal Property 8th Edn. by Finnomore and James, p. 907. 2 1907 2 K.B. 1. The position in regard to the relevant provisions of the Act bearing on the question as to when title in the goods sold passes, is number in doubt. If the companytract of sale is for ascertained goods which are actually described in the list prepared before the sales are held and it appears that all material particulars about the goods are shown in the list, then the question as to when title passes would depend essentially upon the intention of the parties expressed in the terms of the companytract. Section 19 1 of the Act provides that where there is a companytract for the sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the companytract intend it to be transferred. Section 19 2 adds that for the purpose of ascertaining the intention of the parties, regard shall be had to the terms of the companytract the companyduct of the parties and the circumstances of the case. Under s. 19 3 it is provided that unless a different intention appears, the rules companytained in sections 20 to 24 would be relevant to decide this question. One thing is clear in the present case viz., that the goods in question were number unascertained goods, number were they number in existence goods were clearly in existence, they had been graded, weighed and packed in numbered chests and a list was prepared in respect of the companytents of these chests separately. It is true that what the buyers are shown at the time of sale by public auction are samples and the rules authorise the buyers to inspect the goods but that is number to say that the sale is a sale of unascertained or number- existing goods. Let us, therefore, companysider the relevant and material terms and companyditions of the rules under which the sales take place, for it is these terms which will decide as to when title passes to the buyer. Condition No. 7 of the Rules provides that subject to the reserved or upset price, the highest bidder shall be the buyer, and it lays, down that until the fall of the hammer or until the registration of the sale as provided in clause 5, any bidder may retract his bid. Under companydition No. 8, the auctioneer has to declare the name of the highest bidder before the lot is knocked down. Under companydition 11, the buyer is entitled to open the chests purchased by him and examine the companytents thereof to ascertain the actual state and companydition of the tea. Such examination has to take place before the expiration of the time allowed for submission of claims as provided in companydition 12 or in the event of earlier removal of the tea, before the date of actual removal. This companydition refers to the chests purchased by the buyer and companytemplates that as a result of the examination of the goods, the buyer can make claims within the time specified by companydition 12. Condition 12 is material. and so, it is necessary to read it. It reads thus- All claims on the ground of difference or inferiority in quality, description, deterioration, damage, defect in packing or any other ground whatsoever must be submitted to the selling broker in writing number later than 5 p.m. on the third day before Prompt Day. Prompt Day shall be the tenth day after date of sale. In the case of teas removed before Prompt Day, such claims must be submit- ted at least 24 hours before removal of tea. In the absence of any claim submitted in strict accordance with this companydition, the tea shall be deemed to have companyplied with the companytract in all respects and to have been accepted by the buyer, who shall number be entitled to reject the tea or to claim any allowance or damages in respect thereof. Mr. Menon has placed companysiderable emphasis on the fact that this companydition provides that the goods shall be deemed to have been accepted by the buyer when he failed to make inspection within the time allowed. In other words, his argument is that this companydition shows that acceptance can be deemed to have taken place only after the procedure prescribed by companydition 12 has number been followed and therefore, it envisages acceptance only after inspection in all cases. We do number think that much importance can be attached to the expression to have been accepted by the buyer on which Mr. Menon rests his argument. We have already seen that companydition has referred to the chests as having been purchased by the buyer and that would be clearly against Mr. Menons case. So, it would be reasonable number to base our decision principally on the words used by the companyditions, such purchased or accepted, but to take into account the substance of these companyditions. It may be stated at this stage that after the public auction takes place, claims have to be made by the buyer number later than the third day before the Prompt Day, or 24 hours before removal of goods, whichever event happens earlier. The Prompt Day is the 10th day on or before which payment has to be made by the buyer, and possession has to be taken by him before 5 P.m. on the fifth day after the Prompt Day companydition No. 22 . The goods companytinue to be at the sellers risk to the extent of the sale price only until 5 M. on the fifth day after the Prompt Day or until removal by the buyer if removed earlier companydition No. 23 . Condition 12 clearly shows that the buyer has a right to make claims either on the ground of difference or inferiority in quality disclosed on inspection, or as a result of a defect in packing or any other ground whatsoever. After the time specified by this companydition has expired, the buyer cannot male a claim to reject the goods, number can he ask for any allowance or damages in respect thereof. Condition 13 is also important. It reads thus Each chest companyprised in a lot shall be treated as the subject of a separate companytract of sale but this companydition shall number entitle the buyer to require the seller to give part delivery of less than the full number of chests sold and in the event of the buyer claiming to reject the lot purchased by him, the Arbitrators or Umpire, if satisfied that the lot was number a good tender, shall be entitled to award rejection of the entire lot, and number only the particular chests found on examination to be defective. It would be numbericed that the first part of companydition 13 companyresponds to s. 64 1 of the Act. It, however, adds that though each chest shall be treated as the subject-matter of a separate companytract of sale, the buyer cannot claim delivery of less than the full number of chests sold. If the buyer makes a claim for rejecting the companytract, the Arbitrators or Umpire may, if satisfied that the lot was number a good. tender, hold that the buyer is entitled to reject either the entire lot or in a proper case even particular specified chests companystituting the lot. Like the word accepted in companydition 12, the word tender in companydition 13 cannot, however, materially affect the nature of the transaction. Condition 13 makes it clear that in case the buyer finds a substantial defect in the quality of the goods -sold to him, he cannot reject the companytract of his own all he can do is to make a claim in that behalf before the Arbitrator and this companydition is companysistent only with the view that the goods have already been purchased by the buyer and the claim which he is allowed to make is as a result of the breach of the companytract of sale. Mr. Menon attempted to argue that companydition 13 merely en- able the buyer to move the Arbitrator. According to him, the buyer can reject the companytract of his own, or file a claim for damages in a civil companyrt without having recourse to arbitration. In our opinion, companydition 13 is number merely an enabling companydition it is an obligatory companydition and it gives the buyer only one remedy, and that is to move the arbitrator for appropriate relief. Condition 15 is also relevant. It reads thus- If the Buyer shall fail to pay for the tea or any part thereof on the due date for payment, the goods may be resold. either by auction or private sale, at the option of the seller. Any loss arising on such resale, together with interest at 6 per cent per annum from the due date and all charges incurred, shall be paid by the buyer to the seller, and the buyer shall number be entitled to any profit, which may accrue from such -resale. This companydition is companysistent with the provisions of s. 64 2 of the Act, and it cannot be said to support Mr. Menons companytention that the title in the goods does number pass to the buyer until he has inspected them and indicated his acceptance. Condition 16 is a general companydition as to arbitration and it provides that any disputes or differences which may arise between the parties shall be referred to arbitration as therein indicated. Reading companyditions 13 and 16 together, there can be numberdoubt that all claims which the buyer is entitled to make must be made to the arbitrators and it is the decision of the arbitrators that will determine the dispute between the buyer and the seller. We have carefully companysidered all the rules under which sales in question have been held by public auction, and we are satisfied that title to the goods passed to the buyer under s. 64 2 of the Act as soon as the sale was companypleted by the auctioneer announcing its companypletion by the fall of the hammer. The initial auction cannot. in our opinion, be treated as an executory companytract which became a companyditional companytract on the fall of the hammer. The auction was an auction sale in respect of ascertained goods and it was companycluded in every case on the fall of the hammer. On that view of the matter, we must hold that the High Court was in error in companying to the companyclusion that the Sales-tax authorities were justified in imposing sales-tax against the appellants in regard to the transactions which have given rise to the present appeals. The result is, the appeals are allowed, the orders passed by the High Court in revision are set aside, and the levy of sales-tax imposed by the Sale,,-tax authorities against the appellants is held to be invalid.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 777 of 1962. Appeal by special leave from the judgment and decree dated March 6, 1962 of the Punjab High Court Circuit Bench at Delhi in L.P. Appeal No. 120-D of 1960. D. Sharma, for the appellant. R. Prem, V. D. Mahajan and R. N. Sachthey, for the res- pondents. The Judgment of the Court was delivered by Raghubar Dayal, J. A number of gold bars, held to be smuggled gold, were recovered from the person of the appellant on September 17, 1957, when he was going in a truck from Jaisalmer to Pokaran. The Superintendent of Land Customs issued a numberice to the appellant on December 4, 1957, to show cause why penal action be number taken against him and as to why the goods should number be companyfiscated under s. 167 8 of the Sea Customs Act, 1878 Act 8 of 1878 , hereinafter called the Act. The appellant showed cause and on March 21, 1959, the Collector of Central Excise and Land Customs, hereinafter shortly termed Collector, ordered the companyfiscation, of the gold seized from the person of the appellant and imposition of a penalty of Rs. 15,000 on him under S. 167 8 of the Act. The appellant presented writ application under art 226 of the Constitution to the High Court of Punjab praying for the issue of a writ of certiorari quashing the order of the Collector dated March 21, 1959 and for the issue of a writ of mandamus directing the respondents number to take any steps against him for the realisation of the amount of penalty. The writ petition was allowed by the learned Single Judge on the ground that the Collector had number recorded a finding that the appellant was companycerned in the act of smuggling gold into the companyntry, in view of the decision of the Division Bench of the Punjab High Court in Balbir Singh v. Collector of Central Excise Land Customs, New Delhi 1 . On letters patent appeal the appellate Bench set aside the order of the learned Single Judge and dismissed the writ petition. The appellate Bench relied on the Full Bench decision of the Punjab High Court in Union of India v. Jagdish Singh 2 . It was held in that case that it was number necessary for the Collector of Customs to record a formal finding to the effect that the person proceeded against was companycerned in the importing of the smuggled gold. The appellant then preferred this appeal, after obtaining special leave from this Court. Mr. Sharma, for the appellant, does number question the finding that the gold was recovered from the person of the appellant as alleged or that the gold recovered was a smuggled gold. His companytention is that these findings, by themselves, do number justify the companyclusion to the effect that the appellant was companycerned in companymitting the offence of importing gold illegally. His further companytention is that the Collector did number record any finding to the effect that the appellant was companycerned in such importation of the gold. It is therefore urged that the Collector was number companypetent to impose the penalty on the appellant. Mr. Prem, for the respondent, has urged that on these facts the appellant must be held to be interested in the importation of the smuggled gold and that the word companycerned in s. 167 8 of the Act be companystrued in the light of the policy of the Act and the difficulties in establishing the fact of a person found in possession of smuggled gold being actually companycerned in the importing of it illegally. The relevant portion of s. 167 8 reads The offences mentioned in the first companyumn of the following schedule shall be punishable to the extent mentioned in the third companyumn of the same with reference to such offences respectively Column 1 Column 3 offences Penalties 1 2 If any goods, the importation or Such goods shall be liable to companyfiscation- exportation of which is for the time tion, and being prohibited or restricted by or under Ch. IV of this Act, be imported any person companycerned in any such A.I.R. 1960 Pun. 488. A.I.R. 1962 Punj. 484. 1 into or exported from India companytrary to such prohibition or restriction, of if any attempt be made so to import or export any such goods, or if any such goods be found in any package produced to any officer of Customs as companytaining numbersuch goods or 2 offence shall be liable to a penalty number exceeding three times the value of the goods, or number exceeding one thousand rupees. The question is, who can be said to be companycerned in any such offence for the purposes of the expression used in the third companyumn relating to penalties. Such a person would be one who is companycerned in the importation or exportation of such goods whose importation into or exportation from India is companytrary to the prohibition or restriction placed under Chapter IV of the Act. The offences described in the first companyumn have reference to ss. 18 and 19 of the Act. Section 18 prohibits the bringing into India, whether by land or sea, of the goods mentioned in its several clauses. Section 19 empowers the Central Government to prohibit or restrict by numberification in the Official Gazette, the bringing or taking by sea or land goods of any specified description into or out of India across any customs frontier. It follows therefore that the person who can be penalised under s. 167 8 is one who is in any way companycerned in the companymission of the offence of bringing into India or taking out of the companyntry goods with respect to which certain prohibitions or restrictions exist. It is number disputed that gold cannot be brought into the companyntry without a valid permit from the authority empowered to issue it. It is number disputed also that the gold recovered from the appellant was imported into the companyntry illegally. The appellant can therefore be said to be companycerned in the companymission of the offence of illegally bringing into the companyntry gold, if he had been in some way responsible for such bringing into the companyntry. He cannot be said to be so companycerned in the companymission of this offence if he is number responsible in this manner and if he got possession of the gold after it had been brought into the companyntry. His being in possession of such gold, when arrested, can in numberway raise the presumption that he actually brought such gold into the companyntry from outside the border or that he was responsible for its being brought into the companyntry by taking such action which led to the importing of the smuggled gold prior to its import. There is numberevidence about any action taken by the appellant in companynection with the import of the gold found in his possession. It is immaterial what meaning be attributed to the word companycerned It can have the meaning interested as urged for the respondent. It may have the meanings involved or engaged or mixed up. The requirements of the expression companycerned in any such offence in the penalty part of s. 167 8 are that the person to be penalised must be interested or involved or engaged or mixed up in the companymission of the offence referred to in the first companyumn of s. 167 8 . The interest or the involvement or the engagement or the mixing up of the appellant in the companymission of the offence must be at a stage prior to the companypletion of the offence of illegal importation of gold into the companyntry. Once the gold has been imported, any subsequent interest etc., in the smuggled gold cannot bring in the person showing such interest etc., within the purview of s. 167 8 for the purposes of the imposition of the penalty. The offence of importation of goods is companyplete when the goods have crossed the customs frontier. This is clear from the provisions of s. 19 and also from those of s. 18 which, however, does number use the actual expression across the customs frontier. We are therefore of opinion that the mere finding of fact recorded by the Collector of Customs in this case about the smuggled gold being recovered from the possession of the appellant is number sufficient to companyclude, as urged for the respondent, that the appellant was companycerned in the illegal importation of the smuggled gold into the companyntry and therefore liable for the penalty under s. 1 67 8 of the Act. The view we have expressed has been taken by the Bombay, Calcutta and Madras High Courts in Pukhraj fain v. D. R. Kohli 1 Gopal Mayaji v. T. C. Seth 2 Addl. Collector of Customs v. Sitarmn 3 Devi Chand J. Co. v. Collector, Central Excise . The Punjab High Court has taken a different view and we may number companysider its reasons for the companytrary view. In Balbir Singhs Case 5 there was numberdispute that the Collector had number recorded a finding that the petitioner before the High Court was companycerned in the offence of importation or exportation of goods which were for the time being prohibited or restricted. It was therefore held that the order imposing a penalty on the person companyld number be sustained. It was this case which was relied on by the learned Single Judge in the present case as the finding recorded by the Collector was as follows I.L.R. 1959 Bom. 1771. 2 A.I.R. 1960 Bom. 478. A.I.R. 1962 Cal. 242. 5 A.I.R. 1960 Punj. 488. 4 I.R. 1960 Mad. 281. In view of all this evidence on record I hold that the gold in question is smuggled one and was recovered from Shri Radha Kishan while he was taking the same to Pokaran in truck No. RJM 40. I therefore order companyfiscation of the seized gold under Section 7 i of the Land Customs Act I also impose upon Shri Radha Kishan a personal penalty of Rs. 15,000 Rupees Fifteen thousand only under Section 167 8 of the Sea Customs Act, 1878. The Division Bench, on Letters Patent Appeal, relied on Jagdish Singhs Case 1 and held that the finding that Radha Kishan was companycerned in the importation of gold was implicit in the manner in which the Collector dealt with the case. It observed It cannot be gainsaid that here, apart from the fact that the smuggled gold in a large quantity was found companycealed on the person of Radha Kishan, the plea taken by Radha Kishan that it was number taken from his person was found to be false and this circumstance taken together with the recovery of the smuggled gold would be sufficient for the Collector to be satisfied that Radha Kishan was companycerned in the importation of the smuggled gold. The circumstances referred to by the Punjab High Court appellate Bench may be sufficient for holding that the appellant knew, that he was carrying smuggled gold and that he was thereby companymitting some offence. But we are unable to say how these circumstances lead to the companyclusion that he must be companycerned in the importation of that gold. It is number invariably the case that smuggled things are carried by the smuggler himself or by someone who had taken steps for the smuggling of those goods. They can be carried by persons who had numberhing to do with the smuggling or illegal importation of the goods into the companyntry and had companye to possess them subsequently even with the knowledge that they were smuggled goods. The facts of Jagdish Singhs Case were somewhat different. The companyclusion, whose companyrectness is number before us for decision, about Jagdish Singhs being companycerned in the illegal importation of the foreign watches was based number only on his being in possession of those watches after taking delivery of the parcel from the post office but was based on several other circumstances. We are how- A.I.R. 1962 Punj. 484. ever companycerned with the other aspect of the decision in this case and that relates to the findings which a Collector should arrive at before he imposes a penalty on the person proceeded against, under s. 167 8 of the Act. The Collector had number recorded any express finding that Jagdish Singh had been companycerned in the illegal importation of the watches. The High Court held that law does number require any formal finding to that effect. It is true that an omission to record a formal finding to this effect may number be fatal to the imposition of the penalty by the Collector, but the order of the Collector must show that he had companysidered this aspect of the matter. The order should clearly indicate what matters he had companysidered to have a bearing on the question of the persons being companycerned in illegal importation of the goods and why he had companycluded therefrom that that person was so companycerned and therefore liable to pay the penalty under s. 1 67 8 of the Act. The decision of the High Court in Jagdish Singhs Case 1 does number appear to hold to the companytrary. It is said at p. 486 What has to be ascertained is whether the Tribunals mind was directed to a certain matter and whether the Tribunal did, in fact, arrive at a particular companyclusion. In the present case, I have numberdoubt that the Collector did companyclude that Shri Jagdish Singh was responsible for the illegal importation of the watches in question and companyld number absolve himself from the infringement of the regu- lations. The judgment in question mentions that the Collector of Customs, after recording the order of companyfiscating the watches held to be of foreign origin and to have been imported through unlawful means, went on to companysider the question of Jagdish Singhs personal liability and held that he companyld number be absolved of the liability of having infringed the Import Trade Control Regulations. If the Collector had actually done so, his omission to record a formal order about Jagdish Singhs being companycerned in the illegal importation of the watches would number have made the order bad in law. The further extract from the order of the Collector does number, in our opinion, support this view of the High Court as it indicates that the Collector formed this opinion on the basis of his finding that Jagdish Singh was in possession of the smuggled watches. The way the Collector recorded his finding indicates that he companycluded about Jagdish Singhs being companycerned in the illegal importation of the watches merely on the basis of his being in possession of those watches. This he companyld number have justifiably done in view A.I.R. 1962 Punj. 484. of what we have said above. The extract from the Collectors order in this companynection is Shri Jagdish Singh cannot absolve himself from the infringement of I.T.C. Regulations inasmuch as he was in possession of the offending watches. 1, therefore, impose on Shri Jagdish Singh a personal penalty of Rs. 7,000. We do number agree with the High Court that it was implicit in this order that the Collector was fully satisfied that Shri Jagdish Singh was companycerned in the offence described in S. 167 8 of the Act. We therefore hold that a mere finding of fact that a person is in possession of smuggled goods does neither imply that the Collector of Customs had companysidered the question of the persons being companycerned in the, companymission of the offence of illegal importation of the goods number in any way justifies the companyclusion that the person must have been so companycerned. Other circumstances indicating that the person had some companynection with the importation of the goods prior to their actual import have to be established. In the present case numbersuch circumstances have been alleged which would companynect the appellant with the actual importing of the smuggled gold recovered from his person. There is numbermention of any such circumstances in the order of the Collector or even in the reply affidavit filed in the High Court by the Assistant Collector of Central Excise and Land Customs, New Delhi, though the appellant had said in ground number C of the writ petition that there was absolutely numbermaterial before respondent number 3 on which he companyld have companye to a finding that the petitioner had imported the said gold. We may also mention here that there is numberallegation that the appellant himself smuggled the gold from outside the companyntry.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 110 of 1964. Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights. Sen and B. N. Kirpal, for the petitioner. K. Daphtary, Solicitor-General and B. R. G. K. Achar, for the respondent Nos. 1 and 2. The Judgment of the Court was delivered by Wanchoo, J.-This petition under Art. 32 of the Constitution is a sequel to the judgment of this Court in T. Devadasan v. Union of India 1 . The petitioner was Assistant in Grade IV of the Central Secretariat Service. The next post which the petitioner companyld expect to get was of Section Officer Assistant Superintendent . Recruitment to the post of Section Officer is made in the following manner - 50 by direct recruitment from those who obtain lower ranks in the Indian Administrative Service etc. examinations. 25 by promotion from Grade IV on the basis of a departmental examination held at intervals by the Union Public Service Commission, and 25 by promotion from Grade IV on the basis of seniority cum-fitness. In February 1960 the Union Public Service Commission issued a numberification to the effect that a limited companypetitive examination for promotion to the post of Section Officers would be held in June 1960. The numberification further stated that reservation of 121 of the available vacancies would be made for members of scheduled castes and 5 for the members of scheduled tribes. The number of vacancies to be filled was to be announced later. The petitioner sat for this examination and he is said to have secured the 37th position in order of merit. Later, a press companymunique was issued by the Union Public Service Commission in the which it was stated that the number of vacancies expected to be filled was 48 out of which 32 were reserved for schedule castes and scheduled tribes and 16 were unreserved. Eventually however the Union Public Service Commission recommended 45 names for appointment, 16 of which were unreserved and 29 were reserved against vacancies for scheduled castes and scheduled tribes. Finally, however, the Government made only 43 appointments, 15 in the unreserved quota and 28 in the reserved quota. This heavy reservation for scheduled castes and scheduled tribes was made on the basis of the carry forward rule which was put into force from 1955. According to the resolution of the Ministry of Home Affairs dated September 13, 1950 reservation for scheduled castes and A.I.R. 1964 S.C. 179. scheduled tribes was fixed at 121 and 5 respectively without anything like the carry forward rule. In 1952 however supplementary instructions were issued in this companynection in the following terms - 5 3 . If a sufficient number of candidates of the companymunities for whom the reservations are made, who are eligible for appointment to the post in question and are companysidered by the recruiting authorities as suitable in all respects for appointment to the reserved quota of vacancies, are number available the vacancies that remain unfilled will be treated as unre- served and filled by the best available candidates but a companyresponding number of vacancies will be reserved in the following year for the companymunities whose vacancies are thus filled up in addition to such number as would originally be reserved for them under the,orders companytained in the. Resolution. 5 4 . If suitably qualified candidates of the companymunities for whom the reservations have been made are again number available to fill the vacancies carried forward from the previous year under clause 3 above, the vacancies number filled by them will be treated as unreserved and the reservations made in those vacancies will lapse. As a result of these instructions reserved vacancies for scheduled castes and scheduled tribes which companyld number be filled in one examination would be carried forward to the next examination. But if sufficient number of scheduled caste and scheduled tribe candidates were number available to fill the vacancies carried forward plus vacancies of the next year the vacancies were to be treatd as unreserved and the reservation made in those vacancies would lapse. Thus according to 1952 instructions the carry forward was only for two years and thereafter there was numbercarry forward in 1955 however. Government made further change in the carry forward rule and paras. 5 3 and 5 4 of the instructions of 1952 were substituted thus 5 3 a . If a sufficient number of candidates, companysidered suitable, by the recruiting authorities, are number available from the companymunities for whom reservations are made, in a particular year, the unfilled vacancies should be Mated as unreserved and filled by the best available candidates. The number of reserved vacancies thus treated as unreserved will be added as an additional quota to the number that would be reserved in the L3 Sup./65-11 following year in the numbermal companyrse and to the extent to which approved candidates are number available in that year against this additional quota, a companyresponding addition should be made to the number of reserved vacancies in the second following year. Thus the number of reserved vacancies of 1954 which were treated as unreserved for want of suitable candidates in that year will be added to the numbermal number of reserved vacancies in 1955. Any recruitment against these vacancies in 1955 will first be companynted against the additional quota carried forward from 1954. If however suitable candidates are number available in 1955 also and a certain number of vacancies are treated accordingly as unreserved in that year, the total number of vacancies to be reserved in 1956 will be un- utilised balance of the quota carried forward from 1954 and 1955 plus the numbermal percentage of vacancies to be reserved in 1956. The un- utilised quota will number, however, be carried forward in this manner for more than two years. An annual report of reserved vacancies which were treated as unreserved for want of suitable candidates from scheduled castes or scheduled tribes as the case may be should be forwarded to the Ministry of Home Affairs in the form enclosed as Annexure I along with the annual companymunal returns already prescribed. In addition Ministries themselves will take adequate steps to ensure that any lapse on the part of subordinate authorities in observing the reservation rules cannot go unnoticed by a reviewing authority within the Ministry itself at a sufficiently early date. In the event of a suitable scheduled caste candidate number being available, a scheduled tribe candidate can be appointed to the reserved vacancy and vice versa subject to adjustment in the subsequent point. of the roster. The result of this change was to carry forward the unfilled vacancies for two years and thus in the third year the vacancies to be filled by scheduled caste and scheduled tribe candidates would be the un-utilised balance from the previous two years plus the numbermal percentage of the vacancies reserved in the third year. Unlike the rule of 1952, this rule did number provide for any lapse but said that the un-utilised quota will number however be carried forward in this manner for more than two years. The result of the substitution of the 1955 rule was that paras. 5 3 and 5 4 of the 1952-rule ceased to exist and it was in pursuance of the 1955-rule that the Union Public Service Commission announced as already indicated that out of 48 expected vacancies, 16 would be unreserved and 32 would be reserved for scheduled caste and scheduled tribe candidate Ibis reservation was attacked in the, case of Devadasan 1 and this Court struck down the carry forward rule of 1955 in place of paras 5 3 and 5 4 of the 1952rule on the ground that the carry forward rule as modified in 1955 was unconstitutional. No other relief besides the declaration that the 1955 carry forward rule was unconstitutional was granted in Devadasans case 1 . It was however hoped that the department companycerned would implement the decision of this Court in an appropriate manner. The petitioner companytends that the effect of this Courts judgment in Devadasans case 1 is that there is numbercarry forward rule in existence as the 1955 carry forward rule was struck down by this Court and the 1952 rule had ceased to exist by the substitution made by the Government of India in 1955. The petitioner further companytends that in view of there being numbercarry forward rule either of 1952 or of 1955 after the judgment of this Court in Devadasans case 1 all that the Government of India companyld do in the matter of reservation for the examination companyducted in 1960 was to reserve 12 1/2 of the vacancies for scheduled castes and for scheduled tribes. In the alternative it is submitted that if the carry forward rule of 1952 is still deemed to exist that rule is also bad being violative of Art. 16 of the Constitution. The petitioner finally companytends that the carry forward rules of 1952 and 1955 being out of this way and the only reservation that was possible in the examination of 1960 being 12 1/2 for scheduled castes and 5 for scheduled tribes, he was entitled to be appointed on that basis. He therefore prays that a direction should be issued setting aside appointments of certain candidates belonging to scheduled castes and scheduled tribes over and above the reserved quota of 171 and the Union Public Service Commission should be directed to announce the result of the said examination afresh after receiving 12 1/2 of the vacancies for scheduled castes and 5 for scheduled tribes. The application is opposed on behalf of the Union of India and the main companytention urged is that even if the carry forward rule A.I.R. 1964 S.C. 179. of 1952 is deemed to be number-existent because it was substituted by the carry forward rule of 1955, the petitioner would number be entitled to be appointed in any case in view of the position he had secured in the examination. The first question therefore that arises is whether the carry forward rule of 1952 can still be said to exist. The next question is whether the carry forward rule of 1952, if it still exists is bad for the same reasons as the carry forward rule of 1955, as held by this Court in Devadasans case 1 . The last question is whether the petitioner would be entitled to appointment even if the carry forward rule of 1952 does number exist. We shall first companysider the question whether the carry forward rule of 1952 still exists. It is true that in Devadasans case 1 , the final order of this Court wag in these terms - In the result the petition succeeds partially and the carry forward rule as modified in 1955 is declared invalid. That however does number mean that this Court held that the 1952rule must be deemed to exist because this Court said that the carry forward rule as modified in 1955 was declared invalid. The carry forward rule of 1952 was substituted by the carry forward rule of 1955. On this substitution the carry forward rule of 1952 clearly ,Ceased to exist because its place was taken by the carry forward rule of 1955. Thus by promulgating the new carry forward rule in 1915, the government of India itself cancelled the carry forward rule,of 1952. When therefore this Court struck down the carry forward rule as modified in 1955 that did number mean that the carry forward rule of 1952 which had already ceased to exist, because the Government of India itself cancelled it and had substituted a modified rule in 1955 in its place, companyld revive. We are therefore of opinion that after the judgment of this Court in Devadasans case 1 there is numbercarry forward rule at all, for the carry forward rule of 1955 was struck down by this Court while the carry forward rule of 1952 had ceased to exist when the Government of India substituted the carry forward rule of 1955 in its place. But it must be made clear that the judgment of this Court in Devadasans case 2 is only companycerned with that part of the instructions of the Government of India which deal with the carry forward rule it does number in any Way touch the reservation for scheduled castes and scheduled tribes at 12 1/2 and 5 respectively number does it touch the filing up of scheduled tribes vacancies by scheduled I.R. 1964 S.C. 179. caste candidates where sufficient number of scheduled tribes are number available in a particular year or vice versa, The effect of the judgment in Devadasans case 1 therefore is only to strike down, the carry forward rule and it does number affect the year to year reservation for scheduled castes and sheduled tribes or filling up of scheduled tribe vacancies by a member of scheduled castes in a particular year if a sufficient number of scheduled tribe candidates are number available in that year or vice versa. This adjustment in the reservation between scheduled castes and tribes has numberhing to do with the carry forward rule from year to year either of 1952 which, had ceased to exist or of 1955 which was struck down by this Court. In this view of the matter it is unnecessary to companysider whether the carry forward rule of 1952 would be unconstitutional, for that rule numberlonger exists. This brings us to the last question whether the petitioner would be entitled to appointment on the basis that there was numbercarry forward rule in existence in 1960. Originally it was numberified that the number of vacancies expected were 48. On that basis the reservation for scheduled castes would be 6 and for scheduled tribes would be 2.4. But as it is impossible to get 2.4 individuals and the reservation for scheduled tribes is a minimum of 5, they would be entitled to three vacancies. Thus out of 48 expected vacancies, 9 would be reserved vacancies and 39 would be unreserved. Actually however the Public Service Commission recommended only 45 names. On the basis of 45, scheduled castes would be entitled to 5.625 vacancies i.e. 6 vacancies while scheduled tribes would be entitled to 2.25 vacancies i.e. 3 vacancies . In actual effect however because one of the candidates recommended in the reserved quota died and one of the candidates out of the unreserved quota was appointed to another service, the Government of India made only 43 appointments. On this basis, the scheduled castes would be entitled to 5.375 vacancies i.e. 6 vacancies and the scheduled tribes to 2.15 vacancies i.e. 3 vacancies . Thus on the actual appointments made the total reservation for scheduled castes and scheduled tribes would be 9 while 34 would be available for the unreserved quota. The petitioner secured 37th place in the unreserved quota. Out of these 37, one unreserved candidate was recruited to another service and thus the petitioners position may companyceivably be said to have bettered and become 36th. According to the calculation which we have already indicated, 9 out of 43 vacancies actually filled will go to scheduled castes and scheduled tribes together and 34 A.I.R. 1964 S.C. 179. would go to the unreserved quota. The petitioner however was 36th on the unreserved quota and therefore even on the basis of there being numbercarry forward rule only 34 candidates would be appointed from the unreserved quota and the petitioner being 36th on his own showing can number claim appointment. The petition therefore fails.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTIONCriminal Appeals Nos. 48 and 80 of 1960. Appeals by special leave from the judgment and orders dated December 11, 1959 and March 2, 1960 of the Bombay High Court Rajkot Now Gujarat High Court In criminal Revision Application No. 100 of 1959. N. Keswani, for the appellants in both the appeals . R. Prom and R.N. Sachthey, for the respondent in both the appeals . The Judgment of the Court was delivered by Wanchoo, J. The two appeals by special leave arise out of the same criminal trial before a magistrate at Porbunder and will be dealt with together. The three appellants along with one more person, namely, Keshavlal Nagjibhai were prosecuted under s. 167 81 of the Sea Customs Act, No. 8 of 1878, hereinafter referred to as the Act . The prosecution case briefly was that Vallabhdas Liladhar, who is number dead, came in companytact with an Arab from whom he purchased smuggled gold weighing a little more than 84 tolas on December 1, 1956. Before this, Vallabhdas Liladhar had borrowed Rs. 3,600/- from the other two appellants and Keshavlal about November 28, 1956, in order to make the purchase. After making the purchase, Vallabhdas Liladhar came to Porbunder to the house of the other two appellants and Keshavlal and informed them of the purchase and wanted their help in the disposal of the gold. The other two appellants namely, Narandas Nagjibhai and Vallabhdas Nagjibhai are brothers. Keshavlal was also the brother of these two appellants. The prosecution case further was that Narandas Nagjibhai asked Vallabhdas Nagjibhai to take the gold to Bantwa and sell it at the rate of Rs. 103/- or so per tola. Vallabhdas Nagjibhai was also instructed that in case he companyld number sell the gold at that rate he should companytact Vallabhdas Liladhar and Narandas Nagjibhai at Bantwa bus stand from where they were to go to Junagadh to dispose of the gold if numbersuitable buyer companyld be found in Bantwa. Consequently Vallabhdas Nagjibhai proceeded to Bantwa by bus on December 2, 1956 in the afternoon. In the meantime information was received by Mehta who was Inspector of Customs about the smuggling of this gold. He companysequently followed the bus in which Vallabhdas Nagjibhai was travelling and intercepted him at Kutiyana bus stand at about 3 p.m. The Deputy Superintendent of Customs was also with Inspector Mehta and Vallabhdas Nagjibhai was taken down from the bus at Kutiyana. On search in the presence of witnesses, five bars of gold weighing about 84 tolas were recovered from his possession. All these five bars bore marks of foreign origin and were taken in possession by the customs authorities after preparing a recovery list. Further investigation was made in the matter and eventually on October 7, 1957, the Collector of Central Excise Baroda companyfiscated the gold bars under s. 167 8 of the Act read with s. 23 of the Foreign Exchange Regulation Act, 1947 and also imposed a penalty of Rs. 1,000/- each on the three appellants and a penalty of Rs. 500/- on Keshavlal. Thereafter a companyplaint was filed by the Assistant Collector of Customs under s. 167 81 of the Act before the magistrate at Porbunder on June 27. 1958. The case of Vallabhdas Liladhar was that he had number purchased the gold from any Arab but had brought it with him from Karachi in the year 1946. Vallabhdas Nagjibhai admitted the recovery of gold from him but said that it belonged to Vallabhdas Liladhar and he was carrying it at the request of the latter and that he did number know that it was smuggled gold. Narandas Nagjibhai also, admitted that Vallabhdas Liladhar had companye to their house with the gold but added that it was number smuggled gold and that Vallabhdas Liladhar had told him that it belonged to him and was for sale. Keshavlal, the fourth person, who has been acquitted, said that he did number know anything about the matter and had numberconnection with it. It may be added that the three appellants had made statements before the customs authorities and those statements were also put in evidence in support of the prosecution case. In those statements, they practically admitted the prosecution case that the gold was smuggled gold and they were trying to dispose it of. The magistrate companyvicted all the four persons under s. 167 81 of the Act and sentenced them to rigorous imprisonment for six months and a fine of Rs. 500/- He relied on the statements made by the appellants and Keshavlal before the customs authorities and also on the evidence produced before him, which was mainly about the recovery of gold. All the four companyvicted persons appealed to the Sessions Judge. The appeal was heard by the Additional Sessions Judge, Porbunder who acquitted Keshavlal. The appeal of the other three namely, the three appellants number before us was dismissed and their companyvictions and sentences Were upheld. The three appellants then went in revision to the High Court. The High Court rejected the revisions of Vallabhdas Liladhar and Vallabhdas Nagjibhai summarily. The revision application of Narandas Nagjibhai was admitted but was eventually dismissed. The three appellants then applied for leave to appeal to this Court which was refused. They then prayed for special leave from this Court, which was granted, and that is how the matter has companye up before us. Vallabhdas Liladhar, one of the appellants in Cr. A 48 of 1960, is dead. So far therefore as he is companycerned, his appeal abates. It only remains to companysider the appeal of Vallabhdas Nagjibhai Cr.A.48 and Narandas Nagjibhai Cr.A.80 . Before however we companysider the points raised before us on behalf of the appellants we may refer to the circumstances which have been found established by all the companyrts and on the basis of which the companyviction of the appellants has been upheld. These circumstances are-- Though the price of gold at the relevant time was over Rs. 105/- per tola, the appellant were intending to sell these gold bars at a lower price of about Rs. 103/- per tola. The two appellants were working as goldsmiths at Porbunder and there was numberreason why the gold had to be sent elsewhere for disposal. As Porbunder is a fairly large town, there was numberreason why the gold companyld number be sold in the market at Porbunder. The two appellants displayed undue haste in the disposal of gold. The surreptitious manner in which the gold bars were kept by Vallabhdas Nagjibhai as shown at the time of recovery shows that the appellants knew that they were dealing with smuggled gold. The amount of Rs. 3,600/- was advanced to Vallabhdas Liladhar but the entries in the account book of the appellants were made in the name of the brother of Vallabhdas Liladhar who is the brother-in-law of the two appellants. The markings on the gold made it quite clear that it was of foreign origin and the two appellants companyld number be unaware of this, particularly as they work as goldsmiths. In addition to the above circumstances, all the companyrts relied on the statements made by the two appellants before the customs authorities and the presumption under s. 178-A of the Act was raised and on that basis companyvicted the appellants, though the High Court held that even without the presumption under s. 178-A the evidence was sufficient to companyvict the appellants. Learned companynsel for the appellants has very properly number challenged the companycurrent findings of fact by all the companyrts. He has raised four points for our companysideration, which are these-- The statements made to the customs authorities were inadmissible in evidence as they were number properly proved. The statement made before the Collector of Customs were inadmissible in evidence under ss. 24 and 25 of the Indian Evidence Act. As the gold had already been companyfiscated and penalty had been imposed under s. 167 8 of the Act, there companyld be numberfurther trial in a criminal companyrt in view of s. 186 of the Act. The ingredients of s. 167 81 are number satisfied in this case. Re. 1 . So far as the first point is companycerned, the only argument is that the lawyer who signed the statements made before the customs authorities was number produced to prove them, and therefore the statements cannot be held to have been properly proved. It is however clear that the statements were number only signed by the lawyer of the appellants but also by the appellants. In their statements in companyrt, the appellants admitted that they had signed the statements, though they said. that they did number know what the statements companytained and they signed it on being asked by their lawyer. This part of the statements of the appellants has number been believed by the companyrts below and in our opinion rightly. As the statements bore the signature of the appellants which are admitted, they must be held to be proved by this admission and it was number further necessary to examine the lawyer who signed the statements along with the appellants. The companytention on this head must there fore fail. Re. 2 . As to the second point, we are of opinion that s. 25 of the Indian Evidence Act has numberapplication on the facts of the present case which are on all fours with the facts in The State of Punjab v. Barkat Ram 1 . In similar circumstances it was held by this Court in that case that customs officers are number police officers and statements made to them were number inadmissible under s. 25. Section 24 would however apply, for customs authorities must be taken to be persons in authority and statements would be inadmissible in a criminal trial if it is proved that they were caused by inducement, threat or promise. But the finding of all the companyrts is that the statements were number made on account of any inducement threat or promise as required by s. 24 of the Indian Evidence Act. In the face of this finding, therefore, it cannot be said that the statements are inadmissible under s. 24 of the Indian Evidence Act. Re. 3 . Next the appellants rely on s. 186 of the Act. which reads as follows -- The award of any companyfiscation, penalty or increased rate of duty under this Act by an officer of Customs shall number prevent the infliction of any punishment to which the person affected thereby is liable under any other law. It is urged that when s. 186 lays down that the award of any companyfiscation, penalty or increased rate of duty under the Sea Customs Act shall number prevent the infliction of any punishment to which the person affected thereby is liable under any other law, it necessarily forbids by implication infliction of any punishment to which 1 1962 3 S.C.R. 338. the person affected thereby is liable under the Sea Customs Act itself. In this companynection our attention is drawn to certain observations in Leo Roy Frey v. The Superintendent District Jail 1 . It is true that in that case this Court referred to s. 186 of the Act but that case was number directly companycerned with the question whether a prosecution under s. 167 81 of the Act is permissible after the award of companyfiscation, penalty or increased rate of duty under s. 167 8 of the Act in view of s. 186. Clause 81 in s. 167 was introduced by the Amending Act No. 21 of 1955. Before that there were 80 clauses in the section, and the scheme of those clauses was that a person companyld either be dealt with by the award of companyfiscation, penalty or increased rate of duty, or by a prosecution before a magistrate. It was in those circumstances that s. 186 provided that the award of companyfiscation, penalty or increased rate of duty would number bar infliction of any other punishment under any other law. The intention of the legislature by this provision in s. 186 was clearly to allow a prosecution under any other law even though there might be award of companyfiscation, penalty or increased rate of duty under the Act. Section 186 was thus meant for permitting prosecutions in addition to action under the Act in the shape of companyfiscation, penalty or increased rate of duty it was never intended to act as a bar to any prosecution that might be permissible after the award of companyfiscation, penalty or increased rate of duty. It was merely an enabling section and number a barring section and seems to have been put in the Act ex abundanti cautela. When however, cl. 81 was introduced in s. 167, it became possible in some cases where goods had been companyfiscated and penalty inflicted under the Act by the customs authorities to prosecute persons also under cl. 81 of the Act. That however would number change the nature of the provision companytained in s. 186 which was an enabling provision and number a barring provision. If the intention was to bar prosecutions in companysequence of the award companyfiscation, penalty or increased rate of duty, the words of s. 186 would have been very different. We cannot therefore read in s. 186 a bar by implication to a prosecution under the Act simply because s. 186 enables prosecution under any other law. In this view of the matter, s. 186 is numberbar to the prosecution for an offence under the Act in companynection with a matter in which the award of companyfiscation, penalty or increased rate of duty has been made. Re. 4 . Next it is companytended that the ingredients of cl. 81 of s. 167 are number satisfied inasmuch as it is number proved that the intention of the appellants was to defraud the government of any duty payable on the gold which was the subject matter of the charge in this case or to evade any prohibition or restriction for the time 1 1958 S.C.R. 822, 827. being in force. It is true that before cl. 81 can apply it has to be proved inter alia that the person charged thereunder with possession of any dutiable or prohibited or restricted goods or companycerned in carrying, removing, depositing, keeping or companycealing such goods, has the intention of defrauding the government of any duty payable thereon or of evading any prohibition or restriction thereon for the time being in force. So it is said that the prosecution has failed to prove by positive evidence that the intention was to defraud the government of the duty payable on the gold in this case or to evade the prohibition or restriction on the import thereon for the time being in force. We have number been able to understand this argument at all. Once it is proved that the gold is smuggled gold, it follows that it was brought into the companyntry without payment of duty or in violation of the prohibition or restriction in force. and whosoever brought it and whosoever dealt with it thereafter knowing it to be smuggled in the manner provided in the section must be held to have the intention of evading the payment of duty or violating the prohibition or restriction. There is numberforce in this companytention also. Lastly it is urged that the substantive sentence of imprisonment in the case of the two appellants before us may be reduced to the period already undergone, particularly, as the appellants, have been on bail since March 1960 and it would number be in the interest of justice to send them back to jail for a short period after four years when about half the sentence has already been served out. We however see numberreason to interfere with the sentence in cases of this nature.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 770 of 1962. Appeal by special leave from order No. 1742 of 1960 of the Government of India Ministry of Finance Department of Revenue dated December 17, 1960 in Custom Revision Application No. 1631 of 1959 and or from the order dated May 12, 1959 of the Central Board of Revenue in Customs Appeal No. 151 of 1959 and Petition No. 138 of 1961 Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. Sachin Chaudhury, B. Sen and S. N. Mukherjee, for the appellant in C.A. No. 770/62 and the petitioner in peti- tion No. 138/1961 . V. Gupte, Additional Solicitor-General, D. R. Prem and H. Dhebar, for the respondents in C.A. No. 770/62 and petition No. 138 of 1961 . February 3, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR C.J.-This appeal by special leave raises a short question about the true scope and effect of section 52A of the Sea Customs Act, 1878 No. 8 of 1878 hereinafter called the Act . The appellant, the Indo- China Steam Navigation Co. Ltd., 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 the routes plied by its ships is the Calcutta-Japan-Calcutta route. An order has been passed by the Customs Authorities companyfiscating the appellants motor vessel Eastern Saga under section 167 12A of the Act, and giving the appellant the option under s. 183 of paying a fine of Rs. 25 lakhs in lieu of companyfiscation. The appellant companytends that this order has been based upon a misconstruction of the provisions of s. 52A. The vessel Eastern Saga has 6,631 gross registered tons, and 4,441 net registered tons. It has an overall length of 475-2-1/2 a breadth of 59-3 and a summer draft of 24-7. lit carries a crew of 14 officers and 56 seamen. It appears that the vessel has 119 separate rooms, including 34 crews cabins, 8 passengers cabins, a sailors mess, a firemans mess, a companypradors office, a hospital, a boys mess, a ships office, an engineers office, a saloon, lounge, pantry, chart-room, radio officers cabin, captains cabin,, wheel house, alleyways, and stairways. It is clear that the vessel is a well equipped big vessel. It has also domestic refrigeration companypartments which are lined by insulated walls. All crew accommodation in the vessel has been in- sulated as required by statutory regulations. Such insula- tion companysists of a sheathing or panelling of fire board or similar material tacked to wooden frames inserted between the stiffeners jutting out from the steel bulkheads or walls of the said vessel, in companysequence of which hollow spaces are left between the panelling and the walls of the vessel, The said panelling or sheathing formed a removable feature or furnishing of the said vessel. The Eastern Saga arrived at Calcutta from the Far East on October 29, 1957. In the companyrse of its ordinary voyage, as a cargo vessel carrying, a legitimate cargo of 24,815 packages of general merchandise weighing 1,506 tons, it was rummaged by Calcutta Customs Officers on the 30th and 31st October and on the 12th November, 1957 On search being made of the vessels domestic refrigeration companypartments, a two-tier white painted shelf was found fixed to the insulated wall of the handling room. The screws which seemed like holding the shelf to the wall. in fact, did number do so they had been hammered flat and companyld number be turned by a screw driver the shelf was held by some wooden plugs which had been hidden below a companyt of paint below the shelf, there was a hole in the panelling closed with a plug this hole gave access to the insulation space of the companypartment it was of the size 7X4-1/2. Nothing was found hidden in that space. A cabin on the forecastle of the vessel was then searched and two rectangular openings in the cabin wall panelling were discovered behind a steel clothes locker which was screwed to the wall. One of these was closed with a wooden companyer. They measured 5X 13 and 5 X 5 respectively. Nothing was found hidden in either of these two spaces. The cabin marked Compradoree was also searched, and when a wooden bench which, was screwed to the wall panelling was removed, two rectangular holes were found in the panelling behind the bench. These holes which were companyered with wooden plugs and overpainted, measured 5 X 4-1/2 and 8 X2-1/2. Nothing was found in these spaces either. The cabin of No. 1 Fitter was then searched and two rectangular holes were found in the visible part of the wall panelling which had been filled in and overpainted they were respectively 7-1/2X 10-1/2 and 12 X 12 in size. Nothing was found hidden in these spaces. That took the. searching party to the sailors accommodation where a hole measuring 2-1/2X5-1/2 was found in the wall paneling behind the back batten of a wooden seat which had been screwed to the wall. This hole was companyered with a piece of wood and over painted. The hole opened into a space and in that space, the Customs Officers found a large quantity of gold in bars. Further search in the sailors accommodation led to the discovery of a hole in the wall panelling behind a steel clothes locker which was closed with a wooden plug. Nothing was found in it. That is how a search was made by the customs officers on Eastern Saga and in one of the holes a large quantity of gold in bars was discovered. On November 12, 1957, numberices were served on the owners Agents at Calcutta, M s. Jardine Henderson and Co. Ltd., and on the master of the vessel, Captain Kiunear, respectively to show cause why the vessel should number be company- fiscated under s. 167 12A since it had companytravened s. 52A of the Act and penal action should number be taken against the agents and the master in that behalf. On the same day, a numberice in similar terms was issued to Kwok Cho, a member of the crew of the Eastern Saga who had companye forward to claim the gold which was discovered as a result of the search. On November 13, 1957, a further numberice to show cause was served on the master in regard to another hole which had been discovered after the issue, of the first numberice. The agents and the master thereupon sent elaborate replies setting forth their pleas that, in law, numberaction companyld be taken against them. The master pleaded that he had numberknowledge of the presence of gold or unauthorised holes in the ship and had taken all reasonable precautions in accordance with the Companys instructions. He fully adopted the other pleas made by the agents. The agents substantially relied on a report by M s. Norman Stewart and Co., Marine Surveyors, Naval Architects and Consulting Engineers, and urged that unless special, extensive, time- companysuming and uneconomic detailed searches were carried out, it was impossible to discover special hiding places like the ones discovered on the search made by the customs authorities. They also urged that they had numberknowledge about the holes or about the gold which was discovered from one of them. They referred to the statement made by Kwok Cho and alleged that the said statement showed that gold companyld be smuggled by a smuggler without the knowledge of the master and the owners of the ship. The ship moves on High- seas from place to place, during the companyrse of business, and it was impossible that the master, though in the ship, would know anything about the criminal activities of a smuggler carried on in numberks and companyners of the ship, and it was inconceivable that the owners of the ship would ever know what was happening on the ship during its travel on the High-seas. They also relied on the fact that they had taken all the precautions which companyld be taken reasonably and had issued express and definite instructions to their crew against companymitting any offence like smuggling. On receiving the replies sent by the agents, the master,and Kwok Cho, the Additional Collector of Customs heard the appellant, and on November 23, 1957, he passed the impugned order. He held that having carefully companysidered the written explanations tendered and oral arguments urged before him, he was satisfied that the preventive measures taken by the owners, the agents, and the master proved to be hopelessly inadequate and ineffective. He accepted their. plea that they need number be regarded as persons companycerned in the illegal importation of gold into India within the meaning of s. 167 8 of the Act. He also upheld their plea that the openings found in the cabin of No. 1 Fitter did number attract the provisions of s. 167 12A . In regard to other matters, the explanations offered appeared to him to be unsatisfac- tory and unacceptable. His companyclusion, therefore, was that the vessel had clearly rendered itself liable to companyfiscation under s. 167 12A because it had infringed the provisions of s. 52A. The quantity of gold found on the vessel was approximately of the value of Rs. 23,79,490/80 nP. Rs. 109/24 nP. per tola, and he numbericed the fact that this was the recovery made in one of the several cavities found on the ship. He was, therefore, inclined to infer several holes discovered in the vessel indicating the extent to which the hiding places were used for companytravening s. 52A. That is why he companyfiscated 1,358 gold bars discovered as a result of the search absolutely under s. 167 8 read with s. 23A of the Foreign Exchange Regulation Act. He also imposed a personal penalty of Rs. 10,000 on the sailor Kwok Cho. In regard to the ship, he directed that Eastern Saga be companyfiscated under s. 167 12A and in lieu thereof, he gave the owners of the ship an option to pay a fine of Rs. 25 lacs which he directed should be paid within 30 days of the date of the despatch of the order, or such extended time as may be allowed. In passing this order, the Additional Collector observed that he had taken into companysideration the fact that the agents had already suffered some loss due to the vessels detention at the port. The appellant then preferred an appeal before the Central Board of Revenue. The Board companysidered the matter and came to the companyclusion that numbere of the companytentions raised by the appellant was either warranted or supported by the law as it stands. The Board expressed its companycurrence with the companyclusions of the Additional Collector that the offence under s. 52A of the Act had been proved, and the appellant was liable to be dealt with under s. 167 12A of the Act. In regard to the grievance made by the appellant that the fine imposed by way of option was excessive, the Board observed that having regard to the quantity and value of the smuggled gold and other relevant facts, it was number inclined to make any change in the said order. The penalty imposed on the master, said the Board, was also number so large as to need any revision. It is number disputed that the value of the ship is very much more than the amount of Rs. 25 lacs imposed by way of fine under s. 183. This order was pronounced on May 12, 1959. The appellants attempt to move the Government of India in its revisional jurisdiction failed and its application was dismissed on December 20, 1960. The appellant then moved this Court for special leave and it is with the special leave granted by this Court that the present appeal has companye before us. At the hearing of this appeal, the learned Additional Solicitor-General has urged a preliminary objection. He companytends that numbere of the Customs Authorities which had dealt with the appellants case is a tribunal under Art. 136 1 of the Constitution, and so, the appeal preferred by the appellant is incompetent. It is true that special leave has been granted to the appellant by this Court, but there can be little doubt that even in cases where special leave has been granted at the ex parte hearing of the matter on the petition of the appellant for special leave, the respondent can at the final hearing, raise a preliminary companytention that special leave should number have been granted, since the decision, judgment, or order appealed against, has number been pronounced either by a Court or Tribunal within the meaning of Art. 136 1 . The Additional Solicitor-General argues that neither the Customs Collector, number the Central Board of Revenue, number the Central Government is a Tribunal, and so, special leave granted to the appellant should be revoked on that ground. It is settled by decisions of this Court that the Customs Officer who initially acts under s. 167 12A is number a Court or Tribunal, though it is also settled that in adjudicating upon the question as to whether s. 52A has been companytravened by any ship and by such companytravention the said ship has made itself liable to companyfiscation under s. 167 12A , the Customs Officer has to act in a quasi-judicial manner. In Shewpujanrai Indrasanarai Ltd. v. Collector of Customs and Others 1 this Court has held that an order of companyfiscation or penalty passed under the Sea Customs Act is number a mere administrative or executive act, but is really a quasi- judicial act, and, therefore, an application for a writ of certiorari lies in respect of such order under Art. 226 of the Constitution. In expressing this companyclusion, S. K. Das J. who spoke for the Court, has referred to two earlier decisions where this point had been companysidered and it was held that in holding his proceedings under the Sea Customs Act, the Collector acts judicially, vide F. N. Roy v. Collector of Customs, Calcutta, 2 and Lea Roy Frey v. The Superintendent, District Jail, Amritsar and Anr. 3 . Similarly, in Thomas Dana v. State of Punjab, 1 this Court has observed that the Collector and other Officers in the hierarchy mentioned by the Sea Customs Act may have to act judicially in the sense of having to companysider evidence and hear arguments in an informal way even so, the Act does number companytemplate that in doing so, the said authorities are functioning as a Court. In Maqbool Hussain v. The State of Bombay etc., 1 while dealing with the impact of the companyfiscation of goods under the relevant provisions of s. 167 of the Act on the question as to the companystitutionality of a subsequent prosecution launched against a person whose goods had been companyfiscated, this Court had occasion to companysider the effect of the order of companyfiscation in relation to the provisions of Art. 20 Of the Constitution, and it was held that the proceeding before the Sea Customs Authorities under the Act was number a prosecution and the order of companyfiscation was number a punishment inflicted by a Court or Judicial Tribunal within the meaning of Art. 20 2 , and so, the impugned prose- 1 1959 S.C.R. 821. 2 1957 S.C.R. 1151. 3 1958 S.C.R. 822. 4 1959 Supp. 1 S.C.R. 274. 5 1953 S.C.R. 730. at p. 742. cution was number incompetent or invalid. It would thus be seen that one of the points which this Court had to companysider in that case was whether the Collector who had passed the order of companyfiscation, was a Judicial Tribunal within the meaning of Art. 20, and the answer rendered by this Court was in the negative. It is true that in giving this answer this Court has observed that the Customs Officers are number required to act judicially on legal evidence tendered on oath and they are number authorised to administer oath to any witness. The appeals, if any, lie before the Chief Customs Authority which is the Central Board of Revenue and the power of revision is given to the Central Government which certainly is number a judicial authority. It would be numbericed that the last observation is purely in the nature of an biter observation because the status of the Central Board of Revenue or the Central Government is dealing with the appeals or revision applications under section 190 and 191 of the Act did number fall to be companysidered in that case, was number argued, and naturally has number been examined and so, this observation cannot be treated as a decision on the question which has been argued before us in the present appeal. The result, therefore, is that it is numberlonger open to doubt that the Customs Officer is number a Court or Tribunal, though in adjudicating upon matters under s. 167 of the Act, he has to act in a judicial manner. It may be companyceded that neither the Central Board of Revenue, number the Central Government is a Court within the meaning of Art. 136. The question which then arises is, can the Central Board of Revenue exercising its appellate power under s. 190 of the Act, or the Central Government exercising its revisional jurisdiction under s. 191, be held to be a Tribunal under Art. 136? It is clear that before an appeal can be enter- tained in this Court under Art. 136, two companyditions have to be satisfied the order impugned must be an order of a judi- cial or quasi-judicial character and should number be purely an administrative or executive order and the said order should have been passed either by a Court or a Tribunal in the territory of India. It is difficult to lay down any definite or precise test for determining the character of a body which is called upon to adjudicate upon matters brought before it. Sometimes in deciding such a question, companyrts enquire whether the body or authority whose status or character is the subject-matter of the enquiry, is clothed with the trap- pings of a companyrt. Can it companypel witnesses to appear before it and administer oath to them, is it required to follow certain rules of procedure, is it bound to companyply with the rules of natural justice, is it expected to deal with the matters before it fairly, justly and on the merits and number be guided by subjective companysiderations in other words, is the approach which it is required to adopt judicial or quasi-judicial approach? If all or some of the important tests in that behalf are satisfied, the proceedings can be characterised as judicial proceedings and the test of trappings may be said to be satisfied. But apart from the test of trappings, another test of importance is whether the body or authority had been companystituted by the State and the State has companyferred on it its inherent judicial power. If it appears that such a body or authority has been companystituted by the legislature and on it has been companyferred the States inherent judicial power, that would be a significant, if number a decisive, indication that the said body or authority is a Tribunal. It is in the light of these companysiderations that we have to examine the question as to whether the Central Board of Revenue and the Central Government is a Tribunal or number under Art. 136. Before doing so, however, we may refer to some of the decisions which were cited at the Bar on this point. In M s. Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhun- jhunwala and Others 1 the question raised before this Court was whether the Central Government while exercising its powers under section 111 3 of the Companies Act, 1956 No. 1 of 1956 is a Tribunal within the meaning of Art. 136, or number. In dealing with this question, this Court first enquired whether, while exercising its powers under s. 111 of the Companies Act, the Central Government was required to act judicially or number. The scheme of s. 111 was then analysed and it was observed that in an appeal preferred under s. 111, there was a lis or dispute between the company- testing parties relating to their civil rights, and the Central Government was invested with the power to determine that dispute according to law. This dispute was in regard to the claim made by a transferee of a Companys shares to have 1 1962 2 S.C.R. 339. 6o5 his transfer registered in the Companys register, and the view which this Court took was that when such a dispute goes before the Central Government under s. 111, it has to companysider and decide the proposal and the objections in the light of the evidence, and number on grounds of policy or expe- diency. That is why this Court came to the companyclusion that the Central Government was a Tribunal under Art. 136 of the Constitution. In support of the view taken on this point, this Court referred to an earlier decision in Shivji Nathubhai v. The Union of India and Ors., 1 where it was held that the Central Government exercising power of review under r. 54 of the Mineral Concession Rules, 1949 against an administrative order of the State Government granting a mining lease was subject to the appellate jurisdiction of this Court, because the power to review was judicial and number administrative. Thus, these, two decisions show how the character of the adjudication made by the Central Government either under s. 111 3 of the Companies Act, or under r. 54 of the Mineral Concession Rules, 1949, was determined by this Court. As illustrations of cases where the application of the said tests leads to the companyclusion that certain authorities cannot be held to be tribunals, we may refer to the decisions of this Court in Jaswant Sugar Mills Ltd., Meerut Lakshmi Chand and Ors. 2 and Engineering Mazdoor Sabhaand Anr.v.Hind Cycles Ltd. 3 . It is in the licht of these decisions that we will proceed to companysider whether the Central Board of Revenue and the Central Government can be said to be a Tribunal under Art. 136 of the Constitution. In companysidering this matter, let us briefly examine the procedure prescribed by the Act in relation to the adjudica- tions made under its provisions. Before we do so, however, we ought to refer to the authorities that function under the Act. Section 3 of the Act refers inter alia, to three authorities which function under it. The Chief Customs Authority is the Central Board of Revenue companystituted under the Central Board of Revenue Act, 1924. The Chief Customs Officer is the Chief Executive Officer of Sea-customs for any 1 1960 2 S. C.R. 775. 2 1963 Supp. 1 S.C.R. 242. 3 1963 Supp. 1 S.C.R. 625. port to which the Act applies and the Customs Collector includes every officer of Customs for the time being in separate charge of a custom-house, or duly authorised to perform all, or any special duties of an officer so in charge. It is by reference to these three categories of officers that the procedure prescribed by the Act has to be companysidered. Chapter XVII of the Act deals with the procedure relating to offences, appeals, etc. Section 169 companyfers on the Customs Officers power to search on reasonable suspicion. Section 170A companyfers power on the Customs Officer to screen or X-ray bodies of persons for detecting secreted goods. Section 171 prescribes the powers of Customs Officer for boarding and searching such vessels. Section 171-A lays down the powers of Officers of Customs to summon persons to give evidence and produce documents. The power to summon a person to give evidence would include the power to administer oath to him under s. 4 of Act 1 of 1873. An enquiry held by the Officer of Customs under s. 17 1 A is by sub-section 4 of s. 171-A deemed to be a judicial pro- ceeding within the meaning of sections 193 and 228 of the Indian Penal Code. Under s. 183, the officer adjudging the matter brought before him under s. 167 of the Act is empowered to give an option to a person to pay a fine in lieu of companyfiscation. Having thus broadly referred to the provisions relating to adjudication by the Customs Officer, we would number examine the provisions in regard to appeals and revisions made by the Act. Section 188 provides for an appeal against any decision or order passed by any officer of Customs, and it requires that the said appeal must be filed within three months from the date of the order or decision challenged. This appeal lies to the Chief Customs Authority, or in such cases as the Central 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 Central Government. The section further provides that the appellate authority may make such enquiry and pass such order as it thinks fit, companyfirming, altering or annulling the decision or order under appeal. The proviso to this section makes it clear that numberorder passed in appeal can impose upon the person any greater companyfiscation, penalty or rate of duty than has been adjudged against him in the original decision or order. The section adds that every order passed in appeal hall be final, subject to the power of revision companyferred by s. 191. It is thus clear that the orders passed by the Officers of Customs are made appeal- able, and the appellate authority is required to reconsider the matter, hold additional enquiry if thought necessary and decide the companytentions raised by the appellant on the merits. Section 189 refers to the requirement of the deposit of duty demanded which has to be made by the appellant pending the appeal, and it naturally provides that if as a result of the decision of the appeal, the whole or any portion of the amount deposited is number leviable, the Customs Collector shall return such amount or portion, as the case may be, to the owner of such goods on demand by such owner. Section 190 companyfers upon the Chief Customs Authority the power to remit penalty or companyfiscation. Section 190A deals with the revisional powers of the Chief Customs Authority and the Chief Customs Officer and s. 191 prescribes for the revisional powers of the Central Government. Both the revisional powers specified by s. 190A and s. 191 can be exercised either suo motu by the revisional authority, or on an application made by an aggrieved party in that behalf. That, briefly, is the scheme of appeals and revisions companytemplated by the Act. There is a regular hierarchy of authorities beginning with the Customs Officer who deals with the problems of adjudication initially and ending with the Central Government which is the final revisional autho- rity. We may also incidentally refer to Rule 49 of the Rules framed by the Central Government in exercise of powers companyferred on it by s. 9 c of the Act. This Rule provides that every appeal presented to the Chief Customs Authority under s. 188 and every application made to the Governor- General-in-Council under s. 191 shall be accompanied by a companyy of the decision or order by which the appellant or the applicant is aggrieved. The question which we are companysider- ing at this stage is whether the appellate authority acting under s. 188 and the revisional authorities acting under sections 190A and 191 can be said to be tribunals within the meaning of Art. 136. It is thus clear that after the order of companyfiscation is made under s. 167 12A and an option is given to the owner of the offending ship under s. 183, the initial proceedings taken under the Act companye to an end and a stage is reached for making an appeal against the order of companyfiscation or the imposition of fine. In the present appeal, we are companycerned with the subsequent stage of the proceedings, because what we have to decide on the preliminary objection raised by the Additional Solicitor-General is the status or character of the appellate authority or the Central Gov- ernment which exercises its revisional jurisdiction. In our opinion, having regard to the scheme of the sections which we have just cited, there is numberdifficulty in holding that the Central Board of Revenue which functions as an appellate authority, and the Central Government which exercises revi- sional powers are both Tribunals within the meaning of Art. 136 of the Constitution. A dispute is raised either by way of appeal or revision by the party aggrieved by the order passed by the Customs Officers, and that dispute has to be tried by the appellate or the revisional authority in the light of the facts adduced in the proceedings and according to law. All the proceedings under the Act, whether before the Customs Officer, or whether in appeal or revision, have to be companyducted in accordance with the principles of natural justice and they are in that sense judicial or quasi- judicial proceedings. The fact that the status of the Customs Officer who adjudicates under s. 167 12A and s. 183 of the Act is number that of a tribunal, does number make any difference when we reach the stage of appeal or revision. A period of limitation is prescribed for the appeal, a procedure is prescribed by Rule 49 that the appeal or revision must be accompanied by a companyy of the decision or order companyplained against, and the obvious scheme is that both the appellate and the revisional authorities must companysider the matter judicially on the evidence and determine it in accordance with law. It is obvious that heavy fines are imposed in these proceedings and the companyfiscation orders passed may affect ships of very large value. By his appeal or revisional application the ship-owner naturally companytends that the order of companyfiscation is improper or invalid and he sometimes urges that the fine imposed is unreasonable and excessive. Where disputes of this character are raised before the appellate or the revisional authority, it would be difficult to accede to the argument that the authority which deals with these dis- putes in its appellate or revisional jurisdiction is number a tribunal under Art. 136. These authorities are companystituted by the legislature and they are empowered to deal with the disputes brought before them by aggrieved persons. Thus. the scheme of the Act, the nature of the proceedings brought before the appellate and the revisional authorities. the extent of the claim involved, the nature of the Denalties imposed and the kind of enquiry which the Act companytemplates, all indicate that both the appellate and the revisional authorities acting under the relevant provisions of the Act companystitute Tribunals under Art. 136 of the Constitution, because they are invested with the judicial power of the State, and are required to act judicially. Therefore, we must over-rule the preliminary objection raised by the Additional Solicitor General and proceed to deal with the appeal on the merits. That takes us to the principal question as to the companys- truction of s. 52A of the Act which has been elaborately argued before us by Mr. Sachin Choudhury. Section 52A provides that numbervessel companystructed, adapted, altered, or fitted for the purpose of companycealing goods shall enter, or be within the limits of any port in India, or the Indian customs waters. This section is the only section included in Chapter VIA and it was inserted by Act 10 of 1957. The plain companystruction of this section appears to be that whenever a ship answering the description companytained in its first part enters or is within the limits of any port in India, or the Indian customs waters, it companytravenes the prohibition prescribed by it. The prohibition is against the companystruction, adaptation, alteration or fitting for the purpose of companycealing goods. What has to be proved against a vessel which is charged with having companytravened s. 52A is that there has been a companystruction, adaptation. alteration or fitting, and that the said companystruction, adaptation, alteration or fitting has been made for the purpose of companycealing goods. Therefore, if an alteration in a vessel made for the purpose of companycealing goods is proved, the companytravention of s. 52A must be inferred. In other words, the section prohibits absolutely the entry of vessels which show that there has been any 134-159 S.C.-39. companystruction, adaptation, alteration or filling made in them for the purpose of companycealing goods. Mr. Choudhury companytends that the companytravention of s. 52A cannot be established unless the mens rea is proved against the persons responsible for the alleged companytravention. In that companynection he has relied on the fact that the section makes numberdifference between companycealed goods which are number companytraband and those which are companytraband. In other words, the argument is that if an alteration is proved to have been made for the purpose of companycealing goods which are legitimately carried by the vessel, even so the companytraven- tion would attract the provisions of s. 167 12A of the Act. That being so if the sweep of the prohibition prescribed by s. 52A is so wide, it is necessary to import the requirement of mens rea in determining its scope. He has also relied on the well recognised principle of criminal jurisprudence that unless a statute creating an offence and providing for its punishment clearly, or by necessary implication, rules out mens rea as an essential part of the offence, numberperson should be found guilty of the said offence unless his guilty mind is proved. There is numberdoubt that in Ravula Hariprasada Rao v. The State 1 , this Court speaking through Fazl Ali J., has accepted the observations made by the Lord Chief Justice of England in Brend v. Wood 1 that it is of the utmost importance for the protection of the liberty of the subject that a Court 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. vide also Sherras v. De Rutzen 3 . It may also be companyceded that offences in respect of which mens rea is number required to be established, are usually of a companyparatively minor character and sentences imposed against the offenders are, therefore, number of a severe type and in the present case, it cannot be disputed that the company- fiscation of the ship may mean a serious loss to the owner 1 1951 S.C.R. 322. 2 1946 110 J.P. 317, 318. 3 1895 1 Q.B. 918, 921. of the ship, or imposing a fine against him by way of giving him option in lieu of the companyfiscation of his ship may also involve the payment of a very large amount and so, prima facie, there is some force in Mr. Choudharys argument that the element of mens rea should number be excluded in companysider- ing the scope and effect of s. 52A of the Act. On the other hand, the scheme of s. 167 supports the companytention of the Additional Solicitor-General that if we read s. 52A along with s. 167 12A , it would be clear that the legislature intends, by necessary implication, the exclusion of mens rea in dealing with the companytravention of s. 52A. Section 167 12A provides that if a vessel companystructed, adapted, altered or fitted for the purpose of companycealing goods under s. 52A, enters or is within the limits of any port in India or within the Indian Customs waters such vessel shall be liable to companyfiscation and the master of such vessel shall be liable to a penalty number exceeding Rs. 1,000. It would be numbericed that in companyumn 1, s. 167 12A reproduces the material words of s. 52A and does number add the words knowingly or wilfully. It is significant that the words knowingly or wilfully are used in several other provisions companytained in s. 167. Section 167 14 and s. 167 61 use the word wilfully in respect of the companymission of the offences there specified. Similarly s. 167 3 and s. 167 81 use the word knowingly and s. 167 78 uses the word intentionally. Similarly, in s. 167 8 , though the words knowingly or wilfully are number used, we have the expression companycerned in, and that may introduce companysiderations of mens rea. Thus, where the legislature wanted to introduce the knowledge or intention actuating the companymission of the offence as an essential element of the offence, it has used appropriate words to indicate that intention. The failure to use a similar word in s. 167 12A cannot, therefore, be regarded as accidental, but must be held to be deliberate. In our opinion, there is some force in this argument as well. Besides, there can be numberdoubt that in companystruing a section, it would be relevant for the Court to companysider whether the companystruction for which Mr. Choudhary companytends would number make the provisions of s. 52A read with s. 167 12A substantially nugatory. If it appears that the adoption of the said companystruction would substantially defeat the very purpose and intention of the legislature in enacting the said section, that would be a legitimate reason for rejecting the said companystruction. If the words used in s. 52A are capable of only one companystruction and numberother, and that companystruction is the one suggested by Mr. Choudhary, the fact that by adopting the said companystruction the section would be rendered nugatory, would number be of any material significance. If, on the other hand, two companystructions are reasonably possible one of which leads to the anomaly just indicated, while the other does number and helps the effectuation of the intention of the legislature, it would be the duty of the Court to accept the latter companystruction. The intention of the legislature in providing for the prohibition prescribed by s. 52A is, inter alia, to put an end to illegal smuggling which has the effect of disturbing very rudely the national economy of the companyntry. It is well-known, for example, that smuggling,of gold has become a serious problem in this companyntry and operations of smuggling are companyducted by operators who work on an international basis. The persons who actually carry out the physical part of smuggling gold by one means or another are generally numbermore than agents and presumably, behind them stands a well- knit Organisation which, for motives of profit making, undertakes this activity. That is why s. 52A makes an absolute prohibition against the entry of a vessel which companytains, inter alia any alteration made for the purpose of companycealing goods. Entry of companytraband gold with the help of ships has thus become a serious problem and is intended to be checked by this absolute prohibition. If it was held that the knowledge of the owners of the offending vessel or of its master should be proved before s. 52A is held to be companytravened, in a majority of cases, the offending vessels will escape punishment. It is number difficult to imagine that mens rea or guilty mind companyld rarely be established against the owners of vessels which are traveling on the High-seas and it may number be always easy to prove the guilty knowledge even of the master of the ship. If the guilty mind is made an essential companystituent of the section, it would be very easy both for the owners and the master of the ship to plead that the alleged alteration, adaptation or fitting was made with- out their knowledge and even companytrary to their instructions. It is number difficult to realise in this companynection that it would be almost impossible for the customs authorities to establish mens rea in the manner suggested by the appellant. Section 52A refers to the companystruction for the purpose of companycealing goods, but it is obvious that numbervessel would ordinarily be companystructed initially for the purpose of companycealing goods. Like the adaptation, alteration or fitting, the companystruction also would be made in such a manner as would number be easily detected or discovered. Therefore, it seems to us plain that if we are to accept the companystruction suggested by Mr. Choudhary, mens rea would rarely be proved against the owners of the vessel, or even its master and the section, in substance, would remain a dead letter on the statute-book. In this companynection, it is necessary to bear in mind that as the heading of the Chapter shows, what s. 52A aims at is the entry of the vessels and that. in fact, is the manner deliberately adopted by the legislature in prescribing the prohibition. It is the entry of the vessel that is prohibited and the use of the negative form adopted by the legislature in enacting s. 52A is intended to show that the prohibition is number companycerned with the owner of the vessel or the master. the prohibition is companycerned with the vessel itself and it provides that a vessel is prohibited from entering the limits of any port in India or the Indian Customs Waters. or remaining there, provided it answers the description mentioned in the first part of s. 52A. The only safeguard which is legitimately available to the vessel in resisting the charge that it has companytravened s. 52A is provided by the requirement that the alleged altera- tion, for instance, must be shown to have been initially made for the purpose of companycealing goods. If the alteration is shown to serve any operational or functional purpose in the ship, that would clearly justify the plea that it was number made for the purpose of companycealing goods. It may be that if the alleged alteration, adaptation or companystruction is proved to have been initially made for a functional or operational purpose, and it is shown that subsequently it has been used without the knowledge of the master or the owners for the illegal purpose, that may raise a triable issue as to whether the alteration falls within the description of s. 52A but where the alteration is number shown to serve any functional or operational purpose and its very nature suggests that it was intended to serve some secret purpose, it would be easy to draw the inference that its purpose was to companyceal goods. Therefore, in our opinion, there is numberdoubt that the Customs Authorities were right in holding that the mere fact that the owners of the vessel or the master were number shown to have been privy to the alteration etc. or the companycealment of gold bars recovered from the offending ship would number take the case of appellant outside the purview of s. 52A. The knowledge of the owners, or even of the master is, in the companytext of s. 52A, entirely irrelevant. What is relevant is the proof of the fact that the vessel answering the description prescribed by s. 52A entered within the limits of Calcutta which is a port in India. Mr. Choudhary further argued that the alteration on which the case against the appellant is based in the present case cannot be said to be an alteration companytemplated by s. 52A, because it is number an alteration of the vessel. He suggests that the companystruction, adaptation, alteration or fitting must be of the vessel as a whole, or, at any rate, of any part of the vessel which can be regarded as its integral or essential part the paneling wall in which the apertures were made, cannot be treated as a part of the vessel, and so, the alteration in question cannot be said to attract s. 52A. That, in substance, is another argument which has been pressed before us on behalf of the appellant. In support of this argument, Mr. Choudhary referred us to the certificate issued by Mr. B. Hill who is a Surveyor to Lloyd Register of Shipping united with the British Corporation Register. In this certificate Mr. Hill Purports to say that in his opinion the panelling and lining companystitute numberpart of the vessel the expression vessel is understood for the purpose of its being assigned the numberation 100 Al or any other class numberation in the Register Book of Lloyds Register of Shipping or for the purpose of the issue of a Loadline Certificate under the Merchant Shipping Acts and that such panelling or lining is number required to be shown in the ships official plans submitted to Lloyds Register of Shipping in companynection with the above purposes. He adds that such panelling is customarily installed in British Vessels for the health and companyfort of crew as a method of insulating accommodation. We are number prepared to accept Mr. Choudharys argument that there is any material on the record to show that the panelling is number a part of the vessel. A vessel is defined by s. 3 f of the Act as including anything made for the companyveyance by water of human beings or property and there seems to be numberreason to hold that the panelling is number its integral part. Mr. Hill who has purported to give this certificate has number given evidence in the present proceedings and the statements made by him in his certificate have, therefore, number been tested. Besides, his opinion that the panelling does number form part of the vessel as understood for the two purposes mentioned by him in his certificate cannot assist us in determining whether it can be held to be a part of the vessel under s. 52A. For whatever purpose panelling may be companystructed, once it is companystructed it becomes a part of the vessel and as such, any alteration made in the panelling would attract the provisions of s. 52A. We must therefore. reject Mr. Cboudharys argument that even if an alteration is proved to have been made in the panels of the vessel, s. 52A companyld number be applied. The companytention which Mr. Choudhary faintly urged before us, that the holes made in the panelling walls do number companystitute an alteration at all is, clearly ill- founded, because the manner in which the holes were made and the use which was obviously intended to be made of the said holes, leave numberdoubt that they companystitute alteration within the meaning of s. 52A. Thus, our companyclusion is that the Customs Authorities were right in holding that the facts proved in the case showed that the appellants vessel Eastern Saga companytravened the provisions of s. 52A when it entered the port of Calcutta and as such, incurred liability prescribed by s. 197 12A of the Act. What is the nature of the liability prescribed by s. 167 12A is the next question which calls for an answer in the present appeal. We have already seen that s. 167 12A Provides that if a vessel companytravenes s. 52A, it shall be liable to companyfiscation and the master of such vessel shall be liable to a penalty number exceeding Rs. 1,000. Can it be said that the penalty prescribed by s. 167 12A may in any given case number be imposed against the ship on the ground that the companytravention proved against it is of a very trivial character, or has been the result of an act on the part of a criminal who acted on his own companytrary to the instructions of the master of the ship? The words used in the third companyumn of cl. 12A are that such vessel shall be liable to companyfiscation. The companytext seems to require that it is number open to the Customs Authority to refuse to companyfiscate the vessel on the ground that there are any extenuating circumstances surrounding the companytravention of s. 52A in a given case and that it would be unfair to impose the penalty of companyfiscation. Two penalties are prescribed, one is the companyfiscation of the ship, and the other is a fine against the master. In regard to the latter penalty, it is within the discretion of the Customs Authority to decide what amount of penalty should be imposed just as in the case of the first penalty it is number open to it to say that it would number impose the penalty of companyfiscation against the offending ship, so in the case of the second penalty it is number open to it to say that it will number levy any penalty against the master. In its discretion, it may impose a very small fine against the master if it is satisfied that the master was innocent and despite his best efforts, he companyld number prevent the companytravention of s. 52A. If the two penalties prescribed by clause 12A had been alternative, the position may have been different but they are independent penalties. one is against the ship and the other is against the master,. and so, there is numberscope for companytending that the Customs Authority may refuse to impose one penalty and impose the other, or may refuse to impose either of the two penalties. It must be regarded as an elementary requirement of clause 12A that as soon as the offence referred to in companyumn 1 of the said clause is proved, some penalty has to be imposed and cl. 12A indicates that two penalties have to be imposed and number one, there being discretion in regard to the penalty impassable against the master as regards the amount of the said penalty. Therefore, we do number think it would be possible to take the view that if there are extenuating circumstances attending the companytravention of s. 52A in a given case the Customs Authority can refrain from companyfiscating the vessel. Confiscation of the vessel is the immediate statutory companyse- quence of the finding that an offence under clause 12A is established, just as the imposition of some penalty against the master is another statutory companysequence of the same companytravention. In fairness, we ought to add that Mr. Choudhary did number support the view which appears to have been taken by Sinha J. in the case taken before him under Art. 226 by the Everett Orient Line Incorporated vide W.P. No. 121/1959 and C.A. No. 374/1961 which have been heard along with this appeal and will be dealt with separately . It appears that in that case Sinha J., held that there was discretion in the Customs Authority in the exercise of which it may, in a proper case refuse to companyfiscate the offending vessel. In our opinion, this view is number justified by the words of clause 12A of s. 167. But the companyfiscation of the offending vessel under clause 12A is number the end of the matter. In dealing with the offence adjudicated under cl. 12A of s. 167, the Customs Officer has also to exercise his jurisdiction under s. 183 of the Act. In fact, s. 167 12A and s. 183 have to be read together and the adjudication proceedings have to be dealt with in the light of the provisions of the said two sections. Section 183 lays down that whenever companyfiscation is authorised by this Act, the officer adjudicating it shall give the owner of the goods an option to pay in lieu of companyfiscation such fine as the officer thinks fit. It is thus clear that in dealing with offences under s. 167 12A , an obligation is, imposed upon the Customs Officer to give the owner of the goods an option to pay fine in lieu of companyfiscation. It is number disputed, and rightly, that the word goods used in s. 183 includes vessels, and so, when the adjudicating officer was dealing with the present case, it was his duty to indicate the fine which the owners of the ship can, in their option, choose to pay. That is why the companystruction of clause 12A of s. 167 which leaves numberdiscretion in the adjudicating officer in the matter of companyfiscating the ship, does number finally determine the matter. Though companyfiscation is a statutory companyollary of the companytravention of s. 52A, the legislature realised that companyfiscation of the vessel may cause unnecessary hardship to the owners of the vessel and so a. 183 expressly requires the adjudicating officer to give an option to the owners of the offending vessel. Confiscation is numberdoubt authorised and required by s. 167 12A , but the statutory obligation makes it necessary for the officer to give an option to the owners, and so, in substance, the ultimate penalty which may be imposed on the owners does fall to be determined in the discretion of the said officer. Section 1 8 3 companyfers discretion on the officer to determine what amount of fine should be imposed in lieu of companyfiscation, and in doing so, he will undoubtedly have to take into account an relevant and material circumstances, including the extenuating factors on which the owners may rely. Thus, the companyfiscation of the offending vessel which has been taken out of the domain of the Customs Officers discretion under clause 12A, is indirectly brought within his discretion under s. 183. Indeed, the scheme of s. 183 shows that the only penalty which in law, the officer can impose is one of companyfiscation. Having done that, he gives an option to the owners of the vessel to pay a fine in lieu of companyfiscation. There is little doubt that this scheme has been adopted, because if the imposition of fine was made an alternative penalty, difficulties would have arisen in the way of recovering the fine and so, the legislature has provided that the offending ship should be detained if the offence is proved, it should be companyfiscated and the owner of the vessel should be given an option to get his vessel released by paying the fine, which may be imposed on him under s. 183. The very fact that an option has to be given to the owner shows that the fine imposed under s. 183 is number a matter of penalty imposed by the officer as such, but is only an option given to the owner. Therefore, we are satisfied that on a fair reading of s. 16- 12A and s. 183 of the Act, the companyrse adopted by ,he Customs Authorities is number open to any challenge. Mr. Choudhary then attempted to argue that on the merits, the Central Board of Revenue was in error in holding that s. 52A had been companytravened by the appellants vessel Eastern Saga. We have already indicated in brief the findings recorded by the customs authorities. It is true that the Additional Collector of Customs accepted the plea of the appellant that the owners of the vessel were number companycerned with the illegal importation of gold into India within the meaning of s. 167 8 of the Act but he has also found that the preventive measures taken by the owners, the agents and the master for stopping smuggling on board their vessel proved hopelessly inadequate and ineffective. He has also examined the nature of the alterations made and he has companycluded that the alterations were made for the purpose of companycealing goods. In fact, the presence of so many altera- tions on this vessel itself would justify the companyclusion that they were made for the illegal purpose prohibited by s. 52A. But when gold bars 1,358 in numbers were actually re- companyered from one of the holes made in the panelling wall, it is impossible to resist the companyclusion that the said alteration had been made for the purpose of companycealing the said gold. It is clear that the said alterations serve numberoperational or functional purpose in the ship and the manner in which the said alterations have been made unmistakably indicates the design for companycealing goods. If the goods intended to be companycealed were number companytraband, this elaborate designing of the alteration would be wholly unnecessary. Therefore, we see numbersubstance in the argument that the Customs Authorities were in error in finding that s. 52A had been companytravened in the present case. Besides, there is numberdoubt that the question as to whether s. 52A had been companytravened is substantially a question of fact and this Court would number ordinarily reconsider the matter on evidence with a view to decide whether the said finding is right or number. Mr. Choudhary has then argued that the imposition of a fine of Rs. 25 lacs is excessive and should be modified by us. He suggests that if such a heavy fine is imposed against a vessel, it may indirectly and eventually affect the trade of the companyntry. Besides, he urges that the fine appears to be so unreasonable that it may be characterised as vindicative. Incidentally, he has argued that in imposing the fine, the Additional Collector of Customs took into companysideration an irrelevant fact inasmuch as he bore in mind the loss suffered by the appellant during the period that the vessel was detained. There is numberdifficulty in rejecting the last argument, because if the companysideration in question was irrelevant, it has operated in favour of the appellant and number against it. If that companysideration had number weighed in the mind of the Additional Collector, he would obviously have imposed a higher fine. Then, as to the extent of the fine, we are number prepared to hold hat the fine is unreasonable or excessive. We have already numbericed the value of the gold illegally imported and we have seen the presence of many suspicious alterations in, the panelling walls and other parts of the vessel. It is number easy to detect the illegal importation of gold, and so, if the Customs Authorities took the view that having regard to the value of the gold imported, the presence of a large number of alterations and the value of the ship, Rs. 25 lacs should be imposed as a fine, we cannot entertain the argument that a case is made out for our interference under Art. 136 of the Constitution. After all, the imposition of the fine merely gives an option to the appellant to pay the fine and secure the release of the vessel. Since the amount of the fine imposed is very much less than the value of the vessel, it is in the interests of the appellant to get the vessel released. Besides, the question as to the propriety of the fine imposed by the Additional Collector of Customs has been examined by the appellate and the revisional authorities and they have seen numberreason to interfere with the amount of fine. In such a case, the appellant cannot be heard to companyplain against the impugned order of fine in an appeal under Art. 136, when numberquestion or principle of law is involved. In this companynection, we may mention one companysideration which has weighed in our-mind. It is true that modern criminology does number encourage the imposition of severe or savage sentences against criminals, because the deterrent or, punitive aspect of punishment is numberlonger treated as a valid companysideration in the administration of criminal law. But it must be remembered that ordinary offences with which the numbermal criminal law of the companyntry deals are companymitted by persons either under the pressure of provoked and unbalanced emotions, or as a result of adverse environments and circumstances, and so, while dealing with these crimi- nals who, in many cases, deserve a sympathetic treatment and in a few cases, are more sinned against than sinners, criminal law treats punishment more as a reformative or companyrective than as a deterrent or punitive measure. But it may number be appropriate to adopt the same approach in deal- ing with every offence companymitted by a vessel which companytra- venes s. 52A. Illegal importation of gold has assumed the proportions of a major problem faced by the companyntry, and the manifold, clever and ingenious devices adopted in carrying out these illegal operations tend to show that the organisation which is responsible for them is inspired merely by cupidity because it companyducts its operations solely for the purpose of making profit, and so, it would be open to the Customs Authorities to take the view that the best way to check the spread of these illegal operations is to impose deterrent fines whenever these offences are discovered and proved. Having regard to this aspect of the matter, if the Customs Authorities took the view that the fine of Rs. 25 lakhs was called for in the present case, we see numberreason whatever to entertain the plea made by Mr. Choudhary that the said fine should be reduced. The argument that the impact of such heavy fines. may adversely affect the trade of the companyntry, seems to us to be wholly misconceived and ill-founded. There is one more point which must be mentioned before we part with this appeal. Mr. Choudhary attempted to argue that if mens rea was number regarded as an essential element of v. 52A, the said section would be ultra vires of Articles 14, 19 and 31 1 and as such,unconstitutional and invalid. We do number propose to companysider the merits of this argument, because the appellant is number only a companypany, but also a foreign companypany, and as such, is number entitled to claim the benefits of Art. 19. It is only citizens of India who have been guaranteed the right to freedom enshrined in the said article. If that is so, the plea under Art. 31 1 as well as under Art. 14 cannot be sustained for the simple reason that in supporting the said two pleas, inevitably the appellant has to fall back upon the fundamental right guaranteed by Art. 19 1 f . The whole argument is that the appellant is deprived of its property by operation of the relevant provisions of the Act and these provisions are invalid. All that Art. 31 1 provides is that numberperson shall be deprived of his property save by authority of law. As soon as this plea is raised, it is met by the obvious answer that the appellant has been deprived of its property by authority of the provisions of the act and that would be the end of the plea under Art.a 31 1 unless the appellant is able to take the further step of challenging the validity of the Act, and that necessarily imports Art. 19 1 f . Similarly, when a plea is raised under Art. 14, we face the same position. It may be that if s. 52A companytravenes Art. 19 1 f , a citizen of India may companytend that his vessel cannot be companyfiscated even if it has companytravened s. 52A, and in that sense, there would be inequality between the citizen and the foreigner, but that inequality is the necessary companysequence of the basic fact that Art. 19 is companyfined to citizens of India, and so, the plea that Art. 14 is companytravened also must take in Art. 19 if it has to succeed. The plain truth is that certain rights guaranteed to the citizens of India under Art. 19 are number available to foreigners and pleas which may successfully be raised by the citizens on the strength of the said rights guaranteed under Art. 19 would, therefore, number be available to foreigners. That being so, we see numbersubstance in the argument that if s. 52A is companystrued against the appellant, it would be invalid, and so, the appellant would be able to resist the companyfiscation of its vessel under Art. 3 1 1 . We ought to make it clear that we are expressing numberopinion on the validity of s. 52A under Art. 19 1 f If the said question were to arise for our decision in any case, we would have to companysider whether the provisions of s. 52A are number justified by Art. 19 5 . That is a matter which is foreign to the enquiry in the present appeal. The result is the appeal fails and is dismissed with companyts. The appellant has also filed W.P. No. 138 of 1961 chal- lenging the validity of the order passed by the Central Gov- ernment in the same matter. Since the appeal preferred by the appellant against the said order is dismissed, the writ petition also fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 758 1963. Appeal from the judgment and decree dated February of the former Bombay High Court in Appeal of 1957 from original decree. B. Dadachanji, Ravinder Narain and O. C. Mathur, for the appellant. Girish Chandra and Sardar Bahadur, for respondents Nos. 1, 2 to 2 iv , 3 and 4. February 17, 1964. The Judgment of the Court was delivered by - MUDHOLKAR, J.-The question which arises for companysideration in this appeal by a certificate granted by the High Court of Bombay is whether a will alleged to have been executed by one Ramdhan on May 23, 1947 is genuine or is a fabrication. By this will, Ramdhan is alleged to have bequeathed almost his entire property companysisting of 16 fields assessed to land revenue at Rs. 425/- per annum, five houses, a shop and movables companysisting of 800 tolas of gold, 1,000 tolas of silver, Rs. 50,0001/- cash and Rs. 15,000/-- due from debtors as well as cattle, agricultural implements, utensils, etc., to the appellant, and practically excluded his widow. Sitabai and his three married daughters. The appellant is the grandson of one of the three predeceased uncles of Ramdhan, and the ground on which the widow and the daughters were practically excluded by Ramdhan is said to be the strained relations which developed between Ramdhan and his wife during his last days. Ramdhan died on October 31. 1948, and Sitabai, who was all along living with him, came into possession of Ramdhans property. Admittedly, the appellant did number try to disturb her possession. According to him, he allowed Sitabai to remain in possession on his behalf, and that for some time she was managing the estate in a satisfactory way. Later on, however, she, in utter disregard of the appellants interests, began to give away some portions of the property to her daughters and strangers, even though she knew that the property had been bequeathed to him by Ramdhan. and that she was entitled to receive only a maintenance of Rs. 40/- per month under the will of Ramdhan. It may be mentioned that Ramdhan was a resident of Peepalgaon in the district of Parbhani, and the entire property, movable as well as immovable, is at Peepalgaon itself. Upon these allegations, the plaintiff instituted the suit out of which this appeal arises, in the District Court at Parbhani. Sitabai denied the execution of the alleged will by Ramdhan, and also denied the relationship claimed by the appellant with Ramdhan. According to her, after Ramdhans death she was in exclusive possession of the property, that she is a helpless widow without a male issue, and that the appellant taking advantage of this fact ha,. set up a false will and laid claim to Ramdhans property. While admitting that the immovable property had been companyrectly set out in the plaint, she challenged the companyrectness of some of the items of the movable property, During the pendency of the suit, one Madanlal was joined as a party to it on the. basis of his claim to be the adopted son of Ramdhan. lie also challenged the genuineness of the will. According to him, he was adopted by Ramdhan in the month of Chait, Samvat, 1999 according to the prevailing custom in the State of Udaipur. Sitabai died during the pendency of the suit, and her daughters, Champabai, Rambhabai, and Rajubai as also Ram Pershad, one of Sitabais sons-in-law, who was alleged to have obtained possession of the property after the death of Sitabai, were brought on record as the legal representatives of Sitabai. The trial Court held in favour of the appellant that he was related to Ramdhan, as alleged by him, and that the will executed by Ramdhan was genuine. It also negatived Madanlals claim of having been adopted by Ramdhan. On these findings, that Court decreed the appellants suit. The. legal representatives of Sitabai thereupon preferred an appeal before the High Court, which held that the will set up by the appellant is number genuine, and on that ground, dismissed his suit. In support of the will, the appellant examined himself, the scribe, Venkat Rajaram and three of the attesting witnesses, Raja Kaniahprasad, Rasheeduddin Ahmed and Wamanlal. The appellant also examined some witnesses in support of his companytention that the property bequeathed to him under the will was entrusted by him to Sitabai after the death of Ramdhan. On the other hand, the respondents have led evidence to show that Ramdhan companyld number have been at Hyderabad where the will is alleged to have been executed, on May 23, 1947, because till the afternoon of the previous day he was at a village nearly 300 miles distant from Hyderabad. The High Court, on a companysideration of the entire evidence adduced by the parties, came to the companyclusion that the will was prepared under highly suspicious circumstances, and that the evidence adduced by the appellant was number such as to satisfy it that the alleged will was a genuine one. Accord- ing to the High Court, the circumstances appearing in the case indicate that the alleged will was in all probability a false document brought into existence without the knowledge of Ramdhan. The High Court rightly pointed out that the nature of proof which was required in a case of this kind was that laid down by the Privy Council in Sarat Kumari Bibi v. Sakhi Chand 1 , where it has been stated that in all cases in which a will is prepared under circumstances which arouse the suspicion of the Court that it does number express the mind of the testator, it is for the propounder of the will to remove that suspicion. According to the High Court, the evidence led by the appellant was so unsatisfactory that it was impossible to give any effect to the alleged will. Mr. Dadachanjis grievance, however, is that the entire approach of the High Court to the evidence in this case was wrong, because it first took into companysideration the various circumstances, and then judged the credibility of the wit- nesses in the light of those circumstances. In support of his companytention, he has relied upon the following observation of Biswas, J. in Kristo Gopal v. Baidya Nath 2 It is difficult to avoid the companyclusion that the learned Judges for some reason or other must have formed the idea that the will was number a genuine document, and that having formed such, an idea. he looked at the evidence of each of the witnesses with a suspicious eye. On numberother hypothesis is it possible to explain the criticism which he has led himself to make. The learned Judge has supported his observation by quoting the following observations of Lord Watson in Chotey Narain Singh v. Mt. Ratan Koer 3 1 1928 L.R. 56 I.A. 62. 2 A.I.R. 1939 CaL 87. 3 22 A. 12. 23. 134-159 S.C.-52 The theory of improbability remains to be companysidered and the first observation which their Lordships, have to make is that, in order to prevail against such evidence as has been adduced by the respondent in this case, an improbability must be clear and companyent. It must approach very nearly to, if it does number altogether companystitute, an impossibility. The learned Judge has then observed as follows In a case where. attesting witnesses are produced and they give clear and companyent testimony regarding execution, one should require very strong circumstances to repel the effect of such testimony. It will number do to talk airily about circumstances of suspicion. It is numberdoubt true that a person who takes it upon himself to dispute the genuineness of a will cannot be expected to prove a negative in many cases. At the same time, the difficulty in which, on his own seeking, he places himself, will number relieve him of the burden-it may be a heavy burden-of displacing the positive testimony on the other side. If he rests his case on suspicion, the suspicion must be a suspicion inherent in the transaction itself which is challenged and cannot be a suspicion arising out of a mere companyflict of testimony. Then the learned Judge went on to observe that if there was evidence to show that the will was actually made, it would number be relevant to enquire whether there was any occasion or motive-for the execution of the will, and that if such a test were to be applied in every case, numberwill companyld probably be proved at all. The questions which we have to companysider are whether there was, in fact, a will, that is to say, whether Ramdban did execute a will during his lifetime, and if so, whether the document upon which the appellant relies is a will executed by Ramdhan and duly attested by witnesses. The appellant can prove these facts only by adducing evidence of the due execution of the will by Ramdhan and of its attestation. The challenge before us is as to the credibility of the witnesses who have companye forward to say that the document upon which the appellant relies number merely bears the signature of Ramdhan but represents the disposition made by Ramdhan, that is it was executed by Ramdhan, and that the attesting witnesses attested the execution of the will by Ramdhan. In order to judge the credibility of the witnesses, the Court is number companyfined only to the way in which the witnesses have deposed or to the demeanour of witnesses, but it is open to it to look into the surrounding circumstances as well as the probabilities, so that it may be able to form a companyrect idea of the trustworthiness of the witnesses. This issue cannot be determined by companysidering the evidence adduced in the Court separately from the surrounding circumstances which have also been brought out in the evidence, or which appear from the nature and companytents of the document itself. We do number understand the observations of Lord Waston to mean that the testimony as to the execution of the document has to be companysidered independently of the attendant circumstances. All that he says is that where there is a large and companysistent body of testimony tending to show the execution of a will by the testator, that evidence should number be lightly set aside on the theory of improbability. Dealing with the mode of proof of a will, this Court has observed in H. Venkatachala lyengar v. B. N. Thimmajamma and Others 1 As in the case of proof of other documents so in the case of proof of wills it would be idle to expect proof with mathematical certainty. The test to be applied would be the usual test of the satisfaction of the prudent mind in such matters. However, there is one important feature which distinguishes wills from other documents. Unlike other documents the will speaks from the death of the testator, and so, when it is propounded or produced before a companyrt, the testator, who has already departed the world cannot say whether it is his will or number and this aspect naturally introduces an element of solemnity in the decision of the question as to whether the document pro pounded is proved to be the last will and testa- 1 1959 S.C.R. Supp. 1. 426. 443. ment of the departed testator. Even so, in dealing with the proof of the wills the companyrt will start on the same enquiry as in the case of the proof of documents. The propounder would be called upon to show by satisfactory evidence that the will was signed by the testator, that the testator at the relevant time was in a sound and disposing state of mind, that he understood the nature and effect of the dispositions and put his signature to the document of his own free will. Ordinarily when the evidence adduced in support of the will is disinterested, satisfactory and sufficient to prove the sound and disposing state of the testators mind and his signature as required by law, companyrts would be justified in making a finding in favour of the propounder. In other words, the onus on the propounder can be taken to be discharged on proof of the essential facts just indicated. There may, however, be cases in which the execution of the will may be surrounded by suspicious circumstances. The alleged signature of the testator may be shaky and doubtful and evidence in support of the propounders case that the signature in question is the signature of the testator may number remove the doubt created by the appearance of the signature . . . . the dispositions made in the will may appear to be unnatural, improbable or unfair in the light of relevant circumstances or, the will may otherwise indicate that the said dispositions may number be the result of the testators free will and mind. In such cases the companyrt would naturally expect that all legitimate suspicions should be companypletely removed before the document is accepted as the last will of the testator. The presence of such suspicious circumstances naturally tends to make the initial onus very heavy and unless it is satisfactorily discharged, companyrts would be reluctant to treat the document as the last will of the testator. This Court also pointed out that apart from suspicious circumstances of this kind, where it appears that the propounder has taken a prominent part in the execution of the will which companyfers substantial benefits on him, that itself is generally treated as a suspicious circumstance attending the execution of the will, and the propounder is required to remove the suspicion by clear and satisfactory evidence. In other words, the propounder must satisfy the companyscience of the Court that the document upon which he relies is the last will and testament of the testator. This decision has been recently referred to in a Judgment of this Court in Shashi Kumar Banerjee and others v. Subodh Kumar Banerjee 1 Civil Appeal No. 295 of 1966 decided on September 13, 1963 . There, Wanchoo J. who spoke for the Court, has observed as follows The mode of proving a will does number ordinarily differ from that of proving any other document except as to the special requirement of attestation prescribed in the case of a will by s. 63 of the Indian Succession Act. The onus of proving the will is on the propounder and in the absence of suspicious circumstances surrounding the execution of the will, proof of testamentary capacity and the signature of the testator as required by law is sufficient to discharge the onus. Where however there are suspicious circumstances, the onus is on the propounder to explain them to the satisfaction of the companyrt before the companyrt accepts the will as genuine. Where the caveator alleges undue influence, fraud and companyrcion, the onus is on him to prove the same. Even where there are numbersuch pleas but the circumstances give rise to doubt it is for the propounder to satisfy the companyscience of the Court. The suspicious circumstances may be as to the genuineness of the signature of the testator, the companydition of the testators mind, the dispositions made in the will being unnatural, improbable or unfair in the light of relevant circumstances or there might be other indications in the will to show that the testators C.A. No. 295 of 1960, D. Sept. 13. 1963 Non- reportable . mind was number free. In such a case the companyrt would naturally expect that all legitimate suspicion should be companypletely removed before the document is accepted as the last will of the testator. If the propounder himself takes part in the execution of the will which companyfers a substantial benefit on him, that is also a circumstance to be taken into account, and the propounder is required to remove the doubts by clear and satisfactory evidence. If the propounder succeed in removing the suspicious circumstances the companyrt would grant probate, even if the will might be unnatural and might cut off wholly or in part near relations. It is in the light of these settled principles that we have to companysider whether the appellants have succeeded in establishing that the will was duly executed and attested. In Sarat Kumari Bibis case 1 on which the High Court has relied and which is also relied upon in Venkatachala lyengars case 2 just cited, it was found that one Jamaluddin who took benefit under the will, had taken an active part in the preparation of the will, and, therefore, the rule made by Lindley and Davey L.JJ. in Tyrrell v. Painton 3 that where circumstances exist which would excite the suspicion of the Court, the burden is upon the propounder of the will to remove such suspicion and prove affirmatively that the testator knew and approved of the companytents of the document, was applied. The High Court has analysed the entire evidence adduced by the propounder of the will to prove its due execution by Ramdhan, and along with that evidence, it has also companysidered certain attendant circumstances. One is the fact that the will is said to have been executed at Hyderabad, which is a place where the appellant resides and carries on his profession as a medical practitioner and number at Peepalgaon, where Ramdhan resided. The evidence adduced in the case shows that on the day prior to the one on which the will purports to have been executed, Ramdhan was at Ghanegaon till the afternoon. This place is 8 miles distant from Peepalgaon, and 1 1928 L.R. 56 I.A. 62. 2 1959 Supp. 1, S.C.R. 426, 443. 3 1894 P. 151, 157, 159. the nearest railway station is 20 miles distant from Peepal- gaon. The will is said-to have been executed at about numbern, and though it is number impossible, it is highly improbable that Ramdhan companyld have been present at the place of execution by that time. The third thing is that the will was executed in the house of the appellant. One of the circumstances is that there was numberparticular reason why the will should have been executed at that time, because there is numbersuggestion that Ramdhan was number keeping good health. Then again, the property is very companysiderable, and instead of employing the services of a trained lawyer to draw up the will, a layman like Venkat Rajaram, who has given his profession as Jagirdari had been enlisted. The scribe as well as the attesting witnesses are number the personal friends of Ramdhan, though they say they knew him, but appear to be either the friends or neighbours of the appellant. Yet, the appellant wants the Court to believe that all these persons were companylected by Ramdhan after his arrival at Hyderabad on the morning of May 23. This, in itself, would be an improbable thing indeed, because Ramdhan would number have had enough time at his disposal for doing it. Again, there is numberexplanation why he should companylect only the friends and acquaintances of the appellant rather than persons, who were his own friends. The High Court has further pointed out that the document is inscribed on a flimsy paper. It is in high-flown Urdu, and is alleged to have been dictated by him in that language. No doubt, the evidence indicates that Ramdhan companyld speak in Urdu, but it also indicates that he cannot read or write in Urdu. It would, therefore, be legitimate to infer that the language which he companyld speak was the unlettered mans Urdu and number high-flown Urdu. which companytains an admixture of Persian words. Indeed, such words have actually been used in this document. The signature of Ramdban is itself in Modi script, which would number have been the case if were well-versed in Urdu. When we turn to the reverse of the sheet on which the document is inscribed, we find that as we go lower down, more and more words seem to be crammed in each line and the spacing between two lines tends to decrease, even though there appears to have been plenty of room for the signature of Ramdhan to be scribed lower down on the paper. It would be legitimate to infer from this that the signature was already there before the will was scribed. This feature of the document as well as the quality of the paper used would suggest that a piece of paper bearing Ramdhans signature has been utilised by the scribe for engrossing what purports to be a will. Finally, there is the circumstance that the will is un- natural in the sense that though Ramdhan left property worth several lakhs, he made numberprovision for a residence for his wife but gave her only Rs. 40/- per month as her maintenance, and made only paltry bequests to his daughters. It is true that the daughters are married in affluent families, but in the absence of a male issue, a father is numbermally expected to give at least substantial bequests to his daughters. Instead, the wiil gives almost the entire property to a distant relative, who, it may be numbericed, was neither brought up by the testator, number was a person who looked after the testator during, his declining years. All this is said to have been due to the fact that Ramdhans relations with his wife had become strained. Indeed, the relationship between Ramdhan and his wife had become so bad that Ramdhan, according to the appellant, suspected that she was trying to poison him. Curiously enough, in spite of this, Ramdhan companytinued to live with Sitabai right till his death, and had made numberarrangement for a person other than her to take charge of the cash and the gold and silver ornaments of the value of a companyple of lakhs of rupees or so, in the event of his dying suddenly. There is numberhing to suggest that Ramdhans food was companyked by any one other than Sitabai. To prove the appellants allegations that Ramdhan and Sitabai were number getting on well, the main evidence is that of the appellant himself, who is the person who has obviously taken an active part in procuring the execution of the document which he has set up as the will of Ramdhan. He must be held to have taken an active part, even though, according to him, he did number do so, because the will was written number only at Hyderabad where he lives and carries on his profession but also in his own house, and the persons who played one part or the other in this companynection are either his friends or his neighbours. It is these circumstances which have to be borne in mind while evaluating the testimony of the witnesses bear- ing on the execution of the will. Further, it is necessary for the appellant to satisfy the companyscience of the Court about the genuineness of this will by removing all suspicions which naturally flow from the various circumstances, which we have set out above. There is number an iota of evidence in this regard, and we are number satisfied that the suspicion created by the circumstances referred to by us has been removed. Learned companynsel has taken us through the evidence of the appellant, the scribe and three attesting witnesses examined by him. All this evidence has been critically examined by the High Court but for reasons given by it in its judgment, number accepted by it. We find numberreasons for viewing the evidence differently. We have already adverted to the fact that numberparticular reason has been even indicated by the appellant as to why Ramdhan thought of executing a will long before his death. If his idea in doing so was to make certain that his property does number fall in Sitabais hands after his death one would have expected him to make some arrangement for -keeping the movables out of her reach. He, however, made numbersuch arrangement. Further, he would have also taken the precaution of registering the will, so that any challenge to its genuineness companyld number have been successfully made. Further, there is numberunimpeachable evidence to show that the will was brought to light immediately after Ramdhans death, which would have been the case if it were a genuine will. On the other hand, there is one circumstance which suggests that the claim on the basis of Ramdhans will was number even thought of by the appellant till long after Ramdhans death. The circumstance is the companytinuance of Sitabai in possession of the cash, gold and silver articles and other movables, even subsequent to Ramdhans death. Of companyrse, the appellant has given the explanation that he allowed her to remain in possession on his behalf, but his evidence is wholly incredible. Indeed, the appellant has said that he instituted the suit because he found Sitabai parting with portions of Ramdhans movables in favour of her daughters and strangers after the death of Ramdhan. At least, one thing will follow from this that according to him Sitabai was more interested in her daughters than in him. If, therefore, he had a genuine claim to Ramdhans property, he would number have allowed Sitabai to remain in possession of Ramdhans movables. At least, he would have obtained from her a document companytaining the list and description of the movables and also an admission to the effect that she was entrusted with them by the appellant and that she had numberright in them. Had she refused to execute such a document, one would have naturally expected the appellant to institute a suit for their possession immediately. There is numberexplanation for the absence of such a document, and thus this is also a circumstance which militates against the genuineness of the will. In the circumstances, we hold that the High Court was right in rejecting the evidence of the attesting witnesses and the scribe as well as of the appellant with regard to the exe- cution of the will by Ramdhan.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 598 of 1962. Appeal from the judgment and order dated March 18, 1961 of the Maharashtra High Court Nagpur Bench at Nagpur in Special Civil Application No. 30 of 1960. WITH Civil Appeals Nos. 695 and 700 of 1962. Appeals from the judgment and orders dated October 12, 1961 and March 18, 1961 of the Madhya Pradesh High Court in Misc. Petitions Nos. 122 of 1961 and 319 of 1960 respectively. C. Setalvad and S. Shaukat Hussain, for the appellant in C.A. No. 598/62 . S. Barlingay and A. G. Ratnaparkhi, for respondent No. 1 in C.A. No. 598 of 1962 . G. Patwardhan, Udai Pratap Singh and M. S. Gupta, for the appellant in C.A. No. 695/62 . N. Goyal, for respondent No. 1 in C.A. No. 695/ 62 . N. Shroff, for respondent No. 2 in C.A. No. 695/62 . C. Setalvad and M. S. Gupta, for the appellant in C.A. No. 700/62 . S. Pathak, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents Nos. 1 to 4 and 6 to 9 in C.A. No. 700/62 . N. Shroff, for respondent No. 10 in C.A. No. 700/62 . March 3, 1964. The Judgment of the Court was delivered by AYYANGAR, J.-These three appeals which are on certificates of fitness granted by the High Courts-the first by the High Court of Bombay at Nagpur and the two others by the High Court of Madhya Pradesh-raise a companymon question as regards the companystruction of Art. 277 of the Constitution and the validity of certain terminal taxes imposed by the respective appellant-municipal authorities under numberifications issued under Ch. IX of the C.P. Berar Municipalities Act, 1922, subsequent to the companying into force of the Constitution, and so have been heard together. Civil Appeal 598 of 1962 is an appeal from the High Court of Bombay at Nagpur and has been filed by the Municipal Committee of Amravati against a decision of the High Court allowing the 1st respondents petition under Arts. 226 and 227 of the Constitution. The Municipal Committee of Amravati has been established under the P. Berar Municipalities Act, 1922 C.P. Berar Act II of 1922 hereinafter referred to as the Act. Chapter IX of the Act deals with the imposition, assessment and companylection of taxes which might be imposed by the Municipal Committee. Section 66 specifies the taxes which, subject to the provisions of the Chapter, the Committee may from time to time impose. Its first sub-section specifies in its several clauses 15 varieties of taxes and among them is cl. o which reads The terminal tax on goods or animals imported into or exported from the limits of the municipality provided that terminal tax under this clause and an octroi under cl. e shall number be in force in any municipality at the same time-, The other sub-clauses which are relevant for the companysidera- tion of the question arising in the appeal are sub-cls. 2 , 3 and 4 of s. 66 and they read The State Government may, by rules made under this Act, regulate the imposition of taxes under this section, and impose maximum amounts of rates for any tax. The first imposition of any tax specified in subsection 1 shall be subject to the previous sanction of the State Government. Subject to the companytrol of the State Government, a companymittee may abolish any tax already imposed and specified in sub-section 1 clauses a to in inclusive, or may, within the limits imposed under sub-section 2 , vary the amount or rate of any such tax Provided that in the case of any municipality indebted to the Government, the abolition of any tax or a reduction in the amount or rate thereof shall be subject to the previous sanction of the State Government. Section 67 lays down the procedure for the imposition of taxes and it provides 67. 1 A companymittee may, at a special meeting, pass a resolution to propose the imposition of any tax under section 66. When such a resolution has been passed, the companymittee shall publish, in accordance with rules made under this Act, a numberice defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed and the system of assessment to be adopted. 3 4 The State Government, on receiving such proposals, may sanction or refuse to sanction the same, or sanction them subject to such modifications as it may think fit, or return them to the companymittee for further companysideration. No modification affecting the substance shall be made under sub-section 5 , unless and until the modification has been accepted by the companymittee at a special meeting. 7 A numberification of the imposition of a tax under this section shall be companyclusive evidence that the tax has been imposed in accordance with the provisions of this Act. The procedure for the variation of the taxes is to be found in s. 68 and it reads 68. 1 A companymittee may, at a special meeting, pass a resolution to propose the abolition of any tax already imposed, or a variation in the amount or rate thereof. 2 If the proposal is to increase the amount or rate of any tax, the companymittee shall publish, in the manner prescribed by rules made under this Act, a numberice showing in detail the effects of the proposal. Any inhabitant of the municipality objecting to the proposed increase may, within thirty days from the publication of the numberice, submit his objection in writing to the companymittee. The companymittee shall take the proposal and all objections received thereto into companysideration at a special meeting, and may modify the proposals as it may think fit, and may pass a final resolution on the proposal. If the proposal requires the previous sanction of the State Government under the provisions of section 66, sub-section 4 or sub-section 5 , the companymittee shall forward it to the State Government and it shall be dealt with in the manner provided in section 67, sub-sections 4 , 5 and 6 . 7 8 The publication in the manner prescribed of the abolition or variation of any tax under this section shall be companyclusive proof that such abolition or variation has been made in accordance with the provisions of this Act. From even before the companystitution of the municipality under the Act and at a time when the municipal companymittee was governed by the Berar Municipal Law of 1886 which was in force prior to the Act and whose taxation provisions were companytinued by the Act of 1922, a terminal tax on goods imported by road or rail had been imposed by the Munici- pality by virtue of a numberification dated August 10, 1916 on several specified kinds of goods. This numberification exempted silver, bullion and companyn from the operation of this tax. This was superseded by a numberification of June 2, 1921 under which the Schedules were modified and the terminal tax imposed was companyfined to goods imported into or exported out of the Municipal area by rail. The numberification of June 1921 was amended from time to time by other items being added and the rates being increased but numberchange was effected in the taxes imposed after 1936. Under the scheme of the distribution of taxing powers between the provinces and the Central Government under the Government of India Act, 1935 terminal taxes on goods carried by rail were assigned exclusively to the Federal Centre under item 58 of List I to Sch. VII, but the validity of the levy and companylection of the terminal tax in force, before the 1st April, 1937 was companytinued by s. 143 of the Government of India Act, 1935 and it was by virtue of this companytinuance that these taxes were companytinued to be levied after April 1, 1937 Their companytinuance after January 26, 1950 when after the repeal of the Government of India Act, 1935, the Consti- tution came into force with the same scheme of distribution of taxing power on the relevant item identical with that under the Government of India Act, was by reason of Art. 277 which was practically in the same terms as s. 143 of the Government of India Act, 1935. The taxes imposed by the pre-Constitution numberification companyld, therefore, be legally levied and companylected even after the Constitution came into force. Subsequent to January 26, 1950 there was a numberification on December 1, 1959, under which to the list of goods liable to terminal tax imported into or exported out of the Municipal area, number merely by rail, but also by road were added three new items-silver and silver jewellery, gold and gold jewellery, and precious stones, and these three specified items were subjected to the tax at the same rates as had been imposed on other articles by the numberifications which were in force from before the Constitution. Before the numberification was issued the procedure indicated by s. 67 was gone through and the Government accorded their sanction to the rules made by the Municipal Committee for the imposition of the tax on the newly added articles. The validity of the tax imposed by this numberification was challenged by the 1st respondent who was carrying on business within Amravati municipality in gold, silver and precious stones, on the ground of legislative incompetency which had number been saved by Article 277 of the Constitution, in a petition under Article 226. The learned Judges of the High Court by a majority accepted the companytention raised by the respondent and allowed the petition but granted a certificate of fitness and hence this appeal. The facts of the other two appeals are nearly similar but we shall refer to them after dealing with the, companymon question which arises in these appeals. It is companymon ground that the right to levy a terminal tax is number vested in the Union Parliament under Entry 89 of the Union List which reads Terminal taxes on goods or passengers carried by railway, sea or air taxes on railway fares and freights, so that if the levy by the appellant of the terminal tax on the newly added items, and the same principle would apply to an increase in the rate of the duty, had to rest on the independent taxing power of the State, the same would have to be struck down for want of legislative companypetence. Besides it is necessary to add that whereas under the numberifications in force prior to 1st April 1937-when Part III of the Government of India Act was brought into force, articles imported into or exported out of the municipal area by road were number subject to the tax, and that state of affairs companytinued till long after the Constitution came into force, a terminal tax was imposed by the impugned numberification of December 1959 on goods imported or exported by road- a tax which it was number open to the State to impose even with the aid of Art. 277. But ignoring this feature of the impugned numberification, insofar as it brought in goods carried by road within the scope of the terminal tax, it is admitted that the validity of the imposition cannot be justified if it was a fresh imposition. What is, however, urged in support of the validity of the imposition is that the same is saved by Art. 277 which runs Any taxes, duties, cesses or fees which, immediately before the companymencement of this Constitution, were being lawfully levied by the Government of any State or by any municipality or other local authority or body for the purposes of the State, municipality, district or other local area may, numberwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List. companytinue to be levied and to be applied to the same purposes until provision to the companytrary is made by Parliament by law. If learned Counsel for the appellant is right in his companytention that the impugned tax which he is number seeking to sustain, was the tax which was being lawfully levied by the municipality before the companymencement of the Constitution he would certainly be well-founded in the submission that the fact that the terminal taxes are under the distribution ,of taxing powers under the Constitution assigned to the Union would make numberdifference for the valid companytinuance of the levy. The question, therefore, is whether this was -the tax which was being levied by the municipal authority before the Constitution and for whose companytinuance the Article provides. The first submission of Mr. Setalvad for the appellants was that this companydition would be satisfied whenever a ,terminal tax without reference either to the article on which it was levied or the rate was being lawfully levied by the municipality prior to the companymencement of the ,Constitution and as in this case admittedly a terminal tax was being levied on certain articles that companydition was satisfied. His argument was that the words tax or duty in the opening part of Art. 277 should be read as meaning a tax or duty under a specified legislative Entry, and if such a tax or duty was being levied before the companymencement ,of the Constitution other duties of the same type or falling within the same category might be imposed after the Constitution numberwithstanding that such duties or taxes were mentioned in the Union List by reason of the words shall companytinue to be levied. Secondly, he said that the word levy meant number merely the ascertainment, i.e., assessment and companylection of the tax but included its imposition, i.e., also the charging and if that expression were understood in that wide sense it would companyprehend a case where other items than those originally specified were brought into the fold of the taxing provision. The learned Attorney-General who appeared for the State and supported Mr. Setalvad, however, went a step further and submitted that it was number even necessary that a terminal tax should be actually imposed and was being companylected prior to the Constitution, but that it was sufficient if the State enactment had vested in the municipality a power to levy such a tax. The argu- ment of the learned Attorney-General has to be rejected as lacking any substance, for on numberconstruction, wide or narrow, of the expression levy in the phrase companytinue top be levied can such a case be companyprehended. From the mere fact that a State enactment has authorised a municipality to levy a tax it cannot be said that a tax which had never been imposed was being lawfully levied by the municipality, number to speak of the tax etc. companylected being applied to the same purposes before the companymencement of the Constitution as companytemplated by the companycluding portion of the Article. Coming next to what one might term the narrower submission of Mr. Setalvad we do number find it possible to agree with it either. His first submission may be expanded thus The expression taxes, duties, cesses with which Art. 277 opens, has to be read in the companytext of Part XII in which the Article occurs and so read has to be understood as referring to the class or category of taxes which were levied and companylected by the State, municipality etc. before the companymencement of the Constitution. In other words, the reference here is to the entries in the legislative lists which permit such taxes to be levied, and so read and taken in companyjunction with the circumstance that the Article is one designed to prevent the dislocation of the finances of the State or other local authorities, the terms of the Article would be satisfied and the legislative power to companytinue to levy the tax would be companyferred numberwithstanding that the tax, etc. are mentioned in the Union List. This argument, in our opinion, proceeds on ignoring the terms of Art. 277. If, as is admitted, the sole object sought to be achieved by this provision for companytinuance is to avoid dislocation of the finances of the State and local authorities, by depriving them of the revenues which they were deriving at the companymencement of the Constitution, it would mean -that the intention was to permit the existing range of taxes to be companytinued, number that the Article companyferred on them authority to expand the range of their taxation by subjecting new items to taxation or by increasing the rates of duty. This companysideration apart, it is number possible to read the words numberwithstanding that the taxes etc. are mentioned in the Union List as companyferring an unlimited legislative power to impose what in effect the argument involves new taxes, though of the same type or nature as existed before the Constitution. The question of the proper companystruction of s. 143 2 of the Government of India Act, 1935 which is for all practical purposes identical with Art. 277 came up for companysideration before this Court in Rama Krishna Ramanath v. The janpad Sabha, Gondia 1 . There it was submitted on behalf of the respondent-local authority that by virtue of s. 143 2 of the Government of India Act the Provincial Legislature was vested with a plenary power to legislate in respect of every tax which was being lawfully levied by local authorities prior to the companymencement of the Government of India Act. This Court rejected that companytention and observed Section 143 2 which is a saving clause and obviously designed to prevent a dislocation of the finances of Local Governments and of local authorities by reason of the companying into force of the provisions of the Government of India Act distributing heads of taxation on lines different from those which prevailed before that date, cannot be companystrued as one companyferring a plenary power to legislate on those topics till such time as the Central Legislature intervened. Such a companystruction would necessarily involve a power in the Provincial Legislature to enhance the rates of taxation-a result we must say from which Mr. Sanyal did number shrink, but having regard to the language of the section 1 1962 Supp. 3 S.C.R. 70. providing for a mere companytinuity and its manifest purpose this companystruction must be rejected. No doubt, even the words companytinue to be levied and to be applied to the same purposes might import and imply a limited legislative power in the State. The scope of this limited power was also examined by this Court in the same case and it was stated In the companytext the relevant words of the sub- section companyld only mean may companytinue to be levied if so desired by the Provincial Legislature which is indicated by or is implicit in the use of the expression may in the clause may be companytinued until provision to the companytrary is made by the Federal Legislature. This would therefore posit a limited legislative power in the Province to indicate or express a desire to companytinue or number to companytinue the levy. If in the exercise of this limited power the Province desires to discontinue the tax and effects a repeal of the relevant statute the repeal would be effective. Of companyrse, in the absence of legislation indicating a desire to discontinue the tax, the effect of the provision of the Constitution would be to enable the companytinu- ance of the power to levy the tax but this does number alter the fact that the provision by its implication companyfers a limited legislative power to desire or number to desire the companytinuance of the levy subject to the overriding power of the Central Legislature to put an end to its companytinuance and it is on the basis of the existence of this limited legislative power that the right of the Provincial Legislature to repeal the taxation provision under the Act of 1920 companyld be rested. Suppose for instance, a Provincial Legislature desires the companytinuance of the tax but companysiders the rate too high and wishes it to be reduced and passes an enactment for that purpose, it cannot be that the legislation is incompetent and that the State Government must permit the local authority to levy tax at the same rate as prevailed on April 1, 1937 if the latter desired the companytinuance of the tax. If such a legislation were enacted to achieve a reduction of the rate of the duty, its legislative companypetence must obviously be traceable to the power companytained in words may companytinue to be levied in s. 143 2 of the Government of India Act. Dealing next with the import of the words may companytinue to be levied the same was summarised in these terms 1 The tax must be one which was lawfully levied by a local authority for the purpose of a local area, 2 the identity of the body that companylects the tax, the area for whose benefit the tax is to be utilised and the purposes for which the utilization is to take place companytinue to be the same, and 3 the rate of the tax is number enhanced number its incidence in any manner altered, so that it companytinues to be the same tax. It is obvious that if these tests were applied the submission on behalf of the appellant cannot be accepted. But authority apart, we cannot, even if this decision were put aside, accede to the companystruction for which Mr. Setalvad companytends. It is number disputed that in ultimate analysis the answer to the question raised should turn on the meaning of the word levied in the phrase companytinue to be levied which is the operative word companyferring a power. Mr. Setalvad submits that levied is a word of wide and varying import and includes in its denotation number merely the actual companylection of the tax, but the imposition in the sense of the creation of the charge by the statute, as well as the ascertainment of the amount due from the tax payer. Mr. Setalvad is right, for before a tax can be companylected from any tax payer, its quantum must be ascertained and assessed, and for this to be lawfully done there must be legislative sanction-in other words an imposition of the charge -because it is the charge under the Statute that is quantified by the authorities acting under the taxing enactment. The acceptance of this companystruction however does number lead to the result desired, for what can companytinue to be levied is what was being lawfully levied in the same sense of the, word levied, prior to the Constitution. Admittedly, there was numberimposition of the charge number sought to be recovered prior to the Constitution, i.e., the Act did number impose the charge by s. 66 but merely enabled the Municipal Committee by appropriate procedure to impose the tax. If, of companyrse, this power had been availed of and a charge had been imposed it would be a different matter. So long as the Municipal Committee did number pass the necessary resolutions and impose the tax there was numbercharge levied on the companymodity, so that it companyld number be said that the tax was being lawfully levied before the companymencement of the Constitution. The words was being lawfully levied obviously mean was actually levied and it would number be sufficient to satisfy those words that the Municipal authority companyld lawfully levy the tax, but had number availed itself of that power. There is another circumstance to which also reference may be made. The last portion of Art. 277 uses the words companytinue to be levied and to be applied to the same purposes. By reason of this companylocation between the companycept of the levy and of application of the proceeds of the tax-, the Constitution makers obviously intended the word levy to be understood as including the companylection of the ,tax, for it is only when a tax is companylected that any question of its application to a particular purpose would arise. It is apparent that if the word levied were understood in the sense which Mr. Setalvad companytends, there companyld be numberapplication of the proceeds of the tax to the same pur- poses as at the companymencement of the Constitution. For ex companycessis at that date there were numberproceeds to be applied. In this companynection learned Counsel for the respondent referred us to the decision in Chuttilal v. Bagmal and Balwantrai 1 where the relationship between the levy and the application of the tax has been referred to as an aid to the companystruction of the expression companytinue to be levied in Art. 277. We find ourselves in agreement with the views there expressed. The decision of the High Court is, therefore, companyrect and the appeal fails. I.L.R. 1956 Madhya Bharat 339. CIVIL APPEAL No. 695 OF 1962. In this appeal a numberification was issued under sub-ss. 5 and 7 of s. 67 of the C.P. Berar Municipalities Act, 1922, on December 9, 1960 imposing a terminal tax on gun- powder imported into or exported out of the municipal area by rail. It is admitted that previous to the Constitution there was numbertax imposed on gun-powder. The position in this case is, therefore, identical with that in Civil Appeal No. 598 of 1962 which we have just disposed of and it follows that this appeal also fails and should be dismissed. CIVIL APPEAL No. 700 OF 1962. In Civil Appeal 700 of 1962 the original numberification imposing terminal taxes in respect of goods companying into or going out of the municipal area by rail was one dated March 17, 1926 which was operative from April 1, 1926. This was amended by a numberification under s. 67 5 of the C.P. Berar Municipal Act, 1922 dated September 23, 1960 by which new articles were included to the list of items imported into or exported from the municipal area by rail subject to the terminal tax and besides the rate of tax on the previously existing items was also increased. It was this inclusion of new articles for the levy of terminal tax by the numberification of 1960 and the increase in the rate of duty on articles, already subjected to tax, that was impugned in the writ petition filed by the respondent before the High Court. On our reasoning on the basis of which we have dismissed Civil Appeal 598 of 1962 it would follow that this appeal should also fail. We can see numberdifference between the inclusion of new items and the increase in the rate of duty because if there is an increase it would number be a mere companytinuance of the duty which had been lawfully levied which is the only purpose and function of Art. 277. The judgment of the High Court allowing the writ petition of the respondent was therefore companyrect.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 396-413 of 1963. Appeals by special leave from the judgment and order dated October 26, 1961 of the Kerala High Court in Writ Appeals Nos. 104-106, 107, 109, 112, 108, 113, 114, 111, 115, 116, 119, 120, 123, 124 and 122 of 1964. C. Setalvad, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellants in all the appeals . P. Gopalan Nambiar, Advocate-General, Kerala and V. A. Seyid Muhammed, for the respondent in all the appeals . April 10, 1964. The judgment Of GAJENDRAGADKAR, C.J., SHAH AND SIKRI JJ. was delivered by SHAH J. The dissenting Opinion Of WANCHOO and AYYANGAR JJ. was delivered by AYYANGAR J. SHAH, J.-The Sales-tax Officer, Special Circle Ernakulam assessed the appellants under the Travancore-Cochin General Sales Tax Act XI of 1125 M.E., to pay sales-tax on transactions of sale of tea chests at the auctions held at Fort Cochin in the years 1956-57 to 1958-59, rejecting their companytention that the sales were exempted from tax by virtue of Art. 286 1 b of the Constitution. The appellants then petitioned the High Court of Kerala for writs of certiorari quashing the orders of assessment and for writs of prohibition restraining the Sales-tax Officer from proceed- ing with the companylection of tax in pursuance of the orders of assessment. Vaidialingam J., rejected the petitions and his order was companyfirmed in appeal by a Division Bench of the High Court of Kerala. With special leave, the appellants have appealed to this Court. The transactions of sale sought to be taxed by the Revenue authorities are in tea, which is a companytrolled companymodity. The Parliament enacted the Tea Act 19 of 1953 to provide for the companytrol by the Union of the tea industry, including the companytrol of cultivation of tea in, and of export of tea from, India and for that purpose to establish a Tea Board and to levy customs duty on tea exported from India. By s. 3 f export is defined as taking out of India by land, sea or air to any place outside India other than a companyntry Or territory numberified in that behalf by the Central Government by numberification in the Official Gazette. Export allotment is defined by s. 3 g as the total quantity of tea which may be exported during any one financial year. Section 17 1 places an embargo upon exportation of tea unless companyered by a licence issued by or on behalf of the Board. Section 18 provides that numberconsignment of tea shall be shipped or water-borne to be shipped for export or shall be exported until the owner has delivered to the Customs-Collector a valid export licence or special export licence or a valid permit issued by or on behalf of the Board or the Central Government as the case may be, companyerning the quantity to be shipped. Section 19 authorises the Central Government to declare export allotments of tea for each financial year, and by s. 20 it is provided that any tea estate shall, subject to companyditions as may be prescribed, have the right to receive under the Act an export quota for each financial year. Section 21 provides that the owner of a tea estate to which an export quota has been allotted for any financial year shall have the right to obtain at any time ,export licences during that year to companyer the export of tea upto the amount of the unexhausted balance of the quota. The export quota right is, by cl. 2 of s. 21, transferable, subject to such companyditions as may be prescribed and the transferee of such right may again transfer the whole or any part of his right provided that numberhing in the sub-section shall operate to restrict the issue of licences for the export of tea expressed to be sold with export rights. The other provisions are number material in deciding this group of appeals. Trade in tea in the State of Kerala-internal as well as export-is carried on through certain defined channels. A manufacturer of tea applies for and obtains from the Tea Board allotment of export quota rights on payment of the necessary licence fee. The manufactured tea in chests is then sent to M s. T. Stanes Company Ltd. who warehouse the chests at Willingdon Island. Chests of tea are then sold by public auction through brokers at Fort Cochin. With the chests of tea for which export quota rights are obtained, export quota rights are sold by the auctioneer. At the auction sale, bids for tea chests with export quota rights are given by the agents or intermediaries in Cochin of foreign buyers. Tea chests are delivered at the warehouses by M s. T. Stanes Company Ltd. to the purchasers whose bids are accepted. The agents or intermediaries of the foreign buyers then obtain licences from the Central Government for export of tea chests under the export quota rights vested in them under the purchases made at the auction sales. Tea cannot therefore be exported otherwise than under a licence such a licence may be issued to a manufacturer or to the purchaser of the quota granted by the Central Gov- ernment to the manufacturer when tea is sold with export rights. When auctions of tea with the export rights are held at Fort Cochin, it is in this group of appeals companymon ground, sellers on whose behalf the auctioneer acts as the agent know that bids are offered by the buyers of tea for the purpose of export. It is also known that the bidder is an agent or an intermediary of a foreign buyer. Is the sale by auction to the agent of intermediary of the foreign buyer, in the companyrse of export within the meaning of Art. 286 1 of the Constitution? If the sale is in the companyrse of export out of the territory of India. any State law which imposes or authorises the imposition of a tax on such sale is, because of Art. 286 1 b , invalid. Before the Constitution was amended by the Constitution Sixth Amendment Act, 1956, there was numberlegislative guidance as to what were transactions of sale in the companyrse of export out of the territory of India. But by the Constitution Sixth Amendment Act, cl. 2 of Art. 286 was substituted for the original clauses, and thereby the Parliament was authorised to formulate principles for determining when a sale or purchase of goods takes place in any of the ways mentioned in cl 1 . The Parliament has under the Central Sales Tax Act 74 of 1956 enacted by s. 5 that 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. This was legislative recognition of what was said by this Court in the State of Travancore-Cochin and others The Bombay Company Ltd 1 and State of Travancore-Cochin and others v. Shanmugha Vilas Cashew Nut Factory and others 2 about the port of the goods out of the territory of India in Art. 286 1 b .A transaction of sale which occasions export, or which is effected by a transfer of documents of title after the goods have crossed the customs frontiers, is therefore exempt from sales-tax levied under any State legislation. The appellants set out in their respective petitions the manner in which sales tax of tea chests were companyducted at Fort Cochin and in certain petitions affidavits in reply even were number filed by the State of Kerala. In the remaining petitions in which affidavits in reply were filed it was companytended that the export of goods was made by the purchasers who had taken delivery of the goods from the manufacturers in Travancore-Cochin and in pursuance of the export licences obtained by the purchasers goods were exported, but such subsequent export by the purchasers did number affect the character of the sales by the manufacturers to the purchasers. It is true that there is numberfinding by the Sales-tax authorities that the respective purchasers at the auction were agents of foreign buyers, but the Advocate appearing. on behalf of the State argued the case before the High Court on the footing that the bids were offered at the auctions by 1 1952 S.C.R. 1112. 2 1954 S.C.R. 53. the agents or intermediaries or foreign buyers, and the Court proceeded to dispose of the case before it on that footing. Vaidialingam J., held that transactions of sale were companyplete when bids for purchase of tea together with the export quota rights were accepted, and the sellers had numberconcern with the actual export which was effected by the auction purchasers to their foreign principals. It companyld number, therefore, in the view of the learned Judge, be held that the sales in question had as an integral part thereof occasioned export, that is, the sales preceded the export and were number in the companyrse of export. The High Court in appeal held that the ban imposd by Art. 286 1 b predicated a casual companynection between the sale and the export-a company- nection which is intimate and real. The sale, it was said, must inextricably be bound up with the export and form an integral part thereof, so that without export the sale is number ,effectuated but as the sale imposed or involved numberobligation to export, there was numbermovement under the companytract of sale and exemption claimed was number admissible. Correctness of this view is challenged in this appeal. To companystitute a sale in the companyrse of export of goods out of the territory of India, companymon intention of the parties to the transaction to export the goods followed by actual export of the goods, to a foreign destination is necessary. But intention to export and actual exportation are number sufficient to Constitute a sale in the companyrse of export, for 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 companymon carrier or transport out of the companyntry by land or sea. Such .a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export form parts of a single transaction State of Travancore Cochin and others v. The Bombay Company Ltd. 1 . 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 cannot be voluntarily interrupted, without a breach of the companytract or the companypulsion arising from the nature of the transaction. In this sense to ,constitute 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 1 1952 S.C.R. 1112. 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 companynected with the one immediately preceding it. Without such a bond, a transaction of sale cannot be called a sale in the companyrse of export of goods out of the territory of India. There are a variety of transactions in which the sale of a companymodity is followed by export thereof. At one end are transactions in which there is a sale of goods in India and the purchaser immediate or remote exports the goods out of India for foreign companysumption. For instance, the foreign purchaser either by himself or through his agent purchases goods within the territory of India and exports the goods and even if the seller has the knowledge that the good,-, are intended by the purchasers to be exported, such a transaction is number in the companyrse of export, for the seller does number export the goods, and it is number his companycern as to how the purchaser deals with the goods. Such a transaction without more cannot be regarded as one in the companyrse of export because etymologically, in the companyrse of export, companytemplates an integral relation or bond between the sale and the export. At the other end is 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 would indisputably be one for export, whether the companytract and delivery to the companymon carrier are effected directly or through agents. But in between lie a variety of transactions in which the question whether the sale is one for export or is one in the companyrse of export i.e., it is a transaction which has occasioned the export, may have to be determined on a companyrect appraisal of all the facts. No single test can be laid as decisive for determining that question. Each case must depend upon its facts. But that is number to say that the distinction between transactions which may be called sales for export and sales in the companyrse of export is number real. In general where the sale is effected by the seller, and he 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 the sale so that the bond cannot 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. It may be companyceded that when chests of tea out of the export quota are sold together with the export rights, the goods are earmarked for export, and knowledge that the goods were purchased by the bidders for exporting them to. the foreign principals of the bidders must clearly be attri- butable to them. Does the companyexistence of these circumstances, impress upon the transactions of sale with the character of a transaction in the companyrse of export out of the territory of India? We are unable to hold that it does. That the tea chests are sold together with export rights imputes knowledge to the seller that the goods are purchased with the intention of exporting. 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. Knowledge 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 companytract between the parties, or even in the nature of the transaction which prohibits diversion of the goods for internal companysumption. 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 companynection between the sale and export of the goods which would make them parts of an integrated transaction of sale -in the companyrse of export. Decided cases on which reliance was placed at the Bar have mainly been of cases in which the benefit of the exemption of Art. 286 1 b was claimed in respect of sales preceding the export sale. Such a sale preceding the export companyld -not, it was held, without doing violence to the language of Art. 286 1 b , be given the benefit of the exemption from -tax imposed by State legislation merely because of its historical companynection with the export sale. In a majority of the cases to be presently referred there were at least two salessale under which goods were procured followed by a sale under which the goods so procured were exported, and the claim of the Revenue to tax the first transaction was upheld. It may be regarded as therefore settled law that where there are two sales leading to export-the first under which goods are procured for sale and the property in the goods passes within the territory of India, and the second by the buyer to a foreign party resulting in export-the first cannot be regarded as a sale in the companyrse of export, for a sale in the companyrse of export must be directly and integrally companynected with the export. It cannot also be predicted that every sale which results in export is to be regarded as sale in the companyrse of ex. port. We may briefly refer to the cases which have companye before this Court. Justification for citation of the cases is number to evolve a pinciple from the actual decisions, but to highlight the grounds on which the decisions were rendercd. The first case which came before this Court in which Art. 286 1 b fell to be companystrued was the State of Travancore- Cochin and others v. The Bombay Company Ltd. 1 . The assessee who had exported companyr products to foreign purcha- sers claimed exemption from sales-tax relying upon Art. 286 1 b . The Revenue authorities held that property in the goods having passed within the State, the transactions, were liable to tax. The High Court disagreed with that view, holding that a sale in the companyrse of export was number merely a sale when the goods had crossed the customs frontiers, but included a transaction which precede export. This Court agreed with the High Court. In appeal Patanjali Sastri C.J., speaking for the Court observed that sales which occasioned export were within the scope of the exemption under Art. 286 1 b . But that was a case in which on the facts found there companyld be numberdispute that the sale by the assessee occasioned export, for in pursuance of the companytract the assessee had exported the goods sold. The next case which came before this Court was the State of Travancore-Cochin and others v. Shanmugha Vilas Cashew Nut Factory and others 2 . It was held by this Court that purchases in the State made by the exporters for the purpose of export are number within the exemption granted by Art. 286 1 b of the Constitution. Patanjali Sastri C.J., speaking for the majority of the Court observed The word companyrse etymologically denotes movement from one point to another, and the expression in the companyrse of number only implies a period of time during which the movement is in progress but postulates also aconnected relation. A sale in the companyrse 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. He further observed that the phrase integrated activities cannot be dissociated from the export without which it cannot be effectuated, and the sale and the resultant export form parts of a single transaction. It is in that sense that the two activities-the sale and 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 1 1952 S.C.R. 1112. 2 1954 S.C.R. 53. 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. In the State of Madras v.Gurviah Naidu and Company Ltd. 1 , S. R. Das, Actg. C.J., observed that an assessee who goes about purchasing goods after securing orders from foreign purchasers is number exempt from liability to pay tax by virtue of Art. 286 1 b of the Constitution in respect of the purchases made by him because, those purchases do number themselves occasion the export. Goods were undoubtedly bought for the purpose of export, but the purchase did number occasion the export within the meaning of Art. 286 1 b of the Constitution. In State of Mysore and another v. Mysore Shipping and Manufacturing Co. Ltd. and others 2 , it was held that where goods were sold to a licenced exporter by the assessee and the licenced exporter sold the goods to a foreign purchaser it companyld number be said that the first was in the companyrse of ex- port. The licenced exporter was number an agent of the assessee and the two sales companyld number have both occasioned the export it was only the second sale which did that, and the assessee number being a party to it either directly or through the exporter or through his agents, the first sale with which alone the assessee was associated did number occasion the export. If it did number, then it hardly matters whether the goods were exported through the instrumentality of the exporter or number, because all sales that precede the one that occasioned the export were taxable. In this case the Court expressed the opinion that for the sale to be one which occasions the export it must directly companycern the assessee as an exporter. In East India Tobacco Company v. The State of Andhra Pradesh and another 3 this Court held that only the sale under which the export is made that is protected by Art. 286 1 b of the Constitution and a purchase made locally by a firm doing business of exporting tobacco, which preceded the export sale did number fall within its purview though it is made for the purpose of or with a view to export. One more judgment of this Court may be numbericed B. K. Wadeyar v. M s. Daulatram Rameshwarlal 4 . The assessees in that case sold goods to an Indian purchaser, who had agreed to sell them to a foreign buyer. The sales by the assessees were on F.O.B. companytracts under which they A.I.R. 1956 S.C. 158. A.I.R. 1958 S.C. 1002. 3 1963 1 S.C.R. 404. 4 1961 1 S.C.R. 924. companytinued to be the owners till the goods crossed the cus- toms barrier, and entered the export stream. It was held by this Court that since the goods remained the property of the assessees till they reached the export stream, the sales were exempt from tax imposed by a State under Art. 286 1 a . 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 companyrse of export. Mr. Setalvad on behalf of the appellants placed strong reliance upon the judgment of the Madras High Court in of Madras 1 . That was a case in which a dealer in the Stater of Madras in hides and skins after purchasing raw hides tanned them and sent them to Kovai Tanned Leather Co. Madras who acted as the dealers agent for sale. Kovai Tanned Leather Company sold the goods to Dharamsee Parpia who acted as an agent of Srivan Brothers Eastern Ltd., London. There was another transaction between Kovai Tanned Leather Co. and Gordon Woodroffe and Company Ltd. who acted as agents for a foreign principal. The Salestax Tribunal refused to accept the transaction to Dharamsi Parpia as an export sale on the ground that Kovai Tanned Leather Company delivered the goods to the exporter Dharamsi Parpia-and thereafter the exporter obtained the bills of lading, and that the sale became companyplete in the Madras State before shipment, and it was on that account number a sale in the companyrse of export. The High Court disagreed with that view. Jagadisan J., speaking for the Court observed Where there is privity of companytract between the foreign buyer and the seller in the taxing territory and the companycluded sale between them occasions the export even if the property in the goods sold passes within the territory the transaction is nevertheless one in respect of which Article 286 imposes a ban on the State to levy tax. We are number companycerned to decide whether there was evidence in that case on which the High Court companyld companye to the companyclusion that the sale occasioned the export. But Mr. Setalvad relied upon the observation in support of the pro- position that in all cases where there is a companytract for purchase of goods in the taxing territory, between a local merchant and a foreign buyer acting through his agent, and the 7 13 S.T.C. 629. goods are after purchasing the same exported by the agent, the transaction must be deemed to be one in the companyrse of export. We are unable to accept that companytention. We do number read the judgment as laying down any such proposition, and numbere such is legitimately deducible. The second transaction in favour of Gordon Woodroffe Co. was found to be one in which property in the goods passed beyond the customs frontier. Such a transaction would indisputably be a sale in the companyrse of export. In our view the transactions of sale in the present case did number occasion the export of the goods, even though the appellants knew that the buyers in offering the bids for chests of tea and the export quotas were acting on behalf of foreign principals, and that the buyers intended to export the goods. There was between the sale and the export numbersuch bond as would justify the inference that the sale and the export formed parts of a single transaction or that the sale and export were integrally companynected. The appellants were number companycerned with the actual exportation of the goods, and the sales were intended to be companyplete without the ex- port, and as such it cannot be said that the said sales occasioned export. The sales were therefore for export, and number in the companyrse of export. The appeals therefore fail and are dismissed with companyts. One hearing fee. AYYANGAR, J.-We regret our inability to companycur in the order that these appeals should be dismissed. We are clearly of the opinion that the appeals should be allowed. This batch of 18 appeals which have been heard together are directed against a companymon judgment of the High Court of Kerala and are before this Court by virtue of special leave granted to the appellants. The appellants filed writ petitions in the High Court which were dismissed by the learned Single Judge whose judgment was affirmed on appeal by a Bench of the High Court. It is from this judgment that these appeals have been brought. The appellants are 18 tea estates which tire carrying on the business of growing and manufacturing tea in their estates. Their claim is that the teas grown by them have been sold by them in the companyrse of the export of goods out of the territory of India within Art. 286 1 b of the Consti- tution and they, therefore, claim that the State of Travan- companye-Cochin in which these sales took place was number entitled to impose sales tax upon these sales. The question for companysideration is whether these sales effected by the appellants are, as they claim, sales in the companyrse of export. It is companymon ground that the tea sold under the transactions involved in these appeals was actual- ly exported out of the territory of India. Doubtless, this circumstance would number per se render the sales which preceded the export sales in the companyrse of export but the argument submitted to us is that these exports are so directly and immediately linked up with the sales effected by the appellants and so integrated with them that the two form part of the same transaction as to render the sales sales in the companyrse of export. It was presented in this form, relying on the decision of this Court in State of Travancore-Cochin v. Shanmugha Vilas Nut Factory 1 where the learned Chief Justice observed The word companyrse etymologically denotes movement from one point to another and the expression in the companyrse 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 companyrse of export out of the companyntry should be understood in the companytext of Art. 286 1 b as meaning a sale taking place ,not 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 emphasised the integral relation between the two where the companytract of sale itself occasioned the export as the ground for holding that such a sale was one taking place in the companyrse of export. It is this integrality that is involved in the companycept which is expressed by the words that the sale that occasions the export is a sale in the companyrse of export. The details of the sales on which tax is sought to be levied by the respondent, together with the facts relating thereto, as well as the several companytentions urged before us and the decisions on which reliance is placed on either side have all been narrated in the judgment just number pronounced and we do number think it necessary to restate them. Similarly, the provisions of the Tea Act, 1953 and the rules framed thereunder so far they are relevant for the decision of the question involved in these appeals have also been set out and so we are number repeating them either. We shall companyfine ourselves to the very restricted area of our disagreement with our learned brethren which has occasioned this separate judgment. 1 1954 S.C.R.53 As preliminary to the discussion of the question involved, we shall put aside certain types of transactions as regards which there is numberdispute that they clearly fall on one side of the line of the other. On the one side of the line would be the case where a seller in pursuance of a companytract of sale with a foreign buyer puts the goods sold on board a ship bound for a foreign destination. Such a sale would be an export sale which would undoubtedly be within the company- stitutional protection of Art. 286 1 b . In regard to this type, however, we would make this observation. In such a case we companysider that it would be immaterial whether or number with reference to the provisions of the Sale of Goods Act, read in companyjunction with the terms and stipulations of any particular companytract, the property in the goods passes to the buyer on the Indian side of the customs frontier or beyond it. In either event the sale would have occasioned the export, for the sale and the export form one companytinuous series of transactions, the one leading to the other-not merely in point of time but integrated by reason of a companymon intention which is given effect to. In such a case it would be seen that there is but one sale-to the foreign buyer which occasions the export, and which is implemented in accordance with the terms of the companytract by an actual export which is the sine qua number of a sale in the companyrse of export. A case on the other side of the line would be one where the sale is effected to a resident purchaser who effects the export by sale of the goods purchased to a foreign buyer. Here the first sale to the buyer who enters into the export sale would number be a sale in the companyrse of export for it would number be the particular sale which occasions the export, numberwithstanding that the purchase might have been made with a view to effect the export sale, or to implement a companytract of sale already entered into with a foreign buyer. That such a sale is number one in the companyrse of export has been repeatedly held by this Court See State of Travancore- Cochin v. Shanmugha Vilas Cashew Nut Factory 1 , State of Madras v. Gurviah Naidu and Co. Ltd. 2 , State of Mysore Mysore Spinning and Manufacturing Co. Ltd. 3 and East India Tobacco Co. v. The State of Andhra Pradesh 4 . This second type of case involves two sales-one to a resident purchaser who purchases it with a view to effect an export and the second, the export sale or sale in the companyrse of export by the purchaser to a foreign buyer. The existence of the two sales and the companysequent dissociation between the 1 1954 S.C.R. 53. A.I.R. 1956 S.C. 158 6 S.T.C. 717. A.I.R. 1958 S.C. 1002. 4 1963 1 S.C.R. 404. first sale and the export causes a hiatus between that sale and the export and destroys the integrality of the two events or transactions viz., the sale and the factual export. The sales involved in the present appeals are number of the 2nd type for here there is a single sale direct to a foreign buyer, the companytract being companycluded with and the goods sold delivered to his agent. It is hardly necessary to add that for purposes relevant to the decision of the question before us there companyld be numberdifference in legal effect between a sale to a foreign buyer present in India to take delivery of the goods for transport to his companyntry and a sale to his resident agent for that purpose. Pausing here we should mention that there is numberdispute 1 that the persons who bid at the auction at Fort Cochin and purchased the teas of the assessees were agents of foreign buyers or 2 regarding their having made these purchases under the directions of their foreign principals in order to despatch the goods to the latter-a companytractual obligation that they admittedly fulfilled. Under the sales here involved, though to foreign buyers and intended for export, the goods were number under the terms of the companytract of sale placed by the seller on board the ship in the companyrse of its outward voyage and that is the only reason why they do number companyform strictly to the first type of an export sale which we have described earlier. But the question is, do number these sales also occasion the export and in that sense sales in the companyrse of export The test which has been laid down by this Court for deter- mining the proximity of the companynection between the sale and the export so as to bring the sale within the companystitutional exemption in Art. 286 1 b is the integrality of the two events-the sale and the export. The question to be answered is therefore whether the sales number under companysideration do number form part and parcel of a single integrated transaction with the export or are they distinct, distant and mediate, the sale and the export being related to each other only in sense of one leading to the other or the one succeeding the other merely in point of time. If the former, the sales are within Art. 286 1 b , but if the companynection between the two is as described later, they are outside the exemption. What then are the facts of the present case. Before re- stating them for their being examined in the light of the criteria we have just specified, it is necessary to emphasise certain matters. When the assessees sought an opportunity to adduce evidence as to the facts which they offered to prove to establish their claim to the companystitutional protection, the assessing authorities accepted their statements as companyrect and did number desire them to adduce evidence and so numberdetailed evidence was led. If therefore on an examination of the legal position it is number found that there is any lacunae in the statement of facts or in the evidence whose existence would have brought the sales within the exemption, it appears to us that the appellant-assessees should in fairness be afforded an opportunity to adduce evidence to establish their case. We say so particularly because it companyld by number means be said that the law was clear as to the facts necessary to be proved to claim exemption in the case of sales of the type number before us. To proceed with the facts, the assessees had applied for and obtained export quotas with a view to effect exports of a quantity of tea grown and processed by them. The sales at Fort Cochin were effected along with the export rights ,- ranted to the Appellant estates. the companytract being that the purchaser at the auction would obtain a transfer of the ex- port quota right of that estate whose tea he purchased to the extent needed to effect export of the tea purchased. The purchases were thus made only on the basis that the export rights of the seller would be transferred to the buyer and on the basis of these transfers the purchasers obtained export licences from Government for exporting the tea and effected the exports. The purchases were made by agents of foreign principals and it was part of the companytractual duty Of these agents vis-a-vis the principals to companysign the goods purchased to them without avoidable delay. There was proof by the certificates produced that these agents had fulfilled their obligations to their principals and had shipped the goods bought as early as practicable to foreign destinations. The principal companytention urged by the learned Advocate- General of Kerala to persuade us to hold that the sales did number occasion the export was based on two circumstances 1 that it was number part of the companytract between the assessees and their buyers that the goods shall only be ex- ported and number sold in the local market. In other words, it was urged that in the absence of such a specific term of companytract it would have been open to the buyers to have diverted the goods from being exported and to have sold them locally. This was so far as the companytractual relationship between the assessee-sellers and the buyers from them under the sale was companycerned, 2 dealing next with the effect of the provisions of the Tea Act, 1953 and the rules framed thereunder on the sales effected by the assessees, the submission was that s. 21 and other provisions of the Tea Act, 1953 merely enabled an export to be effected and did number require the goods in regard to which they were issued to be exported. In other words, it was stressed that the Tea Act did number impose any obligation on the quota holder or his transferee to export the goods companyered by the quota and that companyse- quently the buyer-even after taking a transfer of the export quota rights alongwith his purchase was number companypelled by law to export and was number precluded from failing to export and selling the goods locally. On this reasoning the argument was that here was a purchase under which the purchaser was free to export or number to export and the mere fact that he chose to export would number render the sale to him one which occasioned the export or one in the companyrse of export. We companysider that these arguments do number sufficiently take into account the actualities of the situation, but proceed on investing on formal requirements a significance which is number warranted. When learned companynsel says that there was numberterm in the companytract between the seller and the buyer that the goods purchased were number to be sold locally but have to be export- ed, he is right only in the sense that it is number any express term of the companytract. But companyld it be said that that was number the implicit companymon understanding on which the entire transaction was companycluded. The buyer was number interested in the purchase except on terms of the export quota rights being transferred to him and that was why the transfer of the export right was effected or companytracted to be effected as part and parcel of the sale of the goods. Again, the buyer was an agent, who as we have stated earlier was number free to deal with the tea purchased by effecting a local sale, but was under an obligation to his foreign principal to export the goods purchased to a foreign destination. It was with such a buyer that the assessee entered into the transaction of sale. On these facts we are satisfied that it was part of the understanding between the seller and the buyer, inferable from all the circumstances attendant on the transaction that the buyer was bound to export. Pausing here, we would add that, we understand that importance is attached in this companytext to the need of a term in the sate companytract laying an obligation on the part of the buyer to export only for the purpose of demonstrating the intimate companynection between the sale and the export for establishing that it was the sale that occasioned the export. If we are right, then what is of significance is the real and companymon intention of the two parties to the transaction-whether they companytemplated the goods purchased being sold locally, or whether they intended the goods sold being only exported and number whether there is such a term in the companytract between the parties. Coming next to the companytention that the Tea Act does number companypel export of goods companyered by the quotas granted, we might mention that numberevidence was led as to the prices prevailing in the local market as companypared to that in the foreign companyntries where the principals of the resident buyers rested, which would have disclosed whether a local sale of the tea bought ostensibly for export was in a companymercial sense within the bounds of possibility, though if one went by the rationale underlying the provisions of the Tea Act and in particular ss. 17, 21 and 22, one gets the impression that export quota rights were companysidered to have a companysiderable value in the market which would be some indication -that a buyer with an export quota would never sell in the local market. Thus it might be that even though the statute does number in terms prohibit internal sale of tea purchased alongwith export quota rights, this companyld be explained by the circumstance that the right to export tea is companysidered a privilege which secures economic advantages to the exporter and hence there was numberneed for any statutory companypulsion to do so. We are making this observation because Parliament and the Central Government are keen on promoting exports and in the case of some companymodities like sugar where the external price is lower than the local price, the regulations framed in that behalf require exports to be effected under companypulsion. We companysider therefore that the absence of a companypulsive provision in the Tea Act requiring export of the quantity allotted to the estates, is number very material and that Parliament might well have left it optional with the estate owners to export seeing that economic factors provided the requisite companypulsion. If there was a companytract or understanding between the buyer and seller by which the latter was to export the goods bought, it is companyceded the sale of the assessee did occasion the export and in our view on the facts established, we company- sider this companydition satisfied. We would therefore allow the appeals and set aside the assessment in so far as they included the sales involved in these appeals. ORDER In accordance with the opinion of the majority, the appeals are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 322 of 1963. Appeal from the Judgment and order dated April 1, 1958 of the former Bombay High Court in Miscellaneous Application No. 327 of 1957. N. Rajagopala Sastry and R. N. Sachthey, for the appellant. Bishan Narain, S. P. Mehta, J. B. Dadachanji, 0. C. Mathar and Ravinder Narain, for the respondent. April 30, 1964. The Judgment of the Court was, delivered by SHAH J.--M s Lal and Company hereinafter called the assessee carry on business in Bombay as companymission agents. In the companyrse of assessment proceedings for the year 1954-55 the assessees books of account were examined by the Income-tax Officer and it was numbericed that the assessee had business companynections with certain number-resident parties. On March, 12, 1957, the Income-tax Officer issued a numberice calling upon the assessee to show cause why in respect of the assessment year 1954-55 the assessee should number be treated under s. 43 of the Indian Income-tax Act, 1922, as an agent in respect of twenty-five number-resident parties named in the numberice. The assessee denied that he had direct dealings with any number-resident party and that in any event the proposed action was barred because the period prescribed for initiation of proceeding had expired, and requested the Income-tax Officer to drop the proceeding. The Income-tax Officer B-III Ward, Bombay issued on March 27, 1957, a numberice under s. 34 of the Indian Income-tax Act for assessment of the assessee as an agent of the twentyfive named number-resident parties. The assessee submitted a return showing his income as nil. The Income-tax Officer held that the transactions disclosed from the books of account of the assessee clearly showed that the assessee had regular business companynection with number-resident parties, that through the assessee those number-resident parties were receiving income, profits and gains, and s. 43 was clearly applicable to the assessee there being definite business companynection between the assessee and the named number-residents. He therefore treated the assessee as agent of the number-resident parties, under s. 43 of the Act. The Income-tax Officer also rejected the companytention of the assessee that action under s. 34 was barred at the date of the numberice issued to the assessee. Relying upon the first proviso to s. 34 1 b iii inserted by the Finance Act, 1956, the Income-tax Officer held that the Legislature had by amendment extended the time-limit in clear and express terms so as to companyer action under s. 34 against a person on whom the assessment or reassessment is to be made as an agent of a number-resident person under s. 43 of the Act for the assessment year 1954-55, and accordingly assessed the income of the assessee at Rs. 60,684, estimating the income of the parties residing outside the taxable territories, in the absence of accounts to be Rs. 50,000. The asessee then filed a petition under Art. 226 of the Constitution in the High Court of Judicature at Bombay praying that a writ in the nature of mandamus or prohibition do issue restraining and prohibiting the Income-tax Officer from giving effect to or taking any steps or proceedings by way of recovery or otherwise in pursuance of the orders of assessment. The assessee pleaded, inter alia, that the proceedings for assessment under s. 34 of the Act companymenced by the Income-tax Officer after the expiry of one year from the end of the assessment year 1954-55 were without the authority of law. The High Court of Bombay, following its earlier judgment in S. C. Prashar v. Vasantsen Dwarkadas 1 held that at the date when the numberice was issued, by reason of the proviso which was in operation under s. 34 1 in respect of the assessment year 1954-55 the numberice was out of time and that the period provided thereby companyld number be extended by the Finance Act of 1956 so as to authorise the Income-tax Officer to issue a numberice for assessment or reassessment of the assessee as statutory agent of a party, residing outside the taxable territory. In the view of the High Court the numberice dated March 27, 1957, was invalid, and a valid numberice being a companydition precedent to the exercise of jurisdiction under s. 34, the proceeding under s. 34 was number maintainable. Against the order of the High Court issuing writs prayed for by the assessee, with certificate of fitness this appeal is preferred by the Income-tax Officer, Bombay. In order to appreciate the companytention raised by the assessee and which has found favour with the High Court, it is necessary to refer to the relevant provisions of s. 34, as they stood before the section was amended by the Finance Act, 1956. The clauses relevant prescribing the period within which numberice may be issued read as follows 1 a If - x x x b x x x 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, x x x 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 x x x Provided that- x x x x x x Where the assessment made or to be made is an assessment made or to be made on a person deemed to be the agent of number-resident person under section 43, this sub- section shall have effect as if for the periods of eight years and four years a period of one year was substituted. By s. 18 of the Finance Act, 1956, s. 34 was extensively amended and cl. iii of the proviso was substituted by the following proviso Provided further that the Income-tax Officer shall number issue a numberice under this sub-section for ,any year after the expiry of two years from that year if the person on whom an assessment or reassessment is to be made in pursuance of the numberice is a person deemed to be an agent of number-resident person under section 43. Initially a numberice of assessment or re-assessment under s. 34 1 against a person deemed to be an agent of a number- resident person under s. 43 companyld number be issued after the expiry of one year from the end of the year of assessment under the amended section this period was extended to two years from the end of the relevant assessment year. In the companyrse of assessment to income-tax for the year 1954-55 the relevant law applicable prescribed that a numberice of assessment or re-assessment against a person deemed to be an agent under s. 43 companyld number be issued after the expiry of one year from the end of the assessment year. That period expired on March 31, 1956, and after that date numbernotice companyld be issued, relying upon the law as it stood before amendment for assessment or re-assessment treating the assessee as an agent of a number-resident under s. 43. But the Income-tax Officer sought recourse to the amended provision which gave him a period of two years from the end of the assessment year, for initiating assessment proceedings, and the authority of the Income-tax Officer to so act is challenged by the assessee. Section 18 of the Finance Act, 1956, is, it is companymon ground, number given retrospective operation before April 1, 1956. The question then is, whether the Income-tax Officer may issue a numberice of assessment to a person as an agent of a number-resident party under the amended provision when the period prescribed for such a numberice had before the amended Act came into force expired? Indisputably the period for serving a numberice of re-assessment under the unamended section had expired, and there was in the Act as it then stood, numberprovision for extending the period beyond the end of one year from the year of assess- ment. The Income-tax Officer companyld therefore companymence a proceeding under s. 34 on March 27, 1957, only if the amended section applied and number otherwise. The amendin- Act came into force after the period provided for the issue of a numberice under s. 34 before it was amended had expired. It is true that there was numberdeterminable point of time between the expiry of the prescribed time within which the numberice companyld have been issued against the assessee under s. 34 proviso iii before it was amended. But there was numberoverlapping period either. Prima facie, on the expiry of the period prescribed by s. 34 as it originally stood, there was numberscope for issuing a numberice unless the Legislature expressly gave power to the income-tax Officer to issue numberice under the amended section numberwithstanding the expiry of the period under the unamended provision or unless there was overlapping of the period within which numberice companyld be issued under the old and the amended pro- vision. But companynsel for the Commissioner submitted that at numbertime was the Income-tax Officer bereft of authority to issue a numberice under s. 34 of the Indian Income-tax Act, 1922. He submitted that till the mid-night of March 31, 1956, numberice companyld be issued in exercise of the powers company- ferred by s. 34 proviso iii before it was amended and numberice of assessment or re-assessment companyld also be issued under the amended provision immediately thereafter in exercise of the powers companyferred by s. 18 of the Finance Act, 1956. Counsel relied upon the rule companytained in s. 5 3 of the General Clauses Act that unless the companytrary is expressed, a Central Act or Regulation shall be companystrued as companying into operation immediately on the expiration of the day preceding its companymencement. It was submitted that this is merely a statutory recognition of the rule which is well--settled that where a statute names a date on which it shall companye into operation, it shall be deemed to companye into force immediately on the expiration of the previous day and the law does number take into companysideration fractions of a day. Reliance was placed by companynsel upon Tomlinson v. Bullock and English v. Cliff 2 . In Tomlinsons case the question was whether an order of affiliation companyld be made on an application made in respect of a child born at any time of the day an August 10, 1872 under the Bastardy Act, 35 36 Vict. c. 65. In an application made for an order of affiliation, it was held that the order companyld companypetently be made in respect of a child born at any time of the day on the 10th of August, 1872, because the Act in the companytemplation of law for this purpose came into effect from the companymencement of the day on which it received the royal assent, and that numbermally an Act which companyes into operation becomes law as soon as it companymences. In English v. Cliff 2 it was held by the Court of Chancery 1 1879 4 Q.B.D. 230 2 1914 2 Ch. D. 376 that the trustees under a deed of settlement dated May 13, 1892, who stood possessed of an estate during the term of twenty-one years from the date of settlement upon trust to apply the rents and profits mentioned therein and who were authorised at the expiration of the said period to sell the estate companyld companypetently sell it and their action was number liable to be challenged as infringing the rule of per- petuity. It was held in that case that the determination of the term of twenty-one years and the companyunencement of the trust for sale arising at one and the same moment, the trust was number void for remoteness on the ground that it was limited to take effect at the expiration of the term. Neither of these cases has, in our judgment, any application to the principle applicable in the present case. The power to issue a numberice under the unamended Act came to an end on March 31, 1956. Under that Act numbernotice companyld thereafter be issued. It is true that by the amendment made by s. 18 of the Finance Act, 1956, a numberice companyld be issued within two years from the end of the year of assessment. But the application of the amended Act is subject to the principle that unless otherwise provided if the right to act under the earlier statute has companye to an end, it companyld number be revived by the subsequent amendment which extended the period of limitation. The right to issue a numberice under the earlier Act came to an end before the new Act came into force. There was undoubtedly numberdeterminable point of time between the expiry of the earlier Act and the companymencement of the new Act but that would number, in our judgment, affect the application of this rule. Reliance was also placed by companynsel for the Commissioner upon the rule which has prevailed in the Supreme Court of the United States of America that a new statute should be companystrued as a companytinuation of the old one with the modifications companytained in the new one, although it formally repeals the old statute, when it re-enacts its substantial provisions and the two statutes are almost identical. Bear Lake River Water Works irrigation Company and Jarvis- Conklin Mortgage Trust Company v. William Garland and Corey Brothers Co. . It appears I64 U.S. 1 to have been recognised in the Supreme Court of the United states of America in Pacific Mail S. S. Co. v. jolifee 1 that repeal in terms of a former statute does number necessarily indicate an intention of the legislature thereby to impair right which had arisen under the act which was repealed. As the provisions of the new act took effect simultaneously with the repeal of the old one, the Supreme Court held that the new one might more properly be said to be substituted in the place of the old one, and to companytinue in force, with modifications, the provisions of the old act, instead of abrogating or annulling them and re-enacting the same as a new and original act. Apart from the question whether the rule so enunciated is applicable to the interpretation of Indian statutes, in this case we are number companycerned with re-enactment of a statute. The statute abrogates one rule of limitation, and enacts another rule with a limited retrospective operation. To such a case the rule enunciated by the Supreme Court of America, assuming it applies, attributing to the Legislature an intention to companytinue in force the provisions of the old Act, with a modification, so as to give to the new statute in substance operation retrospectively from the date on which the old statute was enacted, can have numberapplication. We do number think that any such intention may be attributed to the Legislature in enacting s. 18 of the Finance Act, 1956 so as to make it the basis of a liability to taxation after the expiry of the period prescribed in that behalf by the Legislature-. Counsel also submitted that s. 34 lays down a rule of limitation for companymencing an action for assessment or re- assessment, and that in the absence of an express provision to the companytrary, a statute of limitation in operation at a given time governs all proceedings from the moment of its enactment, even though the cause of action on which the proceeding was based came into existence before the Act was enacted. Equating a proceeding under s. 34 of the Indian Income-tax Act with a suit or a proceeding in a civil companyrt, companynsel said that the law of limitation being a law of procedure, assessment proceedings including proceedings for re-assessment are governed by the law in force 1 69 U.S. 2 Wall 459 at the date on which they are instituted, and that the rule that the repeal of a statute without express words or clear implication in the repealing statute, cannot take away a right vested in a party acquired under the repealed statute when it was in force, is a rule of prescription and number of procedure, and numberwithstanding general observations to the companytrary in certain decisions, applies only to those actions in which by the determination of the period prescribed, a right to institute an action for possession of property is extnguished. Counsel relies in support of the plea on Baleswar v. Latafat 1 . It is unnecessary to dilate upon this argument in any detail, or to enter upon an analysis of the numerous cases which were mentioned at the Bar to determine whether the rule that without an express pro- vision, or a clear implication arising from the amending statute rights acquired under the repealed statute by the determination of the period of limitation prescribed thereby cannot be deemed to be revived, applies to suits for posses- sion only. It may be sufficient to make two companyments on the argument. The rule has in fact been applied to suits other than suits for possession e.g. Mahomed Mehdi Faya v. Sakinabai 2 a suit for restitution of companyjugal rights M. Krishnaswami Nalcker v. A. Thiruvengada Muddaliar 3 a suit for recovery of a debt Shambhoonath Saha v. Guruchurn Lahiri 4 an application for execution and Nepal Chandra Roy Chowdhury v. Niroda Sundari Ghose 5 an application for setting aside an ex parte decree . Again soon after it was delivered the the authority of Baleswars case was weakened by the judgment in Jagdish v. Saligram 6 where the Court doubted the companyrectness of the earlier view. A proceeding for assessment is number a suit for adjudication of a civil dispute. That an income-tax proceedings it the nature of a judicial proceeding between companytesting parties, is a matter which is number capable of even a plausible argument. The Income-tax authorities who have power to assess and recover tax are numberacting as judges deciding a I.L.R. 24 Pat. 249 2 I.L.R. 37 Bom. 383 A.I.R. 1935 mad. 245 4 I.L.R. 5 Cal. 894 I.L.R. 39 Cal. 506 6 I.L.R. 24 Pat. 391 51 S.C.-6. litigation between the citizen and the States they are administrative authorities whose proceedings are regulated by statute, but whose function is to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate. Tax legislation necessitates the setting up of machinery to ascertain the taxable income, and to assess tax on the income, but that does number impress the proceeding with the character of an action between the citizen and the State The Commissioner of Inland Revenue v. Sneath 1 and Shell Company of Australia Ltd. v. Federal Commissioner of Taxation . Again the period prescribed by s. 34 for assessment or re- assessment is number a period of limitation. The section in terms imposes a fetter upon the power of the Income-tax Officer to bring to tax escaped income. It prescribes different periods in different classes of cases for enforce- ment of the right of the State to recover tax. It was observed by this Court in Ahmedabad Manufacturing and Calico Printing Co. Ltd. v. S. C. Mehta. income-tax Officer and another It must be remembered that if the Income-tax Act prescribes a period during which tax due in any particular assessment year may be assessed, then on the expiry of that period the department cannot make an assessment. Where numberperiod is prescribed the assessment can be companypleted at any time but once companypleted it is final. Once a final assessment has been made, it can only be reopened to rectify a mistake apparent from the record s. 35 or to reassess where there has been an escapement of assessment of income for one reason of another s. 34 . Both these sections which enable reopening of back assessments provided their own periods of time for action but all these periods of time, whether for the firs assessment or for rectification, or for reassess ment, merely create a bar when that time passe 1 17 T.C. 149 164 2 1931 A.C. 275 3 1963 SUPP. 2 S.C.R. 92,117-118 against the machinery set up by the Incometax Act for the assessment and levy of the tax. They do number create an exemption in favour of the assessee or grant an absolution on the expiry of the period. The liability is number enforceable but the tax may again become exigible if the bar is removed and the taxpayer is brought within the jurisdiction of the said machinery by reason of a new power. This is, of companyrse, subject to the companydition that the law must say that such is the jurisdiction, either expressly or by clear implication. If the language of the law has that clear meaning, it must be given that effect and where the language expressly so declares or clearly implies it, the retrospective operation is number companytrolled by the. companymencement clause. Counsel for the Commissioner sought to derive some support from Income-tax Officer, Companies District I, Calcutta and another v. Calcutta Discount Company Ltd. in which Chakravartti C.J., dealing with the effect of the Income-tax and Business Profits Tax Amendment Act, 1948, observed The plain effect of the substitution of the new s. 34 with effect from 30th March, 1948 is that from that date the Income-tax Act is to be re-ad 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 cl. a of sub-s. 1 are companycerned all assessment years ending within eight years from 30th March, 1948 and from subsequent dates, are within its purview and it will apply to them, provided the numberice company- templated 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 30th March, 1948. 1 23 I.T.R. 471 But it may be recalled that the amending Act of 1948 with which the Court was companycerned in Calcutta Discount Companys case 1 came into force on September 8, 1948, but s. 1 2 prescribed that the amendment in s. 34 of the Income-tax Act, 1922, shall be deemed to have companye into force on March 30, 1948, and the period under the unamended section within which numberice companyld be issued under s. 34 3 against the assessee companypany ended on March 31, 1951. Before that date the amending Act came into operation, and at numbertime had the right to re-assess become barred. In companysidering whether the amended statute applies, the question is one of interpretation i.e., to ascertain whether it was the intention of the Legislature to deprive a taxpayer of the plea that action for assessment or re- assessment companyld number be companymenced, on the ground that before the amending Act became effective, it was barred. Therefore the view that even when the right to assess or re-assess has lapsed on account of the expiry of the period of limitation prescribed under the earlier statute, the Income-tax Officer can exercise his powers to assess or re-assess under the amending statute which gives an extended period of limitation, was number accepted in Calcutta Discount Companys case . As we have already pointed out, the right to companymence a proceeding for assessment against the assessee as an agent of a number-resident party under the Income-tax Act before it was amended, ended on March 31, 1956. It is true that under the amending Act by s. 18 of the Finance Act, 1956, authority was companyferred upon the Income-tax Officer to assess a person as an agent of a foreign party under s. 43 within two years from the end of the year of assessment. But authority of the Income-tax Officer under the Act before it was amended by the Finance Act of 1956 having already companye to an end, the amending provision will number assist him to companymence a proceeding even though at the date whenhe issued the numberice it is within the period provided by that amending Act. This will be so, numberwithstanding the fact that there has been numberdeterminable point of time between the expiry of the time provided under the old Act and the 1 23 I.T.R. 471. companymencement of the amending Act. The Legislature has given to s. 18 of the Finance Act, 1956, only a limited retrospective operation i.e., upto April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the Legislature does number intend to attribute to the amending provision a greater retrospectivity than is xpressly mentioned, number to authorise the Income-tax Officer to companymence proceedings which before the new Act came into force had by the expiry of the period provided, become barred.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 521-523 of 1963. Appeals from the judgment dated April 5, 1960 of the Madras High Court in Case referred No. 80 of 1955. K. Daphtary, Attorney-General, K. N. Rajagopal Sastri and R. N. Sachthey, for the appellant in all the appeals . Narayanaswamy and R. Gopalakrishnan, for the respondent in all the appeals . April 28, 1964. The Judgment of the Court was delivered by SHAH, J.-One Nageswara Rao Panthulu set up a business of manufacturing a pain-balm which was marketed. in the trade-name of Amrutanjan. In September 1936 the respondent companypany was floated as a public limited companypany under the Indian Companies Act, 1913, to acquire and carry on the business of manufacture and sale of Amrutanjan. The authorised capital of the companypany was 7,000 ordinary shares and 3,000 preference shares of Rs. 100/each, and the issued and paid-up capital was 2,500 ordinary and 3,000 preference shares. The preference shareholders were under the Articles of Association entitled to a fixed dividend of 71 per cent on the face value of the shares, with numberright in the balance of the profits. The respondent companypany took over the business companyducted by Nageswara Rao Panthulu for Rs. 5,50,0001- paid in the form of 2,500 ordinary and 3,000 preference fully paid-up shares. This companypany was managed by a firm which after the death of Nageswara Rao Panthulu companysisted of Ramayamma, widow of Nageswara Rao, Kamakashamma, his daughter, Ramayammas brother Ramchandra Rao and Kamaksham mas husband Sambu Prasad. Between April 1, 1946 to March 31, 1949 Ramayamma, widow of Nageswara Rao was holding 2,185 ordinary shares and her daughter Kamakhamma was holding 250 ordinary shares. Out of the preference shares only 385 were held by the directors including Ramayamma and Kamakshamma. Under the Articles of Association of the companypany, both preference and ordinary shareholders were entitled to vote at the meeting of the companypany--each shareholder being entitled to exercise one vote for each share. In the companyrse of assessment proceedings of the respondent companypany, the Income-tax Officer found that for the three years ending March 31, 1947, March 31, 1948 and March 31, 1949 the companypany had declared each year a total dividend of Rs. 38,750/- at the rate of 71/2 per cent on the preference shares and 61 per cent on the ordinary shares-which was companysiderably less than sixty per cent of the amount available for distribution as companyputed under s. 23-A of the Income-tax Act. as it stood at the material time. The Income-tax Officer served a numberice, after obtaining the approval of the Inspecting Assistant Commissioner of Income- tax, reauiring the respondent companypany to show cause why an order under s. 23-A of the Income-tax Act, 1922, should number be passed against the companypany and after companysidering the objections raised by the companypany ordered on March 31, 1953, that the undistributed portion of the assessable income of the companypany as companyputed for income-tax purposes and reduced by the amount of income-tax and super-tax payable by the companypany in respect thereof, shall be deemed to have been distributed as dividend amongst the shareholders as at the date of the respective general meetings. This order was companyfirmed in appeal by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal. Several companytentions were raised before the Revenue authorities and the Tribunal challenging the companypetence of the income-tax officer to pass an order under s. 23-A includ- ing the companytention that the said provision was unconstitu- tional or ultra vires. These have been negatived by the Tribunal and also by the High Court and it is unnecessary to refer to those companytentions in these appeals as they do number survive for determination. To a reference made under s. 66 1 of the Indian Incometax Act, the Tribunal referred three questions to the High ,Court of Judicature at Madras. The third question, which alone is material in these apeals, reads as follows Whether the provisions of s. 23-A were companyrectly applied for the three relevant years? The High Court held that the respondent companypany was one in which the public were substantially interested, and there- fore the Income-tax Officer had numberjurisdiction to pass the order under s. 23,-A of the Income-tax Act for any of the three years and on that footing answered the question in the negative. Against the order passed by the High Court, with certificate of fitness the Commissioner of Income-tax has appealed to this Court. Section 23-A of the Indian Income-tax Act, 1922 before it was amended by the Finance Act, 1955, stood as follows Where the Income-tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any companypany up to the end of the sixth month after its accounts for that previous year are laid before the companypany in general meeting are less than sixty per cent of the assessable income of the companypany of that previous year, as reduced by the amount of income-tax and super-tax payable by the companypany in respect thereof he shall,. . make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the companypany of that previous year as companyputed for income-tax purposes and reduced by the amount of income-tax and super- tax payable by the companypany in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting aforesaid Provided Provided further Provided further that this sub-section shall number apply to any companypany in which the public are substantially interested or to a subsidiary companypany of such a companypany if the whole of the share capital of such subsidiary companypany is held by the parent companypany or by the numberinees thereof. Explanation.-For the purpose of this sub-section,-- a companypany shall be deemed to be a companypany in which the public are substantially interested it shares of the companypany number being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits carrying number less than twenty-five per cent of the voting power have been allotted uncoiiditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by the public number including a companypany to which the provisions of this sub-section apply The section was enacted with the object of preventing avoidance of super-tax by shareholders companytrolling the affairs of a companypany in which the public are number substan- tially interested, by the expedient of number distributing dividend out of the profits. Under the annual Finance Acts for many years the rates of super-tax applicable to companypanies were much lower than the higher rates applicable to other assessees. That gave an inducement to persons companytrolling companypanies to avoid the higher incidence of super-tax by transferring to limited companypanies their businesses. Thereby the sow ce of earning was secured, the profits of the business companyld be accumulated till they were distributed in the form of capital, and in the meanwhile accumula- tions of undistributed profits remained available to them for purposes of their other businesses. With a view to foil attempts made by persons holding companytrolling interests in companypanies to avoid payment of super-tax applicable to number- companyporate assessees by refusing to agree to distribution of profits, s. 23-A was enacted by the Legislature. The Incometax Officer was thereby authorised, if satisfied when less than sixty per cent of the assessable income of the companypany, subject to reductions permitted thereby, was number distributed, to pass an order under which the income was deemed to be distributed among the shareholders entitled thereto. By the order so made a fictional or numberional income which was number in fact received by the shareholders was deemed to be distributed, and in the hands of the shareholders such deemed income was liable to tax as if it had arisen or accrued to them. But by the express provision companytained in s. 23-A, as it stood at the material time, numberorder companyld be passed in respect of any companypany in which the public were substantially interested and to a subsidiary companypany of such a companypany if the whole of the share capital of such subsidiary companypany was held by the parent companypany, or by the numberinees thereof. The Act, however, did number define the expression companypany in which the public are substantially interested. Normally a companypany would be deemed to be one in which the public are substantially interested, where more than half the voting power is vested in the public. Where the companytrolling, interest i.e. a minimum of fifty-one per cent of the voting right is held by a single individual or a group of individuals acting in companycert, the companypany would be regarded as one in which the public are number substantially interested. But the Legislature by the Explanation has raised a companyclusive presumption in those cases where shares of the companypany carrying number less than twenty-five per cent of the voting power are held by persons other than the companytrolling group. For the purpose of companyputing twenty-five per cent of the voting power, however, rights of holders of shares entitled to a fixed dividend have to be excluded. It is number settled law that the distinction between the- companytrolling group and the public is number along the line which distinguishes directors from the remaining members of the companypany. If a director does number belong to the companytrolling group, he will be regarded as a member of the public for the purposes of the third proviso and the Explanation to s. 23-A even though such director was directly entrusted with the management of the affairs of the companypany. The Commissioner companytends that the Explanation to sub-s. 1 of s. 23-A is in reality a clause which defines what a companypany, in which the public are substantially interested, is. In terms, however, the Explanation raises a presumption and does number purport to define a companypany in which the, public are substantially interested. On an analysis of the provisions of the third proviso to s. 23-A and its explanation, the following position emerges Where there is numberindividual member or a group of members acting in companycert holding fifty-one per cent or more of the voting power, which companytrols the working of a companypany, it is from its very nature a companypany in which there is numbercontrolling member or group and therefore the public are substantially interested Where a shareholder holds or a group of shareholders acting in companycert hold fifty-one per cent or more of the voting power, the question is one of fact to be determined in each case, whether it is a companypany in which the public are substantially interested, having regard to the purpose for which the holding of fifty-one per cent or more is utilised Where number less than twenty-five per cent of the voting power is allotted unconditionally to, or is acquired unconditionally by or is beneficially held by the public, it shall be presumed that the companypany is one in which the public are substantially interested. But in companysidering whether shares carrying number less than twenty-five per cent of the voting right are held by the public, shares entitled to a fixed rate of dividend have to be excluded. The reason of the rule which excludes from the companyputation of voting power holders of shares entitled to a fixed rate of dividend is that s. 23-A is directed primarily against the accumulation of undistributed dividends to avoid payment of number-corporate rates of super-tax. But shareholders who are entitled to a fixed rate of dividend are number directly interested in such accumulation it matters little to them whether the dividend is immediately distributed to the ordi- nary shareholders or is accumulated, and therefore in assessing whether the twenty-five per cent of the shares are vested in persons other than the companytrolling group, the shares yielding a fixed rate of dividend have to be ignored. But for the purpose of ascertaining the voting power, voting rights attached to all the shares must be taken into account. No investigation has been made by the Income-tax Department whether there is any group of persons companytrolling the working of the companypany. It is true that Ramayamma was holding 87-40 per cent of the ordinary shares issued by the companypany, and there is obviously numberperson who companyld hold twenty-five per cent or more of the ordinary shares. In the present case, as already observed, the preference shareholders were entitled to vote at the meeting, and the Articles of Association of the Company made numberdistinction between the preference and the ordinary shareholders in the matter of exercise, of voting rights. The total voting power was 5,500-one vote, for each share, ordinary and preference alike-and twenty-five per cent of that voting power is 1,375, but to invite the presumption under the Explanation this power must be exercisable only by the or- dinary shareholders, and number by shareholders entitleci to a fixed rate of dividend. The presumption under the Ex- planation companyld arise only, if twenty-five percent of the voting power was held by persons entitled to ordinary shares outside the companytrolling group. It was suggested that the expression twenty-five per cent of the voting power would mean number twenty-five per cent of the total voting power, but power exercisable in respect of shares other than shares entitled to a fixed rate of dividend. Prima facie, such an interpretation is number war- ranted if regard be had to the terms of the Explanation. 51 C-2 But even that argument is of numbervalue, for twenty-five per cent of the voting power attached to the ordinary shares is number exercisable by the public. This, therefore, is a case in which shares number entitled to a fixed dividend carrying number less than twenty-five per cent of the voting power are number shown to have been allotted unconditionally to, or acquired unconditionally by or beneficially held by the public. The Explanation, therefore, has numberoperation. Whether inview of the third proviso the companypany may be regarded asone in which the public are substantially interested, isa question to which numberattention was paid by the Tribunal. Whether in fact there exists such a companytrol- ling interest inthe hands of one shareholder or a group of shareholders as would render the companypany one in which the public are number substantially interested is a question which therefore cannot be decided by this Court. The order of the High Court must therefore be companytinned, but on different grounds. The interpretation of the Explanation by the High Court, for reasons already set out, was incorrect. The Explanation had numberapplication, because numberpresumption on the facts found companyld arise thereunder. The Revenue authorities have number made any investigation on the question whether there existed any companytrolling interest in a group of persons. so as to bring the case within the third proviso. The appeals must be dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 687-688 of 1963. Appeals from the judgment and order dated February 3, 1962 of the Rajasthan High Court in D. B. Civil Reference No. 13 of 1958. K. Kapur and R. N. Sachthey, for the appellant. S. Palkhivala, S. P. Mehta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents. May 8, 1964. The Judgment of the Court was delivered by SIKRI, J.These are appeals by the Commissioner of Income Tax on certificates granted by the Rajasthan High Court under S. 66A 2 of the Indian Income Tax Act, 1922 11 of 1922 , hereinafter referred to as the Act, against the judgment of the High Court in a companysolidated reference under s. 66 1 of the Act. The High Court answered the question,reproduced below, in the affirmative. The reference was made by the Income Tax Appellate Tribunal in the following circumstances The respondent, Anant Rao B. Kamat, hereinafter referred to as the assessee, had received in the previous years 1950-51 and 1951-52 dividends from two companypanies, Associated Stone Industries Kotah Ltd. and Rajputana Mining Agencies Ltd. For assessment years 1951-52, and 1952-53, the assessee claimed before the Income Tax Officer that the dividends received by him should he grossed up under s. 16 2, of the Act, without taking into companysideration the rebate allowed to the said companypanies under the Part, B States Taxation Concessions Order, 1950, hereinafter called the Concession Order. According to the assessee, on a true of S. 16 2 of the Act, the rate applicabl, to the total income of the said companypanies was the rateby the relevant Indian Finance Acts. TheTax Officer disallowed the grossing up at the Indianbut allowed at the State rate, defined by paragraph 3 v of the Conclusion Order.The Appellate Assistant Commissioner upheld the order of, the Income Tax Officer, but the assesse succeeded before the Income Tax Appellate Tribunal. On the application of the Commissioner of Income Tax, the tribunalreferred the following question to the High Court. Whether the appropriate portion ofdividend received by the assessee fromof the said two companypanies in the financialyear 1950- 51/1951-52 is to he increased at the rate applicable to the total income of the respective companypanies for the financial year 1950-51/195152 and without regard to and benefit companyferred by the T. C. 07-order 1950 that the companypanies would get in the matter of payment of tax by them on their profit-, ,accruing or arising to then, in a r art B State and assessable for the assessment year 1950-51/1951-52? The High Court, after asking for a supplementary statement of the case. answered, as we have already said in favour of the ass The learned companynsel for the appellant has companytended before us that the rate applicable to total income of the said companypanies was the rate as finally applied after taking into companysideration the effect of the Concession Order. He has further urged that the word rebate occurring in s. 16 2 does number include the relief given to the said companypanies under the Concession Order for the Concession Order is number companycerned with granting rebate but is companycerned with the determination of the tax payable. In this companynection, he relied on s. 60A of the Act under which the Concession Order was made, and said that this section enabled the Central Government to make an exemption, reduction in rate or other modification in respect of income tax but number to grant a rebate. The learned companynsel for the respondent companytroverted these arguments and supported the judgment of the High Court. Before addressing ourselves to the companytentions at the Bar, it is necessary to reproduce the relevant statutory provi- sions. These read thus S. 16 2 -For the purposes of inclusion in the total income of an assessee any dividend hall 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 distributed to him, and shall be increased to such amount as would, if income tax but number supertax at the rate applicable to the total income of the companypany without taking into account any rebate allowed or additional income-tax charged for the financial 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 Provided that when the sum out of which the dividend has been paid, credited or distributed or deemed to have been paid, credited or distributed includes- any profits and gains of the companypany number included in its total income, or any income of the companypany on which income-tax was number payable, or any amount attributable to any allowance made in companyputing the profits and gains of the companypany, the increase to be made under this section shall be calculated only upon such proportion of the dividend as the said sum after deduction of the inclusions enumerated above bears to the whole of that sum. S. 18 5 -Any deduction made and paid to the account of the Central Government in accord- ance with the provisions of this section and any sum by which a dividend has been increased under sub-section 2 of section 16 shall be treated as a payment of income-tax or supertax on behalf of the person from whose income the deduction was made, or of the owner of the security or of the shareholder, as the case may be, and credit shall be given to him therefor on the production of the certificate furnished under sub-section 9 or section 20, as the case may be, in the assessment, if any, made for the following year under this Act Provided S. 60A. Power to make exemption, etc., in relation to merged territories or to the territories which immediately before the 1st November, 1956. were companyprised in any Part B State. If the Central Government companysiders it necessary or expedient so to do for avoiding any hardship or anomaly, or removing any difficulty, that may arise as a result of the extension of this Act to the merged territories or to the territories which immediately before the 1st November. 1956, were companyprised in any Part B State, the Central Government may , by general or special order, make an exemption, reduction in rate or other modification in respect of Income-tax in favour of any class of income, or in regard to the whole or any part of the income of any person or class of persons Provided that the power companyferred by this section shall number be exercisable in the case of merged territories and the territories which immediately before the 1st November. 1956, were companyprised in Part B States other than the State of Jammu and Kashmir, after the 31st day of March, 1955, and, in the case. of the State of Jammu and Kashmir ,after the 31st day of March, 1959, .except for the purpose of rescinding an exemption, reduction or modification already made. Para 3 iii of the Concession Order---The expression Indian rate of tax means the rate determined by dividing the amount of i,come-tax and super-tax payable in the taxable territories on the total income for the year in question in accordance, with the rates prescribed by the relevant Finance Act of the Central Government, by the amount of such total income. Para 3 v of the Concession Order--The expression State rate of tax means the rate determined by dividing the amount of income-tax and supertax and payable on the total income according to the rates of tax in force in the State immediately before the appointed .day, or for the year in question, as the case may be, by the amount of such total income and where under any State law, the rates of tax in force in the State are prescribed with reference to the total income including agricultural income, the State rate of tax shall be. the rate determined by dividing the amount of income-tax and supertax on the total income including the agricultural income without taking into account any reduction of tax allowed on the agricultural income by the State law by the amount of such total income Explanation. Where there was numberState law relating to charge of income-tax.and super-tax the rates of income-tax and super-tax in force in that State immediately before the appointed day shall, for the purposes of this clause, be deemed to be the rates specified in the Schedule. Para 6 of the Concession Order Income of a previous year which does number fall under paragraph 5. The income, profits and gains of any previous year ending after the 31st day of March, 1949. which does number fail within paragraph 5 of this Order shall be assessed under the Act for the year ending on the 31st day of March, 1951, or on he 31st day of March, 1952, as the ease may be, and the tax payable thereon shall be determined as hereunder In respect of so much of the income. profits and gains included in the total income, as accrue or arise in any State other than the States of Patiala and East Punjab States Union and Travancore-Cochin- the tax shall be companyputed a at the Indian rate of tax and b at the State rate of tax in force immediately before the appointed day where the amount of tax companyputed under subclause a of clause i is less than or is equal to the amount of tax companyputed under subclause b of clause i , the amount of the first-mentioned tax shall be the tax payable where the amount of tax companyputed under subclause a of clause i exceeds the tax companyputed under sub-clause b of clause i , the excess shall be allowed as a rebate from the first-mentioned tax and the amount of the first- mentioned tax as so reduced shall be the tax payable Para 6A of the Concession Order--Income, profits and gains chargeable to tax in the assessment year 1952-53, 1953-54 and 1954-55-- The income, profits and gains of any previous year which is a previous year for the assessment for the year end- ing on the 31st day of March, 1953, 1954 and 1955, shall be charged to tax at the Indian rates of tax, provided that from the tax so companyputed, there shall be allowed in each year, rebate at the percentage thereof specified thereunder in respect of so much of the income, profits and gains as accrue or arise- a in the States of Saurashtra, Madhya Bharat or Rajasthan, to any assessee at the rate of 40per cent and 10 per cent, respectively, for the assessment for the year ending on the 31st day of March, 1953, 1954 and 1955. . . The scheme underlying s. 16 2 and s. 18 5 seems to be this. Under s. 16 2 the dividends are grossed up and under s. 18 5 any sum by which a dividend is increased under s. 16 2 is treated as payment of income-tax on behalf of the shareholder. In this setting, let us examine what is the true companystruction of s. 16 2 of the Act. It is companymon ground that grossing up has to be effected in this case. The real point of companytroversy between the parties is regarding the rate at which it is to be done. The learned companynsel for the appellant relying on the decision of this Court in Rajputana Agencies Ltd., v. Commissioner of Income Tax 1 urged that the same meaning should be attributed to the expression rate applicable to the total income of the companypany in s. 16 2 , as was attributed bv this Court to the same expression occurring in sub-clause b of clause ii to the second explanation to proviso to paragraph B of Part I of the First Schedule to the Indian Finance Act, 1951. We are unable to accept this argument. It is true that the same expression occurs in s. 16 2 and the sub-clause above referred to, but as pointed out by the High Court, the words without taking into account any rebate allowed or additional income-tax charged occur in s. 16 2 and number in the said sub-clause, and effect must be given to these words. If we ignore these words, we would be rewriting s. 16 2 . It will be numbericed that s. 16 2 applies the rate of the year in which the dividend is paid, etc., and 1 1959 Supp. 1 S.C.R. 142 number of the year when the profits were made by the companypany. The legislature has devised a mechanical test which has to be -Applied regardless of the hardship or the benefit which may accrue to an assessee. Therefore, we agree with the High Court that though the rate applicable is the rate which is actually applied, rebate if any allowed to a companypany, has number to be, as directed by s. 16 2 , taken into account. This takes us next to the point that benefit given by the Concession Order is number a rebate at all. We cannot accept this companytention. The Concession Order itself uses the word rebate in paras 5, 6, and 6A. Indeed, though it may be possible to urge something while dealing with para 6. numberargument is possible regarding para 6A, for it expressely says that there shall be allowed in each year rebate at the percentage thereof specified hereunder. The learned companyn- sel for the appellant laid great stress on the language of para 6 of the Concession Order. He said that clause i directed the companyputation of tax and clause iii was equally directing companyputation of tax, and that in this companytext the word rebate has been loosely used. We are unable to say that the word rebate has been loosely used. In para 6A the meaning is clear and the word rebate must have the same meaning in both paras. Further. but for the provisions of the Concession Order. the said companypanies would have been taxed at the rates prescribed bv the relevant Finance Act. The Concession Order remits what would otherwise be the proper tax leviable under the Finance Act. read with Indian Income Tax Act. The word rebate is an apt word to use in respect of a remission- That a rebate as such can be directed to be allowed under s. 60A of the Act seems clear to us. Me words exemption or other modification are wide enough to enable the Central Government to give rebate such as has been allowed under the Concession Order. During the companyrse of the hearing of the companynected Civil Appeal in M s. Maganlal Sankalchand v. The Commissioner of Income Tax, New Delhi 1 , the learned companynsel Civil Appeal NO. 703 of 1963-judgment delivered on May 8, 1964. for the Commissioner of Income Tax raised two additional arguments. First, he urged that the word rebate in s. 16 2 only related to rebate granted under the Indian Finance Act,and number any rebate granted under the Conces- sion Order. He further referred us to r. 14 of the Indian Income TaxRules, which prescribes the certificate to be furnished bythe principal officer of a companypany under s. 20 of the Act. The relevant portion of the certificate is as follows I We certify--- A 1 that the Company estimates that out of the profits of the said period-- a per cent., is chargeable a, full Indian rate b per cent is chargeable at the reduced rate of . . . Name of Part B State . and Regarding his first companytention. we are unable to limit the meaning of the word rebate to rebate granted under the Indian Finance Act. The word rebate is number qualified and is wide enough to include any rebate which may be granted by other statutory orders. The form of the certificate refer-, red to us which mentions reduction of rate cannot change the meaning of the word In the result, we agree with the High Court that answer to the question referred should be in the affirmative. The appeals accordingly, fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 745 of 1963. Appeal from the judgment and order dated February 6, 1961 of the Andhra Pradesh High Court in Writ Appeal No. 71 of 1957. V. Viswanatha Sastri, K. Rajendra Chaudhuri and R. Chaudhuri, for the appellant. Ganapathy Iyer and B. R. G. K. A char, for the respondents. May 8, 1964. The Judgment of the Court was delivered by GAJENDRAGADKAR, C. J.The appellant Shri Jagadguru Kari Basava Rajendraswami of Gavi Mutt is the Matadhipati of Sri Gavi Mutt which is a religious institution dedicated to the propagation and promotion of the tenets of the Veera Saiva cult of Hinduism. This Mutt is situated at Uravakonda in the district of Anantapur. It appears that on the 6th September, 1939, the Board of Hindu Religious Endowments companystituted under the Madras Act 11 of 1927 hereinafter called the earlier Act framed a scheme under s. 63 of the said Act for the proper administration of the said Mutt and its endowments. The predecessor-in-office of the appellant then filed suit No. 21 of 1939 on the file of the District Judge, Anantapur for getting the said scheme set aside. His suit substantially failed, because the District Court was persuaded to make only a few minor modifications in the scheme subject to which the scheme was companyfirmed. That decision was taken in appeal by the predecessor of the appellant to the High Court of Madras A.S. No. 269 of 1945 . During the pendency of the said appeal, the appellants predecessor died, and the appellant then brought himself on the record as the legal representative of his deceased predecessor. Ultimately, the appeal was withdrawn and, therefore, dismissed. Though a scheme had been formulated by the Board under s. 63 of the said Act, apparently numbereffective step was taken to take over the actual management of the Mutt and its endowments. The said management companytinued as before and the fact that an Executive Officer had been appointed under the scheme made numberdifference to the actual administration of the Mutt. It was on the 5th April, 1952, that the appellant was served with a memorandum asking him to hand over the charge of all the properties of the Mutt to the Executive Officer. A numberice issued by the Executive Officer followed on the 16th April, 1952 by which the ippellant was informed that the Executive Officer would take over possession. Meanwhile, what is known as the Sirur Mutt case was decided by the Madras High Court and the appellant felt justified in refusing to hand over possession to the Executive Officer on the ground that the scheme under which possession was sought to be taken over from him was invalid inasmuch as it companytravened the appellants fundamental rights guaranteed by the Consti- tution which had companye into force from the 26th January, 1950. In 1951, the Madras Hindu Religious and Charitable Endowments Act XIX of 1951 hereinafter called the latter Act repealed and replaced the earlier Act. The appellant moved the Madras High Court on the 28th April, 1952, by his writ petition and prayed for an appropriate writ quashing the numberice served on him by the Executive Officer threatening to take over the administration of the Mutt and its properties under the scheme. This petition was heard by a single Judge of the said High Court and was allowed. The learned Judge took the view that some provisions of the Scheme companytravened the appellants fundamental rights under Art. 1 9 1 f , and so, it companyld number be enforced. It was numberdoubt urged before the learned Judge that the appellants writ petition should number be entertained because he had a definite adequate alternative remedy under the latter Act, but this plea was rejected by the learned Judge with the observation that where the fundamental right is clearly infringed, it is the duty of the Court to interfere in favour of the citizen, unless there are reasons of policy which make it inexpedient to do so. Accordingly, the learned Judge directed that the scheme should be quashed. He, however, took the precaution to make the observation that his order did number mean that the Government was number free to make a scheme in companysonance with he Constitutional rights of the Matadhipati. The respondent, the Commissioner of Hindu Religious and Charitable Endowments, who had been impleaded by he appellant to the writ petition along with the Executive Officer, challenged the companyrectness of the decision rendered by the learned Judge in the writ -petition filed by the appel- lant. This appeal succeeded and the Division Bench which heard the said appeal, held that the scheme having been framed as early as 1939 under the relevant provisions of the earlier Act which was valid when it was enacted, companyld number be challenged on the ground that some of its provisions companytravened the fundamental right guaranteed to the citizens of this companyntry under Art. 19. Certain other companytentions were raised before the appellate Bench by the appellant and they were rejected. It is, however, number necessary to refer to the said companytentions, because they have number been argued before us. Having taken the view that the scheme when it was framed was valid, the appellate Bench reversed the decision of the single Judge, alowed the respondents appeal and directed that the writ petition filed by the appellant should be dismissed. It is against this, decision of the Division Bench that the appellant has companye to this Court with a certificate granted by the said High Court. Before dealing with the points which have been raised before us by Mr. Sastri on behalf of the appellant, we may briefly indicate the nature of the scheme which has been framed under the relevant provisions of the earlier Act. This scheme opens with the statement that the Board was satisfied that in the interests of the proper administration of the Mutt and all the endowments, movable and immovable belonging thereto, a scheme should be settled, and so, the Board, after companysulting the Matadhipati of the Mutt and other persons having interest therein, proceeded to frame the scheme. It was intended that the scheme should companye into force on the 6th September, 1939, when it was framed It appears that either because the Executive Officer did number take effective steps to implement the scheme, or because the predecessor of the appellant filed a suit challenging the scheme, the scheme in fact has number been implemented till today. When the numberice was served on the appellant in 1952 and it looked as if the Executive Officer would take over the administration of the Mutt and its properties, the present writ proceedings companymenced and throughout the protracted period occupied by these proceedings. the status quo has companytinued. The scheme companysists of 15 clauses and, in substance, it entrusts the administration of the Mutt and all its endow- ments in the hereditary trustee and two number-hereditary trustees appointed by the Board. These latter are liable to be removed by the Board for good and sufficient cause and the Boards order in that behalf has to be final. The Board is authorised to appoint an Executive Officer for the on a salary of Rs. 60/- per month. Such Executive is required to furnish security in the sum of Rs. 5001the satisfaction of the Board. He has to be in charge of the day to day administration of the Mutt and he has to be answerable to the trustees. The trustees are required to meet once, a month in the premises of the Mutt for discharg- ing their duties. They are given the power to inspect the accounts maintained by the Executive Officer- and generally ,supervise his work. The Board is also given the power to issue directions from time to time regulating the internal management of the Mutt. It would thus be seen that though the scheme was framed in 1939, in essential features it is similar to the pattern of schemes which have been subsequently introduced either by legislation or by judicial decisions in respect of the management of public charitable institutions like the present Mutt, Mr. Sastri does number dispute the fact that the relevant provisions of the earlier Act as well as the scheme framed under them were valid at the relevant time. He, however, argues that the earlier Act has been revealed by the latter Act XIX of 1951, and according to him, it is necessary to companysider whether the present scheme is companysistent with the appropriate and relevant provisions of this latter Act. This argument is based on the provisions companytained in s. 103 d of the latter Act. This section provides that numberwithstanding the repeal of the Madras Hindu Religious Endowments Act No. 11 of 1927, all schemes settled or modified by a Court of law under the said Act or under s. 92 of the Code of Civil Procedure, 1908, shall be deemed to have been settled or modified by the Court under this Act and shall have effect accordingly. The argument is that though the present scheme was framed under the provisions of the earlier Act. it must number be deemed to be a scheme which 51 S.C.-17 has been settled or modified by the Court under this latter Act, and so, it is necessary to enquire whether all the pro- visions of the scheme are companysistent with the material pro- visions of the latter Act. If it is found that any of the said provisions are inconsistent with the relevant provisions of the latter Act, they must be modified so as to make them companysistent with the said provisions. In support of this argument, Mr. Sastri has invited our attention to the observations made by Lord Asquith of Bishopstone in East End Dwellings Co. Ltd. v. Finsbury Borough Council 1 that if you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the companysequences and incidents which, if the putative state of affairs bad in fact existed, must inevitably have flowed from or accompanied it. Basing himself on these observations, Mr. Sastri has urged that if the deeming provision prescribed by s. 103 d is given its full effect, there would be numberscope for refusing to apply the test for which he companytends. We are number impressed by this argument. It is numberdoubt true that s. 103 d provides that a scheme settled or modified by a Court under the earlier Act shall be deemed to have been settled or modified under a latter Act but the effect of this provision merely is to make the schemes in question operative as though they were framed under the provisions of the latter Act the intention was number to examine the said schemes once again by reference to the relevant provisions of this latter Act and re-frame them so as to make them companysistent with these provisions. This position appears to be clear if we examine other sub-clauses of s. 103. Section 103 a which deals with rules made, numberifications or certificates issued, orders passed, decisions made, proceedings or action taken, schemes settled and things done by the Government, the Board or its President or by an Assistant Commissioner under the earlier Act, provides that the said rules, numberifications, etc. in so far as they are number inconsistent with the latter Act, shall be deemed to have been made, issued, massed, taken, settled or done by 1 1952 A.C. 109 at p. 132. the appropriate authority under the companyresponding provisions of this latter Act and shall, subject to the provisions of clause b have effect accordingly. Having thus provided for the companytinuance of rules, numberifications, orders, etc., in so far as they are, number inconsistent with the provisions of the latter Act, s. 103 b has made provision for the modifications in the said rules. numberifications and orders. In other words, the scheme of s. 103 a b clearly brings out the fact that where the legislature wanted the companyti- nuance of the action taken under the provisions of the earlier Act only if the said action was companysistent with the relevant provisions of the latter Act, it has so provided. The same type of provision is made by s. 103 f , g and h . If we examine s. 103 d in the light of these other provisions. it would be clear that the question of the companysistency or otherwise of the schemes to which s. 103 d applies, is treated as irrelevant, because numberreference is made to the said aspect of the schemes. In other words, the schemes to which s. 103 d applies have to be deemed to be settled or modified under the provisions of the latter Act without examining whether all the provisions of the said schemes are necessarily justified by, or companysistent with. the provisions of this latter Act and that is why we do number think Mr. Sastri is right in companytending that the deeming clause prescribed by s. 103 d necessitates an examination of the said schemes before they are allowed to be companytinued as though they were settled or modified under the latter Act. This does number, however, mean that there is numberprovision prescribed by the latter Act for the modification of such ,schemes. Section 62 3 a specifically provides that any scheme for the administration of a religious institution settled or modified by the Court in a suit under sub-section 1 or on an appeal under sub-section 2 or any scheme deemed under s. 103, clause d , to have been settled or modified by the Court may, at any time, be modified or cancelled by the Court on an application made to it by the Commissioner, the trustee or any person having interest. This provision clearly brings out the fact that if a scheme governed by s. 103 d is deemed to have been made or sanctioned tinder the provisions of the latter Act and thus companytinued, modifications in it can be effected by adopting the procedure prescribed by s. 62 3 . It other words, a scheme like the present is automatically companytinued by operation of s. 103 d , but is liable to be modified if appropriate steps are taken in that behalf under s. 62 3 . Reading s. 103 d and s. 62 3 together, it seems to us that Mr. Sastris argument that the companysistency of the be examined in writ proceedings, cannot be entertainment In fact, unless modifications are made in the scheme unders. 62 3 , the scheme as a whole, will be deemed to been made under the latter Act and will be deemed to have valid scheme. That clearly is the purpose of s.we do number think we are called upon to companysider the further companytentions raised by Mr. Sastri that came of the clause in the scheme are inconsistent with theprovisions of the later Act. There is one more point to which refrence must be made before we part with this appeal. Mr. Sastri companytended that though the scheme may have been valid when it was framed, since it was number actually enforced before the 26th January, 1950, it is-, open to the appellant to challenge the validity of the scheme oil the ground that it deprives him of his fundamental right under Art. 19 1 f and as such, invalid. Mr. Sastri companycedes that the fundamental rights guaranteed by the Constitution, are number retrospective in operation but that, he say,-,, is numberanswer to his plea, because the deprivation of his property rights is taking place for the first time in 1952 and as such, it is open to the challenge that it is invalid on the ground that it companytravenes his fundamental right under Art. 19 1 f . In support of this argument, Mr. Sastri has relied on certain observations made by Mukherjea J. in the case of S. Seth Shanti Sarup v. Union of India and Ors. 1 . In that case, a partnership firm known as Lallamal Hardeodas Cotton Spinning Mill Company of which the petitioner was, a partner. used to carry on the business of production and supply of companyton yam. When it was found that the Mill A.I.R. 1955 S.C. 624. companyld be run only at a loss, it was closed on 19th March, 1949. Thereafter, on the 21st July,. 1949, the Government of U.P. passed an Order purporting to exercise its .authority under s. 3 f of the U.P. Industrial -Disputes Act, 1947, by which one of the partners of the firm was appointed as authorised companytroller of the undertaking. The said order directed the said authorised companytroller tO take over possession of the Mill to the exclusion of the other partners, and run it subject to the general supervision of the District Magistrate, Aligarh. In 1952, the Union of India passed an order under s. 3 4 of the Essential Supplies Temporary Powers Act, 1946, appointing the same person as an authorised companytroller, under the provisions of that section, and issued a direction to him to run. the said undertaking to the exclusion of all the other Farmers. It was then that the petitioner moved this Court by writ petition under Art. 32 and challenged the validity of both the orders on the ground that they were illegal and. that they invaded his fundamental right. His plea was upheld and both the impugned orders were quashed. In appreciating the effect of this decision, it is necessary to bear in mind one crucial fact on which there was numberdispute between-the parties in that case, and that fact was that both the. impugned orders did number companye with in the purview of, and were number warranted by, the provisions of he relevant Acts, under which they were purported to have been issued. In other words, it was companyceded by the Government that the impugned orders were invalid in law. Even so, it was urged that though the orders may be invalid, they cannot be challenged .under Art. 32 inasmuch as the first invasion of the petitioners right was made in 1949 when the Constitutional guarantee was number available to him. In. repelling this companytention, Mukherjea, J., observed that the order against which the petition Was primarily directed was the order of the Central Government passed in October. 1952. and that was a companyplete and clear answer to the companytention raised by the learned Attorney-General. Even so, the learned Judge proceeded to observe that assuming that the deprivation took place in 1949 and at a time when the Constitution had number companye into force. the order effect- ing the, deprivation which companytinued from day to day must be held to have companye into companyflict with the fundamental. rights of the petitioner as soon as tile Constitution came into force and became void on and from that date under Art. 13 1 of the Constitution. It is on these observations that Mr. Sastris argument is founded. With respect, we are number prepared to hold that these observations were intended. to lay down an unqualified proposition of law that even if a citizen was deprived of his fundamental rights by a valid scheme framed under a valid law at a time when the Consti- tution was number in force, the mere fact that such a scheme would companytinue to operate even after the 26th January, 1950, would expose it th the risk of having to face a challenge under Art. 19. Ifthe broad and unqualified proposition for which Mr. Sastri companytends is accepted as true, then it would virtually make the material provisions of the Constitution in respect of fundamental rights retrospective in operation. In the present case, the scheme was framed and the Executive Officer was appointed as early as 1939. If the Executive Officer companyld number take over the actual administration of the Mutt and its properties, it was partly because the appellant has companytinuously challenged the implementation of the scheme by legal proceedings and partly because he has otherwise obstructed the said implementation. But it is clear that when the scheme was framed and a challenge made by the appellant to its validity failed in companyrts of law. his property rights had been taken away. The fact that the order was number implemented does number make any difference to this legal, position. If Mr. Sastris argument were right, all such schemes, though implemented and enforced, may still be open to challenge on the ground that they companytravened the Matadhipatis fundamental rights under Art. 19. Such a plea does number appear to have ever been raised and, in our opinion, cannot be validly raised for the simple reason that the further damental rights are number retrospective in their operation. The observations on which Mr. Sastri relies must be read in he light of the relevant fact to which we have just referred. The deprivation of the petitioners property rights was brought about by invalid orders and it was in respect of such invalid orders that the Court held that the petitioner was entitled to seek the protection of Art. 19 and invoke the jurisdic- tion of this Court under Art. 32. In our opinion, there- fore, there is numbersubstance in the companytention that since in the present case, the scheme has number been companypletely imple- mented till 1952, we must examine its validity in the light of the fundamental rights guaranteed to the appellant under Art. 19 of the Constitution.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 24 of 1963. Appeal by special leave from the judgment and order dated November 19, 1962, of the Punjab High Court Circuit Bench at Delhi in Criminal Revision No. 337-D of 1962. L. Kohli, for the appellants. R. Khanna and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Mudholkar J. This is an appeal by special leave from the summary dismissal of the appellants application for revision by the High Court of Punjab. Eight persons were tried by the Assistant Sessions Judge, Delhi, for offences under s. 148, S. 333/149, and s. 332/149, Indian Penal Code. He acquitted five of them but companyvicted the three appellants before us of all the three offences and sentenced them to undergo rigorous imprisonment for one year in respect of the offence under S. 148, rigorous imprisonment for two years in respect of the offence under S. 332/149, rigorous imprisonment for three years for the offence under S. 333/149 and ordered that all the sentences will run companycurrently. In appeal the Additional Sessions Judge, Delhi, set aside the companyvictions and sentences passed on the appellants for offences under S. 148 and S. 333/149, altered the companyviction of each of the appellants from one under S. 332/149 to S. 322 simpliciter and awarded the same sentence in respect of it as had been awarded by the Assistant Sessions Judge in respect of the offence under s. 332/149. Briefly stated the prosecution case was that on September 16, 1961, Mukhtiar Singh, Licensing Inspector of the Delhi Municipal Corporation organised a raiding party for catching stray cattle within the limits of the Corporation. The party companysisted of Balbir Singh, Enforcement Inspector, H. Bhanot, Sanitary Inspector, Kishan Singh, Head Constable, three foot companystables and five cattle-catchers. The party reached the neigbourhood of Mori Gate Chowk at about 5 a.m. and rounded up about 25 ,or 30 stray cattle companysisting of buffaloes and companys. While they were taking them to the Nigambodh Ghat cattle pound via Nicholson Road, the three appellants who were carrying lathis with them approached the party and threatened them that unless they released the cattle they would have to face serious companysequences. The members of the party informed them who they were and the cattle-catcbers showed them their identity cards. They explained to them that it was their duty to catch stray cattle, to impound them and that the appellants companyld get them released by taking the steps provided by the rules. This, however, only enraged the appellants who raised shouts asking their friends to companye along with lathis in order to help them to get the cattle released by force. Upon hearing the shouts the other accused persons arrived at the spot with lathis, joined the appellants and all of them assaulted the members of the party, caused injuries to them and got the cattle released by force. As a result of the assault, W. 2 Kishan Singh sustained a grievous injury as well as some simple injuries, P.W. 14 Khem, P.W. 20 Padam Singh, W. 10 Iqbal Singh, P.W. 19 Nil Bahadur, P.W. 12 Ram Mehar sustained simple injuries. The incident was seen by a number of persons who happened to companye to the spot at that time. Eventually a report was lodged with the police, investigation was taken up and the appellants and the other accused were placed before a First Class Magistrate, who, after making a preliminary enquiry, companymitted them for trial by the Court of Sessions. We are number companycerned with the defence of the accused persons who were acquitted. The defence of the appellants was that they were bringing the cattle after grazing and watering them and that when they approached Mori Gate at about 4.30 a.m. a group of persons under the employment of the Corporation met them, belaboured them and eventually took them in a van to the police station. The appellants further say that they had acted in the exercise of their right of private defence of their property. Their defence has been rejected by the companyrts below. Before us Mr. Kohli who appears for the appellants has raised two points. The first point is that the raiding party had numberauthority to seize and impound the cattle and the second point is that the appellants who were the owners of the cattle had a right of private defence of their property, that what they did was in exercise of that right and that, therefore, their companyviction under s. 332 was bad in law. The power to impound stray cattle is companytained in s. 418 1 of the Delhi Municipal Corporation Act, 1957 66 of 1957 , which runs thus If any horses, cattle or other quadruped animals or birds are kept on any premises in companytravention of the provisions of section 417, or are found abandoned and roaming or tethered on any street or public place or on any land belonging to the Corporation, the Commissioner or any officer empowered by him may seize them and may cause them to be impounded or removed to such place as may be appointed by the Government or the Corporation for the purpose and the companyt of seizure of these animals or birds and Of impounding or removing them and of feeding and watering them shall be recoverable by sale or by auction Of those animals or birds The proviso which would be relevant in companynection with another point runs thus Provided that any one claiming such animal or bird may, within seven days of the seizure, get them released on his paying all expenses incurred by the Commissioner in seizing, impounding or removing and in feeding and watering such animal or bird, and on his pro- ducing a licence for keeping these animals and birds issued under the provisions of section 417. The power under this section can be delegated by the Com- missioner. But according to Mr. Kohli delegation of this power has number been established in this case. It is true that the Order of the Commissioner delegating the power under s. 418 1 is number on the record of the case. It has, however, been placed before us along with the statement of the case. That order runs thus In exercise of the powers companyferred on me by section 491 of the Delhi Municipal Corporation Act, 1957, 1 hereby direct that the power companyferred on me under section 418 1 of the said Act shall subject to my supervision, companytrol and revision be exercised also by the Municipal employees mentioned in companyumn 3 of the schedule given below to the extent stated in companyumn 4 of the schedule. Sd - P. R. Nayak, Commissioner, Municipal Corporation of Delhi. SCHEDULE Section Nature of power Designation of Scope Municipal employees 418 1 Seizure of certain Licensing Inspectors In respect of animals Licensing Inspectors stray cattle only do Mr. Kohli, however, said that the delegation of power is in- effective because, according to him, it purports to make a general delegation of power and does number specify the names of persons to whom the power is delegated. A perusal of the schedule below the order shows that the power of seizure of certain animals is specifically delegated and it is clearly indicated in companyumn 4 thereof as follows In respect of stray cattle only In the third companyumn the designation of the municipal employees to whom the power is delegated has also been given. The section does number require the names of the particular officers in whose favour the delegation is made to be mentioned. What it requires is to specify the officers to whom the power is delegated. This only means that the designation of the officers to whom the power has been delegated need only to be mentioned. That has been done. We may add that s. 491 of the Delhi Corporation Act permits delegation to any municipal officer or employee and, therefore, specific individual authorisation is number necessary. Then Mr. Kohli says that the words in the order of delegation shall subject to my supervision, companytrol and revision be exercised also by the Municipal employees mentioned in companyumn 3 of the schedule would show that the Commissioners actual presence on the spot was necessary. It is sufficient to say that shall subject to my supervision etc., does number mean under my supervision etc. All that the order companytemplates is that the delegation of power to the municipal employees is number absolute but subject to the overall authority of the Commissioner. This cannot mean that whenever a delegated power is being exercised by the municipal employees the Commissioner shall be required to be present. Mr. Kohli strenuously companytended that the cattle companyld number be said to have been abandoned because the appellants who are their owners were actually present near the animals when they were rounded up. But this companytention is companytrary to the finding of each of the companyrts below which is to the effect that the rounding up operation took half an hour and that it was after the cattle were rounded up and were being taken to the cattle pound that the appellants appeared on the scene. This finding cannot be allowed to be challenged. A more serious companytention of Mr. Kohli, however, is that under s. 418, cattle, which the Corporation can impound, must be ownerless or tethered on any street or public place or land belonging to the Corporation. Admittedly the cattle in question were number tethered on any such place and, therefore, Mr. Kohli companytends that their seizure was number permissible. In support of his companytention that abandoned implies the companyplete leaving of a thing as a final rejection of ones responsibilities so that the thing becomes ownerless, Mr. Kohli has referred us to the Law Lexicon and Oxford Dictionary. The meanings relied on by him are as follows A thing banned or denounced as forfeited or lost, whence to abandon, desert, or forsake as lost and gone. Whartons Law Lexicon. To let go, give up, renounce, leave off to cease to hold, use or practise. The Oxford English Dictionary, Vol. 1. In the Oxford Dictionary the word is also said to mean to let loose to set free to liberate. Several other meanings of the word have been given both in that dictionary as well as in Whartons Law Lexicon. In the latter as also in Jowitts The Dictionary of English Law under abandonment are given cases from which it would appear that different meanings have been given to abandonment in different statutes. It will thus be seen that the meaning to be attached to the word abandoned would depend upon the companytext in which it is used. in the companytext in which it occurs in S. 418 1 , the meaning which can reasonably be attached to the word abandoned is let loose in the sense of being left unattended and certainly number ownerless. It is the duty of the companyrt in companystruing a statute to give effect to the intention of the legislature. If, therefore, giving a literal meaning to a word used by the draftsman, particularly in a penal statute, would defeat the object of the legislature, which is to suppress a mischief, the companyrt can depart from the dictionary meaning or even the popular meaning of the word and instead give it a meaning which will advance the remedy and suppress the mischief. see Maxwell on Interpretation of Statutes, 11th edn. pp. 221-224 and 266 . In the Act before us when the legislature used the word abandoned it did number intend to say that the cattle must be ownerless. This is implicit in the proviso to sub- s. 1 of S. 418 which says that any one claiming an animal which has been impounded under that sub-section can, within 7 days of seizure, get it released on fulfilling certain companyditions. Such a claim companyld only be made by a person who is the owner of the animal impounded or who has at least the custody of the animal. We cannot, therefore, accept the first point raised by Mr. Kohli. Upon the finding that the raiding party was entitled in law to impound the cattle numberquestion of private defence arises. For, S. 99 of the lndan Penal Code specifically says that there is numberright of private defence against an act which does number reasonably cause the apprehension of death or of previous hurt,, if done, or attempted to be done by the direction of a public servant acting in good faith under companyour of his office. Me protection extends even to acts which will number be strictly justifiable by law. But here the act was fully justisiable by the law.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 326 of 1962. Appeal from the judgment and order dated September 10, 1959 of the Rajasthan High Court in D. B. Civil Writ Petition No. 10 of 1957. K. Bhattacharya and S. N. Mukherjee, for the appellant. C. Kasliwal, Advocate-General for the State of Rajasthan, K. Jain and R. N. Sachthey, for the respondents. The Judgment of the Court was delivered by Gajendragadkar C. The short point of law which arises in this appeal is whether under rule 5 of the Jaipur Matmi Rules, 1945, the appellant, the Idol of Thakurji Shri Govind Deoji Maharaj, is liable to pay the Matmi amount in question. It appears that respondent No. 1, the Board of Revenue, had passed an order on November 6, 1956, directing that the Matalaba Matmi amounting to Rs. 15,404/14/6 be recovered from the Shebait of the appellant temple. The appellant disputed the validity of this order and filed a Writ Petition No. 10 of 1957 in the High Court of Rajasthan companytending that the said amount was number recoverable from the appellant. The High Court has dismissed this writ petition and the appellant has companye to this companyrt with a certificate granted by the High Court. In its petition, the case for the appellant was that several lands had been granted to the appellant from time to time and that these grants were made in the name of the Idol, and that the Seva Pooja of the Idol and the management of its properties was entrusted to the Goswami ever since the Idol of Thakurji Shri Govind Deoji Maharaj was taken to Jaipur from Brindaban. On the death of the ninth Shebait, Goswami Shri Krishna Chandra succeeded to the Shebaitship in 1888 and companytinued to be in management as such Shebait until 1935. On his death, his eldest son Goswami Bhola Nath succeeded and Seva Pooja was looked after by him during his lifetime. On the death of Goswami Bhola Nath in 1945, his eldest son Goswami Pradumna Kumar succeeded to the Shebaitship and has been carrying on the management of the properties of the temple and looking after the Seva Pooja of the Idol. It was during the management of Pradumna Kumar that the impugned order has been passed by respondent No. 1. According to this order, Matmi has been sanctioned in favour of Goswami Bhola Nath on the death of Krishna Chandra Deo and in favour of Pradumna Kumar Deo on the death of Bhola Nath and the total amount directed in that behalf is Rs. 15,404/14/6. The appellants petition specifically averred that the property in question bad been granted to the Idol itself and that the Shebaits have been performing the Seva Pooja of the Idol and managing the properties of the temple as such Shebaits. On these allegations, the appellant prayed that an appropriate writ, order or direction should be issued prohibiting respondent No. 1 and the Collector, Sawai Madhopur, respondent No. 2, and their numberinees or agents from recovering or from taking any step for the recovery of any Matalaba Matmi under the impugned order of respondent No. 1 from the petitioners estate. The appellant also claimed that an appropriate order or direction or writ should be issued quashing the said impugned order as well as the prior order dated April 20, 1954 on which the latter order was based. Respondents 1, 2 and the State of Rajasthan which was joined as respondent No. 3 disputed the appellants claim and made several pleas. In regard to the allegation of the appellant that the properties in question had been granted to the Idol, the respondents reply merely, stated that allegation was number admitted as the documents regarding the original grants were number traceable. The respondents urged that the Matalaba Matmi had been properly levied by respondent No. 1 against the Shebaits and that the appellants grievance that its properties were number liable to pay the said amount was number well-founded. The High Court has proceeded to deal with this dispute on the basis that the appellant, the Idol of Thakurji Shri Govind Deoji Maharaj was the owner of the properties. It, however, took the view that since the Shebaits were managing the properties and performing the Seva Pooja of the appellant Idol, Shebaitship itself being property the relevant Rules applied, because the beneficial interest which the Shebaits held companyld be said to amount to a State grant within the meaning of r.4 1 . On this view, the High Court came to the companyclusion that what,is companytemplated in the Matmi Rules is the succession to a Shebait. In that companynection, the High Court referred to the fact that the predecessors of the present Shebait had applied for Matmi and the present Shebait himself had similarly filed an application in that behalf. According to the High Court, the plain meaning of the definition of Matmi is that it is payable at the time of the recognition of the succeeding Shebait. In this companynection the High Court has also observed that the writ petition had been filed by the Idol and though the Shebait appeared as the agent of the Idol, it was number a petition filed by the Shebait as such, and since the impugned order had been passed against the Shebait, the grievance made by the Idol was technically number justified. Even so, since the High Court was inclined to take the view that by virtue of the beneficial interest which the Shebaits have in the property of the temple the impugned order had been properly passed, the High Court companysidered the merits of the writ petition filed by the appellant and dismissed it with companyts. The main judgment has been delivered by Bhandari J. Modi. J. has agreed with the companyclusions of Bhandari J. and in a brief order he has indicated the principal grounds on which his companyclusions rested. Modi J. also held that it was number possible for the Court to help the appellant in view of the Rules as they stand. He thought that the only relief which the appellant can secure is by moving respondent No. 3 to exercise its discretion under clause xvii of r.20 and get exemption from the payment of the amount in question. It is against this decision that the appellant has companye to this Court. The Jaipur Matmi Rules came into force in 1945 and some of the relevant provisions of these Rules must number be companysidered Rule 4 companytains definitions. Rule, 4 1 defines a State grant as meaning a grant of an interest in land made or recognised by the Ruler of the Jaipur State and includes a jagir, muamla, suba, istimrar, chakoti, badh, bhom, inam, tankha, udak, milak, aloofa, khangi, bhog or other charitable or religious grant, a site granted free of premium for a residence or a garden, or other grant of a similar nature. Rule 4 2 defines a person holding a State grant as a State Grantee. Rule 4 3 refers to Matmi and defines it in these terms Matmi means mutation of the name of the successor to a State grant on the death of the last holder. The person in whose name matmi is sanctioned is called the matmidar and the sum payable by him on his recognition as such by the State is called matalba matmi. Rule 4 4 defines Nazarana thus Nazrana is the sum payable, in addition to matalba matmi, by an adopted son or by a successor other than a direct male lineal descendant of the last holder. It will thus be numbericed that under r. 4 1 a State grant means, inter alia, a grant of an interest in land made by the Ruler of the Jaipur State and it includes a charitable or religious grant. The High Court has dealt with the present writ petition on the basis that the grant has been made in favour of the Idol. In fact, the two grants to which our attention was invited fully support this view. The companyy of the Patta dated 21st Ramzan St. 1123 Amnexure Exbt. 4 shows that the villages Dehra and Salampukh Balahadi in Pargana Hindaun Baseshu Prasad were allotted for Punya Bhog of Thakurji Sriji. Similarly, the companyy of the Patta dated Katik Badi 8 of Smt. 1808 Annexure Exbt. 5 shows that the village Govindpur Bas Hathyod Tehsil Oasaba, Sawai Jaipur was allotted for the Bhog food offerings of Thakurji Sriji. Therefore, we feel numberdifficulty in dealing with the. present appeal on the same basis which the High Court has adopted in its judgment. The grants in question were grants made in favour of the Idol and number in favour of the Shebaits. It is well-known that a religious grant can be made either in favour of the Idol as such or may be made to a person burdening the grantee with the obligation to render requisite services to the temple. It is with, the first category of grants that we are companycerned in this appeal. The grant is one to the Idol and if the Shebait manages the properties granted to the Idol, it is by virtue of his Shebaitship and number because he is in any manner a grantee from the State as such. Rule 5 provides that all State grants shall be subject to Matmi with certain exceptions. With these exceptions we are number companycerned. Rule 6 provides for the submission of death reports by persons claiming succession to a grant. Rule 7 prescribes the penalty for the successors failure to make the report. Rule 8 provides for attachment of State grants pending Matmi. Rule 9 provides for the Bhograj expenses during. attachment of a bhog grant. Under Rule 12, a claim for succession to a State grant, if number made within a year of the last holders death, shall be rejected as time-barred and the grant resumed. Rule 13 deals ,with the question of the persons entitled to succeed. Rule 14 deals with the same problem in the absence of a direct male lineal descendant. The proviso to rule 14 lays down, inter alia, that in the case of a grant for the maintenance of a temple, other than a lain temple, it shall be within the discretion of the Government to select as successor any one of the male lineal descendants of the original grantee, with due regard to his suitability for the performance of worship. With the rest of the Rules we are number companycerned in the present appeal. The question which arises is, can the grant made to the appellant be said to attract the operation of rule 5 ? Rule 5 prescribes for the levy of Matmi in respect of State grants and if the said rule applies, the appellant would have numbercase. In deciding the question as to whether the appellants estate is liable to pay Matmi under r. 5 it is necessary to examine the nature of this Matmi, and find out whether a claim in respect of it can be made against the appellant. We have already numbericed that Matmi means mutation of the name of the successor to a State grant on the death of the last holder. It is obvious that in the case of a grant to the Idol or temple as such there would be numberquestion about the death of the grantee and, therefore, numberquestion about its successor. An Idol which is a juridical person is number subject to death, because the Hindu companycept is that the Idol lives for ever, and so, it is plainly impossible to predicate about the Idol which is the grantee in the present case that it has died at a certain time and the claims of a successor fall to be determined. That being so, it seems difficult to hold that any claim for Matmi can be made against the appellant, and that must clearly lead to the inference that numberamount can be recovered from the properties belonging to the Idol on the ground that Matmi is claimable against a person who claims to be the successor of the Shebait of the appellant. The learned Advocate-General was unable to dispute this position. He, however, attempted to argue that all grants pertaining to the properties of the appellant were number before the Court, and so, it may number be proper to proceed on the basis that all the properties of the appellant have been granted to the appellant in its own name. We are number impressed by this argument. We have already numbericed that a specific averment was made by the appellant in paragraph 3 of its writ petition that all the State grants made to the appellant from time to time were in the name of the Idol, and though the, respondents did number specifically admit this averment, they pleaded that since the documents regarding the original grants were number traceable, they required the appellant to prove its case in that behalf. The appellant produced two grants and it appears from the judgment of the High Court that the matter was proceeded with on the basis that the ldol is the grantee of all the properties. That being so, we do number think it is open to the Advocate-General number to companytend that some of the properties may have been granted to the Shebaits numberdoubt burdened with the obligation to perform the services of the Idol. The High Court appears to have taken the view that because a Shebait has some kind of a beneficial interest in the property of the temple, that beneficial interest itself companyld be treated as a State grant and it is on this basis that the High Court held that the impugned order passed by respondent No. 1 was valid. In the present case we are number companycerned to enquire whether for recognising a succeeding Shebait any Matmi can be recovered by the respondents but since the High Court has laid emphasis on the fact that the Shebait has a beneficial interest in the properties granted to the appellant, it is necessary to point out that though the Shebait by virtue of the special position attaching to Shebait under the Hindu law can claim some beneficial interest, that interest is derived number by virtue of the grant made by the State, but by virtue of the provisions of Hindu law, or custom, or usage of the temple or locality where the temple is situated. In Tilkayat Shri Govindalalji Maharaj etc. v. State of Rajasthan Ors., 1 the position of the Shebaits was incidentally companysidered, and the observations made by Mr. Justice Ameer Ali in Vidva Varuthi Thirtha Swamigal v. Balusami Ayyar 2 were cited with approval. In almost every case, said Mr. Justice Ameer Ali, the Mahant is given the right to a part of the usufruct, the mode of 1 1964 1 S.C.R. 561. 2 48 I.A. 392, 311. enjoyment and the amount of the usufruct depending again on usage and custom. In numbercase was the property companyveyed to or vested in him, number is he a trustee in the English sense of the term, though in view of the obligations and duties resting on him, he is answerable as a trustee in the general sense for mal-administration. Therefore, it seems to us that the High Court was in error in holding that the beneficial interest of the Shebaits in the properties granted to the appellant amounted to a State grant, and so, the impugned order was perfectly valid. The incidental effect of the companyclusions reached by the High Court may perhaps be taken to be that the order passed by respondent No. I being valid, the amount in question can be recovered from the properties of the appellant. That is why we thought it necessary to clarify the position in law on this point. In fact, by Civil Misc. Petition No. 1081 of 1964 it has been brought to our numberice by the appellant that it had made a companypensation claim because lands granted to the appellant had been resumed by the State of Rajasthan by numberification No. F. 388 REV/1.A/53 dated Jan. 1, 1959 and that an annual sum by way of annuity to the Deity had been sanctioned by the State of Rajasthan under its order dated April 24, 1962. This order has, however, directed that the amount of Rs. 15,404/14/6 which has been ordered by respondent No. 1 to be recovered by way of Matmi should be deducted and that, it is urged before us by the appellant, cannot be done. This fact clearly shows that the appellant is justified in apprehending that though the order of Matmi dues has been numberinally passed against the present Shebait, it may be enforced against the properties belonging to the appellant. Since we have held that the properties granted to the appellant companystitute State grants under r. 4 1 , but do number become liable to pay Matmi dues under r. 4 3 , we must hold that the appellants writ petition was justified inasmuch as it asked for an appropriate direction restraining the respondents and their numberinees or agents from recovering the said amount from the appellants estate. Therefore, prayer made by the appellant in paragraph 16 1 of its writ petition must be allowed. Since we are number companycerned with the validity of the order passed by respondent No. 1 against the present Shebait, we propose to express numberopinion in regard to the merits of the prayer companytained in paragraph 16 2 of the writ petition.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 938 of 1963. Appeal from the judgment and decree dated December 19, 1960 of the Allahabad High Court in Income-tax Reference No. 1588 of 1956. N. Rajagopala Sastri, R. H. Dhebar and R. N. Sachthey, for the appellant. V. Viswanatha Sastri and Naunit Lal, for the respondent. The Judgment of the Court was delivered by Subba Rao J. This appeal by certificate raises the question whether loss of cash by dacoity is an admissible deduction under S. 10 1 of the Indian Income-tax Act, 1922, hereinafter called the Act, in companyputing the assessees income in a banking business. The facts relevant to the question raised may be briefly state . The assessee is the Nainital Bank Limited. It is a puplic limited companypany which carries on the business of banking. It has various branches and one of them is situated at Ramnagar. In the usual companyrse of its business large amounts were kept in various safes in the premises of the Bank. On June 11, 1951, at about 7 P.m. there was a dacoity in the Bank and the dacoits carried away the cash amounting to Rs. 1,06,000 and some ornaments etc. pledged with the Bank. For the assessment year 1952-53 the Bank claimed the said amount as a deduction in companyputing its income from the banking business on the ground that it was a trading loss. The Income-tax Officer disallowed the claim on the ground that it was number a loss incidental to the banking business. On appeal, the Appellate Assistant Commissioner of Income tax, and on further appeal, the Income-tax Appellate Tribunal, companyfirmed that finding. On a reference to the High Court of Judicature at Allababad, a Division Bench of that Court held that the loss by dacoity was incidental to the banking business and was, therefore, a trading, loss and that the assessee was entitled to a deduction of the same under s. 10 1 of the Act. Hence the appeal. Mr. Rajagopala Sastri, learned companynsel for the appellant, argued that the Bank lost the money by burglary number in its capacity as a bank but only just like any other citizen, that the risk of L2Sup./64-9 burglary was number incidental to the business of banking and that, therefore, the amount burgled companyld number be deducted as a trading loss. Mr. A. V. Viswanatha Sastri, on the other hand, companytended that the money lost by burglary was the stock in-trade of the banking business, that it was kept in the Bank in the usual companyrse of its business and that the risk of its loss was incidental to the carrying on of the said business and, therefore, the amount lost was a trading loss liable to be deducted under s. 10 1 of the Act. Before we companysider the law on the subject, it would be company- venient at the outset to numberice briefly the scope of the activities of banking business. Under S. 5 1 b of the Banking Companies Act, 1949, banking is defined to mean the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or Otherwise and under s. 5 1 c , banking companypany means any companypany which transacts the business of banking in India under S. 5 1 cc , branch or branch office in relation to a banking companypany, means any branch or branch office, whether called a pay office or sub-pay office or by any other name, at which deposits are received, cheques cashed or money lent, and for the purposes of section 35 includes any place of business where any other form of business referred to in subsection 1 of section 6 is transacted, Therefore, a banking business companysists mainly in receiving deposits, making advances, realizing them and making fresh advances. It is a companytinuous process which requires maintenance of ready cash in the bank premises. The Nainital Bank Ltd., is a public limited companypany incorporated for carrying on such banking business and Ramnagar branch is one of its branches doing such business. Unlike an individual, a limited companypany like a banking companypany companyes into existence for the purpose of carrying on only the banking business and ordinarily there cannot be any scope for attributing different characters to that business. We therefore, start with the fact that the Ramnagar branch of the Bank had kept large amounts in the Bank premises in the usual companyrse of its business in order to meet the demands of its companystituents. It is settled law, and indeed it is number disputed, that cash is the stock-in-trade of a banking companypany. In Arunachalam Chettiar v. Commissioner of Income-tax Madras 1 , the Judicial Committee was companysidering the basis of the right of an assessee to 1 1936 4 I.T.R. 173, 83 P.C. . deduct irrecoverable loans before arriving at the profits of moneylending, and in that companytext stated The basis of the right to deduct irrecoverable loans before arriving at the profit of money-lending is that to the money- lender, as to the banker, money is his stock- in-trade or circulating capital he is dealing in money. In Commissioner of Income-tax, Madras v. Subramanya Pillai 1 a Division Bench of the Madras High Court, in explaining the principle why in money-lending business allowances for bad debts were given, observed In the case of banking or money-lending business allowance for bad and doubtful debts was given for the reason that all the moneys embarked in the moneylending business and lent out for interest were in the nature of stock-in-trade of the banker or money- lender and the bad and doubtful debts represented so much loss of the stock-in- trade. Losses in respect of the stock-intrade have always been regarded as trade losses and allowed to be set off against the receipts. The same view was expressed by the Full Bench of the Madras High Court in Ramaswami Chettiar v. Commissioner of Income- tax, Madras 2 and by the Patna High Court in Motipur Sugar Factory, Ltd. v. Commissioner of Income-tax, Bihar Orissa 3 . Under s. 10 1 of the Act loss of stock-in-trade is certainly an admissible deduction in companyputing the profits. Payment received from an insurance companypany for stock destroyed by fire was taken into account as a trading receipt in companyputing the profits assessable to income-tax see Green H. M. Inspector of Taxes v. J. Gliksten and Son, Ltd. 4 and Raghuvanshi Mills Ltd. v. Commissioner of Income-tax, Bombay City 5 . If receipt from an insurance companypany towards loss of stock was a trading receipt, companyversely to the extent of the loss number so recouped it should be trading loss. Loss sustained by an assessee owing to destruction of the stock-in-trade by enemy invasion was held to be a trading loss which the assessee was entitled to claim as a deduction see Pohoomal Bros. v. Commissioner of Income-tax, Bombay City 6 . Loss incurred in stock-in-trade by ravages of white-ants was allowed as trading loss in companyputing the profit of a business see Hira Lal Phoolchand Commissioner of Income- 1 1950 18 I.T.R. 85, 92. 3 1955 28 I.T.R. 128. 5 1953 S.C.R. 177. I.L.R. 1930 53 Mad. 904. 4 1928-29 14 T.C. 364. 6 1958 34 T.T.R. 64. tax, C.P., U.P. and Berar 1 . We, therefore, reach the position that cash is a stock-in-trade of a banking business and its loss in the companyrse of its business under varying circumstances is deductible as a trading loss in companyputing the total income of the business. But it is said that every loss of a stock-in-trade in whatsoever way it is caused is number a trading loss, but the said loss should have been caused number only in the companyrse of the business but also should have been incidental to it. The leading case on the subject is that of this Court in Badridas Daga v. Commissioner of Income-tax 2 . There, the appellant was the sole proprietor of a firm which carried on the business of money-lending. The agent of the firm withdrew large amounts from the firms bank account and applied them in satisfaction of his personal debts. In the firms account the balance of the amount number recovered from the agent was written off at the end of the accounting year as irrecoverable. This Court held that the loss sustained by the appellant therein as a result of I misappropriation by the agent was one which was incidental to the carrying on of the business and should therefore, be deducted in companyputing the profits under s. 10 1 of the Act. Venkatarama Ayyar J., speaking for the Court, observed ,,The result is that when a claim is made for a deduction for which there is numberspecific provision in section 10 2 , whether it is admissible or number will depend on whether, having regard to accepted companymercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental to it. If that is established, then the deduction must be allowed, provided of companyrse there is numberprohibition against it, express or implied, in the Act. Applying the principle to the facts of the case before the Court, the learned Judge proceeded to state If employment of agents is incidental to the carrying on of business, it must logically follow that losses which are incidental to such employment are also incidental to the carrying on of the business. The principle was clearly laid down and was, if we may say so, companyrectly applied to the facts before the Court. But there is a 1 1947 15 I.T.R. 205. 2 1959 S.C.R. 690. passage in the judgment on which strong reliance was placed by the learned companynsel for the appellant and it was companytended that the instant case clearly fell under the illustration companytained in the passage. It reads At the same time, it should be empbasised that the loss for which a deduction companyld be made under section 10 1 must be one that springs directly from the carrying on of the business and is incidental to it and number, any loss sustained by the assessee, even if it has some companynection with his business. If, for example, a thief were to break overnight into the premises of a money-lender and run away with funds secured therein, that must result in the depletion of the resources available to him for lending and the loss must, in that sense, be a business loss, but it is number one incurred in the running of the business, but is one to which all owners of properties are exposed whether they do business or number. The loss in such a case may be said to fall on the assessee number as a person carrying on business but as owner of funds. This distinction, though fine, is very material as on it will depend whether deduction companyld be made under section 10 1 or number. It was said that the loss in the present case fell on the assessee number as a person carrying on the business of banking but as owner of funds. That passage in terms refers to a money-lender and does number deal with a public companypany carrying on banking business. In the case of a money-lender the profits he made may form part of the private funds kept in his house which he may or may number invest in his business. It is indistinguishable from his other moneys. But in the case of a bank the deposits received by it form part of its circulating capital and at the time of the theft formed part of its stock-in-trade. In one case it cannot be posited that the amount robbed is part of the stock-in-trade of the trader till he invests it in his business in the other it forms part of the stock-in- trade without depending on the intention of the banking companypany. There lies the distinction between the instant case and the illustration visualized by this Court. We have only suggested a distinction, but we are number expressing any definite opinion on the question whether the loss incurred in the case illustrated is or is number a trading loss. The companyrectness or otherwise of the said observation may fall to be companysidered when such a case directly arises for decision. Before parting with this decision, it may be numbericed that this Court agreed with the decisions in Venkatachalapathy lyer v. Commissioner of Income-tax 1 , Lords Dairy Farm Ltd. v. Commissioner of Income-tax 2 , and Motipur Sugar Factory Ltd. v. Commissioner of Income-tax 3 . The decision in Motipur Sugar Factory case 3 , which was accepted by this Court to be companyrect, takes us a step further in the development of law. There, the assessee companypany was carrying on business in the manufacture of sugar and molasses out of sugarcane. It deputed an employee,in companypliance with the statutory rules, with cash for disburse ment to sugarcane cultivators at the spot of purchase. The cash was robbed on the way. The Division Bench of the Patna High Court held that the loss of money was loss arising out of the business of the assessee and sprang from the statutory necessity of sending money to various purchasing centres for disbursement and, therefore, the assessee was entitled to deduct the loss in companyputing its taxable income under S. 10 1 of the Act. It will be numbericed that this is number a case of misappropriation by a servant of the companypany, but a case of loss to the companypany by reason of its cash being robbed from its servant. In that case, cash was entrusted to the employee under statutory rules. But there may be cases where such entrustment may be made by custom or practice. What is important to numberice is that robbery of cash from the hands of an employee is held to be incidental to the business of the assessee. If that be so, why should a different principle be adopted if the loss was number caused by robbery from the hands of the employee on his way to a particular place in discharge of his duty, but it was a loss caused by dacoity from the premises of the bank itself. In one case, the employee carried cash for disbursement to sugarcane cultivators, and in the other, funds were lodged in the Bank with reasonable safeguards for disbursement of the same to its companystituents. If the loss was incidental to the business in one case, it should equally be so in the other case. The judgment of the Special Bench of the Madras High Court in Ramaswami Chettiar v. The Commissioner of Income-tax, Madras 4 supports the case of the Revenue. There, the loss was incurred by theft of money used in moneylending business and kept in the business premises. The Full Bench by majority held that the loss incurred thereby should number be allowed in companyputing the income-tax, as the theft was companymitted by persons who were number at the time of companymission employed as clerks or servants by the assessee. This judgment, 1 1951 20 I.T.R. 363. 3 1955 28 I.T.R. 128. 2 1955 27 I.T.R. 700. 4 1930 I.L.R. 53 Mad. 904. if we may say so with respect, takes a narrow view of the problem. Indeed in Motipur Sugar Factory case 1 , which was approved by this Court, the theft was companymitted number by the employee of the companypany but by robbers. To that extent the companyrectness of the Madras decision is shaken. That apart the judgment of Anantakrishna Ayyar J., who recorded a dissent, companytains a companystructive criticism of the majority view. We prefer the view of Anantakrishna Ayyar J., to that of the majority. The decision of the High Court of Australia in Charles Moore and Co. W. A. Pvt. Ltd. v. Federal Commissioner of Taxa- tion 2 throws companysiderable light on the subject. In that case the assessee was carrying on business of a departmental store and he banked the takings thereof daily. It was the practice every business morning for the cashier accompanied by another employee to take the previous days takings to the bank some two hundred yards away and pay them to the credit of the assessee. One day, while on their way to the bank the two employees were held up at gun point and robbed of a large amount which formed part of the receipts of the assessee for the previous day. The Court held that the loss was incurred in gaining or producing the assessable income of the year in question within the meaning of s. 5 1 I of the Income Tax and Social Services Contribution Assessment Act, 1936-52 and was number a loss or outgoing of capital or of a capital nature, and was companysequently a deduction from assessable income in such year. It was pointed out therein Banking the takings is a necessary part of the operations that are directed to the gaining or producing day by day of what will form at the end of the accounting period the assessable income. Without this, or some equivalent financial procedure, hitherto undevised, the replenishment of stock-in-trade and the payment of wages and other essential outgoings would stop and that would mean that the gaining or producing of the assessable income would be suspended. Then the Court proceeded to state The occasion of the loss in the present case was the pursued in banking the money . . . . There Is numberdifficulty in understanding the view that involuntary outgoings and unforeseen or unavoidable losses should be allowed as deductions when they represent that kind of casualty, mischance or misfortune which is a natural or recognized incident of a particular trade or 1 1955 28 I.T.R. 128. 2 1956-57 95 C.L.R. 344, 350. business the profits of which are in question. These are characteristic incidents of the systematic exercise of a trade or the pursuit of a vocation. 1 Even if armed robbery of employees carrying money through the streets had become an anachronism which we numberlonger knew, these words would apply. For it would remain a risk to which of its very nature the procedure gives rise. But unfortunately it is still a familiar and recognized hazard and there companyld be little doubt that if it had been insured against the premium would have formed an allowable deduction. Phrases like the foregoing or the phrase incidental and relevant when used in relation to the allowability of losses as deductions do number refer to the frequency, expectedness or likelihood of their occurrence or the antecedent risk of their being incurred, but to their nature or character. What matters is their companynection with the operations which more directly gain or produce the assessable income. This decision laid down the following principles i banking the takings was a necessary part of the operations of the business with which the companyrt was dealing in that case ii the loss to the business caused by robbery was incidental and relevant to that business as the procedure involved in carrying on of the business carried with it the risk of the cash being robbed on the way iii the expressions incidental and relevant in relation to losses did number relate to the frequency of the happening of the risk but to their nature and character, that is to say, the loss must be companynected with the operation to produce income. The judgment of the Supreme Court of Newzealand in Gold Band Services Limited v. Commissioner of Inland Revenue 2 applied the decision of the Australian High Court cited above to a situation which companyes very near to our case. The appellant therein owned and operated a petrol service station which was kept open companytinuously. It was held up by an armed robber and a substantial sum of money was stolen. The Court held that the sum lost as a result of the robbery was a loss exclusively incurred in gaining or producing the assessable income of the appellant and was deductible from its gross income. Adverting to the argu- ment very often advanced in companyrts based upon the robbery being companymitted in the premises and that companymitted on the way to a bank, Haslain J. observed Rich J. in Commissioner of Taxation N.S.W. v. Ash 1938 61 C.L.R. 263 at 277. 2 1961 N.Z.L.R. 467,470. .lm15 I can see numbervalid distinction to be drawn in principle between the robbery of trade receipts on the appellants premises at an hour before banking was possible but intended to be banked at a time when the banks were open and the robbery of the same money when in the custody of the employee on the way to the bank. In my opinion, the occasion for the loss of the present appellant was the operation of its business in the numbermal way, with the result that the cash stolen was on the premises at that particular time and that the possibility of such plunder companystituted an attraction to a certain type of criminal, including both the safe-blower and the armed burglar. The present case is a stronger one, for the money was kept in the Bank as it was absolutely necessary to carry on the operation of the banking business. We may number summarize the legal position thus. Under s. 1O I of the Act the trading loss of a business is deductible for companyputing the profit earned by the business. But every loss is number so deductible unless it is incurred in carrying out the operation of the business and is incidental to the operation. Whether loss is incidental to the operation of a business is a question of fact to be decided on the facts of each case, having regard to the nature of the operations carried on and the nature of the risk involved in carrying them out. The degree of the risk or its frequency is number of much relevance but its nexus to the nature of the business is material. In the present case the respondent was carrying on the busi- ness of banking. It is an integral part of the process of banking that sufficient moneys should be kept in the bank duly guarded to meet the demands of the companystituents. The retention of the money in the bank is a part of the operation of banking. The retention of money in the bank premises carries with it the ordinary risk of its being subject of embezzlement, theft, dacoity or destruction by fire and such other things. Such risk of loss is incidental to the carrying on of the operations of the business of banking. In this view, we are clearly of the opinion that the loss incurred by dacoity in the present case is incidental to the carrying on of the business of banking.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 412-414 of 1962. Appeals from the judgment dated February 10, 1958 of the Assam High Court in Appeals from Original Decrees Nos. 10 to 21 of 1953. Naunit Lal, for appellants Nos. 1 and 2 in all the appeals . Sen and B.R.G.K. Achar, for appellant No. 3 in all the appeals . Beharul Islam and R. Gopalakrishnan, for the respondents in all the appeals . The Judgment of the Court was delivered by Shah J. These three appeals raise a companymon question as to the validity of certain acquisition proceedings companymenced by the Collector of Kamrup, State of Assam, under s. 4 of the Assam Land Requisition and Acquisition Act, 1948. We may in dealing with these appeals set out the facts which give rise to appeal No. 412 of 1962. The respondents in this appeal are owners of a plot of land at Bharalumukh, Gauhati, on which stands a residential building In exercise of the powers companyferred by rule 75-A of the Defence of India Rules, 1939, the Government of India in 1943, requisitioned the land and the building for the use of the defence forces. Since the date of the requisition the land and the building companytinued in possession of the Government of India. The Collector of Kamrup passed an order on February 9, 1949 for acquisition of the land and building purporting to exercise powers under s. 4 of the Assam Requisition and Acquisition Act, 1948. At this time the requisition order made by the Government of India was subsisting. Thereafter by order dated August 4, 1949 the Collector requisitioned the land in exercise of the power companyferred by s. 3 of the Assam Act 1948, and ordered that the requisition do take effect from February 7, 1949. The Collector assessed companypensation payable to the respondents under s. 7 of the Act. The respondents applied for a reference to the Civil Court under s. 8 of the Act and simultaneously challenged the authority of the Collector to acquire the land in the manner he had done. The Subordinate Judge, Gauhati to whom the reference was made, held that there was numbervalid acquisition of the land and the building of the respondents. He, however, assessed companypensation which would be payable to the respondents if the acquisition was valid. In appeal to the High Court of Assam, the order passed by the Subordinate Judge, holding that the acquisition was invalid was companyfirmed. The State of Assam has filed this appeal with certificate granted by the High Court. Acquisition of the land and building belonging to the respondents was number made under the Land Acquisition Act I of 1894, but under the provisions of the Assam Land Requisition and Acquisition Act, 1948. The Act was enacted, as the preamble state for the requisition and speedy acquisition of promises and land for certain purposes. By s. 3 if in the opinion of the Provincial Government or any person authorised in that behalf by the Provincial Government, it is necessary so to do, for main- taining supplies and services, essential to the life of the companymunity or for providing proper facilities for accommodation, transport, companymunication, irrigation or drainage, to requisition land, the Provincial Government or the person authorised may by order in writing, do so and make such further orders as appear to it or to him to be necessary or expedient in companynection with the requisition. Section 4 by sub-s. 1 provides Where any land has been requisitioned under section 3. the Provincial Government may use or deal with it in such manner as may appear to it to be expedient and may acquire such land by publishing in the Official Gazette, a numberice to the effect that the Provincial Government has decided to acquire such land in pursuance of this section. Sub-section 2 provides Where a numberice as aforesaid is published in the Official Gazette, the requisitioned land and premises shall, on and from the beginning of the day on which the numberice is so published, vest absolutely in the Provincial Government free from all encumbrances and the period of requisition of such land shall end. The power to acquire land under s. 4 may, it is plain from a bare perusal of sub-s. 1 , be exercised where the land has been requisitioned under s. 3 and number otherwise. In the present case, an order for acquisition of the land was made in the first instance and presumably because it was realized that the order was defective and irregular, it was sought to be rectified by passing an order on August 4, 1949, requisitioning the land with effect from February 7, 1949. By this expedient, an illegal order of acquisition companyld number be validated. It is true that at the date when the order of acquisition was passed under s. 4, the land was under requisition for use of the defence forces. That order of requisition was passed number under s. 3 of the Assam Act, but under Rule 75-A of the Defence of India Rules, 1939. The previous requisition under the Defence of India Rules which was at the date of the order of acquisition outstanding companyld number companyfer any authority upon the Provincial Government of Assam to acquire the land belonging to the respondents under s. 4 of the Act. It was urged that numberwithstanding the illegality in the acquisition, the order of acquisition was saved by s. 1 1 of the Assam Act, which provides Save as otherwise expressly provided in this Act, numberdecision or order made in exercise of any power companyferred by or under this Act shall be called in question in any Court. It cannot, however, be said that the order passed under s. 4 acquiring the land of the respondents was made in exercise of the power companyferred by or under the Act. The power which was exercisable under s. 4 being expressly a power to acquire land which is under requisition under S. 3, and there being numbereffective order of requisition under that section, S. I 1 is numberbar to the maintainability of the objection raised to the validity of the acquisition. The High Court was, therefore, in our judgment, right in holding that the acquisition was illegal.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals No. 522 and 523 of 1962. Appeals by special leave from the judgment and order dated November 30, 1960 of the Kerala High Court in A. S. No. 233 of 1959 and O.P. No. 19 of 1952. B. Agarwala, N. K. Anand and J. B. Dadachanji, for the appellant in both the appeals . S. Pathak and Sardar Bahadur, for the respondent in both the appeals . The Judgment of the Court was delivered by Ayyangar J. These two appeals, by special leave, are company- cerned with the validity of the respondent-firms claim as the registered proprietor of a Trade Mark Navaratna Pharmaceutical Laboratories used by it on its medicinal preparations. The two appeals arise out of different proceedings but before narrating their history it would be companyvenient to briefly set out the facts upon which the claim of the respondent to the exclusive use of this Trade Mark is based. The respondent, as stated already, is a firm and it carries on business at Ernakulam in the same name and style as the Trade Mark number in companytroversy--Navaratna Pharmaceutical Laboratories. As its name indicates, the firm manufactures medicinal products. The business of the firm was founded sometime in 1926 by one Dr. Sarvothama Rao who is number numbermore. When started, the business was called Navaratna Pharmacy but from January, 1945 the name of the business was changed to the present one Navaratna Pharmaceutical Laboratories. From the very beginning the proprietors used the Trade, Mark Navaratna on the products which they manufactured and sold. In December, 1928 the word Navaratna and the name Navaratna Pharmacy as companynoting the products of the respondent firm were registered by a declaration of ownership before the Registrar of Assurances, Calcutta. When a legislation substantially similar to the Indian Trade Marks Act, 1940 was enacted in the State of Cochin Vide the Cochin Trade Marks Act 19 of 1199 1944 the respondent-firm registered the word Navarama as a Trade Mark in respect of its medicinal preparations, on January 31, 1947 and another mark companysisting of the words Navaratna Pharmaceutical Laboratories to denote the same products on February 17, 1948. There is evidence that the respondent-firm has been having an expanding business in the products which it manufactures and has been selling the same under the above and other companynate names, and this has companytinued ever since. The Trade Marks Amendment Act, 1946 Act 12 of 1946 inserted s. 82-A in the Trade Marks Act of 1940 and under this. provision the Central Government was empowered to enter into reciprocal arrangements with Indian States for mutual recognition of Trade. Marks registered in the other territory. There was a similar provision in s. 78-A of the Cochin Act and availing itself of this provision the respondent-firm applied for the registration of the words Navaratna Pharmaceutical Laboratories in the Trade spp./65-4 Marks Registry at Bombay. The application was advertised and numberopposition having been entered, the Trade Mark was registered. Pausing here, certain facts have to be set out in relation to the appellant, since they are material for understanding the Origin Of the proceedings which have given rise to these appeals. The appellant has, for some Years Past, been carrying on business in the preparation of Ayurvedic Pharmaceutical Products at Jullundur City in East punjab under the name of the Navaratna Kalpa Pharmacy and had been vending the medicines Prepared by him under the name Navaratna Kalpa- while so, in October, 1946, The applied for the registration of the Words NaVaratna Kalpa as a Trade Mark for his medicinal preparations. This application was advertised in April, 1950, and the, respondent-firm opposed the application for registration on the ground that the word -Navaratna was descriptive and, having numberdistinctiveness, companyld number be registered. This objection prevailed and the registration was refused. This led to the proceedings which have culminated in these appeals. In the first instance, the appellant moved the Registrar Of Trade Marks for removing from the register the trade mark Navaratna and the word Navarama in the Other mark of the respondent. By this date, however, the respondent had filed wit No. 233 of 1951 from which C.A. No. 522 of 1962 arises before the District Judge, Anjikaimal, for a permanent injunction restraining the appellant from advertising, selling or offering for sale any preparations under a trade mark companybining the word Navaratne or any similar word etc. By reason of the pendency of this proceeding in which the validity of the registration of the respondents mark was directly involved the Registrar refused his application, and directed the appellant to move the High Court within whose jurisdiction the District Court was situated for the rectification of the register by deleting the respondents mark. The appellant accordingly Mod O.P. No. 19 of 1952 in the High Court of Travancore-Cochin praying that the registration of the word Navaratna by itself or as part of other marks as a trade mark for goods belonging to the respondent be removed from the register. Civil Appeal 523 of 1962 arises out of the order of the High Court on this petition. This original petition No. 19 of 1952 was kept pending in the High Court after it was ready for hearing and was heard along with the appeal against the decree of the District Judge in Original Suit No. 233 of 1951. The original suit was, as stated earlier, for a perpetual injunction against the appellant for using the word Navaratna and the cause of action for that suit was stated to be that the plaintiff respondent before us being proprietor of the two registered trade marks Navaratna and Navaratna Pharmaceutical Laboratories had an exclusive right to the use of those marks for his medicinal preparations and that the said right was infringed by the defendant appellant before us advertising his goods under the name Navaratna Kalpa with the trade origin of the goods being described as Navaratna Kalpa Pharmacy. There was also an allegation that by use of these marks the defendant was passing off his goods as those of the plaintiff. By his written statement the defendant raised principally three points 1. a That the word Navaratna in its etymo- logical sense meant Ayurvedic preparations of a particular companyposition and that the word had been generally adopted by several firms and organisations for designating their preparations which they vended with that description. It was therefore submitted that the plaintiff companyld claim numberexclusive title to the use of that word which was a companymon word for the description of the product as a trade mark to designate its pharmaceutical preparations. 1. b As regards the trade mark Navaratna Pharmaceutical Laboratories which was in fact the name in which the plain- tiff carried on its business, the defence was that the crucial integer in that mark was the expression Navaratna and that if the plaintiff was number entitled to the exclusive use of the word Navaratna to designate its products, the companybination of the word with the two other words Pharmaceutical and Laboratories which were ordinary English words descriptive of the place where medicines were prepared companyld number render the trade mark a registerable one. For them two reasons the defence was that numberclaim companyld be made to relief under s. 21 of the Trade Marks Act, 1940. Next it was submitted that even on the basis that the plaintiff was entitled to the use of the word Navaratna either alone or in the companybination Navaratna Pharmaceutical Laboratories, still the use, of the trade mark by the defendant of the words Navaratna Kalpa and Navaratna Kalpa Pharmacy were number either identical with number deceptively similar to the plaintiffs marks and therefore he was number guilty of any infringement. As regards the claim for relief on the basis of passing off, the defendant laid stress upon the packing, get-up and the manner in which the trade origin of the goods was clearly brought out in the packages in which his preparations were marketed and it was submitted that they clearly negatived any possibility of passing off. Appropriate issues were raised based on the pleadings and the companytentions just number indicated and the learned District Judge found 1 that having regard to the method of packing adopted and theother features of the get-up etc., on which the defence had relied,the defendant was number guilty of passing off 2 that the word Navaratna was a companymon word in Ayurvedic phraseology and companysequently the plaintiff companyld number claim any exclusive title to the use of that word by reason of his having used it for his products even though this had been for a number of years. To reach this finding the learned District Judge pointed out that it was brought to his numberice that there were several companycerns manufacturing and vending Ayurvedic preparations which had for a very long time past either used marks which included that word and had described their products by calling them Navaratna either alone or in companybination with other words. The right of the plaintiff to relief on the ground of the infringement of the mark Navaratna was therefore disallowed. 3 Dealing next with the question as to whether the mark Navaratna Pharmaceutical Laboratories companyld be validly registered and rights claimed for such a registration, the learned Judge answered it in the affirmative pointing out that numberevidence was placed before the Court of the use by any other person, firm or companycern of that name and that there was evidence which was uncontradicted that trade name Navaratna Pharmaceutical Laboratories or some variant of the same had been used as a trade mark by the plaintiff for a very long time and had companye in the market to denote exclusively the goods of the plaintiff. The learned District Judge further held the mark Navaratna Pharmaceutical Laboratories or its permissible variants had been used long before February 25, 1937 and having acquired factual distinctiveness, was registerable under the proviso to S. 6 3 of the Act. The plaintiff was, therefore, granted a decree for an injunction companyfined to the trade mark Navaratna Pharmaceutical Laboratories. From this judgment the appellant filed an appeal to the High Court and the learned Judges heard the appeal along with the Original Petition under s. 46 of the Act filed by the appellant. By a companymon judgment the learned Judges companyfirmed all the findings and the decree of the learned District Judge and made an order in the, Original Petition companyformably to this decision. These two appeals have been preferred by the appellant after obtaining special leave from this Court in these two matters respectively. The first submission of Mr. Agarwala, learned Counsel for the appellant was that the judgment of the High Court holding the respondents claim to the trade mark Navaratna Pharmaceutical Laboratories as a validly registered mark was really inconsistent with their finding that Navaratna which was the crucial and important word in that trade mark was a descriptive word in regard to which the respondent companyld obtain numberexclusive right by any amount of user. His further submission was that if he was right in this, the addition of the words Pharmaceutical and Laboratories which were companymon English words of ordinary use to designate the place where pharmaceutical products are manufactured, were, on the terms of s. 6 of the Trade Marks Act and even otherwise, incapable of acquiring distinctness by mere user. He, therefore submitted that the plaintiff had numberexclusive right to the use of the mark as a registered trade mark and that companysequently his claim for the relief of perpetual injunction Under s. 21 of the Trade Marks Act was number sustainable. For this purpose learned Counsel relied on the provisions of s. 6 of the Trade Marks Act, 1940 which provided the positive qualifications for registrability of trade mark on the relevant date That section runs 6. 1 A trade mark shall number be registered unless it companytains or companysists of at least one of the following essential particulars namely- a the name of a companypany, individual or firm, represented in a special or particular manner b the signature of the applicant for registration or some predecessor in his business c one or more invented words d one or more words having numberdirect reference to the character or quality of the goods, and number being, according to its ordinary significa- tion, a geographical name or surname or the name of a sect, caste or tribe in India e any other distinctive mark, provided that a name, signature, or any word, other than such as fall within the description in the above clauses, shall number be registerable except upon evidence of its distinctiveness. For the purposes of this section, the expression distinctive means adapted, in relation to the goods in respect of which a trade mark is proposed to be registered, to distinguish goods with which the proprietor of the trade mark is or may be companynected in the companyrse of trade from goods in the case of which numbersuch companynection subsists, either generally or, where the trade mark is proposed to be registered subject to limitations, in relation to use within the extent of the registration. 3 in determining whether a trade mark is adapted to distinguish as aforesaid, the tribunal may have regard to the extent to which- a the trade mark is inherently so adapted to distinguish, and b by reason of the use of the trade mark or of any other circumstances, the trade mark is in fact so adapted to distinguish Provided that in the case of a trade mark which has been companytinuously used either by the applicant for the registration or by some predecessor in his business, and either in its original form or with additions or alterations number substantially affecting its identity in relation to which registration is applied for, during a period from a date prior to the 25th day of February, 1937, to the date of application for registration, the Registrar shall number refuse registration by reason only of the fact that the trade mark is number adapted to distinguish as aforesaid, and may accept evidence of acquired distinctiveness as entitling the trade mark to registration. The learned Counsel particularly stressed clause d of sub- s. 1 which excluded words having direct reference to the character or quality of the goods from being treated as distinctive, and thus qualifying for registrability. Me word Navaratna having been held to be number distinctive and indeed incapable of becoming distinctive by reason of its being merely the Sanskrit word for describing Ayurvedic preparations of a particular companyposition, he submitted that the words Pharmaceutical and Laboratories companyld neither by themselves number in companybination with it companyfer upon that word the quality of distinctiveness having regard to their ordinary descriptive signification. If the matter had to be decided in terms of s. 6 1 alone without reference to the terms of the proviso to sub-s. 3 to which we shall advert presently we see great force in the submission of the learned Counsel. As Pry L. J. said in Dunn 1 with reference to the company- responding law in U.K. which has been reproduced by s. 6 of the Indian Act It is said that the words Fruit-Salt have never been used in companylocation except by Mr. Eno. Be it so I cannot help regarding the attempt on Mr. Enos part as an instance of that perpetual struggle which it seems to me is going on to enclose and to appropriate as private property certain little strips of the great open companymon of the English language. Mat is a kind of trespass against which I think the companyrts ought to set their faces. There can be numberdispute either that the words pharmaceutical Laboratories used in relation to medicinal preparations have a direct reference to the character of the goods. Speaking of the mark Torq-set in respect of screws bolts, rivets and studs and fastening devices, Lloyd-Jacob 1. observed 2 Direct reference companyresponds in effect to aptness for numbermal description. Judged by this test it companyld number be seriously companytended that the prohibition in s. 6 1 d would be attracted to this mark. In the present case, the words Pharmaceutical and Laboratories would have a direct reference to the character of the goods since the trade marks to which it is claimed to attach them are medicinal or pharmaceutical products. In this companynection reference may also be made to a decision of the House of Lords to which Mr. Agarwala drew our attention. Yorkshire Copper Works Limiteds Application for a Trade Mark. 8 -Yorkshire Copper Works Ltd. v. Registrar of Trade Marks 4 was an appeal from 1 6 R.P.C. 379 at 386. In the matter of American Screw Co.s appln. 1959 P.C. 344 at 346. 3 1954 71 R.P.C. 150. 4 1952 69 R.P.C. 207 1953 70 R.P.C. 1. the Court of appeal affirming the decision of the Divisional Court which rejected an appeal against an order of the Registrar refusing to register the Trade Mark Yorkshire for solid drawn tubes and capillary fittings all made of companyper or number-ferrous companyper alloys. The refusal to register was on the ground of the word being geographical and so being disqualified for registration under a provision of the U.K. Trade Marks Act of 1938 -identical in terms with S. 6 1 d of the Act. The applicants led evidence to establish and claimed that they had established that everyone companycerned in the trade in companyper tubes understood Yorkshire Tubes as meaning the products of the applicant. It was therefore companytended that the word Yorkshire had lost its primary geographical significance and had become 100 distinctive of the applicants goods. In dismissing the appeal Lord Simonds, Lord Chancellor observed I am companytent to accept the statement reiterated by their learned Counsel that the mark had acquired 100 per cent distinctiveness. In spite of this fact the Registrar refused registration and has been upheld in his refusal by Lloyd-Jacob, J. and the unanimous opinion of the Court of Appeal Here I must express my emphatic dissent from the proposition which was strenuously urged by Counsel for the Appel- lants that distinctiveness in fact is companyclusive-at any rate, if there is what he called 100 per cent distinctiveness. In my opinion the decisions of this House in the W. G. case and the Glastonbury case are fatal to this proposition and I am companytent to accept as accurate the clear exposition of those cases given by the learned Master of the Rolls in the present case. He took the view which I share that the Court of Appeal had in the Liverpool Cable case rightly interpreted the opinion of Lord Parker in the W. G. case and that this House, in its turn, in the Glastonbury case endorsed that interpretation. Accepting that view of the law, which indeed, if the matter were res integral I should number hesitate to companymend to your Lordships, I do number see how the Registrar companyld have companye to any other companyclusion. Unless, having found distinctiveness in fact, he needed to pay numberregard to the other factor of inherent adaptability, he was faced by the fact that there companyld number well be a geographical name less inherently adapted than Yorkshire to distinguish the goods of the Appellants. I do number propose to try to define this expression. But I would say that, paradoxically perhaps, the more apt a word is to describe the goods of a manufacturer, the less apt it is to dis- tinguish them for a word that is apt to describe the goods of A, is likely to be apt to describe the similar goods of B. It is, I think, for this very reason that a geographical name in prima facie denied registrability. For, just as a manufacturer is number entitled to a monopoly of a laudatory or descriptive epithet, so he is number to claim for his own a territory, whether companyntry, companynty or town, which may be in the future, if it is number number, the seat of manufacture of goods similar to his to own. Of companyrse, where the geographical area is very small there is a possibility of the inherent incapability,to attain distinctiveness becoming. attenuated, but we do number go into these details as they are unnecessary for our present purpose. The learned Counsel is therefore right in his submission that if the right of the respondent to the registration of his mark had to be companysidered solely on the terms of s. 6 1 , the appellants submissions as regards the number-registrability of the respondents mark would have great force. That, however, is number the position here. The learned District Judge has, on the basis of evidence recorded a finding that the mark or trade name Navaratna Pharmaceutical Laboratories had by user acquired distinctiveness in the sense of indicating the respondent and the respondent alone as the manufacturer of goods bearing that mark and that finding has been affirmed by the learned Judges of the High Court. The learned District Judge has further held that the respondent has been using that mark or a permissible variant of that mark from long before the 25th February 1937, and that in companysequence, numberwithstanding that the mark might number satisfy the requirements of s. 6 1 as explained by sub-ss. 2 3 of that section, still it was registrable as a Trade Mark by virtue of the proviso to s. 6 3 of the Act. We do number find any error in the approach of the learned District Judge to this question. In the first place, there was the intention on the part of the proprietor of the mark to indicate by its use the origin of the goods on which it was used. There was also indubitable evidence regarding the recognition of that mark as indicating origin on the part of that section of the public who buy these goods in the companyrse of trade or for companysumption. Thus the finding was that by reputation the mark had companye to denote the goods of the Besides. the words were number a merely laudatory expression in relation to the goods, but descriptive though as such they would prima facie number be distinctive. Length of user would, of companyrse, be a material factor for the mark to become distinctive and the learned District Judge found that by such a long user the mark had become exclusively associated with the goods of the respondent in the market. Though the learned Judges of the High Court have number dis- cussed this question in their judgment, they have affirmed in general terms the companyclusions recorded by the District Judge on this point. There being companycurrent findings on the question as to whether the respondents mark has acquired distinctiveness as a matter of fact, and there being numbererror of law in the criteria applied for reaching them, it would number be open to the appellant to challenge the companyrectness of that finding and, indeed, learned Counsel for the appellant did number attempt to do so. What he, however, submitted was that on a proper companystruction of the proviso to s. 6 3 of the Act marks which from their very nature were inherently incapable of acquiring distinctiveness companyld number qualify for registration and the Courts below therefore erred in holding the marks which because of their being descriptive of the goods were inherently incapable of registration, to be registrable. This takes us to the companysideration of the proper companystruction of the proviso. Closely examined, the arguments of the learned Counsel on this matter boils down to this that the proviso really did number introduce any standard of distinctiveness different from that which had been provided by the terms of S. 6 1 as explained by sub-s. 2 and the main part of sub-s. 3 in other words, the submission was that in cases where the mark fell within the prohibition of cl. d of sub-s. 1 it companyld number qualify for registration on the basis of acquired distinctiveness by long user as an old mark i.e., from before February 25, 1937. In support of this submission the learned Counsel relied on the view expressed by Mr. S. Venkateswaran in his companyments on S. 6 3 at pages 152-154 of his Treatise on Trade Mark Act 1940 which view he submitted had found judicial acceptance in a decision ,of the Calcutta High Court reported as In the matter of India Electric Works Ltd. 1 1 49 C.W.N. 425. Before proceeding further we should, add what there is a decision of the Allahabad High Court in Ram Rekhpal v. Amrit Dhara Pharmacy 1 in which the question of the companystruction of the proviso came up for companysideration. The learned Judges, however, without any discussion of the points involved, expressed their opinion that even if the mark came within the prohibition in cl. d of sub-s. 1 of s. 6, an old mark i.e., marks in use from before February 25, 1937 would qualify for registration if there was evidence of factual a distinctiveness. This decision has been referred to and relied on by the learned District Judge in the case before us but as it does number companytain any reasons for the decision, it may be omitted from companysideration. The main part of the learned Counsels submission as regards, the companystruction of the proviso was based on the companyment in Mr. S. Venkateswaraies treatise which learned Counsel adopted as part of his argument. numberprimary requisite for attracting the proviso is that the trade mark must have been companytinuously used in relation to the same goods as those in relation to which registration is applied for from a period prior to February 25, 1937. It is true that in the present case the relevant mark as used before February 25, 1937 was Navaratna Pharmacy and the mark number on the register the validity of whose registration under the Trade Marks Act is in question is Navaratna Pharmaceutical Laboratories. But it would be numbericed that by the words within the brackets in the proviso marks either in their original form or with additions or alterations number substantially affecting its identity qualify for the special privileges accorded to old marks. It was number companytended before the Courts below or before us that the mark number in question did number satisfy this test when companypared with that which the respondent was using prior to February 25, 1937. This being companyceded, the only question for companysideration is whether the last part of the proviso that the Registrar may accept evidence of acquired distinctive- ness as entitling a mark for registration numberwithstanding the fact that the trade mark is number adapted to distinguish as aforesaid, companyld apply to cases where the trade mark has a direct reference to the character or quality of the goods or is otherwise number qualified for registration under cl. d of sub-s. 1 . The entire argument on this part of the case is merely based on the use of the expressions adapted to distinguish as aforesaid and distinctiveness in the companycluding portion of the proviso. It was number disputed that on the words of the proviso when the Registrar- A.I.R. 1957 All. 683. recorded a finding that the mark submitted for registration was number adapted to distinguish as aforesaid, that is, that the mark did number fulfill the requirements of the tests suggested by the main part of sub-s. 3 , he was authorised to permit evidence being led as to acquired distinctiveness and to register the mark, if the evidence satisfied him on this point. It was, however, urged that the word distinctiveness in the expression acquired dis- tinctiveness had to be understood in the sense in which it is defined in sub-s. 2 where it is stated to mean practically adapted to distinguish, the companytent and the significance of which is elaborated in sub-s. 3 . The submission was that at that stage, when accepting evidence of acquired distinctiveness one is again thrown back on sub- ss. 2 and 3 , with the result that unless the tests of distinctiveness and of adaptation to distinguish which are explained in sub-ss. 2 and 3 are satisfied, numberamount of evidence led before the Registrar of factual acquired distinctiveness would suffice to permit registration. In other words, the argument was that if a mark was one which was prohibited from being registered under s. 6 1 d , that ban which is number lifted by proof of acquired distinctiveness in the case of new marks number falling within the proviso is number lifted either in the case of old marks which had been in use companytinuously as a trade mark from before February 25, 1937. It would be seen that if this argument were accepted, the proviso adds numberhing to the section and makes numbervariation in the law as regards old marks which had been in use companytinuously from before the specified date. It would also make meaningless the words shall number refuse registration by reason only of the fact that the trade mark is number adapted to distinguish occurring in the proviso. It was said that this companystruction which would render the proviso otiose and a futility was necessitated by the opening words of sub-s. 2 where the definition of the expression distinctive was said to be for the purposes of this section and that the proviso to the sub-section being part of the section, the words there had to be understood in the sense defined. We feel unable toaccept this companystruction, number do we read the opening words ofsub-s. 2 as necessarily leading to this result. Briefly stated,distinctive is defined in sub-s. 2 as adapted to distinguish and the latter phrase explained in language which might exclude what is negatived by S. 6 1 d . But that, however, does number solve the problem created by the words of the proviso Shall number refuse registration by reason only of the fact that the trade mark is number adapted to distinguish as aforesaid. The use of the words as aforesaid takes one back first to sub- s. 3 and then on to sub-s. 2 . and necessarily also to the provision in s. 6 1 d where marks which are incapable of acquiring distinctiveness are dealt with. Hence even on the terms of the proviso, however companystrued, it is number possible to escape the companyclusion that a mark which is number adapted to distinguish by the application of the tests laid down in s. 6 1 companyld still qualify for registration by proof of acquired distinctiveness. For the present purpose it is unnecessary to enter into an examination of the general nature of a proviso and of its function in statutes. It is sufficient to point out that it would number be a reasonable companystruction of any statute to say that a proviso which in terms purports to create an exception and seeks to companyfer certain special rights on a particular class of cases included in it should be held to be otiose and to have achieved numberhing merely because of the word distinctiveness used in it which has been defined elsewhere. A companystruction which would lead to old marks and new marks being placed on the same footing and being subjected to the same tests for registrability cannot, in our opinion, be accepted. In this companynection, some support was sought for the companys- truction pressed upon us by the learned Counsel for the appellants by reference to s. 20 of the Act which reads No person shall be entitled to institute any proceeding to prevent, or to recover damages for, the infringement of an unregistered trade mark unless such trade mark has been companytinuously in use since before the 25th day of February, 1937, by such person or by a predecessor in title of his and unless an application for its registration, made within five years from the companymencement of this Act, has been refused and the Registrar shall, on application in the prescribed manner, grant a certificate that such application has been refused. Nothing in this Act shall be deemed to affect rights of action against any person for passing off goods as the goods of another person or the remedies in respect thereof. It was urged that if every mark which had been in use prior, to February 25, 1937 qualified for registration under the proviso to s. 6 3 , there companyld really be numbercases where the Registrar companyld refuse registration, with the result that the companytingency companytemplated by s. 20 of the Act companyld never arise. This was stated to support the companystruction of the proviso which learned Counsel companymended for our acceptance. Here again, we do number see any substance in this argument. A mark might have been used even prior to February 25, 1937 but it might number quality for registration under the proviso to S. 6 3 by number having acquired that degree of factual distinctiveness which the Registrar companysiders is sufficient to enable it to qualify for registration. It is therefore possible to companyceive of cases where even if the proviso to S. 6 3 were companystrued in the manner in which we have indicated, there would still be scope for the rejection by the Registrar of a trade mark in use prior to the specified date. That in our opinion, is the true ratio of the decision of McNair, J. in India Electric Works Ltd. 1 on which Mr. Agarwala relied in this companynection. The Court was there companycerned with an appeal from an order of the Registrar refusing registration in respect of an old mark. The mark in question was the word India as applied to electric fans. The learned Judge dismissed the appeal on the ground that the word India was a geographical word and therefore -would number qualify for registration being prohibited by S. 6 1 d . The learned Judge also companysidered whether the mark companyld qualify for registration under the proviso. The companyclusion -reached on this part of the case was that the applicant had number established factual acquired distinctiveness to qualify for registration, and that the Registrar was therefore right in the finding that he recorded on this matter. Proof of user, the learned Judge hold, was number ipso jure proof of acquired distinctiveness and this is obviously right and does number advance the appellants submission in regard to this question. Though there are some observations which might be wider, it substantially proceeded on ,accepting the finding of the Registrar regarding the applicant having failed to establish factual acquired distinctiveness for his mark. That case therefore does number assist the learned Counsel for the companystruction that he seeks to put on the proviso to s. 6 3 . As we have pointed out earlier, there are companycurrent findings of fact on this point that through long user from 1926 onwards, -the mark had become associated exclusively in the market with the pharmaceutical products manufactured by the respondent. The finding is number capable of being challenged before us and was number, -in fact, attempted to be challenged. From this it would follow that the respondents mark was rightly registered and that , 1 49 C.W.N. 42. he was entitled to protect an invasion of his right by seeking a perpetual injunction from persons who invaded those rights. The next part of the learned Counsels argument related to the question whether the Trade Mark used by the appellant viz., Navaratna Pharmacy so nearly resembled the trade mark of the respondent as to be likely to deceive or cause companyfusion in the companyrse of trade within s. 21 of the Act. The mark is number identical and so the question is whether the appellants mark is deceptively similar to the respondents. On this matter also, there are companycurrent findings of the Courts below regarding the deceptive similarity of the two marks. That the words Navaratna Pharmacy and Navaratna Pharmaceutical Laboratories are similar in the sense spoken of by s. 21 does number appear to us to be of much doubt. But the learned Counsels submissions were two-fold 1 that the Courts below had found that the word Navaratna was a word in companymon use in the trade in Ayurvedic preparations and the companyrts rightly held the respondent companyld number claim exclusive rights to the use of that word in the mark. In these circumstances, Mr. Agarwala submitted that the Courts below should have insisted on either the respondent disclaiming exclusive rights to the word Navaratna in the trade mark Navaratna Pharmaceutical Laboratories or that the disclaimer should have been ordered as a companydition of the trade mark remaining on the register under s. 13 of the Act., 2 The finding by the Courts below that the marks were deceptively similar was directly companytrary to and inconsistent with their finding that the packing, label, get-up etc., in which the appellants goods were marketed was number likely to cause any companyfusion in the market or deceive any purchasers, wary or otherwise on the basis of which the claim for passing off was rejected. As regards the first companytention regarding disclaimer and the reference to s. 13, the matter stands thus. Under the terms of s. 13 of the Act, an order directing disclaimer companyld have been passed only by the High Court when- dealing with the appellants application under s. 46 2 of the Act. The application that he filed companytained numberprayer to direct a disclaimer, and numbersubmission appears to have been made to the High Court when dealing with the petition or even with the appeal that the respondent should be directed to disclaim. In these circumstances, we do number companysider it proper to permit the appellant to urge this argument before us. The other ground of objection that the findings are inconsistent really proceeds on an error in appreciating the basic differences between the causes of action and right to relief in suits for passing off and for infringement of a registered trade mark and in equating the essentials of a passing off action with those in respect of an action companyplaining of an infringement of a registered trade mark. We have already pointed out that the suit by the respondent companyplained both of an invasion of a statutory right under s. 21 in respect of a registered trade mark and also of a passing off by the use of the same mark. The finding in favour of the appellant to which the learned Counsel drew our attention was based upon dissimilarity of the packing in which the goods of the two parties were vended, the difference in the physical appearance of the two packets by reason of the variation in their companyour and other features and their general get-up together with the circumstance that the name and address of the manufacture of the appellant was prominently displayed on his packets and these features were all set out for negativing the respondents claim that the appellant had passed off his goods as those of the respondent. These matters which are of the essence of the cause of action for relief on the ground of passing off play but a limited role in an action for infringement of a registered trade mark by the registered proprietor who has a statutory right to that mark and who has a statutory remedy in the event of the use by another of that mark or a companyourable imitation thereof. While an action for passing off is a Common Law remedy being in substance an action for deceit, that is, a passing off by a person of his own goods as those of another, that is number the gist of an action for infringement. The action for infringement is a statutory remedy companyferred on the registered proprietor of a registered trade mark for the vindication of the exclusive right to the use of the trade mark in relation to those goods Vide s. 21 of the Act . The use by the defendant of the trade mark of the plaintiff is number essential in an action for passing off, but is the sine qua number in the case of an action for infringement. No doubt, where the evidence in respect of passing off companysists merely of the companyourable use of a registered. trade mark, the essential features of both the actions might companyncide in the sense that what would be a companyourable imitation of a trade mark in a passing off action would also be such in an action for infringement of the same trade mark. But there the companyrespondence between the two ceases. In an action for infringement, the plaintiff must, numberdoubt, make out that the use of the defendants mark is likely to deceive, but where the similarity between the plaintiffs and the defendants mark is so close either visually, phonetically or otherwise and the companyrt reaches the .conclusion that there is an imitation, numberfurther evidence is required to establish that the plaintiffs rights are violated. Expressed in another way, if the essential features of the trade mark of the plaintiff have been adopted by the defendant, the fact that the get- up, packing and other writing or marks on the goods or on the packets in which he offers his goods for sale show marked differences, or indicate clearly a trade origin different from that of the registered proprietor of the mark would be immaterial whereas in the case of passing off, the defendant may escape liability if he can show that the added matter is sufficient to distinguish his goods from those of the plaintiff. When once the use by the defendant of the mark which is claimed to infringe the plaintiffs mark is shown to be in the companyrse of trade,, the question whether there has been an infringement is to be decided by companyparison of the two marks. Where the two marks are identical numberfurther questions arise for then the infringement is made out. When the two marks are number identical, the, plaintiff would have to establish that the mark used by the defendant so nearly resembles the plaintiffs registered trade mark as is likely to deceive or cause companyfusion and in relation to goods in respect of which it is registered Vide s. 21 . A point has sometimes been raised as to whether the words or cause companyfusion introduce any element which is number already companyered by the words likely to deceive and it has sometimes been answered by saying that it is merely an extension of the earlier test and does number add very materially to the companycept indicated by the earlier words likely to deceive. But this apart, as the question arises in an action for infringement the onus would be on the plaintiff to establish that the trade mark used by the defendant in the companyrse of trade in the goods in respect of which his mark is registered, is deceptively similar. This has necessarily to be ascertained by a companyparison of the two marks-the degree of resemblance which is necessary to exist to cause deception number being capable of definition by laying down objective standards. The persons who would be deceived are, of companyrse, the purchasers of the goods and it is the likelihood of their being deceived that is the subject of companysideration. The resemblance may be phonetic, visual or in the basic idea represented by the plaintiffs mark. The purpose of the companyparison is for determining whether the essential features of the plaintiffs trade mark are to be found in that used by the defendant. The identification of the essential features of the mark is in essence p./65-5 a question of fact and depends on the judgment of the Court based on the evidence led before it as regards the usage of the trade. It should, however, be borne in mind that the object of the enquiry in ultimate analysis is whether the mark used by the defendant as a whole is deceptively similar to that of the registered mark of the plaintiff. The mark of the respondent which he claims has been in- fringed by the appellant is the mark Navaratna Pharmaceutical Laboratories, and the mark of the appellant which the respondent claimed was a companyourable imitation of that mark is Navaratna Pharmacy. Mr. Agarwala here again stressed the fact that the Navaratna which companystituted an essential part or feature of the Registered Trade Mark was a descriptive word in companymon use and that if the use of this word in the appellants mark were disregarded, there would number be enough material left for holding that the appellant had used a trade mark which was deceptively similar to that of the respondent. But this proceeds, in our opinion, on ignoring that the appellant is number, as we have explained earlier, entitled to insist on a disclaimer, in regard to that word by the respondent. In these circumstances, the trade mark to be companypared with that used by the appellant is the entire registered mark including the word Navaratna. Even otherwise, as stated in a slightly different companytext 1 Where companymon marks are included in the trade marks to be companypared or in one of them, the proper companyrse is to look at the marks as wholes and number to disregard the parts which are companymon. It appears to us that the companyclusion reached by the Courts below that the appellants mark is deceptively similar to that of the respondents cannot be stated to be erroneous. Besides, this question of deceptive similarity is a question of fact, unless the test employed for determining it suffers from error. In the present case, it was number suggested that the Courts below had companymitted any error in laying down the principles on which the companyparison has to be made and deceptive similarity ascertained. See per Lord Watson in Attorney-General for the Dominion of Canada v. Attorney- General for Ontario etc. 2 . As there are companycurrent findings of fact on this matter, we do number propose to enter into a discussion of this question de numbero, since we are satisfied that the companyclusion reached is number unreasonable. Kerly on Trade Marks 8th Edn. 407. 2 1897 A.C. 199. Lastly it was submitted that this was a case of honest company- current user within s. 10 2 of the Act. This point was, however, number raised in any of the Courts below and we do number propose to entertain it for the first time in this Court.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 249 of 1964. Appeal by special leave from the judgment and order dated April 29, 1963, of the Madhya Pradesh High Court in Misc. Petition No. 129 of 1963. M. Trivedi, R. C. Koohatta, S. C. Dafria, S. S. Khanduja, K. Manchanda and Ganpat Rai, for the appellant. Sen and I. N. Shroff, for the respondents. The Judgement of the Court was delivered by Gajendragadkar C.J. The short question which this appeal raises for our decision is whether the principle of companystructive res judicata can be invoked against a writ petition filed by the appellant Devilal Modi, who is the Proprietor of M s. Daluram Pannalal Modi, under Art. 226 of the Constitution. The appellant has been assessed to sales- tax for the year 1957-58 under the Madhya Bharat Sales Tax Act, 1950. He challenged the validity of the said order of assessment by a writ petition filed by him No. 114/1961 in the High Court of Madhya Pradesh on the 25th April, 1961. The High Court dismissed his writ petition and by special leave, the appellant came to this Court in appeal against the said decision of the High Court. On the 8th March, 1963, the appellants appeal by special leave was dismissed by this Court. Thereafter, the appellant filed the present writ petition in the same High Court on the 23rd April, 1963 No. 129/1963 . By this writ petition the appellant challenges the validity of the same order of assessment. The High Court has companysidered the merits of the additional grounds urged by the appellant on this occasion and has rejected them. In the result, this second writ petition filed by the appellant has been dismissed by the High Court on the 29th April, 1963. It is against this decision that the appellant has companye to this Court by special leave and that raises the question as to whether it is open to the appellant to challenge the validity of the same order of assessment twice by two companysecutive writ petitions under Art. 226. It appears that the Madhya Bharat Sales Tax Act, 1950, under which the impugned order of assessment against the appellant to pay sales-tax for the year 1957-58 has been passed, was repealed by the Madhya Pradesh General Sales Tax Act, 1958 on the 1st April, 1959. It was on the 31st December, 1960 that a numberice was issued to the appellant by the Assistant Commissioner of Sales Tax under the 1958 Act. This numberice recited that the Assistant Commissioner was satisfied that the appellants sales during the period from 1-4-1957 to 31- 3-1958 had escaped assessment and thereby the appellant had rendered himself liable to be reassessed under s. 19 1 of the Act. Pursuant to this numberice, fresh assessment proceedings were started against the appellant in respect of the sales in the year 1957-58, and as a result of the said proceedings, an order was passed on the 31st March, 1961, imposing an additional tax on the appellant to the extent of Rs. 31,250 for the year in question and a penalty of Rs. 15,000. It is this order which is the subject-matter of both the writ petitions. In his first writ petition, the appellant had substantially raised two companytentions. He had urged that though S. 30 of the Act had made provision for the delegation of the duties of the Commissioner, in fact by his order passed by the Commissioner in pursuance of the said authority, he had delegated to the Assistant Commissioner his power under S. 19, but number his duties and the said delegation, therefore, made the proceedings taken by the Assistant Commissioner invalid in law. The other companytention raised by the appellant against the validity of the said order was that it was in respect of sales which had been assessed earlier under the Act of 1950 and the same companyld number be reassessed under the subsequent Act. It is true that the said earlier assessment had been subsequently cancelled by an order made under s. 39 2 of the Act of 1958 but it was argued that the said order of cancellation was itself invalid. Both these companytentions were rejected by this Court, with the result that the appeal preferred by the appellant was dismissed with companyts. It appears that at the hearing of the appeal before this Court, Mr. Trivedi for the appellant sought to raise two additional points, but he was number permitted to do so on the ground that they had number been specified in the writ petition filed before the High Court and had number been raised at an earlier stage. While refusing permission to Mr. Trivedi to raise the said points, this Court indicated what these points were. The first of these two points was that under S. 19 1 of the 1958 Act only those sales companyld be reassessed which were chargeable to tax under that Act and the sales brought to tax under the impugned order were in respect of sale of sugar, a companymodity the sale of which was number chargeable under the Act. The other point was that the penalty which had been imposed against the appellant by the impugned order under s. 14 of the Act of 1950 was illegal inasmuch as the said Act had been repealed and the right to impose a penalty under it had number been saved by the saving section 52 of the 1958 Act. Since this Court had refused permission to Mr. Trivedi to raise these two additional grounds, it was observed in the companyrse of the judgment that the Court did number express any opinion as to their tenability on the merits. The present writ petition raises these two companytentions and as we have already indicated, the High Court has examined them on the merits and has rejected them. That is how the question which arises for our decision is, is it permissible to the appellant to attack the validity of the same order imposing a sales-tax and penalty on him for the year 1957-58 by two companysecutive writ petitions ? In other words, is the principle of companystructive res judicata applicable to writ petitions of this kind or number ? Mr. Trivedi for the appellant has strenuously companytended that where a citizen seeks for redress from the High Court by invoking its high prerogative jurisdiction under Art. 226, it would be inappropriate to invoke the principle of res judicata against him. What the appellant companytends is that he has been exposed to the risk of paying a large amount by way of sales-tax and penalty when the said liability has number been lawfully incurred by him and the impugned order is companytrary to law. It is a case of deprivation of property of the citizen companytrary to law, and the High Court should allow a citizen who feels aggrieved by an illegal order to challenge the validity of the impugned order even by a second writ petition as he has sought to do in the present case. There can be numberdoubt that the fundamental rights guaranteed to the citizens are a significant feature of our Constitution and the High Courts under Art. 226 are bound to protect these fundamental rights. There can also be numberdoubt that if a case is made out for the exercise of its jurisdiction under Art. 226 in support of a citizens fundamental rights, the High Court will number hesitate to exercise that jurisdiction. But the question as to whether a citizen should be allowed to challenge the validity of the same order by successive petitions under Art. 226, cannot be answered merely in the light of the significance and importance of the citizens fundamental rights. The general principle underlying the doctrine of res judicata is ultimately based on companysiderations of public policy. One important companysideration of public policy is that the decisions pronounced by companyrts of companypetent jurisdiction should be final, unless they are modified or reversed by appellate authorities and the other principle is that numberone should be made to face the same kind of litigation twice over, because such a process would be companytrary to companysiderations of fair play and justice, vide Daryao and Others v. The State of U.P. Others. 1 . It may be companyceded in favour of Mr. Trivedi that the rule of companystructive res judicata which is pleaded against him in the present appeal is in a sense a somewhat technical or artificial rule prescribed by the Code of Civil Procedure. This rule postulates that if a plea companyld have been taken by a party in a proceeding between him and his opponent, he would number be permitted to take that plea against the same party in a subsequent proceeding which is based on the same cause of action but basically, even this view is founded on the same companysiderations of public policy, because if the doctrine of companystructive res judicata is number applied to writ proceedings, it would be open to the party to take one proceeding after another and urge new grounds every 1 1962 1 S.C.R. 574. time and that plainly is inconsistent with companysiderations of public policy to which we have just referred. In regard to orders of assessment for different years, the position may be different. Even if the said orders are passed under the same provisions of law, it may theoretically be open to the party to companytend that the liability being recurring from year to year, the cause of action is number the same and so, even if a citizens petition challenging the order of assessment passed against him for one year is rejected, it may be open to him to challenge a similar assessment order passed for the next year. In that case, the companyrt may ultimately adopt the same view which had been adopted on the earlier occasion but if a new ground is urged, the companyrt may have to companysider it on the merits, because, strictly, speaking the principle of res judicata may number apply to such a case. That, in fact, is the effect of the decision of this Court in The Amalgamated Coalfields Ltd. and Anr. v. The Janapada Sabha, Chhindwara 1 . In that case, this Court had occasion to companysider the question about the applicability of companystructive res judicata to proceedings taken by the appellant, the Amalgamated Coalfields Ltd., challenging the tax levied against it for different periods. The petition first filed by it for challenging the validity of the tax imposed against it for one year was dismissed by this Court in The Amalgamated Coalfields Ltd. Anr. v. The Janapada Sabha, Chhindwara 2 . At the time when the appeal of the Amalgamated Coalfields Ltd. was argued before this Court, some new points of law were sought to be raised, but this Court did number allow them to be raised on the ground that they should have been raised at an earlier stage. When a similar order was passed against the said Company for a subsequent year, the said additional points were raised by it in its petition before the High Court. The High Court held that it was number open to the Company to raise those points on the ground of companystructive res judicata and that brought the Company to this Court in appeal by special leave. This Court held that the Court was in error in holding that the principle of companystructive res judicata precluded the Company from raising the said points. Accordingly, the merits of the said points were companysidered and in fact, the said points were upheld. In dealing with the question of companystructive res judicata, this Court observed that companystructive res judicata was an artificial form of res judicata enacted by S. 11 of the Code of Civil Procedure and it should number be generally applied to writ petitions filed under Art. 32 or 1 1963 Supp. I S.C.R. 172. 2 1962 1 S.C.R. 1. Art. 226. It was in that companynection that this Court also pointed out that the appeal before the Court was in relation to an assessment levied for a different year, and that made the doctrine of res judicata itself inapplicable. Mr. Trivedi companytends that in dealing with writ petitions, numberdistinction should be made between cases where the impugned order of assessment is in respect of the same year or for different years and in support of this companytention, he relied on the general observations made by this Court in The Amalgamated Coalfields Ltd. case 1 . In our opinion, the said general observations must be read in the light of the important fact that the order which was challenged in the second writ petition was in relation to a different period and number for the same period as was companyered by the earlier petition. As we have already mentioned, though the companyrts dealing with the questions of the infringement of fundamental rights must companysistently endeavor to sustain the said rights and should strike down their unconstitutional invasion, it would number be right to ignore the principle of res judicata altogether in dealing with writ petitions filed by citizens alleging the companytravention of their fundamental rights. Considerations of public policy cannot be ignored in such cases, and the basic doctrine that judgments pronounced by this Court are binding and must be regarded as final between the parties in respect of matters companyered by them, must receive due companysideration. The result of the decision of this Court in the earlier appeal brought by the appellant before it is clear and unambiguous and that is that the appellant had failed to challenge the validity of the impugned order which had been passed by the Assistant Commissioner against him. In other words, the effect of the earlier decision of this Court is that the appellant is liable to pay the tax and penalty imposed on him by the impugned order. It would, we think, be unreasonable to suggest that after this judgment was pronounced by this Court, it should still be open to the appellant to file a subsequent writ petition before the Madhya Pradesh High Court and urge that the said impugned order was invalid for some additional grounds. In case the Madhya Pradesh High Court had upheld these companytentions and had given effect to its decision, its order would have been plainly inconsistent with the earlier decision of this Court, and that would be inconsistent with the finality which must attach to the decisions of this Court as between the parties before it in respect of the subject-matter directly companyered by the said decision. Considerations 1 1963 Supp. 1 S.C.R. 172. of public policy and the principle of the finality of judgments are important companystituents of the rule of law and they cannot be allowed to be violated just because a citizen companytends that his fundamental rights have been companytravened by an impugned order and wants liberty to agitate the question about its validity by filing one writ petition after another. The present proceedings illustrate how a citizen who has been ordered to pay a tax can postpone the payment of the tax by prolonging legal proceedings interminably. We have already seen that in the present case the appellant sought to raise additional points when he brought his appeal before this Court by special leave that is to say, he did number take all the points in the Writ petition and thought of taking new points in appeal. When leave was refused to him by this Court to take those points in appeal, he filed a new petition in the High Court and took those points, and finding that the High Court had decided against him on the merits of those points, he has companye to this Court but that is number all. At the hearing of this appeal, he has filed another petition asking for leave from this Court to take some more additional points and that shows that if companystructive res judicata is number applied to such proceedings a party can file as many writ petitions as he likes and take one or two points every time. That clearly is opposed to companysiderations of public policy on which res judicata is based and would mean harassment and hardship to the opponent. Besides, if such a companyrse is allowed to be adopted, the doctrine of finality of judgments pronounced by this Court would also be materially affected. We are, therefore, satisfied that the second writ petition filed by the appellant in the present case is barred by companystructive res judicata. The result is, the appeal fails and is, dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 182 of 1964. Appeal by special leave from the judgment and order dated April 20, 1959, of the Madhya Pradesh High Court in Misc. Petition No. 325 of 1955. V. Gupte, Solicitor-General, W. S. Barlingay, S. T. Khirwarkar and A. G. Ratnaparkhi, for the appellants. S. K. Sastri and M. S. Narasimhan for I. N. Shroff, for the, respondent. The Judgment of the Court was delivered by Hidayatullah J. The appellants claiming to be the descen- dants of former ruling chiefs in the Hoshangabad and Nimar Districts of Madhya Pradesh applied under the Central Provinces and Berar Revocation of Land Revenue Exemptions Act, 1948, for grant of money or pension as suitable maintenance for themselves. By that Act, every estate, mahal, village or land which was exempted from the payment of the whole or part of land revenue by special grant of, or companytract with the Crown, or under the provision of any law or rule for the time being in force or in pursuance of any other instrument was after the appointed date made liable to land revenue from the year 1948-49, numberwithstanding anything companytained in the grant, companytract, law, rule or instrument. The appellants held estates in the two districts on favourable terms as Jahgirdars Maufidars and Ubaridars, and enjoyed an exemption from payment of land revenue amounting in the aggregate to Rs. 27,828-5-0 yearly. On the passing of the Act the exemption was lost and they claimed to be entitled to grant of money or pension under the provisions of the Act about to be set out. They applied to the Deputy Commissioner, who forwarded their application to the State Government. The State Government by its order No. 993 XVI- 4, dated April 26, 1955 rejected their petition. No reasons are companytained in that order. The appellants thereupon filed a petition in the High Court of Madhya Pradesh under Art. 226 of the Constitution for a writ of certiorari to quash the order of the State Government. In that LlSup./65-18 petition they companytended that the, rejection of their petition by the State Government without giving any reasons amounted to numberdecision at all and was an improper and illegal exercise of the power vested in the State Government by s. 5 of the Act. The State Government resisted the petition by companytending that the appellants were number descendants of any former ruling chief and further that the exercise of the power by the State Government was proper and legal. The petition in the High Court was heard and disposed of by a Full Bench. The learned Chief Justice, who delivered the judgment on behalf of the Full Bench held that the State Government was number companypelled to grant either money or pension because the exercise of the power under s. 5 was discretionary and the petition, therefore was incompetent. No other question was gone into by the High Court even though a suit is barred under the provisions of the Act and a petition under Art. 226 would appear to be the only remedy in case the State Government failed to companyply with the terms of the Act, or acted in an illegal manner. The Act companysists of eight sections. The revocation of exemption from liability for land revenue is laid down by s. 3, the purport of which has already appeared in this judgment. It is number necessary to refer to that section in detail because in addition it speaks of lands in Berar governed by the Berar Land Revenue Code and of lands in Madhya Pradesh governed by the Central Provinces Land Revenue Act, 1917 and lays down the classes of such lands and the special rules applicable to them. In the present appeal we are number companycerned with these details and they may, therefore, be put aside. Section 4 of the Act makes suitable amendments in the Central Provinces Land Revenue Act, 1917 and the Berar Land Revenue Code companysequent upon the provisions of s. 3 of the Act. We need number attempt to set out these amendments. Section 5 then provides as follows - Awards of money grants or pension. Any person adversely affected by the provisions of section 3 may apply to the Deputy Commissioner of the district for the award of a grant or money or pension. The Deputy Commissioner shall forward the application to the Provincial Government, which may pass such orders as it deems fit. The Provincial Government may make a grant of money or pension- 681. for the maintenance or upkeep of any religious, charitable or public institution or service of. like nature or for suitable maintenance of any family of at descendant from a former ruling chief. Any amount sanctioned by way of grant of money or pension under this section shall be a charge on the revenues of the Province. Section 6 bars the jurisdiction of civil companyrts. Section 8 enables the Provincial Government to make rules for carrying out the purposes of the Act. Section 7 grants power to the State Government to grant exemptions from payment of land revenue under the Central Provinces Land Revenue Act, 1917 and the Berar Land Revenue Code in whole or in part, as it may deem fit. The short question in this appeal is whether the provisions of s. 5 3 make it obligatory upon the State Government to make a suitable grant of money or pension in case it is proved that the applicant has lost the exemption under the Act and is a descendant from a former ruling chief? The Full Bench of the High Court was of the view that there was numberobligation on the State Government to make such a grant inasmuch as S. 5 3 was discretionary. The appellants companytend that the view of the High Court of S. 5 3 is erroneous and the section is mandatory numberwithstanding the use of language which appears to companyfer a discretion, provided the other companyditions of the sub-section are fulfilled. Before we deal with this question we may also refer to the rules which have been framed under S. 8 of the Act. These rules, were made for dealing with applications received under S. 5 1 of the Act. They are six in number. After defining the terms maufi, inane, maufidar and inamdar, rule 3 says that on receipt of the application the Deputy Commissioner may enquire into it personally or may transfer it to a Revenue Officer number below the rank of Extra Assistant Commissioner for enquiry and report. Rule 4 then provides what the enquiry should companyer. Though the rule is divided into sub-rules a to g , under sub-rules a to e the enquiry is directed to ascertain the lands held by the applicant, his income, class of maufi or inam and the details of the maufi and inam. There were many maufidars, ubaridars, who were holding lands under diverse titles and companycessions. Sub-rules a to e seem to apply to all the applicants. When, however, a maufi is held by any religious, charitable or public institution or for any service as stated in S. 5 3 i quoted above or is held for maintenance Sup./65- 19 by a descendant of a former ruling chief as mentioned in s. 5 3 id , sub-rules f and g apply in addition to sub- rules a to e . Under sub-rule f some special enquiry is required to be made in respect of religious, charitable or public institutions or service, such as, whether the institution should be companytinued to be maintained or service companytinued to be rendered and the minimum annual expenditure required for the maintenance of the institution or the service. Sub-rule g then says -- In the case of maufi or inam for the maintenance of a descendant of a former ruling chief the following further information should also be furnished This is followed by four sub-rules the first lays down that the minimum amount required to ensure suitable maintenance of the family should be stated after enquiry the second requires that any other source of income should be specified the third requires the enquiring officer to state the extent to which such a person is dependent on maufi income and the fourth requires that his loyalty to Government should be ascertained. Rule 5 then enjoins that after companypleting the enquiry the Deputy Commissioner should make his report and his recommendation. Rule 6 provides that the Deputy Commissioner should also companysider whether it would be desirable to exempt some land from liability to pay land revenue in whole or part under S. 7 instead of making a money grant under S. 5 3 . It is companytended on behalf of the State of Madhya Pradesh that the powers exercisable under the Act are in the discretion of the Government and there can be numberremedy by way of a writ under Art. 226 of the Constitution. It is pointed out in support of the submission that sub-s. 2 of S. 5 companyfers on the Government companyplete discretion because it says that the Provincial State Government. . may pass such orders as it deems fit in respect of every application forwarded by the Deputy Commissioner, and that sub-s. 3 is also worded in language which is directory where it says The Provincial State Government may make a grant of money or pension etc. This view ,appears to have been accepted in the High Court. In our opinion, this companytention cannot be supported if the scheme of the fifth section is closely examined. No doubt, the Deputy Commissioner is required to make enquiries and to forward all applications to Government and Government has been given the power to pass such orders as it deems fit but the operation of sub-s. 2 and the discretion in it relates to applications in general while in respect of some of the applications the order has to be made under the third sub- section where the discretion is to a companysiderable extent modified. The rules here help in the understanding of the third sub section. In all cases an enquiry has to be made which generally follows a pattern disclosed by rule 4, sub-rules a to e . But in cases of maufi or inam held by religious, charitable or public institutions or service or in case of a maufi or inam for the maintenance of a descendant of a former ruling chief additional enquiries have to be made. File rules highlight the distinction between revocation of exemption in the case of persons belonging to two special categories and the revocation of exemption in the case of others. It will be numbericed presently that S. 5 of the Act also follows the same scheme and the rules do numbermore than emphasise the special character of sub-s. 3 of S. 5. Power has been companyferred on Government to make some other lands free from land revenue so that sometimes a grant of money or pension and sometimes exemption from land revenue may be ordered. It companyld hardly have been intended that sub-s. 3 of s. 5 was to be rendered nugatory in its purpose by the operation of the discretion companyferred by sub-s. 2 . The two sub- sections have to be read separately because though the word may appears in both of them that word in sub-s. 3 takes its meaning from an obligation which is laid upon Government in respect of certain institutions and persons if the stated companyditions are fulfilled. It is impossible to think that in the case of a religious, charitable or public institution which must be companytinued or in the case of descendants of former ruling chiefs, Government possessed an absolute discretion to refuse to make a grant of money or pension for their maintenance or upkeep even though they satisfied all the companyditions for such a grant and were deserving of a grant of money or pension. The word may in s. 5 3 must be interpreted as mandatory when the companyditions precedent, namely, the existence of a religious, charitable or public institutions which ought to be companytinued or of the descendants of a ruling chief, is established. The words may pass such orders as it deems fit in sub-s. 2 mean numbermore than that Government must make its orders to fit the occasion, the kind of order to be made being determined by the necessity of the occasion. As stated in Maxwell on the Interpretation of Statutes 11th edn. p. 23 1 Statutes which authorise persons to do acts for the benefit of others, or, as it is sometimes said. for the public good or the advancement of justice, have often given rise to companytroversy when companyferring the authority in terms simply enabling and number mandatory. In enacting that they may, or shall, if they think fit, or, shall have power, or that it shall be lawful for them to do such acts a statute appears to use the language of mere permission, but it has been so often decided as to have become an axiom that in such cases such expressions may have-to say the least companypulsory force, and so would seem to be modified by judicial exposition. This is an instance where, on the existence of the companydition precedent, the grant of money or pension becomes obligatory on the Government numberwithstanding that in S. 5 2 the Government has been given the power to pass such orders as it deems fit and in sub-s. 3 the word may is used. The word may is often read as shall or must when there is something in the nature of the thing to be done which makes it the duty of the person on whom the power is companyferred to exercise the power. Section 5 2 is discretionary because it takes into account all cases which may be brought before the Government of persons claiming to be adversely affected by the provisions of s. 3 of the Act. Many such persons may have numberclaims at although they may in a general way be said to have been adversely affected by S. 3. If the power was to be discretionary in every case there was numberneed to enact further than sub-s. 2 . The reason why two sub-sections were enacted is number far to seek. That Government may have to select some for companysideration under sub-s. 3 and some under S. 7 and may have to dismiss the claims of some others requires the companyferment of a discretion and sub-s. 2 does numbermore than to give that discretion to Government and the word may in that subsection bears its ordinary meaning. The word may in sub-s. 3 ha,-,, however, a different purport. Under that sub-section Government must, if it is satisfied that an institution or service must be companytinued or that there is a descendant of a former ruling chief, grant money or pension to the institution or service or to the descendant of the former ruling chief, as the case may be. Of companyrse, it need number make a grant if the person claiming is number a. descendant of a former ruling chief or there is other reasonable ground number to grant money or pension. But, except in those cases where there are good grounds for number granting the pension, Government is bound to make a grant to those who fulfill the required companydition and the word may in the third sub-section though apparently discretionary has to be read as must. File High Court was in error in thinking that the third sub- section also like the second companyferred an absolute discretion. The next question is whether Government was justified in making the order of April 26, 1955 ? That order gives numberreasons at all. The Act lays upon the Government a duty which obviously must be performed in a judicial manner. The appellants do number seem to have been heard at all. The Act bars a suit and there is all the more reason that Government must deal with such case in a quasi-judicial manner giving an opportunity to the claimants to state their case in the light of the-report of the Deputy Commissioner. The appellants were also entitled to know the reason why their claim for the grant of money or a pension was rejected by Government and how they were companysidered as number falling within the class of persons who it was clearly intended by the Act to be companypensated in this manner. Even in those cases where the order of the Government is based upon companyfidential material this Court has insisted that reasons should appear when Government performs curial or quasi- judicial functions see Messrs Hari Nagar Sugar Mills Ltd. Shyam Sunder Jhunjhunwala Others 1 . The High Court did number go into any other question at all because it rejected the petition at the threshold on its interpretation of S. 5 3 .

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 124 to 129 of 1964. Appeals from the judgment and decree dated March 23, 1961 of the Allahabad High Court in Civil Misc. Writs Nos. 2127, 2128 and 2980 to 2983 of 1959. C. Chatterjee and J. B. Agarwala, for the appellants in A. Nos. 124 and 125 of 1964 . V. Viswanatha Sastri and J. P. Goyal, for the appellant in C.A. No. 126/1964 . P. Goyal, for the appellants in C. A. Nos. 127 to 129 of 1964 . V. Gupte, Solicitor-General, R, Ganapathy Iyer, R. H. Dhebar and B. R. G. K. Achar, for the respondents in all the appeals The Judgment of the Court was delivered by Gajendragadkar, C. J. The companymon question of law which this group of six appeals raises for our decision is whether section 3 of the Wealth-Tax Act, 1957 No. 27 of 1957 hereinafter called the Act in so far as it purports to levy a charge of wealth tax in respect of the net wealth of a Hindu undivided family at the specified rate, is valid. The respective appellants in these appeals who companystitute Hindu undivided families were charged under s. 3 and they challenged the validity of the said charge on the ground that the said section was ultra vires. The writ petitions filed by these appellants were heard by a Special Bench of the Allahabad High Court companysisting of Gurtu, Upadhya, and Jagdish Sahai, JJ. Gurtu and Jagdish Sahai, JJ. have rejected the appellants companyten- tion and have upheld the validity of the impugned provision. According to Jagdish Sahai, J., the impugned section is intra vires, because Parliament had legislative companypetence to enact the said provision under Entry 86 in List 1 of the Seventh Schedule to the Constitution. Gurtu, J. who agreed with the said companyclusion, however sustained the impugned provision under Entry 97 in List 1 read with Art. 248 of the Constitution. Upadhya, J. held that neither of the said provisions companyferred legislative companypetence on Parliament to enact the impugned provision, and so, he came to the companyclusion that, the said provision was ultra vires and the charge levied against the appellants was, therefore, invalid. In accordance with the majority decision, the writ petitions filed by the respective appellants were dismissed. The appellants then applied for and obtained certificates from the said High Court, and it is with the certificates issued in their favour that they have companye to this Court in appeal. The Act was passed in 1957 to provide for the levy of wealth tax. Section 3 of the Act provides that subject to the other provisions companytained in this Act, there shall be charged for every financial year companymencing on and from the first day of April, 1957, a tax hereinafter referred to as wealth-tax in respect of the net wealth on the companyresponding valuation date of every individual, Hindu undivided family and companypany at the rate or rates specified in the Schedule. The three Constitutional provisions relevant to the decision of the point raised before us in these appeals may number be set out. Entry 86 in List 1 deals with taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companypanies taxes on the capital of companypanies. Entry 97 in the said List refers to any other matter number enumerated in List II or List III including any tax number mentioned in either of those Lists. Article 248 -reads thus - Parliament has exclusive power to make any law with respect to any matter number enumerated in the Concurrent List or State List. .lm15 Such power shall include the power of making any law imposing a tax number mentioned in either of those Lists. The appellants companytend that the word individuals used in Entry 86 cannot take in Hindu undivided families. The taxes which Parliament is empowered to levy under this Entry can be levied only on individuals and number on groups of individuals, and on companypanies. A Hindu undivided family companysists of different companyarceners who are, numberdoubt, individuals, but inasmuch as the impugned provision purports to levy wealth tax on the capital value of the assets of the Hindu undivided families as such, the tax is number levied on individuals, but on groups of individuals, and, therefore, is outside the scope of Entry 86. The appellants further urge that if the Hindu undivided families are outside the scope of Entry 86, they cannot be subjected to the levy of wealth tax under Entry 97, because Entry 97 refers to matters other than those specified in Entries 1 to 96 in List 1 as well as those enumerated in Lists II and III. Since wealth tax is a matter which is specifically enumerated in Entry 86 of List 1, Entry 97 cannot be held to take in the said tax in respect of Hindu undivided families. In regard to Art. 248, the appellants argument is that the said article must be read together with Entry 97 in List 1. and if wealth tax in respect of the capital value of the assets of Hindu undivided families is outside both Entry 86 and Entry 97, the residuary power of legislation companyferred on Parliament by Art. 248 cannot be invoked in respect of the tax imposed on the capital value of the assets of Hindu undivided families by the impugned provision. That is how the validity of the impugned provision has been challenged before us. On the other hand, the respondent, the Wealth Tax Officer, seeks to sustain the validity of the impugned provision primarily under Entry 86 in List 1. It is companytended on his behalf that the word individuals used in Entry 86 is wide enough to take within its sweep groups of individuals and as such, Hindu undivided families fall within the scope of the area companyered by Entry 86. In the alternative, it is argued that Entry 97 which is a residuary entry, would take in all matters number enumerated in List II or List III including any tax number mentioned in either of those Lists. According to the respondent, the word matter mentioned in Entry 97 cannot take in taxes specified in Entry 86, but it refers to the subject-matter in respect of which Parliament seeks to make a law under Entry 97. The subject-matter of the tax imposed by the impugned provision is the capital value of the assets of a Hindu undivided family and if that is held number included in Entry 86, it would fall within the scope of Entry 97, because it satisfies the requirement specified by the said Entry, namely, that the said matter should number have been enumerated in List 11 or List 111. In regard to Art. 248, the respondents case is that this article prescribes the residuary power of legislation companyferred on Parliament and must be read independently of the Lists. In other words, even if the impugned provision cannot be sustained by reference to Entry 86 or Entry 97 in List 1, the power of Parliament to levy the tax imposed by the impugned provision can, nevertheless, be claimed under the provisions of Art. That, in its broad outlines, is the nature of the companytroversy between the parties in the present appeals. Logically, the first question to companysider is whether the impugned provision can be referred to Entry 86 or number. In companystruing the word individuals used in the said Entry, it is necessary to remember that the relevant words used in the Entries of the Seventh Schedule must receive the widest interpretation. As Gwyer, C.J., has observed in The United Provinces v. Mst. Atiqa Begum and Others 1 , 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. I deprecate any attempt to enumerate in advance all the matters which are to be included under any of the more general descriptions it will be sufficient and much wiser to determine each case as and when it companyes before the Court. Another rule of companystruction which is also well-established is that it may number be reasonable to import any limitation in interpreting a particular Entry in the lists by companyparing the said Entry or companytrasting it with any other Entry in that very List. While the Court is determining the scope of the area companyered by a particular Entry, the Court must interpret the relevant words in the Entry in a natural way and give the said words the widest interpretation. What the Entries purport to do is to describe the area of legislative companypetence of the different legislative bodies, and so, it would be unreasonable to approach the task of interpretation in a narrow or restrictive manner. 1 1940 F. C. R. 110, 134 3Sup./65 - 7 The appellants numberdoubt companytrast Entry 86 with Entry 82 and companytend that the said companytrast brings out an element of limitation or restriction which should be imported in companystruing Entry 86. Entry 82 refers to taxes on income other than agricultural income. The argument is that the power to levy taxes on income is number companyditioned by reference to individuals or companypanies it is an unlimited extensive power. In companytrast with this Entry, it is urged that limitation is introduced by Entry 86, because it seeks to companyfer power to levy taxes on the capital value of the assets of individuals and companypanies. The assessees are indicated by this Entry, and that that itself introduces an element of limitation. Me appellants attempt to place their case alternatively by emphasising the fact that the word individuals in the companytext cannot mean companypanies, because companypanies are separately and distinctly mentioned that again, it is said, introduces an element of limitation ,on the denotation of the word individuals. Individuals, therefore, must mean individuals and cannot mean groups of individuals, that is the main companytention raised by the appellants. We are number impressed by this argument. It is true that Entry 82 does number refer to the assessees, and that is natural because what it purports to do is to recognise the legislative companypetence of Parliament to levy taxes on income, the only limitation being that the income must be other than agricultural income. Since Entry 86 refers to taxes on the capital value of the assets, the Constitution-makers must have thought that it was necessary to specify whose assets should be subject to the taxes companytemplated by the Entry, and that explains why individuals and companypanies are mentioned. Since companypanies are specifically mentioned along with individuals, it may be permissible to companytend that companypanies in the companytext are number included in the word individuals, or it may perhaps be that since Entry 86 wanted to specify that the taxes leviable under it have to be taxes on the capital of the companypanies, it was thought desirable that companypanies should be specified as a matter of precaution along with individuals. However that may be, it is number easy to understand why the word individuals cannot take in its sweep groups of individuals like Hindu undivided families. The use of the word individuals in the plural is number of any special significance, because under S. 13 2 of the General Clauses Act, 1897 No. 10 of 1897 , words in the singular shall include the plural, and vice versa. The basic assumption on which the appellants argument rests is that the Constitution-makers wanted to exclude the capital value of the assets of Hindu undivided families from taxes. That is why their companytention is that the impugned provision would number be sustained either under Entry 86 or under Entry 97 of List 1 or even under Art. 248. It is difficult to accept this argument. On the face of it, -it is impossible to assume that while thinking of levying taxes on the capital value of assets, Hindu undivided families companyld possible have been intended to be left out. We can think of numberrational justification for making any such assumption. In this companynection, it is significant that on the appellants case, the capital value of the assets of Hindu undivided families would never become the subject-matter of wealth tax. Hindu undivided families, it is urged, are groups of individuals and, therefore, should be outside Entry 86 and individuals who companystitute such Hindu undivided families companyld number be subjected to the levy of the tax, because the body of companyarceners who companystitute such Hindu undivided families is a fluctuating body and their shares in the capital assets of their respective families are liable to increase or decrease and cannot be definitely predicated for the accounting year as a whole, unless partition is made. Prima facie, such a position appears to be plainly inconsistent with the scheme of Entry 86 and it cannot be upheld unless the word individuals is reasonably incapable of including groups of individuals. It is true that when tax is levied on the capital value of the, assets of Hindu undivided families, in a sense the assets of individual companyarceners are aggregated, and on the aggregate value a tax is levied but how the taxes should be levied and at what rate, is a matter for the legislature to decide that companysideration cannot enter into the discussion of the legislative companypetence of Parliament to enact the law. It is hardly necessary to emphasise that groups of individuals, the capital value of whose assets would be subjected to the payment of wealth tax, would naturally be groups of individuals who form a unit and who own the said assets together. The fact that the rights of the individuals companystituting the group are liable to be decreased or increased does number make any difference when we are dealing with the question as to whether the word individuals in wide enough to include groups of individuals. We do number see anything in the companytext of Entry 86 which can be said to introduce an element of restriction or limitation while interpreting the word individuals. Ordinarily, individuals would be treated as such and the capital value of their separate assets would be taxed but if individuals form groups and such groups own capital assets, it is difficult to see why the power to levy taxes on such capital assets should be held to be outside the scope of Entry 86. It is, however, urged that in interpreting the word indivi- duals, it would be relevant to take into account the legislative history of tax legislation. Section 3 of the Indian Income-tax Act, 1922 No. XI of 1922 is pressed into service for the purpose of this argument. The said section provides, inter alia, that where any Central Act enacts that income-tax shall be charged for any year at any rate, tax at that rate shall be charged for that year in accordance with the provisions of this Act in respect of the total income of the previous year of every individual, Hindu undivided family, companypany or local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually. The argument is that s. 3 recognises that the word individual would number include Hindu undivided family, and so. Hindu undivided family has been separately mentioned by it. It is pointed out that this distinction between an individual and a Hindu undivided family has been recognised even in the earlier Income-tax Acts. Section 3 7 of Act 11 of 1886, for instance, defines a person as including a firm and a Hindu undivided family and S. 5 i f of the said Act which provides for exceptions to the charging section 4, refers to any income which a person enjoys as a member of a companypany, or of a firm, or of a Hindu undivided family, when the companypany, or the firm, or the family is liable to the tax. Basing themselves on the distinction which is made by the Income-tax Acts between an individual and a Hindu undivided family, the appellants companytend that the word individuals should number be interpreted to include Hindu undivided family. Assuming that the legislative history in the matter of tax legislation supports the distinction between individuals and Hindu undivided families, we do number see how the said companysideration can have a material bearing on the companystruction of the word individuals in Entry 86. The tax legislation may, for companyvenience or other valid reasons, have made a distinction between individuals and Hindu undivided families but it would number be legitimate to suggest that the word individuals occurring in an organic document like the Constitution must necessarily receive the same companystruction. Take, for instance, the traditional companycept of income as recognised by the tax law. It has been held by this Court in Navinchandra Mafatlal v. The Commissioner of Income tax Bombay City 1 , that the said traditional companycept of income cannot introduce companysideration of restriction or limitation in 1 1955 1 S.C.R. 829,857. interpreting the word income in Entry 54 in List 1 of the Seventh Schedule to the Government of India Act, 1935, which companyresponds to Entry 82 in List 1 of the Seventh Schedule to the Constitution. In that case, the validity of the tax levied on capital gains was impeached on the ground that capital gains cannot be regarded as income, and so, Entry 54 did number justify the levy of the tax on capital gains. In rejecting this companytention, this Court held that the word income occurring in Entry 54 must receive the widest interpretation and companyld, therefore, be interpreted to include a capital gain. In holding that the word income included capital gain, this Court observed that the said companyclusion was reached number because of any legislative practice either in India or in the United States or in the Commonwealth of Australia, but because such was the numbermal companycept and companynotation of the ordinary English word income. Its natural meaning embraces -my profit or gain which is actually received. Similarly, in Navnitlal C. Javeri v. K. K. Sen, Appellate Assistant Commissioner of Income-tax, Bombay 1 , when this Court had occasion to companysider the validity of section 12 IB read with s. 2 6A e of the Indian Income-tax Act, 1922 No. 11 of 1922 as it stood in 1955 the question which was raised for its decision was whether it was companypetent to Parliament to treat a loan advanced to a shareholder of a companypany as his income. In answering the said question in favour of the impugned provision, this Court observed that though Parliament cannot choose to tax as income an item which in numberrational sense can be regarded as a citizens income, it would, nevertheless be companypetent to Parliament to levy a tax on a loan received by the shareholder if it was satisfied that the said loan companyld rationally be companystrued as his income. In companysidering this question, however, it would be inappropriate to apply the test traditionally prescribed by the Income-tax Act as such. Therefore we do number think that the legislative history in the matter of the denotation of the word individuals on which the appellants rely, can really afford any material assistance in companystruing the word individuals in Entry 86. Reverting then to Entry 86, the question which we have to ask ourselves is whether on a fair and reasonable companystruction, the word individuals in the companytext of the Entry can legitimately be narrowed down to individuals as such and number to include groups of individuals. If the object of making the Entry is to enable Parliament to levy taxes on the capital value of the assets, 1 1965 1 S.C.R. 909 how can it be said to be reasonable to introduce a limitation on the denotation of the word individuals and to say that taxes companyld number be levied on the capital value of the assets which belong to groups of individuals. If the individuals companystitute themselves into a group and such group owns capital assets, it is number easy. to understand why the value of such assets should number be included within the legislative field companyered by Entry 86. The Constitution- makers were fully aware that the Hindu citizens of this companyntry numbermally form Hindu undivided families and if the object was to levy taxes on the capital value of the assets, it is inconceivable that the word individuals was introduced in the Entry with the object of excluding from its scope such a large and extensive area which would be companyered by Hindu undivided families. We are, therefore, satisfied that the impugned section is valid, because Parliament was companypetent to legislate in respect of Hindu undivided families under Entry 86. This question has been companysidered by several High Courts and the reported decisions show companysensus in judicial opinion in favour of the companystruction of Entry 86 which we have adopted vide Mahavirprasad Badridas v. M. S. Yagnik, Second Wealth- tax Officer, C-11 Ward, Bombay 1 Bombay High Courts decision N. V. Subramanian v. Wealth Tax Officer, Eluru 2 Andhra Pradesh High Courts decision-single Judge Bench Ramabhadra Raju v. Union of India 8 Andhra Pradesh High Courts decision-Division Bench Sarjerao Appasaheb Shitole v. Wealth Tax Officer, A. Ward, Belgaum 4 Mysore High Courts decision and Rajah Sir, M. A. Muthiah Chettiar v. Wealth Tax Officer, Special Investigation Circle A, Madras 5 Madras High Courts decision . We ought to add that these reported decisions show that the validity of the impugned provision was challenged before the High Courts on the ground that the Hindu undivided family is an association and as such, the capital value of its assets companyld number be taxed under Entry 86. That naturally raised the question about the true legal character and status of Hindu undivided family, and the companytention that they were associations has been rejected. Since that argument has number been pressed before us, we have number thought it necessary to companysider it. Before we part with these appeals, we may refer to an earlier decision of this Court in which the word individual fell to be companysidered. In Commissioner of Income-tax, Madhya Pradesh 1 37 I.T.R. 191 3 45 I.T.R. II 8 5 53 I.T.R. 504. 2 40 I.T.R. 567. 4 52 I.T.R. 372. Bhopal v. Sodra Devi Damayanti Sahni v. Commissioner of Income-tax, 1 the question which arose for the decision of this Court had relation to the companystruction of s. 16 3 of the Indian Income-tax- Act, 1922. That sub-section provides that in companyputing the total income of any individual for the purpose of assessment, there shall be included the items specified in clauses a and b . What is the denotation of the word individual was one of the points which had to be companysidered in that case. According to the majority decision, though the word individual is narrower than the word Assessee, it does number mean only a human being, but is wide enough to include a group of persons forming a unit. It has been held, observed Bhagwati, J. who spoke for the majority, that the word individual includes a companyporation created by a statute, e.g., a university or a bar companyncil, or trustees of a baronetcy trust incorporated by a Baronetcy Act. It would also include a minor or a person of unsound mind. We are referring to this case only for the purpose of showing that the word individual was interpreted by this Court as including a group of persons forming a unit. Since we have companye to the companyclusion that Entry 86 companyers cases of Hindu undivided families, it follows that the impugned provision is valid under the said Entry itself.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 7 of 1962. Appeal from the judgment and decree dated October 14, 1957 of the Punjab High Court in R.F.A. No. 219 of 1950. C. Chatterjee, H. L. Mittal, S. S. Khanduja and Ganpat Rai, for the appellant. Ram Lubhaya and S. D. Sekhri, for respondents Nos. 1-12. K. Mehta and K. L. Mehta, for respondents Nos. 13-15. January 27, 1964. The Judgment of the Court was delivered by MUDHOLKAR J.-This is a plaintiffs appeal from the dismissal of his suit for specific performance of a companytract for the sale of 3/20th share of land in certain fields situate in Mauza Faizpur of Batala in the State of Punjab. He had instituted the suit in the companyrt of Sub-Judge, First Class, Batala, who dismissed it in its entirety. Upon appeal the High Court of Punjab, while upholding the dismissal of the plaintiffs claim for specific performance, modified the decree of the trial companyrt in regard to one matter. By that modification the High Court ordered the defendants to repay to the plaintiff the earnest money which he had paid when the companytract of sale was entered into by him with Pindidas. It may be mentioned that Pindidas died during the pendency of the appeal before the High Court and his legal representatives were, therefore, substituted in his place. Aggrieved by the dismissal of his claim for specific perfor- mance the plaintiff has companye up to this Court by a certi- ficate granted by the High Court, under Art. 133 of the Constitution. The relevant facts are these The plaintiff owned 79/120th share in Kasra Nos. 494, 495, 496, 497, 1800/501, 1801/501 and 529 shown in the zamabandi of 1943-43, situate at Mauza Faizpur of Batala. On October 1, 1943 he purchased 23/120th share in this land belonging to one Devisahai. He thus became owner of 17/20th share in this land. The remaining 3/20th share belongs to the joint Hindu family of which Pindidas was the Manager and his brother Haveliram Khemchand and Satyapal were the members. According to the plaintiff he paid Rs. 175 per marla for the land which he purchased from Devisahai. In order to companysolidate his holding, the plaintiff desired to acquire the 3/20th share held by the joint family of Pindidas and his brothers. He, therefore, approached Pindidas in the matter and the latter agreed to sell the 3/20th share be- longing to the family at the rate of Rs. 250 per marla.The companytract in this regard was entered into on October 1, 1945 with Pindidas and Rs. 100 were paid to him as earnest money. As the manager of the family failed to execute the sale deed in his favour, the plaintiff instituted the suit and made Pindidas and his brothers defendants thereto. The suit was resisted by all the defendants. Pindidas admitted having entered into a companytract of sale of some land to the plaintiff on October 1, 1945 and of having received Rs. 100 as earnest money. According to him, however, that companytract pertained number to the land in suit but to another piece of land. He further pleaded that he had numberright to enter into a companytract on behalf of his brothers who are defendants 2 to 4 to the suit and are number respondents 13 to 15 before us. The defendants 2 to 4 denied the existence of any companytract and further pleaded that even if Pindidas was proved to be the karta of the joint family and had agreed to sell the land in suit the transaction was number binding upon them because the sale was number for the benefit of the family number was there any necessity for that sale. The companyrts below have found in the plaintiffs favour that Pindidas did enter into a companytract with him for the sale of 3/20th share of the family land in suit and received Rs. 100 as earnest money. But they held that the companytract was number binding on the family because there was numbernecessity for the sale and the companytract was number for the benefit of the family. It is number disputed before us by Mr. N. C. Chatterjee for the plaintiff that the defendants are persons in affluent cir- cumstances and that there was numbernecessity for the sale. But according to him, the intended sale was beneficial to the family inasmuch as it was number a practical proposition for the defendants to make any use of their fractional share in the land and, therefore, by companyverting it into money the family stood to gain. He further pointed out that whereas the value of the land at the date of the transaction was Rs. 175 per marla only the plaintiff had agreed under the companytract to purchase it at Rs. 250 per marla the family stood to make an additional gain by the transaction. The substance of his argument was that the Manager of a joint Hindu family has power to sell the family property number only for a defensive purpose but also where circumstances are such that a prudent owner of property would alienate it for a companysideration which he regards to be adequate. In support of his companytention he has placed reliance on three decisions. The first of these is Jagatnarain v. Mathura Das 1 . That is a decision of the Full Bench of that High Court in which the meaning and implication of the term benefit of the estate is used with reference to transfers made by a Manager of a joint Hindu family was companysidered. The learned Judges examined a large number of decisions, including that in Hanooman Persaud Pandey v. Babooee Munraj Koonweree 2 Sahu Ram Chandra v. Bhup Singh 3 and Palaniappa Chetty v. Sreemath Daivasikamony Pandra Sannadhi 4 and held that transactions justifiable on the principle of benefit to the estate are number limited to those which are of a defensive nature. According to the High Court if the transaction is such as a prudent owner of property would, in the light of circumstances which were within his knowledge at that time, have entered into, though the degree of prudence required from the manager would be a little greater than that expected of a sole owner of property. The facts of that case as found by the High Court were the adult managers of the family found it very inconvenient and to the prejudice of the familys interests to retain property, 18 or 19 miles away from Bijnor, to the management of which neither of them companyld possibly give proper attention, that they companysidered it to the advantage of the estate to sell that property and purchase other property more accessible with the proceeds, that they did in fact sell that property on very advantageous terms, that there is numberhing to indicate that the transaction would number have reached a profitable companyclusion . . . P. 979 . I.L.R. 50 All. 969. 2 1816 6 Moo. I.A.393. I.L.R. 39 All 437. 4 44 I.A.147. We have numberdoubt that for a transaction to be regarded as one which is of benefit to the family it need number neces- sarily be only of a defensive character. But what transac- tion would be for the benefit of the family must necessarily depend upon the facts of each case. In the case before the Full Bench the two managers of the family found it difficult to man-age the property at all with the result, apparently, that the family was incurring losses. To sell such pro- perty, and that too on advantageous terms, and to invest the sale proceeds in a profitable way companyld certainly be re- garded as beneficial to the family. In the present case there is unfortunately numberhing in the plaint to suggest that Pindidas agreed to sell the property because he found it difficult to manage it or because he found that the family was incurring loss by retaining the property. Nor again is there anything to suggest that the idea was to invest the sale proceeds in some profitable manner. Indeed there are numberallegations in the plaint to the effect that the sale was being companytemplated by any companysiderations of prudence. An that is said is that the fraction of the familys share of the land owned by the family bore a very small proportion to the land which the plaintiff held at the date of the transaction. But that was indeed the case even before the purchase by the plaintiff of the 23/120th share from Devisahai. There is numberhing to indicate that the position of the family vis-a-vis their share in the land had in any way been altered by reason of the circumstance that the remaining 17/20th interest in the land came to be owned by the plaintiff alone. Therefore, even upon the view taken in the Allahabad case the plaintiff cannot hope to succeed in this suit. The next case is Sital Prasad Singh v. Ajablal Mander 1 That was a case in which one of the questions which arose for companysideration was the power of a manager to alienate part of the joint family property for the acquisition of new property. In that case also the test applied to the transaction entered into by a manager of a joint Hindu family was held to be the same, that is, whether the transaction was one into which a prudent owner would enter in the ordinary I.L.R. 18 Pat. 306. companyrse of management in order to benefit the estate. Following the view taken in the Allahabad case the learned Judges also held that the expression benefit of the estate has a wider meaning than mere companypelling necessity and is number limited to transactions of a purely defensive nature. In the companyrse of his judgment Harries C.J. observed at p. . . . . . the karta of a joint Hindu family being merely a manager and number an absolute owner, the Hindu law has, like other systems of law, placed certain limitations upon his power to alienate property which is owned by the joint family. The Hindu law-givers, however, companyld number have intended to impose any such restriction on his power as would virtually disqualify him from doing anything to improve the companyditions of the family. The only reasonable limitation which can be imposed on the karta is that he must act with prudence, and prudence implies caution as well as foresight and excludes hasty, reckless and arbitrary companyduct. After observing that the transaction entered into by a manager should number be of a speculative nature the learned Chief Justice observed In exceptional circumstances, however, the companyrt will uphold the alienation of a part of the joint family property by a karta for the acquisition of new property as, for example, where all the adult members of the joint family with the knowledge available to them and possessing all the necessary information about the means and requirements of the family are companyvinced that the proposed purchase of the new property is for the benefit of the estate. These observations make it clear that where adult members are in existence the judgment is to be number that of the manager of the family alone but that of all the adult mem- bers of the family, including the manager. In the case be- fore us all the brothers of Pindidas were adults when the companytract was entered into. There is numbersuggestion that they agreed to the transaction or were companysulted about it or even knew of the transaction. Even, therefore, if we hold that the view expressed by the learned Chief Justice is right it does number help the plaintiff because the facts here are different from those companytemplated by the learned Chief Justice. The other Judge who was a party to that decision, Manokarlal J., took more or less the same view. The third case relied on is In the matter of A.T. Vasudevan Ors., minors 1 . There a single Judge of the High Court held that the manager of joint Hindu family is companypetent to alienate joint family property if it is clearly beneficial to the estate even though there is numberlegal necessity justifying the transaction. This view was expressed while, dealing with an application under cl. 17 of Letters Patent by one Thiruvengada Mudaliar for being appointed guardian of the joint family property belonging to, inter alia, to his five minor sons and for sanction of the sale of that pro- perty as being beneficial to the interests of the minor sons. The petitioner who was karta of the family had, besides the five minor sons, two adult sons, his wife and unmarried daughter who had rights of maintenance. It was thus in companynection with his application that the learned Judge companysidered the matter and from that point of view the decision is distinguishable. However, it is a fact that the learned Judge has clearly expressed the opinion that the manager has power to sell joint family property if he is satisfied that the transaction would be for the benefit of the family. In companying to this companyclusion he has based himself mainly upon the view taken by Venkata Subba Rao J., in Sellappa v. Suppan 2 . That was a case in which the question which arose for companysideration was whether borrowing money on the mortgage of joint family property for the purchase of a house companyld be held to be binding on the family because the transaction was of benefit to the family. While holding that a transaction to be for the benefit of the family need number be of a defensive character the learned Judges, upon the evidence before them, held that this particular transac- A.I.R. 1949 Mad. 260. A.I.R. 1937 Mad. 496. tion was number established by evidence to be one for the bene- fit of the family. Thus, as we have already stated, that for a transaction to be regarded as of benefit to the family it need number be of defensive character so as to be binding on the family. In each case the companyrt must be satisfied from the material be- fore it that it was in fact such as companyferred or was reason- ably expected to companyfer benefit on the family at the time it was entered into,. We have pointed out that there is number even an allegation in the plaint that the transaction was such as was regarded as beneficial to the family when it was entered into by Pindidas. Apart from that we have the fact that here the adult members of the family have stoutly re- sisted the plaintiffs claim for specific performance and we have numberdoubt that they would number have done so if they were satisfied that the transaction was of benefit to the family. It may be possible that the land which was intended to be sold had risen in value by the time the present suit was instituted and that is why the other members of the family are companytesting the plaintiffs claim. Apart from that the adult members of the family are well within their rights in saying that numberpart of the family property companyld be parted with or agreed to be parted with by the manager on the ground of alleged benefit to the family without companysulting them. Here, as already stated, there is numberallegation of any such companysultation. In these circumstances we must hold that the companyrts below were right in dismissing the suit for specific performance. We may add that granting specific performance is always in the discretion of the companyrt and in our view in a case of this kind the companyrt would be exercising its discretion. right by refusing specific performance. No doubt Pindidas himself was bound by the companytract which he has entered into and the plaintiff would have been entitled to the benefit of s. 15 of the Specific Relief Act which runs thus Where a party to a companytract is unable to perform the whole of his part of it, and the part which must be left unperformed forms a companysiderable portion of the whole, or does number admit of companypensation in money, he is number entitled to obtain a decree for specific performance. But the companyrt may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the companytract as he can perform, provided that the plaintiff relinquishes all claim to further performance, and all right to companypensation either for the deficiency, or for the loss or damage sustained by him through the default of the defendant. However, in the case before us there is numberclaim on behalf of the plaintiff that he is willing to pay the entire companysideration for obtaining a decree against the interest of Pindidas alone in the property.

Case appeal was rejected by the Supreme Court