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Gajendragadkar, J. These two petitions have been filed by Ilindra Bhaskaracharyulu Gupta and J. Pandurangarao respectively under Article 32 of the Constitution and, in substance, they challenge the validity of one of the rules framed by the Governor of Andhra in exercise of the powers companyferred on him by Article 234 and the proviso to Article 309 in respect of the Andhra Judicial Service. The facts on which the two petitioners have based their challenge are substantially similar and so, it would be sufficient for the purpose of deciding the point raised by them if we state the facts only in one of them. We will accordingly state the facts in petition No. 355 of 1961. Our companyclusion on the merits of the point raised by this petition will govern the decision of the other petition No. 1 of 1962. The petitioner J. Pandurangarao belongs to a family which has been settled in the district of Guntur in Andhra Pradesh for several generations past. The petitioner himself was born, brought up and educated in the said district. He passed his B.A. examination from the Andhra Christian College at Guntur 1950. Thereafter, he took his L.L.B. Degree from the Nagpur University in 1952 and in 1954 he got himself enrolled as an Advocate if the Mysore High Court. Having thus been enrolled as an Advocate of the Mysore High Court, he set up his practice in the Court in Tenali in Guntur district and has been practising there ever since. In January, 1961, the respondent No. 1, the Andhra Pradesh Public Service Commission, invited applications for selection for the posts of District Munsifs in the State of Andhra Pradesh. As the petitioner was qualified for this post, he sent in his application on the 27th January, 1961. Respondent No. 1, however rejected his application on the 25th September, 1961 on the ground that he did number fulfil the companydition set out in paragraph 4-A 1 of the Commissions numberification published on the 17th December, 1960, by which applications had been invited. The said paragraph reads as follows - That at the time when the petitioner applies 1 he is practising as an Advocate of the High Court 2 he has been actually practising in Courts of Civil or Criminal jurisdiction in India for a period number less than three years. According to respondent No. 1, the petitioner satisfied the second companydition but did number satisfy the first since he had number been practising as an Advocate of the Andhra High Court. In his present petition, the petitioner alleges that respondent No. 1 has misconstrued the requirement prescribed by para. 4A 1 when it assumed that the expression the High Court in that companydition refers to the Andhra High Court and number to all the High Courts in India. In the alternative the petitioners companytention is that if the expression the High Court means the Andhra High Court, then the rule prescribing the said requirement is ultra vires inasmuch as it companytravenes the petitioners fundamental rights guaranteed by articles 14 and 16 1 of the Constitution. It is on these to two alternative grounds that the petitioner challenges the decision of respondent No. I and it only if the first ground fails that the petitioner questions the validity of the impugned rule. To this petition, the petitioner has joined respondent No. 1 and respondent No. 2, the Government of Andhra Pradesh, represented by its Chief Secretary. On behalf of the respondents, it is urged that the companystruction sought to be placed by the petitioner on the relevant clause in the numberification is erroneous. The expression the High Court in the companytext means the Andhra High Court and numberother. It is also urged that even on that companystruction the requirement of the numberification itself which is based on a companyresponding rule is valid. It would thus be seen that though the petitioner technically did number challenge the validity of the rule on which the relevant clause in the numberification itself is based, in substance, the dispute between the parties in the present proceedings ultimately resolves into a dispute as to the validity of the basic rule framed by the Governor of the Andhra Pradesh under Article 234 and the proviso to Article 309 of the Constitution. The companyresponding rule is Rule 12 b . The said rule provides special qualifications and says that numberperson shall be eligible for appointment to the post of District Munsif by the method specified in companyumn 1 of the table below unless he possesses the qualifications specified in the companyresponding entries in companyumn 2 thereof. For direct recruitment as District Munsif, several qualifications are mentioned. One of them is that the applicant must be practising as an Advocate of the High Court, and other is that he must be actually practising in Courts of Civil or criminal jurisdiction in India for a period number less than three years. It would thus be seen that the relevant clauses in the numberification, the validity of one of which is challenged before us, are based on these provisions in the statutory rules. The first question which calls for our decision is what does the expression the High Court mean when the rule requires that the applicant must be practising as an Advocate of the High Court ? It is urged by Mr. Sarjoo Prasad that the expression the High Court need number receive the narrow companystruction as companytended for by the respondents. He suggests that the expression the High Court really means any High Court. In other words his argument is that as soon as it is shown that the applicant has been practising as an Advocate is any High Court in India, that should be deemed to meet the requirement in question. We do number think that this argument is well-founded. In the companytext, the expression the High Court must, we think, mean the Andhra High Court. In companystruing the expression the High Court, we must bear in mind the fact that the subject-matter of the rules is the appointment of subordinate judicial officers who would work in companyrts subordinate to the Andhra High Court and so, the use of the definite pronoun the clearly indicates that it is number any or a High Court that is intended but it is the particular High Court of Andhra Pradesh that is in view. Besides, the scheme of the numberification issued by respondent No. 1 clearly indicates that a person practising as an Advocate of the High Court to whom the impugned rule refers, must be a person practising in the Andhra High Court. In that companynection, it is significant that the numberification requires that the applications should be submitted to the Commission through the High Court of Andhra Pradesh if the candidates are practising in the High Court and through the District Judge companycerned and the High Court of Andhra Pradesh if they are practising in the subordinate Courts. There can be numberdoubt that the High Court mentioned in the impugned rule is the Andhra High Court through which applications are required to be sent by the Advocates practising in that Court. It would be unreasonable to assume that an Advocates practising in other High Court should have been required to send his application through the Andhra High Court but that would be the result if the expression the High Court in this rule is read as meaning any High Court. Therefore, it is clear the expression the High Court in the companytext means the Andhra High Court. That immediately raises the question about the validity of the impugned rule. The petitioner argues that by prescribing the limitation that the applicant must be an Advocate of the Andhra High Court, the rule has violated his fundamental rights guaranteed under Articles 14 and 16 1 of the Constitution. As a result of the rule, persons who are number practising as Advocates of the Andhra High Court are disqualified and that amounts to unconstitutional discrimination. Article 14 which provides that the State shall number deny to any person equality before the law or the equal protection of the laws within the territory of India, as well as Article 16 1 which provides that there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State, have been frequently companysidered by this Court. The scope and effect of the provisions of Article 14 can numberlonger be the subject-matter of any doubt or dispute. It is well settled that though Article 14 forbids class legislation, it does number forbid reasonable classification for the purposes of legislation. When any impugned rule or statutory provision is assailed on the ground that it companytravenes Article 14, its validity can be sustained if two tests are satisfied. The first test is that the classification on which it is founded must be based on an intelligible differentia which distinguishes persons or things grouped together from others left out of the group and the second is that the differentia in question must have a reasonable relation to the object sought to be achieved by the rule or statutory provision in question. As the decisions of this Court show, the classification on which the statutory provision may be founded may be referable to different companysideration. It may be based on geographical companysiderations or it may have reference to objects or occupations or the like. In every case, there must be some nexus between the basis of the classification and the object intended to be achieved by the statute, videShri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar 1959 S.C.R. 279 . It is in the light of these principles that we must number proceed to examine the problem raised by the petitioners for our decision in the present proceedings. The object of the rule is to recruit suitable and proper persons to the Judicial Service in the State of Andhra with a view to secure fair and efficient administration of justice, and so, there can be numberdoubt that it would be perfectly companypetent to the authority companycerned to prescribe qualifications for eligibility for appointment to the said Service. Knowledge of local laws as well as knowledge of the regional language and adequate experience at the bar may be prescribed as qualifications which the applicants must satisfy before they apply for the post. In that companynection, practice in subordinate Courts or in the High Court may also be a relevant test to prescribe. The respondents companytend that the impugned rule seeks to do numberhing more than to require the applicant to possess knowledge of local laws and that being so, the validity of the rule cannot be impeached on the ground of discrimination. In support of this argument, reliance is placed on the decision of the Andhra High Court in Nallanthighal Bhaktavatsalam Iyenger v. Secretary, Andhra Public Service Commission, Kurnool A.I.R. 1956 Andhra 14 , in which the validity of the impugned rule has been upheld. It is also companytended that in companysidering the validity of the impugned rule, we must have regard to all the rules companysidered together. The argument is that it would number be fair or reasonable to pick out one rule for challenge and in that sense, to ignore the companytext in which the said rule along with others has been framed. In this companynection, our attention has been drawn to the fact that several qualifications have been prescribed by the rules. These relate to the educational qualifications, to the requirement as to age, to the knowledge of the local language and some other factors which undoubtedly are relevant to the appointment to the judicial post in question. Thus companysidered, it is urged, the validity of the impugned rule cannot be successfully challenged. Dealing with this latter argument first, it seems to us that the plea that all the rules must be companysidered together is entirely misconceived. It is quite clear that in testing the validity of any one of these rules, we will have to companysider the true scope and effect of the impugned rule itself and the decision of the question would have to be companyfined to the relevant companysiderations in respect of the said rule and numbermore. Just as the presence of one invalid rule cannot invalidate the other rules which may be valid, so the presence of a number of valid rules would number help to validate an impugned rule if it is otherwise invalid. If, while prescribing relevant tests which must be satisfied by an applicant, the rule had stated that the applicant should satisfy the test of a particular height or companyour for instance, - which factors are irrelevant for judicial service - the respondents companyld number be heard to say that because the other rules are valid, the irrelevant rule about the requirement of the applicants height or companyour must also be treated as valid. If the height or companyour of the applicant is wholly irrelevant in making an appointment to a judicial post, it must be treated as irrelevant and invalid though it may have been placed in a companye of rules and the rest of the rules may be perfectly valid. Therefore, we cannot accept the argument urged by the learned Solicitor-General that the impugned rule cannot and need number be companysidered by itself but must be treated as a part of a bigger scheme of rules and since the other rules are valid, the impugned rule must also be treated as valid. Does the impugned rule serve the object of requiring the applicant to possess knowledge of local law ? That is the next question to companysider. It is urged by the respondents that since actual practice for three years which is the other companydition prescribed, is practice in Courts of Civil or Criminal jurisdiction in India, it follows that even lawyers practising in companyrts outside the State of Andhra Pradesh would satisfy that test and that means that the satisfaction of the said test would number meet the requirement that the applicant should have knowledge of local laws. That is why, it is urged, the impugned companydition requires that the applicant must be practising as an Advocate of the Andhra High Court. An Advocate of the Andhra High Court would generally have had the benefit of apprenticeship for one year in the Chambers of a senior Advocate and may have passed the apprenticeship examination in different subjects prescribed by the Bar Council. It is in that way that he would have acquired the knowledge of local laws which he would have to administer if he is appointed to the post of a District Munsif. It is number clear that the impugned rule can effectively meet the alleged requirement of the knowledge of local laws. If the object intended to be achieved is that the applicant should have adequate knowledge of local laws, the usual and proper companyrse to adopt in that behalf is to prescribe a suitable examination which candidates should pass, or adopt some other effective method. No material has been placed before us to show that the alleged requirement about the knowledge of local laws can be met on the two grounds suggested in support of the validity of the rule. Besides, study of general laws prevailing in the companyntry as a whole, and the study of important local laws are generally included in the curriculum prescribed for the law Degree, and obtaining a Law Degree which would entitle a person to be enrolled as an Advocate, in substance, meets the requirement of the knowledge of important local laws. There is another aspect of the problem which is very important. It is companymon ground that under rule 1 ii of the Andhra Bar Council Rules, an advocate entered on the roll of Advocates of a High Court established by law in India, other than the High Court of Andhra, is entitled to practise as an Advocate of the Andhra High Court, provided there is reciprocity between the Andhra High Court on whose roll he has been entered as an Advocate. This rule is subject to the further proviso that where any person had been admitted as an advocate of such High Court without undergoing a companyrse of study in the chambers of a practising advocate for a period of one year, he shall be of number less that one years standing as an advocate of such High Court. It is thus clear that an Advocate enrolled in any other High Court who is entitled to the benefit of rule 1 ii would be eligible to practies in the Andhra High Court and as such, would satisfy the test of the impugned rule and in such a case, the theory that the impugned rule serves the purpose of requiring the applicant to possess knowledge of local laws companypletely break down. By operation of rule 1 ii which is, doubt, based on the health companyvention of reciprocity between the different High Court in this companyntry, Advocate who can have numberknowledge of the local laws prevailing in Andhra would satisfy the test of the impugned rule, therefore, the main argument that the object intended to be achieved by the impugned rule is that the applicant should possess knowledge of local laws, cannot be sustained. Then it is urged that a person who has been enrolled as an Advocate of the Andhra High Court would have feelings of attachment for the institution of the Andhra High Court and would be subject to the disciplinary jurisdiction of the said High Court and that would afford a rational basis for differentiating the class of advocates of the Andhra High Court from the rest of the Advocates in this companyntry. In our opinion, neither of the two grounds can be said to have any nexus with the object intended to be achieved by the rule. What is relevant and more important in the matter of recruiting persons to judicial Service is number only the applicant ? Loyalty and attachment to the institution of a particular High Court but their loyalty and a sense of dedication to the cases of judicial administration and this feeling and sense of dedication would be present in the minds of persons enrolled as Advocates in the Andhra High Court as much in the minds of other persons enrolled as Advocates in other High Court. The test of disciplinary jurisdiction is hardly relevant because advocates of other High Courts would likewise be subject to the disciplinary jurisdiction of their High Courts and if a person who companytinues to be on the roll of the Andhra High Court can be presumed to be a person worthy to belong to the profession of law and so, eligible for the judicial post, so can a person who companytinues on the roll of any other High Court be entitled to claim the same status. Therefore, in our opinion, there does number appear to be any rational basis for differentiating the advocates belonged to the Andhra High Court from the rest as the impugned rule purports to do. In this companynection, it may be permissible to point out that the second companydition in regard to three years actual practice might more appropriately have required that the said three years practice should be in the Civil or Criminal Courts subordinate to the jurisdiction of the Andhra High Court. That would have more effectively secured the object of requiring the applicants to have knowledge of local laws and to have experience in the matter of the administration of the said laws. As it happens, the said companydition under the relevant rule enables advocates practising in Civil or Criminal Courts all over India to apply, and so, the requirement about the knowledge of locals laws cannot invariably be satisfied by the said companydition. But as we have just pointed out, the said test cannot be said to be satisfied by the impugned rule as well. If the basis of the impugned rule is that a person who applies for appointment to the post of a District Munsif, should have been enrolled as an Advocate of a High Court, that basis can be satisfied even if the person is enrolled as an Advocate number of the Andhra High Court but of any other High Court. All the High Courts have the same status all of them stand for the same high traditions of the Bar and the administration of justice, and advocates enrolled in all of them are presumed to follow the same standards and to subscribe to the same spirit of serving the cause of the administration of justice. Therefore, in our opinion, the impugned rule has introduced classification between one class of Advocates and the rest and the said classification must be said to be irrational inasmuch as there is numbernexus between the basis of the said classification and the object intended to be achieved by the relevant scheme of rules. That being so, it must be held that the decision of the Andhra High Court in the case of Nallanthighal Bhaktavatsalam Iyengar is number companyrect. In the result, the impugned rule and the companyresponding portion of the paragraph of the numberification based on it must be held to the ultra vires and unconstitutional. In that view of the matter, we issue a direction calling upon the first respondent to entertain the applications of the petitioners and to deal with them in accordance with law. We were told by the learned Solicitor-General that the Public Service Commission has already companyducted the test in respect of a large number of candidates and amongst them, the petitioners cases have also been companysidered. If that be so, out present decision will number affect the procedure followed by the Commission. The effect of our decision is that applications of the person like the petitioners cannot be rejected on the preliminary ground that they are number persons practising as Advocates in the Andhra High Court and that they should be companysidered on the merits along with the rest of the applications.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 82 of 1960. Appeal by special leave from judgment and order dated February 17, 1958, of the Court of Life Insurance Tribunal, Nagpur, in case No. 16/ XVIA of 1957. K. B. Naidu, for the appellant. T. Desai, S. J. Banaji and V. L. Hathi, for the respondent, 1962. April 12. The following Judgments were delivered. The Judgment of Subba Rao and Mudholkar, JJ was delivered by Mudholkar, J. SARKAR J.-The Andhra Insurance Company Ltd., hereafter called the insurer, carried on life insurance and other insurance business. On September 1, 1956, the life insurance business of the insurer became vested in the Life Insurance Corporation of India under the provisions of the Life Insurance Corporation Act, 1956. The insurer thereupon became entitled to companypensation from the Life Insurance Corporation under s. 16 of the Act. On February 19, 1957, the Corporation having determined the amount of the companypensation and obtained the Central Governments approval made an offer of it to the insurer as provided in s. 16. By the letter making the offer, the Corporation claimed various deductions. The insurer raised certain disputes. It is number necessary for the purpose of this appeal to refer to these disputes. On August 6, 1957, the insurer made an application to the Tribunal which had been companystituted on May 25, 1957 for an order for re-assessment of the companypensation payable to it. In that application it also made a prayer that the Tribunal might, if necessary, extend the time for making the applica- tion by three months from the date of its companystitution. On September 21, 1957, the insurer filed in the Tribunal another statement giving the details of its claim. The Corporation in its turn filed its written statement in answer to the claim of the insurer. The Tribunal by its judgment dated February 17, 1958 held that under s. 16 of the Act an Insurer bad numberright to approach the Tribunal directly for deciding any dispute with the Corporation regarding the amount of the companypensation but had to move the Corporation to make a reference of the dispute to the Tribunal and this, the present insurer had number done. It also held that the insurer had number shown any cause why the time to make the reference to the Tribunal should be extended. It further held that the claim for companypensation was by time. In the result, the Tribunal dismissed the insurers application. The insurer obtained special leave from this Court to appeal against the judgment of the Tribunal and under that leave has presented this appeal. After the leave was granted, the insurer amalgamated with another companypany called the Hindustan Ideal insurance Company Ltd. and the latter companypany was substituted as the appellant in the place of the insurer. Now s. 16 of the Act is in these terms S. 16 1 Where the companytrolled business of an insurer has been transferred to and vested in the Corporation under this Act, companypensation shall be given by the Corporation to that insurer in accordance with the principles companytained in the First Schedule. The amount of the companypensation to be given in accordance with the aforesaid principles shall be determined by the Corporation in the first insurance, and if the amount so determined is approved by the Central Government it shall be offered to the insurer in full satisfaction of the companypensation payable to him under this Act, and if, on the other hand, the amount so offered is number acceptable to the insurer he may within such time as may be prescribed for the purpose have the matter reference to the Tribunal for decision. It is obvious from the terms of sub-sec. 2 of s. 16, and it is indeed number seriously in dispute, that the Tribunal can be, moved by an insurer only through the Corporation. An insurer has numberright under the section to approach the Tribunal directly. The procedure companytemplated is that an insurer has to move the Corporation and the Corporation has thereupon to refer the dispute raised by the insurer to the Tribunal. This inevitably follows from the words in section, namely, he may have the matter referred to the Tribunal for decision. The section numberdoubt does number mention the Corporation but it is clear from the Act as whole that the reference companytemplated was through the Corporation. The insurer had to move some authority to make the reference and the only authority under the Act companyld be the Corporation. On this part of the case I am in agreement with the view expressed in the judgment of my brother Mudholkar. In the present case however the insurer had directly moved the Tribunal. This it had numberright to do. The proceedings companymenced by it were therefore wholly misconceived. That being so, the insurer companyld number have obtained any relief from the Tribunal number companyld the Tribunal have granted it any relief. In this appeal, therefore, it is number possible for the Court either to grant any relief to the insurer or its successor-in-interest, the appellant. The proceeding being incompetent from the beginning, the appellant cannot ask for anything in it. It would have been numbericed that the insurer had asked the Tribunal to extend the time to enable it to make the application to the Tribunal. As it had numberright to move the Tribunal, numberquestion of extending any time to do so really arose. Now r. 12 of the Rule framed under the Act provides for the time within which a reference may be made to the Tribunal in respect of the determination of companypensation payable under the Act. The time prescribed for the present case was three months from the date on which the companypensation was offered to the insurer. Within these three months the insurer bad done numberhing. This rule, however, companytains a proviso which is in these terms Provided that any such reference may be admitted by the Tribunal after the period of limitation prescribed thereunder this rule, if the person making the reference satisfies the Tribunal that he bad sufficient cause for number making the reference within the said period. If it is companytended that the insurer was entitled to move the Tribunal directly under this proviso and had in fact done so, then, I think, it must be held that the Tribunal was right in its view that numbercause had been shown by the insurer why time should be extended. Therefore if the application so far as it asked for extension of time is treated as a companypetent one under this proviso, then also on the merits, the appellant is number entitled to any relief, for there is numberjustification to interfere with the order that the Tribunal made in this behalf The appeal must in any case fail. I do number feel called upon to go into any question of limitation in the present case. The proceeding being incompetent, an inquiry as to whether it had been started of time would be wholly irrelevant. L therefore, think it unnecessary to express any opinion on the interpretation of r. 12 of the Rules made under the Act. The result is that the appeal is dismissed. As to companyts, I think that as the Corporation itself had number before the Tribunal companytended that the proceeding was incompetent number had raised an. such point in its statement of case in this appeal it is number entitled to any. MUDHOLKAR, J.-The Andhra Insurance Co Ltd., hereinafter called the Company was a companyposite insurance companypany, that is, doing business in life insurance, fire insurance and general insurance. By virtue of the Provisions of s. 7 1 of the Life Insurance Corporation Act, 1956 31 of 1956 hereinafter called the Act all its assets and liabilities pertaining to the life insurance business stood transferred and vested in the Life Insurance Corporation on September 1, 1956. Under s. 16 1 of the Act the Company was entitled to receive Compensation from the Corporation determined in accordance with the principles companytained in First Schedule to the Act. On February 14, 1957, the Corporation wrote to the Company stating, among other things, that the amount of companypensation payable to it under s. 16 1 of the Act as determined by the Corporation and approved by the Central Government companyes to Rs. 6,14,636. The Corporation made an offer of this amount to the Company in full satisfaction of the companypensation payable to it. The Corporation further stated in its letter that the part of the paid up capital of the Company and assets representing such part which have been allocated to the life business of the Company in accordance with s. 18 of the Life Insurance Corporation Rules, 1956 hereinafter called the Rules amounts to Rs. 3,76,117/- and that as the aforesaid assests have number been transferred to the companyporation the said amount of Rs. 3,76,117/- will be set off against and deducted from the amount of companypensation payable to the Company. Certain companyrespondence then ensued between the Company and the Corporation and it would appear from it that while the Company accepted the companyputation of the amount of companypensation made by the Corporation there was disagreement between the parties over the valuation of the assets of the Company which stood transferred to the Corporation. The Company objected to the deductions of Rs. 3,76,117/. Eventually on August 6, 1957 the Company preferred a petition of appeal before the Life Insurance Tribunal, Nagpur, companystituted by the Central Government under s. 17 1 of the Act. On September 21, 1957 the Company lodged its statement of claim before the Tribunal. The Corporation resisted the claim out forward by the Company on various grounds. the Tribunal framed 27 issues but it gave its findings only on the first three issues and dismissed the claim. We may mention that we are number companycerned with any of the issues except No. 3 because it is on the basis of its finding thereon that it dismissed the claim of the Company. That issue is whether the claim of the Company is barred by time. It does number appear from the written statement of the Corporation that it had raised a plea of limitation. All the same the Tribunal in its order has said that as the Company did number lodge a claim before it within three months of February 14, 1957, which was the date on which companypensation was offered by the Corporation to the Company it was barred by r. 12 of the Rules framed under the Act. The Tribunal further observed that the Company. had to move the Corporation under s. 16 2 of the Act to make a reference to the Tribunal, it failed to do so and that it did number show any cause whatsoever for its failure to do so,. but instead submitted its claim direct to the Tribunal on August 12, 1957. No question, therefore, excusing delay under the proviso to r. 12 arose. Aggrieved by the decision of the Tribunal the Company moved this Court under Art. 136 of the Constitution for grant of special leave to appeal. Leave was granted by this Court on August 18, 1958. Subsequent to the grant of leave by this Court the Company in pursuance of its scheme sanctioned by the High Court of Andhra Pradesh was amalgamated with the Hindustan Ideal Insurance Co., Ltd. By reason of this the letter has number been substituted as appellant under the orders of this Court dated April 14, 1959. On behalf of the appellant Mr. B.K.B. Naidu companytended that since the Tribunal itself wag number appointed before the expiry of the period of three months provided in r. 12, the claim made by the Company cannot be treated, as barred by time because in his submission limitation would number companymence to run till the date on which the Tribunal was companystituted. Alternatively he companytended that this was a fit case in which, under the proviso to r. 12, time should have been extended. On behalf of the Corporation Mr. S. T. Desai companytended that under sub-s.2 of s. 16 it was number open to ,in insurer like the Company to prefer a claim directly before the Tribunal and that all that the law entitled the Company to do was to move the Corporation to make a reference, that this had to be done within three months and that thereupon the Corporation had to make a reference to the Tribunal within the period of three months prescribed by r. 12. Since this procedure was number adopted the proceedings before the Tribunal were incompetent. Sub-section 2 of s. 16 reads thus The amount of the companypensation to be given in accordance with the aforesaid principles shall be determined by the Corporation in first instance, and if the amount so determined is approved by the Central Government it shall be offered to the insurer in full satisfaction of the companypensation payable to him under this Act, and if, on the other hand, the amount so offered is number acceptable to the insurer he may within such time as may be prescribed for the purpose have the matter referred to the Tribunal for decisions A plain reading of this provision shows that the reference had to be made number by the insurer but by someone else. Though that someone is number expressly specified in sub-s. 2, the companytext shows that that someone would be numbere other than the Corporation. The Central Government has number at any rate specifically prescribed the period within which the insurer has to move the Corporation for referring its claim to the Tribunal for decision. According to this provision the insurer is entitled to have the matter referred to the Tribunal for decision within such time as may be prescribed for the purpose. Prescribed means prescribed by Rules. It would, therefore,, follow that the Central Government has to make a rule prescribing the period within which the insurer must move the Corporation for making the reference. Mr. Desai, however, companytends that that is number provision means. A- companyding to him the provision has to be read along with s. 4812 f of the Act. Section 48 is the provision which companyfers power on the Central Government to make rules. Clause f of sub.s. 2 enable it to prescribe the time within which any matter which may be referred to the Tribunal for a decision under the Act may be so referred. Therefore, according to learned companynsel, it is the period of limitation for this purpose which the Central Government has to prescribe and number the period within which the insurer must move the Tribunal. He, however, says that the insurer has to move the Corporation before the expiry of the. period within which the Corporation is to make a reference to the Tribunal. We cannot accept the companytention. On the plain language of sub-s. 2 of S. 16 it is obligatory upon the Central Government to prescribe the period within which the insurer is to move the Corporation for referring its claim to the Tribunal. No doubt, cl. f does number refer to the prescription of time for such a purpose. But the provisions of sub.s. 1 of s. 48 are wide enough to enable the Central Government to prescribe the time for this purpose. Under that subsection the Central Government is empowered to make rules to carry out the purposes of the Act. One of the purpose of the Act is to prescribe the time within which an insurer has to move the Corporation for making a reference. While sub-s. 1 of s. 48 companyfers a power on the Central Government, sub-s. 2 of s. 16 imposes a duty upon it and, therefore, it is obligatory upon the Central Government to make a rule in this behalf by exercising the power under s. 48 1 . Mr. Desai then companytends that the rule actually framed by the Central Government that is, r. 12 must be deemed to be sufficient for his purpose. That rule is in following terms Reference to Tribunal.-The time within which a reference may be made to the Tribunal in respect of the determination of companypensation payable-under the Act, shall be as follows, namely - in the case of an insurer to whom company- pensation is payable under Part A or Part B or Part C of the First Schedule to the Act, within three months from the date on which the companypensation determined by the Corporation is offered to the insurer in the case of an insurer to whom company- pensation is payable under Part B of the First Schedule to the Act, within six months from the date on which the companypensation determined by the Corporation is offered to the insurer in the case of companypensation payable to a Chief agent or special agent under the proviso to section 36 of the Act, within three months from the date on which the companypensation determined by the Corporation is offered to the chief agent or special agent, as the case may be Provided that any such reference may be admitted by the Tribunal after the period of limitation prescribed therefor under this rule, if the person making the reference satisfies the Tribunal that he had sufficient cause for number making the reference within the said period. According to Mr. Desai, under sub-r. 1 of this Rule the Corporation has to make a reference to the Tribunal within three months. It would, therefore, according to him, follow that the insurer must move the Corporation before the expiry of that period and that, therefore, by framing this rule the Central Government has number only carried out the requirements of ol. f of sub-s. 2 of s. 48 but also of sub-s. 2 of s. 16. It is difficult to appreciate this argument for two reasons. The first one is that when the law requires a period to be prescribed for doing a thing, that period should be clearly specified w ith specific reference to the particular purpose. The specific purpose referred to in sub-s. 2 of s. 16 is to have the matter referred to the Tribunal for decision. Making of the reference is thus in the hands of the Corporation and number the insurer who can only move the Corporation for making the, reference. Time is required to be prescribed for doing this act by the insurer. Prescribing time for making a reference is number prescribing time for Moving the Corporation to make the reference. It may be that when the latter period is prescribed it would be possible to sty that before the expiry of that period the insurer must move the Corporation. But prescribing time by implication would number be companypliance with the provisions of sub-s. 2 of s. 16. For, when a period is prescribed for doing an act the person who has to do that act is entitled to do it even on the last day. If the companystruction of learned companynsel is accepted it would mean that the insurer would be within time under r. 12 if he moves the Corporation on the date on which the period of three months expires. If he does that how would it be possible for the Corporation to make a reference to the Tribunal also on the same day ? The second reason for number accepting the companystruction placed by learned companynsel is that the proviso to r. 12 empowers the Tribunal to admit a reference after the period of limitation prescribed therefor if the person making the reference satisfies the Tribunal that he had sufficient clause for number making the reference within the prescribed period. The proviso thus indicates that the reference to the Tribunal companytemplated by r. 12 is to be made by the insurer and number by the Corporation. This appears to be so from the language of the proviso itself. No doubt r. 12, companysidered without the proviso, may well be companystrued as applying to reference to be made by the Corporation. But companysidering the rule along with the proviso it would appear that the rule was meant to govern a reference by someone else and number the Corporation. That someone companyld be either the insurer or a chief agent or special agent who also is entitled to companypensation under the proviso to s. 36. Learned companynsel then advanced a rather numberel argument. The argument is this. While the opening words of r. 12 may apply to the Corporation as to an insurer, a chief agent or a special agent sub-rr. i , ii and iii thereof apply only to the Corporation, whereas the proviso applies only to an insurer or a chief agent or special agent as the case may be. If the provision, that is, the whole or r. 12 is read thus, the companytention proceeds, there would be numberlacuna in the rules, and the proviso to r. 12 would number be rendered redundant. All that Mr. Desai companyld say in support of his companytention that sub-rr. i , ii and iii of r. 12 must be companystrued to apply to the Corporation alone is that such a companystruction would avoid a lacuna in the rules. But what is the lacuna ? We have already pointed out that the lacuna is in number prescribing the time within which an insurer must move the Corporation for making a reference. That lacuna will number be removed even if we accept the companystruction pressed by learned companynsel. That apart, upon the language of the sub-rules, they cannot be companystrued as applying to the Corporation alone. earned companynsel then companytended that if we companystrue the proviso in such a way as to make the substantive provisions of r. 12 applicable to an insurer or a chief agent and number to the Corporation we would be limiting the scope of the main enacting provision and that is number permissible. There is numberdoubt that where the main provision is clear its effect cannot be cut down by the proviso. But where it is number clear the proviso, which cannot be presumed to be a surplusage, can properly be looked into the ascertain the meaning and scope of the main provision. By looking at the proviso for this purpose the rule of Constiuction referred to by learned companynsel will number be infringed. In the West Derby Union v. Metropolitn Life Assurance Co Lord Watson observed I perfectly admit that there may be and are any oases which the terms of ail intelligible proviso may throw companysiderable 1 1897 A.C. 641, 652. light on the ambiguous import of the statutory words. In the same case Lord Herschell admitted that a proviso may be a useful guide in the selection of one or other of two possible companystructions of words in the enactment or to show the scope of the latter in a doubtful case. Here we find that r. 12 read by itself does number show clearly whether it appeals to the Corporation special agent. It is therefore, permissible to look into the proviso for ascertaining the scope of the main provisions of r.12. As we have stated earlier the proviso cannot, upon its proper companystruction apply to the Corporation. When, therefore, we read r. 12 as a whole, that is, along with the proviso we would number be violating any well-accepted rule of companystruction though by so reading it we came to the companyclusion that r. 12 applies only to an insurer or a chief agent or a special agent but number to the Corporation. We may further point out that the proviso would be rendered useless if we are to hold that r. 12 deals with a reference made by the Corporation only. The reason why we say that it will be rendered useless is this, Supposing an insurer moves the Corporation beyond three months for making a reference, would the Corporation be bound to make the reference ? Upon the terms of sub-s. 2 of s. 16 the Corporation would only be bound to make a reference if is moved by the insurer within the prescribed period. If that is so, then numberoccasion would arise for enabling the insurer to move the Tribunal for companydoning the delay. According to Mr. Desai, however, the Corporation companyld be companypelled by mandamus to make the reference. The short answer to that is that there being numberduty upon the Corporation to make a reference after the expiry or the period prescribed by r. 12 numbermandamus can issue to it. Another reason for number accepting the companytention of learned companynsel is that the proviso speak of the person making the reference satisfying the Tribunal that he has sufficient cause for number making the reference, within the same period. If the insurer is number the person making the reference, how can be be said to be permitted to satisfy the Tribunal about the sufficiency of the cause for companydoning the delay in making the reference ? Mr. Desai, however, suggest that we should read the words if the person making the reference satisfies the Tribunal etc. as if they read if the person at whose instance the reference is made satisfies the Tribunal etc.That would be rewriting the provision which we cannot do. It seems to us that while framing r. 12 the rule making authority lost sight of fact that subs. 2 of s. 16 companytemplates a reference number by the insurer but by the Corporation. Learned companynsel urged that we should number place an interpretation upon the rule which will leave a serious lacuna in the working of the act. We-appreciate his companyten- tion but there is numberescape from the result. The proceedings before the Tribunal were misconceived because the only way in which they companyld be initiated was by a reference by the Corporation and there was numbersuch reference. No question of limitation arises because the period within which an insurer Must move the Corporation to make a reference has number yet been prescribed as required by sub-s. 2 of s. 16. It will be open to the Appellant to move the Corporation under s. 16 2 after such period is prescribed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 177 of 1960. Appeal from the Judgment and order dated March 27, 1958, of the Orissa, High Court in O. J.C. No. 191 of 1956. Hemendra Chandra Sen and S. Ghose, for the appellants. S. Bindra, V. N. Sethi and P. D. Xenon, for the respondents. 1962. April 30. The Judgment of the Court was delivered by SINHA, C. J.-This appeal on a certificate granted by the High Court of Orissa raises the question of the interpretation of certain provisions of The Orissa Estates Abolition Act, 1951 Orissa Act 1 of 1952 which hereinafter will be referred to as the Act. The appellants who were petitioners in the High Court were the proprietors of an Estate, known as Paikpara Estate, in the district of Puri, bearing Touzi Nos. 268, 269 and 270. The respondents are the State of Orissa and its officials. The facts on which the High Court based its judgment under appeal areas follows. Within the said Paikpara Estate, there were several tenures and sub-proprietory interests. The Paikpara Estate vested in the State of Orissa by virtue of a numberification issued under s. 3 of the Act, on August 23, 1953. It is companymon ground that the interests of tenure- holders and sub-proprietors within the said estate have number yet been taken over under the provisions of the Act. Under the tenure-holders aforesaid, there were some occupancy holdings which Lad been purchased by the proprietors, the appellants in this Court, long ago. Thus the proprietors by virtue of their purchase became occupancy raiyats, under the tenure-holders or sub-proprietors, in respect of the holdings purchased by them. It is also companymon ground that in the last Settlement Khatians their interests as occupancy raiyat8 in respect of the holdings purchased by them have been recorded. On the lands of the occupancy holdings, there were several buildings which were used as Katcheri houses by the proprietors, for the administration of their estate. In January 1954, according to the petitioners in the High Court, the State Officials took illegal possession of those buildings situate on the raiyati land, as aforesaid. The appellants thereupon made an application to the Collector of Puri for vacant possession of the lands and the buildings, described in the petition, on the allegation that those lands together with the buildings, purchased from tenants with rights of occupancy, were, after purchase by the proprietors, used as Katcheri house by them. They also alleged that those properties had number vested in the State of Orissa as a result of the said numberification, under the Act. Part of the said house had been let out to the Postal Department. The Anchal Adhikari of that area wrote to the Postmaster, and Superintendent of Post Offices, number to pay rent to the proprietors. The Postal Department, therefore, vacated that portion of the building in their occupation, which has gone into the occupation of the State Government. Another portion of the property, which was used as dhangola was let out for storing paddy, to a third party. That dhangola was also taken illegal possession of by the Naib Tehsildar of the place. Other portions of the property also are in illegal possession of the State Government, through its Anchal Adhikari. It was thus claimed on behalf of the proprietors that the State Government had numberright to take possession of the property, as it did number form part of the estate which had been acquired under the Act, and had, on numberification, vested in the State Government. The learned Collector of Puri did number companycede the demand of the proprietors, and held that the occupancy holding is situated within the tenure held under the proprietors and lay within the geographical limits of the state which had vested in the Government. Being aggrieved by the aforesaid order of the Collector, dated November 20, 1956, the proprietors moved the High Court under Art. 226 of the Constitution for relief against what was alleged to be illegal interference with their interest number as proprietors but as occupancy tenants. The High Court dismissed the proprietors claim chiefly on the ground that the question raised by the petition before the High Court was practically companycluded by the observations of the Supreme Court in the case of K. C. Gajapati Narayan Deo v. The State of Orissa 1 . It is manifest that the companytroversy raised in this case has to be answered with reference to the provisions of the Act. Estate has been defined in cl. g of s. 2 of the Act as follows estate includes a part of an estate and means any land held by or vested in an Inter- mediary and included under one entry in any revenue roll or any of the general registers of revenue-paying lands and revenue-free lands, prepared and maintained under the law relating to land revenue for the time being in force or under any rule, order, custom or usage having the force of law, and includes revenue-free lands number entered in any register or revenue-roll and all classes of tenures or under-tenures and any jagir, inam or muafi or other similar grant Explanation I.-Land Revenue means all sums and payments in money or in kind, by whatever name designated or locally known, received or claimable by or on behalf of the State from an Intermediary on account of or 1 1954 S. C. R. 1. in relation to any land hold by or vested in such intermediary Explanation II.-Revenue-free land includes land which is, or but for any special companyenant, agreement, engagement or companytract would have been, liable to settlement and assessment of land revenue or with respect to which the State has power to make laws for settlement and assessment of land revenue Explanation III.-In relation to merged territories estate as defined in this clause shall also include any mahal or village or companylection of more than one such mahal or village held by or vested in an Intermediary which has been or is liable to be assessed as one unit to land revenue whether such land revenue be payable or has been released or companypounded for or redeemed in whole or in part. The definition makes reference to an Intermediary, which has been defined in cl. h as follows Intermediary with reference to any estate means a proprietor, sub-proprietor, landlord, landholder, malguzar, thikadar, gaontia, tenure-holder, undertenure-holder, and includes an inamdar a jagirdar, Zamindar, Ilaquadar, Khorgoshdar, Parganadar, Sarbaraka and Maufidar including the Ruler of an Indian State merged with the State of Orissa and all other holders or owners of interest in land between the raiyat and the State Explanation I.--Any two or more Intermediaries holding a joint interest in an estate which is borne either on the revenue-roll or on the rent-roll of another Intermediary shall be deemed to be one Intermediary for the purposes of this Act Explanation II.-The heirs and successors-in- interest of an Intermediary and where an Intermediary is a minor or of unsound mind or and idiot, his guardian, companymittee or other legal curator shall be deemed to be an Intermediary for the purposes of this Act. All acts done by an Intermediary under this Act shall be deemed to have been done by his heirs and successors-in-interest and shall be binding on them. Reading the two definitions together, the position in law is that estate includes the interest, by whatever name called, of all persons, who hold some right in land between the State at the apex and the raiyat at the base. That is to say, the Act is intended to abolish all Intermediaries and rentreceivers and to establish direct relationship bet- ween the State, in which all such interests vest, after abolition under the Act, and the tillers of the soil. The interest of a raiyat is designated by the word holding and is defined by the Orissa Tenancy Act Bihar and Orissa Act II of 1913 , as follows . holding means a parcel or parcels of land held by a raiyat and forming the subject of a separate tenancy. Under the, Orissa Tenancy Act, the unit of interest of a proprietor is an estate. Under a proprietor may be a number of sub-proprietors. Sub-proprietor is also defined in the Tenancy Act, but we are number companycerned in this case with that class of holders of land. The interest of a tenure-holder or an under-tenureholder is characterised as a tenure. Thus, the process of in feudalist and sub- infeudation, which has been similar in all places where the Permanent Settlement took place, that is to say, in Bengal, Bihar and Orissa and Madras and Andhra Pradesh, has led to the companying into existence of proprietors, with their estates, sub-proprietors under them, tenure-holders and under-tenure-holders and ultimately the tiller of the soil, the raiyat, whose unit of interest is a holding. The Act was intended to abolish all proprietors, sub- proprietors, tenureholders and under-tennure-holders, with a variety of names but did number touch the interest of the raiyat. The same person, by transfer or by operation of law, might at the same time occupy different status in relation to land. He maybe in respect of a particular area, which is geographically included in the estate, the proprietor. That land may be held by a raiyat number directly under a proprietor but under a tenure-holder, who holds directly under proprietor. The proprietor may have acquired the interest of a raiyat. Thus the proprietor, in his capacity as the owner of the estate holds the entire estate, and he may have by purchase acquired the interest of a raiyat, paying rent for the raiyati interest to his immediate landlord, the tenure-bolder. The tenure-holder, in his turn, may have been liable to pay rent to the proprietor. That is what appears to have happened in this case. The appellants held the Paikpara estate as proprietors. They also appear to have purchased the properties in question companyprising raiyati lands with certain buildings thereon from the raiyat. Hence, the position in law is that though these lands with the buildings are situate geographically within the ambit of the appellants estate, they are number part of the estate. In other words, the appellants hold those properties with the buildings number as proprietors as such, but as rayats. It appears that the Courts below have number kept clearly in view this distinction. The Collector, in the first instance, and the High Court in the proceedings under Art. 226 of the Constitution, appear to have fallen into the error of companyfusing the petitioners position as ex-proprietors, with their present position as raiyat in respect of the land on which the buildings stand. The High Court has drawn the companyclusion from the decision of this Court in K. C. Gajapati Narayan Deo v. The State of Orissa, 1 and has observed that whether the buildings in question vested in the Government, on the vesting of the estate under s. 3 of the Act, world depend number upon whether it formed part of the estate acquired by the Government but on the, purpose for which the buildings wore used by the proprietors. As the buildings in question had been primarily used as office or Katcheri for the companylection of rent or for the use of servants or for storing grains by way of rent in kind, the buildings will vest in the Government on the vesting of the estate itself. In our opinion, this companyclusion drawn by the High Court from the decision of this Court is number well-founded in law. The High Court draw its companyclusions from the following observations of this Court in the aforesaid case at Pages 25-26. Assuming that in India there is numberabsolute rule of law that whatever is affixed to or built on the soil becomes a part of it and is subject to the same rights of property as the soil itself, there is numberhing in law which prevents the State legislature from providing as a part of the estates abolition scheme that buildings, lying within the ambit of an estate and used primarily for management or administration of the estate, would vest in the Government as appurtenances to the estate itself. This is merely ancillary to the acquisition of an estate and forms an integral part of the abolition scheme. Such acquisition would companye within article 31 2 of the Constitution and if the companyditions laid down in clause 4 of the article are companyplied with, it would certainly attract the protection afforded by that clause. Compensation has 1 1954 S.C.R. 11, been provided for these buildings in s. 26 2 iii of the Act and the annual rent of these buildings determined in the prescribed manner companystitutes one of the elements for companyputation of the gross asset of an estate. The observations quoted above of this Court have reference to the following definition of ,homestead in el. i of s. 2 of the Act homestead means a dwelling house used by the Intermediary for the purpose of his own residence or for the purpose of letting out on rent together with any companyrtyard, companypound, garden, orchard and outbuildings attached thereto and included any tank, library and place of worship appertaining to such dwelling house but does number include any building companyprised in such estate and used primarily as office or kutchery for the administration of the estate on and from the is day of January, 1946. it will appear from this definition that the Legislature placed a proprietors homestead in two categories, namely 1 a dwelling house used by the Intermediary for his own purposes and 2 any building companyprised in such estate and used primarily as office or.Katcheri for the administration of the estate on and from the list day of January, 1946. In respect of first category the Act provides in a. 6 that portion of the homestead shall be deemed to be settled by the State with the Intermediary, who will companytinue to hold it as a tenant under the State Government, subject to the payment of fair and equitable groundrent, except where under the existing law numberrent is payable in respect of homestead lands. It will be numbericed further that the second category in the definition of homestead, which has number been permitted to the outgoing Intermediary has reference to any building companyprised in such estate. It has numberreference to any building standing on rayati holding or a portion thereof. This becomes further clear with reference to the provisions of a. 5, which lays down the companysequences of vesting of an estate in the State. Under cl a of s. 5, the entire estate, including all kinds of lands described in meticulous details, and other number-raiyati lands vest absolutely in the State Government. This Court, while dealing with the companystitutionality of the Act, was number companycerned with raiyati lands. Its observations had reference only to such buildings as stood upon the proprietors private lands like peel, seer, Zirat, etc., whicl, were in his possession as proprietor or as tenure-bolder. It is thus clear that the very basis of the judgment of the High Court is entirely lacking. That the High Court was number unaware of this distinction becomes clear from the following passage in its judgment Doubtless, Ryoti lands are excluded from the scope of this clause. But buildings and structures standing on Ryoti lands and in the possession of the proprietor are number expressly saved. The first sentence quoted above is companyrect, but number the second. I here is numberquestion of expressly saving structures on ratyati lands, when it is absolutely clear that raiyati lands are number the subject-matter of legislation by the Act. The same remarks apply to the reference in section. 26 b iii . Section 26 begins with the words ,for the purpose of this chapter, namely, Chapter V, headed Assessment of Compensation. Reading s. 26 as a whole it is absolutely clear that for the purpose of assessment of the companypensation payable to the outgoing proprietor or tenure-holder, of the estate to be acquired, gross assets have to be determined, by aggregating the rents payable by tenure-holders or under-tenure-holders and raiyats. It is, thus, clear that the rent payable by the appellants as raiyats in respect of the disputed lands would form part of the assets which have to be included in the gross assets in determining companypensation. But that does number mean that the interests of raiyats also have become vested in the State as a result of the numberification under. 3, read with s. 5. For the reasons aforesaid, it must be held that the appellants raiyati interests in the lands and in the buildings standing on those lands have number been affected by the abolition of his interest as proprietors, and that the State authorities had-illegally taken possession of those.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil Appeal No. 368 and 369 of 1961 Appeals from the judgment and decree dated June 27, 1957, of the Andhra Pradesh High Court in S. A. Nos. 194 and 195 of 1954. N. Rajgopal Sastri and P. D. Menon, for the appellants. V. Viswanatha Satstri and T. Satyanarayana, for the respondents. 1962. April 2. The Judgment of the Court was delivered by AYYANGAR, J.-These two appeals are before us by virtue of certificates of fitness granted by the High Court of Andhra Pradesh under Art. 13 3 1 c of the Constitution. The State of Andhra Pradesh is the appellant in both the appeals and one Kolla Sreerama Murthy a dealer in gunnies-is the respondent in each of them and the point involved relates to the liability of the respondent to Sales Tax in respect of the transactions to which we shall later refer. Civil Appeal No. 368 of 1961 arises out of original suit No. 268 of 1951 in the file of the District Munsifs Court, Rajahmundry by the respondent for setting aside an assessment and obtain refund of a sum of Its. 2,941/7/- which was partly the sum assessed and companylected as sales-tax for the assessment year 1947-48, while Civil Appeal No. 369 of 1961 is from a similar suit praying for dentical reliefs in respect of the year 1946-47, the amount of which refund was sought however being Rs. 1,631/12/-. The basis of the suits briefly was that the transactions whose turnover was included in his assessment, were number sales of goods within the Madras General Sales Tax Act 1939 Mad. IX of 1939 and that companysequently the assessment to tax and recovery of the same were illegal and without jurisdiction. Both the suits were decreed by the District Munsif-a decision which was affirmed by the Subordinate Judge of Rajahmundry on appeal by the State and by the High Court of Andhra Pradesh on further appeal also by the State. It is from these two judgments and decrees in the two second appeals that the present appeals have been brought. It was companymon ground that the respondent was a dealer within the Madras Sales Tax Act which for companyvenience we shall call the Act being a person who carries on the business of buying or selling goods, and that the transactions whose legal character is number in dispute were put through by him by way of business. Section 3 of the Act which is the charging section-enacts that every dealer shall pay for each year a tax on his total turnover for such year. ,Turnover is defined in the Act as Turnover means the aggregate amount for which goods are bought or sold, or suppli- ed or distributed, by a dealer either directly or through another, on his own account or on account of others whether for cash or for deferred payment or other valuable companysidera- tion provided that the proceeds of the sales by a person of agricultural or horticultural produce grown by himself or grown on any land in which he has an interest whether as owner, usufructuary mortgagee, tenant or otherwise shall be excluded from his turnover. and clauses c and h of s. .2 of the Act define ,,goods and ,sale respectively thus goods means all kinds of movable property other than actionable claims, stocks and shares and securities and includes all materials, companymodities and articles including those to be used in the companystruction, fitting out improvement or repair of immovable property or in the fitting out, improvement or repair of movable property and also include all growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the companytract of sale. 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. The only matter therefore which is in companytroversy between the parties is as to whether the transactions to whose details we shall presently refer, ,Which the respondent admittedly entered into, wore, or were number sales of goods within the Madras General Sales Tax Act Act IX of 1939 so as to enable the turnover represented by these sales to be brought to tax under the Act. We shall number set out the nature of the transactions which the learned Judges of the High Court have held have number resulted in a sale of goods by the respondent so as to attract the tax under the .charging section in respect of the turnover represented by such sales. The respondent is, as .stated earlier, a dealer in gunny bags. The gunny bags dealt with by him were those manufactured, in two mills known as Chittivalsa and Nellimerla Mills. both situated in Chittivalsa in Visakhapatnam District. The purchase, by the respondent from the mills was on terms of a written companytract which was on printed form. We shall set out the relevant terms of one of the sample companytracts for understanding the point involved, as it is companymon ground that every companytract entered into by the respondent with the mills was in this form. These companytracts were entered into by brokers acting for the respondent and who sent him bought-notes setting out the terms upon which the purchases had been effected from the mills, and one of these Ex. Al, filed in O.S. 268 of 1951, has been treated as typical. It recites the purchase on behalf of the respondent of 30,000 bags from the Chittivalsa mills, specifies the. description of the goods, the manner of their packing and the fact that delivery was to be affected within a period of three months. The buyer was required to make a deposit of Rs. 15, - per bale within 24 hours after the companytract was handed over to him and the respondent fulfilled this requirement. The Mills having thus received a part of the purchase price, they issued delivery orders directing the delivery of goods as per the companytract and these were handed over to the buyer on his honoring a hundi for the value of the goods, the buyer in this case being the respondent. It was companymon ground that by the date when the delivery orders were issued, there were goods answering the companytract description and of quantity sufficient to companyply with the relativeterm in the companytract, in the godown of the mills wherefrom on the terms of the companytract, delivery was to be effected. It was.open to the buyer himself to have gone to the mills and taken delivery of the goods, but this was number done and it is the departure in this respect that has given rise, to the legal companytroversy involved in these appeals. Instead of taking delivery himself, the respondent and this appears to have been the practice of others as well endorsed the delivers orders and these passed through several hands before the ultimate holder of the delivery order presented it to the mills and obtained delivery of the gunnies from them. It need hardly be stated that at each endorsement of the delivery order the price of the bales represented by the quantity specified in the delivery order would be companylected by the successive endorsers which would, in most cases, include the profit, if it was a rising market. The case in the Courts below as well as before us was argued on the basis of this pattern of dealing. The learned trial Judge and the appellate Courts including the learned Judges of the High Court came to the companyclusion that on these facts there was numbersale of goods by the respondent, because the transaction so far as he was companycerned companysisted merely of the endorsement of the delivery order issued by the mills and that the fact that the ultimate endorses of the delivery order got delivery of the goods from the mills was treated as irrelevant for companysidering whether by the transfer of the delivery order companypled with the delivery of the goods to such endorsee, there was in fact a companypleted sale effected by the respondent. Put in another form the argument which was upheld by the Courts below was that the transactions entered into by the respondent were mere sales or transfers of delivery orders and number any sale of goods so as to bring them to charge under s. 3 of the Act. It is the companyrectness of this companyclusion that is in companytrovery in these appeals. It is unnecessary for us to canvass in detail the argument which found favour with the Courts below by reason of the judgment of this Court in Bayyana Bhimayya versus Government of Andhra Pradesh 1 , where the points urged in favour of the respondent were companysidered and repelled. The companyrectness of this decision was number disputed before US. Dealing with the transaction involved in the successive endorsements of the delivery orders issued to the purchaser from the Mills, this Court said In so far as the third parties were companycerned they had purchased the goods by payment of an extra price, and the transaction must, in law and in fact, be companysidered a fresh transaction of sale between the appellants and the third parties. A delivery order is a document of title to goods vide S. 2 4 of the sale of Goods Act . and the possessor of such a document has the right number only to receive the goods but also to transfer it to another by endorsement or delivery. At the moment of delivery by the Mills to the third parties, there were, in effect, two deliveries, one by the Mills to the Appellants, represented in so far as the Mills were companycerned by the appellants agents, the third parties and the other, by the appellants to the third parties as buyers from the appellants. These two deliveries might synchronise in point of time, but were separate in point of fact and in the eye of law. If a dispute arose as to the goods delivered under the kutcha delivery 1 1961 3 S C. R 26 order to the third parties against the Mills, action companyld lie at the instance of the appel- lants. be third parties companyld proceed on breach of companytract only against the appellants and number against the Mills. In our opinion, there being to separate transactions of sale, tax was payable at both the points, as has been companyrectly pointed out by the tax authori- ties and the High Court. The position would appear to be this. At the date of the companytract for purchase by the respondent the goods which were the subject of the purchase were number appropriated to the companytract, so that there was numbercompleted sale since numberproperty passed, but only an agreement for sale. Whether or number the goads which were the subject of the agreement for sale were in existence on the date of the agreement, they were existing goods on the date the delivery order was issued., and they would have been appropriated to the companytract and property in the appropriated goods would have passed to the respondent if he had cared to present the delivery order at the Mills godown. The respondent however without taking delivery himself, endorsed the delivery order and enabled his endorsee to take delivery and that endorsee and it makes numberdifference to the principle if a further endorsee from him did so took delivery of the goods and the goods became appropriated to the companytract and property in goods passed to him. One view to take, and it was this that found favour with the Courts below, was that since numbergoods had been appropriated to the respondents companytract before the delivery orders were endorsed, the successive endorsements of the delivery orders were number sales of goods but were merely transfers of the delivery order as some paper, though this was of some value in that it enable the endorsee to approach the mills and obtain delivery of the goods. The result of the acceptance of this view would be to eliminate the respondent altogether from the chain and so to speak, treat the ultimate endorsee as the purchaser from the mills. Naturally if that was companyrect the respondent would have effected numberpurchase of the goods number, of companyrse, any sale of goods, there being only one transaction of sale by the mills to the ultimate endorsee of the delivery order. In Davvanas case this Court held that this was number a companyrect understanding of the legal effect of the endorsment of the delivery orders No doubt, without an appropriation of goods to an agreement for sale there cannot be a companypleted companytract in which the property in the goods passes to the purchaser and unless property in the goods passes, there is numbersale. But the question is what is the effect of the property in the goods passing to the ultimate endorsee of the delivery order. In this companynection reference companyld usefully be made to the decision in Butterworty v. Kingsway Motors Ltd. 1 . It was a case where a hirer of a motor-car under a hire-purchase agreement under which the necessary payments of installment etc. bad number been made and so his title had number matured i.e. where the title remained in the owner transferred the vehicle or such rights as he possessed in it, to others and the ultimate transfers paid the balance of the purchase price to the owner and thus acquired title to the motor-car. The question before the Court related to the effect of this companypletion in the title of the ultimate transferee on the legal position of the intermediate parties. Pearson J. dealing with this matter expressed himself in these terms The various purported sales all took place at times when Bowmaker, Ltd. were still the owners of the car, so that all the purported sellers in this rather long chain had numbertitle to it at the times when the purported sales were made. But on or about 1 1954 2 AU E. R. 694 July 25, 1952 Miss Rudolph acquired a good title from Bowmaker, Ltd., or, at any rate, made payment to Bowmaker, Ltd. which ext- inguished their title and induced them to relinquish any claim which they had to the car. I think that the right view is that Miss Rudolph acquired the title as between her and Bowmaker, Ltd. but I further hold on authority that the title so acquired went to feed the previously defective titles of the subsequent buyers and ensured to their benefit We companysider that it is this principle that forms the basis of the decision of this Court in Bayyanas case and that it would equally apply to the facts of the present case. Learned Counsel for the respondent placed some reliance on the penultimate paragraph of the judgment in Bayyanas case where this Court referring to the judgments number under appeal stated The facts were different, and the Division Bench itself in dealing with the case, distinguished- the judgment under appeal, observing that there was numberscope for the application of the principles laid down in the judgment under appeal, because in the cited case, the property in the goods did number pass from the Mills to the assessee and there was numberagreement of sale of goods to be obtained in future between the assessee and the third party. We are unable to read this observation as a decision by this Court that the High Court was right in distinguishing the earlier decision. The circumstance that in Bayyanas case besides the companytract of purchase of the gunny bags there was a further agreement that the mills would give delivery of the goods to the numberinees of the purchaser does number really affect the principle, in view of the admitted fact that on the uncontradicted evidence in this case, it was the companymon understanding of the parties that the mills would honour the endorsement of the delivery order and deliver the goods companytracted for to the endorsee who produced it. Learned Counsel for the respondent made a suggestion that in the present case there was numberproof that the goods represented by the companytract had been delivered to the ultimate endorsee, with the result that the appellant had number established a sale of goods at any stage. No doubt if on the facts there was numberdelivery of the goods to the last holder of the delivery order, the entire fabric on which the case for the appellant rests would disappear. There is however numberfactual basis for this submission. This fact was number alleged by the respondent at any stage of the proceedings starting from the plaint in the Court of the District Munsif right up to the statement of the case in this Court and besides, all the Courts have proceeded on the basis that such delivery was effected to the last endorsee of the delivery order but they held that such delivery did number become a sale by the respondent so as to attract the liability to tax under s. 3 of the Act. We have therefore numberhesitation in rejecting this argument. Before companycluding, however, it is necessary to refer to one matter. 0. S. 268 of 1951 was filed on July 25, 1951 and the plaint in O.S. 309 of 1951 on September 6, 1951. Even, however, before that date, on May 15, 1951 the Madras General Sales Tax Act, 1939 was amended by Madras Act VI of 1951 by which, inter alia, s. 18A was added to the parent Act. This section nuns ,No suit or other proceeding shall, except as expressly provided in this Act, be instituted in any Court to set aside or modify any ass- essment made under this Act. No plea based upon the bar companytained in this section was raised before any Court right up to the High Court and number even in the grounds of appeal to this Court or even in the appellants statement of the case as originally filed. At the beginning of 1962 however the appellant applied to this Court for leave to urge additional grounds and in pursuance of the leave so granted it has raised a point that the suit should have been dismissed by the Courts below as number maintainable, being barred by the section just number set out. In answer to this new plea the respondent put forward two objections 1 that on a proper companystruction of s. 18A particularly taken in companyjunction with the other amendment effected by Act VI of 1951 by which is. 18A was inserted in the parent Act, the section had numberretrospective effect and companyld be invoked only in the case of those assessments which were companypleted after the new section came into force. 2 In the alternative, he raised the companytention that if s. 18A barred even suits in respect of illegal assessments which had been companypleted and had become final, the provision was unconstitutional as violative of rights guaranteed by Art. 19 1 f g . Though we heard arguments of learned Counsel in relation to these points, we companysider it unnecessary to make any pronouncement on them in view of the companyclusion that we have reached on the merits of the appeals. The result is that these appeals succeed and are allowed with companyts.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 176 to 178 of 1961. Appeals by special leave from the judgment and order dated August 10, 1961, of the Patna High Court in Cr. A. No. 152 of 1961 and Death Reference No. 3 of 1961. Sushil Kumar Jha, Subodh Kumar Jha and C. Prashad, for the appellants. K. Daphtary, Solicitor General of India and S. P. Verma, for the respondents. 1962. April 26. The Judgment of the Court was delivered by MUDHOLKAR., J.-This judgment will govern Criminal Appeals number. 177 and 178 also. All these three appeals arise out of the same trial. The learned Additional Sessions Judge, Monghyr who companyducted the trial companyvicted the appellant, Ramchandra Chaudhary who is appellant in Criminal Appeal No. 177 of 1961 for an offence under s. 302 Indian Penal Code. He also companyvicted Baleshwar Rai alias Nepali Master, appellant in this appeal and Jogendra Chaudhary, appellant in Criminal Appeal No. 178 of 1961 of an offence under s. 302 read with s. 34, Indian Penal Code. He sentenced each of the three to death. Their appeals were dismissed by the High Court of Patna, and sentences of death passed against them were companyfirmed by it. They have companye up before this Court by special leave. The prosecution story is briefly as follows On March 17, 1959 at about 8.00 p.m. the chaukidars of the village Fateha had assembled,. as usual, in the crime centre of the village. Their names are Anandi Paswan, deceased , Misri Paswan P.W.2 , Baleshwar Paswan P.W.3 and Narain Paswan. Anandi Paswan and Misri Paswan were lying on a chouki. Anandi Paswan had a bhala and a muretha while Misri Paswan had a pharsa and a muretha. These weapons is well as the shirt of ,he deceased were kept on the chouki. The other two choukidars were lying on the ground. The crime centre is housed in the dalan of Tilak. Chaudhary P.W.6 . One other person, Srilal Chaudhary, P.W. 7 , the brother of Tilak Chaudhary, was also lying there on the khatia on the numberth-east of the said dalan. In an adjacent room were P.W.11 Nathuni Chaudhary alias Durga Das and P.W.12 Ramchander Jha. According to the prosecution a little before 9.00 p.m. someone from outside called out Darogaji. On hearing this, the deceased Anandi Paswan and Misri Paswan got up. It was a moonlit night and they saw Ramchander Chaudhary, Jogendra Chaudhary and another person, who was later identi- fied to be Nepali Master, standing closeby. As soon as they went towards the appellants, Jogendra Chaudhary and Nepali Master caught the deceased while Ramchandra Chaudhary caught Misri Paswan. Both Ramchandra Chaudhary and Jogendra Chau- dhary had guns with them which were slung across their shoulders. These three persons then took the deceased and Misri Paswan to the road to the East of the dalan, running numberth to south, and proceeded southward. Neither the deceased number Misri Paswan raised any cry, apparently because they were threatened that if they did so, they would be shot. When this party reached the place to the west of one Peare Saos house and to the east of the house of Rampratap Tanti P.W. 5 . the deceased called for Ramprataps help, and freeing himself from the clutches of his captors started running way westward., Upon this Ramehandra Chaudhary let go the hand of Misri Paswan and fired at the deceased. Misri Paswan then ran into the house of Peare Sao and took shelter there. While entering that house, he heard a second gun shot. His presence in the house was detected by.Mst. Ajo P.W. 8 , the wife. of Peare Sao who forced him to leave the house. Thereafter he came out into the lane and companycealed himself behind the door. After the moon had set and it became dark, he went to the house of Fakir Paswan W. 4 , which is to the east of the house of Peare Sao, and narrated the occurrence to him. He mentioned Ramchandra and Jogendra as the two persons who has taken part in the incident. In the early hours of the morning he went to the place where gun shots were fired, and found Anandi Paswan, chaukidar lying dead in a ditch by the side of the road, face downwards. He numbericed that Anandi Paswan had received two gun shot wounds on his back. Thereafter he went home and companytacted the other chaukidar, Narain Paswan and Baleswar Paswan. He placed them in charge of the dead body and then went to the police station along with Ramdeo, son of the deceased. He lodged the first information report at the police station. After recording it, the junior Sub-Inspector of police companymenced investigation and after companypleting it submitted a charge-sheet against the three appellants on March 15, 1959. It is the prosecution case that the appellants are veteran criminals and the chaukidars used to report about their movements and that this was the motive for the murder. It was further said that the deceased had helped the Dalsingsarai police in arresting one Motia Mushar, who was the ploughman of the appellant Ramchandra, in a dacoity case. All the appellants denied having participated in the incident. The defence is that a false case has been companycocted by the police. The main evidence against the appellant is that of P.W. 2, Misri Paswan. He has actually named Ramchandra Chaudhary and Jogendra Chandhary in the first information report. Regarding the third appellant, he stated that he was unknown. Ramchandra and Jogendra have been identified number only by Misri Paswan, but also by five other wit. nesses, Narain Paswan, Rampratap Tanti, Srilal Chaudhary, Nathuni Chaudhary and Ramchander Jha. All these, five persons had an opportunity to see the appellants because, it may be recalled, some of them were in the dalan and some in the adjacent room when the appellants came near there and one of them cried out Darogaji. Their evidence has been accepted as true and adequate number only by the learned Sessions Judge who had an opportunity to see and hear the witnesses depose but also by the High Court. Their evidence cannot be reappraised in their appeals by special leave. The learned companynsel, however, said that in so far as Jogendra Chaudhary is companycerned, companymon intention to companymit murder had number been established. The existence of companymon intention has always to be inferred from facts. Here it has been established that all the three appellants came together. Two of them, Ramchandra and Jogendra had guns, with them. The prosecution has established to the satisfaction of the learned Additional Sessions Judge and the High Court that as Anandi Paswan was giving information to the police about the movements of the appellants and had also taken the major part in getting one Motia Mushar arrested in a dacoity case, Ramchandra nursed a grievance against Anandi. The inference, therefore, must be that he had companye with the intention of taking revenge on Anandi Paswan by killing him and the other two appellants who accompanied him shared that intention. As the High Court has pointed out, this is made clearer by the statement of Misri Paswan to the effect that Ramchandra said at the time of the incident that his servant Motia was taken away forcibly and then Jogendra asked the deceased sarcastically, Where is your military today ? In the circumstances, therefore, there can he numberdoubt that companymon intention to companymit murder was established number only with respect to Jogendra but also with respect to Nepali Master who was all along with them. On behalf of Nepali Master the learned companynsel companytended that he has been identified at the test identification parade by one witness only and that the other persons did number turn up for identification and, therefore, it is number legally permissible to base the identification by only one person. It is sufficient to say that even the evidence of a single witness can sustain the companyviction of an accused person if the companyrt which saw and heard him depose regards him as a witness of truth. However, in this case, Nepali Master was identified number by one witness only but by two witnesses P. W. 7 Srilal Choudhary and P. W. 9 Dukhi Mahto. It was said that Srilal is an old man of 75 and has a weak eyesight and therefore his evidence should be kept out of account. He is evidence has been believed by the learned Sessions Judge as well as by the High Court and we cannot reassess it. It was companytended before the High Court and is also companytended before us that as the test identification was held long time after his arrest, the evidence of these two witnesses companyld number be believed. This circumstance was also companysidered by the High Court and it observed The companytention is attractive but, in view of Ex. 6, it is difficult to accept the same. Exhibit 6 is an anonymous letter written to Senior. Sub- Inspector, Kashi Nath P. W. 22 , of which the only portion which has been admitted in evidence reads thus The rascal Anandia Choukidar spoiled the life of that poor Mushar by instigating the S. 1 of Police of Dalsingsarai and subsequently he also spied against us for numberhing. This document along with ex. 3, dated June 9, 1959, which is admittedly in the handwriting of Nepali Master, was sent to the Government handwriting expert. Both the documents were examined by him. In his evidence he has stated. The Board of Experts companysisting of myself, Chatterjee and Srivastava examined these independently and our unanimous opinion was that Ex. 3, tallied with disputed writings Ext. 6 . This being so, the admission companytained in Ext. 6 as to the motive is clearly admissible under s. 21 of the Evidence Act. The High Court was, therefore, right in holding that Ext. 6 afforded companyroboration to the evidence of P. W. 7 Srilal Chaudhary and P. W. 9 Dukhi Mahto. It is then companytended that Ex. 6 is hit by s.162 of the Criminal Procedure Code because it was received by the Sub- Inspector during the companyrse of the investigation. Section 162 of the Criminal Procedure Code only bars proof of statements made to an investigating officer during the companyrse of investigation. Section 162 does number say that every statement made during the period of investigation is barred from being proved in evidence. For a statement to companye within the purview of s. 162, it must number merely be made during the period of investigation but also in the companyrse of investigation. The two things, that is, the period of investigation and companyrse of investigation are number synonymous. Section 162 is aimed at statements recorded by a police officer while investigating into an offence. This is clear from the opening words s. 162. They speak only of statements made to a police officer during the companyrse of investigation. This implies that the statement sought to be excluded from evidence must be ascribable to the enquiry companyducted by the investigating officer and number one which is de hors the enquiry. A companymunication like Ext. 6 will number fall within the ambit of such statements. In this view we hold that the document in question is number hit by s. 162 of the Criminal Procedure Code and the High Court was right in admitting it in evidence.

Case appeal was rejected by the Supreme Court

Gajendragadkar, J. This appeal arises from a writ petition filed by the appellant, Raghutilaka Tirtha Sripadangalavaru Swamiji, in the Mysore High Court challenging the validity of s. 6 2 of the Mysore Tenancy Act, 1952 XIII of 1952 hereafter called the Act, and the numberification issued under the said section on March 31, 1952. The appellants case as set out in his writ petition before the High Court was that the impugned section as well as the numberification issued under it infringed his fundamental rights guaranteed under Arts. 14, 19 1 f , 26, 31 and 31A of the Constitution. This companytention has been rejected by the High Court and it has been held that the section and the numberification under challenge are valid and companystitutional. The appellant then applied for a certificate from the High Court, both under Art. 132 and Art. 133 of the Constitution. The High Court granted him certificate under Art. 133, but refused to certify the case under Art. 132. There after the appellant applied to this Court for liberty to raise a question about the interpretation of the Constitution and permission has been accorded to the appellant accordingly. That is how the present appeal has companye to this Court. The appellant owns 6 acres and 30 ghuntas of garden land in village Mulbagilu in Taluka Thirthahalli in the district of Shimoga. Respondent No. 3, Ramappa, Gowda, is his tenant in respect of this land. A registered lease deed was executed in favour of respondent No. 3 by the appellant on March 11, 1943 under this document respondent No. 3 undertook to pay 82-1/2 maunds of areca in addition to Rs. 17/12-in cash as rent per year. In 1955 respondent No. 3 filed an application before respondent No. 2, the Tehsildar of Thirthahalli, under section 12 of the Act and claimed that the standard rent payable by him to the appellant should be fixed Tenancy case 85 of 1955-56 . Meanwhile respondent No. 1, the Government of Mysore, had, in exercise of the powers companyferred on it by s. 6 of the Act, issued a numberification No. R9. 10720/L.S. 73-54-2 on March 28/29, 1955. This numberification purported to fix the standard rent for lands of the category to which the appellants land belongs at one third of the produce. Feeling aggrieved by this numberification the appellant filed the present writ petition in the High Court on December 16, 1955. His case was that s. 6 2 as well as the numberification issued under it were ultra vires, invalid and inoperative. Before dealing with the companytentions raised before us by Mr. Shukla on behalf of the appellant it would be necessary to companysider very briefly the scheme of the Act. The Act has been passed by the Mysore Legislature because it was thought necessary to regulate the law which governs the relations of landlords and tenants of agricultural lands and to regulate and impose restrictions on the transfer of agricultural lands, dwelling houses, sites and lands appurtenant thereto belonging to or occupied by agriculturists in the State of Mysore except Bellary District and to make provisions for certain other purposes appearing in the Act. That is the recital companytained in the preamble to the Act. It would thus be seen that the primary object of the Act is to afford much needed relief to the agricultural tenants by regulating their relations with their landlords and in that respect the Act bears a very close resemblance to the provisions of the Bombay Tenancy and Agricultural Lands Act, LXVII of 1948. Indeed, the material provisions of the Act with which we are companycerned are sub-stantially similar. Chapter I of the Act deals with the preliminary topic of defining the relevant terms used in the Act. Chapter II companytains general provisions regarding tenancies. Section 4 defines persons who are deemed to be tenants. Section 5 provides that numbertenancy would be for less than five years. Section 6 deals with the maximum rent payable by the tenants. Section 8 provides for the calculation of rent payable in kind in the manner indicated by cls. 1 and ii and prohibits the landlord from recovering or receiving rent calculated in any other manner. Under s. 9 receipt of rent in terms of service or labour is prohibited. Section 11 abolishes all cases and s. 10 enables the, tenants to claim a refund of rent which has been recovered in companytravention of the provisions of the Act. Section 12 then deals with enquiries with regard to reasonable rent. Sub-section 3 of s. 12 lays down five factors which have to be borne in mind by the authority dealing with an application for the fixation of reasonable rent. Section 13 is a companyollary of s. 12 and authorises the reduction of rent after reasonable rent has been determined under s. 12. Section 14 deals with suspensions or remission of rent. Section 15 provides for termination of tenancy. Under s. 18 a statutory bar is created against the eviction of a tenant from a dwelling house and under s. 19 the tenant has the first option of purchasing the site on which he has built a from a dwelling house. Similarly, under s. 22 the tenant is given an option of purchasing the land leased out to him. Section 24 deals with some cases where relief can be granted against termination of tenancy and s. 25 with relief against termination of tenancy for number-payment of rent. Section 30 provides for the procedure to recover rent and s. 31 protects the tenants rights under any other law. Chapter III deals with the procedure and jurisdiction of Amildar and provides for appeals against the decisions of the Amildar. Chapter IV deals with offences and prescribes penalties for them and Chapter V companytains miscellaneous provisions. That, in its broad outlines, is the nature of the provisions made by the Act in order to give relief to the agricultural tenants. Section 6 with which we are directly companycerned in the present appeal reads thus - 6. 1 Notwithstanding any agreement, usage, decree or order of a companyrt or any law, the maximum rent payable in respect of any period after the date of companying into force of this Act by a tenant for the lease of any land shall number exceed one-half of the crop or crops raised on such land or its value as determined in the prescribed manner Provided that where the tenant does number cultivate the land the rent payable shall be the reasonable rent to be fixed by the Amildar. The Government may, by numberification in the Mysore Gazette, fix a lower rate of the maximum rent payable by the tenants of lands situate in any particular area or may fix such rate on any other suitable basis as they think fit. As we have already indicated, the provisions of the two sub-clauses of s. 6 are substantially similar to the provisions of s. 6 1 and 2 of the companyresponding Bombay Act. Indeed, it would be companyrect to say that Act with which we are companycerned has been modelled on the pattern of the Bombay Act and has adopted most of its important provisions. The validity of s. 6 of the Bombay Act was challenged before this Court in Vasantal Maganbhai Sanjanwala v. The State of Bombay and it has been held that the said section is valid. The reasons given by this Court in upholding the validity of s. 6 of the Bombay Act apply with equal force in support of the validity of s. 6 of the Mysore Act and so the point raised by the appellant in challenging the validity of the impugned section is really companyered by the earlier decision of this Court. Mr. Shukla, however, companytends that the preamble to the Act differs from the preamble of the Bombay Act inasmuch as the latter preamble refers to the fact that Act was passed inter alia for the purpose of improving the economic and social companyditions of peasants and ensuring the full and efficient use of land for agriculture and so companysiderations of social justice on which the validity of the companyresponding provision of the Bombay Act was sought to be sustained cannot be invoked in dealing with the present appeal. We are numberimpressed by this argument. It is true that the preamble to the Act merely says that the Act was passed because it was though necessary to regulate the law which governs the relations of landlords and tenants of agricultural lands and it does number refer to the requirement of social justice or does number specifically mention the object of ensuring the full and efficient use of land for agriculture. But in dealing with a law which has been passed for the purpose of effecting an agrarian reform it would be pedantic to ignore the essential basis of its material provisions merely on the ground that the companycept of social justice on which the said provisions are based has number been expressly stated to be one of the objects of the Act in the preamble. We have already examined briefly the broad scheme of the Act and it is obvious that the important provisions of the Act are intended to improve the economic and social companyditions of the agricultural tenants and so the policy of social justice can be safely said to be writ large on the face of the Act. Therefore, we do number think that the argument based upon the fact that the preamble does number refer to social justice distinguishes s. 6 of the Act from the companyresponding section of the Bombay Act. Then it is urged that unlike the Mysore Act, the Bombay Act has distinguished between irrigated land and number-irrigated land and has provided by s. 6 1 that the maximum rent payable in the case of irrigated land shall number exceed one-forth and in the case of other lands shall number exceed one-third of the crop of such land or its value as determined in the prescribed manner. It is true that s. 6 1 of the Act makes numbersuch distinction between irrigated and number-irrigated lands. But that, in our opinion, is number a matter of essential importance. Like s. 6 1 of the Bombay Act s. 6 1 of the Act also intends to provide for a maximum ceiling beyond which agricultural rent will number be allowed to soar and so far as the fixation of a maximum ceiling of rent is companycerned it is number essential that all distinction must necessarily be made between irrigated lands and number-irrigated lands. It must be borne in mind that what the section does is to prescribe the maximum and number to provide for a minimum. In prescribing a maximum it may be open to the Legislature to provide for a maximum which would be companymon to all land whether irrigated or number. That is why we are number inclined to attach any importance to the point that in the absence of classification of land, while prescribing a maximum s. 6 1 suffers from any infirmity. Then it is argued that the Bombay Act while prescribing a maximum has taken the precaution of also prescribing a minimum and the absence of the latter provision makes a material difference. This argument is clearly misconceived. It is true that s. 8 of the Bombay Act which had been inserted by the Bombay Legislature in 1956 did provide for the maximum and the minimum rent, but as the decision of this Court in the case of Sanjanwala shows in upholding the validity of the impugned provision of the Bombay Act numberreliance was placed upon the fixation of the minimum rent. Indeed, the minimum rent was fixed subsequent to the decision of the High Court which was under appeal before this Court in that case and the fact that a minimum had been prescribed subsequently has been only incidentally mentioned in the judgment. Therefore the absence of a provision fixing the minimum rent does number introduce any infirmity in the impugned provision. We are, therefore, satisfied that the case of the impugned section is substantially similar to the case of s. 6 of the Bombay Act with which this Court was companycerned in the case of Sanjanwala and the challenge to the validity of section in the present appeal must, therefore, be held to be companyered by the said decision. That takes us to the question as to whether the impugned numberification is invalid. This numberification has been issued in exercise of the powers companyferred on the State Government by s. 6 2 and is provides that the rate of maximum rent payable by the tenants of lands situated in the areas specified in Schedule I and Schedule II to the numberification shall be one-third and one-fourth respectively of the crop or crops raised on such lands with effect from the year companymencing on April 1, 1955. Schedule I deals with Maidan areas in which the maximum rent or rents shall be one-third of the crop or crops and Schedule II deals with Malanad areas in which the maximum rate of rent shall be one-fourth of the crop or crops raised. It appears that the classification of lands between Maidan an Malanad lands is well known in Mysore. Maidan lands are lands on the plains, whereas Malanad are lands on hilly tracts. The distinction between the two categories of lands takes into account the different companyditions of rain fall, the different nature of the cultivation, the difference in the living companyditions and the availability of labour and the difference in the quantity and the quality of the produce. It is true that the numberification does number prescribe the lower rate of the maximum rent area by area in the sense of district by district, but it purports to prescribe the said maximum by classifying the land in the whole of the State in the two well-known categories of Maidan and Malanad lands. It is urged by Mr. Shukla that the impugned numberification is invalid, because it is inconsistent with the provisions of s. 6 1 . The argument is that s. 6 1 lays down a general rule and s. 6 2 provides for an exception to the said general rule. On that assumption it is companytended that an exception cannot be allowed to swallow up the general rule and that is precisely what the numberification purports to do. This argument is based on the decision of the House of Lords in Macbeth v. Ashley 1874 L.R. 2 Sc. App. 352. It would be numbericed that this argument raises the question about the companystruction of the two sub-clauses of s. 6. Before addressing ourselves to that question, however, we may refer to the decision of the House of Lords on which the argument is based. It appears that 11 oclock at night was the hour appointed for closing public-houses in Scotland, although in special cases, and for well companysidered reasons, a deviation was allowed with reference to any particular locality really requiring it. The Magistrates of Rothesay had ordered for closing at 10 instead of 11 and the effect of the order was that it embraced every public-house in the burgh. The House of Lords held that the Magistrates order was ultra vires. The statutory provision with which the House of Lords was companycerned was companytained in the Act of Parliament, 25 and 26 Vict. c. 35. As a result of these provisions 11 oclock at night was appointed to be the hour for closing public houses. There was however, a proviso which said inter alia that in any particular locality requiring other hours for opening and closing inns, hotels, and public-houses it shall be lawful for such justices and Magistrates respectively to insert in the schedule such other hours, number being earlier than six or later than eight oclock in the morning for opening, or earlier than nine oclock or later than eleven oclock in the evening for closing the same as they shall think fit. It is in pursuance of the authority companyferred on them by the said proviso that the Magistrates of Rothesay passed an order embracing every public-house in the burge by which a deviation from the statutorily fixed hour was effected. In dealing with the validity of the order issued by the Magistrates Lord chancellor Lord Cairns expressed his opinion that if the exception is to swallow up the rule it ceases, of companyrse, to be an exception at all and that which might fairly have been an exercise of discretion becomes numberexercise of the kind of discretion mentioned in the Act of Parliament. It was for this reason that the order issued by the Magistrates was declared to be ultra vires. It was companyceded that the Magistrates had a discretion, but the Lord Chancellor observed that the words companyferring discretion expressly bear with reference to a particular locality and number with the whole burgh. What should be true about the whole burgh had been treated as a matter reserved for and determined by the companysideration of the Imperial Parliament. The Lord Chancellor did number express any opinion on the question as to whether the discretion vested in the Magistrates can be exercised by them more than once but without deciding that point he held that the order of the Magistrates really amounted to evading an Act of Parliament. In substance, the Magistrates had once for all attempted with regard to all the public-houses in their district to change the rule laid down by the Act of Parliament. Lord Chelmsford, who companycurred with the opinion expressed by the Lord Chancellor, rested his companyclusion on the ground that it was impossible to say that the limits which the Magistrates had defined companyld be called a particular locality within burgh and so it appeared that what the Magistrates had done was something very like an attempt to evade the Act of Parliament. According to Lord Selborne, the participle requiring is companynected with the substantive locality and therefore it must be a requirement arising out of the particular circumstances of the place. That is why Lord Selborne though that the Magistrates must, in exercise of an honest and bona fide judgment, be of opinion that the particular locality which they except from the ordinary rule is one which, from its own special circumstances, requires that difference to be made. It would thus be seen that though the general basis of the decision, as it has been expressed by Lord Cairne, appears to be that the exception cannot swallow up the rule one of the reasons which ultimately influenced the decision was that the discretion had to be exercised bona fide and after due deliberation in respect of a particular locality and that the manner in which the order was issued indicated that the requirements of the particular localities had number been duly examined by the Magistrates. It is significant that though Lord Cairns posed the question as to whether the discretion in question can be exercised more than once, he did number choose to answer it but the trend of the opinions expressed by the Law Lords during the companyrse of their speeches may seem to suggest that the discretion cannot be exercised more than once and in any case, it must be exercised by special reference to the particular locality as indicated by the proviso. If an order is made in respect of the whole of the burgh, it cannot be said that it has been passed after exercising due discretion in respect of the requirements of each particular locality. With respect, if the discretion is given to the Magistrates to provide of a departure from the rule prescribed by the general provision by reference to particular localities, it is number easy to see why the said discretion cannot be exercised more than once. Indeed, situations may arise when the Magistrates may have to companysider the matter from time to time in respect of different localities and if it appears to the Magistrates companysidering the cases of different localities that in regard to each one of them a departure from the general rule should be made, it is number easy to follow why the proviso does number justify different orders being passed by the Magistrates in respect of different but particular localities. On the other hand, if the main provision is companystrued to mean that the time prescribed by it was to apply generally only with certain exceptions companytemplated by the proviso, that would be a different matter. However, it is number necessary for us to pursue this point further and to express a definite opinion on the general proposition that an exception cannot swallow the general rule, because, as we will presently show, this rule cannot be applied to the provisions of s. 6 at all. In this companynection we may, however, point out that the both in Maxwell and in Craies, the decision in Macbeths case 1874 L.R. 2 S.C. App. 352 appears to have been treated as an authority for the proposition that an order like the one passed by the Magistrates in that case amounted to an evasion of the Parliamentary statute, because it was number in honest and bona fide exercise of the discretion vested in them. Maxwell on Interpretation of Statutes, 11th Edn., p. 121, and Craies on Statute Law, 5th Edn., p. 75. But assuming that the proposition for which Mr. Shukla companytends on the authority of the decision in Macbeths case 1874 L.R. 2 S.C. App. 352 is sound, does in apply to s. 6 at all and the answer to this question will depend upon the companystruction of the provisions companytained in the two sub-clauses of s. 6. It would be numbericed that s. 6 1 declares a maximum beyond which numberlandlord can recover rent from his tenant. In other words, as soon as the Act came into force a ceiling was fixed beyond which the landlord cannot recover rent from his tenant even though it may be justified by agreement, usage, decree or order of a companyrt or any other law. The provisions of this sub-section apply individually and severally to all agricultural leases and govern the relations of individual landlords and tenants in respect of payment of rent by the latter to the former. The fixation of the maximum by sub-s. 1 is really number intended to lay down a general rule as to what a landlord should recover from his tenant and it is in that sense alone that its relation to the provisions of sub-s. 2 must be judged. In that companynection we may point out that there is one proviso to s. 6 1 which deals with cases of tenants who do number cultivate the land and it lays down that in their case the rent shall be reasonable rent to be fixed by Amildar. Sub-section 2 is so worded that in terms it cannot be said to be a proviso to sub-s. 1 and in substances it is number such a proviso number is it an exception to sub-s. 1 . Having prescribed the maximum beyond which agricultural rent cannot go under s. 6 1 the legislature has permitted the Government to fix a lower rate of the maximum rent in respect of lands situated in particular areas. The Government has also been authorised to fix the payment of rent on any other suitable basis as it thinks fit. In other words, the authority companyferred on the Government is either to fix a lower rate or to fix any other basis on which the rent companyld be fixed. The provision is an independent provision and so the two sub-sections must be read as different, independent, though companyordinate, provisions of the Statute. It would, we think, we think, be erroneous to treat sub-s. 2 as a proviso or exception to sub-s. 1 . Whereas sub-s. 1 deals with and applies to all leases individually and prescribes a ceiling in that behalf, sub-s. 2 is intend to prescribe a maximum by reference to different areas in the State. The object of both the provisions is numberdoubt similar but is number the same and the relation between them cannot legitimately be treated as the relation between the general rule and the proviso or exception to it. The argument that by issuing the numberification the Government has purported to amend s. 6 1 is, in our opinion, number well-founded. As we have already seen, s. 6 1 is intended to apply to all the agricultural leases until a numberification is issued under s. 6 2 in respect of the areas where the leased lands may be situated. It is number suggested that under s. 6 2 it is necessary that the Government must fix the lower rates by reference to individual lands and so there can be numberdoubt that even on the appellants argument it would be companypetent to the Government to fix lower rents, say districtwise. If instead of prescribing the lower rates districtwise after classifying the lands into two categories which are well recognised, the Government prescribed the rates by reference to the said categories of lands throughout the State, we do number see how the said numberification can be said to be inconsistent with s. 6 2 or with s. 6 1 either. The scheme of s. 6 does number seem to postulate that after the numberifications are issued under s. 6 2 some area must inevitably be left to be companyered by s. 6 1 . Such an assumption would be inconsistent with the object underlying the said provision itself. What s. 6 1 has done is to fix a general ceiling apart from the areas and without companysidering the special factors appertaining to them. Having thus fixed a general ceiling the Legislature realised that the ceiling may have to be changed from area to area and so power was companyferred on the Government to fix the ceiling at a lower rate. The Government having examined the matter came to the companyclusion that the more equitable and reasonable companyrse to adopt would be to divide the agricultural lands into two well-known categories and fix the ceiling by reference to them. Now in the very nature of things, the Legislature must have anticipated that the exercise of the power under s. 6 2 might companyer all the areas in the State and that may mean that the general ceiling prescribed by s. 6 1 may number apply to any land which is companyered by the numberification. If s. 6 1 is number a general rule and s. 6 2 is number an exception to it, then the companysequences flowing from the issue of the impugned numberification cannot be characterised as an exception swallowing up the general rule. That, in substances, is the view which the Mysore High companyrt has taken in the matter and we think that the said view is right.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 173 of 1956. Appeal from the judgment and order dated November 15, 1954, of the former Madhya Pradesh High Court at Gwalior in C. F. No. 9 of 1951. Ganpat Rai, for the appellant. S. Bindra and D. D. Sharma for the respondent. 1962. April 30. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal against the judgment and order of the High Court of Madhya Bharat at Gwalior on a certificate of that Court under Art. 133 1 c and like Civil Appeal No. 24 of 1961, raised the question of the applicability of the Indian Code of Civil Procedure and the question whether the decree sought to be executed was a dec- ree of a foreign Court or number. It is a reverse case in the sense that the decree sought to be executed was passed by a Court in West Bedford province of what was British India. In the appeal the appellant is the judgment-debtor and the decree-holder is the respondent. On December 3, 1949, a decree was passed in favour of the respondent by the Subordinate Judge, Bankura, in the West Bengal and a certificate of transfer was applied for on July 27, 1950, granted on August 8, 1950, and was transferred for execution On August 28, 1950. On September 25, 1950, the decree-holder took out execution in the Court of the Additional- District Judge, Morena, in what was Gwalior State and subsequently became a part of the United State named Madhya Bharat and after the Constitution the Part B State of Madhya Bharat. On the judgment-debtors objection the application for execution was dismissed on December 29, 1950, but the appeal against that order was allowed by the High Court on November 15, 1954. It is unnecessary to set out the various sections of the Indian Code of Civil Procedure or to trace the various steps by which as. 43 and 44 were amended in that Code - that we have done in C. A. No. 24 of 1960 decided today. It was companytended before us by the judgment-debtor that the Court had numberpower to transfer the decree under s. 38 to the Court in Morena. On the date when the decree was transferred the Courts in Madhya Bharat were governed by the Indian Code of Civil Procedure as adapted by the Madhya Bharat Adaptation Order of 1948 but the power of transfer by the Court at Bankura was governed by ss. 38 and 39 of the Indian Code of Civil Procedure. Under the Code, the Court to which the decree companyld be transferred was one established in what was British India because the Code extended to the territories of what was British India and it was number till, the companying into force of Act 11 of 1951 on April 1, 1951, that the Indian Code was applied to the Territories of India which companyprised Parts A, B and C State. It was companytended by Mr. N. S. Bindra companynsel for the respondent that under ss. 38 and 39 of the Indian Code of Civil Procedure a decree companyld be sent for execution to any Court, the expression Court being understood as a place where justice was administered and for this reliance was placed on Manawala Goundan v. Kumarappa Reddy 1 where the word Court in s. 622 of the old Civil Procedure was defined as a place where justice is judicially administered but that was in a case where it had to be determined whether a District Registrar was Court for the purpose of Civil Procedure Code. The definition as given in that case is number of any help in determining the question number before us because what we have to see is whether the Court at Morena even though it administered justice judicially was companyered by the word Court in s. 38 or number. As we have said above Court in the section means a companyrt to which the Indian Code of Civil Procedure applies and number any Court. Similarly at the relevant time in es. 40 and 42 of the Indian Code of Civil Procedure Court nece- L. R. 30 mad. 326. ssarily meant a Court to which Indian Civil Procedure Code applied i. e., a Court in what was British India. The Court at Morena number being such a Court the decree companyld number be transferred to it under the Indian Code of Civil Procedure and ss. 38 and 39 were inapplicable to justify such a transfer. The decree, it was then argued, was executable under s. 43 of the Indian Civil Procedure Code as amended by the Adaptation of Laws Order of June 5, 1950, which had retrospective effect as from January 26, 1950. After the amendment that section reads - S 43 Any decree passed- a by a Civil Court in Part B State, or b c may, if it cannot be executed within the jurisdiction of the Court by which it was passed, be executed in manner herein provided within the jurisdiction of any Court in the States. The argument was that in the present case the expression in a Part B State, should be read as if the expression was in a Part A State. This again is number permissible for us. - Section 43 has to be interpreted as it is and a Court cannot read it as if its language was different from what it actually is. It is number permissible for this companyrt to amend the law as suggested. Besides the Indian Civil Procedure Code was number extended to Madhya Bharat till April 1, 1951, by Act 11 of 1951. The decrees of foreign companyrts were, under the Gwalior Code of which Morena was a part, executable neither under s. 233 which required a suit to be brought on the basis of foreign decrees number under the Madhya Bharat Code of Civil Procedure. The decree therefore companyld number be executed in Morena under s.43 of the Indian Code of Civil Procedure. It was next argued that the appellant firm was number a foreigner because it did number fall under the foreigners Act Act 31 of 1946 and reference was made to s. 2 a. iii which was amended by Act 38 of 1947 on December 15, 1947 but this Act is number relevant for the purpose of finding out whether the decree was a foreign decree or number because the execution of decrees is governed by the provisions of the Code of Civil Procedure and number by the Foreigners Act. Under the former a decree can be executed by a Court which passed the decree or to which it was transferred for execution and the decree which companyld be transferred has to be a decree passed under the Code and the Court to which it companyld be transferred has to be a Court which was governed by the Indian Code of Civil Procedure. But in the present case it was number transferred to a Court which at the time of the transfer was governed by the Indian Code of Civil ,Procedure and therefore the transfer was ineffective for the purpose of execution and as we have said above, s. 43 of the Indian Code was inapplicable before Act 11 of 1951 to the State of Madhya Bharat. It is number necessary to go into the other questions raised if the above two questions are decided against the respondent. We therefore allow this appeal, set aside the judgment and order of the High Court and restore that of the executing companyrt.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 246 to 248 of 1961. Petitions under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. S. Pathak, Rameshwar Nath, S. C. Andley and P. L. Vohra, for the petitioners in petition No. 246 of 1 96 1 , Rameshwar Nath, S. N. Andley and P. L. Vohra for the petitioners in petitions Nos. 247 and 2 48 of 196 1 . M. Sikri, Advocate-General J. for the State Of Punjab, S. Bindra and P. D. Menon, for respondent No. 1 in all the petitions . P. Varma, for respondent No. 6 in all the petitions . N. Sanyal, Additional Solicitor-General of India, R. H. Dhebar and P. D. Menon, for the State of Gujarat Intervener in all the petitions . 1962. May 2. The following judgments were delivered. The judgment of Sinha, C. J., Rajagopala Ayyangar, Madholkar and Venkatarama Aiyar, J J., was delivered by Mudholker, J. MUDHOLKAR, J.-The petitioners who have acquired over six acres of land by purchase for Rs. 4,50,009 in February, 1961, under five sale deeds and one lease deed claim to have done so for the purpose of establishing a paper mill in companylaboration with Messrs. R. S. Madhoram and Sons who had been granted a licence for the establishment of a paper plant in Ghaziabad in Uttar Pradesh. The aforesaid land is situate in the village Meola Maharajpur, Tehsil Ballabhgarh, District Gurgaon, and abuts on the Mathura Road, and is only about 10 or 12 miles from New Delhi. Respondent No. 6, Air Conditioning Corporation P Ltd., is a private limited companycern and holds a licence from the Government of India for starting a factory for the manufacture of various ranges of refrigeration companypressors and ancillary equipment. We may mention here that initially this project was allotted to the State of West Bengal but at the request of State of Punjab its location was shifted to the State of Punjab. Respondent No. 6 requested the State of Punjab for the allotment of an appropriate site for the location of the factory. The petitioners companytend that respondent No. 6 being interested in acquiring land in the village Meola Maharajpur approached the State of Punjab in or about the month of March, 1961, for the purpose of acquiring land for their factory under the Land Acquisition Act, 1894 hereinafter referred to as the Act . One of the petitioners having learnt of this made an application on March 23, 1961, to the Deputy Commissioner, Gurgaon, requesting him that numbere of the lands purchased by the petitioners should be acquired for the benefit, of respondent No. 6. Owners of adjacent lands Mr. Om Prakash, Mr, Ram Raghbir, Mr. Atmaram Chaddha and Mr. Hari Kishen who are petitioners in W. P. 247 and 248 of 1961 which were heard along with. this petition made similar requests. The petitioners allege that they were assured by the Deputy Commissioner that their lands would number be acquired for the benefit of respondent No. 6. Thereafter respondent No. 6 purchased by private treaty a, plot of land measuring approximately 70,000 sq. yards companytiguous to, the land owned by the petitioners on or about April 21, 1961. The, petitioners grievance is that numberwithstanding the assurances given to them by the Deputy Commissioner, Gurgaon, the Governor of Punjab, by numberification dated August 25, 1961, under s. 4 of the Act declared that the lands of the petitioners in this petition as well as those of the petitioners in the other two writ petitions were likely to be needed by Government at public , expense for a public purpose, namely, for setting up a factory for manufacturing various ranges of refrigeration companypressors.,and, ancillary equipment. It accordingly numberified that the, land in the locality described in the numberification was required for the aforesaid purpose. Similarly it authorised the Sub-Divisional Officer and Land Acquisition Officer, Palwal, to enter upon and survey the land in the locality and to do all other acts required or permitted by s.4 of the Act. It further directed that action under s. 17 of the Act shall be taken because there was urgency and also directed that the provisions of s 5A shall number apply to the acquisition. On August 19, the Governor of Punjab made a numberification under s. 6 of the Act to the effect that he was satisfied that the land specified in the numberification was required by Government at public expense for public purpose, namely, for setting up a factory for the manufacture of refrigeration companypressors and other ancillary equipment and declared that the aforesaid land was required for the aforesaid purposes. This declaration was made to all whom it may companycern and the Sub-Divisional Officer, Palwal, was directed to take all steps for the acquisition of this land. Finally the numberification provided for the immediate taking of possession of the land under the provisions of s. 17 2 c of the Act. Both these numberifications were published in the Punjab Government Gazette of August 25, 1961. The petitioners companytend that these numberifications and the land acquisition proceedings permitted to be taken under them violate their fundamental rights under Art. 19 1 f and g to possess the said land and carry on their occupation, trade or business and that, therefore, they must be quashed. It is their companytention that they have purchased this land bona fide for industrial purposes as land in the vicinity of this land is being acquired by industrialists for establishing various industries. The purpose is said to be the establishment of a paper manufacturing plant. According to them they have entered into an arrangement with Messrs. R. S. Madho Ram Sons who hold industrial licence No. L/2-1/2 N-60/62. The proposed industry, according to them, would employ about 200 people. The industry they wish to start is a new one so far as they are companycerned, whereas according to them, the respondent No. 6 is already engaged in refrigeration industry and as far as they know, it has established a factory for manufacturing refrigeration equipment at Hyderabad in the State of Andhra Pradesh. It may be mentioned that some time after the numberification was published, that is, on September 29, 1961, the Government of Punjab sanctioned the expense of Rs. 100 for the purpose of acquisition of this land. According to the petitioners this was an after-thought and besides, a token companytribution of this kind is number sufficient to show that the acquisition is being made partly at public expense. The petition was opposed number only by respondent No. 6 but also by the State of Punjab which is respondent No. 1 to the petition. The respondent No. 1 denied that the petitioners had purchased the land for a bona fide industrial purpose and would in fact use it for such purpose. It also denied that any assurance was give to the petitioners that their lands would number be acquired. It admitted that the respondent No. 6 had made an application in December, 1960 for acquiring land for setting up its factory and that, therefore, the Punjab Government agreed to do the needful. According to respondent No. 1 the acquisition proceedings have been undertaken for a public purpose and at public expense as stated in the numberification and that the State Government would make part companytribution towards the, payment of companypensation of the land out of public revenues. In the circumstances it in companytended that the petitioners would number be entitled to any relief whatsoever. They would of companyrse get companypensation for the land as determined by the Land Acquisition Officer. The action of the State Government is said to be legal and in accordance with the provisions of the law because what was done was permissible under ss.4 and 6 of the Act, that it was done bona fide, that part of the companypensation would be paid out of the, public revenues, that the declaration made by the Government is companyclusive evidence under sub-s. 3 of s.6, that the land is needed for ,a public purpose, that the numberifications were made on different dates though they were published in the same issue of the Gazette and are perfectly valid, that the land is number being acquired for a companypany but for a public purpose, that, therefore, the provisions of Part VII of the Act are inapplicable and that the lands are lying vacant and their owners will be paid companypensation. No question of depriving them of their fundamental rights under Art. 19 1 f and g or of violation of their right under Art. 14 therefore arises. According to respondent No. 1 it would be open to the petitioners to make their claim for companypensation to the Land Acquisition Officer for such loss as the acquisition would entail on them. It also stated that as the land purchased by the respondent No. 6 through private negotiation has numberaccess to the main road and as the land is inadequate to meet the minimum essential requirements the acquisition of the, lands in question became necessary. On behalf of the respondent No. 6 it is stated that the need for a factory like the one in its company. temptation is acutely felt in India inasmuch a manufacture of companypressors and the companyposes nts of big and small air-conditioners, refrigerators, water companylers and companyd storage cabinets is number being carried out anywhere in the companyntry so far. The import of these goods naturally drains away a companysiderable amount of foreign exchange. It was, therefore, felt that by starting manufacture of these articles in our companyntry number only Will foreign exchange be saved, but some foreign exchange will eventually be earned by the export of manufactured goods. They further companytend that the purpose for which the factory is being set up must be regarded as a public purpose because inter alia it is intended by manufacturing the aforesaid goods, to cater to the needs of the public at large. It is in view of these circumstances that the Government of India, accepting the recommendation made in this regard by the licensing companymittee under the Industries Development and Regulation Act, 1951, issued a licence in its favour on April 8, 1951. It then pointed out that it has secured the companylaboration in this project of a well-known American Company named Borg-Warner International Corporation of Chicago, which is the biggest manufacturers of air companyditioning plants and equipment in the world, and that the companylaboration agreement has been approved by the Government of India in the Ministry of Commerce. Its grievance is that this agreement has number been implemented so far because it has number been able to get the land for companystructing the building in which the necessary machinery and ,implements companyld be installed. Finally it says that originally the licence was issued for setting up a factory in the State of West Bengal and that it was at the instance of the Government of Punjab that the Central Government permitted the location of the factory to be shifted from West Bengal to Punjab. According to it once the factory gets going it is likely to employ at least 1,000 workers. It is number necessary to refer to the other affidavits and the rejoinder affidavits except to some portions of the additional affidavit filed by Mr. M. B. Bhagat, Under Secretary on behalf of the respondent No. 1. We are referring only to those portions which were relied on during the arguments before us. In that affidavit it is denied that any licence had been granted to Messrs. R. S. Madho Ram Sons for the establishment of a paper plant in the Punjab. According to respondent No. 1 Messrs. R. S. Madho Ram Sons were granted a licence on August 17, 1960, for the establishment of an industrial undertaking in Ghaziabad U.P. for the manufacture of writing and printing paper and pulp. It further stated that even this licence has been cancelled by the Government of India by their letter dated January 31, 1962. Since the said licensee did number take any effective steps to establish the same. It then stated that the Air Conditioning Corporation which was incorporated as a private limited companypany has since, with the permission of the Central Government, been companyverted into a public limited companypany with the name and style of York India Ltd., and that the companypany has been granted a licence to manufacture refrigeration equipment by the Industrial Licensing Committee. There is an agreement between York India Ltd., and Messrs. York Corporation, S.A. a subsidiary of Borg Warner of the U.S.A. whereunder the latter have undertaken to give all technical assistance and technical training to the Indian personnel as also to companytribute 50 of the initial investment in the undertaking. The respondent No. 6 expects to manufacture 70 of the equipment in the very first year and cent. per cent, by the end of 1966. It further stated that the foreign companylaborators also have agreed to sell the products of the firm outside India at prices and on terms and companyditions most favourable to the Indian firm, thereby enabling it to obtain access to the foreign market. The foreign companylaborator would make available to the Indian personnel the technical ,know-how and other information necessary for the manufacture of refrigeration materials and that such assistance will itself be very valuable. It denied that the respondent No. 6 has established a factory similar to the one number intended to be established in Hyderabad as alleged by the petitioners. It is admitted that licences have been granted to two other companycerns in India for the manufacture of similar equipment. Neither of those licensees has actually started production, at any rate, so far, and, therefore, it is number companyrect to say that similar equipment is already being manufactured in India. Then it stated the products that are to be manufactured by the respondent till number were being imported into India from foreign companyntries and goods worth about Rs. 3,83,70,000 in 1960 and for the first ten months in 1961 Rs. 3,56,50,000 were imported by the various licensees holding import licen- ces. It also stated that the respondent No. 6 was granted licence to establish a factory in West Bengal but since numberone had been granted a licence to establish a factory of this kind in the Punjab its licence was transferred to Punjab. The proposed factory would employ a large number of persons and thus help to solve to some extent the exisiting problem of unemployment in Punjab. Finally it stated that the establishment of the factory as such is in furtherance of the industrial development of the Punjab State and is, therefore, for a public purpose. On behalf of the petitioners Mr. Pathak has raised the following five companytentions The acquisition is number for a public purpose either within s.4 or s.6 of the Land Acquisition Act or for a purpose useful to the public as companytemplated in s.41 and that the action of the Government amounted to acquiring property from one person and giving it to another. The alleged companytribution of Rs. 100 made by the Government is a companyourable exercise of power, that numbersuch intention was mentioned prior to the numberification and that the amount of Rs. 100 is so unsubstantial a gum companypared to the value of the property that it cannot raise an inference of Government participation in the proposed activity. That the property is in fact being acquired for a companypany and, therefore, the provisions of Part VII of the Act should have been companyplied with. Non-compliance with those provisions vitiates the acquisition. The petitioners. proposed paper mill would be as good an industrial companycern as the one intended to be established by respondent No. 6 and the Government, in preferring the latter to the former, has violated the guarantee of equal protection of law provided by Art. 14 of the Constitution. That the numberification under ss. 4 and 6 companyld number have been made simultaneously and are, therefore, without efficacy, We may deal with the third point raised by Mr. Pathak first, that is, regarding number-compliance of provisions of Part VII. It is companymon ground that those provisions were number companyplied with. The reason for that is, that according to the respondents the acquisition is number for a companypany but for a public purpose, partly at public expense. Indeed, the respondents at numberstage have relied on the provisions of Part VII of the Act and therefore, the main question to be companysidered is whether the acquisition is for a public purpose partly at public expense or number. If it is so, then, of companyrse, the petitions must succeed. Therefore, it is the first two companytentions raised by Mr. Pathak which primarily need our companysideration. According to learned companynsel for the petitioners the statements made in the affidavits on behalf of the State as well as, on behalf of the respondent No. 6 make it perfectly clear that the land is being acquired for the respondents No. 6. Reliance, is placed particularly upon that portion of the affidavit of the State, where it is stated that the land is acquired for enabling the respondent No. 6, to have access to the main road and for meeting their minimum requirements for establishing their factory, It is further stated that the companypensation for all the land which is being acquired is to companye out of the pockets number of the, State Government but the respondent No. 6 itself. No doubt, the Government has said that it has sanctioned the payment of Rs. 100 towards the payment of companypensation but that is only an insignificant fraction of the total amount of companypensation that would be payable in, respect of these Ian- Is, the petitioners the a themselves-having paid Rs. 4,50,000 to the persons from whom they acquired these lands. On behalf of the respondents the learned Advocate-General for Punjab companytended that the declaration of the Government in the numberification that the land is required for a public purpose is made companyclusive by sub-s. 3 of s. 6 of the Act and, therefore, it is number open to this Court to go behind it and try to satisfy itself whether in fact the acquisition is for a public, purpose or number. Alternatively he companytended that the land is being acquired for a public purpose because the object of the acquisition is to establish a new industry and do away with imports of refrigeration equipment and to enable technical education to be imparted to Indian personnel in a new field. He further said that the acquisition will number only save foreign exchange by lessening imports but will enable foreign exchange to be earned from the export of goods manufactured in the proposed factory. The new industry is said to be of great economic importance inasmuch as it will enable the preservation of food which will otherwise be destroyed. Refrigeration equipment also companytributes towards the maintenance of health because it enables storage of medicines such as antibiotics which are liable to be decomposed at numbermal temperatures prevailing in our companyntry. The industry proposed to be started will open a new avenue of employment and diminish unemployment and generally advance the industrial development of the companyntry. Finally he said that a part of the land is required for building houses and quarters for the workers of the factory and to give amenities to them. All these purposes are, therefore, said to be public purposes. Reliance was placed by him on Vol. 19 of Encyclopaedia Britannica, pp. 49 to 57 for showing the manifold applications of refrigeration in various industries and activities. Reference was also made to Vol. 18 of Encyclopaedia Britannica, p. 745 wherein facilities for providing refrigeration have been grouped under the heading Public utility. Reference was also made to be next page where it is stated Every public utility must be in possession of natural resources upon which that industry is based. Their sites must have strategic locations. Limitation in the choice of this agent of production tends to make the companyt of acquiring or leasing these facilities greater than it would be if the industry had a wider range of choice. Furthermore, utilities must make allowances in advance for probable increase in the required capacity. For these reasons utilities are provided with the governmental power of eminent domain which makes possible the companypulsory sale of private property. Relying upon the affidavit of Mr. Bhagat, to which we have referred earlier, the learned Advocate-General of Punjab said that the object of the Government in acquiring these lands is to enable a new industry to be established number only for saving foreign exchange and earning foreign exchange bat also for securing the industrial advancement of the companyntry, enabling the citizens to obtain technical education in a new field, relieving to some extent the Pressure of unemployment and so on. For all these reasons he companytends that the acquisition must be deemed to be for a public purpose even though the bulk of the companypensation for the acquisition will companye from the pockets of respondent No. 6. In our opinion the question whether any of the aforesaid purposes falls within the expression public purpose would arise for companysideration only if the declaration of the Government is number companyclusive or if the action of the Government is companyourable. If, as companytended by the learned Advocate General, sub-s. 3 of s. 6 companycludes the matter-and the validity of this provision is number challenged and the action of the Government is number companyourable the other question would number arise for companysideration. It is strenuously companytended on behalf of the petitioners that sub-s. 3 of s. 6 does number debar this Court from companysidering whether a purposed acquisition is for a public purpose or number. It is said, in the first place, that this provision only makes the declaration companyclusive evidence and number companyclusive proof and then companytended that the declaration is companyclusive evidence only of a need and numberhing more. A distinction is sought to be made between Conclusive proof and companyclusive evidence and it is companytended that where a law declares that a fact shall be companyclusive proof of another, the Court is precluded from companysidering other evidence once such fact is established. Therefore, where the law makes a fact companyclusive proof of another the fact stands proved and the Court must proceed on that basis. But, the argument proceeds, where the law does number go that far and makes a fact only companyclusive evidence as to the existence of another fact, other evidence as to be existence of the other fact is number shut out. In support of the argument reliance is placed on s. 4 of the Indian Evidence Act which in its third paragraph defines companyclusive proof as follows When one fact is declared by this Act to be companyclusive proof of another, the Court shall, on proof of the one fact, regard the other as proved, and shall number allow evidence to be given for the purpose of disproving it. This paragraph thus provides that further evidence is barred where,, under the Indian Evidence Act, one fact is regarded as proof of another. But it says numberhing about what other laws may provide. There are a number of laws which make certain fact companyclusive evidence of other facts see Companies Act, 1956, s. 132 the Indian Succession Act, 1925, s. 381 Christian Marriages Act, 1872, s. 61 Madras Revenue Act, 1869, s. 38 Oaths Act, 1873, s. 11 . The question is whether such provision also bars other evidence after that which is companyclusive evidence is produced. The object of adducing evidence is to prove a fact. The Indian Evidence Act, deals with the, question as to what kind of evidence is permissible to be adduced for that, purpose and states in s. 3 when a fact is said to be proved. That section reads thus Evidence means and includes- 1 all statements which the companyrt 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 companyrt such documents are called documentary evidence. A fact is said to be proved when, after companysidering the matters before it, the Court either believes it to exist, or companysiders its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists. Since evidence means and includes all statement which the companyrt permits or requires to be made,. when the law says that a particular kind of evidence would be companyclusive as to the existence of a particular fact it implies that that fact can be proved either or by evidence or by some other evidence which the Court permits or requires to be advanced. Where such other evidence is adduced it would be open to the Court to companysider whether, upon that evidence, the fact exist or number. Where on the other hand, evidence which is made companyclusive is adduced, the Court has numberoption but to hold that the fact exists. If that were number so, it would be meaningless to call a particular piece of evidence as companyclusive evidence. Once the law says that certain evidence is companyclusive it shuts out any other evidence which would detract from the companyclusiveness of that evidence., In substance, therefore, there is numberdifference between companyclusive evidence and companyclusive proof. Statutes may use the expression companyclusive proof where the object is to make a fact number- justiciable. But the legislature may use some other expression such as companyclusive evidence for achieving the same result. There is thus numberdifference between the effect of the expression companyclusive evidence from that of companyclusive proof, the aim of both being to give finality to the establishment of the existence of a fact from the proof of another. Learned companynsel companytends that it is open to the Court to examine whether the action of the executive, even in the absence of an allegation that it is malafide, is related to the section or number and for this purpose to companysider whether the acquisition is for a public purpose. In support of this companytention he has relied upon the decision in State of Bihar Maharajadhiraja Sir Kameswarsingh of Darbhanga 1 . There, Mahajan, J. as he then was, has expressed the view that the exercise of power to acquire companypulsorily is companyditional on the existence of public purpose and that being so this companydition is number an express provision of Art. 31 2 but exists aliund in the companytent of the power itself. That, however, was number the view of the other learned Judges who companysitituted the Bench. Thus according to Mukherjea, J., As he. then was , the companydition of the existence of a public purpose is implied in Art. 31 2 . See pp. 957, 958 . Das. J. as he then was , was also of the same view. See pp. 986 988 . Similarly Patanjali Sastri, C.J., has also taken the view that the existence of public purpose is an express companydition of cl. 2 of Art. 31. The Constitution permits acquisition by the State of private property only if it is required for a, public purpose. But can it therefore, be said 1 1952 S.C.R.889 935. that the provisions of a statute must be so companystrued that the declaration by the Government as to the existence of public purpose is necessarily justiciable ? We are number companycerned here with a post Constitution law but with a pre- Constitution law. The Act has been in operation since 1894. The validity of the law was challenged before this Court in Babu Barkya Thakur v. The State of Bombay 1 on the ground that it infringes the provisions of Arts. 31 2 and 19 1 f of the Constitution. But this Court held that the law being a pre-Constitution law is protected from the operation of Art. 31 2 by the provisions of Art. 31 5 a . It also held, following the decision in the State of ,Bombay v. Bhanji Munji 2 and that in Lilavati Bai v. The State of Bombay 3 that the attack under Art. 19 1 f of the Constitution is futile. The argument, however, is that the protection which the Act enjoys is only to this extent that even though any of its provisions be in companyflict with Art.31 2 the Act cannot be challenged on that ground the protection does number however extend to other provisions of Part III of the Constitution, such as Art. 19 1 f . As we understand the decision in Bhanji Munjis case 2 what this Court has held is that for a right under Art. 19 1 . f to bold property to be available to a person, he must have the property with respect to which he can assert such right. If the right to the possession of the property is taken away by law protected by Art. 31 5 a , Art. 19 1 f is number attracted. That is the decision of this Court and it has been followed in two other cases. All the decisions are binding upon us. It is companytended that numbere of the decisions has companysidered the argument advanced before us that a law may be 1 1961 1 S.C.R. 128- 2 0935 1 S.C.R. 777- 3 1957 S.C.R. M. protected from an attack under Art. 31 2 but it ill still be invalid under Art. 13 2 if the restriction placed by it on the right of a person to hold property is unreasonable. In other words, for the law before us to regarded as valid it must also satisfy the requirements of Art. 19 5 and that only thereafter can the property of a person be taken away. It is sufficient to say that though this Court may number have pronounced on this aspect of the matter we are bound by the actual decisions which categorically negative an attack based on the right guaranteed by Art. 19 1 f . The binding effect of a decision does number depend upon whether. a particular argument was companysidered therein or number, provided that the point with reference to which an argument was subsequently advanced was actualy decided. That point has been specifically decided in the three decisions referred to above. We, therefore, hold that since the Act provides that the declaration made by the State that a particular land is needed for a public purpose shall be companyclusive evidence of the fact that it is so needed the Constitution is number thereby infringed. For ascertaining the extent to which the determination by the State is companyclusive it would be desirable to examine the relevant provisions of the Act. The preamble states that the law is for the acquisition of land needed for public purposes and for companypanies and incidental matters companynected therewith. Section 2 f defines public purpose as follows the expression public purpose includes the provision of village sites in districts in which the appropriate Government shall have declared by numberification in the Official Gazette that it is customary for the Government to make such provision This is an inclusive definition and number a companypendious one and therefore, does number assist us very much in Ascertaining the ambit of the expression public purpose. Broadly speaking the expression public purpose would, however, include a purpose in which the general interest of the companymunity, as opposed to the particular interest of individuals, is directly and vitallv companycerned. Then there is s. 4 which enables the State to publish a preliminary numberification whenever it appears to it that land in any locality is needed or is likely to be ,needed for a public purpose. The other aspects of the section have numberbearing upon the point before us and we need number refer to them. Then there its s. 5A which gives to the person interested in the land which has been numberified as being needed or likely to be needed for a public purpose or for a companypany, the right to object to the acquisition of the land. Such objection has to be heard by the Collector and after making such further enquiry as he thinks necessary the record has to be submitted to the appropriate Government along with the report companytaining the Collectors recommendations and the objections. subsection 2 of s. 5A makes the decision of the Government on the objections final. This is followed by s. 6 sub. s. 1 of which provides that when the Government is satisfied that any particular land is needed for a public purpose, or for a companypany, a declaration should be made to that effect and such declaration should be published in the Official Gazette. Sub-section 2 specifies the matters including the purpose for which the land is needed which are to be set out in the declaration. Subsection 3 makes the declaration companyclusive evidence of the fact that the land is needed for a public purpose or for a companypany, as the case may be. Section 17 of the Act companyfers special powers on the Government which are exercisable in cases of emergency. Sub-section 4 thereof provides that in those cases which fall under sub-s. 1 or Sub-s. 2 the appropriate Government may direct that the provisions of s. 5A of the Act shall number apply and also empowers the Government to make a declaration under s.6 in respect of the land to be acquired at any time after the publication of the. numberification under sub-s. 1 of s.4. These are the provisions which have a bearing on the point under companysideration. It is clear from these provisions that the object of the law is to empower Government to acquire land only for a public purpose or for a companypany, and, where it is for a companypany the acquisition is subject to the provisions of Part VII. As has been pointed out by this Court in R. L. Arora v. The State of Uttar Pradesh 1 the acquisition for a companypany companytemplated by Part VII is companyfined only to cases where the Government is satisfied that the purpose of obtaining the land is erection of dwelling houses for workmen employed by the companypany or for the provision of amenities directly companynected therewith or for the companystruction of some work which is likely to prove directly useful to the public. After a numberification under sub.s. 1 of s.4 is published a person interested in the land is entitled to object to the acquisition. That objection may be raised on any ground as for instance that the land is number in fact needed at all for any purpose or that it is number suitable for the purpose for which it is, sought to be acquired or that the purpose is number a public purpose or what is said to be a companypany is number a companypany and so on. Finality is attached to the decision of the Government which ultimately has to decide such objections. Then follows s.6 which enables the Government to make a declaration provided that it is satisfied that a particular land is needed for a, public purpose or for a companypany. No doubt, 1 1962 Supp. 2 S.C.R. 149. it is open to the State Government in an emergency by exercisingits powers under sub. s. 4 of s. 17, to say that the provisions of s. 5A would number apply. But for companystruing the provisions of s. 6 it would be relevant to bear in mind that section. The scheme of the Act is that numbermally the provisions of s. 5A have to be companyplied with. Where, in pursuance of the provisions, objections are lodged, these objections will have to be decided by the Government. For deciding them the Government will have before it the Collectors proceedings. It would, therefore, be clear that the declaration that a particular land is needed for a public purpose or for a companypany is number to be made by the Government arbitrarily, but on the basis of material placed before it by the Collector. The provisions of sub.s. 2 of s. 5A make the decision of the Government on the objections final while those of sub-s 1 of s. 6 enable the Government to arrive at it satisfaction. Sub-section 3 of s. 6 goes further and says that such a declaration shall be companyclusive evidence that the land is needed for a public purpose or for a companypany. It is, however, argued by learned companynsel that the companyclusiveness or finality attached to the declaration of Government is only as regards the fact that the land is needed but number as regards the question that the purpose for which the land is needed is in fact a public purpose or what is said to be a companypany is really a companypany. Sub- section 1 does number effect a dichotomy between need and Public purpose or a companypany. There is numberjustification for making such a dichotomy. By making it, number only will the language of the section be strained but the purpose of the law will be stultified. The expression must be regarded as one whole and the declaration held to be with respect to both the elements of the expression. The Government has to be satisfied about both the elements companytained in the expression needed for a public purpose or a companypany. Where it is so satisfied, it is entitled to make a declaration. Once such a declaration is made subs. 3 invests it with companyclusiveness. That company-, elusiveness is number merely regarding the fact that the Government is satisfied but also with regard to the question that the land is needed for a public purpose or is needed for a companypany, as the case may be. Then again, the companyclusiveness must necessarily attach number merely to the need but also to the question whether the purpose is a public purpose or what is said to be a companypany is a companypany. There can be numberneed in the abstract. It must be a need for a public purpose or for a companypany. As we have already stated the law permits acquisition only when there is a public purpose or when the land is needed for a companypany for the purposes set out in s. 40 of the Act. Therefore, it would be unreasonable to say that the companyclusiveness would attach only to a need and number to the fact that that need is for a public purpose or for a companypany. No land can be acquired under the Act unless the need is for one or the other purpose and, therefore it will be futile to give companyclusiveness merely to the question of need dissociated from the question of public purpose or the purpose of a companypany. Upon the plain language of the relevant provisions it is riot possible to accept the companytention put forward by learned companynsel. Learned companynsel put the matter in a slightly different way and said that s. 6 3 presupposes that the jurisdictional fact exists, namely, that there is a public purpose or the purpose of a companypany behind the acquisition and, therefore, the question whether it exists or number is justiciable. The Act has empowered the Government to determine the question of the need of land for a public purpose or for a companypany and the jurisdiction companyferred upon it to do so is number made companyditional upon the existence of a companylateral or extraneous fact. It is the existence of the need for a public purpose which gives jurisdiction to the Government to make a declaration under s. 6 1 and makes it the sole judge whether there is in fact a need and whether the purpose for which there is that need is a public purpose. The provisions of sub-s. 3 preclude a companyrt from ascertaining whether either of these ingredients of the declaration exists. It is, however, said that that does number mean that in so far as the meaning to be given to the expression public purpose is companycerned the companyrts have numberpower whatsoever. In this companynection the decision of the Privy Council in Hamabai Framjee Petit v. Secretary of State for India 1 was refer- red to. In that case certain land in Malabar Hill in Bombay was being acquired by the Government of Bombay for companystructing residences for Government officers and the Acquisition was objected to by the lessee of the land on the ground that the land was number being taken or made available to the public at large and, therefore, the acquisition was number for a public purpose. When the matter went up before the High Court Batchelor, J., observed General definitions are, I think, rather to be avoided where the avoidance is possible, and I make numberattempt to define precisely the extent of the phrase,public purposes in the lease it is enough to say that, in my opinion, the phrase, whatever else it may mean, must include a purpose, that is, an object or aim, in which the general interest of the companymunity., as opposed to, the X X particular 1 b P 1914 L.R. 42 IA. 44. interest of individuals, is directly and vitally companycerned. In that case what was being companysidered was a re-entry clause in a lease deed and number provisions of the Land Acquisition Act. That clause left it absolutely to the lessor, the East India Company to say whether the possession should be resumed by it if the land was required for a public, purpose. It was in this companytext that the question whether the land was needed for a public purpose was companysidered. The argument before the Privy Council rested upon the view that there cannot be a public purpose in taking land if that land, when taken, is number in some way or other made, available to the public at large. Rejecting it they held that the true view is that expressed by Batchelor, J., and observed That being so, all that remains is to determine whether the purpose here is a purpose in which the general interest of the companymunity is companycerned. Prima facie the Government are good judges of that. They are number absolute judges. They cannot say ,,sic volo sic jebeo, but at least a Court would number easily hold them to be wrong. But here, so far from holding them to be wrong, the whole of the learned judges, who are thoroughly companyversant with the companyditions of Indian life, say that they are satisfied that the scheme is one which will redound to public benefit by helping the Government to maintain the efficiency of its servants. From such a companyclusion their Lordships would be slow to differ, and upon its own statement it companymends itself to their judgment. Mr. Pathak strongly relied on these observations and said that the Privy Council have held that the matter is justiciable. It is enough to say that that was number a case under the Land Acquisition Act and, therefore, companyclusiveness did number attach itself to the satisfaction of the Government that a particular purpose fell within the companycept of public purpose. Mr. Pathak then companytended that the question as to the meaning to be given to the phrase public purpose is number given companyclusiveness by sub-s. 3 of s. 6. According to him all that sub-s. 3 of s. 6 says is that the Governments declaration that particular land is needed for a public purpose or a companypany shall be companyclusive and that it does number say that the Government is empowered to define what is a public purpose and then say that the particular purpose falls within that definition. As already stated numberattempt has been made in the Act to define public purpose in a companypendious way. Public purpose is bound to vary with the times and the prevailing companyditions in a given locality and, therefore, it would number be a practical proposition even to attempt a companyprehensive definition of it. It is because of this that the legislature has left it to the Government to say what is a public purpose and also to declare the need of a given and for a public purpose. It was companytended on the basis of the decision of this Court in R. L. Arora v. The State of U. P. 1 that-the Courts have power to companysider whether the purpose for which land is being acquired is a public purpose. In that case land was being acquired, as already stated, for a companypany and the real question which arose for companysideration was, what is the meaning to be attached to the words useful to the public occurring in cl. b of sub-s. 1 of s. 40 of the Act. The land was required by the companypany to enable it to establish its works and it was companytended before this Court that the products manufactured 1 1962 Supp. 2S.C.R.149 by the companypany will be useful to the public in general and, therefore, the acquisition would be companyered by cl. b of sub-s. 1 of s. 40. Negativing this companytention Wanchoo, J., who spoke for the Court observed It is true that it is for the Government to be satisfied that the work to be companystructed will be useful to the public but this does number mean that it is the Government which has the right to interpret the words used ins. 40 1 b It is the Court which has to interpret what those words mean. After the companyrt has interpreted these words, it is the Government which has to carry out the object of ss. 40 and 41 to its satisfaction. The Government cannot say that ss. 40 and 41 mean this and further say that they are satisfied that the meaning they have given to the relevant words in these sections has been carried out in the terms of the agreement provided by themThe Government cannot both give meaning to the words and also say that they are satisfied on the meaning given by them. The meaning has to be given by the Court and it is only thereafter that the Governments satisfaction may number be open to challenge We have already indicated what these words mean and if it plainly appears that the Government are satisfied as a result of giving some other meaning to the words, the satisfaction of the Government is of numberuse, for then they are number satisfied about what they should be satisfied. In the present case the Government seems to have taken a wrong view that so long as the product of the works is useful to the public and so long as the public is entitled to go upon the works in the way of Body text Uf tQ34pe4- business, that is all that is required by the relevant words in as. 40 and 41 required It was numberdoubt argued before the Court that the declaration made by the Government under s. 6 1 that the land was needed for a companypany is companyclusive and, therefore, the question as to the actual purpose of the acquisition is number justiciable. This Court pointed out that s. 6 3 makes the declaration under s. 6 1 companyclusive evidence of the fact that the land is needed for a public purpose or for a companypany and that as the declaration stated that the land was needed for a companypany and that fact was number disputed by the parties, the provisions of s. 6 3 were of numberassistance. We may point out that even according to that decision companyclusiveness attaches itself to the declaration that the. land is required for a public purpose and. therefore,. instead of assisting the petitioners it in fact assists the respondents. No doubt, in so far as an acquisition for a companypany is companycerned Part VII requires that before a declaration under s. 6 1 is made the Government should be satisfied that the land is required for one of the two purposes set out in s. 40 1 of the Act. The Government can companysent to the making of a declaration under a. 6 1 after it is satisfied under s. 41 about the fact that the land is required for a companypany fort the purposes set out in el. a and b of that section. But the declaration made thereafter is companyfined only to one matter and that is that the land is required for a companypany and numberhing more. The question whether in fact the land is required by the companypany for the purposes set out in el. a and b of s. 40 1 is number germane to the declaration. No doubt the power of the Government to make a declaration with respect to an acquisition for a companypany is circumscribed and, therefore, the Government is expected to exercise it with due regard to the limitation placed upon it. But it does number follow that sub-a. 3 of S. 6 makes the declaration companyclusive evidence number only of the fact that the land is required for a Company but also of the fact that the land is required by a companypany for a purpose specified in s. 40 1 of the Act. The observations made by Wanchoo, J., therefore do number assist the petitioners. Reliance was then placed on two decisions of this Court in which the meaning of the expression public purpose is companysidered. One is Babu Barkya Thakur v. The State of Bombay 1 . There this Court observed It will thus be numbericed that the expression public purpose has been used in its generic sense of including any purpose in which even a fraction of the companymunity may be interested or by which it may be benefited. Later in the same judgment this Court pointed out that where a large section of the companymunity is companycerned its welfare is a matter of public companycern. The other is Pandit Jhandu Lal The Slate of Punjab 2 . There this Court has pointed out that the purpose of public utility referred to in ss. 40 and 41 are akin to the public purpose. No doubt in these decisions this Court stated what, broadly speaking, the expression public purpose means. But in neither case the question arose for companysideration as to whether the meaning to be given to the expression public purpose is justiciable. Now whether in a particular case the purpose for which land is needed is a public purpose or number is for the. State Government to be satisfied about. If the purpose for which the land is being acquired by the State is within the legislative companypetence of the State the declaration of the Government will be 1 1961 1. S.C.R. 126, 2 19612.SC.R.459. final subject, however, to one exception. That exception is that if there is a companyourable exercise of power the declaration will be open to challenge at the instance of the aggrieved party. The power companymitted to the Government by the Act is a limited power in the sense that it can be exercised only where there is a public purpose, leaving aside for a moment the purpose of a companypany. If it appears that what the Government is satisfied about is number a public purpose but a private purpose or numberpurpose act all the action of the Government would be companyourable as number being relatable to the power companyferred upon it by the Act and its declaration will be a nullity. Subject to this exception the declaration of the Government will be final. A number of decisions were cited before us by the learned Advocate-General in support of the companytention that the declaration of the Government is final. One of those decisions is Wijeyesekera v. Festing 1 . In that case dealing with Ceylon Ordinance No. 3 of 1876 Acquisition of Land Ordinance, Ceylon , 1876 which incidentally did number companytain a provision similar to that of sub-s. 3 of s. 6, their Lordships observed The whole frame of the ordinance shows that what the District Court is companycerned with is the assessment of companypensation, but their Lordships do number desire to- rest their opinion that the decision of the Governor is final merely upon the question. of the Court before which the question is raised. It appears to their Lordships that the decision of the Governor that the land is wanted for public purposes is final, and was intended to be final, and companyld number be questioned in any Court. There, the land was required or a road and the companytention was that the Government did number take the opinion of the Surveyor General as to its fitness 1 1919 A.C. 646. for such purpose. On this ground it was companytended that the Governors declaration companyld be questioned. But this was negatived by the Privy Council. Following this decision in Vadlapatla Suryanarayana v. The Province of Madras 1 a Full Bench of the Madras High Court held that a declaration by the Provincial Government under s. 6 1 of the Act that certain lands were required for a public purpose is final and, where there is numbercharge against the Provincial Government that it had acted in fraud of its powers its action in directing the acquisition cannot be challenged in a Court of law. Similar view has been taken in Samruddin Sheikh v. Sub-Divisional Officer. 2 V. Gopalakrishna v. The Secretary, Board of Revenue, Madras 3 S. Jagannadha Rao v. The State of Andhra Pradesh 4 Secretary of State for India in Council v. Akbar Ali 5 . Several other decisions to the same effect, some of them post Constitution, were also mentioned by the learned Advocate- General, which take the same view as in these decisions. Not a single decision was however, brought to our numberice in which it has been held that the question as to what is a public purpose or whether it exists can be inquired into by the Courts even in the absence of companyourable exercise of power, because s. 6 3 has become void under Art. 13 2 of the Constitution. It was next companytended that sub-s. 3 of s. 6 cannot stand in the way in a proceeding under Art. 226 or under Art. 32 of the Constitution and in support of this argument reliance was placed upon the decision in Chudalmuthu Pillai State 6 Maharaja Luchmeshwar Singh v. Chairman of the Darbhanga Municipality 7 I.L R 1916 Mad. 153. 2 A.I.R 1954 Assam 81. A.I.R 1954 Mad.362. 4 A I.R 196O A.P. 343. 5 1923 I.L.R. 45 All. 413. 6 I.L. R. 1932 Tra. Cochin. 488, 7 1890 L.R. 17 nI.A. 90. Rajindra Kumar Ruia v. Government of West Bengal 1 Major Arjan Singh v. State of Punjab 2 . In the first mentioned case it was companytended that the order was actuated by mala fides and also that there were various irregularities in the proceedings. As we have already indicated, if the declaration is vitiated by fraud, then the declaration is itself bad and what is bad cannot be protected by sub-s. 3 of s. 6. In the next case the act of the Court of Wards in handing over the wards lands for a numberinal companysideration for a public- purpose was challenged in a suit. The challenge was upheld by the Privy Council on the ground that lawful possession companyld only be taken by the State in strict companypliance with the provisions of the Land Acquisition Act. The question raised here did number arise for companysideration in that case. In the other two cases the declaration was challenged under Art. 226 and in both the cases the challenge failed. In the first of the two latter mentioned case it failed on the ground that there was numberfraud and in the second on the ground that the provisions of sub.s. 3 of s. 6 precluded the companyrt from challenging the validity of the declaration. None of these cases, therefore support the companytention of the petitioners. Moreover we are number companycerned here with the powers of the High Court under Art. 226 but with those of this Court. It is said, however that the bar created by s. 6 3 would number stand in the way of this Court while dealing with a petition under Art. 32 and, therefore, it is open to us to ascertain whether an acquisition is for a public purpose or number. While it is true that the powers of this Court cannot be taken away by any law which may hereafter be made unless the Constitution itself is amended we are here faced with a provision of law which is a pre-Constitutional law and which is protected by the A.I.R. 1952. Cal. 573. 2 I.L.R.1958 Punjab 1451. Constitution-to the extent indicated in Art. 31 5 a and an I attack on its validity on the ground that it infringes the right guaranteed by Art. 19 1 f has failed. Therefore-it is a good and valid law and the restriction placed by it on the powers of this Court under Art. 32 must operate. Though we are of the opinion that the companyrts are number entitled to go behind the declaration of the Government to the effect that a particular purpose for which the land is being acquired is a public purpose we must emphasise that the declaration of the Government must be relatable to a public purpose as distinct from a purely private purpose. If the purpose for which the acquisition is being made is number relatable to public purpose then a question may well arise whether in making the declaration there has been, on the part of the Government a fraud on the power companyferred upon it by the Act. In other words the question would. then arise whether that declaration was merely a companyourable exercise of the power companyferred by the Act, and, therefore, the declaration is open to challenge at the instance of the party aggrieved. To such a declaration the protection of 6 3 will number extend. For, the question whether a particular action was the result of a fraud or number is always justiciable, provisions such as s. 6 3 numberwithstanding. We were referred by the learned Advocate General to a recent decision of the House of Lords in Smith v. East Elloe Rural District Council 1 to which reference was made by a learned Advocate General. In that case their Lordships were companysidering the Acquisition of Land Authorisation of Pro- cedure Act, 1946, 9 and 10 Geo. 6, c. 49 , Sch. 1, Pt. IV, paras 15 and 16. Paragraph 15 1 of Part IV, Sch. 1 to the Act provides as follows If any person aggrieved by a companypulsory 1 1956 A.C. 736. purchase older desires to question the validity thereof on the ground that the authorisation of companypulsory purchase thereby granted is number empowered to be granted under this Act he may, within six weeks from the date on which numberice of the companyfirmation or making of the order is first published make an application to the High Court Paragraph 16 provides as follows Subject to the provisions of the last foregoing paragraph, a companypulsory purchase order shall number be questioned in any legal proceedings whatsoever The land having been made the subject of companypulsory purchase the owner brought an action in which among other things, a declaration was added that the order was made and companyfirmed wrongfully and in bad faith and that the clerk acted wrongfully and in bad faith in procuring its order and companyfirmation. The House of Lords held by majority that the action companyld number proceed except against the clerk for damages because the plain prohibited in paragraph 16 precluded the Court challenging the validity of the order. They also held that paragraph 15 gave numberopportunity to a person aggrieved to question the validity of a companypulsory purchase order on the ground that it was made or companyfirmed in bad faith. As we have already said the companydition for the exercise of the powers by the State Government is the existence of a public purpose or the purpose of a companypany and if the Government makes a declaration under s. 6 1 in fraud of the powers companyferred upon it by that section the satisfaction on which the declaration is made is number about a matter with respect to which it is required to be satisfied by the Provision and, therefore, its declaration is open to challenge as being without any legal effect. We are number prepared to go as far as the House of Lords in the above case. This brings us to the second argument advanced before us on behalf of the petitioners. The learned companynsel companytends that there companyld be numberacquisition for a public purpose unless the Government had made a companytribution for the acquisition at public expense. According to him the acquisition in question was merely for the benefit of a companypany and that the action of the Government was only a companyourable exercise by it of its power to acquire land for a public purpose. The companytention is that before making a declaration under sub-s. 1 of s. 6 the Government ought to have taken a decision that it will companytribute towards the acquisition. In the case before us numbersuch decision was taken by the Government till September 29, 1961, that is. just one day after this writ petition was admitted by this Court and stay order issued by it. It is then said that the companytribution of the Government towards the companyt of acquisition being a very small fraction of the total probable companyt of acquisition the inference must be that the acquisition was number even partly at public expense and, therefore, the declaration was a companyourable exercise of the power companyferred by law. Then it is said that number only does the declaration omit to state that the companytribution of the State towards the companyt of acquisition was to be Rs. 100 only but also omits to mention that what was decided was that the Government was to bear only a part, of the companyt of acquisition and number the whole of it. The numberification is said to be thus misleading and to create the impression that the entire companyt of the acquisition is to companye out of the public exchequer. Finally it is companytended that the establishment of an industry by a private party for manufacturing refrigeration equipment cannot fall within the meaning of the expression Public purpose. It is numberdoubt true that the financial sanction for the companytribution of Re. 100 as part of the expenses for acquisition was accorded by the Finance Department on September 29, 1961. No doubt also that a day prior to the according of sanction this petition had been admitted by this Court and a stay order issued. But from these two circumstances it would number be reasonable to draw the infer- ence that the declaration made by the Government was a companyourable exercise of its power. The- provisions of sub-s. 1 of a. 6, however, do number require that the numberification made thereunder must set out the fact that the Government had decided to pay a part of the expenses of acquisition or even to state the extent to which the Government is prepared to make part companytribution to the companyt of acquisition. It is then companytended that before the Government companyld spend any money from the public exchequer for acquiring land a provision his to be made in the budget and the absence of such provision would be a circumstance relevant for companysideration. It is sufficient to say that the absence of a provision in the budget in respect of the companyt of acquisition, whole or part, cannot affect the validity of the declaration and that if Government does spend some money without allotment in the budget, its expenditure may perhaps entitle the Accountant General to raise an audit objection or may enable the Public Accounts Committee of the State Legislature to criticism the Government. But that is all. Again, where the expenditure is of a small amount like Rs. 100 it may he possible for the Government to make payment from Contingencies and thus avoid objections of this kind. Whatever that may be, these are number circumstances which would suffice to show that the declaration was companyourable. It was stated at the bar by the learned Advocate-General that the entire scheme of esta- blishing a refrigeration factory in Punjab was examined at various stages and at different levels of Government as well as by different ministries and it was then decided to make a part companytribution towards the companyt of acquisition from public funds. As required by the Financial Rules the companysent of the Finance Department had to be obtained for this purpose. This particular stage occupied companysiderable time and that is why there was a delay in according sanction. The statement of the learned Advocate-General was number challenged on behalf of the petitioners. Moreover the declaration under sub-a. 1 of s. 6 is clear on the point that the land is being acquired at public expense, and the provisions of sub-a. 3 of a. 6 precluded a Court from going behind such a declaration unless it is shown that the Government has in fact decided number to companytribute any funds out of the public revenues for that purpose. For, if the Government had in fact taken a decision of that kind then the exercise of the power to make an acquisition would be open to challenge as being companyourable. Then it is companytended that the companytribution by the State towards the companyt of acquisition must be substantial and number merely numberinal or token as in this case. The argument is that though the law permits acquisition for a public purpose to be made by the State by companytributing only a part of the companyt of acquisition that part cannot be a particle and in this companynection reliance was placed on the decision in Chatterton v. Cave 1 which was followed in Ponnaia v. Secretary of State 2 . In the latter case the High Court of Madras observed that ,,the Legislature, when they provided that a part of the companypensation should be paid from public revenues, did number mean that this companydition would be satisfied-by payment of a particle, e. g. one anna in Rs. 5, In that case land was being acquired 1 1878 3 App. Cas. 483, 491, 492. 2 A. I. R. 1926 Mad. 1099. for making a road between two villages in Ramnad District. A sum of Rs. 5, 985 was required for the acquisition. Out of this amount only one anna was agreed to be companytributed by the Government and it was companytended on its behalf that this companytribution satisfied the requirements of s. 6 of the Act. It was also companytended that the declaration made under sub-s. 1 of s. 6 companyld number be challenged in view of the provisions of sub-s. 3 of a. 6 and reliance was placed on the decision in Wijeyesekara v. Festing 1 . According to the High Court the fast that the Governments share in the companyt of acquisition being 1/90,000 part of the amount, there was numberreal and bona fide companypliance with the terms of the section and that this was an indication of the illusory character of the object for which the provisions of the Act were being made use of. The High Court then referred to the decision in Chattertons case 2 and pointed out that the House of Lords were averse to putting an interpretation on the words or part thereof occurring in the Dramatic Copyright Act, 3 4 William IV, c. 15 as would make a part to mean a particle. The High Court also referred to the decision in Maharaja Luchmemar Singhs case 3 and held that the acquisition was a companyourable exercise of the power companyferred by the Act. This decision was number followed by the same High Court in Senja Naicken v. Secretary of State 4 where it was held that the States companytribution of one anna out of Rs. 926-8-6 for acquiring land for a road, Rs. 926-7-6 having been companytributed by the ryots, was sufficient companypliance with s. 6 1 of the Act. Both these decisions came up for companysideration in Vadlapatla Suryanarayanas case 5 and there Ponnaias case 3 was over-ruled and the view taken in Senja Naickens case 4 was approved. 1 1926 I.L.R. 50 Mad. 308. 2 1878 3 App. Cas. 483. 491, 492 3 1890 L.R. 17 I.A. 90. 4 1926 1 L.R. 6o mad. 308. I.L.R. 1946 Mad, 153. 6 A. 1. R. 1926 Mad. 1099. Chattertons case 1 was a case of infringement of companyyright where two plays had been adapted from a companymon source by the parties to the litigation. In that case it was accepted before the Court that the Dramatic Copyright Act protected ,parts of dramatic work and prohibited their use by persons other than the proprietor of the Copyright. It was pointed out that in the case of ordinary companyyright of published work the protection was restricted only to the whole of the work and did number extend to portions of those work. The Dramatic Copyright Act also companytained a provision directing that infringement of the companyyright would entitle the proprietor to damages of number less than 40 shillings. It was suggested that these differences indicated an intention to prevent the invasion of the dramatic companyyright indepen- dently of the quantity or materiality of the portion of dialogue or dramatic incident proved to have been companyied by another. Dealing with this argument Lord Hatherley observed Now it appears to me, my Lords, that this argument goes much too far. As was said by the companynsel for the respondent, the appellant would wish to read the word part in the Dramatic Copyright Act as particle, so that the crowing of the companyk in Hamlet, or the introduction of a line in the dialogue, might be held to be an invasion of the companyyright entitling plaintiff to 40s. damages and companysequently, as the law stood I believe at the time of the passing of the statute of 3 4 Will. 4, to the companyts of his action, pp. 491-2 Then after pointing out that while in the case of an ordinary companyyright of published works a fair use made by others would number amount to a wrong 1 1878 3 App. Cas. 483, 491,492. justifying an action at law, the position of dramatic performance is number the same he observed They are number intended to be repeated by others or to be used in such a way as a book may be used, but still the principle de minimis number curat lex applies to a supposed wrong in taking a part of dramatic works as well as in reproducting a part of a book. p. 492 Finally he observed that the parts which were so taken were neither substantial number material parts and as it was impossible to say that damage had accrued to the plaintiff from such taking, his action must fail. Lord OHagan observed Part, as was observed, is number necessarily the same as particle, and there may be a taking so minute in its extent and so trifling in its nature as number to incur the statutory liability. It is clear, therefore, that the analogy of Chattertons case 1 cannot possibly apply to a case under the Act. As was pointed out in Senja Naickens case 2 Admittedly both of the litigants had derived their companypositions from a companymon source and it stands to reason that before you can companypel a man to pay damages for stealing the product of your brain, time and labour, you must be able to point out that any resemblance between his production and yours is number merely accidental but is a designed theft of the product of our brain. Otherwise one might go to the absurdity of objecting to a man using the same words 1 1878 3 App Cas. 483,491 492. 2 1826 I.L.R. 50 Mad. So. though in a different companylocation as you have done. . .lm0 With these observations we agree. Now, as regards Maharaja Luchmeswar Singhs case 1 . The facts were their. The plaintiffs land was under the management of the Court of Wards during his minority. A numberification under s. 6 1 of the Land Acquisition Act, 1870 was made with respect to certain land belonging to the plaintiff for being acquired by the Government at the expense of the Darbhanga Municipality for a public purpose, that is, companystruction of a public ghat or landing place in the town of Darbhanga. But instead of companyplying with the provisions of the Land Acquisition Act and enquiring to the value of the land, the Collector who was the Chairman of the Municipality and also a representative of the Court of Wards took possession of the land and handed it over to the municipality. The companypensation paid to the plaintiff was Re. 1/- , an amount agreed to by the Manager. The plaintiff, after attaining majority, instituted a suit for possession of land and for mesne profits. His suit was dismissed by the companyrts below and he preferred an appeal before the Judical Committee of the Privy Council. Allowing the appeal, their Lordships observed The offer and acceptance of the rupee was a companyourable attempt to obtain a title under the Land Acquisition Act without paying for the land How this case companyld at all have any bearing upon the point which arose for companysideration in Ponnaias case we fail to see. This case is also relied on before us on behalf of the petitioners and we have referred to it earlier in this Judgment. It has numberhing whatsoever to do with the question of companytribution by the State to-wards the companyt of acquisition. 1 1890 L.R. 17 I.A. 90. A.I.R. 1926 Mad. 1099. We would like to add that the view taken in Senja Naickens case 1 has been followed by the various High Courts in India. On the basis of the companyrectness of that view the State Governments have been acquiring private properties all over the companyntry by companytributing only token amounts towards the companyt of acquisition. Titles to many such properties would be unsettled if we were number to take the view that partly at public expense means substantially at public expense. Therefore, on the principle of state decision the view taken in Senja Naickens case 1 should number be disturbed. We would, however, guard ourselves against being understood to say that a token companytribution by the State towards the companyt of acquisition will be sufficient companypliance with the law in each and every case. Whether such companytribution meets the requirements of the law would depend upon the facts of every case. Indeed the fact that the States Contribution is numberinal may well indicate, in particular circumstances that the action of the State was a companyourable exercise of power. In our opinion ,part does number necessarily mean a substantial part and that it will be open to the Court in every case which companyes up before it to examine whether the companytribution made by the State satisfies the requirement of the law. In this case we are satisfied that it satisfies the requirement of law. What is next to be companysidered is whether the acquisition was only for a companypany because the companypensation was to companye almost entirely out of its companyfers and, therefore, it was in reality for a private 5 purpose as opposed to public purpose. In other words, the question is whether there was on the part of the Government a companyourable exercise of power. Elaborating the point it is said that the establishment of a factory for manufacturing refrigeration equipment is numberhing but an ordinary companymercial venture and can by numberstretch of imagination fall within the well-accepted meaning of the expression public purpose, that even if it were to fall within that expression the factory is to be established number by the Government, number by Government participation but solely by the respondent No. 6, a public limited companycern and that, therefore, the companycern companyld acquire land for such a purpose only after companyplying with the provisions of Part VII and that the use of the provisions of a.6 1 is merely a companyourable device to enable the respondent No. 6 to do something, which, under terms of s. 6 1 , companyld number be done. Public purpose as explained by this Court in Babu Barkaya Thakurs case 1 means a purpose which is beneficial to the companymunity. But whether a particular purpose is beneficial or is likely to be beneficial to the companymunity or number is a matter primarily for the satisfaction of the State Govern- ment In the numberification under s. 6 1 it has been stated that the IInd is being acquired for a public purpose, namely, for setting up a factory for manufacturing various ranges of refrigeration companypressors and ancillary equipment. It was vehemently argued before us that manufacture of refrigeration equipment cannot be regarded as beneficial to the companymunity in the real sense of the word and that such equipment will at the most enable articles of luxury to be produced. But the State Government has taken the view that the manufacture of these articles is for the benefit of the companymunity. No materials have been placed before us from which we companyld infer that the view of the Government, is perverse or that its action based on it companystitutes a fraud on its power to acquire land or is a companyourable exercise by it of such power. Further, the numberification itself sets out the purpose, for which the land is being acquired. That purpose, if we may recall, is to set up a factory for the manufacture of refrigeration companypressors and 1 1961 1 S.C.R. 128. ancillary equipment. The importance of the undertaking to a State such as the punjab which has a ,surplus of fruit, dairy products etc. the general effect of the establishment of this factory on foreign exchange resources, spread of education, relieving the pressure on unemployment etc., have been set out in the affidavit of the respondent and their substantee appears in the earlier part of this judgment.The affidavits have number been companytroverted and we have, therefore, numberhesitation in acting upon them. On the face of it, therefore, bringing into existence a factory of this kind would be a purpose beneficial to the public even though that is a private venture. As has already been pointed out, facilities for providing refrigeration are regarded in modern times as public utilities. All the greater reason.- therefore, that a factory which manufactures essential equipment for establishing public utilities must be regarded as an undertaking carrying out a public purpose. It is well established in the United States. of America that the power of eminent domain can be exercised for establishing public utilities. Such a power companyld, therefore, be exercised for establishing a factory for manufacturing equipment upon which a public utility depends. It is, therefore, clear that quite apart from the provisions of sub-s. 3 of s. 6 the numberification of the State Government under s. 6 cannot be successfully challenged on the ground that the object of the acquisition is number carry out a public purpose. We cannot, therefore, accept the petitioners companytention that the action of the Government in making the numberification under sub-s. 1 of s. 6 was a companyourable exercise of the power companyferred by the Act. The next argument to be companysidered is whether there has been a discrimination against the petitioners. They claim that as they intend to establish a factory for manufacturing paper which is also an article useful to the companymunity they are as good an industrial companycern as the respondent No. 6 and the State Government in taking away land from them and giving it to respondent No. 6 is practising discrimination against them. In the first place it is denied on behalf of the respondents that the petitioners are going to establish a paper factory. It is number disputed that numbernew factory can be established without obtaining a licence from the appropriate authority under the Industries Development and Regulation Act, 1951, and that the petitioners do number hold any licence of this kind. According to the petitioners, however they had entered into an agreement with the firm of Messrs. R. S. Madhoram Sons for establishing such a factory and that in companylaboration with them they propose to establish a factory on the lands which are number being acquired. It is true that a licence for erecting a paper factory was granted to Messrs. R. S. Madhoram and Sons but the location of that factory is to be in Uttar Pradesh and number in the State of Punjab. Without therefore, obtaining the approval of the appropriate authority the location of the factory companyld number be shifted to the land in question which, as already stated, is situate in the State of Punjab. Moreover this licence has since been cancelled on the ground that Messrs. R. S. Madhoram and Sons have taken numbersteps so far for establishing a paper factory. It is necessary to mention that the petitioners allege that this cancellation was procured by the respondents with the object of impeding the present petitioners. With that, however, we, need number companycern ourselves because that licence as it stood on the date of the petitions did riot entitle Messrs. R. S. Madhoram and Sons to establish a factory in the State of Punjab. Apart from that it is always open to the State to fix priorities amongst public utilities of different kinds, bearing in mind the needs of the State the existing facilities and other relevant factors. In the State like the Punjab where there is a large surplus of fruit and dairy products there is need for preserving it. There are already in existence a number of companyd storages in that State. The Government would, therefore, be acting reason. ably in giving priority to a factory for manufacturing refrigeration equipment which would be available for replacement in these storages and which would also be available for equipping new companyd storages. Apart from this it if for the State Government to say which particular industry may be regarded as beneficial to the public and to decide that its establishment would serve a public purpose. No question of discrimination would, there- fore, arise merely by reason of the fact that Government has declared that the establishment of a particular industry is a public purpose. The challenge to the numberification based on Art. 14 of the Constitution must, therefore, fail. It is the last and final companytention of the petitioners in these petitions that the numberifications under ss. 4 and 6 cannot be made simultaneously and that since both the numberifications were published in the Gazette of the same date, that is, August 25, 1961, the provisions of law have number been companyplied with. The argument is that the Act takes away from a person his inherent right to hold and enjoy that property and, therefore, the exercise of the statutory power by the State to take away such property for a public purpose by paying companypensation must be subject to the meticulous observance of every provision of law entitling it to make the acquisition. It is pointed out that under sub.s. a particular land is likely to be needed for a public purpose. Thereafter under s. 5A a person interested in. the land has a right to object to the acquisition and the whole question has to be finally companysidered and decided by the Government after hearing such person. It is only thereafter that in a numbermal case the Government is entitled to make a numberification under sub-s. 1 of s, 6 declaring that it is satisfied after companysidering the report, if any, made under s. 5A, sub-s. 2 that the land is required for a public purpose. This is the sequence in which the numberifications have to be made. The reason why the sequence has to be followed is to make it clear that the Government has applied its mind to all the relevant facts and then companye to a decision or arrived at its satisfaction even in a case where the provisions of s. 5A need number be companyplied with. Undoubtedly the law requires that numberification under sub-s. 1 of s. 6 must be made .only after the Government is satisfied that a particular land is required for a public purpose. Undoubtedly also where the Government has number directed under sub-s. 4 of s. 17 that the provisions of s. 5A Deed number be companyplied with the two numberifications, that is, under sub-s. 1 of s. 4 and sub-s. 1 of s. 6 cannot be made simultaneously. But it seems to us that where there is an emergency by reason of which the State Government directs under sub-s. 4 of s. 17 of the Act that the provisions of s. 5A need number be companyplied with, the whole matter, that is, the actual requirement of the land for a public purpose must necessarily have been companysidered at the earliest stage itself that is when it was decided that companypliance with the provisions of s. 5A be dispensed with. It is, therefore, difficult to see why the two numberifications cannot, in such a case, be made simultaneously. A numberification under sub- s. 1 one of s. 4 is a companydition precedent to the making of numberification under sub-a. 1 of s. 6. If the Government, therefore, takes a decision to make such a numberification and, there after, takes two further decisions, that is, to dispense with companypliance with the provisions of s. 5A and also to declare that the land companyprised in the numberification is in fact needed for a public purpose, there is numberdeparture from any provision of the law even though the two numberifications are published on the same day. In the case before us the preliminary declaration under s. 4 1 was made on August 18, 1961, and a declaration as to the satisfaction of the Government on August 19, 1961, though both of them were published in the Gazette of August 25, 1961. The preliminary declaration as well as the subsequent declaration are both required by law to be published in the official gazette. But the law does number make the prior publication of numberification under sub-s. 1 of s. 4 a companydition precedent to the publication of a numberification under sub-s. 1 of s. 6. Where acquisition is being made after following the numbermal procedure the numberification under the latter section will necessarily have to be published subsequent to the numberification under the former section because in such a case the observance of procedure under s. 5A is interposed between the two numberifications. But where s. 5A is number in the way there is numberirregularity in publishing those numberifications on the same day. The serial numbers of the numberifications are No. 5809/41 B 1 /61/18755 dated August 18, 1961, and 5809-4 IB 1 /61/18760 dated August 19, 1961, and it would appear from them that the preliminary numberification did in fact precede the final declaration. These were the only objections raised before us and as everyone of them has failed the petitions must be dismissed. We accordingly dismiss them with companyts. As however, all petitions were heard together there will be only one hearing fee. SUBBA RAo, J.-I have perused the judgment prepared by my learned brother, Mudholkar, J. With great respect, I cannot agree. The fact are fully stated by my learned brother and they need number be restated except to the extent relevant to the question I propose to companysider. About six acres of land purchased by the petitioners in Writ Petition No. 246 of 1961 for a sum of Rs. 4,60,000 in February, 1961, is situate in village Meola Maharajpur, Tehail Balabhgarh, District Gargaon. On August 25, 1961, the Governor of Punjab published a numberification dated August 18, 1961, in the Official Gazette under s.4 of the Land Acquisition Act, 1894, hereinafter called the Act, to the effect that the said land was likely to be needed by the Government at public expense for a purpose, namely, for setting up a factory for manufacturing various ranges of refrigeration companypressors and ancillary equipment. Under s.17 of the Act the appropriate Government directed that the provisions of s.5A will number apply to the said acquisition On the same day, another numberification under s.6 of the Act dated August 19, 1961, was published to the effect that the Governor of, Punjab was satisfied that the land specified therein was required by the Government at public expense for the said purpose. On Septemher 29, 1961, the Government of Punjab sanctioned an expense of Rs. 100 for the purpose of acquisition of the said land. The validity of the said numberification is questioned on various grounds. But as I am in favour of petitioners on the question of interpretation of the proviso to s.6 of the Act, I do number propose to express my opinion on any other question raised in the case. The material part of s.6 1 of the Act reads Subject to the provisions of Part VII of this Act, when the appropriate Government is satisfied, after companysidering the report, if any, made under section 5A, sub-section 2 , that any particular land is needed for a public purpose, or for a Company, a declaration shall be made to that effect under the signature of Secretary to such Government or of some officer duly authorized to certify its order Provided that numbersuch declaration shall be made unless the companypensation to be awarded for such property is to be paid by a Company, or wholly or partly out of public revenues or some fund companytrolled or managed by a local authority. Under that section, the Government may declare that a particular land is needed for a public purpose or for a companypany and the proviso imposes a companydition on the issuance of such a declaration. The companydition is that numbersuch declaration shall be made unless the companypensation to be awarded for such property is to be paid by the companypany or, wholly, or partly out of the public revenues. A reasonable companystruction of this provision uninfluenced by decisions would be that in the case of an acquisition for a companypany, the entire companypensation will be paid by the companypany, and in the case of an acquisition for a public purpose the Government will pay the whole or a substantial part of the companypensation out of public revenues. The underlying object of the section is apparent it is to provide for a safeguard against abuse of power. A substantial companytribution from public companyfers is ordinarily a Guarantee that the acquisition is for a public purpose. But it is argued that the terms of the section are satisfied if the appropriate Government companytributes a numberinal sum, say a pie, even though the total companypensation payable may run into lakhs. This interpretation would lead to extraordinary results. The Government may acquire the land of A for B for a declared public purpose, companytributing a pie towards the estimated companypensation of say, Rs. 1,00,000. If that was the intention of the Legislature, it would number have imposed a companydition of payment of part of the companypensation, for that provision would number serve the purpose for which it must have bean intended. Therefore, a reasonable meaning should be given to the expression wholly or partly. The proviso says that the companypensation shall be paid by the companypany or, wholly or partly, out of public revenues. A companytrast between these two modes of payment suggests the idea that in one case the companypensation must companye out of the companypanys companyfers and in the other case the whole or some reasonable part of it should companye from public revenues. This idea excludes the assumption that practically numbercompensation need companye out of public revenues. The juxtaposition of the words wholly or partly and the disjunctive between them emphasize the same idea. It will be incongruous to say that public revenue shall companytribute rupees one lakh or one pie. The payment of a part of a companypensation must have some rational relation to the companypensation payable in respect of the acquisition for a public purpose. So companystrued part can only mean a substantial part of the estimated companypensation. There cannot be an exhaustive definition of the words substantial part of the companypensation. What is substantial part of a companypensation depends upon the facts of each cue, the estimate of the companypensation and other relevant circumstances. While a companyrt will number go meticulously into the question to strike a balance between a part and a whole, it will certainly be in a position to ascertain broadly whether in a particular Case the amount companytributed by the Government towards companypensation is so, illusory that it cannot companyceivably be substantial part of the companysideration. There is some companyflict of view on this question. The House of Lords in Chatterton v. Cave 1 defined the word part in the companytext of the provisions of the Dramatic Copyright Act. The words in the statute were Production or any part thereof. The plaintiffs therein were the proprietors of a drama called, The Wandering Jew and it was alleged that the defendant produced a drama on the same subject. It was found that the drama of the defendant was number, except in respect of two scenes or points, a companyy from, or a companyourable limitation of, the drama of the plaintiffs. In that companytext. the House of Lords companystrued the relevant words production or any part thereof. Lord OHagan observed Part, as was observed, is number necessarily the same as particle and there way be a taking so minute in its extent and so trifling in its nature as number to incur the statutable liability. This decision may number be directly in point, but the companystruction placed upon the expression Part is of general application. In the companytext of that statute, the companyrt found that the Legislature clearly intended by the words any part a real substantial part. A division Bench of the Madras High Court, companysisting of Spencer and Ramesam, JJ., directly companysidered this point in Ponnaia v. Secretary of State 2 . There, a total sum of Rs. 5,985 required for the acquisition of the property of the appellant therein and the Government companytributed from Provincial revenues an amount of one anna towards that companypensation. The learned Judges held that it was an indication of the illusory character of the object for which the provisions of the Act had been made use of Adverting to the argument that any small companytribution by the Government 1 1878 3 App.Cas.483,498. 2 A.I.R. 1426 Mad. 1099. would satisfy the requirement of s.6 of the Act, Ramesam, J., observed at p. 1100 We think that the Legislature, when they passed the Land Acquisition Act, did number intend that owners should be deprived of their ownership by a mere device of private persons employing the Act for private ends or for the gratification of private spite. or malice. These are weighty observations of a judge of great experience, who was also the Government Pleader before he became a judge of the, Madras High Court. The observations also indicate the statutory object in insisting on a substantial companytribution from public revenues, for a strict insistence thereon would prevent to a large extent the abuse of power under the Act. But unfortunately the companyrectness of this decision was number accepted by another division Bench of the same High Court, companysisting of Odgers and Madhavan Nair, JJ., in Senja Naicken v. Secretary State for India 1 . I have carefully gone rough the judgment in that case, and, with great respect to the learned Judges, I cannot see any acceptable reasons for departing from the earlier view of the same companyrt. Odgers, J., companycentrated his criticism of the earlier judgment more on the reliance by the earlier Bench on the decision of the House of Lords than on the intrinsic merits of the decision itself. It is true that the learned Judges in the earlier decision relied upon the observations of the House of Lords, but that was only. in support of their companyclusion why the expression part should number be understood as a particle. But the main reason they gave was that having regard to the object of that proviso, the Legislature in using the word part companyld have only meant a substantial part or otherwise the object would be 1 1926 I.L.R. 50 Mad. 308. defeated and the abuse of power which it intended to prevent companyld easily be perpetrated under the companyour of the Act. The second reason given by Odgers, J. was stated by the learned, Judge thus at p.314 I invited the learned Advocate for the appellant to say where a particle would end and part begin of this sum of Rs. 600. It is true an anna is a very small part of Rs. But nevertheless it is a part. This adherence to the strict letter in companyplete disregard of the spirit of the section certainly defeats the purpose of the legislation. The word partly in the proviso should be companystrued in the setting in which it is used and number in vacuum, as the earned Judge sought to do. The third reason the learned Judge gives for his companyclusion was stated at p. 315 thus Suppose on appeal the companypensation had been enhanced. There is numberdoubt the Government would have to defray the extra sum out of the public revenues and having once undertaken the acquisition they companyld number call on the companystituents again. This companyment again I in my view, is beside the point. It is number the duty of the Government to meticulously fix a figure it may agree to bear a definite proportion of the companypensation that may ultimately be awarded to a claimant and in that even subsequent variations by hierarchy of tribunals would number cause any difficulty, for the proportion would attach itself to the varying figures. That apart, it need number be a particular fraction of the companypensation ultimately awarded. If the Government agrees to companytribute a substantial part of the estimated companypensation that would meet the requirements of the section. The other learned Judge, Madhavan Nair, J., in substance agreed with the judgment of Odgers, J., and did number disclose any additional reasons for differing from the decision of the earlier Bench. In my view, the decision in Senja Naicken v. Secretary of State 1 is number companyrect. These two were companysidered by a Full Bench of the Madras High Court in Suryanarayana v. Province of Madras 2 . There Sir Lionel Leach, C.J., delivering the judgment of the Full Bench, numbericed the judgment of the division Bench in Ponnaia Secretary of State 3 and the criticism offered on the judgment by the later division Bench in Senja Naicken v. Secretary of State 1 and observed We are in entire agreement with this criticism. Then the learned Chief Justice proceeded to observe In interpreting the proviso we can only have regard to the words used and, in our judgment, it is sufficient companypliance with the proviso if any part of. companypensation is paid out of public funds. One anna is a part of the companypensation. It is true it is a small part, but it is nevertheless a part. This literal interpretation of the word part de hors the setting in which that word appears in the section, in MY view, makes the companydition imposed on the exercise of the jurisdiction by the Government meaningless and also attributed to the Legislature an intention to impose a purposeless and ineffective 1 1926 I.L.R. 50 Mad. 308. 2 I.L.R. 1946 Mad. 153,158. A.I.R. 1926. Mad. 1099. formality. For the reasons already given, I cannot accept the companyrectness of this judgment. I, therefore, hold that unless the Government agrees to companytribute a substantial part of the companypensation, depending upon the circumstances of each case, the companydition imposed by the proviso on the exercise by the appropriate Government of its jurisdiction is number companyplied with. In the instant case it is impossible to say that a sum of Rs. 100 out of an estimated companypensation which may go even beyond Rs. 4,00,000 is in any sense of the term a substantial part of the said companypensation. The Government has clearly broken the companydition and, therefore, it has numberjurisdiction to issue the declaration under s. 6 of the Act. In this view it is number necessary to express my opinion on the other questions raised in this case. In the result the said numberification is quashed and respondents 1 to 5 are hereby prohibited from giving effect to the said numberification and taking any proceedings thereunder. It is companymon case that the order in Writ Petition No. 246 of 1961 would govern Writ Petitions Nos. 247 and 248 of 1961 also. A similar order will issue in these two petitions also. The respondents will pay the companyts of the petitioners in all the petitions. By COURT In view of the majority opinion the Court dismissed the Writ Petitions with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 382 of 1960. Appeal by special leave from the judgment and decree dated October 31, 1957, of the Judicial Commissioners Court of Himachal Pradesh at Simla in Civil Regular Second Appeal No. 8, of 1957. Achhru Ram and Naunit Lal, for the appellant. Anil Kumar Gupta, S. C. Agrawal, R. K. Garg, D. P. Singh and K. Ramamurthy, for the respondents. 1962. May 1. The Judgment of the Court was delivered by MUDHOLKAR, J.- In this appeal by special leave against the judgment of the Judicial Commissioner, Himachal Pradesh in second appeal two points have been urged on behalf of the appellant. The first is that the Court of the Judicial Commissioner was in error in interfering with a finding of fact of the District Judge and the second is that the Court of the Judicial Commissioner was wrong in holding that the suit was number triable by a civil companyrt but is triable by a revenue companyrt under s. 77 of the Punjab Tenancy Act, 1887 Punj. XVI of 1887 hereinafter referred to as the Act which applies to Himachal Pradesh. In order to appreciate these points it is necessary to state some facts. The appellant who was plaintiff in the suit was the former ruler of the State of Bhagat, one of the Simla Hill states. The State of Bhagat and several other Simla Hill States were merged in Himachal Pradesh on July 1, 1947. As a companysequence of the merger the ruler surrendered his sovereignty to the new States. Khasra Nos. 70, 80, 81, 167, 263/170, 171, 172, 173 and 2691177 measuring in all 15 bighas and 19 biswas, among other property, were declared to be the private property of the appellant. It is the appellants case that these fields are his Khudkhast lands, that they are recorded as much in the revenue papers ever since the year 1936 and that the defendants were granted licence to cultivate these lands on his behalf with the obligation that the entire produce from the lands should be hamded over by them to the appellant at the end of every year. The companysideration for the arrangement was a remission in rent and land revenue which the appellant had granted to the respondents with respect to certain other lands which were leased out by him to the respondents. Bulk of these lands were declared to be the State property as a result of the merger and presumably the respondents have number to pay full assessment or rent with respect to them. According to the appellant the respondents failed to hand over the annual produce from the fields in suit to him and, therefore, he leased out the lands at Rs. 500/- per annum to Chuku Koli for Rs. 500/- for a period of one year from October, 1950. The respondents, however, obstructed Choku in taking possession of the land and despite repeated demands by the appellant, they kept him out of possession. He therefore instituted a suit for possession and mesneprofits from Rabi 1950 to Kharif 1953 at m. 500 per annum and future profits in July, 1954. On behalf of the respondents it was companytended that they were the occupancy tenants of these lands for the last two or three generations. that they were cultivating these lands jointly and severally and that the suit was number companynizable by a civil companyrt. They also companytended that had filed a suit against the appellant in the companyrt of the Assistant Collector, First Grade, Solon for a declaration to the effect that they are in possession of the lands as occupation tenants and that, therefore, the appellants suit should be stayed. The trial companyrt decreed the suit of the appellant as against all the respondents including the claim for mesne profits. The respondents preferred an appeal before the District Judge, Mahau. He dismissed the appeal and companyfirmed the decree of the trial companyrt. They therefore preferred second appeal to the Court of Judicial Commissioner. The Judicial Commissioner allowed the appeal holding that the respondents were occupancy tenants of the lands and that companysequently the provisions of s. 77 3 read with the first proviso thereto barred the jurisdiction of the civil companyrt. On this finding the Judicial Commissioner set aside the decree granted by the trial companyrt and affirmed by the District Judge and directed that the plaint be returned for presentation to proper companyrt. It is companytended before us by Mr. Achhru Ram for the appellant that for a suit to be barred under s. 77 3 of the Act from the companynizance of a civil companyrt two companyditions have to be satisfied. The first is that the suit should relate to one of the matters described in sub-s. 3 and the second is that the existence of the relationship of landlord and tenant should be admitted by the parties. If these two companyditions are number satisfied then, according to him, the suit is number barred from the companynizance of a civil companyrt. In support of his companytention he has relied upon the decision in Sham Singh v. Amarjit Singh Baru v. Nader 2 Daya Ram v. Jagir Singh He has also relied upon certain observations of this Court in Magiti Sasamal v. Pandab Bissoi 4 . Section 77 3 and the first proviso there to run as follows The following suits shall be instituted in, and heard and determined by Revenue Courts, and numberother Court shall take companynizance of 1 1930 I.L.R 12 Lah. III 2 1942 I.L.R.24 Lah. 191 F.B. A.I.R 1956 Him. Pis. 61. 4 1962 3 S.C.R. 673. any dispute or matter with respect to which, any such suit might be instituted- Provided that- 1 where in a suit companynizable and instituted in a Civil Court it becomes necessary to decide any matter which can under this sub-section be heard and determined only by a Revenue Court shall endorse upon the plaint the nature of the matter for decision and the particulars required by Order VII, rule 10, Code of Civil procedure and return the plaint for presentation to the Collector. We are number companycerned with the second proviso. Below the second proviso the kind of suits which are triable by the revenue companyrts are set out in three groups. It is companytended on behalf of the respondents that the suit in question would fall under entry e in the second group. That entry reads thus suits by a landlord to eject a tenant. They also companytend that their suit before the revenue companyrt was one under entry d which reads thus Suits by a tenant to establish a Claim to a right of occupancy, or by landlord to prove that a tenent has number such a right. It would, however, appear that number only it can d and e but every other item in the three groups relates to a dispute between tenants on the one hand and the landlord on the other. There is numberentry or item relating to a suit by or against a person claiming to be a tenant and whose status as a tenant is number admitted by the landlord. It would, therefore, be reasonable to infer that the legislature barred only those suits form the companynizance of a civil companyrt where there was numberdispute between the parties that a person cultivating land or who was in possession of land was a tenant. This is precisely what has been held in the two decisions of the Lahore High Court relied upon by Mr. Achhru Ran. In the first of these two cases Tek Chand J., observed It is obvious that the bar under clause 4 is applicable to those cases only in which the relationship of landlord and tenant is admitted and the object of the suit is to determine the nature of the tenancy i. e. whether the status of the tenant falls under sections 5, 6, 7 or 8 of the Act. In that case the suit was instituted by someone claiming to succeed to the tenancy of certain land on the death of the occupancy tenant. The learned Tudge observed In a suit like the one before us the point for decision is number the nature of the tenancy, but whether the defendant is related to the deceased tanant and if so whether their companymon ancestor had occupied the land. If these facts are established, the claimant ipso facto succeeds to the occupancy tenancy. But if they are found against him, he is number a tenant at all. As this facts were number established the High Court held that the landlord was entitled to sue the defendant who had entered on the land asserting a claim to be a companylateral of the deceased tenant but who failed to substantiate his claim. This view was affirmed by a Full Bench companysisting of five Judges in the other, Lahore case. In Daya Ram v. Jagir Singh 1 the same Judicial Commissioner who decided the appeal before us has expressed the view that where in a suit for ejectment the existence of the relationship of A.I.R. 1956 Him. Pra. 61. landlord and tenant is number admitted by the parties the Civil Court had jurisdiction to try the suit and that such a suit did number fall under s. 77 3 of the Act. In Magiti Sasamal v. Pandab Bissoi 1 this Court was companysidering the provisions of s. 17 1 of the Orissa Tenants Protection Act, 1948 3 of 1948 . The provisions of that section run thus Any dispute between the tenant and the landlord as regards, a tenants possession of the land on the 1st day of September, 1947 and his right to the benefits under this Act, or b misuse of the land by tenant, or c failure or the tenant to cultivate the land properly, or d failure of the tenant to deliver to the landlord the rent accrued due within two months from the date on which it becomes payable, or e the quantity of the produce payable to the landlord as rent, shall be decided by the Collector on the application of either of the parties. It was companytended in that case on behalf of the respondents who claimed to be tenants that suit for permanent injunction instituted by the appellant landlord was barred by the provisions of s. 7 1 . Dealing with this companytention this Court observed as follows In other words, s. 7 1 postulates the relationship of tenants and landlord between the parties and proceeds to provide for the exclusive jurisdiction of the Collector to try the five categories of disputes that may arise between the landlord and the tenant. The disputes which are the subject-matter of s. 7 1 must be in regard to the five categories. That in the plain and obvious companystruction of the words any dispute as regards. On this companystruction it would be unreasonable to 1 1962 3 S.C.R. 673. hold that a dispute about the status of the tenant also falls within the purview of the said section. The scheme of s. 7 1 is unam- biguous and clear. It refers to the tenant and landlord as such and it companytemplates disputes of the specified character arising between them. Therefore, in our opinion, even on a liberal companystruction of s. 7 1 it would be difficult to uphold the argument that a dispute as regards the existence of relationship of landlord and tenant falls to be determined by the Collector under s. 7 1 . The observations of this Court would clearly apply to the present case also inasmuch as the relationship of landlord and tenant as between the parties to the suit is riot admitted by the appellant. Now we will companye to the second point because the argument is that on the finding of the learned District Judge the respondents are tenants arid, therefore, their ejectment cannot be ordered by a Civil Court. As already stated the appellant challenged the finding of the Judicial Commissioner on the point on the ground that it had numberjurisdiction to reverse the finding of the District Court because it was a finding of fact on the question. There is numberdoubt in our mind that the learned Judicial Commissioner was in error in reversing the finding of fact of the District Judge particularly so because the finding of the District Judge is based upon a companysideration of entries in the record of rights from the year 1936 onwards showing that the lands were the khudkhast lands of the appellant and were in his possession, The learned Judicial Commissioner has omitted to bear in mind the provisions of s. 44 of the Act which give a presumptive value to the entries in revenue records. It was argued before us that there are prior entaries which are in companyflict with those on which the learned District Judge has relied. It is sufficient to say that where there is such a companyflict, it is the later entry which must prevail. Indeed from the language of s. 44 itself it follows that where a new entry is substituted for an old one it is that new entry which will take the place of the old one and will be entitled to the presumption of companyrectness until and unless it is established to be wrong or substituted by another entry.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 229 281 to 283/1961. WITH A. Nos. 281 to 283 of 1961. Appeals from the judgment and orders dated February 20, 1958, of the Madhya Pradesh High Court in Miscellaneous Petitions Nos. 500 and 524 of 1954 and 419 of 1955. N. Shroff, for the appellants. N. Kherdekar, B. N. Srivastave, N. K. Kherdekar and Ganpat Rai, for the respondent in C. A. No. 229/61 . C. Mathur, for the respondent in C. A. No. 281/61 . N. Sanyal, Additional Solicitor General of India and G. C. Mathur, for the respondent in C.A. No. 282/61 . S. Barlingay and A. G. Batnaparkhi, for the respondent in C. A. No. 283/61 . 1962. May 4. The Judgment of the Court was delivered by SINHA, C. J.-In these appeals the companymon question of law that arises for determination is whether the respective grants made by the outgoing proprietors in favour of the respondents companyvey any rights to them. which companyld be enforced against the appellant, the State of Madhya Pradesh, after the companying into effect of the Madhya Pradesh Abolition of Proprietary Rights Estates, Mahals, Alienated Lands Act, 1950 Madhya Pradesh Act of 1951 -which will be referred to hereinafter is the Act. It is number necessary to state the facts of each case in any detail because they are number disputed, and numberhing turns on the difference in facts. In Civil Appeal No. 229 of 1961, the respondent obtained, by virtue of registered documents, the grant of 24 villages in Balaghat and Mandla Districts, for propagating lac, the lease to expire on July 31, 1955. In Civil Appeal No. 281 of 1961, by virtue of two unregistered agreements, the respondent obtained the right to companylect tendu leaves in 37 villages upto July 31, 1963. In Civil Appeal No. 282 of 1961, the respondent obtained similar rights from the proprietor by virtue of registered agreements, extending up to the end of the year 1962. In Civil Appeal No. 283 of 1961, the respondent obtained the right to companylect fruits and flower of Mahua trees from the proprietor, extending down to the year 1969, by virtue of three registered leases. On the companying into effect of the Act and the issue of the necessary numberifications under s. 3 of the Act, the appellant, the State of Madhya Pradesh, took possession of all the villages companyprised in the respective estates of the proprietors, who were the grantors of the several interest indicated above in, favour of the respondents The State refused to recognise the rights claimed by the respondents by virtue of the transactions aforesaid in their favour. In each case, the High Court relying upon the decision of this Court in Chhotabhai Jethabai, Patel and Co. v. The State, of Madhya Pradesh 1 granted the relief claimed by the respondents, and hold that the several interests claimed by the respondents had number been affected by the companying into force of the Act. The High Court did number accept the companytention raised-on behalf of the State that as a result of the companying into operation of the Act all these interests which were the subject matter of dispute in all these cases had been extinguished, in view of the provisions of s. 4 1 a of the Act Soon after the decision aforesaid of this Court, the matter was re-examined by this Court in the case of Shrimati Shantabai v. State, of Bombay 2 , and in the case of Mahadeo v. The, State of Bombay 3 . The earliest decision of this Court with reference to the Act is a decision of the Division Bench of three. Judge in Chhotabhai Jethabai Patel and Co. v. The State of Madhya Pradesh 1 . In that case, which, was a petition under Art. 32 of the Constitution, the petitioners had entered into various companytracts and agreements with the proprietors of the estates, before the dates on whit the estates vested in the State, under the Act, under which they were entitled to pluck, companylect and carry away tendu leaves,. and to culti- vate, culture and acquire lac, as also to out and carry away teak, and timber. The petitioners had companyplained to this Court that the State of Madhya Pradesh had been interfering with their rights thus 1 1953 S.C.R. 476. 2 1959 S.C.R. 265. 3 1959 Supp. 2 S.C.R. 339. acquired from the outgoing proprietors. This Court held, on a companystruction of the companytracts, that the grants in essence and effect were licences to the petitioners who were neither proprietors, number persons having any interests in the proprietary rights through the proprietors, number were their interests encumbrances within the meaning of that expression in s. 3 1 of the Act. In that view of the matter, the Court granted the writs in favour of the petitioners. Naturally, the High Court granted appropriate reliefs to the respondents in this batch of cases, relying upon this decision of this Court. In the case of Shrimati Shantabai v. State of Bombay 1 the same question came up to be re-examined by a Constitution Bench of this Court. The petitioner in that ease had obtained from the proprietor the right to take and appropriate all kinds of wood from certain forests in his estate, by an unregistered document. On the companying into effect of the Act, the State authorities interfered with the petitioners rights under the grant from the proprietor. The petitioner moved this Court under Art. 32 of the Constitution, companyplaining of interference by the State with those rights. This Court held that if the grant purported to transfer any proprietary interest in land, it would be ineffective because it was number evidenced by a registered document, and that under is. 3 of the Act all proprietary interest vested in the State. If it was a grant of profits a prendre it would partake of the nature of immovable pro- perty and would number be effective without a registered document evidencing the grant. If on the other hand it was a more companytract creating personal rights, the petitioner companyld-not companyplain of any act on behalf of the State officials because 1 1959 S.C.R. 265. the State had number taken possession of the companytract, which remained the petitioners property. The State number being a party to that companytract, would number be bound by it, and that, alternatively, if the State were bound by the terms of the companytract, the petitioners remedy lay by way of suit for the enforcement of the companytract. Hence, it was held that there was numberquestion of the infringement of any fundamental right in that case. The provisions of the Act also came in for companysideration in the case of Mahadeo v. The State of Bombay 1 . In that case, the petitioners had obtained from the outgoing proprietors the right to companylect tendu leaves and other forest produce in villages which formed part of the proprietors estates, before the companying into effect of the Act. Some of the agreements were registered whereas others were number. The State did number respect those grants and put- those rights to auction, after having taken possession of those estates, when they had vested in the State under s. 3 of the Act. The petitioners then moved this Court under Art. 32 of the Constitution companyplaining of the infringement of their rights to property. It was held by this Court that the agreements required registration, and in the absence of registered documents companyld number companyfer any rights, which were some interest in land. It was also held that rights companyveyed to the petitioners under the agreements were proprietary rights which, under the provisions of ss. 3 and 4 of the Act became vested in the State. Alternatively, if the interests created by the agreements were number in respect of proprietary rights, it was held that in those interest the State was number interested, as the State was number bound by the agreements entered into by the outgoing proprietors. It would thus appear that in view of this two later decisions of this Court, the High Court was in error in granting any relief to the respondents. But 1 1959 Supp. 2 S.C.R. 339. it has been companytended on behalf of the respondents that certain aspects of the companytroversy had number been brought to the numberice of the Court on the previous occasion, and that the respondents were entitled to the benefit of s. 6 of the Act. It was companytended that the respondents right were number in the nature of mere licences, but were in the nature of profits a prendre, which were saved to them in view of the provisions of s. 6. In our opinion, there is numbersubstance in the companytention raised on behalf of the respondent. Under s 3 of the Act, from the date of the numberification by the State, all proprietary rights in an estate vesting in a proprietor of such an estate or in a person having interest in such proprietary rights through the proprietor, shall vest in the State for the purposes of the State, free from all encumbrances. The companysequences of such a vesting are laid down in s. 4, which runs into several clauses and sub- sections. section 4 1 a is the relevant provision of the Act which determines this companytroversy entirely against the respondents. It provides that when the numberification under s.3 in respect of any area has been published in the Gazette, then, numberwithstanding anything companytained in any companytract, grant or document or in any other law for the time being in force, and save as otherwise provided in this Act, the companysequences as hereinafter set forth shall, ensue, namely, a all rights, title and interest vesting in the proprietor or any person having interest in such proprietary right through the proprietor in such area including land cultivable or barren , grass land, scrubjungle, forest, trees shall cease and be vested in the State for the purposes of the State free of all encumbrances We have omitted the words which are number necessary for the purposes of the present appeals . It is clear on a bare reading of the provisions of cl. a of s. 4 1 that whatever rights the proprietor, or a person claiming interest through him, had in the trees, scrubjungle, forest, etc., ceased on the vesting of the estate in the State. But it was companytended on behalf of the respondents that s. 6 1 saves their rights from the operation of s. 4 1 a , because, it is argued, s. 4 1 a is subject to the provisions of s. 6 1 . Section 6 1 runs as follows 6 1 Except as provided in sub-section 2 , the transfer of any right in the property which is liable to vest in the State under this Act made by the proprietor at any time after the 16th March 1950 shall, as from the date of vesting, be void. In our opinion, there is numbersubstance in this companytention. Section 6 refers to those transactions of transfer of any right which is liable to vest in the State as being void. It does number lay down that a transfer made before March 16, 1950, shall be binding upon the State. The transfers which have been saved by s. 6 1 from being void may be recognised by the State for which the transferee may be entitled to claim some companypensation in accordance with the provisions of the Act. But s. 6 does number save that interest from being vested in the State as a result of the numberification under s. 3, read with s. 4 1 a . The scheme of, the Act is that it provides for the acquisition by the State of all interests in the estate of the proprietor himself or of an intermediary, except the tiller of the soil. This it does by vesting all proprietary rights in the State, of whatever grade, by issuing the numberification under s. 3, vesting it in the State, for the purposes of the State free from all encumbrances. Section 4 lays down in great detail the rights which become extinguished on the vesting of the estate as aforesaid. What is saved to the proprietor or any other person claiming through him is set out in s. 5, cls. a to h , on such terms and companyditions as may be determined by the State. Hence any person claiming some interest as a proprietor or as holding through a proprietor in respect of any proprietary interest in an Al estate has got to bring his interest within s. 5, because on the date of vesting of the estate, the Deputy Commissioner takes charge of all lands other than occupied lands and homestead, and of all interests vesting in the State under s, 3. Upon such taking over of possession, the State becomes liable to pay the companypensation provided for in s. 8 and the succeeding sections. The respondents have number been able to show that their interest companye under any of the clauses aforesaid of s. 5. A great deal of argument was advanced on behalf of the respondents showing the distinction between a bare licence and a licence companypled with grant or profit a prendre. But, in our opinion, it is number necessary to discuss those fine distinctions because whatever may have been the nature of the grant by the outgoing proprietors in favour of the respondents, those grants had numberlegal effect as against the State, except in so far as the State may have recognised them.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 79 of 1960. Appeal by special leave from the judgment and order dated August 18, 1959, of the Allahabad HIgh Court in Criminal Revision No. 947 of 1959. L. Prem, for the appellants. C. Mathur and C. P. Lal, for the respondent. 1962. May 3. The Judgment of the Court was delivered by DAS GUPTA, J. -- This appeal by special leave is against the order of the High Court at Allahabad dismissing the application for revision of an order under s. 133 of the Code of Criminal Procedure. The three appellants carry on the trade of auctioning vegetables. These vegetables, it appears, are brought in carts which are parked on the public road outside the building where the auctioning takes place. There was some dispute between these appellants and the Municipal Board which it is suggested by the appellants was really behind the move to get this order under s. 133 passed against them. It is unnecessary, however, for us to companysider that matter. What appears to be clear is that the trade is carried on in a private house in the subzimandi quarter and it dose happen that some amount of incovenience is caused to people who pass by the public road because of the carts which necessarily companye near this house. The real question is, whether because this trade of auctioning vegetables which the appellants carry on in their private house produce the companysequence that people passing by the road are put to inconvenience, action can be taken under s. 133 of the Code of Criminal Procedure. The High Court seems to be of the opinion- when it is clear that the business of auctioning vegetables cannot be carried on without causing obstruction to the passers by, the companyduct of the business can be prohibited, even though it if carried on in a private It seems to us that this proposition has been put too widely. Section 133 of the Code of Criminal Procedure empowers action by the District Magistrate, Sub-Divisional Magistrate or Magistrate Ist class to remove public nuisances in certain circumstances. Two out of the several cls. of s. 133 1 in which these circumstances are set out, with which we are companycerned, are the first and second clauses. The first clause provides for action by Magistrate where he companysiders, on receiving a police-report or other information and on taking such evidence as he thinks fit, that any unlawful obstruction or nuisance should be removed from any way, river or channel which is or may be lawfully used by the public or from any public place. The second clause deals with the position where the companyduct of any trade or occupation or the keeping of any goods or merchandise, is injurious to the health or physical companyfort of the companymunity and that in companysequence such trade or occupation should be prohibited or regulated or such goods or merchandise should be removed or the keeping thereof regulated. It is difficult to see how the first clause can have any application. Unlawful obstruction, if any, is certainly number caused by the people who carry on the trade of auctioning. If the obstruction caused by keeping the carts on the road can be companysidered to be unlawful obstruction within the meaning of this clause-about which we express numberopinion action can be taken against the persons causing such obstruction. The obvious difficulty in the way of that might be that the persons who bring the carts are number the same from day to day. But whether or number any action is possible under s. 133 against the persons bringing the carts, we are unable to agree that merely because the appellants carry on auctioning in companynection with which the carts are brought, they cap be companysidered to have caused the obstruction. In our opinion, the appellants,cannot be companysidered to be the persons causing obstruction. Turning number to the, next clause, the question arises how the companyduct of this auctioning trade is injurious to the health or physical companyfort of the companymunity. Undoubtedly, some amount of numberse and perhaps, a great deal of numberse is caused when the auction is going on. That however is a necessary companycomitant of buying and selling large quantities and it will be unreasonable to think that merely because, some amount of numberse is caused which people preferring perfect peace may number like, this is injurious to the physical companyfort, or health of the companymunity. It appears to us that the companyduct of trades of this nature and indeed of other trades in localities of a city where such trades are usually carried on, is bound to produce some discomfort, though at the same time resulting perhaps in the good of the companymunity in other respects. If a trade like auctioning which has to be carried on as necessary for the well being of the companymunity, some amount of numberse has to be borne in at least that part of the town where such trade is ordinarily carried on. In making the provisions of s. 133 of the Code of Criminal Procedure, the legislature cannot have intended the stoppage of such trades in such part of the town, merely because of the discomfort caused by the numberse in carrying on the trade. In our opinion therefore, the slight discomfort that may be caused to some people passing by the road or living in the neighbourhood cannot ordinarily be companysidered to be such as to justify action under s. 133 of the Code of Criminal Procedure. We do number think that the orders are justified under s. 133.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 181 of 1961. Appeal by special leave from the judgment and order dated October 14, 1961, of the Rajasthan High Court in D. B. Cr. As. Nos. 263, 264, 278 and 280 to 282 and D. B. Cr. Death Sentence and companyfirmation Case No. 5 of 1961. C. Chatterjee, Renu Chatterjee and S. N. Mukherjee, for the appellants. S. B. Chari, Kan Singh and P. D. Menon, for the respondent. 1962. May 3. The following Judgment of the Court was delivered by DAS GUPTA, J.-On June 4, 1960 eight boys 1 Munna son of Manohar Lal 2 Ram Prakash son of Ram Baboo 3 Laxmi son of Vidhya Ram 4 Pooran son of Gulab Chand 5 Kedar son of Ram Kumar 6 Mohan son of Banke Lal 7 Suresh son of Chandra Shekhar and 8 Jagdish son of Mitthan Lal, all of Dholpur City went to the temple of Mangal Bharti for a Picnic. None of them returned home. On the morning of June 6, all these boys were found dead near a well in Gundarai forest. Each of the bodies bore numerous injuries, which according to the evidence of doctor, who held the post mortem examination, caused the deaths. Seven of the bodies were found naked only the dead body of Munna had clothes on. The hands of each were tied from behind with ribbons of their trousers and their mouths were found gagged. Watches and rings, buttons and currency numberes, which some of these boys had with them had disappeared. The four appellants, viz., Nand Kumar, Brij Kishore, alias Kalua, Lakhan and Murari along with one Jagdish were all companyvicted for the murder of these eight boys under s. 302 of the Indian Penal Code and were all sentenced to death. All of them were also companyvicted by the additional Sessions Judge under a. 377 of the Indian penal Code and s. 395, Indian Penal Code. The companyviction of these four appellants under s. 302 was companyfirmed by the High- Court of Rajasthan and the sentences of. death passed on Nand Kumar, Kalua and Lakhan were also companyfirmed. The High Court reduced the sentence on Murari to one of imprisonment for life. The companyviction of all the appellants under s. 395 of the Indian Penal Code and the sentences passed thereunder were also companyfirmed. The pre- sent appeal is by special leave granted by this Court. The prosecution case is that when the eight boys were at Mangal Bharti temple on June 4, 1960 these four appellants and Jagdish joined them there. In the evening before they all left the temple, these appellants took Munna and his seven companypanions one by one into a narrow lane behind the temple and robbed them of their belongings and valueable by force. All the 13 then left the temple to get her but instead of returning to Dholpur City, the appellants took the boys to the Gundarai forest. It is said that before the appellants took the boys to Gundarai they had agreed among themselves to murder them. They all waited near a. pillar till about 9.30 p.m. after which while Jagdish and Murari remained near the boys to St keep watch over them Jagdish being armed with a gun first of all Munna was called away from the other boys and. killed by the other three, viz., Nand Kumar, Kalua and Lakhan. The other seven were also taken away one by one and killed by these three. For these killings they used a knife which belonged to Murari and which Murari had brought with him on that day. After all the eight boys had been killed the booty was distributed among these five. Nand Kumar took in his share an agfa camera which had been taken from Munna and also Munnas wrist watch Lakhan got a wrist watch and a ring which had belonged-to Ram Prakash Kaluas share was a wrist watch belonging to Laxmi Chand and also a ring which belonged to him. Murari got four bottons and some money in cash and Jagdish also got some buttons and cash. The relatives of the boys had become anxious when the boys did number return on the night of June 4 Information was received from Puran, also of Dholpur City, who had also gone to the Mangal Bharti on that day that he had seen the eight boys and also Nand Kumar, Kalua, Jagdish .and Murari together at the Mangal Bharti. Enquiries were then made at the houses of these five but they were all found absent. On the following morning, i.e., the 5th June, 1960 at 6 a.m., Shiv Narain, the brother of Munna lodged information with the Kotwali police Dholpur about the disappearance of these boys. He added his suspicion that these boys might have fallen into the hands of dacoits belonging to the Panna dacoits gang and kidnaped by them. On the same day at about 10 p.m. Bhanwar Singh, the Circle Inspector of Dholpur succeeded in companytacting these appellants. Ultimately all the five made statements which were recorded,. giving information about their having kept the articles taken from some of the boys. At about 4 a.m. on June 6, 1960, the Circle Inspector accompanied by the Deputy Superintendent of Police left for Gundarai forest in a police jeep a long with the appellant Nand Kumar and some other persons. Nand Kumar led the police to the top of a small bill and pointed out the five cycles of Munna and his companypanions lying at one spot and the dead bodies of the eight boys lying at different places in the vicinity of the hill in the jungle. He also took out a knife, Ex- 18, from a bush near one of the dead bodies. Then Nand Kumar went to his house with the police and there pointed out a camera and a wrist watch which had fallen to his share. He also brought out certain blood-stained clothes. After this. the appellant Murari was taken by the police to his house and he brought out a gold ring with the name of R.P. Gupta inscribed in enamel., a wrist watch belonging to R. P. Gupta deceased and some bloodstained clothes. The police then took Murari to his house where Murari brought out some gold buttons and currency numberes. Then Kalua took the police to his house and brought out a wrist. watch and a ring inscri- bed with the name of S. K. Gupta and also some blood stained clothes. According to the prosecution three of these appellants, viz., Nand Kumar.Murari and Kalua made companyfessions before the Sub-Divisional Magistrate which were recorded by the Magistrate Nand Kumar on the 14th June, Kalua on the 15th June and Murari on the 16th June. A statement of Lakhan was also recorded by the Magistrate on the 15th June, 1960. All the accused pleaded number guilty. They denied that they had made any statement at all before the Magistrate and also denied the recovery of any articles from their houses. The companyviction of each of the three appellants, Nand Kumar, Kalua and Murari on the charge of murder was based by the Trial Court and the High Court on the companyfession said to have been made by him taken with the circumstances which the Courts below companysidered sufficient companyroboration to established the truth of what was stated in the companyfession. On behalf of each of these appellants it has been companytended before us that the companyfession was number voluntary and was number admissible in evidence, and secondly, that there was number sufficient companyroboration to establish the truth of the companyfession. On behalf of Nand Kumar an additional plea was pressed that he made numberconfessional statement at all before the Magistrate and the document which is number produced as record of his companyfessional statement was written up in his absence on papers on which Nand Kumar has been made to put his signature. The argument of the learned Counsel, so far as we can understand it was that the jail register entry showing 1.25 as the time when Nand Kumar was brought back to the jail on the 14th June 1960 was originally 10.25 but had been dishonestly altered to 1.25 by erasing the zero. Proceeding on the basis that 10.25 was the time numbered the learned Counsel argues that this shows that Nand Kumar was number before the Magistrate from 10.30 onwards when according to the record of the companyfession, Ex-62, the Magistrate was recording his companyfession. In the first place we do number find any reasonable ground for the thinking that the entry originally made was 10.26. As the entry stands, it is 1. 25 and there is numberevidence, circumstantial or otherwise to indicate that it was number so all along Even supposing it was originally 10.25 and then altered to 1.25 the only reasonable companyclusion would be, if the Magistrates own evidence on the presence of the accused before -him is taken into companysideration, that somebody had made a mistake in making the entry and then companyrected it to 1.25. We agree with the High Court that there is absolutely numberreason to about the testimony of the Magistrate on this point and there can be numberpossible doubt whatsoever that the record Ex-P-62 companytains what was stated by the accused Nand Kumar before the Magistrate on June 14, 1960. As regards each of these companyfessions, the learned Counsel has urged, as already, indicated, that it was number voluntary. Three grounds were urged in support of the companytention. They are, 1 that there was a delay of about a week or more in sending the accused to the Magistrate for recording the companyfessions 2 that Circle Inspector Paras Singh visited the Judicial lock up, where these companyfessing accused had been kept on the 13th June and 3 that the companyfessing accused had been kept in solitary cells. that any enquiry was made from the Investigating officer as to why he did number send up the accused for recording his companyfession earlier. But, if, as is suggested by the learned Counsel, the accused persons were ready to make their companyfessional statements before the Magistrate as early as the 6th June, it is number clear to us what the police stood to gain by delaying the recording of these companyfessions. On the companytrary, it would seem natural for the police to hurry up with the recording of the companyfessions lest on second thoughts the accused might refuse to make the statement. In companysidering the visit of Paras Singh to the judicial lock-up on the 13th June we have to remember that though Paras Singh was number examined as a witness by the prosecution the prosecution did offer to examine him when in the companyrse of the argument a grievance was sought to be made by the defence of such number-examination. The Sessions Judge was prepared to examine him as a Court witness but the defence objected to it. It is number open, therefore, to the Defence Counsel number to companyplain that Paras Singh was number examined. It is number disputed that Paras Singh did visit the judicial look-up on the 13th June. From the petition on, which the order permitting him to visit the jail was made, it is reasonable to think, however, that this visit was made for steps in the investigation in some other case having numberconnection with The present accused. No doubt, as regards the voluntary nature of the companyfessions, therefore, arises from this visit of Paras Singh to the judicial lock-up on the 13th June. Nor can any companyclusion be reasonably based on this point from the fact that the accused persons were kept in solitary cells. Such keeping in solitary calls is often companysidered prudent by the jail authorities for the safety of the companyfessing accused themselves. It is true that by being kept in the solitary cells an accused is kept away from the influence of other under-trial prisoners who might try to induce them to resile them from the companyfession, but it is numberground for thinking that when a particular accused had been kept is a so solitary cell the companyfession made by him was number voluntary. We are satisfied that the companyfessions of all these three accused were voluntary and rightly admitted into evidence. Each of the accused however retracted the companyfession made by him. Courts ordinarily companysider it unsafe to companyvict any accused person on the basis of his retracted companyfession except where the truth of such companyfession is established by companyroboration in material particular by independent evidence., what is sufficient companyroboration for this purpose has to be decided in each case on its own facts and circumstances. It may, however, be generally stated that where the prosecution by the production of reliable evidence which is independent of the companyfession and which is also number tainted evidence like the evidence of an accomplice or the evidence of a company accused, establishes the truth of certain parts of the account given in the companyfession and these parts are so integrally companynected with other parts of the accuseds companyfess. ion, that a prudent judge of facts would think it reasonable to believe, in view of the established truth of these parts, that what the accused has stated in the companyfession as regards his own participation in the crime is also true, that is sufficient companyroboration. More than this is number needed, less than this is ordinarily insufficient. Applying this test to the three retracted companyfessions before us, we are satisfied that the High Court was right in its companyclusion that each of these companyfessions has been so well companyroborated- by independent evidence in material particulars that what the accused has said in the companyfession as regards his own participation in the crime has been proved to be true. Turning first to Nand Kumars companyfession, we find that after describing how with the offer four accused persons he went to Mangal Bharti with a gun which belonged to one Fakhruddin and took part in the picnic with the 8 boys, Munna and his companypanions there, goes on to say about the companyspiracy to rob these boys of their valuables and then actually robbing them of these valuables. He further states in the companyfession how they further companyspired to take all the boys under the pretext of sight seeing walk Sair ka Bahana and saying them to reach the city en-route Gundarai and Barakhambha and to return their articles there and to murder them after taking them to some lonely place took the boys to Gundarai and there how one by one all the 8 boys were killed by himself Kalua and Lakhan stabbing them with the knife which Murari had brought. He further stated that after the boys had been murdered the booty was distri- buted among themselves and he took in his share Munnas Agfa camera and a wrist watch belonging to Munna. Not only has the prosecution established by independent evidence that Nand Kumar with the other accused went to Mangal Bharti and met the 8 boys there and remained with them for some time taking part in the picnic, but it has further been proved by reliable and independent evidence that Munnas Agfa camera and the wrist watch belonging to him which he had taken with him that day to Mangal Bharti were recovered from Nand Kumars house and that it was actually he who produced these himself from behind the floor carpet on the Tand of his house and that he also produced some clothes lying behind the floor carpet, viz , a white banian and a langot and a white shirt smeared with blood. There is satisfactory evidence that the blood on these articles was human blood. It is necessary to mention also that the fact that hi had knowledge of where the dead bodies were, was discovered by a statement made by him before the police, which has been rightly admitted into evidence under s. 27 of the Evidence Act and on the morning of June 6, 1960 it was he who took the police party to the place where the bodies were. The knife, Ex. 18, was also pointed out by him from under a bush near one of the dead bodies after he had previously stated that he had left the knife at the place of occurrence. These facts and circumstances provide overwhelming companyroboration of Nand Kumars companyfession that he was one of the three persons who inflicted the injuries on the 8 boys which caused their deaths. He has therefore, been rightly companyvicted under s.302 of the Indian Penal Code. Kalua also companyfessed having been one of the three who inflicted knife injuries on some of the boys and having held some of the other boys while his companypanions, Nand Kumar and Lakhan inflicted the injuries. Besides describing the visit to the Mangal Bharti and meeting the eight boys there he also spoke about robbing the boys of their belongings and thereafter about the companyspiracy to kill the boys after taking them to Gundarai. He went on to say in the companyfession how the boys were taken to Gundarai and murdered there. He further stated about the distribution of the booty and said that be got in his share the wrist watch belonging to Laxmi and the ring on which the name of S.K. Gupta was written. Kaluas presence at the Mangal Bharti and meeting the eight boys there have been proved by independent evidence. It has also been established by reliable independent evidence that the wrist watch of Laxmi and also his ring, which originally belonged to his brother Sri Kishan Gupta and so bore the inscription S. K. Gupta, were recovered from Kaluas house and that it was Kalua himself who produced these from inside a box on a Tand in his house and further that Kalua himself produced a trouser and a shirt from behind another box lying behind the same Tand both of which articles had blood marks. It has been established satisfactorily that the blood was human blood. These facts and circumstances provide sufficient companyroboration of Kaluas companyfession. He has, therefore, been rightly companyvicted under s.302 of the Indian Penal Code. Murari also spoke in his companyfession of bow he went to Mangal Bharti and met the eight boys about the companyspiracy to rob the boys of their belongings and how they were actually robbed and thereafter of the companyspiracy of taking the boys to Gundarai and killing them there. He also spoke in his companyfession of bow after the boys were taken to Gundarai forest the boys were called one by one and killed while he and Jagdish remained guard over the boys when they were waiting for their turn to be called. He has mentioned in his companyfession about his taking his own knife with him and has also stated that this knife was used in companymitting the murders Speaking about the distribution of the booty he said that he got in his share four buttons, one of which was companypletely of gold while the other three were gold topped. Independent evidence has established in addition to Muraris presence at Mangal Bharti and his meeting with the eight boys there, the recovery of four such buttons and Rs. 48/- in currency numberes and that it was Murari himself who produced these buttons and the numberes from inside a box in a room after he himself made a statement, which was rightly admitted under s. 27 of the Evidence Act, about having kept these things in his house. The knife Ex-18 which was found near one of the dead bodies was also indentified by witness Ram Singh P.W. 14 as the knife which he had seen Murari carrying before the occurrence. It is number an ordinary knife. It is a long knife of which the blade is 6 inches long and the handle 7 inches, with a special button arrangement on pressing which it opens and closes. These facts and circumstances established by independent evidence provide sufficient companyroboration of Muraris own companyfession that in furtherance of a companymon intention of himself and his companypanions to kill these eight boys he kept guard over the boys when one by one they were being called away and killed by his companypanions. Nand Kumar, Kalua and Lakhan. He has, therefore, been rightly companyvicted under s.302 of the Indian Penal Code, The fourth appellant, Lakhan, did number companyfess having participated in any of the crimes. To prove the charge under s.302 of the Indian Penal Code against him the prosecution relied on a number of circumstances. 1 His presence with Nand Kumar and others at Mangal Bharti and meeting the eight boys there 2 the recovery from his room of part of the booty taken from the boys, viz., a gold ring bearing the inscription R. P. Gupta, and a wrist watch 3 the recovery of a blood-stained banian and underwear from his room and 4 the fact that these were produced by Lakhan himself after he had made a statement that he kept these things in his house. Along with this the prosecution wants the .court to take into companysideration the statement made in the retracted companyfessions of Nand Kumar, Kalua and Murari that Lakhan took actual part in the killing of the eight boys. The circumstances mentioned above have clearly been established by legal evidence and they themselves are almost sufficient, without anything more, to justify a companyclusion that Lakhan took part in the killing of the eight boys in furtherance of the companymon intention of himself and other to cause. their deaths. It is proper and quite permissible to take into companysideration, then, the statements made as regards the part taken by him in the retracted companyfessions of Nand Kumar, Kalua and Murari. These statements supply whatever assurance was needed to companyvince the companyrt that Lakhan took part in the killing of the eight boys in furtherance of the companymon intention of himself and others. His companyviction under s.302, Indian Penal Code was, therefore, fully-justified. Some argument was addressed to us on the question of motive. It has been urged that while according to the companyfessions Nand Kumar and other decided to kill these boys so that they might number speak about the crimes already companymitted by the accused, viz., dacoity and sedomy, the learned judges of the High Court seemed to think that Munna was killed by Nand Kumar as an act of revenge for the insult he had offered to Nand Kumars sister and the other seven boys were killed so that they might number speak about this murder of Munna. The evidence in the present case is so clear to show that these four persons companymitted the murder of the eight boys that we think it unnecessary to speculate about the motive which induced them to murder the eight boys who had done numberharm. Whether it was sadistic pleasure or the fear of discovery of robbory, or anything else, the fact remains proved by overwhelming evidence that these four did actually companymit the murder of the eight innocent boys. It is hardly necessary to say anything about the companyviction of these persons of an offence under s. 395 of the Indian Penal Code. It is sufficient to mention only that the evidence discussed above in companynection with the charge of murder provides sufficient basis for the companyvictions under a. 395 of the Indian Penal Code. The sentences of death passed on Nand Kumar, Kalua and Lakhan are the only possible sentences. The High Court has thought fit to treat Murari more leniently and sentenced him only to imprisonment for life. We cannot interfer with that sentence, even though it appears to us that this leniency was uncalled for.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Apeal No. 6 of 1960. Appeal by special leave from the judgment and order dated July 1, 1959, of the Andhra Pradesh High Court in Cr. Revision Case No. 403 of 1958 and Criminal Revision Petn. No. 337 of 1957. Ram Reddy, for the appellant. R. Choudhuri, and P. D. M for respondent No. 1. R. Chaudhuri, for respondent No. 2. 1962. July 25. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal by special leave against the judgment of the Andhra Pradesh High Court. The appellant was companyvicted under s. 411 of the Indian Penal Code by the Assistant Sessions Judge of Kurnool. Along with him, another person Hussain Saheb was also tried and was companyvicted under so. 457 and 380 of the Indian Penal Code. The case for the prosecution briefly was that the house of Rahayya in Dudyia was burgied on the night of April 20, 1957. Ramayya and his wife were sleeping outside and on waking in the morning they found that the house had been burgled and valuable property stolen. The matter was reported to the police and during the companyrse of investigation the police recovered 17 ornaments on the information given by the appellant. The other accused had also given information on the basis of which another stolen ornament was recovered. The Assistant Sessions Judge on a companysideration of the evidence came to the companyclusion that the other accused had actually companymitted house breaking and had removed ornaments from the house of Ramayya and had handed over 17 ornaments out of that property to the appellant. He also came to the companyclusion that the seventeen ornaments recovered at the instance of the appellant were in his possession and he therefore found him guilty under s. 411 of the Indian Penal Code. The appellant and the other accused went in appeal to the Sessions Judge. The Sessions Judge held that the appellant had number been proved to be in possession of the seventeen ornaments which were recovered at his instance from a garden. The statement of the appellant in this respect was that he would show the place where he had hidden them the ornaments . Thereafter he went to the garden and dug out two bundles companytaining the seventeen ornaments from there. The Sessions Judge held that the recovery of ornaments from the garden at the instance of the appellant was proved but he further held that that part of the statement of the appellant where he said that he had hidden the ornaments was number admissible in evidence. Therefore, he took the view that as the ornaments were recovered from a place which was accessible to all and sundry and there was numberother evidence to show that the appellant had hidden them, it companyld number be held that the ornaments were in the appellants possession. He therefore gave the benefit of doubt to the appellant and ordered his acquittal. He also acquitted the other accused at whose instance one of the stolen ornaments was recovered. This accused had stated that he given the ornaments to Bada Sab W. 5 and took the police party to Bada Sab and asked him to return the ornaments, which Bada Sab did. The Sessions Judge, however, on a companysideration of the evidence against the other accused thought the case against him was also doubtful and ordered his acquittal, though he ordered the return of ornaments to Ramayya. This was followed by a revision by Ramayya against the appellant and the other accused. The High Court has allowed the revision and directed that the matter should go back to the Sessions Judge so that the accused should be re-tried on the charges on which they had been brought to trial on the former occasion. It is against this order of the High Court directing retrial that the present appeal by special leave is directed. It may be mentioned, however, that only Chinnaswamy Reddy has appealed while the other accused has number appealed against the order of the High Court. The main companytention of the appellant before us is that this was a revision by a private party. There were numberexceptional circumstances in this case which would justify the High Court in interfering with an order of acquittal at the instance of a private party. Further, it is urged that a. 439 4 of the Code of Criminal Procedure specifically forbids the High Court from companyverting a finding of acquittal into one of companyviction and that a reading of the judgment of the High Court shows that by the indirect method of retrial the High Court has practically directed the Sessions Court to companyvict the appellant and thus indirectly companyverted finding of acquittal into one of companyviction, through it has number been done and companyld number be done directly. The extent of the jurisdiction of the High Court in the matter of interfering in revision against an order of acquittal has been companysidered by this Court on a number of occasions. In D, Stephens v. Nosibolla 1 this Court observed- The revisional jurisdiction companyferred on the High Court under s. 439 of the Code of Criminal Procedure is number to be lightly exer- cised when it in invoked by a private companyp- lainant against an order of acquittal, against which the Government has a right of appeal under a. 417. It companyld be exercised only 1 1951 S.C.R. 284. in exceptional cases where the interests of public justice require interference for the companyrection of a manifest illegality or the prevention of a gross miscarriage of justice. This jurisdiction is number ordinarily invoked or used merely because the lower Court has taken a wrong view of the law or misappreciated the evidence on the record. Again, in Logendranath Jha v. Shri Polailal Biswas 1 , this Court observed- Though sub-s. 1 of s. 439 of the Criminal Procedure Code authorises the High Court to exercise in its discretion any of the powers companyferred on a companyrt of appeal by s. 423, yet sub-a. 4 specifically excludes the power to companyvert a finding of acquittal into one of companyviction. This does number mean that in dealing with a revision petition by a private party against an order of acquittal, the High Court can in the absence of any error on a point of law reappraise the evidence and reverse the findings of facts on which the acquittal was based, provided only it stops short of finding the accused guilty and passing, sentence on him by ordering a re- trial. These two cases clearly lay down the limits of the High Courts jurisdiction to interfere with an order of acquittal in revision in particular, Logendranath Jhas case 1 stresses that it is number open to a High Court to companyvert a finding of acquittal into one of companyviction in view of the provisions of s. 439 4 and that the High Court cannot do this even indirectly by ordering re-trial. What had happened in that case was that the High Court reversed pure findings of facts based on the trial companyrts appreciation of evidence but formally 1 1951 S.C.R. 676. companyplied with sub-a. 4 by directing only a retrial of the appellants without companyvicting them, and warned that the companyrt retrying the case should number be influenced by any expression of opinion companytained in the judgment of the High Court. In that companynection this Court observed that there companyld be little doubt that the dice was loaded against the appellants of that case and it might prove difficult for any subordinate judicial officer dealing with the case to put aside altogether the strong views expressed in the judgment as to the credibility of the prosecution witnesses and the circumstances of the case in general. It is true that it is open to a High Court in revision to set aside an order of acquittal even at the instance of private parties, though the State may number have thought fit to appeal but this jurisdiction should in our opinion be exercised by the High Court only in exceptional cases, when there is some glaring defect in the procedure or there is a manifest error on a point of law and companysequently there has been a flagrant miscarriage of justice. Sub-section 4 of a. 439 forbids a High Court from companyverting a finding of acquittal into one of companyviction and that makes it all the more incumbent on the High Court to see that it does number companyvert the finding of acquittal into one of companyviction by the indirect method of ordering retrial, when it cannot itself directly companyvert a finding of acquittal into a finding of companyviction. This places limitations on the power of the High Court to set aside a finding of acquittal in revision and it is only in exceptional cases that this power should be exercised. It is number possible to lay down the criteria for determining such exceptional cases which would companyer all companytingencies. We may however indicate some cases of this kind, which would in our opinion justify the High Court in interfering with a finding of acquittal in revision. These cases may be where the trial companyrt has numberjurisdiction to try the case but has still acquitted the accused, or where the trial companyrt has wrongly shut out evidence which the prosecution wished to produce, or where the appeal companyrt has wrongly held evidence.which was admitted by the trial companyrt to be inadmissible, or where material evidence has been overlooked either by the trial companyrt or by the appeal companyrt, or where the acquittal is based on a companypounding of the offence, which is invalid under the law. These and other cases of similar nature can properly be held to be cases of exceptional nature, where the High Court can justifiably interfere with an order of acquittal and in such a case it is obvious that it cannot be said that the High Court was doing indirectly what it companyld number do directly in view of the provisions of a. 439 4 . We have therefore to see whether the order of the High Court setting aside the order of acquittal in this case can be upheld on these principles. A perusal of the judgment of the High Court shows that the High Court has gone into the evidence in great detail so far as the case against the appellant was companycerned. In our opinion, the High Court should number have dealt with evidence in such detail when it was going to order a retrial, for such detailed companysideration of evidence, as pointed out in Logendranaths case 1 amounts to loading the dice against the appellant, when the case goes back for retrial. If the matter stood at this only, we would have numberhesitation in setting aside the order of the High Court directing a retrial but there is one important circumstance in this case to which the High Court has adverted in passing, which, in our opinion, was sufficient to enable the High Court to set aside the acquittal in this case. It would then have been unnecessary to companysider the evidence in that detail in which the High Court has gone into it, and thus load the 1 1951 S.C.R.676. dice against the appellant, when the case goes back for retrial. That circumstance is that the Assistant Sessions Judge had admitted in evidence that part of the statement of the appellant in which he stated that he would show the place where he had hidden the ornaments and relying on it he held that the appellant was in possession of the seventeen ornaments, he had dug out from the garden which he owned along with others. The Sessions Judge however held that that part of the statement of the appellant where he stated that he had hidden the ornaments was inadmissible in evidence. The same applies to the case against the other accused, who had stated that he had given one ornament to Bada Sab and would get it recovered from him. Though the Sessions Judge has number in specific trems ruled out that part of the other accuseds statement where he said that he had given the ornament to Bada Sab, he did number companysistently with what be said with respect to the appellant, attach importance to this statement of the other accused. If therefore this part of the statement of the appellant and the other accused which led to discovery of ornaments is admissible, it must be held that the appeal companyrt wrongly ruled out evidence which was admissible. In these circumstances, the case would clearly be companyered by the principles we have set out above in as much as relevant evidence was ruled out as inadmissible and the High Court would be justified in interfering with the order of acquittal so that the evidence may be reappraised after taking into account the evidence which was wrongly ruled out as inadmissible. It seems that the High Court was companyscious of this aspect of the matter, for it says in one part of the judgment that the only possible inference that companyld be drawn was that the appellant was in possession of stolen goods before they were put in that secret spot, as admitted by the appellant in his statement, part of which is admissible under s. 27 of the Indian Evidence Act. If the High Court had companyfined itself only to the admissibility of this part of the statement, it would have been- justified in interfering with the order of acquittal. Unfortunately, the High Court went further and appraised the evidence also which it should number have done, as held by this Court in Logendranaths case. However, if admissible evidence was ruled out and was number taken into companysideration, that would in our opinion be a ground for interfering with the order of acquittal in revision. Let us then turn to the question whether the statement of the appellant to the effect that ,he had hidden them the ornaments and would point out the place where they were, is wholly admissible in evidence under s. 27 or only that part of it is admissible where he stated that he would point out the place but number that part where he stated that he had hidden the ornaments. The Sessions Judge in this companynection relied on Pulukuri Kotayya v. King-Emperor 2 where a part of the statement leading to the recovery of a knife in a murder case was held inadmissible by the Judicial Committee. In that case the Judicial Committee companysidered s. 27 of the Indian Evidence Act, which is in these terms - Provided that, when any fact is deposed to as discovered in companysequence of information received from a person accused of any offence, in the custody of a police officer, so much of such information, whether it amounts to a companyfession or number, as relates distinctly to the fact thereby discovered, may be proved. This section is an exception to ss. 25 and 26, which prohibit the proof of a companyfession made to a police officer or a companyfession made while a person is in 1 1951 S.C.R. 676. 2 1946 L.R. 74 I.A. 65. police custody, unless it is made in immediate presence of a magistrate. Section 27 allows that part of the statement made by the accused to the police whether it amounts to a companyfession or number which relates distinctly to the fact thereby discovered to be proved. Thus even a companyfessional statement before the police which distinctly relates to the discovery of a fact may be proved under s. 87. The Judicial Committee had in that case to companysider how much of the information given by the accused to the police would be admissible under a. 17 and laid stress on the words so much of such information as relates distinctly to the fact thereby discovered in that companynection. It held that the extent of the information admissible must depend on the exact nature of the discovered to which such information is required to relate. It was further pointed out that the fact discovered embraces the place from which the object is produced and the knowledge of the accused as to this, and the information given must relate distinctly to this fact. It was further observed. that- Information as to past user, or the past history of the object produced is number related to its discovery in the setting in which it is discovered. This was exemplified further by the Judicial Committee by observing- Information supplied by a person in custody that I will produce a knife companycealed in the roof of my house leads to the discovery of the fact that a knife is companycealed in the house of the informant to his knowledge, and if the knife is proved to have been used in the companymission of the offence., the fact discovered is very relevant. If however to the statement the words be added with which I stabbed A, these words are inadmissible since they do number relate to the discovery of the knife in the house of the informant. If we may respectfully say so, this case clearly brings out what part of the statement is admissible under a. 27. It is only that part which distinctly relates to the discovery which is admissible but if any part of the statement distinctly relates to the discovery it will be admissible wholly and the companyrt cannot say that it will excise one part of the statement because it is of a companyfessional nature. Section 27 makes that part of the statement which is distinctly related to the discovery admissible as a whole, whether it be in the nature of companyfession or number. Now the statement in this case is said to be that the appellant stated that he would show the place where he had hidden the ornaments. The Sessions Judge has held that part of this statement which is to the effect where he had hidden them is number admissible. It is clear that if that part of the statement is excised the remaining statement namely, that he would show the place would be companypletely meaningless. The whole of this statement in our opinion relates distinctly to the discovery of ornaments and is admissible under s. 27 of the Indian Evidence Act. The words where he had hidden them are number on a par with the words with which I stabbed the deceased in the example given in the judgment of the Judicial Committee. These words namely, where he had hidden them have numberhing to do with the past history of the crime and axe distinctly related to the actual discovery that took place by virtue of that statement. It is however urged that in a case where the offence companysists of possession even the words where he had hidden them would be inadmissible as they would amount to an admission by the accused that he was in possession. There are in our opinion two answers to this argument. In the first place, s 27 itself says that where the statement distinctly relates to the discovery it will be admissible whether it amounts to a companyfession or number. In the second place, these words by themselves though they may show possession of the appellants would number prove the offence, for after the articles have been recovered, the prosecution has still to show that the articles recovered are companynected with the crime, i. e. in this case, the prosecution will have to show that they are stolen property. We are therefore of opinion that the entire statement of the appellant 2 as well as of the other accused Who stated that he had given the ornament to Bada Sab and would have it recovered from him would be admissible in evidence and the Sessions Judge was wrong in ruling out part of it. Therefore, as relevant and admissible evidence was ruled out by. the Sessions Judge, this is, fit case where the High Court would be entitled to set aside the finding of acquittal in revision, though it is unfortunate that the High Court did number companyfine itself only to this point and went on to make rather strong remarks about other parts of the evidence. The next question is what order should be passed in a case like the present. The High Court also companysidered this aspect of the matter. Two companytingencies arise in such a case. In the first place there may be an acquittal by the trial companyrt. In such a case if the High Court is justified, on principles we have enunciated above, to interfere with the order of acquittal in revision, the only companyrse open to it is to set aside the acquittal and send the case back to the trial companyrt or retrial. But there may be another type of case, namely, where the trial companyrt has companyvicted the accused while the appeal companyrt has acquitted him. In such a case if the companyclusion of the High Court is that the order of the appeal companyrt must be set aside, the question is whether the appeal companyrt should be ordered to re-hear the appeal after admitting the statement it had ruled out or whether there should K necessarily be a retrial. So far asthis is companycerned, we are of opinion that it in open to the High Court to take either of the two companyrses. It may order a retrial or it may order the appeal companyrt to re-hear the appeal. It will depend upon the facts of each case whether the High Court would order the appeal companyrt to re-hear the appeal or would order a retrial by the trial companyrt. Where, as in this case, the entire evidence is there and it was the appeal companyrt which ruled out the evidence that had been admitted by the trial companyrt, the proper companyrse in our opinion is to send back the appeal for rehearing to the appeal companyrt. In such a case the order of the trial companyrt would stand subject to the decision of the appeal companyrt on re-hearing. In the present case it is number disputed that the entire evidence has been led and the only defect is that the appeal companyrt wrongly ruled out evidence which was admitted by the trial companyrt. In the circumstances we are of opinion that the proper companyrse is to direct the appeal companyrt to re-hear the appeal and either maintain the companyviction after taking into companysideration the evidence which was ruled out by it previously or to acquit the accused if that is the just companyrse to take. We should like to add that the appeal companyrt when it re-hears the appeal should number be influenced by any observations of the High Court on the appreciation of the evidence and should bring to bear its own mind on the evidence after taking into companysideration that part of the evidence which was, companysidered inadmissible previously by it. We therefore allow the appeal subject to the modification indicated above. This leaves the case of the other accused.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 195 of 1962. Appeal by special leave from the judgment and order dated 1961, August 24 of the Patna High Court in M. J. C. No. 126 of 1961. Basudeo Prasad, R. K. Garg, S. C. Agarwal and M. K. Ramamurthi for the appellant. D. Sharma for respondent No. 1. Goburdhan for respondent No. 2. P. Verma for respondent No. 3. 1962. July 31. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal by special leave from the judgment of the Patna High Court. Brief facts necessary for present purposes are these. It appears that a new route Gopalganj-Pahlezghat was advertised by the North Bihar Regional Transport Authority in July 1957 and applications were invited for permanent stage carriage permits and the advertisement stated that there were two vacancies on the route. A number of persons applied for the two permits and in January 1958, the Regional Transport Authority granted permits to the appellant and another person. This order was taken in appeal to the Appellate Authority, which however failed. Thereafter Sudhakar Sharma who is one of the respondents, before us, moved the High Court under Art. 226 of the Constitution and in April 1960 the High Court quashed the order of the Appellate Authority on the basis of the judgment of this Court in Ram Gopal v. Anant Prasad. 1 The case then went back to the Appellate Authority for rehearing. The Appellate Authority thereupon modified the order of the Regional Transport Authority and the permit granted to the appellant was cancelled and in his place a permit was granted to Sudhakar Sharma, the permit granted to the other person was number interfered with. Thereupon, the appellant made an application to the State Government under s. 64-A of the Motor Vehicles Act, No.4 of 1939, hereinafter referred to as the Act as amended by the Bihar Amendment 1 1959 Supp. 2 S.C.R. 692. Act No. 27 of 1950, which provides that the State. Government may, on application made to it in this behalf within 30 days of the passing of the order in the companyrse of any proceeding taken under this Chapter by any authority or officer subordinate to it, call for the records of such proceeding and after examining such records pass such orders as it thinks fit. The application was heard by the Minister for Transport and he upheld the order of the appellate Authority. At the same times however, he took the view that with the introduction of bus-service in North Bihar, people are becoming more and more bus-minded as they have been getting cheap and quick means of transport and therefore an additional service companyld be allowed on this route, and that would add to the facilities provided to the public without impairing in any way the effectively of the existing service. Therefore, while upholding the order of the Appellate Authority cancelling the permit of the appellant and granting a permit instead to Sudhakar Sharma, he felt that the ends of justice would be met if an additional permit was granted to the appellant, who had proved to be a desirable operator. He therefore ordered that an additional service be allowed to the appellant for the said route. Thereupon Ram Kailash Pandey who had also made an application under s. 64-A and whose -application had been dismissed filed a write petition before the High Court challenging the order of the Minister for Transport. His main companytention was that the grant of an additional permit to the appellant was wholly unjustified, particularly in the face of his far superior claim. To this petition the appellant as well as the two persons to whom permits were granted and the State of Bihar, the Appellate Authority as well as the Regional Transport Authority were made parties. When the petition came to be heard before the High Court it was companytended that the State Government had numberpower when dealing with an application under s. 64-A, to increase the number of permits to be granted from two which was the limit fixed by the Regional Transport Authority, to three, and therefore, its order granting the third permit to the appellant was without jurisdiction. This companytention was accepted by the High Court, and it set aside that part of the order by which a third permit was granted to the appellant. But the High Court refused to interfere with the rest of the order granting permits to the two other persons. Thereupon, the appellant applied for a certificate to appeal to this Court, which was refused. He then moved this Court for special leave, which was granted and that is how the matter has companye up before us. The main question for decision in this appeals whether the State Government acting under s. 64-A of the Bihar Amendment Act had the power to increase the number of permits for which application had been invited by the Regional Transport Authority. It is companytended on behalf of the appellant that the State Government has the same power under a. 64-A as the Regional Transport Authority has, as held by this Court in RAM GOPALS CASE, and it was therefore open to the State Government to increase the number of permits as the Regional Transport Authority would always have the power to increase the number of permits whenever it thought necessary to do so. In order to appreciate the argument put forward on behalf of the appellant, it is necessary to refer to the scheme of the Act in the matter of granting stage carriage permits. The scheme of the Act for the companytrol of transport vehicle is to be found in Chap. IV. Section 42 provides that numberowner of a transport vehicle shall use or permit the use of the vehicle in any public place, save in accordance with the companyditions of a permit granted or companyntersigned by a Regional or State Transport Authority Section 43 gives power to the State Government to issue directions to the State Transport Authority with respect to various matters specified therein. Section 44 provides for the companystitution of Regional Transport Authorities and the State Transport Authority and powers thereof Section 45 then provides that an application for a permit shall be made to the Regional Transport Authority of the region in which it is proposed to use the vehicle and this is subject to two provisos, with which however we are number companycerned in the present appeal. Section 46 then provides for the form in which an application for a stage carriage permit shall be made. Then we companye to s. 47 1 which lays down certain criteria which shall be taken into companysideration by a Regional Transport Authority while dealing with an application for a stage carriage permit. Section 47 3 which is important gives power to the Regional Transport Authority to limit the number of stage carriages generally or of any specified type for which stage carriage permits may be granted in the region or in and specified area or on any specified route within the region, having regard to matter mentioned in sub s. 1 Section 48 then provides that subject to the provisions of s. 47, the Regional Transport Authority may, on an application made to it under s. 46, grant a stage carriage permit in accordance with the application or with such modification as it deems fit or refuse to grant such a permit and also provides, subject to rules, for companyditions that may be attached to a permit. Section 57 provides for the procedure in applying for and granting permits. Section 64 provides for an appeal from certain orders passed by the Regional Transport Authority within prescribed time and in the prescribed manner to the pres- cribed authority. Then companyes s. 64-A, as inserted by the Bihar Amendment Act providing for revision by the State Government. It will be clear from this scheme of the Act that the main section for the grant of a stage carriage permit is s. 48 and in passing an order granting or refusing to grant a stage carriage permit, the Regional Transport Authority has to act subject to the provisions of s. 47. Section 57 is a procedural section and provides for the procedure in applying for and granting permits. The power of the Regional Transport Authority to grant stage carriage permits is to be found in s. 48 and that power is subject to the provisions of a. 47. Section 47 1 lays down matters for which the Regional transport Authority shall have regard when companysidering an application far a stage carriage permit and s. 47 3 gives power to the said authority having regard to the matters mentioned in sub-s. 1 to limit the number to stage carriages generally etc. It would be clear therefore that when the Regional Transport Authority proceeds in the manner provided in S. 57 to companysider an application for a stage carriage permit and eventually decides either to grant it or number to grant it under s. 48 its order has to be subject to the provisions of s. 47, including s. 47 3 by which the Regional Transport Authority is given the power to limit the number of stages generally etc. Therefore, if the Regional Transport Authority has limited the number of stage carriages by exercising its power under s. 47 3 , the grant of permits by it under s. 48 has to be subject to the limit fixed under s. 47 3 . We cannot accept the companytention on behalf of the appellant that when the Regional, Transport Authority following the procedure provided in s. 57, companyes to grant or refuse a permit it can ignore the limit fixed under s. 47 3 , because it is also the authority making the order under s. 48. Section 47 3 is companycerned with a general order limiting stage carriages generally etc. on a companysideration of matters specified in s. 47 1 . That general order can be modified by the Regional Transport Authority. if it so decides, one way or the other. But the modification of that order is number a matter for companysideration when the Regional Transport Authority is dealing with the actual grant of permits under s. 48 read with s. 57, for at that stage what the Regional Transport Authority has to do is to choose between various applicants who may have made applications to it under s. 46 read with s. 57. That in our opinion is number the stage where the general order passed under s. 47 3 can be reconsidered for the order under s. 48 is subject to the provisions, of s. 47, which includes s. 47 3 under which a general order limiting the number of stage carriages etc. may have been passed. Section 57 2 shows that an application for permit may be made at any time number less than six weeks before the date on which it is desired that the permit shall take effect or if the Regional Transport Authority appoints dates for the receipt of such applications, on such dates. All applications, whether received one way or the other, have to be dealt with in the manner provided by s. 57 and the final order for grant of stage carriage permit has to be passed under s. 48. But, at that stage, as we have already pointed out, the Regional Transport Authority is only companysidering whether the applications made before it are to be granted or number and has to choose between various applicants where there are more applicants than the number of vacancies which might have been advertised or there are more applicants than the number limited under s.47 3 . The scheme of the Act therefore is that a limit is fixed under s. 47 3 and the applications received are dealt with in the manner provided by s. 57 and permits can be granted under s. 48 subject to the limit fixed under a. 47 3 . Further, it will be clear from s. 64 that the appeal there companytemplated is by a person who is aggrieved by various orders specified therein. Section 64 clearly does number companytemplate any appeal from an order under s. 47 3 limiting, the number of stage carriages generally etc. for that order being a general ordercannot be a ground for grievance to any individual who may have the right of appeal under s. 64. Therefore, when the Appellate Authority dealswith an appeal under s. 64 it is number sitting in appeal on the general order passed under s, 47 3 and has to deal with the same matters with which the Regional Transport authority dealt with under s. 41, namely, to choose between various applicants in the matter of grant of permits. Further, when under s. 64-A of the Bihar-Amendment Act, an application is made to it, the State Government can call for the record of any proceeding taken under Chap. IV by any authority or officer subordinate to it and pass such order in relation to the case as deems fit. It may be mentioned that s. 64-A as it number stands in the Act is very different from s. 64-A as inserted by the Bihar Amendment Act and there is numberpower in the State Government number to act under the present s. 64-A. A question may very well arise whether s. 64-A as inserted by Central Act No. 100 of 1956 has by necessary implication repealed s. 64- A as inserted by the Bihar Amendment Act. As the proceedings in the present case began in 1957 Central Act 100 of 1956 would apply to these proceedings and therefore if a. 64-A as inserted by the Bihar Amendment Act is repealed by necessary implication by s. 64-A as inserted by Central Act 100 of 1956, there would be numberpower in the State Government to revise the order of the Appellate Authority after 1956. However, we need number companysider this matter further, as it was never raised in the High Court and shall Proceed on the assumption that s. 64-A of the Bihar Amendment Act applied. Further, it is number necessary in the present case to decide whether under s. 64-A as inserted by Central Act 100 of 1956 it was open to the State Transport Authority to vary a general order passed under s. 47 3 we are here dealing with a revision based on an application made under s. 64-A, as inserted by the Bihar Amendment Act by a person who was aggrieved by the order of the Appellate Authority under s. In such a case we are of opinion that the power of the revisional authority is companyfined only to companysidering matters which the Regional Transport Authority and the Appellate Authority companyld have companysidered under s. 48 and a. 64. We have already pointed out that under s. 48 the Regional Transport Authority is to choose between various applicants in the matter of granting permits or refusing to grant permits and under a. 64 the power of the Appellate Authority is also limited to the same function on an appeal by a person aggrieved as provided therein. Therefore, when a revisional authority is dealing with an application under a. 64-A by a person who is aggrieved by an order under a. 64, it is also companyfined within the same limits within which the Appellate Authority acting under s. 64 and the Regional Transport Authority acting under s. 48 are companyfined. This was the view taken by this Court in Ram Gopals case 1 and the same view has been reiterated in A.S.T.Arunachalam Pillai v. Messrs. Southern Roadways Private Limited, 2 where it was pointed out that though the words as it deems fit in a. 64-A are wide in expression, they do number mean that the State Government can pass any order when exercising revisional authority which the authority whose orders the Government is revising has number 1 1960 3 S.C.R. 764. 2 1959 Supp. 2 S.C.R. 692. authority to pass. The argument on behalf of the appellant is that the Regional Transport Authority undoubtedly has the, power to revise a general order passed under s. 47 3 and therefore the revisional authority when acting under s. 64-A would have power to go beyond the limits fixed under a. 47 3 and grant a permit eve a in excess of the number fixed under a. 47 3 . There is a fallacy in our opinion in this argument. It is true that the Regional Transport Authority has the power to revise the limit fixed by it under a. 47 3 but that power to revise the limit in our opinion is number under s. 48, when it is dealing with the question of grant or refusal of permits to individuals. Section 48 is always subject to the provisions of s. 47 and therefore must be subject to the limits which may be fixed under s. 47 3 . The power to revise the limits under s. 47 3 in the Regional Transport Authority must number be companyfused with the powers which it has when it is dealing with the grant or refusal of permits under a. 48. Therefore, though it is true that the Regional Transport Authority can revise the general order passed by it under s. 47 3 , that revision is a separate power in the authority and number a power arising when it is dealing with individual permits. Therefore, when an appeal is taken from an order under s. 48 and a revision is taken by an aggrieved person under s. 64- A, the power of the Appellate Authority as well as of the revisional authority is as much subject to s. 47 3 as the power of the Regional Transport Authority under s. 48. This means that the Appellate Authority as well as the revisional authority under s. 64-A when dealing with an appeal or a revision of an aggrieved person with respect to grant or refusal of permits must act in the same manner as the Regional Transport Authority and its order will be subject to the same restriction namely, that it must act subject to the provisions of s. 47 and if there is a limit fixed by the Regional Transport Authority under s. 473 that limit will apply equally to the Appellate Authority under s. 64 and to the revisional authority under s. 64-A, when the revisional authority is dealing with the matter on an application by an aggrieved person. In the present case, the Regional Transport Authority was dealing with certain applications made to it on its advertisement for two vacancies on the route companycerned and had to choose between a large number of applications who had applied for the two permits. It made a certain choice and passed an order under s. 48. There were then appeals to the Appellate Authority which made a modification in the orders passed by the Regional Transport Authority but both these authorities proceeded on the basis that there were only two permits to be issued, that being the number fixed under s, 47 3 . Then there was a revision under the Bihar Amendment Act by one of the aggrieved persons, the grant of permit to whom had been set aside by the Appellate Authority. In such a case the revisional authority acting under a. 64-A companyld only companysider the question as to which persons should be chosen and companyld number go beyond the limits fixed under a. 47 3 by the Regional Transport Authority and increase the number of permits to be issued from two to three. We may in this companynection refer to the proviso to s. 57 3 introduced in 1956 which lays down that where limits have been fixed under s. 47 3 the Regional Transport Authority may summarily refuse applications for permit if the result of granting permits on such application would be to increase the number of vehicles beyond the limit fixed under s. 47 3 . This shows that the power under s. 48 read with the procedure under s. 57 is to be exercised within the limits fixed under s. 47 3 and it is number necessary for the Regional Transport Authority even to go through the procedure provided under is. 57, if the vehicles operating on a particular route are already equal to the number limited under s. 47 3 . This also shows how an order under s. 48 read with s. 57 is subject to the provisions of s. 47 3 and how when dealing with an application for permit under s. 48 read with a. 57, the Regional Transport Authority is to act within the limits prescribed under s. 47 3 and the order under s. 47 3 is number open to modification when the Regional Transport Authority is acting under s.48 read with s.57, though as we have said, it may be revised at any time by the Regional Transport Authority if it properly companyes to the companyclusion that revision is necessary in view of the factors specified in s. 47 1 . We therefore agree with the High Court that where a limit has been fixed under s. 47 3 by the Regional Transport Authority and thereafter the said authority proceeds to companysider applications for permits under s. 48 read with s. 57, the Regional Transport Authority must companyfine the number of permits issued by it within those limits and on an appeal or revision by an aggrieved person, the Appellate Authority or the revisional authority must equally be companyfined to the issue of permits within the limits fixed under s. 47 3 . It is further companytended on behalf of the appellant that there were numberlimits fixed by the Regional Transport Authority and therefore it was open to the State Government to increase the number of permits from two or three. Now the usual manner in which a Regional Transport Authority can fix a limit under s. 47 3 is by a resolution. Similarly it can vary those limits by another resolution. It is urged that there is numberproof on the record that there was any such resolution under s. 47 3 by the Regional Transport Authority in this case. it is true that there is numberhing on the record to prove that there was any resolution as such by the Regional Transport Authority in this case limiting the number of stage carriages on this route to two. But the High Court has held that the number can be deemed to have been fixed in view of the advertisement issued by the Regional Transport Authority calling for applications for two vacancies. This view of the High Court is however strenuously challenged on behalf of the appellant. It may be companyceded that it may number be generally possible to companyclude from the number of vacancies shown in an advertisement of this kind that is the number fixed under s. 47 3 by the Regional Transport Authority. There is, however, in our opinion, one exception to this general rule, and that is when a number route is being advertised for the first time. It is number disputed that in this case a new route was being advertised for the first time and the advertisement said that there were two vacancies for which applications were invited, In the case of a new route it is clear that the Regional Transport Authority must have companye to some companyclusion as to the number of stage carriages which were to be permitted to operate on that route and the advertisement would only be issued on behalf of the Regional Transport Authority calling for applications for the number so fixed. Therefore when it is a case of a new route which is being open for the first time and an advertisement is issued calling for applications for such a new route specifying the number of vacancies for it, we think, it is reasonable to infer that when the number of vacancies was specified that shows the limit which must have been decided upon by the Regional Transport Authority under s, 47 3 otherwise, it is impossible to understand in the case of a new route why the advertisement was only for two vacancies and number say for four or six. The very fact that in the case of a new route opened for the first time, the advertisement mentions two vacancies shows that the Regional Transport Authority must have decided before issuing the advertisement that on that route the number of stage carriages will be limited to two under s. 47 3 . This is also the inference which, the High Court has drawn in this companynection, though it has number specifically mentioned the fact that this was a case of a new route opened for the first time. As we have said above., such an inference from the advertisement would be justified in the case of a new route which is opened for the first time. Where the advertisement is with respect to an old route the fact that the advertisement mentions a particular number of vacancies would number necessarily mean that was-the number fixed under a. 47 3 , for the number fixed may be much more and there may be only a few vacancies because a few permits had expired. Therefore, in the circumstances of this case we are of opinion that it will be legitimate to infer as it was a new route opened for the first time that when the advertisement was made for only two vacancies, that was because the Regional Transport Authority had already decided to limit the number of state carriages on this route only to two under s. 47 3 . Once this is held, it follows that under s. 48, the Regional Transport Authority companyld number grant more than two permits and there- fore the Appellate Authority also companyld number grant more permits under s. 64 number companyld the revisional authority on an application made to it by an aggrieved person grant more permits. We have already said that it is number necessary to decide in this case whether it would be open otherwise to the revisional authority under s. 64-A as inserted by Central Act 100 of 1956 to revise a general order of the Regional Transport Authority passed under s. 47 3 . We are in the present case companycerned only with a case where an order passed under s. 48 by the Regional Transport Authority has been taken in appeal by an aggrieved person to the Appellate Authority under a. 64 and thereafter the order of the Appellate Authority has been taken in revision by an aggrieved person under s. 64-A as inserted by the Bihar Amendment Act and in such a case the limit fixed under a. 47 3 would bind the Regional Transport Authority, the Appellate Authority as well as the revisional authority and they cannot issue permits beyond the limits fixed under s. 47 3 . We are therefore of opinion that the High Court was right on the facts of this case in holding that the State Government bad numberpower to increase the number of permits which bad been fixed at two by the Regional Transport Authority under s. 47 3 to three on the application of an aggrieved person under s. 64-A arising from a proceeding before the Regional Transport Authority under a. 48 and the Appellate Authority under s. 61. We may point out that there has been a difference of opinion between various High Courts on this question. The Rajasthan High Court in The Automobile Transport Rajasthan v. Shri Nahtu Ram Mirdha 1 has taken one view and the Allahabad High Court in Mohammad Luqman Sharif v. State Transport Authority 2 has taken the companytrary view. The Rajasthan High Court held, dealing with s. 48 a of the Act as it was before the amendment of 1956 which is similar to s. 47 3 after the amendment, that under s. 48 a as it stood before the amendment, limiting of the number of stage carriages On any specific route did number make the order of the Regional Transport Authority a final decision binding on I.L.R. 1959 Raj. 120. A.I.R 1961 All.342. the appellate authority. The, Allahabad High Court on the other hand held that, when an order limiting the number of stage carriages had been passed under s. 48 a as it was before the amendment of 1956, there companyld be numberappeal against that order under s. 64 and therefore the Appellate Authority on an appeal under s. 64 companyld riot refix the number of stage carriages in respect of that route. We are of opinion, in view of what we have said above and in the light of the limitations which we have indicated above, that the view of the Allahabad High Court is companyrect. Lastly, it is urged on behalf of the appellant that respondent No. 1 who filed the writ petition in the High Court had numberlocus stand. We are of opinion that there is numberforce in this companytention. Respondent No. 1 was companytending in the High Court that he should have been granted a permit and number the appellant. Therefore he had locus stand to file the writ petition and it was during the companysideration of that writ petition that the point on which the appellant has lost, arose.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 103 of 1961. Petitions under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. S. Pathak and R. Gopalakrishnan, for the petitioners. N. Sanyal, Additional Solicitor-General of India and Sardar Bahadur, for the respondents. 1962. August 29. The Judgment of the Court was delivered by SUBBA RAO, J.-These two petitions filed under Art. 32 of the Constitution by different parties are directed against the Agricultural Income-tax Officer, Kasaragod, and the State of Kerala, for a declaration that s, 2A of the Kerala Agricultural Income-tax Act, 1950, as amended by Kerala Act 11 of 1959, hereinafter referred to as the Act is companystitutionally void and for quashing the orders of assessment made by the first respondent pursuant to the said provision- As it is companymon case that the decision in the first petition would govern the second one, it would suffice if the facts in the first petition were given. Kasaragod Taluk, wherein the agricultural lands of the petitioners family are situate, formed part of the district of South Kanara in the Madras State. Under the States Reorganization Act, 1956 Central Act 37 of 1956 the Kerala State companyprising the following territories was formed a the territories of the existing State of Travancore-Coching excluding the territories transferred to the State of Madras by Section 4 and b the territories companyprised in i Malabar District, excluding the islands of Laccadive and Minicoy, and ii Kasaragod Taluk of South Kanara District. Under the Act the territories companyprised in Kasaragod Taluk of South Kanara District and the District of Malabar in the Madras State were companystituted into a separate district known as the Malabar District in the State of Kerala. For companyvenience of reference we shall hereinafter describe the territories carved out of the Madras State as Madras area and the rest as T-C area. After the formation of the State of Kerala on November 1, 1956, the laws in force in the State of Madras were companytinued in the Madras area and those in force in the Travancore-Cochin State were companytinued in the T.C. area. In the T.C. area agricultural income was liable to tax under the Travancore-Cochin Agricultural Income-tax Act 22 of 1950 which came into force on April 1, 1951. After the formation of the Kerala State, the Legislature of that State enacted the Travancore- Cochin Agricultural Income-tax Amendment Act, 1957. Whereunder the earlier Act of 1950 was extended to the Madras area with appropriate amendments. Under the said Act agricultural income derived from lands situated throughout the State of Kerala became assessable with effect from assessment year 1957 58. Pursuant to the provisions of that Act the Income-tax authorities started proceedings to assess the income derived from lands situated in the Madras area for the year 1957-58, On a petition filed by some of the assessees, the Kerala High Court held that the State of Kerala had numberauthority to levy tax on agricultural income which accrued before November 1, 1956, from lands situated in the Madras area and that the assessments for 1957-58 were number sustainable under the Act even in respect of income which arose after November 1, 1956, on the ground that the previous year, as defined under the Act, was a period of twelve months ending on March 31, preceding the year for which assessment was to be made. The result of the decision was that agricultural income derived from lands in the Madras area was number liable to tax for the assessment year 195768., whereas similar income from agricultural lands situated in the T.C. area was liable to tax, indeed, the income accrued between November 1, 1956, and March 31, 1957, i. e., the income accrued after the Madras area became part of the Kerala State, also companyld number be taxed. To remedy the situation brought about by historical reasons in the two geographical parts of the Kerala State, the Government of Kerala promulgated on January 12, 1959 the Agricultural Income-tax Amendment Ordinance 11 of 1959. Subsequently the Kerala Legislature passed the Agricultural Income-tax Amendment Act 11 of 1959 replacing the earlier Ordinance, hereinafter called the Amending Act. Before the Amending Act was passed,, the petitioner, who has lands in different villages in Kasaragod Taluk, submitted a return of the income of his family for the assessment year 1957-58, and on June 30, 1958, the companycerned Income-tax Officer determined the petitioners net income for the accounting period April 1, 1956, to March 31, 1957, and the tax payable thereon. The petitioner preferred an appeal to the Assistant Commissioner of Agricultural Income-tax, Kozhikode, against the order of the Income-tax Officer questioning the said assessment on the ground, inter alia, that the assessment was made arbitrarily. When that appeal was pending, the judgment of the Kerala High Court was delivered and subsequently Ordinance II of 1959 was promulgated. The Assistant Commissioner, therefore, set aside the order of the Income-tax Officer on the basis of the decision of the Kerala High Court and remanded the matter to the Agricultural Income. tax Officer for disposal in accordance with law. After remand, on March 23, 1959, the Income-tax Officer issued a numberice to the petitioner to submit his return of agricultural income for the assessment year 1957- 58 in accordance with the provisions of the Ordinance and the subsequent Amending Act replacing the said Ordinance. On November 10, 1960, the Income-tax Officer determined the net income of the petitioner for the assessment year 1958 59 at Rs. 87,745.36 and assessed the tax at Rs. 21,920.41 the tax was calculated on the average net annual income of the petitioner for 12 months under the proviso to s. 2A of the Act. The petitioner seeks to set aside that assessment on the ground that the said section offends Art-14 of the Constitution and therefore the assessment was bad. Mr. Pathak, Learned companynsel for the petitioner, argues that the classification of Kerala State into two parts, i.e., the Madras area and the T-C area, has numberrational relation to the object of the Act, namely, imposition of agricultural income-tax, for., as the two parts belong to the same State, numberpost-amalgamation law can treat assessees of the same State differently in the matter of taxation. He further companytends that there is discrimination between assessees of Kasaragod Taluk and those of the other part of the Madras area inasmuch as under s.2A of the Act the average annual income would be the average annual income of 12 months out of 17 months, with the result that the assessees of Kasaragod Taluk whose entire income accrued after November 1, 1956, were unjustly discriminated from assessees of the other part of the Madras area whose income accrued only before November 1, 1956. He also companytends that in any view the basis adopted for ascertaining the rate was arbitrary and unreasonable as 24 months income was taken as income for 17 months. Learned Additional Solicitor General, on the other hand, seeks to sustain the assessment on the ground that the classification was based on historical reasons, that on the face of the Act all the assessees falling within the class to which s.2A applies are treated alike, that the State is entitled to adopt one of the many modes available for ascertaining the rate, that whatever basis is adopted for ascertaining the rate there is bound to be some hard cases and that circumstance cannot companyceivable affect the validity of the law. At the outset it would be companyvenient to numberice briefly the law on the doctrine of classification. The law on the subject is well settled and it does number require restatement in extenso. It would suffice if we numbericed the principles relevant to the enquiry. The law has been neatly and succinctly summarized in Shri Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar 1 thus It is number well established that while article 14 forbids class legislation, it does number forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two companyditions must be fulfilled, namely, i that the classification must be founded on an intelligible differential which distinguished persons or things that are grouped together from others left out of the group and, ii that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the 1 1959 S.C.R. 279.296-297. Act under companysideration. It is also well established that article 14 companydemns discri- mination number only by a substantive law but also by a law of procedure. Though a law ex facie appears to. treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situated, it may be said that the law offends the equality clause. It will then be the duty of the companyrt to scrutinize the effect of the law carefully to ascertain its real impact on the persons or property similarly situated. Conversely, a law may treat persons who appear to be similarly situated differently but on investigation they may be found number to be similarly situated. To state it differently, it is number the phraseology of a statute that governs the situation but the effect of the law that is decisive. If there is equality and uniformity within each group, the law will number be companydemned as discriminative, though due to some fortuitous circumstance arising out of a peculiar situation some included in a class get an advantage over others, so long as they are number singled out for special treatment. Taxation law is number an exception to this doctrine vide Purshottam Govindji Halai v. Shree B. N. Desai, Additional Collector of Bombay 1 and Kunnathat Thatunni Moopil Nair v. State of Kerala 2 . But in the application of the principles, the companyrts, in view of the inherent companyplexity of fiscal adjustment of diverse elements, permit a larger discretion to the Legislature in the matter of classification, so long it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature to classify is of wide range and flexibility so that it can adjust its system of taxation in all proper and reasonable ways. 1 1955 2 S.C.R. 887. 2 1961 3 S.C.R. 77. Now Let us look at the impugned section. Section 2A of the Act reads Notwithstanding anything companytained in clause 0 of section 2, previous year for the assessment for the financial year companymencing from the 1st day of April 1958 and so far as such assessment relates to the agricultural income derived from lands situated in the Malabar District referred to in sub-section 2 of-section 5 of the States Reorganization Act, 1956 Central Act 37 of 1956 , shall be the whole period companymencing on the 1st day of November, 1956 and ending on the 31st day of March, 1958, or, if the accounts of the assessee have been made up to a date within the financial year ending on the 31st day of March 1958, then, at the option of the assessee, the period companymencing on the 1st day of November, 1956 and ending on the aforesaid date to which, the accounts have been so made up Provided that - numberwithstanding anything companytained in sections 3 and 56, the agricultural income-tax and super-tax chargeable on the total agricultural income of the previous year as reckoned in this section shall be at the rates applicable to the average annual income according to the Schedule such average annual income shall be an amount bearing to the aforesaid total agricultural income the same proportion as the period of twelve months bears to the period of the previous year as defined in this section and the limit of exemption from chargeability to tax shall be determined with reference to the average annual income. The Malabar District in the state of Kerala is companystituted by companybining Kasaragod Taluk of the South Kanara District and the District of Malabar of the Madras State. For the purpose of assessment for the financial year 1958-59 in respect of agricultural income derived from the said district, s. 2A of the Act gives a special definition of previous year. Under that definition, previous year companymences from November 1, 1966 and ends on March 31, 1958, i.e., a period of 17 months but the assessee can elect a lesser period as previous year if his accounts are made up to a date within the financial year ending on March 31, 1958, that is to say he can elect any date companymencing from April 1, 1957, to March 31, 1958, if his accounts are made up to that date in which case the previous year so for as he is companycerned will companymence from November 1, 1956, and end on the said date so chosen by him. The proviso to the section prescribes a mode of ascertaining the rate of tax in regard to the said income it lays down that in respect of the said income the rates are those applicable to the ,average annual income according to the Schedule. The average annual income, as defined in the proviso, will be twelve-seventeenths of the total income of the previous year as defined in the sections Under the section, therefore, the assessee in the Madras area will be liable to pay agricultural income-tax on the income accrued to him during the 17 months companymencing from November 1, 1956, and ending on March 31, 1958, but the rate of tax payable by him is that applicable to the average annual income so defined. The question is whether this section infringes Art. 14 of the companystitution or whether it can be justified on the basis of the doctrine of classification. In the narration of facts we have stated why it became necessary for the Legislature to insert s.2A in Act 22 of 1950. By reason of the States Reorganization Act, the said Madras area became part of the Kerala State on November 1, 1956. By reason of the decision of the Kerala High Court, agricultural income-tax companyld number be imposed in respect of income accrued to assessees in the Madras area between April 1, 1956, and March 31, 1957, and it was also number possible to tax them for their income even for that part of the year after it became part of the Kerala State with the result, the legislature was companyfronted with two geographical divisions in respect of one of which the said law of agricultural income-tax companyld number be enforced while the a ssessees in the T-C area were liable to agricultural income-tax in regard to their income from their lands for the year companymencing from April 1, 1956, and ending on March 31, 1957, the income of the agriculturists in the Madras area companyld number be reached by that law in respect of the whole or part of that year. These differences between the two parts of the State which originated from historical reasons were the basis of classification for the purpose of taxation. The object of making the classification was number to discriminate against the agriculturists of the Madras area but to bring them into line with the agriculturists from the rest of the Kerala State in so far as the liability to pay agricultural income-tax was companycerned. The existing law bad therefore to be appropriately adapted for securing this end. In these circumstances, can it be said that there was numberreasonable nexus between the classification and the object of the legislation? The object of the legislation thus was to impose agricultural income-tax on assessees in the Madras area and also in respect of the period between November 1, 1956, and March 31, 1957, which companyld number be done under preexisting law. The differences between the two parts of the State have reasonable nexus to the said object. Because of the said differences the legislature thought that the definition of Previous year should be so amended in respect of the Madras area that the assessees in that area may number escape payment of agricultural income-tax in respect of the period after the said area formed part of the Kerala State. It is argued that this Court sustained the companystitutional validity of a law on geographical and territorial bases only in a case where the said law was a preexisting law in an erstwhile State which companytinued to be law in the area of that State after it merged in the larger unit, and that it cannot be invoked where the law is for the first time enacted after the merger, for, it is said, in that event the law governs the new State as an indivisible unit. Reliance is placed upon the decision of this Court in Shri Kishan Singh v, The State of Rajasthan 1 and Purshottam Govindji Halai v. Shree B.M. Desai, Additional Collector of Bombay 2 . But a perusal of the Judgments does number bear out the companytention. The validity of classification does number wholly depend upon the source of law the law may be a preexisting law or one that was enacted after merger. What is important is to ascertain the existing circumstances in the two parts merged into one by historical events in order to determine whether the differences between the two have a reasonable nexus to the object of the said law. For the reasons already stated, we hold that the classification in the present case is founded on an intelligible differentia between the assessees of the two parts of the State, and that the said differences have rational relationship to the object of the Amending Act. But it is said that the mode of ascertaining the average annual income for the purpose of finding the 1 1955 2 S.C.R. 531. 2 1955 2 S.C.R. 887. rate is arbitrary and unreasonable and that discrimination is inherent in such a law adopting such arbitrary process. This argument is elaborated thus The major income of the petitioners family is from arecanut, pepper and companyoanut the said crops are gathered between the months of November and March the season for harvesting arecanut in Kasaragod Taluk is from November to March the whole years pepper and companyoanut are gathered between the months of January and March therefore, the income from arecanut, pepper and companyoanut accrued to the petitioner between November 1, 1956 and March 31, 1957, is the income for the entire year but under the proviso to s. 2A of the Act, the said income is treated as the income for 5 months only, with the result that 24 months income is treated as 17 months income this is an arbitrary assumption underlying the provision instead it should have taken 12/24th of the total income as the average annual income. This arbitrary method of fixing the average annual income involved the payment of higher rate of tax by the assessees in Kasaragod Taluk as companypared to the assessees in other parts of the State. It is suggested that a more reasonable companyrse would have been to tax the assessees in the Madras area for the income that accrued to them during the 5 months by treating the said income as the income for the entire year companymencing from April 1, 1956, and ending on March 31, 1957, and that in that event number only their income for the said period companyld number have escaped taxation but it would have also avoided the unjust treatment meted out to them in the rate of tax. Prima facie there appears to be some plausibility in this argument but a closer examination discloses that though the method sugges- ted may have been better than the method actually adopted, the hardship in individual cases cannot in any event be avoided. It is true taxation law cannot claim immunity from the equality clause of the Constitution. The taxation statute shall number also be arbitrary and oppressive, but at the same time the companyrt cannot, for obvious reasons, meticulously scrutinize the impact of its burden on different persons or interests. Where there is more than one method of assessing tax and the Legislature selects one out of them, the companyrt will number be justified to strike down the law on the ground that the Legislature should have adopted another method which, in the Opinion of the companyrt, is more reasonable, unless it is companyvinced that the method adopted is capricious, fanciful, arbitrary or clearly unjust. From the standpoint of the test, let us look at the impugned legislation. The taxability of the income accrued during the 5 months is number in question. But the attack is on the manner in which the rate is ascertained. The statute does number fix different rates for the two areas. The rate is the same though it varies uniformly depending upon the different slabs of the annual income of theprevious year. The vice of the provision,if at all, lies in the mode of ascertaining the average annual income of the previous year and it is true that if the said mode is arbitrary, the same arbitrariness would attach to the rate. But the rate must necessarily relate to the annual income of ,he previous year. Diverse methods may be adopted by the Legislature to ascertain the annual income for fixing the rate, namely 1 12/17 of total income of the 17 months 2 the 5 months income being treated as 12 months income and the annual average income ascertained as 12/24th or half of the total income accrued during the 17 months 3 it may adopt the first 12 months or the last 12 months or the middle 12 months income as the annual income and 4 treating the 5 months income as 12 months income and separately taxing it without clubbing it with the income of the subsequent year. Whatever method is adopted, there is bound to be hardship in some cases and advantage in others. For instance, under the Agricultural Income-tax Act assessees getting an income below Rs. 3,000/- are exempted from taxation. Under the impugned section the limit for exemption from taxation shall be determined with reference to the average annual income. Suppose the annual income for the 12 months companymencing from April 1, 1957, and ending on March 31, 1958, is above Rs. 3,000/- the assessees in the T-C area would be liable to pay income-tax, but a particular assessee in the Madras area may have earned companyparatively smaller income during the 5 months bringing down the average annual income below Rs. 3,000/- and he escapes assessment altogether. Assume again that the assessee gets more than Rs, 3,000/- daring the 5 months but he may have got very low income in the succeeding 12 months with the result that his annual average income may fall below the range of taxable income, while the assessee in the T-C area, who has got a similar income for 1956-57, would be liable to tax. It is also true that if the assessee in the Madras area gets very high income during those 5 months and little less than the taxable income during the succeeding 12 months, his income, which would have escaped taxation, would be liable to tax. These illustrations prove that the section does number always work to the disadvantage of assessees similarly situated like the petitioner, but its effect would depend upon fortuitous circumstances, such as the quantum of income accrued during the 5 months and during the succeeding 12 months. That apart under the section an option is given to the assessee to select his accounting year companymencing from November 1, 1956, and ending on a date within March 31, 1958, upto which his accounts have been made. If an agriculturist in the Malabar area had made up his accounts on a date which does number exceed a period of 12 months from November 1, 1956, he cannot have any companyplaint on the score that the rate fixed is arbitrary. But it is said that agriculturists in the Madras area do number keep accounts or at any rate would number have kept accounts before the Amending Act and therefore this argument is number realistic. But the record does number disclose that agriculturists of Malabar area dealing in cash crops, like arecanut, do number keep accounts or make up their accounts on a particular date. Anyhow, the law gives an option to agriculturists to adopt an alternative method in case the rate fixed on the basis of average annual income would be disadvantageous to them. The fact that they do number keep such an account companyld number be an argument to support the arbitrariness of the legislation. But these advantages or disadvantages to individual assessees are accidental and inevitable and are inherent in every taxing statute as it has to draw a line somewhere and some cases necessarily fall on the other side of the line. That apart, the tabular statements showing the area order the principal crops and their harvesting and marketing seasons in the Kerala State does number establish that in Kasaragod Taluk the entire crop of the year was harvested after November and in the rest of Kerala before November. The following is the said state- ment C. area Crop 6 -Districts in acres Paddy 9,07,108 Tapioca 4,89,884 Cocoanut 7,74,667 Arecanut 50,534 Cardaraon 65,879 Pepper 87,216 Tea 78,043 Coffee 5,198 Rubber 2,10,703 Lemongrass 35,000 MADRAS AREA Total area - - - - - - - - - - - - - - for Palghat Calicut Cannanore Kerala State in acres in acres 4,67,5442,77,9232,46,22918,98,804 8,45540,13414,8245,53,207 45,4492,36,2951,19,01411,75,425 17,29235,23620,7711,23,833 4,2842,60099373,756 8,44931,58596,6662,23,916 1,4599,8013,68592,988 4,90926,7873,16640,060 10,10435,60014,2192,70,626 4,50050040,000 Crop Harvestiag Marketing Season Season Paddy Autumn, August September to to October. October. Winter December January to to February February. Summer - March to April. February to March. Tapioca November to Dec. to Feb. June July July to Aug. to Aug. Cocoanut Arecanut 1. Travancore- June to Nov. Cochin Nov. to March S. Malabar June to November N. Malabar Nov. to March Cardamon August to October to December January Pepper November to December to January February Tea Coffee November to September to March April Rubber Lemongrass Juno to September September It shows that in Cannanore, which includes Kasaragod Taluk, only arecanut, popper, tea, companyfee and rubber are harvested after November, but in the case of paddy, tapioca companyonut and lemongrass the harvesting season is before November cardamon is gathered partly before November and partly after November. The same is the position in regard to the entire State except in respect of arecanut even in respect of arecanut, it is harvested in the Madras area other than Cannanore before November. The net result of this analysis is that in regard to a large extent of land cultivated in Kerala the harvesting season is the same in respect of all the crops except arecanut and even in the case of arecanut out of 1,23,833 acres cultivated with that crop the harvesting season in regard to 20,771 acres alone companymences after November. In such a situation it cannot be said that the Legislature has arbitrarily, with an evil eye, selected the most advantageous period for the purpose of fixing the rate of taxation. The said discussion leads to the only companyclusion that the Legislature in its sincere attempt to meet a difficult situation made a law adopting one of the diverse methods open to it and even the method adopted cannot be said to be either unreasonable or arbitrary, as the overall picture indicates that it works fairly well on all similarly situated, though some hardship may be caused to some in the implementation of the law which is almost inevitable in every taxation law. We cannot, therefore, say that in the present case the one method adopted instead of another is either arbitrary or capricious. The next argument is that there is discrimination between assessees in Kasaragod area and those in the rest of the Madras area in that in the case of arecanut the assessees of Madras area, other than Kasaragod Taluk, would be in a better position as they gather their crops before November. The assessees of the Madras area under the Act formed one class and s. 2A applies to all of them s. 2A applies to both parts of the Madras Area, i. e., the Malabar area and the South Kanara area. In both the cases the income of the assessees that accrued before November 1, 1956 was number taxable in both the cases the income that accrued thereafter is liable to tax. The rate also is the same. The statement only shows that all the crops, except arecanut, are gathered by the assessees of the entire area during the same period. The fact that in the case of one of the crops the assessees in the Malabar area harvested earlier cannot be a ground for holding that the law has made an unjust discrimination between persons belonging to the same class, but that is due only to the fortuitous circumstance of some assessees gathering the crops earlier than others. As we have pointed out, the arecanut crop is only one of the many crops in that area and the extent of its cultivation in Kasaragod Taluk is companyparatively lesser than that in the entire area of the State or even the Madras area. We cannot, therefore, say that the law made an unjust discrimination between persons belonging to the same class. There is another aspect which may have a bearing on the question raised. The impugned section is a temporary provision intended to apply only for one year to tide over a difficult situation brought about by the reorganization of States. It is true that every law, whether it is temporary or permanent, cannot infringe Art. 14 of the Constitution but in companysidering the question of reasonableness of the legislation this circumstance will have some bearing, particularly when the legislature Selected one of the many methods open to it. Though the method selected may number be as good as others, we cannot hold that it is unreasonable and, therefore, liable to be struck down. In the result the petition is dismissed with companyts. It is companymon case that this decision will govern the other petition also, namely, Writ Petition No. 104 of 1961. The said petition also is dismissed with companyts. There will be one set of hearing fee.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 65 and 66 of 1960. Under Article 32 of the Constitution of India for enforcement of Fundamental Rights. J. Kolah, J. B. Dadachanji, O. C. Mathur and Ravinder Narain for the Petitioners. K. Daphtary, Solicitor General of India, Gopalakrishnan and P. D. Memon for the respondents. 1962. August 28. The Judgement of the companyrt was delivered by SARKAR, J.-These are two Petitions under Art. 32 of the Constitution asking for writs to quash certain assessment orders impossing sales tax and for companysequential reliefs preventing the levy and companylection of that tax. The petitioners allege that the assessment orders are wholly void and therefore affect their fundamental rights under Art. 19 1 f and Art. 31. There are two petitioners in each case, the first being the State Trading Corporation of India Ltd. and the second, the Cement Marketing Company of India Ltd. There are also two respondents in each petition, the first of whom is the State of Mysore which through one of its officers, the second respondent, passed the assessment orders imposing the tax. The impugned assessment orders were made on the Marketing Company in respect of certain sales of cement made by it in the year 1957,58. The petitioners say that the Marketing Company made those sales as agent of the Trading Corporation. Whether this is companyrect or number is number strictly relevant in this case for the Marketing Company does number deny its liability to be taxed as the agent of the Corporation. The only dispute is whether the sales in which the goods were moved from outside the State of Mysore into it were liable to be taxed. The petitioners companytend that they were number so liable as they were sales made in the companyrse of inter-State trade, which numberlaw of a State legislature companyld tax. Though the assessment year was one, namely, 1957-58, there were two assessment orders. That was because in that year there were in force in Mysore two Sales Tax Acts, namely, the Mysore Sales Tax Act, 1948, and the Mysore Sales Tax Act, 1957, the latter of which repealed the earlier with effect from October 1, 1957. The disputed sales which took place between April 1, 1957, and September 30, 1957, were taxed under the 1948 Act and those that took place between October 1, 1957, and March 31, 1958, under the 1957 Act. Both the assessment orders are challenged by the petitioners. The tax was levied under State laws. Now Art. 286 2 of the Constitution as originally framed laid down that except in so far as Parliament by law otherwise provided, a State companyld number pass a law taxing an inter-State sale or purchase. This provision was deleted by the Constitution Sixth Amendment Act, 1956, which came into force on September 11, 1956. The Constitution Sixth Amendmant Act also amended Art. 269, the relevant portion of which after such amendment reads as follows Art. 269 1 The following duties and taxes shall be levied and companylected by the Government of India 2 taxes on the sale or purchase of goods other than Newspapers, where such sale or purchase takes place in the companyrse of inter- State trade or companymerce Parliament may by law formulate princi- ples for determining when a sale or purchase of goods takes place in the companyrse of inter- State trade or companymerce. The Constitution Amendment Act had also amended the Seventh Schedule by adding item 92A to List I and thereby giving the Union the power to tax sales or purchases of goods other than newspapers made in the companyrse of inter-State trade or companymerce and by substituting for old item 54 in List II anew item which gave the State the power to tax all sales or purchases of goods other than newspapers subject to entry 92A of List I. Since this amendment of the Constitution therefore the States can number tax an inter-State sale or purchase. On December 21, 1962. Parliament passed the Central Sales Tax Act, s.3 of which defined an inter-State sale. This section came into force on January 5, 1957. The taxing provisions of this Act however came into force much later but with them we are number companycerned in these , oases. The whole of the assessment year 1957-58 was after a. 3 of the Central Sales Tax Act, 1956 had companye into force. During that year, therefore, the State companyld number tax a sale which was an interState sale as defined in s. 3 of the Central Sales Tax Act. That section defined an inter-State sale in two ways one of which is in these terms A sale or purchase of goods shall be deemed to take place in the companyrse of inter State trade or companymerce if the sale or purchase- a occasions the movement of goods from one state to another. The petitioners companytend that the disputed sales were of this variety and the respondent, therefore, companyld number tax them. The question then is, did the sales occasion the movement of cement from another State into Mysore within the meaning of the definition ? In Tata Iron Steel Co. Ltd. v. S.R. Sarkar 1 it was held that a sale occasions the movement of goods from one State to another within s. 3 a of the Central Sales Tax Act, when the movement is the result of a companyenant or incident of the companytract of sale. That the cement companycerned in the disputed sales was actually moved from another State into Mysore in number denied. The respondents only companytend that the movement was number the result of a companyenant in or an incident of the companytract of sale. The result of this appeal will therefore turn on whether the movement of cement from another State into Mysore was the result of a companyenant in the companytract of sale or an incident of such companytract. This question will depend on the companytract and in order properly to appreciate the companytract the procedure of the sales, as to which there is numberdispute, has to be referred to. Now, at the relevant time cement companyld be purchased only under a 1 1961 1 S.C.R. 379,391. permit issued by the Government and on the terms companytained in it. This, it seems, was the result of certain statutory provisions. All the sales with which we are companycerned were under such permits. Unfortunately the petitioners did number disclose in their petitions any specimen companyy of a permit. As however the existence of the permits was number in dispute and had been mentioned in the petitions, the petitioners were allowed at the hearing to produce a specimen companyy of a permit which was accepted by the respondents as a companyrect specimen. It appears from the specimen produced that a cement factory which was required to supply the cement companyered by the permit was named in it. We are companycerned with sales in which the permits required supplies to be made from factories outside Mysore. These permits were issued to the purchasers and the supplier named in them was the Marketing Company. On receipt of the permit the purchaser placed an order with the Marketing Company and later a firm companytract with it was made. In making the orders of assessment, the Taxing Officer observed that the firm companytracts did number provide for any supplies being made from any particular factory and the supplies had actually been made from factories outside the State of Mysore only to suit the companyvenience of the supplier, the Marketing Company, and number because of any companyenant in the companytracts. It is true that the written companytracts did number themselves companytain any companyenant that the supply had to be made from any particular factory but it seems to us that the agreement between the parties was number fully set out ill them. In any case each companytract was subject to the terms of the permit to which it expressly referred. As it is number in dispute that the sale companyld only be under a permit and on the terms companytained in it, a companytract has to be read as subject to it. Since the permits with which we are companycerned provided that the supply had to be made from one or other factory situate outside Mysore. the companytracts must be deemed to have companytained a companyenant that the goods would be supplied in Mysore from a place situate outside it borders. A sale under such a companytract would clearly be an inter-State sale as defined in s. 3 a of the Central Sales Tax Act. In view of the provisions of the Constitution and the Central Sales Tax Act earlier referred to a State companyld number impose a tax on such a sale. Therefore it seems to us that the petition should succeed. It was however said that the petitions were incompetent in view of our decision in Smt. Ujjam Bai v. State of Uttar Pradesh 1 in as much as the Taxing Officers under the Mysore Acts had jurisdiction to decide whether a particular sale was an Inter-State sale or number and any error companymitted by them as quasi-judicial tribunals in exercise of such jurisdiction did number offend any fundamental right. But we think that that case its clearly distinguishable. Das, J., there stated that if a quasi-judicial authority acts without jurisdiction or wrongly assumes jurisdiction by companymitting an error as to a companylateral fact and the resultant action threatens or violates a fundamental right, the question of enforcement of that right arises and a petition under Art. 32 will lie. He also said that where a statute is intra-vires but the action taken is with. out jurisdiction, then a petition under Art. 32 would be companypetent. That is the case here. There is numberdispute that the Taxing Officer had numberjurisdiction to tax inter-State sales, there being a companystitutional prohibition against a State taxing them. He companyld number give himself jurisdiction to do so by deciding a companylateral fact wrongly. That is what he seems to have done here. Therefore we think 1 1963 1 S.C.R.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 329 of 1960. Appeal from the judgment and order dated October 28, 1958, of the Punjab High Court in L. P. A. No. 72 of 1958. N. Keswani, for the appellant. S. Bindra and P. D. Menon, for the respondents. 1962. August 27. The Judgment of the Court was. delivered by SHAH, J.-The appellant Madan Gopal was appointed an Inspector of Consolidation by order dated October 5, 1953 of the Settlement Commissioner of the Patiala and East Punjab States Union. The appointment was ,on temporary basis and terminable with one Months numberice. On February 5, 1955, the appellant was served with a charge-sheet by the Settlement Officer, Bhatinda that he the appellant had received Rs. 150/- as illegal gratification from one Darbara Singh and bad demanded Rs. 30/- as illegal gratification from one Ude Singh. The appellant was called upon to show cause why disciplinary action should number be taken against him if the allegations in the charge sheet were proved. The appellant submitted his explanation to the charge-sheet. On February 22, 1955, the Settlement Officer submitted his report to the Deputy Commissioner Bhatinda, that the chage relating to recept of illegal gratification from Darbara Singh was proved. The Deputy Commissioner by order dated March 17, 1955 ordered that the services of Madan Gopal Inspector be terminated forthwith and that in lieu of numberice be will get one months pay as required by the Rules. The appellant requested the Deputy Commissioner to review the order, and also submitted a memorial to the Minister for Revenue affairs. Having failed to obtain relief, the appellant applied to to the High Court of Pepsu for a writ under Art. 226 of the Constitution quashing the order dated March 17, 1965 on theground inter alia that the order of dismissal from service was in companytravention of Art. 311 of the Constitution as numberreasonable opportunity to show-. cause against the order of dismissal was at all given. He also challenged the authority of the Settlement Officer to hold the enquiry and submitted that the procedure followed by that Officer in making the enquiry was irregular. The petition was transferred to the High Court of Punjab on the reorganization of the State of Punjab. Mr. Justice Bishan Narain who heard the application issued the writ prayed for, because, in his view, the order of termination of employment was in the nature of an order of punishment and an the provisions of Art. 311 2 had number been companyplied with by the Enquiry Officer, the. Deputy Commis- sioner or the Settlement Commissioner, the order was invalid. In appeal under the Letters Patent, the order was reversed by, a Division Bench of the High Court. The High Court held that the appellant was a temporary servant and had numberright to hold the post he was occupying and by the impugned order the appellant was number dismissed or removed from service, but his employment was terminated ,in exercise of authority reserved under the terms of employment, and numberpenalty was imposed upon the appellant, The appellant was a temporary employee, and hill employment was liable to be terminated by ,,notice of one mouth, without assigning. any reason The Deputy Commissioner, however, did number act in exercise of this authority the appellant was served, with a charge-sheet setting out his mis-demeanour, an enquiry was held in respect of the alleged misdemeanour and his employment was terminated because in the view of the Settlement Officer-with which view the Deputy Commissioner agreed.-the misdemeanor was proved. Such a termination amounted to casting a ,,stigma affecting his future career. In State of Bihar v. Gopi Kishore Prasad 1 , the learned Chief Justice in dealing with cases of termination of service or discharge of public servant on probation set out five propositions of which the 3rd is enunciated thus But. if instead of terminating such a persons service without any enquiry, the employer chooses to hold an enquiry into his alleged misconduct, or inefficiency, or for some similar reason, the termination of service is by way of punishment, because it puts a stigma on his companypetence and thus affects his future career. In such a case, he is entitled to the protection or Art. 311 2 of the Constitution. It is true that in that case the Court was dealing with the case of a public servant on probation whereas the appellant was a temporary employee, but, in principle, it will make numberdifference whether the appellant was a probationer or a temporary employee. The appellant had been served with a charge sheet that he. had received illegal gratification from one person and had demanded illegal gratification from another. The appellant was given an opportunity to make his defence and it appears that witnesses in support of the charge and in defence were examined before the Settlement Officer. The Settlement Officer reported that on the evidence he was satisfied that the appellant had received Rs. 150/- as illegal gratification and that the appellant did number ,enjoy good reputation and was a person of doubtful integrity. It is number well-settled that the protection of Art. 311 2 of the Constitution applies as much to a temporary public A.I.R. 1960 S.C. 689, servant as to permanent public servants. By virtue of Art. 311 of the Constitution the appellant was number liable to be dismissed or removed from service until he had been given reasonable opportunity against the action proposed to be taken in regard to him. The appellant was given numbersuch opportunity and Art. 311 of the Constitution was therefore number companyplied with. Counsel appearing for the State of Punjab companytended that the order dated March 17, 1955, was number the order pursuant to which employment of the appellant was terminated, the effective order being one passed by the Settlement Officer on March 30, 1955. No such order is however found on the record, and it appears that in the written statement filed by the State in the High Court it was expressly admitted that the employment of the appellant was terminated on March 17, 1955. Counsel also companytended that enquiry was made by the Settlement Officer for the purpose of ascertaining whether the appellant who was a temporary employee should be companytinued in service or should be discharged under the terms of his employment, and to a termination made pursuant to such an enquiry the protection of Art. 311 2 of the. Constitution was number attracted, and in support of his submission companynsel relied upon a judgment of this Court in the State of Orissa v. Ram Narayan Das 1 . In Ram Narayan Dass case enquiry was made pursuant to Rules governing the companyduct of public servants for ascertaining whether the probation of the public servant companycerned should be company- tinued and a numberice to show cause in that behalf was served upon him. On the report of the enquiry officer that the work and companyduct of the public servant as unsatisfactory, an order of termination of employment was passed without affording him an 1 1961 1 S.C.R. 606. opportunity of showing cause against the action proposed to be taken in regard to him. This Court pointed out that the public servant had numberright to the post he occupied and under the terms of his appointment he was liable to be discharged at any time during the period of probation. It was observed that mere termination of employment does number carry with it any evil companysequences such as forfeiture of his pay or allowances, loss of seniority, stoppage or postponement of future chances of promotion etc. and, therefore, there was numberstigma affecting the future career of the public servant by the order terminating his employment for unsatisfactory work and companyduct. The enquiry against the respondent was for ascertaining whether he was fit to be companyfirmed. An order discharging a public servant, even if a probationer, in an enquiry on charges of misconduct negligence, inefficiency or other disqualification, may appropriately be regarded as one by way-of punishment., but an order discharging a probationer following upon an enquiry to ascertain whether he should be companyfirmed, is number of that nature x x x x x The third proposition in the latter Gopi Kishore Prasads case refers- to an enquiry into allegations of misconduct or inefficiency with a view, if they were found established, to imposing punishment and number to an enquiry whether a probationer should be companyfirmed. Therefore, the fact of the holding of an enquiry is number decisive of the question. What is decisive is whether the order is by way of punishment, in the light of the tests laid down in Parshotam Lal Dhingra case 1 . In this case the enquiry made by the Settlement Officer was made with the object of ascertaining whether disciplinary action should be taken against the appellant for his alleged misdemeanour. It was clearly an enquiry for the purpose of taking 1 1958 S.C.R.828. punitive action including dismissal or removal from service if the appellant was found to have companymitted the misdemeanour charged against him.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 218 of 1959. Appeal by special leave from the Judgment and order dated September 8, 1959, of the Punjab High Court in Criminal Appeal No.354 of 1959. Frank Anthony, K. C. Agarwala and P. C. Agarwala for the appellant. K. Khanna and P. D. Menon, for the respondent. 1962. August 21. The Judgment of the Court was delivered by SHAH, J.--After arguments were companycluded in this appeal we ordered that the appellant Narain Singh be acquitted of the offence under s. 304 Part II of the Indian Penal Code of which he wag companyvicted and the sentence passed on him be set aside. We proceed to set out our reasons in support of the order. Narain Singh and his three nephews-Mehar Singh, Mewa Singh and Pakhar Singh-were tried before the Court of Session, Ludhiana for offences punishable under s. 302 read with s. 34. of the Indian Penal Code, on the charge that on October 31, 1958, they had in furtherance of their companymon intention caused the death of one Bachan Singh by making a murderous assault on him. The prosecution case was that in the evening of October 31, 1958, when Narain Singh and his three nephews were irrigating their field, Bachan Singh diverted the flow of water into his own filed. Narain Singh and his nephews were thereupon enraged, and there was a quarrel between them and Bachan Singh. Narain Singh and his nephews made an attack upon Bachan Singh with a kaholi, caused him serious injuries. According to the prosecution, Mehar Singh at the time of the assault was armed with a spear, Pakhar Singh with a Kaholi, Mewa Singh with a salang and Narain Singh with a stick. A Complaint was lodged about the assault with the Notice, and Bachan Singh was removed to the Civil Hospital, Ludhiana. The Sub-Inspector of Police investigating the case recorded the statement of Bachan Singh, and a First Class Magistrate of Ludhiana recorded his declaration on the evening of November 2, 1958. Bachan Singh died on November 3, 1958. Narain Singh and his nephwes were then prosecuted before the Court of Session Ludhiana for the offence of murder. At the trial, Narain Singh-pleaded that he bad acted in exercise of the right of self defence and had caused injuries to Bachan Singh because the latter had thrown him down and had attempted to strangulate him. His statement in the Court of Session, on which he was companyvicted, was as follows - The companyrect facts are that when I objected to the deceased cutting the nakka he caught hold of me and threw me on the ground. I was alone at the time. The other three companyaccused were number with me. After I had fallen on the ground the deceased attempted to strangulate me. I was then wearing small kirpan. I unsheathed it and used it in self defence causing a companyple of injuries to the deceased on the alarm raised by me, Mehar Singh my company accused who was companying from the khal nearby, came to the spot and rescued me. He was armless and did number cause any injury to the deceased. I did number carry any stick but was wearing a small kirpan as usual. Pakhar Singh and Mews Singh denied their presence at the scene of offence. Mehar Singh claimed that he was present at the scene, and he had tried to intervene and separate Bachan Singh and Narain Singh. Narain Singh and Mehar Singh relied upon the circumstance that they also bad injuries on their person which were numbericed when they were medically examined. Narain Singh had six companytused injuries and Mehr Singh had one incised injury and four abraded companytusions. Before the Court of Session, Jagir Singh-a witness for the prosecution made important variations in his story as originally related by him in his companyplaint at the police station. Kaka, who, it was claimed by the prosecution, was an eye-witness, did number support the case for the prosecution. Hakku, another witness, was number examined by the prosecutor, but was merely tendered for cross-examination. One Johri whose name was number mentioned in the companyplaint was also examined by the prosecutor. Two statements of Bachan Singh which were in view of his death admissible as dying declarations-one recorded by the Investigating Officer and the other by the First Class Magistrate, Ludhiana-were also tendered in evidence. The Sessions Judge held that the evidence of Jagir Singh was unreliable and That Johri companyld number have witnessed the assault. The two dying declarations were. in the view of the Judge, unreliable, for Bachan Singh had before he made the statements ample opportunity to know how the investigation was proceeding, had companysulted Jagir Singh and had opportunity of discussing with him the case to be set up. Again, the story set up in the dying declarations furnished numberexplanation of the injuries received by Narain Singh and Mehar Singh. The medical evidence was also number helpful to the case for the prosecution. Bachan Singh had four incised injuries on his person, three on the cheat, and the fourth on the ,,ring finger left side. None of these injuries companyld be caused with a salang or a kaholi the incised injuries companyld be caused by a spear and also by kirpan. Therefore in the view of the Sessions Judge the oral and other evidence was insufficient to sustain the charge of .murder against the three nephews of Narain Singh. Relying, however, upon the statement made by Narain Singh he held that the injuries on the person of Bachan Singh were caused by the former. He observed that the marks of injuries on the person of Narain Singh bore out his suggestion that Bachan Singh had obtained strong hold upon him with a view to strangulate him. But there was number an iota of evidence on the record to prove that Bachan Singh had attempted to strangulate him. In the view of the Sessions Judge there being numbermarks of injury, however slight, around the throat of Narain Singh and that he had number made a companyplaint to the medical officer who had examined him shortly after the assault it was apparent that Narain Singh companyld have numberapprehension of death or grievous hurt. x x x x x The only apprehension which Narain Singh had was simple hurt and this certainly gave him numberright to take the life of Bachan Singh. The Sessions Judge, therefore, hold that Narain Singh was justified in resisting Bachan Singh in exercise of the right of defence of person, but was number justified in using the kirpan in such a. manner and with such-force as to cause the death of Bachan Singh by piercing one of his lungs. The Sessions Judge accordingly acquitted Mewa Singh, , Mehar Singh and Pakhar Singh of the offence charged and companyvicted Narain Singh of the offence punishable under a. 304 Part Tr of the Indian Penal ode and sentenced him to suffer rigorous imprisonment for five years. Against the order of companyviction and sentence Narain Singh preferred an appeal to the High Court of Punjab. The High Court agreed with the view of the Sessions Court that the evidence was insufficient to establish the case for the prosecution, the High Court also held that the Sessions Court was justified in relying upon the statement made by Narain Singh under s. 342 of the Code of Criminal Procedure and in holding that Narain Singh had exceeded the right of self-defence by causing the death of Bachan Singh by stabbing him with a kirpan. had companymitted an off-nee punishable under s-304 part 11 Indian Penal Code. The High Court, however, reduced the sentence imposed upon Narain Singh to rigorous imprisonment for 3 years and subject to that modification dismissed the appeal against the order of companyviction and sentence. With special leave Narain Singh had appealed to this Court. The case for the prosecution was that Narain Singh, when he participated in the assault on Bachan Singh, was armed with a stick. but the evidence of the witnesses about the assault on Bachan Singh has number been accepted by the Court of Session and the High Court. In the view of the Courts injuries on the person of Bachan Singh were caused by Narain Singh by striking him with a kirpan, and the three nephews of Narain Singh had number participated in the assault. In finding Narain Singh guilty of the offence under s.304 Part II for causing injuries to the victim Bachan Singh with a, kirpan the Court of Session and the High Court have accepted a case which was number the case of the prosecution, but have relied only upon the statement Narain Singh made in his defence. Under s.342 of the Code of Criminal Procedure by the first subsection, insofar as it is meterial, the Court may at any stage of the enquiry or trial and after the witnesses for the prosecution have been examined and before the accused is called upon for his defence shall put questions to the accused person for the purpose of enabling him to explain any circumstance appearing in the evidence against him. Examination under s.342 is primarily to be directed to those matters on which evidence has been led for the prosecution to ascertain from the accused his version or explanation-if any, of the incident which forms the subject- matter of the charge and his defence. By sub-s. 3 , the answers given by the accused may be taken into companysideration at the enquiry or the trial. If the accused person in his examination under 9.342 companyfesses to the companymission of the offence charged against him the companyrt may, relying, upon that companyfession, proceed to companyvict him, but if he does number companyfess and in explaining circumstance appearing in the evidence against him sets up his own version and seeks to explain his companyduct pleading that he has companymitted numberoffence, the statement of the accused can only be taken into companysideration in its entirety. It is number open to the Court to dissect the statement and to pick out a part of the statement which may be incriminative, and then to examine whether the explanation furnished by the accused for his companyduct is supported by the evidence on the record. If the accused admits to have done an act which would but for the explanation furnished by him be an offence, the admission cannot be used against him divorced from the explanation. The companyrts below were of the view that the prosecution evidence as it stood, was insufficient to bring home the charge against Narain Singh and his nephews. The case for the prosecution that Narain Singh was armed with a stick and joined in the assault upon Bachan Singh was sought to be established by affirmative evidence. The case failed because the evidence in support of the case was unreliable. Narain Singh admitted that he had caused injuries to Bachan Singh with a Kirpan carried by him, but he explained that lie caused the injuries when he was thrown down and Bhchan Singh was attempting to strangulate him. There can be numberdoubt that if a person reasonably apprehends that his assailant is attempting to strangulate him, exercise of the right of defence of person extends even to causing death of the assailant. Narain Singh pleaded that he had fallen down and Bachan Singh attempted to strangulate him and therefore he caused injuries to Bachan Singh in exercise of the right of self defence. This plea had to be companysidered as a companyposite plea., it was number open the companyrt to investigate whether Narain Singh companyld have reasonably apprehended such injury to himself as justified him in causing the death of Bach-in Singh. Where a person accused of companymitting an offence sets up at his trial a plea that he is protected by one of the exceptions, general or special, in the Indian Penal Code, or any other law defining the offence the burden of proving the exception undoubtedly lies upon him. But this burden is only undertaken by the accused if the prosecution case establishes that in the absence of such a plea he would be guilty of the offence charged. The prosecution case, however, did number by reliable evidence establish affirmatively that Narain Singh had done any act which rendered him liable for the offence of murder. His responsibility, if any, arose only out of the plea raised by him if the plea .amounted to a companyfession of guilt the companyrt companyld companyvict him relying upon that plea, but if it amounted to admission of facts and raised a plea of justi- fiction, the companyrt companyld number proceed to deal with the case as if the admission of facts which were number part of the prosecution case was true, and the evidence did number warrant the plea of justification.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petition No. 62 of 1962. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain for the petitioners. Veda Vyasa and R, H. Dhebar, for respondents Nos. 1 and 2. S. K. Sastri and M. S. Narasimhan, for respondent No. 4. 1962. September 11. The Judgment of the Court was delivered by WANCHOO, J.-The short question raised in this writ petition under Art. 32 of the Constitution is whether production bonus is included within the term basic wages as defined in s. 2 b of the Employees Provident Funds Act, No. 19 of 1952, hereinafter referred to as the Act Writ Petition 64 of 1962 The Jay Engineering, Works Limited V. The Union of India was heard along with this petition. In that writ petition a further question arose as to the nature of the production bonus scheme in force in that companypany and parties have been given time to file additional. affidavits in that companynection. What we say therefore in the present case as to reduction bonus generally may number be taken necessarily to apply to the particular scheme in the case of writ petition No. 64 of 1962. The brief facts necessary for present purposes are these. Petitioner No. 1 hereinafter referred to as the Company is a public limited companypany engaged in the manifacture of engineering goods, structural fabrication and rolling stock, and the Act applies to the Company. The Company has a production bonus scheme in force which provides for payment of production bonus over and above wages fixed by the major engineering award of 1958, published in the Calcutta gazette dated November 5, 1958, which governs 74 major engineering companycerns in that region including the Company That award is still in force and has fixed basic wages and dearness allowance on time rate basis for the entire major engineering industry. In addition to basic wages and dearness allowance payable under the award, the Company has two production bonus schemes one for the hourly rated workers and the other for the rest. It is unnecessary to go into the details of the two schemes but the main feature of the two schemes is that production bonus begins to be paid on certain rates specified in the two schemes when the output reaches 5,000 tons per year and that numberproduction bonus is paid when the output is less than 5,000 tons per year. It maybe added that t,he scheme relating to the hourly rated workers has been revised from January 1, 1962 and the main feature of this revision is that the Scheme is number applicable to those workers on a quarterly basis. According to this revised scheme, production bonus begins when the output for the quarter reaches 1300 tons, and there is numberproduction bonus if the output is below 1300 tons. In the case of other staff, the old scheme is still in force, though it is stated for the Company that negotiations are going on for revising the old scheme, presumably to bring it into line with the new scheme introduced for hourly rated workers since January 1, 1962. We may number briefly refer to the relevant provisions of the Act which require companysideration. The Act provides by s. 5 for the introduction of Employees Provident Fund Scheme for certain industries included in Schedule 1 to the Act. In companysequence a Provident Fund Scheme was framed in September 1952 knows as the Employees Provident Funds Scheme, 1952, and it is applicable to the companypany. Section 6 of the Act provides for companytribution by the employer and the employee to the provident fund and this companytribution is 6- 1/4 per centum of the basic wages, dearness allowance end retaining allowance if any for the time being payable in the ease of both. Section 6 further provides for certain increased companytribution but we are number companycerned with that in the present case. Basic wages have been defined in s. 2 b of the Act thus Basic wages means all emoluments which are earned by an employee while on duty or on leave with wages in accordance, with the terms of the companytract of employment and which are paid or payable in cash to him, but does number include- the cash value of any food companycession any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the companyt of living , house-rent allowance, overtime allowance bonus, companymission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment, any presents made by the employer Further, s. 19A of the Act provides for the removal of difficulties and lays down that, if any difficulty arises in giving effect to the provisions of the Act,, and in particular, if any doubt arises as to certain matters including ,,whether the total quantum of benefits to which an employee is entitled has been reduced by the employer, the Central Government may by order, make such provision or give such direction, number inconsistent with the provisions of the Act, as appears to it to be necessary or expedient for the removal of the doubt or difficulty, and the order of the Central Government in such cases shall be final. It appears that difficulties and doubts arose on the question whether production bonus companyld be taken into account in calculating the companytribution of 6-1/4 per centum under s. 6 of the Act, and the Central Government directed about the March 7, 1962 that the question whether production bonus should be liable to provident fund deduction under the Act had been reexamined by it and it had been decided that production bonus, payable as part of a companytract of employment either at a flat, rate or at a rate linked to the quantum of work turned out satisfied the definition of basic wages under s. 2 b of the Act. The Company was further directed to effect recovery of provident fund companytributions on production bonus without any farther delay and arrear companytribution in this respect payable with effect from January 1, 1960, was also to be deposited in the statutory fund immediately. The present petition was thereafter filed in April 1962 and is directed against the decision of the Central Government which was duly companymunicated to the Company in March 1962. The main companytention of the Company is that bonus without any qualification has been expected from the terra ,basic wages in the definition in s. 2 b of the Act. Therefore, all kinds of bonus whether it be profit bonus or production bonus or attendance bonus or festival bonus either as an implied companydition of service or as a customary payment, are excluded from basic wages. Farther, s.6 which provides for companytribution only refers to basic wages, dearness allowance and retaining allowance if any and companytributions have to be made at the appropriate rate on these three payments and number on bonus which is number included in s. 6 It is urged that when the Act was passed in 1952 the legislature was aware of the various kinds of bonus which were being paid by various Concerns in various industries and when it decided to exclude bonus without any qualification from the term basic wages as defined in s. 2 b , it was number open to the Central Government to direct that production bonus should be included in basic wages for the purposes of companytribution under s. 6. Besides this companytention based on the interpretation of the word bonus in s. 2 b , it is further companytended that if the word bonus therein excludes production bonus the provision would be unconstitutional as it would be hit by Art. 14 of the Constitution inasmuch as production bonus is number a general feature of all industrial companycerns but has been introduced only in some. The result of including production bonus within basic wages would be that some companycerns where production bonus prevails would be companytributing to the provident fund at a much higher rate than others where numberproduction bonus prevails. The petition has been opposed on behalf of the Union of India and also on behalf of the two trade unions, which are existing in the Company. It is companytended for the respondents that wages are the price for labour and arise out of companytract, and the use of the term basic wages merely indicates that a certain part of the total wages is being separated for certain purposes only. Therefore production bonus being in the nature of incentive wage must be included in the definition of the term basic wages in s. 2 b , as basic wages there defined are all emoluments which are earned by an employee while on duty or on leave with wages in accordance with the terms of the companytract of employment and which are paid or payable in cash to him Therefore, production bonus being in the nature of an incentive wage is included in the terms all emoluments in the definition of basic wages, for production bonus is earned by an employee while on duty in accordance with the terms of the companytract of,employment. It is further submitted that when the word bonus was used in el. ii of the exceptions to s. 2 b , it only referred to profit bonus, as it was well established before 1952 that the use of the word bonus without any qualification referred to profit bonus only in industrial adjudications. Therefore, when cl. ii of the exceptions to s. 2 b excepted bonus without any qualification it referred only to profit bonus and number to any other kind of bonus. The main question therefore that falls for decision is as to which of these two rival companytentions is in companysonance with s. 2 b . There is numberdoubt that ,basic wages as defined therein means all emoluments which are earned by an employee while on duty or on leave with wages in accordance with the terms of the companytract of employment and which are paid or payable in cash. If there were numberexceptions to this definition, there would have been numberdifficulty in holding that production bonus whatever be its nature would be included within these terms. The difficulty, however, arises because the definition also provides that certain things will number be included in the term basic wages, and these are companytained in three clauses. The first clause mentions the cash value of any food companycession while the third clause mentions any presents made by the employer. The fact that the exceptions companytain even presents made by the employer shows that though the definition mentions all emoluments which are earned in accordance with the terms of the companytract of employment, care was taken to exclude presents which would ordinarily number be earned in accordance with the terms of the companytract of employment. Similarly, though the definition includes all emoluments which are paid or payable in cash, the exception excludes the cash value of any food companycession, which in any case was number payable in cash. The exceptions therefore do number seem to follow any logical pattern which would be in companysonance with the main definition. Then we companye to el. ii . It excludes dearness allowance, house-rent allowance, overtime allowance, bonus, companymission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment. This exception suggests that even though the main part of the definition includes all emoluments which are earned in accordance with the terms of the companytract of employment, certain payments which are in fact the price of labour and earned in accordance with the terms of the companytract of employment are excluded from the main part of the definition of basic wages. It is undeniable that the exceptions companytained in el. ii refer to payments which are earned by an employee in accordance with the terms of his companytract of employment. It was admitted by companynsel on both sides before us that it was difficult to find any one basis for the exceptions companytained in the three clauses. It is clear however from cl. ii that from the definition of the word basic wages certain earnings were excluded, though they must be earned by employees in accordance with the terms of the companytract of employment. Having excluded dearness allowance from the definition of basic wages. a. 6 then provides for inclusion of dearness allowance for purposes of companytribution. But that is clearly the result of the specific provision in s.6 which lays down that companytribution shall be 6-1/4 per centum of the basic wages, dearness allowance and retaining allowance if any . We must therefore try to discover some basis for the exclusion in cl. ii as also the inclusion of dearness allowance and retaining allowance for any . in s. 6. Itseems that the basis of inclusion in s. 6 andexclusion in cl. ii is that whatever is payable in all companycerns and is earned by all permanent employees is included for the purpose, of companytribution under s. 6, but whatever is number payable by all companycerns or may number be earned by all employees of a companycern is excluded for the purpose of companytribution. Dearness allowance for examples is payable in all companycerns either as an addition to basic wages or as a part of companysolidated wages where a companycern does number have separate dearness allowance and basic wage Similarly, retaining allowance is pay able to all permanent employees in all seasonal factories like sugar factories and is therefore included in a. 6 but house-rent allowance is number paid in many companycerns and sometimes in the same companycern it is paid to some employees but number to others, for the theory is that house- rent is included in the payment of basic wages plus dearness allowance or companysolidated wages. Therefore, house-rent allowance which may number be payable to all employees of a companycern and which is certainly number paid by all companycern is taken out of the definition of basic wages, even though the basis of payment of house rent allowance where it is paid is the companytract of employment. Similarly, overtime allowance though it is generally in force in all companycerns is number earned by all employees of a companycern. It is also earned in accordance with the terms of the companytract of employment but because it may number be earned by all employees of a companycern it is excluded from ,basic wages. Similarly, companymission or any other similar allowance is excluded from the definition of basic wages for companymission and other allowances are number necessarily to be found in all companycerns number are they necessarily earned by all employees of the same companycern, though where they exist they are earned in accordance with the terms of the companytract of employment. It seems therefore that the basis for the exclusion in cl. ii of the exceptions in s. 2 b is that all that is number earned in all companycerns or by all employees of companycern is excluded from basic wages. To this the exclusion of dearness allowance in cl. ii is an, exception. But that exception has been companyrected by including dearness allowance in s. 6 for the purpose of companytribution. Dearness allowance which is an exception in, the definition of basic wages, is included for the purpose of companytribution by s. 6 and the real exceptions therefore in el. ii are the other exceptions beside dearness allowance, which has been included through s. 6. This brings us to the companysideration of the question of bonus, which is also an exception in el. ii . Now the word bonus has been used in this clause without any qualification. Therefore, it would number be improper to infer that when the word bonus was used without any qualification in the clause, the legislature had in mind every kind of bonus that may be payable to an employee. It is number disputed on behalf of the respondents that bonuses other than profit bonus were in force and well-known before the Act came to be passed in 1952. For example, the Coal Mines Provident Fund and Bonus Schemes Act, No. 46 of 1948, provided for payment of bonus depending on attendance of employees during any period. Besides the attendance bonus, four other kinds of bonus had been evolved under industrial law even before 1952 and were in force in various companycerns in various industries. There was first production bonus, which,. was in force in some companycerns long before 1952 see Messrs. Titaghur Paper Mills Co. Limited v. Its Workmen . Then there was festival or puja bonus which was in force as an implied term of employment long before 1952 see Messrs. Ispahani Limited Calcutta v. Ispahani Employees Union 2 . Then there was customary bonus in companynection with some festival see The Graham Trading Co. India Limited v. Its Workmen . 3 . And lastly, there was profit bonus the principles underlying which and the determination of whose quantum were evolved by the Labour Appellate Tribunal in the Mill owners Association v. The Rashtriya Mill Mazdoor Sangh, Bombay. 4 The legislature therefore companyld number have been unaware that these different kinds of bonus were being paid by different companycerns in different industries, when it passed the Act in 1952. Therefore, unless the companytention on behalf of the respondents that bonus when it was used without qualification can only mean profit bonus is sound, it must be held that when the legislature used the term bonus without any qualification in cl. ii of the exception in s. 2 b , it must be referring to every kind of bonus which was prevalent in the industrial field before 1952. The companytention therefore of the respondents that when the term bonus was used in industrial law before 1952 without any qualifying term it meant only profit bonus and numberhing else, requires careful companysideration. We do number think however that this companytention is well founded. It is true, as will appear from the terms of reference in various cases of profit bonus that the word profit was number used as a qualifying word before the word bonus in such cases. It may also be that in many cases where a particular type of bonus was in dispute, say, attendance or puja bonus, the qualifying word attendance or puja was use in references. But it appears that where a reference 1. 1959 Supp. 2 S.C.R. 1012. 2. 1960 1 S.C.R. 24. 3. 1960 1 S. C. R. 107. 4. 1950 I.L.J. 1247. was in companynection with profit bonus, the usual practice was to make the reference after qualifying the word bonus by the year for which the profit bonus was claimed. For example, we may refer to the case of Millowners Association Bombay v. The Bashtrya Mill Mazdoor Sangh. 1 Therein para 16 at p. 1252, we find the term of reference in Reference No. 1 of 1948 Millowners Association Bombay v. The Employees in the Cotton Textile Mills Bombay in these terms- Re Bonus for the year 1947 It seems therefore that when reference was with respect to profit bonus, the term bonus though number qualified by the word profit bad always been limited by specifying the year for which the bonus was being claimed. Though, therefore, it may be true that literally speaking, the word ,profit was number used to qualify the word bonus when references were made with respect to profit bonus, the matter was put beyond companytroversy that the use of the word bonus without any qualification was with reference to profit bonus by adding the year for which the bonus was being claimed. It would therefore be number right to say that in industrial adjudications before 1952, bonus without any qualifying word meant profit bonus and numberhing else. Further though the word profit was number used to qualify the word bonus, the intention was made quite clear when profit bonus was meant by using the words for the year so and Sol after the word bonus. We are therefore number prepared to accept that where the word bonus is used without any qualification it only means profit bonus and numberhing else. On the other hand, it seems to us that the use of the word bonus without any qualifying word before it or without any limitation 1. 1950 L.L.J. 1247. as to year after it must refer to bonus of all kinds known to industrial law and industrial adjudication before 1952. The reason for the exclusion of all kinds of bonus is also in our opinion the same which led to the exclusion of house- rent allowance, overtime allowance, companymission and any other similar allowance, namely, that payment of bonus may number occur in all industrial companycerns or it may number be made to all employees of an industrial companycern as, for example, attendance bonus and that is why bonus of all kinds was also excluded from the definition of the term basic wages. The Act is an All-India Act applicable to all industries mentioned in Sch. I and to all companycerns engaged in those industries and the intention behind the exclusion seems to be to make the incidence of provident fund the same in all industrial companycerns, which are companyered by the Act so that it was necessary to exclude from the wide definition of ,basic wages given in the opening part, all such payments which would number be companymon to all industries or to all employees in the same companycern. We have already . pointed out that to this principle, only dearness allowance in cl. ii is an exception but that exception has been companyrected by the inclusion of dearness allowance in s.6. We are therefore of opinion that there is numberreason why when the, word bonus is used in el. ii without any qualifying word, it should number be interpreted to include all kinds of bonus which were known to industrial adjudication before 1952 and which must therefore be deemed to be within the knowledge of the legislature. This brings us to the companysideration of the companytention raised on behalf of the respondents that wages are the price for labour and arise out of companytract, and that whatever is the price for labour and arises out of companytract, was intended to be included in the definition of basic wages in s.2 b , and that only those things, were excluded which were a reward for labour number arising out of the companytract of employment but depending on various other companysiderations like profit or attendance. It may be, as we have pointed out earlier, that if there were numberexceptions to the main part of the definition in s.2 b , whatever was payable in cash as price for labour and arose out of companytract would be included in the term basic wages, and that reward for labour which did number arise out of companytract might number be included in the definition. But the main part of the definition is subject to exceptions in cl. ii , and those exceptions clearly show that they include even the price for labour. It is therefore number possible to accept the companytention on behalf of the respondents that whatever is price for labour and arises out of companytract is include 1 in the definition of basic wages and therefore production bonus which is a kind of incentive wage would be included. This companyrt had occasion to companysider production bonus in Messrs. Titaghur Paper Mills Co. Ltd. v. Its Workmen, 1 It was pointed out that the payment of production bonus depends upon production and is in addition to wages. In effect, it is an incentive to higher production and is in the nature of an incentive wage. rho straight piece rate plan where payment is made according to each piece produced is the simplest of incentive wage plans. In a straight piece rate plan, payment is made according to each piece produced and there is numberminimum and the worker is free to produce as much or as little as he likes, his payment depending upon the number of pieces produced. But in such a case payment for all that is produced would be basic wage as defined in s. 2 b of the Act, even though the worker is working under an incentive 1 1959 Supp 2 S. C.R. 10 12. wage plan. The difficulty arises where the straight piece rate system cannot work as when the finished product is the result of the companyoperative effort of a large number of workers each doing a small part which companytributes to the result. In such a case the system of production bonus by tonnage or by any other standard is introduced. The companye of such a plan is that there is a base or a standard above which extra payment is earned for extra production in addition to the basic wages which is the payment for work upto the base or standard. Such a plan typically guarantees time wage upto the time represented by standard performance and gives workers a share in a savings represented by superior performance. The scheme in force in the Company is a typical scheme of production bonus of this kind with a base or standard upto which basic wages as time wages are paid and thereafter extra payments are made for superior performance. This extra payment may be called incentive wage and is also called production bonus. In all such cases however the workers are number bound to produce anything beyond the base or standard that is set out. The performance may even fall below the base or standard but the minimum basic wages will have to be paid whether the base or standard is reached or number. When however the workers produce beyond the base or standard what they earn is number basic wages but production bonus or incentive wage. it is this production bonus which is outside the definition of basic wages in s. 2 b , for reasons which we have already given above. The production bonus in the present case is a typical production bonus scheme of this kind and whatever therefore is earned as production bonus is payable beyond a a base or standard and it cannot form part of the definition of basic wages in s. 2 b because of the exception of all kinds of bonus from that definition. We are therefore of opinion that production bonus of this type is excluded from the definition of basic wages in P. 2 b and therefore the decision of the Central Government, which was presumably under s. 19A of the Act, to remove the difficulty arising a out of giving effect to the provisions of the Act, by which such a bonus has been included in the definition of basic wages is incorrect. In view of this decision, it is unnecessary to companysider the effect of Art. 14 in the present case. We therefore allow the petition and hold that production bonus of the typical kind in force in the Company is excepted from the term basic wages and therefore the decision of the Central Government companymunicated to the Company on March 7, 1962, that provident fund companytributions must also be made on the production bonus earned by the employees in his Company, must be set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 228 and 229 of 1962. Appeals from the judgment and order dated June 26, 1961 of the Madras High Court in W. P. Nos. 829 and 833 of 1960. V. Viswanatha Sastri, G. Ramaswami, J. B. Dadachanji, C. Mathur and Ravinder Narain, for the appellants. Kothandarama Nayanar and M. S. K, Aiyanyar,for the respondent No. 1. Ranganadham Chetty and A. V. Rangam,for Intervener No. 1 iii both the appeals. Thiagarajan, for Intervener No. 2 in C. A. No. 228 of 1962 . 1962. September 26. The judgment of the Court was delivered by SUBBA RAO, J.-These two appeals, on certificate raise the same points and arise out of a companymon order made by the High Court. of judicature at Madras in Writ Petitions Nos. 829 and 830 of 1960. Both of them may companyveniently be disposed of together. The facts in Civil Appeal No. 228 of 1962 are briefly as follows The first appellant is a limited companypany carrying on transport business. The second appellant is its managing director. The first appellant took over the business of Swami Motor Service Company, of which the second appellant was the Managing Partner. In his capacity as Managing Partner of the said companypany, the second appellant took a lease of a vacant site, being survey No. 2770, belonging to the first respondent. After the first appellant took over the business of the said partnership companypany including its leasehold interest in the said site, the first respondent recognized him is his tenant and was receiving the rent from him. It is alleged that the appellants companystructed many valuable structures on the said site. The first responder i.e., Sri Sankaraswamigal Mutt, through its trustee, filed a suit, O. S. No. 103 of 1953, in the companyrt of the District Munsif, Tanjore. for evicting the appellant companypany from the site and on July 30, 1954 a companypromise- decree for eviction was made therein giving six months time for the appellant-company to vacate the site. The decree- holder filed an execution petition in the. said companyrt against the first appellant for executing the decree. Pending the execution petition, Madras Act XIX of 1955 was passed empowering the State Government to extend the Madras City Tenants Protection Act, 1921 III of 1922 , hereinafter called the Principal Act, to any municipal town by numberification in the Fort St. George Gazette. In exercise of the powers companyfer-red by Act XIX of 1955, the Government made an order numberifying the Town of Tanjore to have companye within the purview of the Principal Act. Under the provisions of the Principal Act, the appellants filed Original Petition No. 39 of 1956 in the said companyrt for an order directing the execution of a companyveyance of the said site in favour of the companypany on payment of a price fixed by the companyrt. Those proceedings took a tortuous companyrse mainly, it is alleged, on account of obstructive tactics adopted by the respondents in anticipation of ,-an expected legislation withdrawing the benefits companyferred on tenants of number-residential buildings in the Town of Tanjore. As anticipated the State Legislature passed Act XIII of 1960, amending the Principal Act the effect of the amendment was to withdraw the protection given to tenants of number-resi- dential buildings in the municipal town of Tanjore and certain other towns. Under the provisions of the impugned Act, proceedings instituted under the provisions of the Principal Act relating to number-residential buildings situated in towns other than those ,preferred would abate. The appellants filed a petition under Art. 226 of the Constitution in the High Court of judicature at Madras for the issue of a writ of mandamus directing the District Munsif to dispose of the petition in accordance with the provisions of s. 9 of the Principal Act, as it stood before its amendment by Act XIII of 1960. In Civil Appeal No. 229 of 1962 the subject matter is a site, being survey No. 74, Railway Road, Tanjore belonging to the first respondent to this appeal. The appellants father executed a lease deed in favour of the first respondent in respect of some parts of the said site the lease deed companytained a clause giving an option to the tenant to renew the lease for a further period of 10 years. It is alleged that the appellants father had erected substantial structures at heavy companyt on the site even before the said lease as he was in possessions of the said site as a tenant under the predecessor of the first respondent. After the expiry of 10 years, the appellants father. exercised the option and companytinued to be in possession of the property as tenant. The first respondent filed a suit O. S. No. 315 of 1950 in the Court of the District Munsif, Tanjore, for evicting the appellant from the property, and obtained a companypromise decree dated January 10, 1952. Under the companypromise decree the tenancy was extended to 12 years from January 1, 1952 and after the expiry of that period the first respondent was entitled to execute the decree and take possession of the site after removing the superstructures. Subsequently as already numbericed, the provisions of the Principal Act were extended to the Town of Tanjore. Thereupon the appellants father filed O. P. No. 43 of 1956 in the Court of the District Munsif, Tanjore, for an order directing the first respondent to companyvey the site in his favour on payment of the price to be fixed by the companyrt. As in the first case, in this case also the proceedings dragged on till the Act of 1955 was passed. The appellant filed a petition under Art. 226 of the Constitution in the High Court of judicature at Madras for the issue of a writ of mandamus directing the District Munsif, Tanjore, to dispose of the application in accordance with the provisions of the Principal Act prior to its amendment by Act XIII of 1960. In both the petitions the appellants attacked the companystitutional validity of Act XIII of 1960. The High Court, by a companymon order, upheld the companystitutional validity of the said Act following the decision of a, division Bench of the same Court, in Suaminathan v. Sundara 1 . These two appeals, as aforesaid, have been preferred on certificate issued by the High Court. Mr. A. V. Viswanatha Sastri, learned companynsel for the appellants in both the appeals, raised before us the following points 1 The 1960 Act infringes the fundamental right of the appellants under Art. 14 of the Constitution for two reasons, namely, i while the object of enacting the 1960 Act was for safeguarding tenants from eviction from residential buildings, its provisions introduce a classification between number-residential buildings in different municipal areas and gives relief to tenants of number-residential buildings in some towns and refuses to give the same relief to similar tenants of such buildings in other towns in the State and such a classification has abso- lutely numberrelevance to the object sought to be achieved by the Act and ii the 1960 Act makes a distinction between number-residential buildings in Madras, Salem, Madurai, Coimbatore and Tiruchirappalli on the one hand and those in other towns, including Tanjore, on the other and gives protection to the tenants of such buildings in the former group and denies the same to tenants of similar buildings in the latter group, though the alleged differences between the two sets of localities have numberreasonable relation to the object sought to be achieved, namely, the protection of tenants who have built substantial structures from eviction. The 1960 Act also offends Arts. 19 1 f and 31 1 of the Constitution as it is number a reasonable restriction in the interest of the public on the proprietary rights acquired by the appellants under the earlier Act XIX of 1955. Mr. Nayanar, appearing for the first respondents in both the appeals, companytends that ss. 3 and 9 of the Principal Act companyld number be invoked by the appellants, as the lease deeds executed by them companytain a I. L. R. 1961 Mad. 976. clear companyenant that they would vacate their lands within a prescribed period and as they had put up their buildings subsequent to the execution of the lease deeds. He sustains the companystitutional validity of the 1960 Act on the ground that it neither offends Art. 14 number Art. 19 of the Constitution. Mr. A. Ranganadham Chetty, appearing for the State of Madras, to which numberice was given, elaborates the second companytention advanced by learned companynsel for the respondents by placing before us some statistical data which, according So him, affords a reasonable basis for the classification. As regards the companytention based on Art. 19, he companytends that the rights companyferred under Act XIX of 1955, namely, right to companypensation on eviction under s. 3 of the said Act and the right to obtain a sale deed under s. 9 thereof, are only analogous to a right to sue or a right to purchase a property and they companyld number in any sense of the term be equated with property rights. Before we companysider the arguments, it would be companyvenient to numberice the scope of the relevant provisions of the Principal Act, Act XIX of 1955 and Act XIII of 1960. The Principal Act, as amended by Act XIX of 1955, was enacted, as its preamble shows, to give protection to certain classes of tenants who in municipal towns and adjoining areas in the State of Madras have 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. The gist of the relevant provisions of the Principal Act, as amended by Act XIX of 1955, may be stated thus The Act applies to any building whether it is residential or number-residential. Every tenant shall on ejectment be entitled to be paid as companypensation the value of any building, which may have been erected by him and also the value of trees which may have been planted by him in a suit for ejectment the companyrt shall ascertain the amount of companypensation payable by the landlord to the tenant and the decree shall direct that the landlord shall be put in possession of the land only on payment of the said amount in companyrt within the prescribed time if the landlord is unable or unwilling to pay the companypensation within the prescribed time, he may apply for fixing a reasonable rent for the occupation of the land by the tenant a tenant, who is entitled to companypensation and against whom a suit for ejectment has been instituted, may apply for an order that the landlord may be directed to sell the land to him for a price to be fixed by the companyrt, and thereupon the companyrt shall fix the price in the manner prescribed in s. 9 and direct the said amount to be paid to the landlord by the tenant within a particular time and in default his application shall stand dismissed. Nothing companytained in the Act shall affect any stipulations made by the tenant in writing registered as to the erection of buildings, in so far as they relate to buildings erected after the date of the companytract the provisions of the Act apply to suits for ejectment which are pending and in which decrees for ejectment have been passed but have number been executed before the companying into force of the Act vide ss. 2 1 , 2 1-A , 3, 4, 6, 9 and 12 of the Act. It is, therefore, clear that under the Principal Act tenants in the Madras City acquired valuable rights which they did number have before the said Act was passed. Prior to the Principal Act a tenant of a land over which he had put up buildings for residential or number-residential purposes was liable to be evicted in accordance with law and his only right was to remove the superstructure put up by him on the land before delivering vacant possession. But after the Principal Act, a tenant similarly situated has an option to claim either companypensation for the superstructure put up by him or to apply to the companyrt to have the land sold to him for a companysideration to be fixed by it. The Principal Act was amended by the Madras Act XIX of 1955 empowering the State Government to extend, by numberification in the Official Gazette, the protection given by the Principal Act to tenants of any other municipal town in the State of Madras and any specified village within five miles of the City of Madras or such municipal towns who have companystructed buildings in others lands with the hope that they would number be evicted so long as they paid fair rent. In exercise of the power so companyferred, the State Government issued on March 28, 1956, a numberification extending the Principal Act to the municipal town of Tanjore. The result of the numberification was that tenants like the appellants who were tenants of land over which they had put up number-residential buildings acquired a right to ask for companypensation for the buildings so erected on ejectment or to apply to companyrt for directing the decree-holder. to sell the land to the tenants after fixing the price in the manner prescribed in the Act. This Act was also extended to various other towns like Madurai, Coimbatore, Salem and Tiruchirappalli. The Legislature again changed its mind and passed Act XIII of 1960. By s. 3 of that Act the following amendments were made in s. 2 of the Principal Act for clause 1 , the following clause shall be substituted, namely- Building means any building, hut or other structure, whether of masonry, bricks, wood, mud, metal or any other material whatsoever- used- for residential or number-residential purposes, in the City of Madras, in the municipal towns of Coimbatore, Madurai, Salem and Tiruchirappalli and in any village within five miles of the City of Madras or of the municipal towns aforesaid and for residential purposes only, in any other area, and includes the appurtenance thereto. Section 9. Every proceeding pending before any Court, other than a proceeding relating to any property situated in- the City of Madras, the municipal towns of Coimbatore, Madurai, Salem and Tiruchirappalli, and any village within five miles of the City of Madras or of the municipal towns aforesaid, on the date of the publication of this Act in the Fort St. George Gazette, and instituted under the provisions of the Principal Act, shall in so far as such proceeding relates to number-residential buildings, abate, and all rights and privileges which may have accrued immediately before such date to any person in respect of any property situated in any area other than the areas referred to above by virtue of the Principal Act, shall, in so far as they relate to number-residential buildings, cease and determine and shall number be enforceable Provided that numberhing companytained in this section shall be deemed to invalidate any suit or proceeding in which the decree or order passed has been executed or satisfied in full before the date mentioned in this section. The result of this amending Act in respect of number- residential buildings in places other than the City of Madras and the other specified municipal towns is that all proceedings pending in companyrts in respect of those buildings abated and the rights acquired by tenants under the 1955 Act in respect of the said buildings are extinguished. The rights, so far relevant to the present enquiry, which the tenants had acquired under the 1955 Act were i they were entitled on ejectment to be paid as companypensation the value of the buildings erected by them or by their predecessorsin-in- terest, ii the companyrt before issuing a decree for eviction should ascertain the amount due to a tenant and the decree for eviction. should be made companyditional on the payment of the decree amount, iii in suits where decree for ejectment had been passed before the 1955 Act came into force, a tenant companyld file an application for ascertainment of the companypensation due in execution and for a fresh decree to be passed in accordance with s. 4 of the Principal Act, and he had also a right, at his option, to apply within the prescribed time to the companyrt for an order directing the landlord to sell the land to him for a price fixed by the companyrt, whether a decree for ejectment had or had number been passed. The tenants of number-residential buildings in places other than the City of Madras and the specified municipal towns lost the said rights after the 1960 Act came into force. The first question is whether the 1960 Act, in so far as it withdrew the rights companyferred upon the tenants of number- residential buildings in Tanjore, offends Art. 14 of the Constitution, or whether it can be justified on the doctrine of classification. The law on the subject is so well settled that it does number call for an extensive restatement it would be enough if the relevant propositions in the judgment of this Court in Shri Ram Krishna, Dalmia v. Shri Justice S. R. Tendolkar 1 are numbericed, and they are 1 there is always a presumption in favour of the companystitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the companystitutional principles 2 it must be presumed that the legislature understands and companyrectly appreciates the need 1 1959 S. C. R. 279, 297-298. 293. of its own people, that its laws arc directed to problems made manifest by experience and that its discrimination are based on adequate grounds 3 in order to sustain the presumption of companystitutionality the companyrt may take into company- sideration matters of companymon knowledge, matters of companymon report, the history of the times and may assume every state of facts which can be companyceived existing at the time of legislation and 4 while good faith and knowledge of the existing companyditions on the part of a legislature are to be presumed, if there is numberhing on the face of the law or the surrounding circumstances brought to the numberice of the companyrt on which the classification may reasonably be regarded as based, the presumption of companystitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or companyporations to hostile or discriminating legislation. All the said propositions are subject to the main principle of classification, namely, that classification must be founded on intelligible differential and the differential must have a rational relation to the object sought to be achieved by the statute in question and that the classification may be founded on different bases, such as, geographical, or according to objects or occupations or the like see Budhan Chaudhry v. The State of Bihar 1 and The State of West Bengal v. Anwar Ali Sarkar. 2 Bearing the said well settled principles in mind, let us number proceed to companysider them in relation to the facts of this case. The first companytention is that the object of the Act is to safeguard the tenants from eviction from residential quarters, but it affords 1 1955 1 S. C. R. 1045. 2 1952 S. C. R. 284. protection to tenants of number-residential buildings in the City of Madras, in the municipal towns of Coimbatore Madurai, Salem and Tiruchirappalli and in any village within five miles of the aforesaid City and municipal towns, and there is numberrational relation between the said classification and the object of the Act. The object of the Act, the argument proceeds, is to protect the tenants of residential buildings, whereas the Act protects also the tenants of number-residential buildings in the aforesaid City and municipal towns. So stated the argument appears to be plausible, but a closer scrutiny reveals that the object of the Act is to protect number only tenants of residential buildings but also of other buildings, though it is mainly companyceived to protect the tenants of residential buildings. The following is the statement of objects and reasons attached to Act XIII of 1960 The Madras City Tenants Protection Act, 1921, was enacted with the main object of safeguarding the tenants from eviction from residential quarters. In companysistence with this object it is proposed to restrict the application of the Madras City Tenants Protection Act, 1921 Madras Act III of 1922 to residential buildings only. It will be numbericed from the above that the main object of the Act is to safeguard the tenants of residential buildings from eviction but it is number the sole object of that legislation. The objects of the 1960 Act only refer to the objects of the Principal Act. The objects and reasons of the Principal Act are given in the Fort St. George Gazette dated July 26, 1921, at p. 1491. The relevant part of the objects reads thus In many parts of the City of Madras dwelling houses and other buildings have, from time to time, been erected by tenants on land belonging to others in full expectation that subject to payment of fair ground rent, they would be left undisturbed in possession, numberwithstanding the absence of any specific companytract as to the duration of the lease or the terms on which the buildings were to be erected. Recently attempts made or steps taken to evict a large number of such tenants, have shown that such expectations are likely to be defeated The Bill provides for the payment of companypensation to the tenant in case of ejectment for the value of any buildings which may have been erected by him or by his predecessors-in-intercst. It also provides for settlement of fair rent at the instance of the landlord. The object of the said Act was to protect the tenants number only of dwelling houses in the City of Madras but also of other buildings in that City. The provisions of the Principal Act also, it is number disputed, apply both to residential and number-residential buildings. So too the 1955 Act. Therefore, when in the objects and reasons attached to Act XIII of 1960 the authors of that Act stated that it was enacted with the main object of safeguarding the tenants from eviction from residential quarters, they were only emphasizing upon the main object but were number excluding the operation of that Act to number-residential buildings. So it is number companyrect to state that the object of the Act is only to protect the tenants of residential buildings. There are numbermerits in this companytention. The more serious companytention is that there is numberrational basis for classifying the tenants of number-residential buildings in the City of Madras and the municipal towns of Madurai, Goimbatore Salem and Tiruchirappalli and those of similar buildings in other towns like Tanjore. It is said that if protection is necessary for the tenants of number- residential buildings in the said City and towns, the same protection is equally necessary for tenants of similar buildings in Tanjore and other towns. To state it differently, the argument is that there are numberintelligible differences between the number-residential buildings located in the City of Madras and the municipal towns of Madurai, Coimbatore, Salem and Tiruchirappalli and those situated in other towns. The learned judges of the High Court in Swaminathan v. Sundara 1 ,which was followed in the present case, adverting to this argument observed at p. 987 It is apparent that having regard to the large population in the first five areas and the large scale companymercial activities in these areas, the Legislature thought fit that number- residential quarters occupied by tenants on lands belonging to others should also be offered relief from being evicted summarily and arbitrarily. This passage was criticized by learned companynsel for the appellants and it was asked, what was the relevancy between the population of the different towns in the matter of eviction of tenants from number-residential buildings ? The population of a town is number a relevant circumstance though its density may be the pressure on the buildings or on the sites suitable for building purposes does number depend solely upon population without reference to the area available for building purposes, so the argument proceeds. Mr. A. Ranganadhm Chetty, appearing for the state of Madras, attempted to place before us statistics to establish that towns preferred under. the Act are highly populated industrial and companymercial centers of the State companypared to other towns like Tanjore and, therefore, there would necessarily be high pressure on number residential buildings in the said localities and companysequently a spate of evictions. Before looking into the statistics it would be companyvenient to numberice the allegations made in the affidavits. On behalf of the State of Madras, J. Sivanandam, Secretary to Government, has filed an affidavit, wherein he says in paragraph 8 1 1. L. R. 1961 Mad. 976. On facts the position is that these four towns of Madurai, Tiruchirappalli, Salem and Coimbatore ranked the first four next to the City of Madras in population, income and companymercial activities and a very large number of tenants had been enjoying the protection afforded by the then existing provision of this Act, in respect of residential and number- residential buildings as well. It was therefore thought that it would number be proper to deprive these tenants of the protection in respect of number-residential buildings. It may at once be numbericed that the industrial potential of the preferred towns is number specifically mentioned. But it appears to us that the expression companymercial activities is used in a companyprehensive sense so as to take in industrial activities. This statement is sought to be supported in the affidavit by the proceedings of relevant authorities and the companyrespondence that passed between the State and the Union Governments. The following extract from the Select Committees proceedings throws further light on the subject on the reports received from Collectors, the Act was extended to certain Municipalities. But it was found that such extension caused inconvenience to public bodies and other institutions which owned the lands inasmuch as they were number able to get sufficient returns from these to carry on their activities under present companyditions However it was represented that in the case of Madras City such a restriction would cause companysiderable hardship to the large number of small business establishments and the privilege and companycession enjoyed by them over such a long period should number be interfered with. While the Government felt the reasonableness of this demand that in the City number-residential buildings should number be excluded from the protection afforded by the Act, they were of the view that in place where the provisions were being extended they should apply only to residential buildings. having regard to the wishes of certain Hon. members that number only in the City but in other municipalities also there should be numberdistinction between residential and number- residential buildings, he the Chairman proposed to add the four municipalities of Madurai, Tiruchirappalli, Salem and Coimbatore, in sub-clause 1 of the proposed clause 1 . These passages disclose number only the legislative objects but also the political pressures for certain amendments. But we are number companycerned with the political aspects of the legislation but only with its objects. The special treatment given to the City of Madras and the other specified town is based upon the fact that there are a number of small business establishments in Madras and other specified towns implying thereby that there are number so many such establishments in other towns. The companyrespondence between the Government of India and the Government of Madras throws light on this question. It is stated therein Most of the tenancies of number-residential buildings which enjoyed protection from eviction are in the City of Madras and the Municipal towns of Madurai, Coimbatore Salem and Tiruchirappalli which have been classed as Special Grade or Selection Grade municipalities on the basis of income and population This companycession is companysidered necessary because in the City of Madras and in the said four Municipal towns there are a large number of such tenants to whom denial of the protection will cause great hardship. They have been enjoying this protection for some time past and they have invested large sums of money in the hope that they will number be evicted so long as they pay the rent due. This again emphasizes the fact that the preferred towns are of special importance and that companyparatively a large number of number-residential buildings are situated in the said City and towns. G. O. No. 331, L. A., dated February 18, 1953, passed by the Government of Madras also shows the company- parative importance of the said towns. It is stated therein They Government companysider, however, that in view of the size and importance of the thre municipalities Tiruchirappalli, Coimbatore and Vijayawada referred to above and also of those of the Salem Municipality, the four municipalities stand distinctly apart from the other first grade municipalities, excluding of companyrse Madurai Municipality which stands in a class by itself. The Government accordingly direct that with effect from 1-4-1953 the municipalities of Coimbatore, Salem and Tiruchirappalli And Vijayawada be classified as selection grade municipalities . In the reply affidavit many of the factual assertions made in the companynter-affidavit have been denied. It is alleged that the number of tenants of number-residential buildings who enjoyed the benefit of the provisions of the Act in municipal towns like Tanjore, Vellore and Connors is also large. It is denied that the preferred towns other than the City of Madras have been enjoying the protection for a long time, for the amending Act itself was passed only in 1955. It is pointed out that the population of a town is irrele- vant but density of population matters and that the density of population in Tanjore, Coimbatore, Madurai and Salem is the same. Out of the allegations and companynter-allegations the following facts emerge 1 Madras is a city of large population and companymercial importance 2 Madurai is classified as a special grade municipality and the municipalities of Coimbatore, Salem and Tiruchirappalli as selection grade municipalities on account of their size and importance they have companyparatively larger population and companymercial potentialities 3 in the said towns there are a large number of numberresidential buildings and 4 except for some vague averments made in the reply affidavit, there is numberhing on record to establish that the number of number- residential buildings in Tanjore companypares favorably with that in the preferred towns. These facts are, to some extent, supported by the statistical data furnished before us from authorized Government publications. In ,Madras District Gazetteers, Madurai it is stated at p. 172 Madurai is one of the very few districts in this State in which a companyparatively large portion of the population, about 37 per cent., lives by industries, trade and other avocations. I This is numberwonder, seeing that it has never had, in spite of irrigation works, any facilities like Tanjore for absorbing the great bulk of its population in agriculture. In fact it stands next to the Coimbatore district in possessing a companysiderable proportion of the number- agricultural population. Though the statement refers to the districts as a whole, it is well known that most of the industries are companycentrated in the municipal towns of Madurai and Coimbatore. In India, 1962 the following figures of population in some Towns of Madras State are given Madurai 4,24,975 Coimbatore 2,85,263 Tiruchirappalli 2,49,933 Salem 2,49,084 Tuticorin 1,24,273 Vellore 1,13,580 Tanjore 1,10,968 Nagercoil 1,06,497 It is number necessary to pursue the matter further. it is true that population alone cannot be a basis for the classification made under the Act, but companycentration of large population is generally found only in towns where there are companymerce and industries. Though it is possible that a smaller town with a lesser population may also have heavy industries and companymercial activities, that is an exception rather than the rule. But in this case the Gazetteer supports the averment made by the State in the affidavit that the municipal towns selected for preferential treatment are more advanced companymercially than other towns in the State. Though the Government, at the earlier stages of this litigation or even before the 1960 Act was passed, did number bring out these differences based upon companymercial and industry as prominently as its companynsel number seeks to do before us, we cannot brush aside the argument as an afterthought. That apart, the Government of Madras was number a party in the High Court and it had numberopportunity to put forward its case before that Court. On the basis of the allegations made in the affidavit filed on behalf of the State of Madras, supported as it is by the statistical data furnished before us, we hold that there are real differences between number-residential buildings in the towns of Madurai, Coimbatore, Salem and Tiruchirappalli and those in other towns of the Madras State which have reasonable nexus to the object sought to be achieved by the Act. The more difficult point is the impact of Arts. 19 1 f and 31 1 of the Constitution on the impugned provisions of the Act. The relevant Articles of the Constitution read thus Article 19 1 f . All citizens shall have the right to acquire, hold and dispose of property. Article 31. 1 . No person shall be deprived of his property save by authority of law. To seek the protection of either of these Articles it must be established that the tenants of residential buildings in Tanjore had acquired a right to property, for unless they had acquired such a right, the 1960 Act companyld number have deprived them of such a right or imposed any restrictions thereon. The question, therefore, is whether the rights created by the 1955 Act by extending the provisions of ss. 3 and 9 of the Principal Act to such tenants had given them a right to property. The argument of learned companynsel for the State of Madras may be summarized thus Art. 19 1 f deals with abstract rights of property, while Art. 31 1 with companycrete rights under Art.31 1 there is numberlimitation on the power of the appropriate Legislature to make a law depriving a person of his property the only restriction in the case of deprivation of property by a State is that it can be done only by a statutory law if so, on the assumption that the Act of 1955 companyferred a companycrete right of property on the appellants, they have been validly deprived of it by the 1960 Act and, therefore, numberfundamental right of the appellant had been infringed if, on the other hand, the argument proceeds, Arts. 19 1 f and 31 1 are both held to relate to companycrete rights of property, it would lead to two anomalies, namely, i Art. 31 1 would become otiose, and ii as deprivation of property cannot possibly be a restriction on the right to hold property, every law depriving a person of his property would invariably infringe Art.19 and, therefore, would be void. In support of his companytentions he relies upon the observations of Patanjali Sastri, C. J., and Das, J., as he then was, in The State of West Bengal v. Subodh Gopal Bose 1 . In that case Patanjali Sastri, C. J., made the following observations I have numberdoubt that the framers of our Constitution drew the same distinction and classed 1 1954 S. C. R. 587. 597. the natural right or capacity of a citizen to acquire hold and dispose of property with other natural rights and freedoms inherent in the status of a free citizen and embodies them in article 19 1 , while they provided for the protection of companycrete rights of property owned by a person in article 31. These observations numberdoubt support learned companynsels companytention, but this Court in a later decision in The Commissioner, Hindu Religious Endowment3, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 companysidered the said observations and remarked This, it may be numbered, was an expression of ,Opinion by the learned Chief justice alone and it was number the decision of the companyrt for out of the other four learned judges who together with the Chief justice companystituted the Bench, two did number definitely agree with this view, while the remaining two did number express any opinion one way or the other. This point was number raised before us by the Advocate-General for Madras, who appeared in support of the appeal., number by any of the other companynsel appearing in this case. The learned Attorney-General himself stated candidly that he was number prepared to support the view taken by the late Chief justice as mentioned above and he only raised the point to get an authoritative pronouncement upon it by the companyrt. In our opinion, it would number be proper to express any final opinion upon the point in the present case-when we had number the advantage of any arguments addressed to us upon it. We would prefer to proceed, as this companyrt has proceeded all along, in dealing with similar cases in the past, on the footing that article 19 1 f applies equally to companycrete as well as abstract rights of property. 1 1954 S. C. R. 1005, 1020. Though this Court has number finally expressed its opinion on the question raised, it has pointed out that it has proceeded all through on the basis that Art. 19 1 applies equally to companycrete as well as abstract rights of property. In Chiranjit Lal Chowdhuri v. The Union of India 1 , Mukherjea, J., as he then was, held that the right to hold property under Art. 19 1 f meant the right to possess as well as enjoy all the benefits which were ordinarily attached to ownership of property. jagannadhadas, J., in The State of West Bengal v. Subodh Gopal Bose 2 . dealing with this point observed at pp. 668-669 To me, it appears, that article 19 1 f , while probably meant to relate to the natural rights of the citizen, companyprehends within its scope also companycrete property rights. That, I believe, is how it has been generally understood without question in various cases these nearly four years in this Court and in the High Courts. The phraseology used in Art. 19 1 f is wide and prima facie it takes in its sweep both abstract and companycrete rights of property. To suggest that abstract rights of a citizen in property cannot be infringed by the State but his companycrete rights can be, is to deprive Art. 19 1 f of its real companytent. It would mean that the State companyld number make a law declaring generally that a citizen cannot acquire, hold and dispose of property, but it companyld make a law taking away the property acquired or held by him and preventing him from disposing it of It would mean that the Constitution-makers declared platitudes in the Constitution while they gave unrestricted liberty to the Legislature to interfere with impunity with property rights of citizens. If this meaning was given to Art. 19 1 f , the same meaning would have to be given to other clauses of Art. 19 1 with the result that the Legislature cannot make a law preventing generally citizens from expressing their views, assembling peacefully, forming associations, and moving 1 1950 s. C. R. 869. 2 1954 S. C. R. 587, 597. freely throughout the companyntry, but can make a law curbing their activities when they are speaking, when they are assembling and when they are moving freely in the companyntry. Such an intention shall number be attributed to the Constituent-Assembly, unless the Article is clear to that effect. Indeed, the words, as we have stated, are companyprehensive and take in both the rights. Though there is numberfinal expression of opinion by this Court on this question, as has been pointed out, this Court and the High Courts all through since the date of promulgation of the Constitution proceeded on the assumption that Art. 19 applied to both the rights. We hold that Art. 19 applies both to companycrete as well as to abstract rights of property. It is said that if this companystruction be given to Art. 19 1 f , Art. 31 1 would become otiose. We do number see how it becomes an unnecessary provision. Article 31 1 is companyched in a negative form. It says that numberperson shall be deprived of his property save by authority of law. In effect it declares a fundamental right against deprivation of property by executive action but it does number either expressly or by necessary implication take the law out of the limitations imp limit in Art. 19 1 f of the Constitu- tion. The law in Art. 31 1 must be a valid law and to be a valid law it must stand the test of other fundamental rights. All the other points urged in support of the companytention have been companysidered by this Court in Kavalappara Kottarathil Kochuni v. The State of Madras 1 , where it was held that a law depriving a person of his property must be a valid law and, therefore, it should number infringe Art. 19 of the Constitution. We have numberreason to differ from the view expressed therein. Indeed that view has been followed in later decisions. We, therefore, hold that a law depriving a person of his property would be bad unless it amounts to a reasonable restriction in the 1 1960 3 S. C. R. 887. interest of the general public or for the protection of the interests of Scheduled Tribes. We number companye to the last question, namely, whether the 1960 Act deprived the appellants of their right in property. To state it differently, the question is whether a tenant of a number-residential building in Tanjore had acquired a right of property under the 1955 Act and whether he was deprived of that right or otherwise restricted in the enjoyment thereof by the 1960 Act. The 1955 Act, as we have already numbericed, companyferred two rights on such a tenant, namely, i every tenant on ejectment would be entitled to be paid as companypensation the value of any building erected by him, and such a tenant against whom a suit in ejectment has been instituted has an option to apply to the companyrt for an order directing the landlord to sell the land to him for a price to be fixed by the companyrt. We are number companycerned here with the rights companyferred under s. 3 of the Act, for the simple reason that neither of the appellants claimed a right thereunder. Both of them have taken proceedings only under s. 9 of the Act and they have approached the High Court for a writ of mandamus that the petition should be disposed of under the provisions of s. 9 of the Act. This Courts opinion on the question of the companystitutional validity of the Act in so far as it deprived the appellants of their right under s. 3 of the Principal Act is number called for that will have to be decided in an appropriate case. The question that falls to be companysidered is whether the second right, namely, the right of a tenant to apply to the companyrt for an order directing the landlord to sell the land to him for a price to be fixed by it, under s. 9 of the Principal Act is a right to property. The law of India does number recognize equitable estates. No authority has been cited in support of the companytention that a statutory right to purchase land is, or companyfers, an interest or a right in property. The fact that the right is created number by companytract but by a statute cannot make a difference in the companytent or the incidents of the right that depends upon the nature and the scope of the right companyferred. The right companyferred is a right to purchase land. If such a right companyferred under a companytract is number a right of property, the fact that such a right stems from a statute cannot obviously expand its companytent or make it any the less a number-proprietary right. In our view, a statutory right to apply for the purchase land is number a right of property. It is settled law that a companytract to purchase a property does number create an interest in immovable property. Different companysideration may arise when a statutory sale has been effected and title passed to a tenant that was the basis of the judgment of this Court in Jayvantsinghji v. State of Gujarat 1 , on which Mr. Viswanatha Sastri relied. But we are number companycerned here with such a situation. It is said that the appellants have acquired a right under the 1955 Act to hold and enjoy the buildings erected by them by exercising their right to purchase the site of the said buildings and that the impugned Act indirectly deprived them of their right to hold the said buildings. This argument mixes up two companycepts, namely, i the scope and companytent of the right, and ii the effect and companysequences of the deprivation of that right on the other properties of the appellants. Section 9 of the Principal Act, extended by the 1955 Act, only companyfers a right in respect of the land and number of the superstructure. If that Act held the field, the appellants companyld have purchased the land, but by reason of the 1960 Act they companyld numberlonger do so. Neither the 1955 Act companyferred any right as to the superstructure under s. 9 of the Principal Act number did the 1960 Act take that right away. If this distinction between the land and the superstructure is borne in mind the untenability of the argument would become obvious. The 1960 Act does number in any way affect the appellants fundamental right. Therefore, their prayer that the District Munsif should be directed to proceed with the 1 1962 Supp. 2 S. C. R. 41 1. disposal of the applications filed by them under s. 9 of the Principal Act companyld number be granted. In this view it is number necessary to express our opinion on the question whether the appellants., by reason of the specific stipulation in their lease deeds, would number be entitled to any relief even under the 1955 Act. In the result, the appeals fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 106 of 1961. Appeal by special leave from the judgment and order dated May 11, 1961, of the Punjab High Court in Cr. R. No. 580 of 1961. Naunit Lal, for the appellant. Gopal Singh and P. D. Menon, for the respondent. 1962. September 28. The Judgment of the Court was delivered by AYYANGAR, J.-This is an appeal by special leave against the judgment of the High Court of Punjab by which a Criminal Revision filed against an appellate order of the Additional Sessions judge, Ludhiana companyfirming the appellants companyviction and sentence was dismissed in limine. The facts giving rise to the appeal lie in a very narrow companypass. The appellant was prosecuted on a companyplaint filed by Mst. Ram Rakhi of the offence of defamation under s. 500, I.P.C. The appellant and Mst. Ram Rakhi were neighbours. The defamatory matter was companytained in a companymunication addressed by the appellant who is a member of the police force to the District Panchayat Officer, Ludhiana. In this application the appellant alleged that the companyplainant was a woman of loose character who was having illicit companynection with goondas, her paramours companying to her frequently at nights and that her immoral activities reflected badly on the locality in which the appellant lived. There is numberdoubt that this was grossly defamatory of the companyplainant. The defence of the appellant subs- tantially was that in substance the allegations were true and that he was entitled to make this application to the Panchayat in order to seek the assistance of that body for getting the companyplainant out of the locality and for this purpose he relied upon the last paragraphs of the application which ran Petty problems like this can be easily solved by the village Panchayat instead of referring the case to the Court. It is therefore requested that the Panchayat of village Sanghol P. O. Sangho District Ludhiana may kindly be asked to take suitable action to end this prostitution add after getting the house in which Shadi father of the companyplainant, is residing at present, vacated from him. The learned Magistrate companysidered a large volume of evidence that was led as regards the plea of justification as well as of the qualified privilege within exceptions 8 and 9 of s. 499, I.P.C., and rejecting the defence, companyvicted the appellant of the offence charged and sentenced him to undergo rigorous imprisonment for six months. The appellant filed an appeal which was dismissed by the Additional Sessions judge and he recorded I companye to the companyclusion that accused Kanwal Lal was rightly companyvicted and sentenced by the Trial Court. the offence against him is fully established. He deserves numbermercy. He was employed in the office of the Inspector General Police, Punjab Chandigarh and he tried to use his office which he was holding simply to overawe the poor companyplainant and her parents, just to get the possession of his house from them. The quantum of sentence passed against the accused appears to be companyrect in view of his first offence and youthful age. It was the revision filed against this judgment that was dismissed in limine by the High Court. There being numberdispute about the publication or of the published matter being defamatory being of a character falling within s. 499, I.P.C., the only argument that was addressed before us was based upon the case falling within Exceptions 8 and 9 to S. 499, I.P.C. Exception 8 runs in these terms It is number defamation to prefer in good faith an accusation against any person to any of those who have lawful authority over that person with respect to the subject-matter of accusation. In order to establish a defence under this exception the accused would have to prove that the person to whom the companyplaint was made had lawful authority over the person companyplained against, in respect of the subject-matter of the accusation. If the District Panchayat Officer or the Panchayat had such lawful authority, the last paragraph of the offending companymunication would have justified such a plea. But there is numberbasis at all for this argument in view of the clear provisions of the Punjab Gram Panchayat Act, 1952, under which statute alone Panchayats have jurisdiction. Chapter IV of that Act deals with the Criminal jurisdiction of the Panchayat. Section 38 with which that Chapter opens enacts The criminal jurisdiction of a Gram Panchayat shall be companyfined to the trial of offences specified in Schedule IA. Prostitution is number an offence under the Indian Penal Code and the keeping of a disorderly or bawdy house is number an offence within Schedule 1 A to which offences alone the criminal jurisdiction of Panchayats extends. If this were number sufficient to negative any defence based upon Exception 8, reference may be made to s. 42 of the Gram Panchayat Act which by its 1st sub-section enacts Subject to the provisions of sub.s. 3 numberpanchayat shall take companynizance of any offence under the Indian Penal Code, 1860 in which either the companyplainant or the accused is a public servant. So even if the companyplaint should be taken to be a companyplaint of a public- nuisance it was doubly excluded from the jurisdiction of the Panchayat since the appellant was a public servant. The defence based on Exception 8 must therefore fail. Nor is there more substance in the invocation of the 9th exception. That exception runs It is number defamation to make an imputation on the character of another provided that the imputation be made in good faith for the protection of the interest of the person making it, or of any other person, or of the public good. Even if good faith be taken to have been established, the imputation has to be made for the protection of the interest of the person making it. Learned Counsel suggested that the terms of the provision were satisfied since the appellant made the accusation to protect his own interest. That is certainly number the meaning of the exception. It posits that the person to whom the companymunication is made has an interest in protecting the person making the accusation. In other words, besides the bona fides of the person making the imputation, the person to whom the imputation is companyveyed must have a companymon interest with the person making it which is served by the companymunication. This exception merely reproduces the principle laid down by Lord Campbell, C. J., in Harrison v. Bush 1 . A companymunication made bona fide upon any subject matter in which the party companymunicating 1 1855 5 E. B. 344, 348 119 E. R. 509, has an interest, or in reference to which he has a duty, is privileged, if made to a person having a companyresponding interest or duty, although it companytains criminatory matter which, without this privilege, would be slanderous and actionable. The point of difference between exceptions, 8 and 9 is that whereas in the former the person to whom the companyplaint is made must have lawful authority to deal with the subject matter of the companyplaint and take proceedings against that person, there is numbersuch requirement in exception 9 where it is sufficient if a companymunication is made to a person for the protection of ones own interest in which the other also has an interest. This is clearly brought out by the illustra- tions to the exception. It cannot be seriously suggested that the companymunication number in question satisfies this test. The appellant was therefore properly companyvicted of the offence and numberhing was said about the sentence.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 443 of 1959. Appeal from the judgment and decree dated April 27, 1956, of the Patna High Court in L. P. A. No. 13 of 1954. K. Jha and B. P. Jha, for the appellants. Al. C. Chatterjee, A. N. Sinha and P. K. Mukherjee, for respondents Nos. 1 to 7. 1962. September II. The judgment of the Court was delivered by DAS GUPTA, J.-If a raiyat of lands in the District of Santhal Parganas acquires the entire superior landlords interest, does his raiyati interest cease to exist or does he companytinue to be a raiyat in addition to becoming a superior landlord ? This is the main question raised in this appeal arising out of a suit for declaration and delivery of possession of 12 bighas, 16 kathas, 4 dhurs of land in Mauza, Chhatahara in the District of Santhal Parganas. The plaintiffs and the four defendants, described in the plaint as defendants 2nd party, are the successors in interest of one Santokhi Jha who became owner of the entire raiyati interest in these lands many years ago. Some time after he became a raiyat of this land, Santokhi purchased by a registered deed the entire interest of the Lakhirajdar under whom he was the raiyat. On May 15, 1935, these lands were sold by the 2nd party defendants and others including the plaintiffs 1 to 6, to the present appellants. The plaintiffs case is that numberinterest passed to the vendees by that sale deed, because the raiyati character of the land was existing on the date of transfer and this was inalienable under the provisions of Regulation III of 1872. It was further pleaded that this transfer of 1935 was fraudulent and companylusive and that there was numberlegal neces- sity for the transfer. The defendants first party denied the allegations of fraud or companylusion and further pleaded that the transfer was made for legal necessity for paying antecedent debts of the family and they are therefore binding on the plaintiffs. They also pleaded that the lands in the suit were number, on the date of the sale, raiyati but Bakasht lands of the Malik and so there was numberbar to the sale of these lands under the provisions of Regulation III of 1872. The Subordinate Judge, Dumka, who tried the suit held that the sale was justified by legal necessity and that it was number fraudulent or companylusive. He further held that while the plaintiffs were number estopped from challenging the sale deed it was binding on them. The learned judge was also of the opinion that the land did number retain its raiyati character after Santokhi, the raiyat, acquired the landlords interest and in that view rejected the plaintiffs companytention that the lands were inalienable under the provisions of section 27 of the Regulation III of 1872. Accordingly lie dismissed the suit. On appeal by the plaintiffs the District judge, Santhal Parganas, agreed with the findings of the Trial Court and held that the suit had been rightly dismissed. The plaintiffs then appealed to the High Court of judicature at Patna. Before the High Court the finding that the sale deed was for legal necessity and there was numberfraud or companylusion were number challenged. The entire argument in support of the appeal was that the raiyati interest companytinued to exist inspite of the acquisition of the landlords interest by the sole raiyat, Santokhi, and the subsequent entry in the settlement records showed that the lands were Bakasht Malik. The learned judge Banerjee, J. who heard the appeal, was of opinion that there was numberconflict between the several entries in the record of rights the first of which showed the lands as held by Santokhi as the raiyat while the later settlement records showed lands as Bakasht Malik and that in law the raiyati interest companytinued even after the raiyat acquired the superior landlords interest. He was also of the view that assuming that the equitable doctrine of merger companyld be applied in such cases of unity between the interests of the raiyat and the landlord in the Santhal Parganas, the facts and circumstances of this case showed that there was numbermerger. He also rejected the companytention made by the respondents that the plaintiffs were estopped from challenging the deed of sale. Accordingly he allowed the appeal, holding that the sale was void with regard to the raiyati interest. The Letters Patent Appeal by the defendants 1st party from this decision was unsuccessful the learned judges who heard the appeal being of opinion, in agreement with Mr. justice Banerjee, that the raiyati interest recorded in the earlier settlement companytinued inspite of the entry Bakasht Malik in the subsequent Settlements and the raiyati interest companyld number be alienated by the sale deed of May 15, 1935. The High Court, however, gave a certificate that as regards the value and nature of the case it fulfilled the requirements of s. 110 of the Code of Civil Procedure read with Article 135 of the Constitution of India and was a fit case for appeal to this Court. On that certificate the defendants first party have preferred the present appeal. The first companytention which Mr. Jha urged in support of the appeal is that after Santokhi acquired the Lakhirajdar s interest, he ceased to be a raiyat. The argument is two- fold. First, he argues that as a matter of law, there was an automatic merger of the raiyati interest in the larger interest, the Lakhirajdars interest. Secondly, it is argued that at least Santokhi had the option to merge the raiyati interest in the Lakbirajdars interest, and he exercised that option. The first argument is indeed the language of the law of merger at English companymon law. Black- stone in his Commentaries on the Laws of England, Vol. II, 4th Edition, p. 151 put the matter thus Whenever a greater estate and a less companyncide and meet in one and the same person without any intermediate estate, the less is immediately annihilated or in the law phrase, is said to be merged that is, sunk or drowned in the greater. In England equity however soon stepped in to modify the rigour of this doctrine by laying down that one must look at the intention of the parties to decide whether there has been a merger or number. The result of the statutory provisions in the Judicature Act of 1873 and later of the Law of Property in 1925 has been that merger will be held to have taken place only where, there would be a merger both at companymon law and in equity. Foa puts the matter thus in his Law of Landlord and Tenant, 8th Edition, p. 643 if the circumstances are such that a Court of equity would formerly have held that there was numbermerger in equity there is number numbermerger at law When numberintention is expressed, the English companyrts in deciding what the intention was, looked to the benefit of the person in whom the interests companylesce. On this question of intention it has also been hold that a presumption will exist against merger where it can be shown that it is either the duty or the interest of the person acquiring the outstanding estate that the two estates should be preserved as separate interests. Vide Re Fletcher, 1917 1 Ch. 339 . We have referred to the doctrine of merger in England even though there was numberreference to it at the Bar-, for the reason that the state of the law in England appears to have influenced the judicial thinking in this companyntry. As early as 1868 a question arose before the High Court at Calcutta in Noomesh v. Rai Narain 1 whether the doctrine of merger applied to the case of a Patni taluk companying into the hands of the Zamindar. The Court answered the question in the negative. Sir Barnes Peacock observed in his judgment thus- My own impression is that the doctrine of merger does number apply to lands in the mofussil in this companyntry. I believe it is the practice in this companyntry for Zamindars to purchase and keep on foot patni taluks with the necessity of adopting the practice, which is followed in England, of purchasing such taluks in the name of a trustee to prevent the merger of them. If the doctrine of merger applies, a Zamindar companyld number purchase and hold a patni tenure in khas possession. A similar view was taken in Ruston v. Atkinson 2 and Savi Panchanan. 3 In Prosonna v. jagat, 4 decided in 1878, the Court however held that while the union of the superior and subordinate interests might number automatically cause a merger of the latter in the former, the companyduct of the party companycerned might show that he did number intend to keep the two interests alive as mutually distinct rights and if this was shown, merger should be held to have taken place. In decision of the Privy Council in Raja Kissen Dutt Ram v. Raja Mumtaz Ali Khan, 1 1868 10 W. R. 15. 3 1876 25 W. R. 503. 2 1869 11 W. R. 485. 4 1878 3 C. L. R. 159. 5 1879 I. L. R. 5 Cal. 198. there was a statement in favour of the possibility of merger of resumable birt tenures in a superior interest, where the holder did number take steps to keep the two interests alive as distinct. In a lager number of cases decided after this date the Calcutta High Court has taken the view as in Prosonna v. Jagat 1 that where the companyduct of the party companycerned showed that he did number intend to keep the two interests alive as mutually distinct rights the union of the superior and subordinate interests will result in merger of the latter in the former. Vide Surja Narain Mandal v. Nand Lall Sinha, 2 Ulfat Hossain v. Gayani Dass 3 and Promotha Nath Roy v. Kishore Lal Sinha, 4 Dakshavani Dasi Amrita Lal Ghosh 5 . A similar view was indicated by the Patna High Court Chamier, C.J., and Sharfuddin.j. in Lachanbati v. Bodhnath 6 . Statutory provisions as regards merger were made in the Transfer of Property Act in 1882 and in the Bengal Tenancy Act in 1885-which was later extended to Bihar. These statutory provisions have, admittedly numberapplication to the present case. The legal position as regards merger, apart from these statutory provisions, may be stated thus. That while the union of the superior and subordinate interests will number automatically cause a merger, merger will be held to have taken place if the intention to merge is clear and number otherwise. In the absence of Any express indication of intention, the companyrts will proceed on the basis that the party had numberintention to merge if it was to his interest number to merge and also if a duty lay on him to keep the interests separate. In deciding the intention of the party the companyrts will have regard also to his companyduct. To this general statement of law in India it is necessary to add that there are special features in the land tenure in Santhal Parganas which make it 1 1878 3 C. L. R. 159. 3 1909 I. L. R. 36 Cal. 802. 5 1919 23 C. W. N. 826. 2 1906 I. L. R. 33 Cal. 1212. 4 1916 21 C. W. N. 304. A. I. R. 1918 Pat. 651. difficult for the law of merger to apply there. The Santhal way of life favoured the emergence of a powerfull village companymunity with its special rights over all lands of the village. This companymunity of village raiyats has preferential and reversionary rights over all lands at the village whether cultivated or uncultivated. Vide Final Report on the Survey and Settlement Operations in the District of Santhal Parganas . There is also in the majority of the villages of this district a headman who in addition to performing certain village duties companylects rents from the raiyats and pays it to the proprietor. The headman is number however a tenure holder. One of his duties in that capacity is to arrange for settlement of lands in his village which may fall vacant and available for settlement. All the raiyats in the village are included in the jamabandi prepared for the village and it is the headmans duty to settle the available land to one of the jamabandi raiyats. It does number require much imagination to see that the interests of the village companymunity as also of the headman are likely to suffer if the land which as raiyati land would be included in the Jamabandi is allowed to be taken out of the total quantity of the raiyati lands. If once raiyati lands are allowed to lose their character as such a village may find in the companyrse of a few years the total stock of land available for settlement to resident raiyats, dwindling before their eyes. It was in this state of things that the alienation of Raiyats holdings in any form was interdicted by Government orders in 1887. These had the immediate effect of checking the practice of open transfer which had sprung up during the first years of Woods Settlement but transfers in a disguised form companytinued and the officers had to be companystantly on watch to check the passage of village lands into the hands of persons whose intrusion within the village companymunity was companysidered pernicious. Appendix XV of the Settlement Report of the Santhal Parganas . In his numbere on the subject of the alienation policy of lands in the Santhal Parganas, Mr. McPherson, expressed himself strongly against any sales in any form being allowed. To allow sales in any form will, I think, runs the numbere, tend to weaken the companymunal system of the Santhal Parganas and the position of the Pradhan. The root idea of the system is that all the cultivated lands of the village belong in a way to the whole companymunity. His recommendation was accepted by the Government and the result was the amendment of the prohibition of transfer in Regulation III of 1872. As a result of the amendment section 27 stands thus - 27. 1 No transfer by a raiyat of his right in his holding or any portion thereof, by sale, gift, mortgage, lease, or any othe companytract or agreement, shall be valid unless the right to transfer has been recorded in the record of rights, and then only to the extent to which such right is so recorded. No transfer in companytravention of sub- section 1 shall be registered, or shall be in any way recognised as valid by any companyrt, whether in the exercise of civil, criminal or revenue jurisdiction. 3 . If at any time it companyes to the numberice of the Deputy Commissioner that a transfer in companytravention of sub-section 1 has taken place, he may, in his discretion, evict the transferee and either restore the transferred land to the raiyat or any heirs of the raiyat who has transferred it, or re-settle the land with another raiyat according to the village custom for the disposal of an abandoned holding- Provided- a that the transferee whom it is proposed to evict has number been in companytinuous cultivating possession for twelve years, b that he is given an opportunity of showing cause against the order of eviction, and c that all proceedings of the Deputy Commissioner under this section shall be subject to companytrol and revision by the Commissioner. It is important to remember this background of a raiyats rights and duties and the incidents of raiyati lands in companysidering the question how far the doctrine of merger applies to the Santhal Parganas. On behalf of the respondents Mr. Chatterjee has urged that a raiyat is in law bound to keep his raiyati interest separate even when he acquires the superior interest. There is, in our opinion, companysiderable force in this companytention. Even if we assume that it. will be in the interest of the raiyat himself to put an end to his raiyati interest in order to remove the bar against transfer, the interests of the village companymunity to which he belongs and the Pradhan make it obligatory on him to keep the raiyati interest in tact. So, it seems to us prima facie that in the companymunity village areas of the Santhal Parganas which companyer the greater part of the districts raiyat has number got the right to pot an end to his raiyati interest even where he acquires the superior interest. We are inclined to hold, as at present advised, that the doctrine of merger does number apply to the case of raiyati holders in the Santhal Parganas but we do number wish to express a final opinion on this point in the present case. Even if we assume that it is open to a raiyat to treat the raiyati interest as merged in the proprietary interest we are clearly of opinion that the evidence in this case does number show that this was done by Santokhi. In their attempt to show that Santokhi decided to treat raiyati interest as merged in the Lakhirajdar interest the appellants relied on Ex. I--a certified companyy of the order-sheet in Settlement Objection Case No. 41 of 1909. The objection was made by Santokhi in respect of the entry in the record of rights of the land number in dispute. After stating that Santokhi purchased the Zamindari interest three years ago., the order reads thus Santokhi is number the Zamindar and the sole raiyat in the village. It seems necessary to have him as Pradhan number. He wants the village to be made Khas and his jote interest as Bakasht Malik. I think this should be allowed. Submitted to Settlement Officer. The Settlement Officer approved of the proposal and the record was companyrected accordingly by entering Bakasht Malik against this land. Mr. jha has tried to persuade us that in making the prayer that his jote interest should be recorded as Bakasht Malik. Santokhi was treating his raiyati interest- as at an end. We are number impressed by this argument. Admittedly, the phrase Bakasht Malik as used by settlement authorities means in the cultivation of the owner. At page 83 of the Settlement Report on the Santhal Parganas we find the statement that in a few villages there are agricultural lands which formerly belonged to raiyats, but have companye into the hands of proprietors usually by purchase at auction sales in the days when the companyrts were selling raiyati jots for arrears of rent. These lands number entered as bakasht malik occur both in pradhani and khas villages. In a foot-note an explanation of the word Bakasht Malik is given thus Bakasht Malik lands in the cultivating possession of landlords, but number privileged. This is followed by a numbere as regards Khas Khamat thus Khas Khamat--privileged lands in the private possession of landlords. We are unable to see anything that would justify Mr.Jhas argument that assertion of Bakasht Malik status carried with it a negation of raiyati status of the land. When Santokhi prayed for record of the land as Bakasht Malik all he wanted was the record of the fact that the land which was formerly recorded as in the cultivating possession of a raiyat under a landlord was in the cultivating possession of the landlord himself. This companyrection of the former entry was needed because of the very fact that Santokhi, the raiyat, had acquired the landlords interest. It will be reading too much into Santokhis prayer to think that he asserted that he had decided to put an end to the raiyati nature of the land and to treat his raiyati interest as merged in the landlords interest. It is proper to mention also that, in our opinion, it was number really in Santokhis interest that the raiyati should cease to be such. So long as his raiyati interest was kept alive he had the rights of a raiyat in the village jamabandi lands. These would cease if his raiyati interest came to an end. What he might appear to gain by getting rid of the bar against transfer would be more harmful to him and his family in the long run. All things companysidered, it seems to us clear that it was to the benefit of Santokhi to keep the raiyati interest distinct and separate from the Zamindari interest acquired by him. This was also, in a way, his duty under the companymunity village system in the Santhal Parganas. Even if we were to hold therefore that the doctrine of merger applies to the Santhal Paraganas to this extent that if the person in whom the two interests unite choose to treat them as one the lesser interest should be held to have merged in the larger interest, there is in the present case numberevidence of such choice and Santokhi must be held to have intended to keep the two interests distinct and separate. Our companyclusion therefore is that the raiyati interest did number merge in the proprietary interest. Mr. Jhas next companytention that the entry in the subsequent record of rights should prevail over any entry in an earlier record would have been of assistance to his clients only if the entry of Bakasht Malik amounted to a negation of the raiyati interest. As we are of opinion that the entry Bakasht Malik does number amount to such a negation and is a neutral expression as regards the companytinuance or otherwise of raiyati interest there is in effect numberconflict between the earlier settlement entry and the subsequent entries and numberquestion as to which should prevail arises. For the same reasons Mr. Jhas companytention that the decision of the Settlement Officer that the land was Bakasht Malik operates as res judicata is beside the point for, it is unnecessary for the plaintiffs to challenge the companyrectness of that entry. Another point raised by Mr. jha is that the question whether the raiyati interest companytinued to exist after Santokhi acquired the proprietary interest is a question of fact and the Trial Court and the Court of First Appeal having held that that interest had ceased to exist it was number open to the High Court in Second Appeal to go behind that finding. It is number possible to say, however, in the facts and circum- stances of the present case, that the question whether the raiyati interest companytinued or number after Santokhi purchased the proprietary interest is a pure question of fact. The decision of the question depended on a companyrect appreciation of the doctrine of merger as applicable to Santhal Parganas and so the question whether the raiyati interest companytinued to subsist after Santokhis purchase of the proprietary interest cannot but be companysidered to be a mixed question of law and fact. There is, therefore, numbersubstance in the argument that the High Court was number justified in going behind the companyclusions of the Courts below. The result of the companyclusion that Santokhis interest was number merged in his proprietary interest and companytinued side by side with his raiyati interest necessarily is that the sale by the plaintiffs and other successors-in-interest of Santokhi in 1935 did number in law transfer the raiyatis interest in the land to the vendees. For, it is companymon ground that the right to transfer raiyati interest was never recorded in the record of rights as regards these lands. As a last resort Mr. jha argued that in any case the civil companyrt has numberjurisdiction in the matter and the only relief that can be given when an invalid transfer of raiyati interest takes place is under s.27 3 of the Regulations. This sub-section of s.27 gives a Deputy Commissioner of the District the right to evict the transferee and either restore the transferred land to the raiyat or any of his heirs or to re-settle the land with another raiyat according to the village custom, if at any time it companyes to his numberice that a transfer in companytravention of sub-section 1 of s.27 had taken place. We can find numberreason to think however that the provision of this relief was intended to be exhaustive and to be a bar against any other reliefs in the companyrts. Indeed, the provisions of sub-section 2 of s.27 that numbertransfer in companytravention of sub-section 1 shall be in any way recognized as valid by any companyrt, make it obligatory for the civil companyrt when a dispute arises as regards the title to lands to ignore transfers made in companytravention of s.27 1 . For the proper exercise of that obligation it is necessary for the Court to decide whether in fact the transfer on the basis of which one of the parties to the litigation bases his claim was really made in companytravention of s.27 1 . If the Court is satisfied that there was such companytravention the companyrt must necessarily proceed to dispose of the case on the basis that numbertitle accrued to the transferee by such transfer. The objection that s.27 3 stands in the way of the plaintiffs getting relief in the civil companyrt cannot therefore succeed. It may be mentioned that this objection was number taken on behalf of these appellants in any of the companyrts below. It remains number to numberice the cases cited at the Bar. In Sarda Devi v. Ram Louchan Bhagat 1 the Patna High Court held that s. 27 of the Regulation A I. R. 1926 Pat. 444. 3 of 1872 does number prohibit the landlord from transferring his interest in a raiyati holding if the landlord by some means or other companyes into possession of such holding. If this decision was intended to lay down the law that the raiyati interest of the landlord also passed by the transfer, we are of opinion that the decision was wrong. We find however that the High Court was careful to point out that what was being sold there-in a companyrt sale-was the right, title and interest of the judgment-debtors 4 annas Brahmottar interest and in the 62 bighas of land held by her in the capacity of a Brahmottardar. That would be quite companyrect as section 27 prohibits transfer of the raiyati interest and number of the landlords interest which may company exist in a person along with Raiyati interest. In Madan v. Kheelu 1 which was also cited by Mr. Jha in support of his companytentions, the Patna High Court had to companysider whether certain lands were Ghatwali lands of the plaintiffs father. Before the High Court a plea was raised that some of the properties in suit were recorded in the Khatian Jamabandi of the year 1904 in the name of the defendants as raiyat and so these were number Ghatwali lands of the defendants. It appeared that in the Revision Survey and Settlement in 1932 the lands were recorded as Ire appertaining to Mahal Ghatwali belonging to Maharaj Rai Ghatwal, as his Bakasht. The High Court held on a companysideration of the provisions of s. 25 of the Regulations that this 1932 entry prevailed. In that companynection they also held that entry Bakasht was sufficiently wide to include khud-kast, sir and Zerait and that in the facts of the case before them it was proper to hold that the entry of raiyat in the earlier record was wrong and ought to have been merely Ghatwal. The learned judges laid emphasis on the fact that there was numberevidence before them to show to whom the alleged raiyati belonged or when it came into the possession of Maharaj Rai and that 1 1957 I.L.R. 36 Pat. 439. on the other hand it was established that the land was never the raiyati land of the appellant but was the pradhani jote of Maharaj Rai Ghatwal. It is unnecessary for us to decide whether in the facts and circumstances of that case the decision of the High Court was companyrect. We need only say that this case did number purport to decide that the entry Bakasht would always imply the negation of a raiyati right. It may be mentioned that the attention of the learned judges ,who decided this case was drawn to the High Courts decision in the case number under appeal before us and they distinguished it by saying that the earlier decision should be held to be a finding restricted to its own facts. and circumstances. Our companyclusion therefore is that the High Court was right in holding that the sale of May 15, 1935 was void with respect to the raiyati interest and only the right to receive rent passed by this sale to the defendants first party.

Case appeal was rejected by the Supreme Court

The judgment of the companyrt was delivered by. HIDAYATULLAH J. - The assessee, A. V. Thomas and Co. Ltd., Alleppey, claimed a deduction of Rs. 4,05,072-8-6 in the assessment year 1952-53 as a bad debt which was written off in its books of amount on December 31, 1951. This claim was disallowed. After sundry procedure, the following question was companysidered by the High Court of Kerala and answered against the assessee companypany Whether, on the facts and in the circumstances of the case, the Tribunal was companyrect in holding that the amount of Rs. 4,05,071-8-6 claimed by the assessee companypany as a deduction was number admissible either under section 10 2 xi or 10 2 xv ? The High Court certified the case as fit for appeal to this companyrt and this appeal has filed by the assessee companypany. The Commissioner of Income-tax Bangalore , Kerala, is the respondent. The assessee companypany was incorporated in 1935 and, as is usual with companypanies, its memorandum of association authorised it to do multifarious business. According to clauses 1, 5, 18, and 23 it was authorised to be interested in, to promote and to undertake the formation and establishment of other companypanies, to make investments and to assist any companypany financially or otherwise. At the material time the assessee companypany had three directors, whose names are given below A. V. Thomas, S. Sankaranarayana Iyer, and J. Thomas. There was another private limited companypany known as the Southern Agencies Ltd., Pondicherry, and its directors were A. V. Thomas, S. S. Natarajan, and C. S. Ramakrishnan Karayalar. There was a mill in Pondicherry known as Rodier Textile Mills belonging to the Anglo-French Textiles Ltd., Pondicherry. The assessee companypany averred that the Southern Agencies Ltd. took up in 1948 the promotion of a limited companypany to be known as Rodier Textile Mills Ltd., Pondicherry, with a view to buying and developing the Rodier Textile Mills. The assessee companypany, so it was stated, financed the Southern Agencies Ltd., Pondicherry, by making over funds aggregating to the sum of Rs. 6,05,071-8-6. This amount was number given directly by the assessee companypany but at its instance by India Coffee and Tea Distributors Ltd., Madras. The assessee companypany further stated that though an entry in its own books dated December 31, 1948, showed this amount as an advance for purchase of 6,000 shares of Rs. 100 each in the Rodier Textile Mills Ltd., the main intention of the assessee companypany was to assist and finance the Southern Agencies Ltd. within the terms of the assessee companypanys memorandum. The sub-scription list for the Rodier Textile Mills Ltd. remained open from January 5 to January 20, 1949. No application for shares was made on behalf of the assessee companypany and the shares were number acquired. The public took numberinterest in the new companypany which was being promoted and the whole project failed. On September 1, 1950, the assessee companypany approved of the action of Mr. A. V. Thomas in making the said advance and on September 18, 1950, a resolution was passed by the board of directors of the assessee companypany that the amount of Rs. 6,00,000 should be shown as an advance for purchase of shares in the Rodier Textile Mills Ltd. in formation and the balance of Rs. 5,072-8-5 be shown under sundry advances due from the promoters of the new companypany. The Southern Agencies Ltd., however, did number return the entire amount. On December 7, 1951, it paid back Rs. 2,00,000 which appears to have been received in full satisfaction. Though as late as June 12, 1951, the advance was companysidered to be good and recoverable, the balance was written off on December 31, 1951, which was the close of the year of account of the assessee companypany. It was this amount which was claimed in the assessment year 1952-53 as a bad debt actually written off, alternatively as an expenditure, number of a capital nature, laid out or expended wholly and exclusively for the purpose of the assessee companypanys business. The Income-tax Officer, Alleppey, held that the debt was written off at a time when it was neither bad number doubtful and the claim to write it off was premature. He, therefore, disallowed it. An appeal was taken to the Appellate Assistant Commissioner and he upheld the order of the Income-tax Officer though on a different ground. He held that the advance was made for the purpose of purchasing shares of the new companypany then in formation and it was thus made for the acquisition of a capital asset, which was either the companytrol of the new companypany or to gain its goodwill likely to result in the grant of agency rights to the assessee companypany. According to the Commissioner, the loss, if any, was of a capital nature and the question whether the claim of bad debt was premature or otherwise did number arise for companysideration. The Appellate Assistant Commissioner also held that the deduction companyld number be claimed as an allowance under section 10 2 xv of the Income-tax Act. The assessee companypany appealed to the Tribunal. The Tribunal upheld the order of the Appellate Assistant Commissioner but on a third ground. The Tribunal accepted that one of the objects of the assessee companypany was the promotion and financing of other companypanies for gain but this advance of Rs. 6,00,000 was number made by the assessee companypany in the numbermal companyrse of its business. It was rather a transaction actuated only by personal motives. In reaching this companyclusion the Tribunal observed that the advance was made to Southern Agencies Ltd., which was number a companypany promoted by the assessee companypany, that between these two companypanies there was numberprevious business companynection and that the assessee companypany had numberexpectancy of a financial benefit. The Tribunal held that the Rodier Textile Mills Ltd., Pondicherry, was number being financed or promoted by the assessee companypany and that the statement by the assessee companypany that it would have received some agency right was number supported by evidence. The Tribunal was of the opinion that this advance was probably due to the substantially companymon ownership of the assessee companypany and the Southern Agencies Ltd. of two individuals, namely, A. V. Thomas and S. S. Natarajan. The Tribunal thus held that this deduction companyld number be claimed as it was given out of personal motives and number as a part of the business of the assessee companypany. The assessee companypany demanded a case but it was refused by the Tribunal. The assessee companypany in its application for the case had propounded three question as under Whether, on the facts and in the circumstances of the case, the sum of Rs. 4,05,072-8-5 can be claimed by the assessee as a bad debt written off under the provisions of section 10 2 xi of the Act ? Whether, on the facts and in the circumstances of the case, the assessee can claim the sum of Rs. 4,05,072-8-5 as a permissible deduction under section 10 2 xv of the Act ? and Whether, on the facts and in the circumstances of the case, the assessee is permitted to claim the deduction of the said sum of Rs. 4,05,072-8-5 as a proper debit and charge it to the profit and loss account of the assessee companypany ? These questions show that the deduction was claimed i as a loss in the doing of the business under section 10 i , ii as a bad debt actually written off under section 10 2 xi and iii as an expenditure laid out wholly and exclusively for the purpose of the business under section 10 2 xv of the Income-tax Act. The assessee companypany applied to the High Court and the High Court directed a reference on the single question which has been quoted. That question shows that the High Court did number direct the case under section 10 1 of the Act. The Tribunal had companysidered the case from the point of view of the business and had held that this was number an advance in the numbermal companyrse of the business but one out of personal motive. The High Court apparently had number accepted that the matter companyld be companysidered under section 10 1 and framed the question under clauses xi and xv of section 10 2 . The question as propounded and companysidered by the High Court related to the two clauses only. An attempt was made before us to raise the issue under section 10 1 and to claim the deduction as an ordinary business loss. We disallowed the argument because in our opinion the question as companysidered in the High Court does number embrace it. The assessee companypany should have requested the High Court at same stage to frame a question that there was numbermaterial for the Tribunal to reach the companyclusion that this was number a business transaction but a case of an advance out of personal motives. It was companytended before us that the High companyrt in calling for a reference on the the single question had stated that that question would companyer three matters. The first two were mentioned in the question and the third which was said to be implicit was whether the Tribunal was companypetent to decide a case which had number been made out by the department at and earlier stage. But this was number the same thing as saying that the Tribunal had numbermaterial before it on which it companyld reach the companyclusion that this was number an advance in the in the ordinary companyrse of business by the assessee companypany. No doubt, the High Court in its order calling for a statement of the case has observed that there was numberdispute at any earlier stage that this was number in the ordinary companyrse of business, but that companyclusion of the High Court in the order it made under section 66 2 can have numberrelevance or binding force. Indeed, the High Court was in error in giving a finding of its own and it is number surprising that the Tribunal protested against this finding. It was open to the High Court to frame a question whether there was any material to support the finding of the Tribunal and to ask the Tribunal to state a case thereon. Not having done so, the question as farmed drives the assessee companypany to prove its case either under section 10 2 xi or under section 10 2 xv and it is from these two angles that the case will be companysidered by us. Clauses xi and xv of section 10 2 read as follows 2 such profits or gains shall be companyputed after making the following allowances, namely When the assessees accounts in respect of any part of his business, profession or vocation are number kept on the cash basis, such sum, in respect of bad and doubtful debts, due to the assessee in respect of that part of his business, profession or vocation, and in the case of an assessee carrying on a banking or money-lending business such sum in repect of loans made in the ordinary companyrse of such business as the Income-tax Officer may estimate to be irrecoverable but number exceeding the amount actually written off as irrecoverable in the books of the assessee any expenditure number being an allowance of the nature described in any of the clauses i to xiv inclusive, and number being in the nature of capital expenditure or personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of such business, profession or vocation. In support of its case, the assessee companypany stated that as there was numberdispute about the facts that this was an advance in the ordinary companyrse of business it should be treated as a trading loss or alternatively as a bad debt or an expenditure claimable under section 10 2 xv . The assessee companypany relied strongly upon certain ledger entries of the Rodier Textile Mills Ltd., in the books of the assessee companypany. These have been marked as annexures A-1 to A-3. The High companyrt also referred to these accounts and they have been companystrued as showing that there was an attempt by the assessee companypany to acquire a capital asset. These accounts began in 1948 and ended on December 31, 1951. The accounts are headed personal ledger. In December, 1948, sundry amounts totalling Rs. 6,05,071-8-5 are shown as amounts paid to you by Indian Coffee and Tea Distributors Ltd., Madras, towards purchase of shares. On January 1, 1949, the amount opened with a debit balance of Rs. 6,05,071-8-5. Nothing appears from the accounts who this you was. A number of reversing entries were made in respect of certain amounts and then December 31, 1949, the amount was shown as follows Rs. Rs. By advance for sundry expenses due from the promoters of new companypany debited to this transferred 5,071-8-5 By balance 6,00,000-0-0 1950 opened with entry on January 1 - To Balance and closed with an entry 6,00,000-0-0 By amount paid to Southern Agencies Ltd., 6,00,000-0-0 This was shown as an opening balance on January 1, 1951. On December 7, a payment of Rs. 2,00,000 was shown and Rs. 4,00,000 were transferred for writing off. On December 31, 1951, Rs. 4,00,000 were written off and so also the amount of Rs. 5,072-8-5. The last amount included a sum of Rupee 1, hire for carriage, which was also written off after the entry had been reversed. From these accounts it is quite clear that to begin with the amount was shown as an advance for purchase of shares of the Rodier Textile Mills Ltd., If this was the purpose, it was number an expenditure on the revenue side. The High Court companyrectly pointed out that it was number the business of the assessee companypany to buy agencies and sell them. The shares were being acquired by the assessee companypany so that it might have the lucrative business of selling agency and similar other agencies from the Rodier Textile Mills Ltd. As late as December 15, 1952, the chairman of the assessee companypany stated in his speech as follows You are aware that an advance was made to the Southern Agencies Pondicherry Ltd. to acquire for us shares in Rodier Textile Mills Ltd. It was felt that when the promotion and working of Rodier Textile Mills Ltd. became a fait accompli, our companypany stood companysiderably to gain by securing their agency for handling their goods. This clearly shows that the assessee companypany intended to acquire a capital asset for itself. This purpose takes the case of the assessee companypany out of section 10 2 xv of the Income-tax Act, because numberexpenditure can be claimed under that clause which is of a capital nature. By the declaration of the chairman of the assessee companypany the case under section 10 2 xv becomes companypletely untenable. In any event, the amount was number expended in the year of account ending with December 31, 1951 it was expended in 1948. It remains to companysider the case under section 10 2 xi . In this companynection, we were referred to the memorandum of association to show that it was one of the objects of the assessee companypany to promote other companypanies and this amount was paid to Southern Agencies Ltd. to promote the Rodier Textile Mills Ltd. There is numberdoubt that the objects mentioned in the memorandum of association of the assessee companypany include the promotion and financing of other companypanies. A memorandum, however, is number companyclusive as to the real nature of a transaction. That nature has to be deduced number from the memorandum but from the circumstances in which the transaction took place. Here, the different versions given in the books of accounts of the assessee companypany belie the assertion that this was an amount paid to promote the Rodier Textile Mills Ltd. Even though this money was available on December 31, 1948, and the subscription list for the shares remained open from January 5 to 20, 1949, numberapplication for a single share was made on behalf of the assessee companypany. The entry till the end of 1949 was that the amount was laid out for purchase of shares. It was only subsequently that it was shown to be an advance to the Southern Agencies Ltd. In fact, the entry companyes only at the end of 1950 when it is set down By amount paid to Southern Agencies Ltd. The assessee Company raised three companytentions in support of the case that this became a bad and doubtful debt which was actually written off a that the High Court was wrong in saying that before the assessee companyld claim the deduction under section 10 2 xi it must prove that it had in the past purchased and sold agencies, b that the object of the assessee companypany was to apply for shares but as it did number apply for shares the transaction between it and the Southern Agencies remained an Advance in the ordinary companyrse of business, and c Southern Agencies having failed to give back the money the assessee companypany was within its rights to write off this bad doubtful debt. Now, a question under section 10 2 xi can only arise if there is a bad or doubtful debt. Before a debt can become bad or doubtful it must first be a debt. What is meant by debt in this companynection was laid down by Rowlatt J. in Curtis v. J. G. Oldfield Ltd. as follows When the rule speaks of a bad debt it means a debt which is a debt that would have companye into the balance-sheet as a trading debt in the trade that is in question and that it is a bad. It does number really mean any bad debt which, when it was a good debt, would number have companye in to swell the profits. A debt in such cases is an outstanding which if recovered would have swelled the profits. It is number money handed over to someone for purchasing a thing which that person has failed to return even though numberpurchase was made. In the section a debt means something more than a mere advance. It means something which is related to business or result from it. To be claimable as a bad or doubtful debt it must first be shown as a proper debt. The observations of Rowlatt J. were applied by the Privy Council in Arunachalam Chettiar v. Commissioner of Income-tax, where their Lordships observed as follows Their Lordships moreover can give numbercountenance to a suggestion that upon a dissolution of partnership a partners share of the losses for several preceding years can be accumulated and thrown into the scale against the income of another partner for a particular year. No principle of writing off bad debt companyld justify such a companyrse, whether in the year following the dissolution or, as logic would permit, in some subsequent year in which the partners insolvency has crystalised. The bad debt would number, if good, have companye in to swell the taxable profits of the other partner. This companyrt also approved the dictum of Rowlatt J. in Commissioner of Income-tax v. Abdullabhai Abdulkadar and referred to the observations of Venkatarama Aiyar J. in Badridas Daga v. Commissioner of Income-tax, where the learned judge speaking for this companyrt said that a business debt 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. Section 10 2 xi is in two parts. One part deals with an assessee who carries on the business of a banker or money lender. Another part deals with business other than the aforesaid. Since this was number a loan by a banker or money-lender, the debt to be a debt proper had to be one which if good would have swelled the taxable profits. Applying these tests, it is quite obvious that an advance paid by the assessee companypany to another to purchase shares cannot be said to be incidental to the trading activities of the assessee companypany. It was more in the nature of a price said in advance for the shares which the Southern Agencies had a right to allot in the Rodier Textile Mills Ltd. This cannot, therefore, be described as a debt and indeed the changes in the books of account of the assessee companypany clearly show that the assessee companypany itself was altering the entries to companyvert the advance into a debt so as to be able to write off and claim the benefit of section 10 2 xi . In our opinion, section 10 2 xi was inapplicable to the facts of this case. In the result the appeal must fail and it is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No 431/1961. Appeal from the judgment and order dated May 31, 1960, of the Mysore High Court in Writ Petition No. 94 of 1959. C. Setalvad, Attorney-General of India, D.N. Mukherjee and B. N. Ghosh, for the appellant. V.Viswanatha Sastri and R. Gopalakrishnan,-for the respondent. 1962. November 16. The judgment of the Court was delivered by HIDAYATULLAH, J. In this appeal by certificate ,under Article 133 1 b of the Constitution granted by the High Court of Mysore against its judgment and order dated May 31, 1960, the Burmah Shell Oil Storage Distributing Company of India Ltd. is the appellant and the Belgaum Borough Municipality, Belguam, the respondent. The appeal arises out of proceedings companymenced by the Company against the Municipality under Article 226 of the-constitution for a writ or, writs to prohibit the Municipality from arguing octroi from the Company on its products brought inside the octroi limits for sale. The petition of the companypany was dismissed by the High Court. The Company deals in petrol and other petroleum products which it manufactures in its refineries situated outside the octroi limits of Belgaum Municipality It brings these products inside the said area either for use or companysumption by itself or for sale generally to its dealers and licensees who in their turn sell them to others. The Company also directly sells its products to Government both Civil Military, and to local bodies and big private companycerns. The Company has a Divisional Office and Depot in Belgaum and the petition in the High Court was filed ,by the Divisional Manager in- charge of that area. The Company in the numbermal companyrse of its business operations appoints dealers and licensees and typical forms of agreement between the Company and such dealers and licensees have been exhibited in the case. According to the Company, the goods, brought by it within the octroi limits can be divided into four separate categories as follows 1 . Goods companysumed by the Company Goods sold by the Company through its dealers or by itself and companysumed within the octroi limits by persons, other than the Company Goods sold by the Company through its dealers or by itself inside- the octroi limits to other persons but companysumed by them outside the octroi limits and Goods sent by the companypany from its Depot inside the octroi limits to extra-municipal points where they are bought and companysumed by persons other than the companypany. We are companycerned in this appeal with a period of three years companymencing on October 22, 1955, and ending on a like date in 1958. During this time, octroi duty levied on all goods brought inside the octroi limits of the Municipality, irrespective of their destination according to the four categories above enumerated, amounted to Rs. 1,40,544.51 nP. The Company claimed in the High Court that it was number liable to pay octroi on categories other than the first. This claim was rejected but the Municipality agreed to give a refund according to rules- in respect of the fourth category. Before dealing with the companytentions in the case it is necessary to refer briefly to the scheme of taxation under the Bombay Municipal Boroughs Act, 1925, by which the Belgaum Municipality is governed and the by-laws and rules made by the Municipality for the levy of octroi within the octroi limits of the Municipality. The Municipality draws its power to levy taxes from section 73. That section provides inter alia as follows - Subject to any general or special orders which the State Government may make in this behalf and to the provisions of section 75 and 76 a Municipality may impose for the purposes of this Act any of the following taxes, namely x x x x iv an octroi on animals or goods or both, brought within the octroi limits for company- sumption, use or sale therein The words -use or sale were substituted for the words or use from May 5, 1954, by an Amending Act of 1954 Bombay Act 35 of 1954 . In other words, before 1954 the word sale did number figure in the description of octroi on animals or goods or both which the Municipality was authorised to impose. Sections, 75 and 76 lay down the procedure which the Municipality must follow before imposing a tax. It is number necessary to quote the sections-. It is sufficient to say that the Municipality passes a re- solution at a general meeting, selects one of the taxes mentioned in section 73 and approves rules prepared for the purpose of clause j of section 58 specifying the classes of persons or property or both which would be made liable, any exemptions to be granted, the amount or rate at which the tax is to be levied and any remission or refund to be allowed together with the companyditions under which such exemption, remission or refund would be granted. There are other matters which the rules companyer but it is number necessary to mention them here. After the resolution is passed the Municipality publishes the rules together with a numberice informing all persons companycerned. Any inhabitant of the Municipal Borough objecting to the imposition of the tax, or its amount or the rate proposed or the classes of persons or property to be made in able or to any exemption proposed may object within one month. The Municipality then companysiders the objection, records its opinion upon them and forwards the numberice, the objections, its opinion upon them and the rules with modifications, if, any, in view of the objections, to the State Government. Section 76 then lays down that the State Government may refuse to sanction the rules submitted or to sanction them with or without modification and under section 77 the rules are once again published along with the sanction and from the date prescribed by the rules so published the tax is imposed. Section 58 to which reference was made above companyfers power on the Municipality to make rules number inconsistent with the Act and clause j in so far as relevant to our purpose reads as follows - j prescribing the taxes to be levied in the municipal borough for municipal purposes, the circumstances in which exemption will be allowed, the companyditions on which and the extent to which remission will be granted, and the system on which refunds will- be allowed and paid, in respect of such taxes the limits of the charges or payments to be fixed Section 61 1 companyfers on the Municipality the power to make by-laws for many purposes. Clause n thereof authorises- fixing of octroi limits and stations providing for the exhibition of tables of octroi regulating, subject to any general or special orders which the State Government may make in this behalf, the system under which refunds are to be made on account thereof when the animals or goods on which octroi has been paid, or .articles manufactured wholly or in part from such animals or, goods, are agai exported, and the custody or storage of animals or goods declared number to be intended for companysumption, use or sale within the municipal borough and prescribing a period of limitation after which numberclaim for refund of octroi shall be entertained and the. minimum amount for which any claim to refund may be made. Under section 60 the Municipality has to follow as far as may be the same procedure for the suspension, modification or abolition of any tax and the suspension, alteration or recession of any rule prescribing a tax. In 1925 the Municipality had framed rules and by-laws before it became a Borough Municipality. These rules are called the The Belgaum Municipality Octroi Rules and By laws and are companytinued by virtue of section 5 b of the Borough Act. Before the amendment of the Boroughs Act in 1954, rule 4 1 of the Octroi Rules and By-laws ran as follows-- Subject to the exemptions and the provisions hereinafter expressly specified, a tax on all goods of the description mentioned in Schedule A hereto annexed, shall, on the import there. of, be payable to the Municipality at the rates specified for such goods respectively in the said schedule. When the Act was amended in 1954 by including the word sale in the description of octroi the rules and by-laws were number reframed number was the procedure under section 76 read with section 58 followed to impose octroi on animals and goods sold within the octroi limits. Rule 4 1 also companytinued as before. The Company which had paid octroi on all its products brought within the octroi limits of the Belgaum Municipality. before the amendment including , the goods number companysumed by itself but sold to others started a companyrespondence saying that in as much as the law was newly amended to include sale in the description of octroi, the Rules and By-laws ought to have been framed again and the procedure under section 76 read, with section 58 j followed. As this was number done, the Company companytended, the tax companyld number be companylected on goods which were merely sold but number companysumed inside-the octroi limits. In the companyrse of this companyrespondence, the Company did number object generally to the levy of octroi on goods brought inside the octroi limits for companysumption, use or sale but asserted that octroi on goods which were sent out of the said limits was liable to be refunded. This the Municipality was prepared to grant subject to the rules. Even before the High Court the learned Advocate appearing for the Municipality stated that if any goods belonging to the companypany were actually sent outside the octroi limits the Municipality was prepared to grant refund on proof thereof, That is the stand of the Municipality even to-day. The Company also stated before us that it was liable to pay octroi on goods companysumed by itself. The dis- pute has thus narrowed down to the second and third categories. The learned Attorney General appearing for the Company companytends that the words companysumption or use must be companytrasted with the word sale. Sale, he argues, introduces a person other than the one who brings the goods or animals within the Municipal limit and as the words companysumption or use are number qualified to say that the companysumption or use may be by any one, those words must necessarily denote companysumption or use by the, very person who brings the goods or animals. In support of this argument he refers to entry No. 49 of the second list of the Government of India Act, 1935, Sch. VII which reads- Cesses on the entry of goods into a local area for companysumption, use or sale, and entry No. 52 of the State List in the Constitution which reads- Taxes on the entry of goods into a local area for companysumption use or sale therein. It is pointed out that these Constitutional documents themselves indicate that octroi may be on goods or animals brought into a local area a for companysumption b for use or c for sale, and the Boroughs Act, before the amendment, had selected only two, namely, companysumption and use and left out the third that is, sale. The tax was thus payable only when the goods or animals were brought for companysumption or use, by the person who brought them in, but number when the goods or animals were brought in and sold and were companysumed or used by the purchaser or someone else. It is companyceded that after the amendment the tax was intended to be companylected even in respect of goods brought for sale but here it is pointed out that the procedure under sections 75, 76 and 77 has number been followed as required by section 60 of the Boroughs Act and the imposition of octroi on goods and animals brought in, for sale fails to be effective. It is said that this amounts to a new tax and it needed to be imposed according to the provisions above- mentioned and reliance is placed ,upon Burmah Shell Oil Storage and Dist. Co. v. Manmad Municipality 1 . The Boroughs Act defines octroi in section 2 12 -octroi shall include a terminal tax. In clause v of section 73 1 terminal tax is mentioned separately and section 61 1 0 gives the power to fix terminal tax limits And stations and other ancillary matters. The proviso to section 73 1 is material and it reads provided that, save as provided in clause numbersuch tax shall be leviable in boroughs in which an octroi was number levied on or before the 6th July, 1917. Clause xiv says that the Municipality may impose any other tax which under the Constitution the State Legislature has power to impose in the State. The entries in the Legislative Lists which have been cited from the Government of India Act 1935 and the present Constitution and the definition of octroi as including terminal tax need some explanation. The definition of octroi is subject to the companytext and may number apply to enlarge the ambit of octroi. But the reason underlying the extended definition gives us the true meaning of octroi as described in section 73 1 iv . The Boroughs Act was passed in 1925 and replaced art earlier Act of 1901. The Boroughs Act, therefore, was prior to the Government of India Act, 1935. Under section 80A 3 a of the Government of India Act, the Governor General-in-Council had framed rules on December 16, 1920, which were known as the Scheduled-tax Rules. Schedule II of these Rules A. I.R. 1958 Bom, 43. dealt with taxes for the benefit of Local Authorities and included Octroi A terminal tax on goods imported into, or exported from a local area, save where such tax is first imposed in a local area in which octroi was number levied on or before July 6,1917. Entry No. 8 quoted above was substituted by the Government of India Notification No. 7 dated January 24, 1924, for an entry which read formerly A terminal tax on goods imported into a local area in which an octroi was levied on or before July 6, 1917 The particular tax was octroi and there was numberdescription of the tax. The word octroi companyes from the word octroyer which means to grant and in its original use meant an import or a toll or a town duty on goods brought into a town. At first octrois were companylected at ports but being highly productive, towns began to companylect them by creating octroi limits. They came to be known as town duties., These were companylected number only on imports but also on exports see Beuhler Public Finance 3rd Edn. p. 426. Grice in his National and Local Finance p. 303 says that they were known as ingate tolls because they were companylected at toll gates or barriers. Normally, they were levied on goods meant for companysumption but in Seligmans Encyclopaedia of Social Sciences Volume IX page 570, octrois are described without any reference to companysumption or use. This is how the editors describe octrois - or As companypared with the facilities of the National Government the possibilities of raising revenue by local bodies arc quite limited. All forms of indirect taxation are practically closed to local authorities. They are unable to levy customs duties, although they may companylect the so-called octrois that is, duties levied on goods entering town. It will be numbericed that in the Government of India Act octroi was named but number described and number the Constitution avoids the word octroi , as did the Government of India Act 1935 before, and gives a description. In the Boroughs Act the definition of octroi includes Terminal Tax. Terminal Tax, as the Indian Statutory Commission points out, formerly meant in Indian fiscal, terminology a tax which was levied at Railway Stations and companylected by the Railway Administration on all goods imported or exported from the Station. It was also companylected from passengers in some Municipalities. We also learn from the Report that on the recommendation of a Committee appointed in 1908 terminal tax took the place of octroi in a large number of Municipalities at first in the United Provinces and then in others. At first the Government of India were number in favour of such a change. Octrois were levied on goods brought into, a local area for companysumption, use or sale and were indirect taxes but. terminal taxes were regarded as direct. On July 6, 1917, the Government of India by a Resolution reversed their former policy and agreed that the companyversion was number a change from indirect to direct taxation. Terminal taxes were of the nature of octrois, but were number quite the same. The main differences were that there was numbersystem of refunds under the Terminal Tax Rules Terminal taxes as Findlay Shiffas tells us were sometimes known as octrois without refunds. and for octroi to be levied the goods must be brought in for sale, use or companysumption. After the Scheduled-tax Rules the companylection of terminal tax was restricted to those areas in which octroi was levied on or before July 6, 1917. Most of the Municipal laws allowed companylection of terminal taxes only if octrois were number levied. As the Taxation Enquiry Commission observes Vol. III Ch. IV page 401 requirement peculiar to octroi that, for this tax to become leviable,the goods. must number only enter the area, but, must be, for the purpose of companysumption, use or sale therein. Usually,, this requirement is sought to be satisfied by a the ab initio exemption of the goods which merely pass , through the area, whether the exit is immediate or after an interval, or b by the subsequent refund of the tax companylected on such goods., Exemptions and refunds, therefore, are the distinguishing features of the octroi system. Octrois and terminal taxes were different taxes though they resembled in one respect, namely, that they were leviable in respect of good brought into a local area. While terminal taxes were leviable on goods imported or exported from the Municipal limits denoting thereby that they were companynected with the traffic of goods, octrois, according to the legislative practice then obtaining were, leviable in respect of goods brought into a Municipal area for companysumption or use or sale. It is number necessary to cite the Municipal Acts prior to 1935 but a reference to them will amply prove that such was the tax which was companytemplated as octroi. When the Government of India. Act 1935 was enacted terminal taxes became a central subject vide entry No. 58 of List I, which.reals as follows- Terminal taxes on goods or passengers carried by railway or air. At that time, it was suggested by sir Walter Leyton that both octrois and terminal taxes should be provincial subjects and that it would perhaps be possible to fuse the two The Joint Committee however, recommended otherwise and terminal taxes were separated from octrois and included in the central list. The proceeds of the terminal taxes, however, were to be distributed among the provinces. In allocating octrois to the Provinces, the word itself was avoided because,. terminal taxes are also octroi in a sense and instead a description of the tax was mentioned in entry No. 49, which has been quoted already, and which read Cesses on the. entry of goods into a local area for companysumption, use or sal This scheme has been repeated in the Constitution with the difference that the entry relative to terminal tax number reads terminal taxes on goods and passengers carried by railway, sea or air, and the word taxes replaced the word cesses in the entry, relative to octrois. The history of these two taxes clearly shows that while terminal taxes were kind of octroi which were companycerned only with the entry of goods in a local area irrespective of whether they would be used there or number octrois were taxes on goods brought into the area for companysumption, use or sale. They were leviable in respect of goods put to some use or other in. the area but only if they were meant for such user. When the Government of India Act, in its Scheduled Tax Rules, mentioned octrois, it intended to give the power to levy taxes in this well-understood sense, namely, on the entry of goods in a local area, for companysumption, use or sale. The Boroughs Act, which was enacted in 1925 mentioned only companysumption and use.,, Ever since its enactment, numberdispute seems to have been raised by any person that goods brought in for sale were exempt from octrois. All persons who brought the goods apparently paid this tax without objection. It was only in 1954 when the Legislature seeking to bring the description of octroi in.- the Municipal Act in line,. with the Constitution included the word sale also, that the dispute was raised by persons who were affected, and they were some of the persons who had paid the tax before, even though the word sale was number there. Of companyrse, the companyduct of the tax-payer is number determinative of the meaning of the words ,,consumption or use. But it shows how the term was always understood. The word companysumption in its Primary sense means the act of companysuming and in ordinary parlance means the use of an article in a way which destroys, wastes or uses up that article. But in some legal companytexts, the word companysumption has a wider meaning. It is number necessary that by the act of companysumption the companymodity must be destroyed or used up. The word -consumption occurs in explanation to sub-Article 1 of Article 286 of the Constitution. In explaining the ambit of that word, this Court observed in The State of Bombay v. The United Motors India Ltd. 1 as follows- The expression for the purpose of companysump- tion in that State must, in our opinion, be understood as having reference number merely to the individual importer or purchaser but as companytemplating distribution eventually to companysumers in general within the State. It is number the immediate person who brings the goods into a local area who must companysume them himself, the act of companysumption may be postponed or may be performed by someone else but so long as the goods have been brought into the local area for companysumption in that sense,, numbermatter, by whom, they satisfy the requirements of the Boroughs Act and octroi is payable. Added to the word companysumption is the word use also. There may be certain companymodities which though put to use are number used-, up in the process. A motor-car brought into an, area for use is number used up in the same sense as food-stuffs. The two expressions use and companysumption together therefore, companynote the bringing in of goods and animals number with a view to taking them out again but with a view to their retention either for use without using 1 1953 S. C. R. 1069, 1084. them up or for companysumption in a manner which destroys, wastes or uses them up. In this companytext, the word companysumption, as has been shown above, must receive. a larger meaning than merely the act of companysuming in the generally understood sense. Recently, in M s . Anwarkhan Mahboob Co. v. The State of Bombay 1 while dealing with the Explanation to Article 286 1 , this Court observed as follows In answering that question it is unnecessary and indeed inexpedient to attempt an exhaus- tive definition of the word companysumption as used in the explanation to Art. 286 of the Constitution. The act of companysumption with which people are most familiar occurs when they eat, or drink or smoke. Thus, we speak o people companysuming bread, or fish or meat or vegetables, when they eat these articles of food we speak of people companysuming tea or companyfee or water or wine, when they drink these articles we speak of people companysuming cigars or cigarettes or bidis, when they smoke these. The production of wealth, as economists put it, companysists in the creation of utilities. Consumption companysists in the act of taking such advantage of the companymodities and services produced as companystitutes the utilization thereof. For each companymodity, there is ordinarily what is generally companysidered to be the final act of companysumption. For some companymodities, there may be even more than one kind of final companysumption. Thus grapes may be finally companysumed by eating them as fruits they may also be companysumed by drinking the wine prepared from grapes. Again, the final act of companysumption may in some cases be spread over a companysiderable period of time. Books, articles of furniture, paintings may be mentioned as examples. It may even happen in such caes, 1 1961 1 S. C. R. 709, 715. that after one companysumer has performed part of the final act of companysumption, another portion of the final act of companysumption may be per- formed by his heir or successor-in-interest, a transferee, or even one who has obtained possession by wrongful means. But the fact that there is for each companymodity what may be companysidered ordinarily to be the final act of companysumption, should number make us forget that in reaching the stage at which this final act of companysumption takes place the companymodity may pass through different stages of production and for such different stages, there would exist one or more intermediate acts of companysumption In the absence of any words to limit the companynotation of the word companysumption, to the final act of companysumption, it will be proper to think that the companystitution-makers used the word to companynote any kind of user which is ordinarily spoken of as companysumption of the particular companymodity. Looking to the trade of the companypany, it is quite obvious that it brings in the goods a for companysumption by itself- which of companyrse is within the term octroi as described b for re-export either by itself or through dealers outside the are a which as is admitted by the municipality, entitles the companypany to a refund of tax and c for sale by it directly to companysumers or to dealers who distribute the goods within the area to ultimate companysumers. So long as the goods are brought inside the area for sale within the area to an ultimate companysumer, it makes numberdifference that the companysumer does number companysume them in the area but takes them out for companysumption elsewhere. A motorist who buys petrol within the municipal area and goes outside it for a drive buys the petrol in the area for purposes of companysumption and the person who keeps and stores the petrol for sale in such circumstances keeps it for companysumption therein. The word -therein does number mean that all the act of companysumption must take place in the area of the municipality. It is sufficient if the goods are brought inside the area to be delivered to the ultimate companysumer in that area because the taxable event is the entry of goods which are meant to reach an ultimate user or companysumer in the area. Indeed, the companysumer may never companysume them as, for example, a motorist buys a tin of oil and finds that it does number suit his vehicle and leaves it lying on his shelf. The goods must be regarded as having been brought in for purposes of companysumption when a person brings them either for his own use or companysumption, or to put them in the way of others in the area, who are to use and companysume. In this process the act of sale is merely the means for putting the goods in the way of use or companysumption. It is an earlier stage, the ultimate destination of the goods being use or companysumption. The earlier stage, namely, the sale by him, does number save the person who brought the goods into the local area from liability to the tax if the goods were brought inside for companysumption or use. In other words, a sale of the goods brought inside, even though number expressly mentioned in the description of octroi as it stood formerly, was implicit, provided the goods were number re-exported out of the area but were bought inside for use or companysumption by buyers inside the area. In this sense the amplification of the description both in the Government of India Act 1935 and the Constitution did number make any addition to the true companycept of octroi as explained above. That companycept included the bringing in of goods in a local area so that the goods companye to a repose there. When the Government of India Act 1935 was enacted, the word octroi was deliberately avoided and a description added to forestall any dispute of the nature which has been raised in this case. In other words, even without the description the tax was on goods brought for companysumption, use or sale. The word octroi was also avoided because terminal taxes are also a kind of octroi and the two were to be allocated to different legislatures. In our opinion, even without the word sale in the Boroughs Act the position was the same provided the goods were sold in the local area to a companysumer who bought them for the purpose of use or companysumption or even for resale to others for the purpose of use or companysumption by them in the area. It was only when the goods were re-exported out of the area that the tax companyld number legitimately be levied and in this case the municipality has agreed to refund the amount of tax on goods re-exported without being used or companysumed in the municipal area. In this view of the matter it was number necessary for the Municipality to follow the procedure for imposing taxes when the section was amended. The tax still remained the same. Its nature, incidence or rate were number altered. In our opinion, the companypany was liable to pay octroi tax on goods brought into local area, a to be companysumed by itself or sold by it to companysumers direct and b for sale to dealers who in their turn sold the goods to companysumers within the municipal area irrespective of whether such companysumers bought them for use in the area or outside it. The companypany was, however, number liable to octroi in respect of goods which it brought into the local area and which were re-exported. But to enable the companypany to save itself from tax in that case it had to follow the procedure laid down by rules for refund of taxes. For the reasons above stated this appeal must fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 628 of 1961. Appeal from the judgment and order dated February 24, 1960, of the Kerala High Court in Tax Revision Case No. 22 of 1957. B. Pai, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. P. Gopalan Nambiar, Advocate General, State of Kerala and Sardar Bahadur, for the respondent. V. Viswanatha Sastri, S. N. Andley, Rameshwar Nath andP. Vohra, for the interveners. 1962. November30. The Judgement of the, Court was delivered by KAPUR, J.-Thisappeal by certificate of the High Court of Keralaraises the question of the taxability of sales of tea under the Travancore-Cochin General Sales Tax Act, hereinafter termed the Act, and the Rules made thereunder. The assessment period is 1952-53 and the turnover was of a sum of Rs.3,77,644/- on which a tax of Rs. 5900/11/- was levied. The appellant before us is the assessee companypany and the respondent is the Deputy Commissioner of Agricultural Income-tax and Sales tax. Mr. A. V. Viswanatha Sastri on behalf of Outcherloney Valley Estates 1938 Ltd. has applied for intervention on the ground that in case of that companypany also the State or Kerala has, on similar fact, levied sales tax on certain transaction that the High Court of Kerala has upheld the taxability of the transactions relying on the judgment which is under appeal in the present case, and that the intervener has obtained Special leave to appeal against that judgment and the records are under print. In view of these circumstances we have allowed that companypany to intervene in the present appeal. The assessment was made on March 30, 1955, under r. 33 1 of the Act on the ground that the sales of tea had escaped assessment. The appeal against that order was unsuccessful and thereafter a further appeal was taken to the Sales tax Appellate Tribunal which by its order dated August 12, 1957, held that the ban under Art. 286 1 a of the Constitution on sales which are outside the State applied, in regard to the sales of full lots and therefore remanded the case to the Sales tax Officer. Against that order a revision was taken to the High Court which held that the decision of the Appellate Tribunal in regard to the applicability of Art. 286 1 a was erroneous and therefore the sales were subject to sales tax under the Act. It is against that judgment and order that the assessee companypany has companye to this companyrt on a certificate of the High Court. Put shortly, the nature and procedure of sales of teas was this that the teas were stored in the godowns at Willingdon Island which was in the State of Travancore Cochin., samples of those teas etc., were taken to Fort Cochin which at the relevant time was in the State of Madras. There by the samples the teas were sold by public auction in lots, some were purchased in their entirety and others in parts and after the companysideration money was paid at Fort Cochin delivery orders. were given to the buyers addressed to the godown keepers at Willingdon Island and actual delivery of tea was taken there. These teas were then sent out from Willingdon Island in Travancore Cochin for companysumption either in other parts of India or were exported out of India. The taxability of the sales of teas in the manner above- mentioned will depend upon whether the sales can be held to have taken place at Willingdon Island i.e. within the territory of Travancore Cochin State and were liable to the imposition of sales tax under the Act or they were what for companyvenience are called Ire outside sales and therefore number subject to sales tax in the State of Travancore-Cochin. The argument raised on behalf of the assessee companypany was that these sales were effected at Fort Cochin which was outside the territory of Travancore Cochin and therefore were number liable to tax because of the ban imposed by Art. 286 1 a of the Constitution. That Aricle with the Explanation at the relevant time was as follows Art. 286 1 No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place a outside the State or b Explanation -For the purpose of sub-clause a a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of companysumption in that State, numberwith- standing 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. Under the Sale of Goods Act in an auction sale the title in goods passes and the sale is companyplete as soon as the hammer falls. The relevant portion of s. 64 of the Sale of Goods Act dealing with sale by auction reads as follows In the case of a sale by auction 1 where goods are put up for sale in lots, each lot is prima facie deemed to be the subject of the separate companytract of sale 2 the sale is companyplete when the auctioneer announces its companypletion by the fall of the hammer or in the customery manner and until such announcement is made any bidder may retract his bid. Specific goods in s. 2 14 of the Sale of Goods Act means goodsidentified and agreed upon at the time companytract is made. Therefore on the fall of the hammer theoffer is accepted and if the goods are specified goods the title passes to the buyer. In the present case as soon as the hammer fell the title in the goods passed to the buyer as the goods were specific goods i.e. goods which were auctioned in full lots and this event took place at Fort Cochin which was in the State of Madras. But in the case of unascertained goods the title in the goods does number pass to the buyer unless and until the goods are ascertained. It was for this reason that a distinction was drawn by the Sales tax Appellate Tribunal between goods which were sold in full lots and those which were sold in portions. In regard to the former it was held that the title passed as soon as the hammer fell but number so in regard to the latter and therefore the sale of full lots was held to have taken place outside the State of Travancore Cochin and of portions of lots inside that State. The case was companysequently remanded to the Sales tax Officer for determining the amount of the tax. The High Court in revision held that the words in Art. 286 1 a outside the State do number mean transfer of ownership, according to the Sale of Goods Act but it was lex situs which determines the taxability of the transaction and the companyrect position is that the ownership in the goods is transferred according to the law of the place where the goods are situate. Therefore the sale in the present case was in the State of Travancore Cochin and there is numberhing in the Explanation to Art. 286 1 a which provides to the companytrary. It has been found and it has number been disputed that the title to the goods in the present case passed at Fort Cochin. The purchase money was paid there and the purchaser obtained from the auctioneer delivery numberes directing the godown keepers at Willingdon Island to deliver the goods and only the actual physical delivery of the goods took place at Willingdon Island. In these circumstances the question is whether the sale was outside 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 which has been set out above explains what a sale outside the State is. According to that Explanation a fiction is created as between two States, one where the goods are delivered for companysumption in that State and the other where the title in the goods passes and the former is treated as the situs of the taxable event to the exclusion of the latter. Therefore where the Explanation applies the difficulty about 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. In somewhat similar circumstances this companyrt in Indian Copper Corporation Ltd. v. State of Bihar 1 held by a majority decision that the opening words of Art 286 1 which speak of a sale or purchase taking place and the number-obstante clause in 1 1961 2 S.C.R. 276,286, the Explanation which refers to the general law relating to the sale of goods, indicated that it was the passing of property within the State that was intended to be fastened on, for the purpose of determining, whether the sale in question was inside or outside the State and therefore subject to the operation of the Explanation, that State in which property passed would be the only State which would have the power to levy a tax on the sale. At page 286 it was observed The companyclusion reached therefore is that where the property in the goods passed within a State as a direct result of the sale, the sale transaction is number outside the State for the purpose of Art. 286 1 a unless the Explanation operates. The majority decision in Indian Copper Corporation Ltd. v. State of Bihar 1 companycludes the point in favour of the appellant. On the facts of this case it was found by the Sales Tax Appellate Tribunal that in regard to the sales of tea in full lots the property passed at Fort Cochin and this view has number been challenged in this companyrt. Therefore, on the majority decision in Indian Copper Corporation Ltd. State of Bihar 1 the only State which would have the power to levy a tax on such sales would be the State of Madras and so far as Travancore Cochin was companycerned, the sale would be an outside sale. In the present case therefore the sale was an outside sale and cannot be said to be an inside sale qua Travancore Cochin because the title passed at Fort Cochin which is in the State of Madras. Apart. from that the money was paid there and the delivery order was also received there even though the actual physical delivery of goods was made at a Willingdon Island in the State of Tranvancore Cochin. The fiction created by the Explanation to, Art. 286 1 a is inapplicable 1 1961 2 S.C.R. 276, because there was numberdelivery as a direct result of sale for the purpose of companysumption in any particular State. There then remains the question of goods which were exported out of India from Willingdon Island. In the case of those goods also it cannot be said that there was a sale inside the State of Travancore Cochin because the same companysiderations will apply to those sales as to the sales already discussed i.e. goods the title to which passed at Fort Cochin were delivered at Willingdon Island and were delivered for companysumption in parts of India other than Travancore Cochin. In our view therefore the High Court was in error and the appeal should therefore be allowed and the judgment and order of the High Court of Kerala set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 625 626 of 1962. Appeals by special leave from the award dated June 9, 1962, of the Industrial Tribunal, Maharashtra in Reference IT No 16 of 1962. C. Setalvad, Attorney-General for India C. K. Daphtary, Solicitor--General of India J. B. Dadachanji, O. C. Mathur and Narain, for the appellant in C.A. No. 625/62 and respondent No. in C. A. No. 626/62 . T. Sule, Madan G. Phadnis, and Sharma, for the Respondent in C.A. No. 625/62 and the Appellant in C. A. No. 626/62 . 1962. November 30. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-Two items of dispute between the appellant Pfizer Private Ltd., and the respondents, its employees, were referred for adjudication to the Industrial Tribunal, Bombay, by the Government of Maharashtra under ss. 1 1 d and. 12 5 of the Industrial Disputes Act 1947 on the 22nd of January, 1962. Both these items arose out of the proposed changes which the appellant wanted to make in the terms of employment governing the service of the respondents. The appellant proposed to reduce the existing paid holidays to 8 instead of 27 to which the respondents were entitled because so long, the appellant has been giving to its employees the benefit of public holidays as declared under the Negotiable Instruments Act. This was the first item of dispute between the parties. The second item of dispute was in regard to re-fixation of the hours of work. The appellant desired to introduce three shifts in most of its departments and accordingly it had given a numberice of change under s. 9A of the Industrial Disputes Act. Both these proposed changes were resisted by the respondents. The Tribunal has rejected the appellants case for the introduction of three shifts in its factory and this part of the award is challenged by the appellant by its appeal No. 625 of 1962. In regard to the appellants claim for reducing the paid holidays, the Tribunal has substantially accepted the appellants case and has directed that, the holidays should be reduced to 10 every year. has directed,the appellant to fix these holidays in companysultation with the respondents. It has also added that in view of the fact that a substantial reduction was being made in the number of paid holidays, the appellant should give the respondents an additional increment in their grade with effect from the 1st August, 1962. This increment would be in addition to the numbermal increment which may become due or after the 1st August, 1962. This part of the award reducing the number of holidays is challenged by the respondents by their appeal No. 626 of 1962. Both the appeals have been brought before this Court by special leave. The appellant is a Company incorporated under the the Indian Companies Act, 1913. It has its registered office at Bombay and it runs a factory in which it manufactures life saving drugs, such as antibiotics and anti-tubercular drugs, and vitamin products. The appellants factory was working a multiplicity of shifts with different times. It, however, found that this working did number fully utilise the machinery installed in the factory. The utilisation of the raw product received by the appellants factory in Bombay from its factory at Chandigarh was also number satisfactory and as a result of inadequate production, the appellant was riot able to meet adequately the demand for its products from the market. That is why the appellant came to the companyclusion that there was need to introduce three shifts in order to have extensive production of better quality products. The appellant felt that if it was able to produce its products on a much larger scale, it would be able to undertake export of the said products, and in any event, larger production would enable the appellant to meet its companypetitors in the trade. Besides, the preparation of the well-known anti-tubercular drug Para Amino Salicylic Acid P.A.S. which the appellant had developed in its research laboratory after carrying out laboratory and pilot plant experiments in 1960-61, needed the working of the relevant section on a three-shift basis because its production was a companytinuous process and a result of the investigation made by its expert, the appellant came to the companyclusion that the quality of the product would be very much improved if the section working in the production of the said drug was to work companytinuously. That was an additional reason why the appellant wanted to introduce 3 shifts in its factory. It thought that if the chemical and pharmaceutical departments were to work in three shifts, the other subsidiary sections would also have to work in three shifts in order to companye with the production. That, in brief, is the basis on which the appellant wanted to introduce three shifts in its factory and so, it gave numberice of change to the respondents, and after the companyciliation efforts failed, it moved the Maharashtra Government to refer these disputes to the Industrial Tribunal for its adjudication. The demand for three shifts was stoutly resisted by the respondents. They urged, that for several years past, in the appellants factory the respondents have received the benefit of 5-days week and that has number become a term of their employment the introduction of three shifts would inevitably companyvert the 5-days week into a 6-days week, and that would be a retrograde step highly prejudicial to the interests of the employees. They companyceded that in case the needs of the factory required, they would be willing to work on two Saturdays every month, provided they were paid proper over-time wages for that work but they disputed the appellants claim that there was a case for introducing such a drastic change as three shifts. Besides, the respondents companytended that the inevitable companysequence of the three shifts would be addition to the work-load of the respondents, and according to them, the proposal made by the, appellant in that behalf was a companyplete departure from the pattern prevailing in the pharmaceutical industry in the region. The respondents also disputed the appellants claim that the production of P.A.S. was a companytinuous process. They were, however, prepared to agree that all the manufacturing departments should be run on a two-shifts basis, avoiding the third shift altogether with suitable adjustments in time. The Tribunal companysidered the documentary and oral evidence adduced by the parties before it in support of their respective companytentions and held that the appellant had number made out a case for the introduction of three shifts. It found that the effect of the documentary evidence produced was to show that the pharmaceutical factories in Greater Bombay worked one, and in some cases, two shifts, though in a few cases, there were three shifts only in the section manufacturing chemicals and number pharmaceuticals. It agreed that the departments like Watch Ward and maintenance were, in some companypanies, working three shifts, but that was so even in the appellants factory. The Tribunal also held that the working arrangement which would result from the introduction of three shifts would number only be inconvenient to the bulk of the employees, but would involve the abolition of the 5-days week system, an it thought that, on principle, companypelling the employees to work at night would be prejudicial to their interests and may number even help the production of better quality product. In regard to the appellants claim that the production of P.A. S. involved a companytinuous process, the Tribunal observed that the evidence produced by the appellant did number show that in the present state of manufacture by it of P. A. S. it would be companyvenient to have three shifts so that the product can be produced according to specifications without too many rejections. In fact, the Tribunal was number satisfied that the production of this drug required companytinuous working in 3 shifts. On these findings, the Tribunal rejected the appellants case for the introduction of 3 shifts. In rejecting this claim, the Tribunal observed that in order to give some relief to the appellant and to enable it to produce its product in larger quantity, it was reducing the number of holidays and that being so, there was hardly any case for increasing the working hours. It, however, appears that while the dispute was pending before the Tribunal, an interim arrangement was allowed by it in regard to three shifts in the P.A.S. department. Under this arrangement, the appellant was authorised to introduce a third shift in that department and rotate up to two employees number engaged in the other shifts in the night shift. In its award the Tribunal has ordered that this interim arrangement should companytinue for a year after the award becomes enforceable and then the question may be companysidered. It has also ordered that the two workers who will work in the night shift by rotation should be paid 10 over their basic wages and dearness allowance for the days on which they are required to work in the third shift. Then as to the holidays, the Tribunal took the view that the number of holidays under the Negotiable Instruments Act which the appellant was allowing to its employees was unreasonably high. It companypared holidays allowed by other companycerns and came to the companyclusion that 10 days holidays in a year would be reasonable and just. In the result, the appellants claim for reduction of holidays succeeded, while its claim in regard to the introduction of 3 shifts failed. Before dealing with the points raised by the parties in these appeals, it would be companyvenient to indicate the present working arrangements in the factory of the appellant and the changes which would be introduced in the said working arrangements if three shifts are allowed. The factory of the appellant employs 821. workmen, 235 of whom are girl employees and since s. 66 1 b of the Factories Act prohibits the employment of women in any factory, except between the hours of 6 A.M. and 7 P.M., the problem posed by the proposal to introduce three shifts involves the rotation in the 3 shifts only of male workmen and that is a factor which has to be borne in mind in dealing with the present dispute. The statement filed by the appellant Exb.C-1 shows that there are four departments in the appellants factory. The first department which Works 6-day week on a three shift basis deals with P.A.S. Watch and Ward, Maintenance and Hydrazine. Each of the three shifts is spread over 8 hours,, there is a lunch break for half an hour and there are two tea breaks of ten minutes each. These breaks are companymon in all the departments of the factory. The actual working time in the first department is 7 hrs. 10 mts. per day which means 43 hrs. per week. The total number of employees in this department is 125. The P. A. S. section of this department, for instance, works in 3 shifts 0700- 1500, 1500-2300, 2300-0700, and in these 3 shifts, the number of workmen employed is 10, 8 and 2 respectively. The second department works 5 days in a week on a one shift basis. The actual working time in this department is 8.25 hrs. per day which means 42.5 hrs. per week. This department is companycerned with the production of ointment, mixing injection, orals, INA, INAH, protinex and protin Hydrolisate. The last two departments of this department work 5 days in a week. The total number of employees in this department is 75 out of whom 18 are girls and 57 are boys. The third department which works 5 days in a week on a 2 shift basis, deals with packing filling washing, tablet and capsules. The actual working, time in this department is 8.25 hrs. per day which totals up to 42.5 hrs. per week. The two shifts are between 0800-1715 and 2145-0700. The total number of employees in this department in the day shift is 339, out of whom 134 are boys and 205 are girls, whereas the total number of employees in the night shift is 1 1 7 boys. The fourth department which works 5 days in a week on one shift basis companysists of research development, quality companytrol, factory office, stores and despatch godown. Its actual working time is 8.25 hrs. per day which means 42.05 hrs. per week. The total number of employees in this department is 165., 14 of whom are girls and 151 are boys. Now, as a result of the 3 shifts which the appellant proposes to introduce by its numberice of change, there would be substantial change in the working arrangements in Groups II , III. There would be numberchange in shift working hours or work spread over in the first department. It may be that the number of its employees may increase. After 3 shifts are introduced, the second third departments would be companybined for the purpose of rotating the male workmen in the night shift. The timings for the three shifts which are proposed for these two departments companybined are 7.20 A.M. to 3.20P.M., 3.20 P. M. to 11.20 P.M. and 11.20 P.M. to 7.20 M. The break for lunch and the break for two teas will companytinue. The result of the introduction of the 3 shifts would be,, the working hours will increase by 1-1/4, the net increase in the working timings being 55 minutes per week. As soon as the 3 shifts are introduced, the appellant expects that those working in the existing first shift would be placed in the new first shift and those working at present on the night shift will be placed on the second shift. The appellant proposes to increase the number of its employees in the second shift which it companyld number do at present because of difficulties in rotation. In the night shift about 30 to 50 employees would be engaged and night shift work would be rotated among the male employees with greater frequency. This, of companyrse, will mean the employment of some additional hands which the appellant proposes to do. In regard to the fourth department, the present timings of 8.00 A.M. to 5.15 P. M. would be changed to 9.00 A.M. to 5.00 P.M. 6 days per week. This would result in increase in working hours by If, the net increase in working timings being 55 mts. per week. That is the nature of the working arrangements which would evolve on the introduction of the 3 shift system in the appellants factory. The week will cease to be 5-day week but will become 6-day week, and the working hours will increase by 1- 1/4, the net increase in working timings being 55 mts. per week. In dealing with the merits of the dispute in the present appeals, it is essential to bear in mind that in the face of the present national emergency, the companyplexion of the problem has companypletely changed. The whole economy of the companyntry is number being put on a war basis and inevitably, industrial production must be geared up to meet the require- ments of the nation. There can be numberdoubt that at present, capital, labour and industrial adjudication alike must be sensitive, and responsive, to the paramount requirement of the companymunity which is faced with a grave danger, and so, all legitimate efforts made by the employer to produce more and more of the goods required for the companymunity must receive the companyperation of the employees-of companyrse, on reasonable terms. Both the learned Attorney- General and Mr. Sule companyceded that at the time when this Court is dealing with the problem raised by these appeals, it would be necessary to decide the issues in the light of the peremptory and paramount requirement of the Nation at this hour. There can be little doubt that if the Tribunal had been dealing with the present dispute at this time, it would have adopted an entirely different approach. The main argument on which Mr. Sule has relied and which has found favour with the Tribunal is based on the pattern of industrial employment in pharmaceutical industry in the region of Bombay. We would, therefore, very briefly, refer to this pattern. It is well-known that under s. 51 of the Factories Act, numberadult worker shall be required or allowed to work in a factory for more than 48 hours in any week, and under s. 59, where a worker works in a factory for more than 9 hours in any day or for more than 48 hours in any week, he shall be entitled to overtime payment as prescribed by the said section. Mr. Sule made a grievance of the fact that by introducing 3 shifts, the appellant would be substantially denying the respondents the overtime wages to which they would be entitled if they were called upon to work on Saturdays under the present arrangements. This grievance is, however, number well-founded because it appears from the record that the appellant was willing to pay for night work and was prepared to companysider extra payment for third shift, but the respondents were number agreeable to companysider that pro- posal because they were, on principle, opposed to the introduction of three shifts. Indeed, the learned Attorney-General has stated before us that in case we allow the appellant to introduce three shifts, the appellant is willing to go before the Tribunal and obtain its decision on the question as to the additional payment which should be made to the employees companysequent upon the introduction of 3 shifts. Therefore, the grievance that the respondents would be wholly denied the overtime wages to which they would be entitled under the present arrangements loses much of its validity. We have already numbericed that the maximum working hours under the present system in the factory of the appellant is 43 per week and it ranges between 42.05 to 43 hrs. and in numbercase, can the working hours be increased beyond 48. In fact, as we have already set out, according to the plan which the appellant wants to introduce, there would be an additional load of 1-1/4 working hour, the net additional working load being of the order of 55 mts. per week. In companysidering the question about the pattern of working arrangements in the pharmaceutical industry in the region, these facts cannot be ignored. The statement Ext. C-10 filed by the appellant to show that in certain pharmaceutical companycerns three shifts are working, refers to 15 industries. The respondents made companyments on the said statement and challenged some of the assumptions made by the appellant in that behalf. Mr. Sule has placed before us a typed statement showing the actual position in respect of these 15 factories. It appears that in most of these factories, security and maintenance departments work three shifts. In Sandoz India Ltd.,Thana, the pharma plant works 3 shifts. Similarly, in Raptakos Brott Co. Pvt. Ltd, the Dextrone Maltose section works 3 shifts. In Merck Sharp Dohme of India Ltd., Chemical manufacturing process goes on under 3 shifts. Similarly, in Parke Davis India Ltd., Chemical Product Operators work ,shifts besides boiler serang, watchmen and electricians. Sarabhai Chemicals, Baroda, have, some departments working 3 shifts. Alembic, Baroda, have some departments working 3 shifts. Hindusthan Anti-biotic Poona have some departments working 3 shifts. Glaxo, Thana works 3 shifts. Lederlo, Bulsar, works 3shifts. It is true that the Tribunal was number prepared to companysider any companycerns situated outside Greater Bombay, but in dealing with the larger issue as to whether it would be permissible to introduce 3 shifts at least in respect of the chemical sections of the Pharmaceutical industry, the Tribunal should number have adopted this rigid attitude. Therefore, on the material placed before us, it is clear that the chemical sections of the pharmaceutical factories do, work 3 shifts and this would have a direct bearing on the appellants case in regard to the P.A.S. section of its factory. Besides, as we have already observed, in dealing with the question about 3 shifts which would inevitably lead to more production, the background of the imperative necessity of today cannot at all be ignored. Let us then companysider whether the Tribunal was right in holding that the production of P.A.S. does number involve a companytinuous process. On this point, the appellant led the evidence of Dr. Joshi who is M.Sc. Ph.D. in Organic Chemistry of the Bombay University. He joined the appellants service as a Research Chemist in 1957 and has been placed in charge of the appellants Research Laboratory since 1956. In his affidavit he stated that the P.A.S. was put on companymercial production basis in January, 1962, and be found by experience that out of the total January production of 2770 Kg. as much as 1795. g., i.e. 65, was rejected. by the Quality Control Laboratory. The rejection was mainly due to higher M.A.P. Meta Amino Phenol companytent. This large percentage of rejection raised a problem for the appellant, and so, Dr. Joshi, was deputed to investigate into the cause of bad quality of P.A.S. Having companyducted several test runs in the laboratory, Dr. joshi came to the companyclusion that the M.A.P. companytent companyld be lowered within tolerable limits to pass U.S.P. XVI specifications only if the operations after the purification stage were made companytinuous and carried out in shortest possible time. Dr. joshi stated that he companyfirmed his companyclusion by actually implementing his findings on the main plant itself. According to Dr. joshi, the operation leading to the production of P.A.S. companysists of eleven items. The 6th item is purification. After the purification process is over, begins precipitation which takes one hour it is followed by centrifuging washing, digging of centrifuge which takes 6.30 hrs. Then follows wet milling which accounts for 1.30 hrs. That brings in vacuum dryer including charging and discharging and this lengthy process takes 9 hrs. and the last process is dry milling and packing which means 2 hours. Dr. Joshi is of the opinion that the six processes beginning with precipitation must be treated companytinuously in order to improve the quality of P.A.S. and since they take 20 hours, three shifts are inevitable. Dr. Joshi was cross-examined by Mr. Sule for the respondents, and Mr. Sule very strongly relied on Dr. Joshis statement that if acquaeous solutions of P.A.S. arc kept below 30 degrees centigrade, it will stop deterioration. We do number see how this statement can materially affect the main point made by Mr. Joshi that the relevant processes beginning with precipitation which takes 20 hours must be companytinuously attended to. It is true that the respondents attempted to companytradict Dr. joshis Statement by examining Mr. Pillai who was working in the P. S. department under Mr. Moeller. But Mr. Pillai is obviously number a technical man and it would be futile to suggest that the statements made by him should be preferred to those made by Dr. joshi. Besides, it is significant that when he was cross-examined, he virtually companyceded that the six important processes would take at least 18-1/2 hours and that itself would make it necessary to introduce three shifts. In this companynection, we ought to add that the statements made by Dr. Joshi in regard to the time occupied by each process are supported by the companytempo- raneous record kept by the laboratory workers. This record was produced by Dr. joshi and it was shown to Mr. Pillai who virtually refused to look at it. Therefore, in our opinion, the Tribunal was in error in holding that Dr., Joshis evidence did number establish the appellants case that the process of producing P.A.S. is a companytinuous process and in order to improve its quality and to avoid rejection of a large percentage of the product it is necessary that three shifts must be introduced in the section dealing with it. In fact, the finding made by the Tribunal in this behalf shows that the Tribunal did number really companysider seriously the value of Dr. joshis evidence and was prepared to accept Mr. Pillais statements though they are plainly partisan statements made by a person without any technical knowledge. Therefore, there can be numberdoubt Whatever that the appellant is entitled to start 3 shifts in the P.A.S. section and produce P.A.S. in larger quantities and of a better quality. That takes up to the question as to whether the other departments in the factory should also be allowed to work 3 shifts. Now the pharmaceutical section of the department which produces ointments, injections and other pharmaceutical products is at present working on a 1 shift basis. But the evidence given by Mr. Treharne, who is the Director of the appellant Coy., makes out a strong case for working this department in 3 shifts. He has stated that the appellant has a factory at Chandigarh, and the total production of that factory is available for processing would be assisted if the subsidiary department is also allowed to work 3 shifts. Therefore, we are inclined to take the view that the claim of the appellant to introduce 3 shifts cannot today, be rejected. There are, however, some other companysiderations which have to be taken into account before we reach a final decision in the matter. Mr. Sule has strenuously urged that the 5-day week and rest at night which are guaranteed to the respondents under the present service companyditions prevailing in the appellants factory, are benefits which the respondents value very much, and he companytends that it would be a retrograde step to allow the appellant to make it 6-day week and to companypel some of the respondents to work at night. There can be numberdoubt that industrial employees are entitled to look forward to a 5-day week and work only by day. Two days rest at the end of every week would afford adequate opportunities to the employees to take part in cultural and recreational activities and would tend to make their work for the remaining 5-days more satisfactory and efficient. Similarly, working at night may, on theoratical grounds, number be desirable. But these are goals which may be reached after we attain an adequately high level in our national economy and industrial development. In the companytext of today, it would be unreasonable to approach this problem in a purely doctrinaire spirit. If, today, an employer desires to produce more goods which would meet-the requirements of the companymunity and is prepared to companypensate the employees for the additional work involved in the process, industrial adjudication would be reluctant to discourage the employer and would assist, both capital and labour to devise ways to companyperate with each other and produce more. Therefore, the academic arguments urged by Mr. Sule cannot be treated as effective for the purpose of deciding the present appeals. equipment before obsolescence of product or of fcilities national emergency, as the urgent needs of war a force number yet. actual but emerging, the belief that the social burden of labour can be alleviated by companytinuous utilisation of equipment accompanied by a distribution of the attendant labour among workers organised in shifts. The authors numberdoubt recognised that the assumption created by industrial and social customs is that the group working during the day- light hours is the numbermal one and that the others are abnormal. A better intelligence and still in labour and supervision gravitate towards the day shift and are accompanied by a better emotional attitude towards goals and methods. Furthermore, studies of night work indicate that usually a worker produces less in a night than a day shift, although it is number yet clear whether this is because of inherent physiological and psychological factors, or because the worker who labours at night yields to the temptation of activities during the day which preclude the securing of numbermal rest. It is then stated that the principal method of achieving equivalence of shifts is by establishing companyditions of night work fully equivalent to those of day work and by such a thoroughgoing establishment of standards of skill, materials, facilities, processes, methods, qualities and quantities as to permit measurements, specifications and companyparisons of performance. Considering the question as to the direction in which the progress would be made in this matter, the writers say that the direction of progress is number entirely clear. It is probable that night work will decrease in those industries in which it is number companypelled by inherent technical companyditions, for recognition of a problem of economic balance among industries as well as of the relatively lesser productivity of night work is causing the economic advantage of companytinuous operating to be questioned. On the other hand, it is companyceivable that industry may discover how to organise night work more effectively and eliminate factors number unfavourable to workers and management, and society may decide that the social disutility of such work is less than the social advantage of shorter and shorter work periods made possible by working machinery companytinuously with the application of labour in short time shifts. We do number propose to express any definite opinion on this theoretica companytroversy. As this, Court has repeatedly observed, in dealing with industrial adjudication, it would be undesirable to reach companyclusions purely on doctrinaire or theoretical companysiderations. Besides, as we have already emphasised, the adoption of such a theoretical or doctrinaire approach has, in the companytext of today, lost some of its validity. Therefore, we do number think the Tribunal was right in companying to the companyclusion that the appellants claim for the introduction of 3 shifts should be rejected on the ground that it would involve the respondents working at night. Incidentally, we may add that from the record, it appears that the appellant is an enlightened employer and that the terms and companyditions of service offered by it to the respondents are, on the whole, very fair. It also appears that in the factory itself, the appellant makes efforts to create companyditions which would be companyducive to the efficient working of the respondents. Miss Kolpe who has been examined by the respondents has stated that aseptic companyditions are maintained in sterile areas and the room has to be kept in sterile companydition. The workmen assigned to the job spray the rooms with certain chemicals. They do swabbing of machines, walls, windows, and some other workmen have to apply denatured spirit to machine parts before the said machines are used. Cleaning of the cabinet and machine parts has also to be done. It is true that a grievance was made on behalf of the respondents that there are numberexhaust fans working in the night shift and that as a result, body itch may be caused if M.A.P. and potassium carbonate are handled barehanded. The appellants explanation was that the workers are given and gloves and when companyplaints were made about body itch, the medical survey pointed out that they were number justified. We trust that when the appellant starts 3 shifts, it will take all reasonable precautions to make the companyditions of work for the respondents healthy and companyducive to the efficient discharge of their duties. There is one more minor point which still remains to be companysidered. It was urged before the Tribunal on behalf of the respondents that the timetable of factory working hours which the appellant proposes to introduce after bringing into force the three-shift system, would begin at 7.20 in the morning and,that would cause inconvenience to the girl employees, and in support of this plea, two girl employees were examined. Miss Desai stated that she stays at Thana and if she had to join duty at 7.20 A. M., she would have to start earlier than 5 A. M. from her house. According to her, there is another girl employee of the factory who stays at Thana, Miss Rodriguies, who also supported the plea of inconvenience, stated that if the work were to begin at 7.20 M., she would number be able to get sleep because after she returns home, she has to do tuitions in order to help her family., and that means she cannot go to bed before midnight. Evidence was also led to show that in the locality where the factory is situated,. if the girls were to go early in the morning, they stood the risk of being molested by bad characters. We are number impressed by this evidence. In companysidering the plea of inconvenience raised by the respondents, it would be reasonable to rely upon stray cases of girl employees who stay away from Bombay, as far instance, at Thana or whose unfortunate economic companydition companypels them to work after factory hours. On the whole, it can be stated without any hesitation that 7.20 A.M. is number an unduly early hour for work in Bombay. Besides, it is relevant to remember that this hour has been taken as a starting hour having regard to the companyvenience of transport available in the locality. The Factory Manager, Mr. Pillai whom the appellant examined, has stated that he prepared a summary of the bus. and train timings and came to the companyclusion that 7.20 A.M. would be companyvenient to all the workmen. Therefore we do number think the ground of inconvenience on which the Tribunal has relied in rejecting the appellants case for 3 shifts, can be sustained. In this companynection, we may incidentally refer to the fact that the Standing Order 10 1 a of the Standing Orders framed by the appellant clearly provides that more than one shift may be worked in any department or a section of a department at the discretion of the Manager and it adds that in such cases, workmen shall be liable to be transferred from one shift to another There is numberdoubt that the Standing Orders sanctioned by the Industrial Employment Standing Orders Act 1946 No. 20 of 1946 companystitute statutory terms and companyditions of service between the employer and his employees, and so, it is open to the appellant to suggest that when the respondents took up their employment with it, they knew that more shifts than one can be started by the management in its discretion. It is quite true that though the relevant Standing Order enables the appellant to introduce more shift than one, if a dispute is raised by the employees in that behalf and is referred for industrial adjudication, the Industrial Tribunal may have to companysider the reasonableness of the change proposed to be made by the management,. It is obvious that additional shifts may result in additional work load being imposed on the employees, and in that sense, may companystitute a change in the companyditions of service. Therefore, it would be open to the Industrial Tribunal to examine the reasonableness- of the change proposed to be made. But in dealing with this question, it would number be irrelevant to bear in mind the fact that more than one shift was companytemplated by the Standing Order. In this companynection, we would number be prepared to uphold the extreme stand taken by both the parties. We cannot hold that because the Standing Order companytemplates the adoption of more than one shift, it is entirely and absolutely in the discretion of the management to make the change without due scrutiny by industrial adjudication, and so, the extreme stand taken by the appellant cannot be upheld similarly, we cannot accept the companytention that because the introduction of 3 shifts would mark a departure from the pattern prevailing in the pharmaceutical industry, the change cannot be permitted. After all, the question must be companysidered in the light of relevant facts adduced before the Court, and in doing so, the importance and the necessity for more production must be borne in mind. We are therefore, satisfied that the Tribunal was in error in rejecting the appellants case for the introduction of 3 shifts. As we have already pointed out, the appellant was always willing to companysider the question of paying additional amounts to the respondents either by way of increase in wages or by way of companypensation in companysequence of the change proposed to be made in the working structure of the factory. In fact, we were told that though the Tribunal has ordered that the appellant should pay to the night workers 10 over their basic wages and dearness allowance for the days on which they are required to work in the third shift, the appellant is paying 12 and it is similarly paying 8 to those who work in the second shift. Therefore, it cannot be said that the appellant was number prepared to submit to an order in regard to the additional adequate payment which should be made to the employees companysequent upon the introduction of the third shift. Since this matter cannot be decided by us in appeal, we direct that the case should be sent back to the Tribunal which dealt with this dispute for its decision on this question. The Tribunal should allow the parties to, lead evidence if they so desire, should hear them and should decide what additional payment should be made to the employees either by way of increase in the wages or, by way of companypensation, or otherwise in companysequence of the change in the working time table of the factory resulting from the introduction of the third shift The 3shifts will companye into operation after this issue has been finally decided by the Tribunal. Until then, the interim arrangement sanctioned by the award will companytinue. We trust the Tribunal will deal with the issue remitted to it as expeditiously as possible. That takes us to the appeal preferred by the respondents in respect of the reduction of holidays made by the award. We have already seen that the appellant gives to its employees all the public holidays under the Negotiable Instruments Act. In the relevant year, the number of such public holidays was 27. The Tribunal has taken the view that the number of public holidays thus allowed is unreasonably high and has ordered that they should be reduced to 10. Mr. Sule for the respondents companytends that there is numberjustification for this reduction. He urges that the employees have enjoyed this benefit as their term of service companydition and numbercase has been made out for the reduction in that behalf. He has also relied on the fact that the Tribunal reduced the number of holidays substantially because he was number prepared to allow the appellants case for the introduction of the 3rd shift or for the addition in working hours and he argues that if we allow the introduction of the 3rd shift, there would be numberjustification for companyfirming the award made by the Tribunal in respect of holidays. There is some force in this latter companytention. It is true that the Tribunal made a drastic reduction in the number of holidays partly because he refused the appellant permission to add to the working hours. In dealing with the question of paid holidays, it may be relevant to remember that the holidays declared under the Negotiable Instruments Act are usually applicable to Government institutions only and they have certain financial and statutory implications envisaged by the Act itself. The companymercial establishments and factories do number usually adoptthese holidays and so, it would number be reasonable toinsist that the appellant is bound to grant holidays as sanctioned by the Negotiable Instruments Act. Besides it is number generally accepted that there are too many public holidays in our companyntry and that when the need for industrial production is. urgent and paramount, it may be advisable to reduce the number of such holidays in industrial companycerns. In dealing with the present appeals, the need for more production which has weighed in our minds in companysidering the question of 3 shifts, cannot be ignored. It is true that the Maharashtra Government seems to have adopted a very liberal policy in the matter of public holidays. In 1961, for instance, the said Government had declared 28 public holidays out of which 3 happened to fall on Sundays. It may be numbericed that other State Governments have shown a tendency to reduce these holidays. U.P., for instance, had 18 public holidays, Andhra Pradesh had 17, Mysore 15 and Madras 14 in 1961. According to the Govern- ment of India, the number of public holidays is generally limited to 16. It is obvious that this question does number admit of a categorical answer one way or the other. It has to be decide on an ad hoc basis, bearing in mind all the relevant facts. Having companysidered all the relevant facts in the present case, we are disposed to think that the number of public holidays which are granted by the appellant to the respondents should be reduced from those sanctioned under the Negotiable Instruments Act to 16 every year. The result is, both the appeals are allowed. Appeal No. 625 of 1962 succeeds and the change proposed to be made by the appellant according to the numberice of change served by it on the respondents is allowed to be made, subject to the decision of the Tribunal on the question remitted to it.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 116 to 125 of 1961. Appeals by. special leave from the judgment and decrees dated March 4, 1955, of the former Andhra Pradesh High Court, Guntur, in S. T. Appeals Nos. 83,85-88,90,91 and 119- 121 of 1954. C. Setalvad, Attorney-General for India, R. Ganapathy Iyer, V. Sureshan and G. Gopalakrishnan, for the appellants in C.As.Nos. 116-119 of 61 aid the respondents in As.Nos. 120-125 of 1961 . V. Viswanatha Sastri, V. Yedantachari and T.V.R. Tatachari, for respondents 1 to 5 in C.A. No. 116/61 and respondent No. 1 in C.As. Nos. 117-119/61 and the appellants in C.A. Nos.120125/61. Bhimasankaram and P. D. Menon, for respondent No. 2 in A.Nos. 117-119/61 . 1962. November 19. The judgment of the Court was delivered by RAGHUBAR DAYAL, J. These appeals arise out of the order of the Tribunal appointed under s. 8 of the Madras Estates Abolition and Conversion into Ryotwari Act, 1948 Madras Act XXVI of 1948 , hereinafter called the Act, apportioning the advance companypensation given and interim payments made in companynection with the vesting of the Venkatagiri Estate in the Government of Madras as a result of a numberification issued under sub-s. 4 of s. 1 of, the Act from the numberified date, i.e., September 7, 1949. The Act received the assent of the Governor General on April 2, 1949 and some of its sections, including ss. 4 and 8, mentioned in sub-s. 4 of s. 1, came into force at once. The other sections came into force with respect to the Venkatagiri Estate from the numberified date. With effect from the numberified date, i.e., September 7, 1949, the entire Venkatagiri Estate stood transferred to the Government and vested in it by reason of s. 3 b of the Act. Section 39 provides for the Director of Settlements to determine the basic annual sum in respect of the estate and also the total companypensation payable in respect of the estate, in accordance with the provisions of the Act. Section 54-A provides that the Government shall estimate roughly the amount of companypensation payable in respect of the estate and deposit one-half of that amount within six months from the numberified date in the office of the Tribunal as advance payment on account of companypensation. Subs. 2 of s. 50 provides for the deposit of interim payments by the Government during the period between the numberified date and the final determination and deposit of the companypensation payable in respect of the estate. In respect of the Venkatagiri Estate, the Government deposited Rs. 12,11,419/- as and by way of advance payment of companypensation, after deducting Rs. 7,28,500/- payable to the Government by the Estate for peishkush out of the sum of Rs. 19,39,919-8-0, half of the estimated amount of companypensation payable. The Government also deposited as interim payment Rs. 1,55,194/- for each of the Fasli years 1359 to 1362 F. It is the distribution of these amounts in deposit as advance payment of companypensation and interim payments, which is the subject matter for determination in these appeals. To understand the various claims for payment out of these deposits, the following genealogical table will be helpful KUMARA YACHENDUR VARU ----------------------------------------------------- Rajagopala Krishna Raja Venkata Krishna Yachendra Deacsed Yachendra Deacsed Rajagopala Krishna Raja V. Kumara Krishna Yachendra Yachendra dead . Petitioner in O.P. No. 392 of 1950 Petitioner --------------------------------------- Raja V. Venkata Raja V. Rama Raja Venkata Krishna Krishna Rajagopala Yachendra R.10 Yachendra Krishna Yachendra P. R.11 O.P. R.12 O.P. No. 382/50 384/50 --------------------------------------------------------- vegna Kumara Raja Venkata Rajagopala Krishna Krishna R-3. R.4 O.P. 256/50 -------------------------------- Rajagopala Krishna Gopal Krishna Yachendra R-6. R-7. Son Unnamed R-8. Son Unnamed R-9. --------------------------------------------------- Raja Maddukrishna Raja Venugopala Yachendra Krishna Yachendra Died Issueless --------------------------- Raja V. Rajeswara Rao Raja Maheswara Rao R-14 R-15 ----------- -------------------------- Venkata Gopala Minor Madanagopal Died Krishna R-16 O.P. R-15 No. 385 of 50 3/50. ------------- vaneethu R-O.P. 3/50 The Venkatagiri Estate is an ancient estate in North Arcot and the necessary history of the estate for the purposes of this case is companytained in the document Exhibit A-1 with which we number deal. Kumara Yachendra Bahadur Varu, who tops the genealogical table numbered above and his four sons mentioned therein, are parties to this document. Kumara Yachendra Bahadur Varu represents also his minor son Venugopala Krishna Yachendra. The document recites that the estate had been made over in 1878 to Rajagopala Krishna Yachendra, the eldest of the four brothers, by their father Kumara Yachendra Bahadur Varu, the then Rajah, as he wanted to devote himself to offering prayers to God for obtaining salvation. He was said to be the sole heir to the estate, as Venkatagiri Zamindari was an impartible estate and succession to it was governed by the rule of lineal primogeniture. In 1889, two of the brothers, Venkata Krishna Yachendra and Muddukrishna Yachendra, expressed a desire for the partition of the estate. The then Rajah, i.e., Rajagopala Krishna Yachendra, the eldest brother, asserted that it was number liable for partition. The four brothers then companysulted their father and he told them that the Venkatagiri Zamindari was originally acquired by the valour of our ancestors in warfare, that the Zamindari is ancient, that it is an Impartible Estate which has to pass in the order of primogeniture, that at the time when the Sannad Istimdar Milk was given to the Raja of Venkatagiri who was ruling at the time of the permanent settlement th Peshkush was settled for this Venkatagiri Samasthanam on the amount which was being paid as tribute and on the entire expenses relating to military assistance that was to be rendered lo the Nawabs government which was in power previously that for this reason this Venkatagiri Samasthanam is number at all partible that the immovable properties relating thereto and also other immovable properties acquired with the income of the said Samasthanam are number liable for partition that this is his opinion in regard to immovable properties The father suggested partition of certain other property. The terms of the final settlement between the father and his four sons are then numbered. They may be briefly mentioned. As the Venkatagiri Estate is an Impartible Estate and it passes to the eldest son by the rule of lineal primogeniture, the said Estate, the immovable properties pertaining to it and other immovable properties acquired with the income derived from the said Estate will be enjoyed by the Rajah, the eldest brother, and after his death his sons and grandsons and so on in succession shall enjoy, always the eldest male being the heir. If in the line of the said Rajah, his natural sons or adopted so s do number have male issue and that line stops short, then the properties shall be enjoyed by him who is the nearest heir and who is also the eldest to whom the impartible properties of the family pass according to law and custom and the same shall be enjoyed by his successors. The said Estate, all the properties pertaining to it, the title, power, privileges, all these shall be enjoyed fully and with all powers according to law and custom by the respective individuals who would be ruling at the respective periods subject to the companydition of payment of allowances to other members of the family from the income derived from the Estate and from the properties in a manner befitting their respective status. The allowances were settled as follows Each of the brothers was to get Rs. 1,000/- per mouth for the rest of his life. After the death of each of these brothers, his male heir would companytinue to get this allowance of Rs. 1,000/- per month. This amount of Rs. 1,000/- would be distributable between such male heirs and their male issues, according to Hindu Law. If the male member died without leaving a natural son or an adopted son, the allowance was to pass the nearest agnates of the same branch according to Hindu Law and in case he left a wife or wives who had to be paid maintenance, their maintenance would be a liability on such agnate. It was further provided that if any of the three lines of the family ceased for want of male issue, i.e., whether natural or adopted son, then subject to the companydition that the wife or wives of the surviving male member of that branch who dies last shall be paid for their life-time as maintenance a sum of Rs. 500/- being one half of the entire allowance of Rs. 1000/- that was being paid to the said male member, the allowance which was being paid to that branch would entirely cease. This document has been acted upon. In 1904, the Madras Impartible Estates Act, 1904 Act 11 of 1904 came into force. The Venkatagiri Estate was included in the Schedule of that Act and had to be deemed to be an impartible estate in view of s. 3 of that Act. Section 9 of that Act mentioned the persons entitled to maintenance out of the impartible estate, where for the purpose of ascertaining the succession to the impartible estate the estate had to be regarded as the property of a joint Hindu family. In view of s. 66 of the Act the Madras Impartible Estates Act of 1904 is deemed to have been repealed in its application to the Venkatagiri Estate with effect from the numberified date. The expression impartible estate in the Act means an estate governed immediately before the numberified date by the Madras Impartible Estates Act, 1904 and therefore applies to this estate. S. 41 of the Act provides for the companypensation to be deposited in the office of the Tribunal. Section 42 provides for the filing of claims to the companypensation before the Tribunal by persons claiming any amount by way of a share or by way of maintenance or otherwise and by creditors. By s. 43, the tribunal is to inquire into the validity of the claims and determine the persons who, in its opinion, are entitled to the companypensation deposited and the amount to which each of them is entitled. Section 44 provides that as a preliminary to the final determination, the Tribunal shall apportion the companypensation among such persons whose rights or interests in the estates stood transferred to the Government, including persons who are entitled to be maintained from the estate and its Income, as far as possible, in accordance with the value of their respective interests in the estate. Its sub-s. 2 provides how the value of those interests shall be ascertained, and says that in case of an impartible estate referred to in s. 45, the ascertainment shall be in accordance with the provisions companytained in that section and in such rules, number inconsistent with that section, as may be made by the Government in that behalf. Section 45 is the main section for our purpose and may be quoted 45. 1 In the case of an impartible estate which had to be regarded as the property of a joint Hindu family for the purpose of as- certaining the succession thereto immediately before the numberified date, the following pro- visions shall apply. The Tribunal shall determine the aggregate companypensation payable to all the following persons, companysidered as a single group a the principal landholder and his legitimate sons, grandsons, and great- grandsons in the male. line living or in the womb on the numberified date including sons, grandsons and great-grandsons adopted before such date who are hereinafter called sharers and b other persons who, immediately before the numberified date,were entitled to maintenance out of the estate and its income either under section 9 or 12 of the Madras Impartible Estates Act, 1904, or under any decree or order of a Court, award, or other instrument in writing or companytract or family arrangement, which is binding on the principal landholder who are hereinafter called maintenance- holders Provided that numbersuch maintenance-holder shall be entitled to any portion of the aggregate companypensation aforesaid, if before the numberified date, his claim for maintenance, or the claim of his branch of the family for maintenance, has been settled or discharged in full. The Tribunal shall next determine which creditors, if any, are lawfully entitled to have their debts paid from and out of the assests of the impartible estate and the amount of which each of them is so entitled and only the remainder of the aggregate companypensation shall be divisible among the sharers and maintenance-holders as hereinafter provided. The portion of the aggregate company- pensation aforesaid payable to the maintenanceholders shall be determined by the Tribunal and numberwithstanding any arrangement already made in respect of maintenance whether by a decree or order of a Court, award or other instrument in writing or companytract or family arrangement, such portion shall number exceed one-fifth of the remainder referred to in sub- section 3 , except in the case referred to in the second proviso to section 47, sub-section 2 . 5 a The Tribunal shall, in determining the amount of the companypensation payable to the maintenance-holders and apportioning the same among them, have regard, as far as possible, to the following companysiderations, namely-- the companypensation payable in respect of the estate the number of persons to be maintained out of the estate the nearness of relationship of the person claiming to be maintained the other sources of income of the clai- mant and the circumstances of the family of the claimant. For the purpose of securing i that the amount of companypensation payable to the maintenance-holders does number exceed the limit specified in sub-section 4 and ii that the same is apportioned among them on an equitable basis, the Tribunal shall have power, wherever necessary, to re-open any arrangement already made in respect of maintenance, whether by a decree or order of a Court, award, or otherinstrument in writing or companytract or family arrangement. The balance of the aggregate companypen- sation shall be divided among the sharers, as if they owned such balance as a joint Hindu family and a partition thereof had been effected among them on the numberified date, Rajah Velugoti Kumara Krishna Yachendra, appellant in Appeal No. 117 of 1961, hereinafter called Krishna Bahadur, filed Original Petition No. 2300 of 1953 before the Tribunal. Three of his sons Ramakrishna Yachendra, Rajagopala Krishna Yachendra and Movva Gopala Krishna Yachendra, appellants in Civil Appeals-Nos. 118, 119 and 116 of 1961, respectively, filed separate petitions. By their applications they raised the companytentions that they were entitled to an amount in the companypensation as sharers, as the impartible estate lost its character as such from the numberified date and that the companypensation payable with respect to their estate became partible and that in any case, they were entitled to the amount as creditors. It was further companytended that the provisions of s. 45 of the Act were ultra vires the State Legislature and were discriminatory and so void and that the maintenance amount be determined with respect to the amount of companypensation and number with respect to the amount of companypensation minus the amount of peishkush which was payable by the estate to the Government. None of these companytentions was accepted by the Tribunal or by the Special Tribunal companystituted in accordance with s. 21 of the Act for bearing appeals against the orders of the Tribunal. The Tribunal fixed Rs. 75,000/- as the amount payable to Krishna Bahadurs branch out of the sum of Rs. 12,11,419/- deposited as advance payment of companypensation and further fixed the ratio of the value of the interests of Krishna Bahadur and the two brothers of the present Rajah, in the 1/5th of the advance companypensation, at 757592. The amounts deposited as interim Payment were to be distributed in the same, ratio. The present Rajah, Sarvagna Kumara Krishna, had urged before the tribunal that the amount of maintenance to be paid to Krishna Bahadurs branch should be calculated on a different basis which, in brief, may be said to be that the amount to which he be held entitled out of the companypensation should bear the same proportion to the total companypensation as the monthly allowance payable to him under the document Exhibit A-1 bears to the income of the Estate in 1889 when that allowance of Rs. 1,000/per month was fixed. This companytention also did number find favour with the Tribunal or the Special Tribunal on appeal. The Rajah has therefore filed Civil Appeals Nos. 120 to 123 of 1961. He has also filed two appeals Nos. 124 and 125 with respect to the interim payments made so Krishna Bahadurs branch for the Fasli years 1359 and 1360 which were apportioned in accordance with the same principle which the Tribunal had adopted for the distribution of the maintenance allowance out of the advance companypensation. The points urged for the appellants in appeals Nos. 116 to 119 are Venkatagiri Estate was, impartible by custom that impartibility was recognized when disputes arose in 1889, that impartibility companytinued under the Madras Impartible Estates Act of 1904 but ceased when the Estate vested in the Government on September 7, 1949 2 - In these circumstances, the companypensation Will number bear the character of impartibility as the property,, became the property of the joint family, the companyarcenary having companytinued all through Section 45 and other provisions of the Act are ultra vires the State Legislature for want of legislative companypetence inasmuch as the said Legislature had numberpower to enact a law disturbing the rights of a joint family and also because the provisions of s. 45 are discriminatory and offend Art. 14 of the Constitution as they provide for the maintenanceholders to get 1/5th out of the companypensation while the proprietor and his sons are to get 4/5ths out of it after satisfying the claims of the creditors The appellants are number maintenanceholders, but creditors The amount of peishkush payable by the Venkatagiri Estate to the Government was number to be deducted from the companypensation when calculating maintenance amount payable to the maintenance. holders. Now, the amount of peishkush payable to the Government had to be deducted out of the amount to be deposited under sub- s. 1 of s. 54-A in view of the provisions of its sub-s. 2 which provides that from the amount to be deposited under sub-s. 1 the Government shall be entitled to deduct one half of all moneys, if any, due to them in respect of peishkush. Sub-s. 4 of s. 54-A authorizes the Tribunal, after such enquiry as it thinks fit, to apportion the amount deposited in pursuance of that section, among the persons mentioned in that sub-section as far as possible in accordance with the value of their respective interests and further provides that the provisions of ss. 42 to 46 both inclusive , shall apply mutatis mutandis in respect of the amount so deposited. It is true that the peshkash was a payment which the holder of the Estate had to make to the Government out of the income of the estate and that any arrears of peshkash remain a liability on the estate. It was in view of this fact that s.55 1 of the Act which takes away the right of any land-holder to companylect any rent which had accrued to him from any ryot before the numberified date and was outstanding on that, date empowers the manager appointed under s. 6 to companylect such rent and to pay the balance, if any, after making certain deductions specified in the section, including any arrears of peshkash to the landholder. The real companypensation which is to be paid by the Government on the vesting of the estate must be equal to the amount of the value of the estate as such, minus the liabilities of the estate. What is to be distributed between the various persons entitled to the companypensation must be the net amount and number the theoretical companypensation for the estate as such. In this view of the matter too, the share of the maintenance-holders will have to be calculated in the amount of companypensation deposited, i. e., the amount of companypensation minus the permissible deductions including peshkash. It is therefore clear that the Tribunal companyld number have ignored the deduction of peshkash from one half of the estimated amount of companypensation payable in respect of the estate and had to apportion the amount deposited after taking into companysideration such deduction. The companytention for the appellants that the amount to be companysidered for calculating the share of the maintenance-holders should have been taken at Rs. 19,00,000/-odd and number at Rs. 12,00,000/- odd, the actual amount of the deposit, is number sound. The next question is whether the allowance is a debt owed by the Rajah-landholder to his brothers to whom the allowance was to be paid. It might have been so only if it was postulated that the Rajah had purchased the share of the other members of the family and was paying the sale price in the form of an allowance. This is, number what the document Exhibit A-1 recites. There is numberhing in it to indicate that the brothers of the Rajah to whom the estate had been made over by their father claimed a share in the estate after they had been told by their father that the estate was impartible. The sale price is numbermally fixed while the amount of allowance to be payable is an indefinite quantity depending upon length of time through which each of the brothers branches companytinues to have a male member. The word allowance appears to have been used either as a dignified expression preferable in form to that of maintenance or due to the idea that the word ,maintenance is to be used appropriately only for the amounts to be paid to female members of the family in certain circumstances. The allowance referred to in the deed, Exhibit A.-1, as payable to Kishen Chander, father of Krishna Bahadur, is number akin to a debt owed by the Rajah to Kishen Chander. It is number made payable on account of certain loans taken by the Rajah, but is payable for maintenance, as the estate being impartible the other members of the family had a reasonable claim to maintenance. The only ground urged in support of the companytention that the allowance is number an allowance for maintenance is that the word maintenance is used in the document A-1 in companynection with the amount payable to the widows. A different terminology in referring to the amounts to be paid to Kishen Chander and his brothers does number change the character of the payment. The widows were to get a share out of the same allowance when there was numbermale member in the particular family. That amount cannot be a debt so long as it was payable to a male member and a maintenance when payable to a female member. Kishen Chander himself referred to this amount as maintenance in earlier proceedings. We therefore hold that the view expressed by the Courts below with respect to the nature of this allowance is companyrect. The validity of s. 45 of the Act on the ground of the companypetence of the Legislature of the State was number questioned in the High Court. The companytention, however, is that the Act was made by the State Legislature by virtue of Entry 21 in List II of the Seventh Schedule to the Government of India Act, 1935, which reads Land, that is to say, rights in or over land, land tenures, including the relation of land- lord and tenant, and the companylection of rents transfer, alienation and devolution of agricultural land land improvement and agricultural loans companyonization Courts of Wards Encumbered and attached estates treasure trove. The question of succession to the impartible estate does number companye under this Entry and companyes under Entry No. 7 of List III of the Seventh Schedule to the Government of India Act which reads Wills, intestacy, and succession, save as regards agricultural land. The reply for the respondent is that the Act can companye within either item No. 9 or item No. 21 or both, of List II of the Seventh Schedule to the Government of India Act, 1935. We are of opinion that the Act does number teal with the succession to impartible estates. The Act acquires the impartible estate which vests in the Government on the numberified date. The rights of the and holder in the estate cease on that date. The Act was enacted by the State Legislature by virtue of item No. 9, List II, Seventh Schedule to the Government of India Act which reads Compulsory acquisition of land. The Act is number ultra vires the State Legislature Theattack on the validity of s. 45 of the Act on the ground of its companytravening the provisions of Art 14 of the Constitution is number open to the appellants in view of Art. 31B which provides inter alia that number of the Acts specified in the Ninth Schedule number any of the provisions thereof shall be deemed to be void or ever to have become void on the ,round that the Act takes away or abridges any of the rights companyferred by any provisions of Part III. Article 14 is in that Part of the Constitution. The Act is mentioned at item No. 10 in the Ninth Schedule. We therefore hold that the provisions of s. 45 of the Act are number void. The next question for determination is whether the appellants should have got share in the companypensation as sharers on account of the partible character of the estate reviving on the numberified date as a result of the repeal of the Impartible Estates Act, 1904. We are companycerned in these appeals with the distribution of advance companypensation given and interim payments made in accordance with the provisions of the Act. We have held the relevant provisions to be valid. Therefore, the appellants can only ask for their share of the companypensation in accordance with those provi- sions. We do number companysider it necessary to decide the question whether any property ceased to be impartible after the numberified date and understand that an appeal in which the question directly arises is pending against a judgment in a civil suit holding that the buildings to which sub-s. 4 of s. 18 applied were impartible and were owned by the Rajah. Even if the appellants had any right in the estate, though we do number so decide , that right ceased on the numberified date in view of the provisions of s. 3 of the Act and thereafter they are entitled to such rights and privileges only as are recognized or companyferred by or under the Act. Section 3 of the Act provides the companysequences of numberification of the estate. The relevant portions of s. 3 are x x x x b . the entire estate shall stand transferred to the Government and vest in them c all rights and interests created in or over the estate before the numberified date by the principal or any other land-holder, shall as against the Government cease and determine x x x x x e the principal or any other landholder and any other person, whose tights stand transferred under clause b or cease and determine under clause c , shall be entitled only to such rights and privileges as are recognized or companyferred on him by or under this Act., x x x x x g any rights and privileges which may have accrued in the estate, to any person before the numberified date, against the principal or any other landholder thereof, shall cease and determine, and shall number be enforceable against the Government or such landholder, and every such person shall be entitled only to such rights and privileges as are recognized or companyferred on him by or under this Act. The estate was impartible up to the moment it vested in the Government on the numberified date. Whatever be the nature of the companypensation payable, the distribution of the companypensation between the persons who had an interest in the estate would be in accordance with the provisions of sub-s. 2 of s. 45 which defines sharers to be the principal landholder and his legitimate sons, grandsons and the great- grandsons in the main line living, or in the womb on the numberified date, including sons, grandsons- and great- grandsons adopted before such date. The appellants do number companye under any of the persons mentioned in this clause and therefore they cannot get, companypensation as sharers. The result of our findings is that all the four appeals number. 116 to 119 of 1961 fail. The dispute in the remaining six civil appeals relates to the principle on which the amounts of maintenance payable to the persons entitled to it are to be calculated. The companytention is that when the net income of the estate in 1889, was about Rs 6,00,000/- a year, the allowance payable to each brother was Rs. 1,000/- per month and that therefore the value of the interest of each brother in the estate came to about 1/50th of the income. The amount payable to him number, it is urged should bear the same proportion to the basic annual sum which is first calculated under the provisions of the Act and later capitalised to obtain the amount of companypensation payable for the estate. The relevant provisions in companynection with the apportionment of the maintenance allowance applicable to impartible estates are to be found in s. 45 of the Act, Sub-section 3 provides for determining the amount to which the creditors of the holder of the estate are entitled out of the assets of the estate. The amount due to them is first to be deducted from the companypensation and out of the balance the maintenance-holders as a body can have an amount equal to 1/5-th and numbermore. If the amount due to them companyes to less than 1/5th they will get it as they had been getting in the past. If the , amount exceeds 1/5th of the aforesaid balance,, the tribunal has the authority, to re-open any arrangement previously made in respect of maintenance and re-assess the amount to paid to each maintenance-holder, keeping in regard the provisions of sub-section 5 There is numberhing in this sub-section which authorises the Tribunal to calculate the incidents of the amount of companypensation on the income of the estate at the time it was fixed. Even in the present case, the amount of maintenance allowance was number. fixed as a certain proportion of the net income of the estate but was fixed, according to document A-1, after companysidering several factors affecting the question as is apparent from the following statement in the document The aforesaid mediator companysidered in full the status of all the claimants. the status and dignity, of the Estate and all the other matters deserving companysideration and settled that the said Rajha. Rajagopala Krishna Yachendra of Venkatagiri should pay the allowances as mentioned below. We are therefore of opinion,. that the Special Tribunal had held rightly that the apportionment of the advance payment of companypensation and the interim payment had been made in accordance with the provisions of the Act. In view of what we have stated above, we dismiss all the appeals with companyts, one hearing fee for Civil Appeals Nos. 116 to 119 and one hearing fee for C I Appeals Nos.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 291 of 1960. Appeal by special leave from the judgment and decree dated October 21, 1955, of the Andhra High Court at Guntur in Appeal against order No. 94 of 1952. N. Shroff, for the appellant. Ram Reddy, for the respondents. 1962. November 1. The judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal by special leave arises out of insolvency proceedings taken against the firm of T. A. Doshi, Bombay hereinafter called the firm by its creditors on the original side of the Bombay High Court, as well as in the District Court, Bellary. The orders of adjudication passed against the said firm by the two Courts have led to some avoidable companyplications and delay, with the result that the claim made by the respondents in respect of a portion of the property of the insolvent before the District Court at Bellary still remains to be tried, though the involvency orders were passed as early as 1950. 811. It appears that on January 25, 1950, an replication was presented I. P. No. 2 of 1950 in e District Court, Bellary, by some of the creditors of the firm for adjudicating the firm as insolvent, and on December 13, 1950, an order of adjudication was passed. Pending the adjudication proceedings, the District Court appointed the Official Receiver as interim Receiver at the instance of the petitioning creditors. The Receiver was authorised to take possession of certain goods alleged to belong to the insolvent which were then in transit to Bombay. Accordingly, the Receiver took possession of the said goods and under the orders of the Court, disposed of them. The sale-proceeds were then deposited in companyrt. Thereupon, the respondents moved the District Court and claimed that they were entitled to a part of the money deposited by the Official Receiver, because the Railway Receipt in respect of the goods which had been sold by the Receiver had been made over to them by the insolvent for companysideration. On this allegation, they prayed that as an interim measure, the sale proceeds should be paid over to them, because they had borrowed money from a bank on the security of the Railway Receipt in question and since the goods had been taken over by the Receiver, the bank was demanding immediate repayment of the loss. This application was allowed by the Court and the respondents were permitted to withdraw the amount on giving security and an undertaking to redeposit the amount in companyrt with interest 6 per annum when called upon to do so. In accordance with this order, the respondents withdrew the money on April 6, 1950. The claim made by the respondents in this way still remains to be tried though they withdrew the amount as far back as 6-4-50. Whilst the insolvency proceedings before the District Court had proceeded in this manner, similar proceedings had already been taken against the firm by some other creditors on the original side of the Bombay High Court on April 14, 1950, I. P. No. 52 of 1950 . On this application, an adjudication order was passed on April 17, 1950. As a result of this order of adjudication all the properties of the insolvent vested in the Official Assignee of Bombay. The Official Assignee then moved the District Court at Bellary I. A. No. 183 of 1950 , and prayed that insolvency proceedings pending against the firm in that Court should be stayed and that all the assets and books of account,, belonging, to the insolvent should be transferred to Bombay. To this application, the respondents were made parties. On December 13, 1950, whilst making an order of adjudication, the District Court passed an order on the application made before it by the Official Assignee of Bombay. It directed its Official Receiver to move the Bombay High Court to annul the adjudication order made by it on April 17, 1950. It observed that when, such an application is made before the Bombay High Court, the said Court will companysider all the relevant facts and circumstances and decide whether it would be companyvenient for all companycerned to allow the assets and effects of the insolvent to be administered at Bellary or at Bombay Having. made this order, the District Court instructed the Official Receiver number to part with any portion of the assets and effects of the insolvent until he moved the Bombay High Court and final orders were passed on his application. It, however, added that if the High Court, decides that the assets and effects of the insolvent should be administered from Bombay, all the assets, documents and account books belonging to the insolvent will be handed over to the Official Assignee at Bombay. Pending the final decision of the application to be made by the Official Receiver, status quo was allowed to be maintained. This order was number challenged by the respon- dents by preferring an appeal against it. Though the District Court had directed the Official Receiver to move Bombay High Court, numberaction was taken by him for along time and so, the Official Assignee had to file another application before the Distt. Court I. A. No. 171 of 1951 on October 15, 1951. By this application, the Official Assignee brought it to the numberice of the Court that the Official Receiver had taken numberaction in accordance with the orders already passed by the Court and so, it was necessary in the interests of justice that the Court should direct the respondents to deposit all the amounts drawn by them on furnishing security and to transfer the said sums and other sums in deposit in Court and all the assets, movables and the books of account of the insolvents firm together with the file of the Insolvency Case No. 1. P. 53/1950 to the Bombay High Court. It was alleged that unless these steps were taken, the estate would suffer irreparable loss and injury. Meanwhile, the Official Receiver moved the Bombay High Court for annulment of the adjudication order already passed by it. The High Court declined to annul its adjudication order and directed the companytinuance of the insolvency proceedings before it because it took the view that the estate of the insolvent companyld be administered more companyveniently in Bombay than in Bellary. When the application made by the Official Assignee No. 171/1951 came to be heard by the District Court, it was duly apprised of the order passed by the Bombay High Court on the application made by the Official Receiver. Having regard to the fact that the Bombay, High Court had declined to annul its adjudication order, the District Court took the view that the application made by the Official Assignee should be allowed. It, therefore, directed the Official Receiver to transmit all the accounts and deposits lying in companyrt and called upon the respondents to refund the amounts drawn by them on furnishing security with interest 6 per annum, so that the same companyld as well be transferred to Bombay. This order was challenged by the respondents by preferring an appeal before the High Court of Andhra Pradesh. The High Court has allowed the appeal. It has held that the application made by the Official Assignee did number satisfy the requirements of section 77 of the Provincial Insolvency Act and that, on the whole, it would be more companyvenient. that the estate of the insolvent should be administered by the District Court at Kurnool which had been clothed with jurisdiction to try the said proceedings as a result of the reorganisation of the States. It is against this decision of the High Court that the Official Assignee hereinafter called the appellant has companye to this Court. The first question which calls for our decision in this appeal is in whom does the property of the insolvent vest ? For deciding this question, the relevant provisions of the Provincial Insolvency Act and the Presidency Towns Insolvency Act have to be companysidered. Sec. 17 of the Presidency Act provides, inter alia, that on the making of an order of adjudication, the property of the insolvent wherever situate shall vest in the official assignee and shall become divisible among his creditors. Under s. 51 of the said Act it is provided, inter alia, that the insolvency of a debtor shall be deemed to have relation back to, and to companymence at, a the time of the companymission of the act of insolvency on which an order of adjudication is made against him, or b if the insolvent is proved to have companymitted more acts of insolvency than one, the time of the first of the acts of insolvency proved to have been companymitted by the insolvent within there months next preceding the date of the presentation of the insolvency petition. It is thus clear that when an adjudication order is made under s.17 it relates back to the date specified by s. 51. As a result of the companybined operation of the said two sections, the insolvency under the Presidency Act companymences on the companymission of the act of insolvency and it is on that date that the property of the insolvent vests in the Official Assignee. Sec. 51 clearly shows that the insolvency is deemed to companymence from the moment when the debtor companymitted the earliest act of insolvency which is proved to have been companymitted within three months before the presentation of the petition on which the order of adjudication is made. This petition can be made either by the debtor himself or by any of his creditors. This position about the effect of the doctrine of Relation back is number in dispute. Applying this principle, it would follow that the adjudication order passed by the Bombay High Court on April 17, 1950, on the insolvency petition filed before it goes back number only to the date on which the said petition was presented, viz, April 14, 1950, but to the earliest act of insolvency within three months prior to the said presentation which is March 14, 1950. In other words, the adjudication order passed by the Bombay High Court relates back to March 14, 1950. Let us number examine the effect of the order of adjudication passed by the District Court at Bellary. Sec. 28 2 of the Provincial Insolvency Act provides, inter alia, that on the making of an order of adjudication, the whole of the property of the insolvent shall vest in the Court or in a Receiver as hereinafter provided, and shall become divisible among the creditors. This companyresponds to s. 17 of the Presidency Act. Section 28 7 of the Provincial Act which provides for relation back of the adjudication order, lays down that an order of adjudication shall relate back to, and take effect from, the date of the presentation of the petition on which it is made. Unlike s.-51 of the Presidency Act which relates back the adjudication order to the earliest act of insolvency within three months before the presentation of the insolvency petition, s. 28 7 of the Provincial Act relates back the adjudication order to the date when the petition was presented and that means that the order of adjudication passed by the District Court on December 13, 1950, will relate back to January 25, 1950 when the petition was presented in the said Court. This position also is number in dispute. The question which then arises is in whom does the insolvents estate vest ? Does it vest in the Official assignee by reason of the fact that the order of adjudication was made by the Bombay High Court before the District Court made a similar order, or does it vest in the Official Receiver of the District Court because the adjudication order passed by the Distt. Court relates back to a date earlier than the date to which the Bombay High Courts adjudication order relates ? In our opinion, the property of the insolvent vests in the Official Assignee by virtue of the operation of s. 17 of the Presidency Act. Section 17 provides for the vesting of the property on the making of the order of adjudication, and so, when the District Court at Bellary passed an adjudication order in the insolvency proceedings pending before it, s. 28 2 companyld number in law operate in respect of the insolvents property because the said property had by virtue of the statutory provisions companytained in s. 17 of the Presidency Act already vested in the Official Assignee. The doctrine of relating back on which s. 28 7 of the Provincial Act and s. 51 of the Presidency Act are based, companyld have numberapplication in the present case because the vesting in the Official Assignee is the result of a statutory provision and so, in the absence of any provision in the Provincial Act for the divesting of the property which has already vested in the Official Assignee, it cannot be said that the doctrine of relating back has that effect. The object of providing for the vesting of the insolvents property in the Court Officer obviously is to protect the said property in the interests of the creditors of the insolvent and to facilitate its fair and just admini- stration. If for achieving that object by operation of an adjudication order passed by the Bombay High Court in exercise of its jurisdiction under s. 17 the said property has vested in the Official Assignee, there would be numberpurpose in providing that the said property should be divested from the Official Assignee and vested in the Official Receiver of the District Court. In a case where adjudication orders are made by two different companyrts, the procedure to be followed may depend upon companysiderations of companyvenience, fair play and justice but there is numberjustification for the argument that because s. 28 7 takes the adjudication order of the District Court to an earlier date, the property which has vested in the Official Assignee should be divested and should be deemed to be vested in the Official Receiver. The reasonable way to reconcile s. 28 2 read with s. 28 7 of the Provincial Act with sections 17 and 51 of the Presidency Act is to hold that the doctrine of relation back prescribed by s. 28 7 has numberapplication to cases where the insolvents property has already vested in the Official Assignee. Therefore, we must hold that the property of the firm has validly vested in the Official Assignee. A similar question fell to be companysidered by the Madras High Court in The Official Assignee of Madras v. The Official Assignee of Rangoon by his Agent Subramania Aiyar 1 . Wallis, C. J., who delivered the judgment of the Court held that where there are successive adjudications in insolvency by two Courts, all the property of the insolvent vests in the Official Assignee appointed by the Court in which the prior adjudication was made and it will number be divested from him by the subsequent adjudication of the other Court, even if the later adjudication be based on acts of insolvency companymitted earlier in date than those upon which the prior adjudication I.L.R. 42 Mad. 121. was made. It is true that in that case both the companypeting orders of adjudication had been passed by the High Courts in proceedings which were governed by the provisions of the Presidency Act. But the principle which was enunciated by Wallis, C. J., in dealing with that case would apply as such to the present case where the companypeting adjudication orders have been passed under the provisions of the Presidency and the Provincial Acts respectively. The provision in s. 17, observed Wallis, C. J., that on the making of an order of adjudication the property shall vest in the Official Assignee is express, and there. is numberprovision in the Act divesting the property so vested in that Official Assignee and transferring it to another Official Assignee under a later adjudication. .p. 125 . Sec. 51 like s. 28 7 is really intended to enable the Official Assignee or the Official Receiver to recover property from third parties and it is with that object that the said provisions prescribe the doctrine of relation back. The said doctrine is number intended to divest the property which has already vested in the Official Assignee by virtue of an order of adjudication and vesting it in another official assignee or Official Receiver. As Dicey 1 has observed, the property to be vested in the Court Officer under the Insolvency Law must be in strictness property of the bankrupt. Property which once belonged to the bankrupt, if it has before the companymencement of the bankruptcy become already vested in some other person, e.g., the trustee under a Scottish bankruptcy, is number the property of the bankrupt, and does number vest in the trustee under the English bankruptcy. Therefore, in dealing with the present dispute, we must proceed on the basis that the property of the firm has vested in the Official Assignee at Bombay and the Bombay High Court is entitled to deal with all matters arising in respect of the insolvency of the firm. The High Court of Andhra Pradesh has held that the application made by the Official Assignee Diceys Conflict of Laws. 7th Ed. P. 691. does number meet the requirements of section 77 of the Provincial Act and so it has set aside the order passed by the District Court directing the transfer of the assets and account-books to Bombay. Section 77 of the said Act lays down that Courts should be auxiliary to each other, and it provides that all Courts having jurisdiction in insolvency and the officers of such Courts respectively, shall severally act in aid of and be auxiliary to each other in all matters of insolvency and it adds that an order of a Court seeking aid with a request to another of the said Courts shall be deemed sufficient to enable the latter Court to exercise, in regard to the matters directed by the order, such jurisdiction as either of such Courts companyld exercise in regard to similar matters within their respective jurisdictions. Substantially, the same provision is companytained in sec. 126 of the Presidency Act. According to the High Court, an application made by the Official Assignee cannot be said to be a request made by the Bombay High Court to the District Court at Bellary, and unless a request is made as required by s. 77 of the Provincial Act, the Bellary Court should number have acted upon the application made by the Official Assignee. In our opinion, this view is substantially companyrect in so far as the companystruction of s. 77 is companycerned. Section 77 lays down the procedure whereby one Court can make a request to another Court, and in that behalf it provides that companysiderations of decorum and companyrtesy require that the request should be made by the Court itself and number by its officers. Therefore, if the Bombay High Court had to make a request to the Court at Bellary under s. 77, it would have been necessary for the said High Court. to make an order in that behalf and follow it up by a letter of request addressed to the District Court at Bellary, vide in re. King Co. 1 . 1 30 Cal. 542. The difficulty in accepting the companyclusion of the High Court that the District Court at Bellary should number have allowed the official Assignees application however arises from the fact that the said application does number purport to have been made and is, in fact, and, in law, number made under s. 77. It will be recalled that the order passe by the District Court at Bellary on December 15, 1950 calling upon the Official Receiver to move the Bombay High Court for annulment of its adjudication order had number been companyplied with by the said Receiver, and so, the principal object of the Official Assignee in making the subsequent application was to invite the attention of the Court to the failures of its officer to companyply with the order already passed and to request the Court to transfer the assets and books of account of the firm to Bombay The Official Assignee, in substance, companytended that since the earlier order of the Court had number been companyplied with, the last operative portion of the order should be enforced and transfer made as requested by him. We have already numbericed that meanwhile the Official Receiver moved the Bombay High Court without success, and before the District Court finally dealt with the Official Assignees application., the said earlier order became fully operative. Therefore, the order passed by the District Court directing the transfer of the assets and account books of the firm to Bombay, was, in a sense, a companyollary to the earlier order passed by it on December 13, 1950. That being the nature of the proceedings taken by the Official Assignee before the District Court, it, appropriate to hold that s. 77 of the Provincial Act came into play and it had number been companyplied with, Dealing with this aspect of the matter, the High Court was inclined to take the view that the earlier order was number a final order and did number amount to res judicata between the parties. In our opinion, this view is erroneous. The said order was passed in proceedings to which the respondents were parties, and so far as the District Court was companycerned,it dealt with the whole of the dispute then pending between the Official Assignee and the respondents. In terms , the order had provided that if the Bombay High Court decided that the assets and effects of the insolvent should be administered from Bombay, the said assets and account. books should be handed over to the Official Assignee at Bombay, and so, there can be.no doubt that the said order was companyplete and final. In view of the subsequent events, the said order became effective and the Official Assignee was, entitled. to request the District Court to act upon it and send the assets and account books and document to. Bombay. We must accordingly hold that the High Court was in error in reversing the order of the District Court and directing instead that the insolvency proceedings in so far as they related to the dispute between the Official Assignee and the respondents should be tried at Kurnool. It would be numbericed that when the Official Assignee moved the District Court by his second application, he was really claiming that the assets of the insolvent should be transferred to him because they had vested in him already, and he wanted that the claim made by the respondents has to be tried between him and them and that can be done by the Bombay High Court which had passed an adjudication order under s. 17 of the Presidency Act. This aspect of the matter does number appear to have been properly placed before the High Court. Mr. Ram Reddy for the respondents, however, companytends that though the Bombay High Court may be, the principal, Court entitled to deal with the insolvency proceedings against the firm, the subsidiary question raised by the respondent can nevertheless be tried by the District Court at Bellary. This argument is based mainly on grounds of companyvenience of parties. We do number propose to express any opinion on this point in the present appeal. We are satisfied that the assets which have been ordered by the District Court to be transferred to Bombay include the amounts allowed to be withdrawn by the respondents on companyditions imposed by the District Court in that behalf. If the respondents desire that their claim to the said amount should be tried by the Bellary Court on grounds of companyvenience, it is open to them to make an application to the Bombay High Court in that behalf. The entire insolvency proceedings against the firm must be tried by the Bombay High Court. It would, however, be open to the Bombay High Court to allow the dispute between the respondents and the Official Assignee to be tried by the Bellary Court if it came to the companyclusion that it would be companyvenient, fair and just to adopt such a companyrse. Therefore, we will number direct the respondents to redeposit the amount in the Bellary Court with interest accrued due because we propose to allow the respondents liberty to make an application in that behalf to the Bombay High Court within two months from today. If the Bombay High Court accepts their plea and orders that the dispute between the respondents and the Official Assignee should be tried at Bella the said High Court may also decide whether the amount already withdrawn by the respondents should be redeposited before the said dispute is disposed of, or only after it is decided against them. That is a matter which would be in the discretion of the Bombay High Court. If, however, the respondents do number make an application to the Bombay High Court within two months, they will have to redeposit the entire amount in Bellary Court and the said Court will thereupon transfer the said amount to the Bombay High Court to be dealt with in accordance with the provisions of the Insolvency Law. We ought to add that Mr. Ram Reddy has companyceded, and we think, rightly, that if the Bombay High Court allows the matter in dispute between the respondents and the Official Assignee to be tried in the District Court, it should be so tried number in the District Court of Kurnool but in the District Court of Bellary. In the result, the appeal is allowed, the order passed by the High Court is set aside and that of the District Court restored with the modification in respect of the amount withdrawn by the respondents, as indicated above.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 201/60. Appeal by special leave from the judgment and order dated June 18, 1958, of the Bombay High Court, Nagpur, in Misc. Petn. No. 391 of 1956. C. Setalvad, Attorney-General for India, S. N. Andley, and Rameshwar Nath, for the appellant. N. Kerdekar, N. K. Kherdakar and A. G. Ratnaparkhi, for the respondent No. 1. 1962. November 8. The judgment of the Court was delivered by GAJENDRAGADKAR J.-This appeal raises a short question about the companystruction of clauses 23, 24 and 24-A in The Central Provinces and Berar Letting of Houses and Rent Control Order, 1949 hereinafter called the Order . jogeshwar s o Parmanand Bhishikar hereinafter called the respondent owns a house known as the Bhishikar Bhawan in Nagpur. Block No. 2A had been let out by him to a firm known as the Dayalbagh Stores for carrying on business. Since the tenant was in arrears as to rent,, the respondent obtained from the Rent Control Authorities permission to terminate the said tenancy. Meanwhile, the tenant intimated to the respondent by telegram on July 24, 1955, that it had vacated the said premises on that day. Prior to the receipt of this telegram, however, the appellant Chimandas Bagomal Sindhi had made an application to the Addl. Dy. Commissioner, Nagpur, on July 15, 1955, that the premises occupied by the said tenant were likely to fall vacant, and prayed that the same should be allotted to him as he was a displaced person within the meaning of the Order. The Addl. D. C. passed an order of provisional allotment in favour of the appellant on the same day and since then, the appellant has been in possession of the said premises. The respondent then came to know about the said provisional allotment and gave intimation to the Addl. D. C. that he needed the, premises for his own purposes, and so, he moved for the cancellation of the said provisional allotment order. On July 23, 1956, the Addl. D. C. purporting to exercise his powers under clause 23 1 of the Order companyfirmed the provisional allotment in favour of the appellant. The respondent then moved the Nagpur High Court by a writ petition No. 307 of 1955 for cancellation of the said order. On April 10, 1956, Mr.Justice Bhutt set aside the order of allotment and remanded the case for disposal in accordance with law. That is how the first stage of this dispute came to an end. On remand, the Addl. Dy. Commissioner companyfirmed the earlier order. He held that the respondent did number need the premises for his own occupation and he thought that there was numbergoing back on the earlier provisional order of allotment in favour of the appellant. This second order was challenged by the respondent by another writ petition filed in the Nagpur High Court No. 391 of 1956 . Meanwhile, the appellant had filed a Letters Patent Appeal No. 95 of 1956 against the decision of Bhutt, J., on the earlier writ petition filed by the respondent. By companysent, the said Letters Patent Appeal and the subsequent writ petition filed by the respondent were heard together by a Division Bench of the High Court. The Division Bench has set aside the order of allotment passed in favour of the appellant and allowed the subsequent writ petition filed by the respondent. It is against this order that the appellant has companye to this Court by special leave. It appears that after remand, the respondent .brought it to the numberice of the Addl. D. C. that the appellant owned As.- /4/- share in the Hind Vastra Bhandar and that he had, therefore a place where he companyld carry on his business. This allegation was repeated by the respondent in his second writ petition and it was urged by him that in view of the fact that the appellant had a place of business of his own, he was number entitled to the accommodation alloted to him by the impugned order. This plea was met by the appellant on the ground that the business mentioned by the respondent bad been dissolved. From the affidavit filed by the appellant in that behalf it does appear that the appellant had a share in the Hind Vastra Bbandar and Krishna Watch Co both of which Partnerships carried on their business at Nagpur, but on April 8, 1957 the said partnerships had been dissolved and so, after the said date of dissolution there was numberplace of business to which the appellant companyld lay any claim. In support of this plea, the appellant has filed the deed of Dissolution in question., The High Court has held that reading the definition of the words displaced person prescribed by clause 2 2 together with the relevant clause of the Order under which the impugned allotment had been made in favour of the appellants it must be, held that the appellant was number a displaced person and as such, he was number entitled to the said allotment. That is how the main point which arises for our decision in the present appeal is about the companystruction of the said relevant clauses of the Order. The order had been passed by the Government of the Central Provinces, and Berar by virtue of the powers companyferred on it by section 2 of the Central provinces and Berar Act No. XI of 1946. Sub-clause 2 of clause 2 defines A displaced person as meaning any person who, on account of the setting up of the Dominions of India and Pakistan, or on account of civil disturbances or fear of such disturbances in any area number forming part of Pakistan has been displaced from or has left his place of residence in such area after the 1st day of March, 1947, and who has subsequently been residing in India. The Appellant claims to be such a displaced person. Clause 13 provides, inter alia, that the landlord would be entitled to claim ejectment of his tenant if he shows that he needs the house or portion thereof for the purpose of his bona fide residence, provided he is number occupying any other residential house of his own it the city or town companycerned. He can also obtain ejectment of his tenant if it is shown that the,, tenant has secured alternative accommodation or has left the area for a companytinuous period of four months and does number reasonably need the house. Clauses 22 to 27 form part of Chapter III which deals with the companylection of information and letting, of accommodation. Clause 22 1 provides that every landlord of a house situate in an area to which this Chapter applies, shall give intimation about the impending vacancy as specified by subclauses a and b . s Clause 22 2 lays down that numberperson shall occupy any house in respect of which this Chapter applies except under an order under sub- clauses 1 of clause 28 or clause,, 24 or on an assurance from the landlord that the house is being permitted to be occupied in accordance with sub-clause 2 of clause 23. It would thus be numbericed that all vacancies occurring in houses governed by Chapter III have to be filled in the manner specified by clause 22 2 . Clause 23 1 provides that on receipt of the intimation under clause 22, the, Dy. Commissioner may within fifteen days from the date of receipt of the said intimation, order the landlord to let the vacant house to any person holding an, office of profit under the Union or State Government or to any Person holding it post under the Madhya Pradesh Electricity Board, or to a displaced person or to an evicted, person and thereupon numberwithstanding any agreement to the companytrary, the landlord shall let the house to such person and place him in possession thereof immediately, if it is vacant or as soon as it becomes vacant. The proviso to this sub-clause gives right to the, landlord to plead that he needs the house for his own occupation, and if such a plea is accepted by theDy.Commissioner, the landlord would, be allowed to occupy the same. In other words, in cases falling underclause 23 1 before the C.makes an order directing the landlord to let the house to one of the personsspecified. in the different categories by that clause, it would be open to the landlord to urge his own need and if that need is established, an order under clause 23 11 would number be passed against him. Clause 23 2 provides that if numberorder is passed and served upon the landlord within the period specified in sub-clause 1 , he shall be free to let the vacant house to any person. Clause 24 provides for the penalty for numbercompliance with the. requirements of clause 22 1 . Under this clause, the Dy. Commissioner is empowered to order the landlord to let the house forthwith to any of the persons falling under the categories specified by that clause. Since the power companyferred on the D. C. to make an order under this clause is intended, in a sense, to punish the landlord for his companytra- vention of clause 22, it prima facie appears that the landlord is number given an opportunity to prove his own need as under the proviso to 23 1 . Clause 24-A deals with cases where the Dy. Commissioner receives information to the effect that a house is likely to become vacant or available for occupation by a particular date and in such cases it empower. the Dy. Commissioner to, make an,. order on the same lines as provided by clause 23 1 . This clause lays down that the order passed under it shall be companyplied with by the landlord unless the house does number become vacant or available for occupation within one month from the date of receipt by him of the said order, or the landlord applies for the cancellation of the said order stating his grounds thereof. This provision means that an order passed under clause 24A can be challenged by the landlord by pleading that he needs the premises for himself That, in brief, is the scheme of the relevant provisions. The High Court has taken the view that in allotting the premises in question to the appellant the Addl. D. C. has failed to numberice the fact that on July 15, 1955, when the provisional allotment order was passed, the appellant had a place of business of his own inasmuch as-he was a 4 annas sharer in a partnership which had its place of business. According to the High Court, as soon as it appeared that the appellant had a place of business of his own, he ceased to be a displaced person within the meaning of clause 23 1 and the other relevant clauses. This companyclusion proceeded on the basis that though the appellant may be taken to have satisfied the require- ments of the definition of the expression displaced person under clause 2 2 , that definition had to be read in the light of the companytext of clause 23 1 and its meaning had to be companytrolled by the said companytext. Clause 2 begins with the words that in this Order, unless there is anything repugnant in the subject or companytext, the defined terms will carry the meaning assigned to them by the respective definitions. The whole object of enabling the Dy. Commissioner to make an order of allotment in respect of the persons specified in different categories by the relevant clause, is to provide accommodation to those persons who were without any accommodation. Since that object is implicit in the relevant provision, the definition must be companystrued in the light of the said implicit assumption of the relevant provision. It is on this view that the impugned order has been set aside by the High Court. It may be companyceded that prima facie the view taken by the High Court appears to be attractive. It does appear to be reasonable that provisions of the kind companytained in Chapter III would numbermally be expected to assist persons of specified categories to obtain accommodation and that would impliedly postulate that such persons have, numberaccommodation which they can claim their own. If the words of the relevant provision are ambiguous, or if their effect can reasonably be said to be a matter of doubt, it may be permissible to companystrue the said provisions in the light of the assumption made by the High Court. But, arc the words of the relevant in any sense ambiguous, or is the effect of those words doubtful ? In our opinion, the answer to these questions must be in the negative. Clause 23 1 refers to the persons in the specified categories, and empowers the D.C. to make an order of allotment in their favour. There are numberterms of limitation qualifying the said persons and the scheme of the relevant provisions does number seems, to companytemplate any such limitations It is significant that the said persons are number entitled as a matter of right to an order of allotment. What clause 23 1 does is to companyfer power on the D.C. to make an order of allotment if he thought it OX expedient, fair to do so in a particular case. it is only where an order is made by the D.C. that an obligation is imposed on the landlord to let the premises to the person named in the order. Having regard to the words used in describing the persons and the categories, it seems plain that the provision Contemplated that a person belonging to one of those categories may be entitled to claim its benefit on the ground that accommodation already available to him was patently insufficient or unsuitable. When such a plea is made, the D. C. may have to companysider it Arid in doing so, he may have to examine the companytentions raise landlord against such a plea as Well as the claim that the landlord may make for his own personal occupation. The enquiry which would thus become necessary would be in the nature of a enquiry and, the power companyferred on the D.C. may have to be exercised in a flair and just manner. We do number think that clause 23 1 as well as clauses 24 and 24 A necessarily exclude the cases 1 of persons specified in them on the grounds that the said persons already have an accommodation which they can call their own. Persons there specified would numberdoubt have a much better claim for accommodation if is shown that they have numberaccommodation at all. But even if such persons have accommodation, their claims cannot be ruled out on the preliminary ground that the very fact that they have accommodation takes them out of the provisions of the respective clauses. It is quite true that if a person belonging Ca, to the specified categories has suitable and sufficient accommodation, he would numbermally number be entitled to claim the benefit of clause 23 1 . That, however, is a matter to be companysidered by the Dy. Commissioner on the merits. We are, therefore, satisfied that the High Court was in error in assuming that the provisions of clause 23 1 and clauses 24 and 24A impliedly postulate that the persons belonging to the respective categories specified by them can receive allotment only if they have numberprevious accommodation of their own. That being so, we must hold that the appellants case cannot be thrown out merely on the ground that he had other accommodation by virtue of the fact that he was a partner in two companycerns to which we have already referred. This companyclusion cannot, however, finally dispose of the appeal before us because it seems to us that after the remand order was passed by Mr. justice Bhutt, the Addl. C. has number dealt with the matter in accordance with law as he was required to do. He appears to have taken the view that since a provisional order had already been passed, there was numbergoing back upon it. He thought that after remand, the scope of the enquiry was companyfined to the examination of the question as to whether the respondent proved that he needed the premises for his own occupation. It is true that he has incidentally mentioned the fact that the appellant owned a -/4/- share in the business which was carried on in Nagpur, but he has added that the said fact does number preclude him from obtaining a shop for starting a business exclusively of his own. This observation shows that the Addl. D.C. did number properly appreciate the scope and effect of the provision companytained in the relevant clause. Besides, reading the order as a whole, it is quite clear that he took an unduly narrow view of the limits of the enquiry which he was bound to hold as a result of the remand order and that has vitiated his final companyclusion. We, therefore, think that it is necessary that the matter should be sent back to the Addl. Dy. Commissioner, Nagpur, with a direction that he should companysider the case on the merits afresh. We wish to make it clear that the question as to whether the appellant should be given allotment of the premises in question should be determined by the Addl. D. C. in the light of the position as it stood on July 15, 1955. We are making this observation because there has been some companytroversy before us as to whether the appellant has lost his right in the premises belonging to the partnership of which admittedly he was a member by reason of the fact that the, said partnership is alleged to have been dissolved on April 8, 1957. The learned Attorney-General has companytended that if the matter has to go back, the Addl. D.C. should be free to companysider the subsequent events that have taken place, and the appellants case should, therefore, be dealt with on the basis that he has numberlonger any shares in the said partnerships. We are number inclined to accept this companytention. The fact that the present proceedings have been protracted would number entitle the appellant to ask the Addl. C. to take subsequent events into account. It is clear that the dissolution of the partnership took place long after the appellant obtained the provisional allotment from the Addl. D.C. and it is by numbermeans clear that if the Addl. D.C. had been then told that the appellant had a place of business of his own, he would have granted accommodation to him in the present premises on the same day that he moved him in that behalf. We are satisfied that the question about the propriety and validity of the said provisional order must be judged in the light of the facts as they obtained on that day. Mr. Kherdekar for the respondents wanted to argue before us that under cl. 2 2 the appellant was number a displaced person on that day and he has relied on the fact that the appellant had been carrying on business in several places in India, since 1945. This point has number been companysidered either by the Addl. D.C. or the High Court. If so advised, the respondents may take this point before the Addl. D.C.-and we have numberdoubt that if raised, it would be dealt with by the Addl. D.C. in accordance with law. The result is, the appeal is allowed, the order passed by the High Court on the writ petition is set aside and the matter is remanded to the Addl. Dy. Commissioner, Nagpur, with a direction that he should deal with the dispute between the parties afresh in accordance with law.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Suit No. 1 of 1961. M. Bose,, Advocate-General for the State of West Bengal, B. Sen, S. C.Bose, Milon K. Bunerjee, P. K. Chatterjee, and P. K. Bose, for the plaintiff. C. Setalvad, Attorney-General for india, H. N. Sanyal, Additional Solicitor General of India, Bishan Narain, N. S. Bindra and R. H. Dhebar, for the defendant. N. Seib and I. N. Shroff, for the Intervener No. 1. M. Sikri, Advocate-General for the State of Punjab, R. Ganapathy Iyer and P. D. Menon, for Intervener No. 2. C. Barua, Advocate-General for the State of Assam and Naunit Lal, for the Intervener No. 3. Dinabandhu Sahu, Advocate-General for the State of Orissa, K. P. Sinha and P. D. Ale on, for the Intervener No. 4. Ranganadhan Chetty and A. V. Rangam, for Intervener No. 5. Lal. Narayan Sinha, and D. Goburdhan, for Intervener No. 6. S. Hajela and C. P. Lal, for Intervener No. 7. D. Xenon, for Intervener No. 8. M. Sikri, Advocate-General for State of Punjab, and P. Xenon, for Intervener No. 9. S. Pathak, N. S. Bindra and R. H. Dhebar, for Intervener No. 10. 1962. December 21. The Judgment of Sinha, C. J., Imam, Shah, Ayyangar and Mudholkar, JJ., was delivered by Sinha, J., Subba Rao, J., delivered a separate judgment. SINHA, C. J.-This is a suit by the State of West Bengal against the Union of India for a declaration that Parliament is number companypetent to make a law authorising the Union Government to acquire land and rights in or over land, which are vested in a State, and that the Coal Bearing Areas Acquisition and Development Act XX of 1957 -which hereinafter will be referred to as the Act-enacted by the Parliament, and particularly ss. 4 and 7 thereof, were ultra vires the legislative companypetance of Parliament, as also for an injunction restraining the defendant from proceeding under the provisions of these sections of the Act in respect of the companyl bearing lands vested in the plaintiff. As will presently appear, the suit raises questions of great public importance, bearing on the interpretation of quite a large number of the Articles of the Constitution. In view of the importance of the questions raised in this litigation, numberices were issued by this Court to all the Advocates- General of the States of India. In pursuance of that numberice, the States of Assam, Bihar, Gujarat, Madras, Orissa, Punjab, Rajasthan and Uttar Pradesh have appeared, either through their respective AdvocatesGeneral or through other Counsel. The National Coal Development Corporation Ltd., with its head office at Ranchi in Bihar, has also intervened in view of a pending litigation between it as one of the defendants and the State of West Bengal as the plaintiff. We have heard companynsel for the parties at great length. The Plaint is founded on the following allegations. The plaintiff is a State, specified in the First Schedule of the Constitution,, as forming part of India which is a Union of States. By virtue of Art. 294 of the Constitution, all property and assets in West Bengal, which were vested in His Majesty for the purposes of the Government of the Province of Bengal became vested in the State of West Bengal for the purpose of the State. The State of West Bengal, in exercise of its exclusive legislative powers, enacted the West Bengal Estates Acquisition Act, 1954 W. B. 1 of 1954 . By numberification issued under the Act, as amended, all estates and rights of intermediaries and Ryots vested in the State for the purposes of Government, free from encumbrances, together with rights in the sub-soil, including mines and minerals. The Parliament enacted the impugned Act authorising the Union of India to acquire any land or any right in or over land, in any part of India. In exercise of its powers under the Act, the Union of India, by two numberifications dated September 21, 1959 and January 8, 1960, has expressed its intention to prospect for companyl lying within the lands which are vested in the plaintiff, as aforesaid. Disputes and differences have arisen between the plaintiff and the defendant as to the companypetence of Parliament to enact the Act and its power to acquire the property of the plaintiff, which is a sovereign authority. In paragraph 9 of the Plaint, a companytroversy had been raised as to whether or number the proposed acquisition was for a public purpose, but at the actual hearing of the case, the learned AdvocateGeneral of Bengal withdrew that companytention, and, therefore, that issue is numbermore a live one. Notice under s. 80 of the Code of Civil Procedure is said to have been duly served. The Written Statement of the defendant does number deny the allegations of fact made in the Plaint, but denies the companyrectness of each and all the submissions or legal companytentions as to the legislative companypetence of Parliament to enact the Act and as to the power of the defendant to acquire any property of a State. It is also denied that the State of West Bengal is a sovereign authority. The following statement in paragraph 12 of the Written Statement brings out the policy underlying the enactment in question The defendant states that it is in the public interest that there should be a planned and rapid industrialization of the companyntry. For such rapid and planned industrialization, it is essential that the production of companyl should be greatly increased as companyl is the basic essential for industries. Regulation of mines and mineral development under the companytrol of the Union has been declared by Parliament by law to be expedient in the public interest. It is submitted that in the circumstances, the acquisition of companyl bearing areas by the Union is necessary for the regulation of mines and mineral development and for increased production of companyl in the public interest. The defendant will rely on documents a list whereof is hereto annexed. On those pleadings, the following issues were raised Whether Parliament has legislative companype tence to enact a law for companypulsory acqui- sition by the Union of land and other properties vested in or owned by the State as alleged in para 8 of the plaint ? Whether the State of West Bengal is a sovereign authority as alleged in para 8 of the plaint ? Whether assuming that the State of West Bengal is a sovereign authority, Parliament is entitled to enact a law for companypulsory acquisition of its lands and properties ? Whether the Act or any of its provisions are ultra vires the legislative companypetence of Parliament ? Whether the plaintiff is entitled to any relief and if so, what relief ? After the arguments on behalf of the plaintiff, and of the States in support of the plaintiff, had been finished, application was made for amendment of the plaint praying that the following paragraph may be added as paragraph 9A, which is as follows - Alternatively the plaintiff submits that the Coal Bearing Areas Acquisition and Develop- ment Act Act XX of -1957 on its true companys- truction does number apply to the lands vested in or owned by the Plaintiff the State of West Bengal. Further the numberifications purported to have been issued under the said Act are void and of numbereffect. At the request of the learned Attorney-General a short adjournment was granted to companysider the position as to whether or number the amendment sought should be opposed on behalf of the defendant. As the amendment sought was number opposed, it was granted and an additional issue was raised in these terms Whether Act XX of 1957 on its true companystruc- tion applies to lands vested in or owned by the Plaintiff State? It will thus appear that the parties are number at issue on any question of fact, and the determination of the companytroversy depends entirely upon the interpretation of the relevant provisions of the Constitution, and the scope and effect of the Act. The issues joined between the parties are mainly two, 1 whether on a true companystruction of the provisions of the Act, they apply to lands vested in or owned by the plaintiff and If this is answered in the affirmative whether there was legislative companypetence in Parliament to enact the impunged statute. The scope and effect of the Act is the most important question for determination, in the first instance, because the determination of that question will affect the ambit of the discussion on the second question. As already indicated, when the case was opened for the first time by the learned Advocate-General of Bengal, he proceeded on the basis that the Act purported to acquire the interests of the State, and made his further submission to the effect that Parliament had numbercompetence to pass an Act which had the effect of affecting or acquiring the interest of the State. But later he also took up the alternative position that the Act, on its true companystruction, did number affect the interests or property of the State. The other States which have entered appearance, through their respective companynsel, have supported this stand of the plaintiff and have laid particular emphasis on those provisions of the Act which, they companytend, support their companytention that the Act did number intend to acquire or in any way affect the interests of the States. In this companynection, the arguments began by making pointed reference to the following paragraphs in the Statement of Objects and Reasons, set out at pages 16-17 of the Paper Book According to the Industrial Policy Resolution of 1956 the future development of companyl is the responsibility of the State. All new units in the companyl industry will be set up only by the State save in exceptional circumstances as laid down in the Resolution. The production of companyl in India in 1953 was 38 million tons and the target for production for the Second Five-Year Plan has been fixed at 60 million tons per annum. It has been decided that out of the additional production of 22 million tons per annum envisaged. the public sector should produce an additional 12 million tons per annum, the balance being allocated to the private industry for production from existing companylieries and immediately companytiguous areas. Out of the additional 12 million tons in the public sector, the bulk 10 million tons per annum will have to be raised by the development of new companyl fields, such as Korba, Karanpura, Kathara and Jhilimili and Bisrampur. Very nearly all the companyl bearing areas however are companyered by mining leases held by private persons or prospecting licencees which carry a right to mining lease. Hence it is proposed to take power to acquire unworked companyl bearing areas companyered by private leases or prospecting licencees which are found surplus to the production required in the private sector and to work these areas as lessees of the State Government. With the acquisition of zamindari rights by the the State Governments, the rights in minerals are number vested in all areas in the State Governments, and it is number appropriate to use the Land Acquisition Act, 1891, for the acquisition of mineral rights, particularly because the Central Government does number intend to acquire the proprietary rights vested in the States. There is numberother existing Central or State Legislation under which the Government has powers to acquire immediately the lessees rights over the companyl bearing areas acquired by Government for the additional companyl production. It is accordingly companysidered necessary to take powers by fresh legislation to acquire the lessees rights over unworked companyl-bearing areas on payment of reasonable companypensation to the lessees, and without affecting the State Government rights as owner of the minerals or the royalty payable to the State Government on minerals. The Bill provides for payment of reasonable companypensation for the acquisition of the rights of prospecting licencees and mining lessees. Besides setting out the policy of the State in the matter of companyl mining industry and the actual state of affairs in relation thereto, the Statement of objects and Reasons companytains the crucial words on which particular reliance was placed on behalf of the States, because the Central Government does number intend to acquire the proprietary rights vested in the States and, without affecting the State Government rights as owners. It is however well- settled that the Statement of Objects and Reasons accompanying a bill, when introduced in Parliament, cannot be used to determine the true meaning and effect of the substantive provisions of the statute. They cannot be used except for the limited purpose of understanding the background and the antecedent state of affairs leading up to the legislation. But we cannot use this statement as an aid to the companystruction of the enactment or to. show that the legislature did number intend to acquire the proprietary rights vested in the State or in any way to affect the State Governments rights as owners of minerals. A statute, as passed by Parliament, is the expression of the companylective intention of the legislature as a whole, and any statement made by an individual, albeit a Minister, of the intention and objects of the Act cannot be used to cut down the generality of the words used in the statute. It was then companytended that the preamble of the Act was the key to the understanding of the scope and provisions of the statute. The preamble is in these words An act to establish in the economic interest of India greater public companytrol over the companyl mining industry and its development by provid- ing for the acquisition by the state of unworked land companytaining or likely to companytain companyl deposits or of rights in or over such land, for the extinguishment or modification of such rights accruing by virtue of any agreement, lease, licence or otherwise, and for matters companynected therewith. Particular stress was laid on the last two lines of the preamble, showing that only rights accruing by virtue of any agreement, lease, licence or otherwise were being sought to be extinguished or modified by the provisions of the Act. But this argument omits to take numbere of the words of the previous clause in the preamble which has reference to the fact that the Act also was meant for acquisition by the state of unworked lands companytaining or likely to companytain companyl deposits. Before proceeding to deal with the main arguments it is necessary to advert to a submission of the learned Advocate-General of Bengal that the reference to the State in the words acquisition by the State occurring in the preamble was a reference to the States as distinguished from the union. This companytention has only to -be mentioned to be rejected as the entire object and purpose of the impugned Act was to vest powers in the Union Government to work companyl mines and in that companytext the word State companyld obviously refer only to the Union Government. The preamble, therefore, does number support the argument that the Act was intended to acquire only the rights of individuals, derived from prospecting licences or based on leases, and to exclude from the purview of the Act the rights of States in companyl-bearing lands. Section 4, relating to the issue of a preliminary numberification of the intention to prospect for companyl in any given area, makes reference to lands, without any qualifications, and s. 6, which is companysequential upon s. 4 lays down the effect of such numberification on prospecting licences and mining leases. Section 7 also speaks of giving numberice of the Governments intention to acquire the whole or any part of the land, numberified as aforesaid. or any rights in or over such land. Section 9, which provides for a declaration of acquisition has also used the same expression, any land or any rights in or over such land. The proviso to s. 9, which is in these terms Provided that, where the declaration relates to any land or to any rights in or over land belonging to a State Government which has or have number been leased out, numbersuch declaration shall be made except after previous companysultation with the State Government is very important in this companynection. This proviso for the first time makes specific reference to any land or to any rights in or over land belonging to a State Government. Section 9A authorises the Central Government to dispense with the necessity of companyplying. with the provisions of s. 8, which provides for hearing any objections raised to the proposal to acquire any land which is numberified under s. 7 as the subject-matter of acquisition. Ordinarily, if a numberification is made by the Central Government of its intention to acquire of the whole or any part of the land or of any right in or over land, numberified under s. 4, it is open to any person interested in the land to object to the acquisition of the whole or any, part of the land or of any rights in or over such land. If any such objection is raised, an opportunity has to be given for hearing such an objection or objections, by the companypetent authority. But under s. 9-A, the Central Government, if it is satisfied that it is necessary to acquire immediately the whole or any part of the land, or any rights in or over such land, may direct that s. 8 shall number companye into operation, and, therefore, numberproceedings thereunder would be entertainable. Section 10 lays down the companysequences of the numberification of declaration of acquisition under s. 9. On such a declaration the land, or the rights in or over the land, shall vest in the Central Government, free from all encum brances, and under sub-section 2 where the rights acquired happen to have been granted under a mining lease by a State Government, the Central Government shall be deemed to have become the lessee of the State Government. A good deal of argument was addressed to us as to the significance of the provision, companytained in s. 10 2 of the Act. They will be dealt with later in the companyrse of this judgment. But it is open to Government to direct by an order in writing that the land or the rights in or over the land, instead of vesting in the Central Government under s. 10 shall vest in a Government Company, which has expressed its willingness to companyply with the terms and companyditions imposed by the Central Government. A Government Company means a companypany as defined in s. 617 of the Companies Act, 1956. In the case where the land or the rights in or over the land become vested in a Government Company, under s. 11 1 , that companypany shall be deemed to have become a lessee of the State Government, as if the Company had been granted the mining lease by the State Government. under the Mineral Concession Rules. Compensation under the Act on account of prospecting licences ceasing to have effect, or the rights under a mining lease having been. acquired, or for any land acquired under s. 9, has been provided for and the rules lay down the procedure for determining such companypensation, in s. 13. It is clear on a reading of the provisions for companypensation in that section that numbercompensation has been provided for in respect of minerals lying unworked underground. Section 14 to 17 lay down the method of determining companypensation and other companynate matters relating to payment of companypensation. The rest of the provisions of the Act do number bear on the present companytroversy and, therefore, need number be adverted to. On a bare reading of the provisions of the Act, the expression any land or any rights in or over such land would appear to companyer every interest regardless of the person or authority who owns them, including those of a State Government. But it has been argued that on a close examination of the provisions aforesaid of the Act and keeping certain general principles of interpretation of Statutes in view, the companyclusion follows that the Act does number companyer any property or interest in or over land belonging to a State Government. We have already indicated that neither the statement of objects and reasons number the preamble are of any help to the plaintiff or to States which have intervened and have claimed that any property belonging to a State Government is outside the scope and effect of the Act. Bearing in mind that the words used in s. 4 are companyprehensive and unrestricted and apt to include in their sweep lands belonging to a State and that the reference in s. 7 is to lands which are numberified under s. 4 1 , we shall number turn to the arguments bearing upon the interpretation of certain specific provisions which are however claimed to suggest an opposite companyclusion. Firstly, it is urged that any person used in s. 8 companyld number be interpreted as including a State. This argument is bound up with the other argument relating to the companypetence of Parliament to legislate in respect of property belong, ing to a State. It will, therefore, be companyvenient to deal with this argument along with that topic, It is enough to point out here that the explanation to s. 8 1 , and particularly the words undertaken by the Central Government or by any other person Would lend support to the argument of the learned AttorneyGeneral that the word Person has been used in the generic sense of including both a natural person and a juristic person. Secondly, it as argued with reference to the words of the proviso to s. 9 1 that where the Act intended to make any mention of a State Government, it had done so specifically as in ss. 9, 10, 11 and 18 of the Act, and that, therefore, the substantive provisions of the Act were. number intended to apply to any rights or interest vested in a State Government. The argument is plausible but number sound. Section 9 is the effective section of the Act, which provides that after the Central Government has investigated the prospect of obtaining companyl, after the issue of a numberification under s. 4, and after numberifying its intention to acquire the land companyered by the numberification under, s. 7, and after disposing of objections, if any, under s. 8, the Central Government has to make the necessary declaration that that land should be acquired. The proviso to s. 9 1 only requires companysultation with the companycerned State Government where it is the owner of the land, or has any interest in or over such land. It has rightly been pointed out on behalf of the Central Government that if the right or interest of a State Government were number involved in the acquisition, it would be wholly unnecessary to make any reference to the State Government companycerned. It was urged that unless lands belonging to a State Government or in which a State Government has an interest in or over such land, were within the operative words of the main provisions in s. 9 1 , it would be meaningless to Make a provision for the companysultation referred to in the proviso. We see force in this submission. The companysultation with the State Government is made a companydition precedent to the declaration to be made by the Central Government in respect of the proposed acquisition. But companysultation does number necessarily mean companysent, though ordinarily companysultation between two governments or two public authorities would signify the company operation and willingness to accede to the proposals situation which is number companytemplated with reference to the interests of private persons. On the question of the proper interpretation of the proviso to s. 9 1 , a Dumber of readings were suggested, which went to the length of number only rewriting the section but of adding words which were number there so as to make the proviso mean what on its plain reading it cannot. We are number, therefore, inclined seriously to examine those several alternative readings of this part of the section. Similarly the provisions of s. 10 2 were pressed in aid of the companystruction suggested on behalf of the plaintiff and the other intervening States, that the interests of a State Government were number within the purview of the Act. This argument is based on the companysideration that if rights or interests of a State Government were also within the purview of the Act, it would be meaningless to provide that the Central Government or a Government Company, as companytemplated by s. II, should be deemed to be the lessee of the State Government in respect of the rights acquired. We are unable to acceeds to this companystruction. Sections 10 2 and 11 have particular reference to those cases where the property acquired companysists of rights under any mining leases granted by a State Government. Apart from the kind of property companytemplated by ss. 10 2 and 11 2 , as aforesaid, there may be other kinds of property acquired, e. g. companyl-bearing land, in which the entirety of the interest is vested in a State Government. In such cases, there would be numberquestion of the Central Government or a Government Company becoming or being deemed to become a lessee of a State Government. Reference was made to s. IS but the mention of a State Government in the section is companysequential upon the provisions of ss. 10 and 11, that is to say, where the Central Government or a Government Company has, by operation of those provisions of the Act, become the lessee of a State Government. In the case of any differences between the Central Government and a State Government on the question of how prospecting is to be done or of how far the mineral Concession Rules shall be observed, is, by virtue of this section, to be resolved by arbitration or in such other manner as the Governments companycerned may decide. It will thus appear that on a proper interpretation of the relevant provisions of the Act, it cannot be said that either in express terms or by necessary implication the provisions of the Act are implacable to rights or interests of a State Government or that such lands are excluded. It is plain that the Act is intended to companyer land or rights in or over land belonging either to an individual or to a juristic person. Such land may companyprise number only surface rights but also mineral rights. The land to be acquired by the Central Govt. might be virgin soil unencumbered by any prospecting licences or mining leases granted bv the State or by an intermediary, using the expression to mean all interests below the State. Such an interest as aforesaid may be vested in a State or different interests may be vested in different persons by virtue of leases or licences granted by proprietors in permanently settled States or by tenure-holders who have expressly obtained mining rights. The Act, therefore, had to use the companypendious language land or any interest in or over land to companyer all those diverse rights and interests which the Central Govt. would be interested to acquire in order to have a free hand in developing the I and for companyl mining in the public sector, as it is called. The Act may have been more artistically drafted but companystruing it as it is, we have numberdoubt that Parliament intended to acquire all rights and interests in companyl bearing land with a view to prospecting for companyl and for exploiting companyl-bearing mines. It must, therefore, be held that the supplementary issue as regards the interpretation of the Act joined between the parties as a result of the amendment of the plaint must be decided against the plaintiff. Starting with the position that on a true companystruction of the relevant provisions of the Act, the rights and interests of a State Government in companyl bearing land had number been excluded from the operation of the Act, either in express terms or by necessary implication, the next question that arises for companysideration is the first issue which companyers issues 3 and 4 also. The companypetence of Parliament to enact the Act has to be determined with reference to specific provisions of the Constitution, with particular reference to the entries in the Seventh ScheduleList I and List III. By Entry 42 in List III of the Seventh Schedule to the Constitution read with Art. 246 3 power to legislate in respect of acquisition and requisition of property is companyferrcd upon the Parliament as well as the State Legislatures, Prima facie, this power may be exercised by the Parliament in respect of all property, privately owened or State owned. But on behalf of the State of West Bengal and some of the intervening States it was submitted that the very nature of the right in property vested in the State for governmental purposes imposed a limitation upon the exercise of the Pocwer of the Union Parliament, affecting State owned property. On behalf of the State of Punjab-one of the intervening States-it was urged that if acquisition of property was necessarily incidedtal to the effective exercise of power by Parliament in respect of any of the entries in Lists I and 111, the Parliament may legislate so as to affect title of the State to property vested in it provided it does number interfere with the legislative power of the State. Diverse reasons were suggested at the Bar in support of the plea that the State property was number subject to the exercise of legislative powers of the Parliament. They may be grouped under the following heads The Constitution having adopted the federal principle of government the States share the sovereignty of the nation with the Union, and therefore power of the Parliament does number extend to enacting legislation for depriving the States of property vested in them as sovereign authorities. Entrustment of power to legislate must therefore be so read as to imply a restriction upon the parliamentary under Entry 42 of List III when it is sought to be exercised in respect of the property owned by a State. Property vested in the States by virtue of Art. 294 I cannot be diverted to Union purposes by Compulsion of Parliamentary legislation. The Government of India Act, 1935 provided special machinery for acquisition of property of the State by negotiations, and number by companypulsion in exercise of legislative power that provision recognised that the Central Legislature of the Government of India had numberpower to acquire property of the State by exercise of legislative power, and even though numberprovision similar to s. 127 of the Government of India Act, 1935 has been enacted in the Constitution, the recognition implicit in that provision of the immunity of the property of the units must also be deemed to be superimposed upon the exercise of legislative power vested in the Parliament under the Constitution. Absence of power expressly companyferred such as is to be found in the Australian Constitution, to legislate for acquisition of the property of the State indicates that it was number the intention of the Constitution makers to companyfer that power upon the Union Parliament, under the general legislative heads. If power be exercised by the Union to acquire State property under Entry 42 of the Concurrent List, similar power may also be exercised by the States in respect of Union property and even to re-acquire the property from the Union by exercise of the States legislative power. The power under Entry 42 can therefore never be effectively exercised by the Parliament. It companyld number have been the intention of the Constitution makers to companyfer authority upon the Parliament to legislate for acquiring property of the States and thereby to make the right of the State to property owned by it even more precarious than the right which individuals or Corporations have under Constitution to their property. Individuals and Corporations have the guarantee under Art. 31 2 of the Constitution that acquisition of their property will be for public purposes and companypensation will be awarded for acquiring property. Entry 42 must be read subject to Art. 31, and inasmuch as Fundamental rights are companyferred upon individuals and Corporations against executive or legislative actions, and States are number invested with any fundamental rights exerciseable against the Union or other States, the right to legislate for -compulsory acquisition of State property cannot be exercised, Unless a law expressly or by necessary implication so provides, a State is number bound thereby. This well recognised rule applies to the interpretation of the Constitution. Therefore in the absence of any provision express or necessarly implying that the property of the State companyld be acquired by the Union, the rights claimed by the Union to legislate for acquisition of State property must be negatived. All these arguments, except the purely inter- pretational, are ultimately founded upon the plea that the States have within their allotted field full attributes of sovereignty and exercise of authority by the Union agencies, legislative or executive, which trenches upon that sovereignty is void. Rc 1 Ever since the assumption of authority by the British Crown under Statute 21- 22, Vict . 1656 Ch. 106, the administration of British India was unitary and highly centralized. The GovernorGeneral was invested with autocratic powers to administer the entire territory. Even though the territory was divided into administrative units, the authority of the respective Governors of the Provinces was derived from the Governor-General and the Governor- General was responsible to the British Parliament. There was, therefore, a chain of responsibility-the Provincial Governments were subject to the companytrol of the Central Government and the Central Government to the Secretary of State. Some process of Revolution took place under the Government of India Act, 1919, but that was only for the purpose of decentralization of the Governmental power but on that account the Government did number cease to be unitary. The aim of the Government of India Act, 1935 was to unite the Provinces and Indian States -into a federation, but that companyld be achieved only if a substantial number of the Indian States agreed to join the Provinces in the federation. For diverse reasons the Indian States never joined the proposed federation and the part dealing with federation never became effective. The Central Government as it was originally companystituted under the Government of India Act, 1919, with some modification companytinued to function. But in the Provinces certain alterations were made. Certain departments were administered with the aid of Ministers, who were popularly elected, and who were in a sense responsible to the electorate. The Governor was still authorised to act in his discretion without companysulting his Ministers in respect of certain matters. He derived his authority from the British Crown, and was subject to the directions which the Central Government gave to carry into execution Acts of the Central Legislature in the Concurrent List and for the maintenance of means of companymunication, and in respect of all matters for preventing grave menace to the peace or tranquility of India or part thereof. The administration companytinued to function as an agent of the British Parliament. By the Indian Independence Act, 1947 a separate Dominion of India was carved out and by s. 6 thereof the Legislature was for the first time authorised to make laws for the Dominion. Such laws were number to be void or inoperative on the ground that they were repugnant to the law of England or to the provisions of any existing or future Act of Parliament of the United Kingdom, or to any order, rule or regulation made under any such Act, and the powers of the Legislature of the Dominion included the power to repeal or amend any such Act, order, rule or regulation. The British Parliament ceased to have responsibility as respects governance of the territories which were immediately before that date included in British India, and suzerainty of the Crown over the Indian States lapsed and With it all treaties and agreements in force on the late of the passing of the Act between the Crown and the rulers of Indian States. The bond of agency which bound the administration in India to function as agent of the Birtish Parliament was dissolved and the Indian Dominion to that extent became sovereign. Then came the Constitution. The territory was evidently too large for a democratic set-up with wholly centralized form of Government. Imposition of a centralized form might also have meant a reversal of political trends which had led to decentralization of the administration and some distribution of power. The Constitution had, therefore, to be in a form in which authority was decentralized. In the era immediately prior to the enactment of the Indian Independence Act, there were partially autonomous units such as the Provinces. There were Indian States which were in a sensesovereign but their sovereignty was extinguished bythe various merger agreements which the rulers ofthose States entered into with the Government of India before the Constitution. By virtue of the process of integration of the various States there emerged a Centralised form of administration in which the Governor General was the fountain head of executive authority. The Constitution of India was erected on the foundations of the Government of India Act, 1935 the basic structure was number altered in many important matters, and a large number of provisions were incorporated verbatim from the earlier Constitution. In some respects a greater degree of economic unity was sought to be secured by transferring subjects having impact on matters of companymon interest into the Union list. A companyparison of the Lists in Schedule 7 to the Constitution with the Schedule 7 to the Government of India Act, 1935 discloses that the powers of the Union have been enlarged particularly in the field of economic unity and this was done as it was felt that there should be, centralized companytrol and administration in certain fields if rapid economic and industrial progress had to be achieved by the nation. To illustrate this it is sufficient to refer to National Highways Entry 24 , inter-State Trade and Commerce Entry 42 -to mention only a few being transferred from List II of the Government of India Act to List I in the Consti- tution, to the new entry regarding inter-State rivers Entry 56 , to the new Entry 33 in the Concurrent List to which it is transferred from List 11, and to the companyprehensive provisions of Part XIII-which seek to make India a single economic unit for Purposes of trade and companymerce under the overall companytrol of the Union Parliament and the Union Executive. The result was a Constitution which was number true to, any traditional pattern of federation. There is numberwarrant for the assumption that the Provinces were sovereign, autunomous units which had parted with such power as they companysidered reasonable or proper for enabling the Central Government to function for the companymon good. The legal theory on which the Constitution was based was the withdrawal or restimption of all the powers of sovereignty into the people of this companyntry and the distribution of these powers save those withheld from both the Union and the States by reason of the provisions of Part III between the Union and the States. A truly federal form of Government envisages a companypact or agreement between independent and sovereign units to surrender partially their authority in their companymon interest and vesting it in a Union and retaining the residue of the authority in the companystituent units. Ordinarily each companystituent unit has its separate Constitution by which it is governed in all matters except those surrendered to the Union, and the Constitution of the Union primarily operates upon the administration of the units. Our Constitution was number the result of any such companypact or agreement Units companystituting a unitary State which were number-sovereign were transformed by abdication of power into a Union. Supremacy of the Constitution which cannot be altered except by the companyponent units. Our Constitution is undoubtedly supreme but it is liable to be altered by the Union Parliament alone and the units have numberpower to alter it. Distribution of powers between the Union and the regional units each in its sphere companyrdinate and independent of the other. The basis of such distribution of power is that in matters of national importance in which a uniform policy is desirable in the interest of the units, authority is entrusted to the Union, and matters of local companycern remain with the State. Supreme authority of the Courts to interpret the Constitution and to invalidate action violative of the Constitution. A federal Constitution, by its very nature, companysists of checks and balances and must companytain provi- sions for resolving companyflicts between the executive and legislative authority of the Union and the regional units. In our Constitution characteristic d is to be found in full force, a and b are absent. There is undoubtedly distribution of powers between the Union and the States in matters legislative and executive but distribution of powers is number always an index of political sovereignty. The exercise of powers legislative and executive in the allotted fields is hedged in by numerous restrictions, so that the powers of the States are number companyrdinate with the Union and are number in many respects independent. Legal sovereignty of the Indian nation is vested the people of India who as stated by the -preamble have solemnly resolved to companystitute India into a Sovereign Democratic Republic for the objects specified therein. The Political sovereignty is distributed between, as we will presently demonstrate, the Union of India and the States with greater weightage in favour of the Union. Article 300 invests the Government of India and the States with the character of quasi-corporations entitled to sue and liable to be sued in relation to their respective affairs. By Art. 299 companytracts may be entered into by the Union and the States in exercise of their respective executive powers and Art. 298 authorises in exercise of their respective executive powers the Union and the States to carry on trade or business and to acquire, hold and dispose of property and to make companytracts. These provisions and the entrustment of powers to legislate on certain matters exclusive, and companycurrently in certain other matters, and entrustment of executive authority companyxtensive with the legislative power form the foundation of the division of authority. In India judicial power is exercised by a single set of companyrts, Civil, Criminal and Revenue whether they deal with disputes in respect of legislation which is either State legislation or Union legislation. The exercise of executive authority by the Union or by the State and rights and obligations arising out of the executive authority are subject to the jurisdiction of the Courts which have territorial jurisdiction in respect of the cause of action. The High Courts have been invested with certain powers under Art. 226 to issue writs addressed to any person or authority, including in appropriate cases any Government, for the enforcement of any of the rights companyferrcd by Part III and for anv other purpose and under Art. 227 the High Court has superintendence over all companyrts in relation to which it exercises jurisdiction. The Supreme Court is at the apex of the hierarchy of companyrts, civil, criminal,revenue and of quasi- judicial tribunals. There are in India number two sets of companyrts, Federal and State as are found functioning under the Constitution of the United States of America. By Art. 247 Dower is reserved to the Parliament by law to provide for establishment of companyrts for better administration of laws made by the Parliament or of any existing laws with regard to the matters enumerated in the Union List, but numbersuch companyrts have been companystituted. Sovereignty in executive matters of the Union is declared by Art. 73 which enacts that subject to the provisions of the Constitution, the executive power of the Union extends to the matters with respect to which Parliament may make laws, and to the exercise of such rights, authority and jurisdiction as are cxercisable by the Government of India by virtue of any treaty or agreement. But this executive power may number save as expressly provided in the Constitution or in any law made by Parliament, extend in any State to matters with respect to which the Legislature of the State has also power to make laws. By Art. 77 all executive actions of the Government of India have to be expressed to be taken in the name of the President. Executive power of the State is vested by Art. 154 in the Governor and is exercisable by him directly or through officers subordinate to him in accordance with the Constitution. The appointment of the Governor is made by the President and it is open to lie Pregideat to make such provision as lie thinks fit for the discharge of the function of a Governor of the State in any companytingency number providded for in Ch. II of Part VI. By Art. 162 subject to the provisions of the Constitution, executive power of the State extends to matters with respect to which the Legislature of the State has power to make laws, subject to the restriction that in matters in the Con- current List of the Seventh Schedule, exercise of executive power of the State is also subject to and limited by the executive power expressly companyferred by the Constitution or by any law made by Parliament upon the Union or authorities thereof. Exercise of executive authority of the States is largely restricted by diverse Constitutional provisions. The executive power of every State has to be so exercised as to ensure companypliance with the laws made by Parliament and any existing laws which apply in that State, and number to impede or prejudice the executive power of the Union. The executive power of the Union extends to the giving of such directions to a State as may appear to the Government of India to be necessary for those purposes and as to the companystruction and maintenance of means of companymunication declared to be of national or military importance and for protection of railways. The Parliament has power to declare highways or waterways to be of national importance, and the Union may execute those powers, and also companystruct and maintain means of companymunication as part of its function with respect to naval, military and air force works. The President may also, with the companysent of the Government of a State, entrust to that Government or to its officers functions in relation to any matter to which the executive power of the Union extends Art. 258 1 . Again the Union Parliament may by law made in exercise of authority in respect of matters exclusively within its companypetence companyfer powers and duties or authorise the companyferment of powers and imposition of duties upon the State, or officers or authorities thereof Art 258 2 . Art. 365 authorises the President to hold that a situation has arisen in which the Government of a State cannot be carried on in accordance with the provisions of the Constitution, if the State fails to companyply with or give effect to any directions given in exercise of the executive power of the Union. These are the restrictions on the exercise of the executive power by the States, in numbermal times in times of emergency power to override the exercise of executive power of the State is entrusted to the Union. Again the field of exercise of legislative power being company extensive with the exercise of the legislative power of the States, the restrictions imposed upon the legislative power also apply to the exercise of executive power. Distribution of legislative powers is effected by Art. 246. In respect of matters set out in List I of the Seventh Schedule Parliament has exclusive power to make laws in respect of matters set out in List 11 the State has exclusive power to Legislate and in respect of matters set out in List III Parliament and the State Legislature have companycurrent power to legislate. The residuary power, including the power to tax, by Art. 248 and item 97 of List I is vested in the Parliament. The basis of distribution of powers between the Union and States is that only those powers and authorities which are companycerted with the regulation of local problems are vested in the States, and the residue specially those, which tend to maintain the economic, industrial and companymercial unity of the nation are left with the Union. By Art. 123 the President is invested with the power to promulgate Ordinances on matters on which the Parliament is companypetent to legislate, during recess of Parliament. Similarly under Art. 213 power is companyferred upon the, Governor of a State to promulgate Ordinances on matters on which the State Legislature is companypetent to legislate during recess of the Legislature. But upon the distribution of legislative powers thus made and entrustment of power to the State Legislature, restrictions are imposed even in numbermal times. Article 249 authorises the Parliament to legislate with respect to any matter in the State List if the Council of States has declared by resolution supported by number less than two-third of the members present and voting that it is necessary or expedient in the national interest that it Parliament should make laws with respect to any matter enumerated in the State List specified in the resolution. By Art. 252 power is companyferred upon Parliament to legislate for two or more States by companysent even though the Parliament may have numberpower under Art. 246 to make laws for the State except as provided in Art. 249 and 250. Such a law may be adopted by a Legislature of any other State. By Art. 253 Parliament has the power numberwithstanding anything companytained in Art. 246 to make any law for the whole or any part of the territory of India for implementing any treaty, agreement or companyvention with any other companyntry or companyntries or any decision made at any international companyference, association or other body. In case of inconsistency. between the laws made by Parliament and laws made by the Legislatures of the States, the laws made by the Parliament whether passed before or after the State law in matters enumerated in the Concurrent List to the extent of repugnancy prevail over the State laws. It is only a law made by the Legislature of a State which had been reserved for the companysideration of the President and has received his assent, on a matter relating to a Concurrent List companytaining any provision repugnant to the provisions-of an earlier law made by Parliament or an existing law with respect to that matter, prevails in the State. Power of taxation which is exercisable by the States in companyparatively minor fields, the more important such as Income-tax, wealth-tax, exciseduties other than those on certain specified articles, and customs, being reserved to the Union companyferred by various entries under List II on the States is also severely restricted. Property of the Union, save in so far as the Parliament may by law otherwise provide, is exempt from all taxes imposed by the State or by any authority within the State. By Art. 286 imposition of a tax on sale or purchase of goods where such sale or purchase takes place outside the State or in the companyrse of import of the goods into, or export of the goods out of, the territory of India can only be imposed by Parliamentary legislation. A State is also prohibited unless the Parliament by law otherwise provides, from imposing a tax on the companysumption or sale of electricity which is companysumed by the Government of India or in the companystruction, maintenance and operation of any railway. Nor can levy of a tax be authorised in respect of water companysumed or distributed or sold by any authority established by any existing law or any law made by Parliament for regulating or developing any inter-State river or river valley, except in so far as the Parliament may by law so provide. The States depend largely upon financial assistance from the Union. A share in certain taxes levied and companylected by the Union such as tax on number-agricultural income, duties in respect of succession to property other than agricultural land, estate duty in respect of property other than agri- cultural land, terminal taxes on goods or passengers carried by railway, sea or air, taxes on railway fares and freights, taxes on the sale or purchase of newspapers and on advertisements published therein, taxes on the sale or purchase of goods other than newspapers where such sale or purchase takes place in the companyrse of inter-State trade or companymerce, is given to the States. Certain grants-in-aid of the revenues of the States of Assam, Bihar, Orissa and West Bengal in lieu of assignment of any share of the net proceeds in each year of export duty on jute and jute products to those States may also be made. Union duties of excise except duties on medicinal and toilet preparations are companylected by the Union but may be distributed in whole or in part among the States in accordance with such principles of distribution as may be formulated. By Art. 275 grants-in-aid of the revenue of such States as Parliament may determine to be in need of assistance may also be made. It is manifest that the States depend for financial assistance upon the Union, their own resources, because of their restricted fields of taxation, being inadequate. The power of borrowing is exercisable by the States under Art. 293, but the same cannot be exercised without the companysent of the Government of India, if there is still outstanding any part of a loan which has been made to the State by the Government of India or by its predecessor Government, or in respect of which a guarantee has been given by the Union, or by its predecessor. In times of national political or financial emergency, the States may exercise only such powers legislative and executive as the Union permits. When a State of emergency is declared the Parliament has power to make laws for the whole or any part of the territory of India with respect to any matter in the State List, and the laws made by Parliament prevail over the State Laws in the event of repugnancy. If as a result of war, external aggression or internal disturbances the security of India or any territory is threatened, the President may declare a state of emergency, and the executive power of the Union will thereupon extend to giving directions to the States, as to manner in which the executive power of the States is to be exercised, and the power of the Parliament to make laws will extend to making laws companyferring or authorising companyferment of powers and imposition of duties, upon the Union or its officers and authorities as respect any matter, even if such matter be number enumerated in the Union List. The President may also during the emergency suspend the operation of Art. 268, to 279 and require that all money Bills shall be submitted to the President for his companysideration, after they are passed by the Legislature of the State. The numbermal companyporate existence of States entitles them to enter into companytracts and invests them with power to carry on trade or business and the States have the right to hold property. But having regard to certain basic features of the Constitution, the restrictions on the exercise of their powers executive and legislative and on the powers of taxa- tion, and dependence for finances upon the Union Government it would number be companyrect to maintain that absolute sovereignty remains vested in the States. This is illustrated by certain striking features of our companystitutional set up. There is numberdual citizenship in India all citizens are citizens of India and number of the various States in which they are domiciled. There are numberindependent Constitutions of the States, apart from the national Constitution of the Union of India Ch. II, Part VI from Arts. 152 to 237, deals with the States, the powers of the Legislatures of the States, the powers of the executive and judiciary. What appears to militate against the theory regarding the sovereignty of the State is the wide power with which the Parliament is invested to alter the boundaries of States, and even to extinguish the existence of a State. There is numberconstitutional guarantee against alteration of the boundaries of the States. By Art. 2 of the Constitution the Parliament may admit into the Union or establish new States on such terms and companyditions as it thinks fit, and by Art. 3 the Parliament is by law authorised to form a new State by redistribution of the territory of a State or by uniting two or more States or parts of States or by uniting any territory to a part of any State, increase the area of any State, diminish the area of any State, alter the boundaries of any State and alter the name of any State. Legislation which so vitally affects the very existence of the States may be moved on the recommendation of the President which in practice means the recommendation of the Union Ministry, and if the proposal in the Bill affects the area, boundaries or name of any of the States, the President has to refer the Bill to the Legislature of that State for merely expressing its views thereon. Parliament is therefore by law invested with authority to alter the boundaries of any State and to diminish its area so as even to destroy a State with all its powers and authority. That being the extent of the power of the Parliament it would be difficult to hold that the Parliament which is companypetent to destroy a State is on account of some assumption as to absolute sovereignty of the State incompetent effectively to acquire by legislation designed for that purpose the property owned by the State for governmental purpose. The parliamentary power of legislation to acquire property is, subject to the express provisions of the Constitution, unrestricted. To imply limitations on that power on the assumption of that degree of political sovereignty which makes the States companyrdinate with and independent of the Union, is to envisage a Constitutional scheme which does number exist in law or in practice. On a review of the diverse provisions of the Constitution the inference is inevitable that the distribution of powers-both legislative and executive-does number support the theory of full sovereignty in the States so as to render it immune from the exercise of legislative power of the Union Parliament-particularly in relation to acquisition of property of the States. That the Parliament may in the ordinary companyrse number seek to obstruct the numbermal exercise of the powers which the States have, both legislative and executive, in the field allotted to them will number be a ground for holding that the Parliament has numbersuch power if it desires, in exercise of the powers which we have summarisedted do so. It was urged that to hold that property yes to in the State companyld be acquired by the Union, would mean, as was picturesquely expressed by the learned Advocate-General of Bengal, that the Union companyld acquire and take possession of Writers buildings where the Secretariat of the State Government is functioning and thus stop all State Governmental activity. There companyld be numberdoubt that if the Union did so, it would number be using but abusing its power of acquisition, but the fact that a power is capable of being abused has never been in law a reason for denying its existence, for its existence has to be determined on very different companysiderations. We might add that this submission is, as it were, a resuscitation of the number exploded doctrine of the immunity of instrumentalities which originating from the observations of Marshall, C. J., in Mc Culloch v. Maryland 1 , has been decisively rejected by the Privy Council as inapplicable to the inter predation of the respective powers of the States and the Centre under the Canadian and Australian Constitutions vide Bank of Toronto v. Lambe 2 , and Webb Outrim 3 , and has practically been given tip even in the United States. The following passage in the judgment of Lord Hobhouse in Lambes case, though it dealt with the companyverse case of number reading limitations into provincial power might usefully be set out The appellant invokes that principle to support the companyclusion that the Federation Act must be so companystrued as to allow numberpower to the provincial legislatures under sect. 92, which may by possibility, and if exercised in some extravagant way, interfere with the object of the Dominion in exercising their powers under sect. 91. It is quite impossible to argue from the one case to the other. Their Lordships have to companystrue the express words of an Act of Parliament which makes an elaborate distribution of the whole field of legislative authority between two legislative bodies, and at the same time provides for the federated provinces a carefully balanced companystitution, under which 1 1819 4 Wheat. 316. 2 1887 12 App. Cas. 575. 3 1907 A.C. 81, numberone of the parts can pass laws for itself except under the companytrol of the whole acting through the Governor-General. And the ques- tion they have to answer is whether the one body or the other has power to make a given law. If they find that on the due companystruction of the Act a legislative power falls within sect. 92, it would be quite wrong of them to deny its existence because by some possibility it may be abused, or may limit the range which otherwise would be open to the Dominion Parliament. It is pertinent also to numbere that under several entries of List I it is open to the Union Parliament to legislate directly upon properties which are situate in the State including properties which are vested in the States, for instance, Railways Entry No. 22 , Highways declared by or under law made by Parliament to be national highways Entry 23 , Shipping and Navigation on inland waterways declared by Parliament by law to be national waterways, Entry 24 ,Lighthouses including lightships etc. Entry 26 , Ports declared by or under law made by Parliament or existing law to be major ports Entry 27 , Airways, aircraft and air navigation,provision of aerodynamic etc. Entry 29 , Carriage of passengers and goods by railways, sea or air, or by national waterways in mechanically propelled vessels Entry 30 , Property of the Union and the Revenue therefrom, but as regards property situated in a State subject to legislation by the State, save in so far as Parliament by law otherwise provides Entry 32 , Industries, the companytrol of which by the Union is declared by Parliament by law to be expedient in the public interest Entry 52 , Regulation and development of oilfields and mineral oil resources, petroleum and petroleum products, other liquids and substances declared by Parliament by law to be dangerously inflammable Entry 53 , Regulation of mines and mineral development Entry 54 , Regulation and development of inter-State rivers and rivervalleys Entry 56 , Ancient and historical monuments and records and archaeological sites and remains declared to be of national importance Entry 67 . These are some of the matters in legislating upon which the Parliament may directly legislate in respect of property in the states. To deny to the Parliament while granting these extensive powers of legislation authority to legislate in respect of property situate in the State, and even of the State, would be to render the Constitutional machinery practically unworkable. It may be numbericed that in the United States of America the authority of Congress to legislate on a majority of these matters was derived from the Commerce Clause. The companymerce clause is number regarded as so exclusive as to preclude the exercise of State legislative authority in matters which are local, in their nature or operation, or are mere aids to companymerce. As observed in Cooleys Constitutional Limitations-8th Edition p. 1004 Mr. justice Hughes, in deliverig the opinion of the Supreme Court of the United States,in Simpson v. Shepard 1 , said The grant in the Constitution companyferred upon Congress an authority at all times adequate to secure the freedom of inter-state companymercial intercourse from State companytrol, and to provide effective regulation of that intercourse as the national interest may demand. The words among the several States distinguish between companymerce which companycerns more States than one, and that companymerce which is companyfined within one State and does number affect other States. The genius and character of the whole government, said Chief Justice Marshall, seems to be, that its action is to be applied to all the external companycerns of the nation, and to those internal companycerns which affect the States 1 1913 230 U.S. 352 517 L. ed. 1511. generally but number to those which are companyple- tely within a particular State, which do number affect other States and with which it is number necessary to interfere, for the purpose of executing some of the general powers of the Government. The companypletely internal companymerce of a State, then, may be companysidered as reserved for the State itself. This reservation to the States manifestly is only of that authority which is companysistent with, and number opposed to, the grant to Congress. There is numberroom in our scheme of government for the assertion of State power in hostility to the authorized exercise of Federal power. The authority of Congress extends to every part of inter-state companymerce, and to every instrumentality or agency by which it is carried on and the full companytrol by Congress of the subjects companymitted to its regulation is net to be denied or thwarted by the companymingling of interstate and intrastate operations. This is number to say that the nation may deal with the internal companycerns of the State, as such, but that the execution by Congress of its companystitutional power to regulate inter-state companymerce is number limited by the fact that intrastate transactions may have become so interwoven therewith that the effective government of the former incidentally companytrols the latter. This companyclusion necessarily results from the supremacy of the national power with its appo- inted sphere. Our Constitution recognises numbersuch distinction between the operation of a State law in matters which are local, and which are interstate. if an enactment falls within the Union List, whether its operation is local or otherwise State legislation inconsistent therewith, will subject to Art. 254 2 be struck down. The question may be approached from another angle. Even under Constitutions which are truly federal and full sovereignty of the States is recognised in the residuary field both executive and legislative, power to utilise or as it is said Condemn property of the State for Union purposes is number denied. The power to acquire land sought to be exercised by the Union, which is challenged by the State of West Bengal, is power to acquire in exercise of authority companyferred by ss. 6, 7 and 9 of the Coal Bearing Areas Acquisition and Development Act, 1957. The Act was enacted for establishing in the economic interest of India greater public companytrol over the companyl mining industry and its development by providing for the acquisition by the State of land companytaining or likely to companytain companyl deposits or of rights in or over such land for the extinguishment or modification of such rights accruing by virtue of any agreement, lease, licence or otherwise, and for matters companynected therewith. By Entries 52 and 54 of List I the Parliament is given power to legislate in respect of Industries, the companytrol of which by the Union is declared by parliament by law to be expedient in the public interest. Regulation of mines and mineral development to the extent to which such regulation and development under the companytrol of the Union is declared by Parliament by law to the expedient in the public interest. In exercise of powers under Entry 36 of the Government of India Act, 1935 which companyresponds with Entry 52 of the Constitution the Central Legislature enacted the Minerals Mining Regulation . Development Act, 1948, LIII of 1948 . By s. 2 of the Act it was declared that it was expedient in the public interest that the Central Government should take under its companytrol the regulation of mines and oilfields and development of minerals to the extent specified in the Act. Mine was defined under the Act as meaning any excavation for the purpose of searching for or obtaining minerals and includes an oil well. No mining lease companyld be given after the companymencement of the Act, otherwise than in accordance with the rules made under the Act. By s. 13 the provisions of the Act were to be binding on the Government, whether in the right of the Dominion or of a State. By the declaration by s. 2 the minerals became immobilized. The Act is on the Statute Book, and the declaration, in the future application of the Act since the Constitution must also remain in force, as if it were made under Art. 52 of the Constitution. After the Constitution, the Industries Development Regulation Act, 1951 65 of 1951 was enacted by the Parliament. By s. 2 it was declared that it is expedient in the public interest that the Union should take under its companytrol the industries specified in the First Schedule. In the Schedule item 3 Coal, including Coke and other derivatives was included as one of such industries. The Legislature then enacted the Mines Minerals Regulation Development Act, 1957 LXVII of 1957 . By s. 2 a declaration in terms similar to the declaration in Act LIII of 1948 was made. The Act deals with all minerals except oil, and enacts certain amendments in Act LIII of 1948. There being a declaration in terms of item 52 the Parliament acquired exclusive authority to legislate in respect of Coal industry set out in the Schedule to Act 65 of 1951 and the State Government had numberauthority in that behalf. In the American Constitution there is numberexpress power companyferred upon the Congress to make a law for acquisition of any property for a public purpose. But it has been held by a long companyrse of decisions that it is open to the Congress to legislate in respect of matters within its companypetence even if such legislation may have a direct impact upon the States rights, to property. In the States of Oklahoma Ex Rel. Leon Co. Phillips v. Guy F. Atkinson Company 1 , it was held that in enacting flood companytrol legislation which authorised companystruction of a reservoir, the Congress had the power to companydemn lands owned by a companystituent State. It was observed The Tenth Amendment does number deprive the national government of authority to resort to all means for the exercise of a granted power which are appropriate and plainly adapted to the permitted end United States v. Darby 312 U. S. p. 124 x x x Since the companystruction of this dam and reservoir is a valid exercise by Congress of its companymerce power, there is numberinterference with the sovereignty or the State. United States v. Appalachian Electric Power Co. 311 U. S. 428 . The fact that land is owned by a state is numberbarrier to its companydemnation by the United States. Wayne Country v. United States, 53 Ct. cl. F 417, affirmed in 252 U. S. 574. Similarly it was held in The Cherokee Nation v. The Southern Kansas Railway Co. 2 , that Congress has the power to authorise a Corporation to companystruct a railway through the territory of the Cherokee Nation, for the United States may exercise the right of eminent domain even within the limits of the several States for purposes necessary to the execution of powers granted to the general government by the Constitution. Power to effectuate its legislative authority which is entrusted in absolute terms being essential for carrying out of the powers, does number depend upon the companysent of the States, and cannot be thwarted by any opposition on the part of the States. The extent of this power was aptly de- scribed by Strong, J., in 1 1940 313 U.S. 508 85 L. ed. 1487. 2 1889 135 U,S, 641 34 L, ed. 295. Kohl v. United States 1 . It has number been seriously companytended during the argument that the United States Government is without power to appropriate. lands or other property within the States for its own uses and to enable it to perform its proper functions. Such an authority is essential to its independent existence and perpetuity. These cannot be preserved if the obstinacy of a private person, or if any other authority, can prevent the acquisition of the means or instruments by which alone governmental functions can be performed. The powers vested by the Constitution in the General Government demand for their exercise the acquisition of lands in all the States. These are needed for forts, armories and arsenals, for navy yards and light houses, for custom-houses, post offices and Court-houses, and for other public uses. If the right to acquire property for such uses may be made a barren right by the unwillingness of property holders to sell, or by the action of a State prohibiting a sale to the Federal Government, the companystitutional grants of power may be rendered nugatory, and the Government is dependent for its practical existence upon the will of a State, or even upon that of a private citizen. This cannot be. No one doubts the existence in the state governments of the right of eminent domain-a right distinct from and paramount to the right of ultimate ownership. It grows out of the necessities of their being, number out of the tenure by which lands are held. It may be exercised, though the lands are number held by grant from the Government either mediately or immediately, and independent of the companysi- deration whether they would escheat to the Government in case of a failure of heirs. The right is the offspring of political necessity and 1 1876 91 U.S. 449. it is inseparable from sovereignty, unless denied to it by its fundamental law. In the United States of America power to take, private property for public use is called by American lawyers eminent domain. It is the power of the State to take property upon payment of just companypensation for public use it is an inherent attribute of sovereignty-not arising even out of the Constitution, but independently of it, and may be exercised in respect of all property in the States for effective enforcement of the authority of the Union against private property or property of the State. In Attorney-General for British Columbia v. Canadian Pacific Railway 1 ,one of the questions which fell to be determined before the judicial Committee was whether power under s. 91 read with s. 92 of the British North America Act 1867 which secures to the Dominion Parliament exclusive legislative authority in respect of lines of steam or other ships, railways, canals, telegraphs, and other works and undertakings companynecting any province with any other, or others companyld be exercised so as to authorise use of crown. lands in the province for a railway. The judicial Committee observed at p. 210 It was argued for the appellant that these enactments ought number to be so companystrued as to enable the Dominion Parliament to dispose of Provincial Crown lands for the purposes mentioned. But their Lordships cannot companycur in that argument. In Canadian Pacific Ry. Co. v. Corporation of the Parish of Notre Dame de Bonsecours 1899 A. C. 367 a case relating to the same companypany as the present the right to legislate for the railway in all the provinces through which it passes Was fully recognised. In Toronto Corporation v. Bell Telephone Co. of Canada 1 1906 A.C. 204. 1905 A. C. 52 which related to a telephone companypany whose operations were number limited to one province, and which depended on the same sections, this Board gave full effect to legislation of the Dominion Parliament over the streets of Toronto which are vested in the city companyporation. To companystrue the section number in such a manner as to exclude the power of Parliament over Provincial Crown lands would in their Lordships opinion, be inconsistent with the terms of the sections which they have to companystrue, with the whole scope and purposes of the legislation, and with the principle acted upon in the previous decisions of this Board. Their Lordships think, therefore, that the Dominion Parliament had full power if it thought fit, to authorize the use of provincial Crown lands by the companypany for the purposes of this railway. It is number companysidered as inconsistent with a true federation like Australia to have a provision like s. 51 31 of the Commonwealth of Australia Act, 1900 which specifically empowers the Commonwealth to acquire State property, if needed for a Commonwealth purpose on terms of payment of companypensation. In this companynection it is to be numbericed that there is under the Commonwealth of Australia Act a provision as regards vesting of property in States and in the Commonwealth on lines somewhat similar to Art. 294. In Canada, the decision of the Privy Council have held that the acquisition of property by the Dominion for implementing or carrying out Dominion legislation under powers vested in Parliament in that behalf by s. 91 was number inconsistent with what might be termed the legislative sovereignty of the Provinces in the fields marked out for them by s. 92. And lastly, even in America which is a true federation, since the Constitution of the U. S. makes numberprovision for the State Constitutions, these being determined by their own laws, it has been held that the power of eminent domain of the Congress for the purposes of effectuating Congressional purpose companyprehends the right to expropriate State property. In these circumstances we are unable to appreciate the argument that if the Constitution were to be held to be a Federation, the States being companysidered as the federative units, such a status necessarily involved a prohibition or negation of the right of the Union to acquire the property of the State for the purpose of giving effect to its legislative powers. Therefore the power of the Union to legislate in respect of property situate in the States even if the States are regarded qua the Union as Sovereign, remains unrestricted, and the State property is number immune from its operation. Exercising powers under the diverse entries which have been referred to earlier, the Union Parliament companyld legislate so as to trench upon the rights of the State in the property vested in them. If exclusion of State property from the purview of Union legislation is regarded as implicit in those entries in List 1, it would be difficult if number impossible for the Union Government to carry out its obligations in respect of matters of national importance. If the entries which we have referred to earlier are number subject to any such restriction as suggested, there would be numberreason to suppose that Entry 42 of List III is subject to the limitation that the property which is referred to in that item is of individuals or companyporations and number of the State. In its ultimate analysis the question is one of legislative companypetence. Is the power companyferred by Entry 42 List III as accessory to the effectuation of the power under Entries 52 54 incapable of being exercised in respect of property of the States? No positive interdict against its exercise is perceptible in the Constitution and the implication of such an interdict assumes a degree of sovereignty in the States of such plenitude as transcending the express legislative power of the Union. The Constitution which makes a division of legislative and executive powers between the Union and the States is number founded on such a postulate and the companycept of superiority of the Union over the States in the manifold aspects already examined negatives it. Re. 2 . By Art. 294 a all property and assets which immediately before the companymencement of the Constitution were vested in the British Crown for the Dominion of India, became vested in the Union, and property vested for the purposes of the Government of the Provinces, became vested in the companyresponding States. Under the Government of India Act all property for governmental purposes was vested in the British Crown, and by virtue of the Constitution that property became vested in the Union and the States. By virtue of cl. b the rights, liabilities and obligations of the Government of India and the Provinces, devolved upon the Union and the companyresponding States. A companysiderable point was made of the fact that Art. 294 had vested certain property in the State and it was submitted that subject to the right of the State by agreement to companyvey that property under Art. 298, the Constitution intended that the State should companytinue to be the owner of that property and that this vesting must be held to negative the Unions right to acquire any property vested in the State without its companysent. It was pointed out by the learned Attorney-General that so far as the plaintiff-the State of West Bengal-was companycerned it did number own the companyl- bearing lands on the date of the Constitution, and that it got title thereto only after the vested in the State by virtue of the provisions of the Bengal Acquisition of Estates Act of 1954 W. B. I of 1954 and that the property thus acquired subsequently was number within the scope of Art. We have numberdoubt that this would be an answer to the claim of the plaintiff in this suit and particularly in the companytext of the challenge to the validity of the numberification number impugned , but we do number desire to rest our decision on any such narrow ground.- Article 298 runs The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the mak- ing of companytracts for any purpose Provided that- a the said executive power of the Union shall, in so far as such trade or business or such purpose is number one with respect to which Parliament may make laws, be subject in each State to legislation by the States and b the said executive power of each State shall, in so far as such trade or business or such purpose is number one with respect to which the State Legislature may make laws, be subject to legislation by Parliament. The argument was that the Constitution intended and enacted that property allotted to or vested in a State under the provisions of Art. 294 or 296 shall companytinue to belong to that State unless and until by virtue of the power companyferred on the State by Art. 298 it chose to part with it, and that without a Constitutional amendment of these Articles such property cannot be divested from the State. We companysider that this submission proceeds on a misconception of the function of Arts. 294 and 298 in the scheme of the Constitution. To start with it has to be pointed out that when Art. 298 Confers on States the power to acquire or dispose of property, the reference is to the executive power of the State to acquire or dispose of property which would apply without distinction to property vested under Art.294 or under 296 by escheat or lapse or as bona vacantia, on- property acquired otherwise. Besides, Art. 298 is merely an enabling Article-conferring on the State as owner of the property, the power of disposal. That cannot on any reasonable interpretation be companystructed a,, negativing the possibility of the States title to property being lost by the operation of other provisions of the Constitution. Art. 298 has therefore numberrelevance on the proper companystruction of Art. 294. Article 294 wits modelled on s. 172 of the Government of India Act, 1935. As pointed out by the Federal Court in In re the Allocation of Lands and Buildings in a Chief Commissioners Province 1 . Up to April 1st, 1937, when the greater part of the Act came into force, the Government of India was a unitary Government to which all the Provincial Governments were subordinate and hence all lands and buildings belonging to Government or used for governmental purposes of were vested in His Majesty for the purpose of the Government of India. This had been the legal position ever since the Government of India Act, 1858 see s. 31 of that Act, and s. 28 1 and 3 of the Government of India Act. which immediately preceded the Art of 1935 . Bitt the setting up of a number of autonomous Provinces, independent of the Central Government and dividing with the latter the totality if executive and legislative powers in British India, and the separation of the powers companynected with the exercise of the functions of the Crown in its relations with the Indian State which were to be thenceforward exercised 1 1943 F.C.R 20, 23 exclusively by His Majestys Representative appointed for that purpose made an allocation necessary among these three authorities of the lands and buildings which had hitherto been vested in His Majesty for the purposes of the Government of India alone. It is this alloca- tion which was effected, or attempted to be effected, by the provisions of s. 172, sub-s. 1 , paras, a , b and c . Section 172 which effected this distribution rat 172. 1 All lands and buildings which imme- diately before the companymencement of Part III of this Act were vested in His Majesty for the purpose of the Government of India shall as from that date-- a in the case of lands and buildings which are situate in a Province, vest in His Majesty for the purposes of the government of that Province unless they were then used, otherwise than under a tenancy agreement between the Governor-General in Council and the Government of that Province, for purposes which thereafter will be purposes of the Federal Government or of His Majesty Representative for the exercise of the functions of the Crown in its relations with Indian States, or unless they are lands and buildings formerly used for such purposes is fore, said, or intended or formerly intended to, be so used and are certified by the Governor-General in Council or, as the case may be, His Majestys Representative, to have been retained for future use for such purposes, or to have been retained temporarily for the purpose of more advantageous disposal by sale or otherwise just like s. 172 being the forerunner of Art. 294, as. 174 and 175 are phrased in terms similar and companyrespond to Arts. 296 and 298. The right of the States to property, which devolved upon them by Art. 294 a was therefore numberdifferent from the right they had in the after acquired property the Constitution does number warrant a distinction between the property acquired at the inception of the Constitution, and in exercise of executive authority. Article 294 does number companytain any prohibition against transfer of property of the State and if the property is capable of being transferred by the State it is capable of being companypulsorily acquired. Attorney-General for Quebec v. Nipissing Central Railway Co. and Attorney-General for Canada 1 , is in this companytext instructive. The Dominion legislation-the Railway Act, 1919 of Canada- made provision for the expropriation of lands for the purpose of railways and for the payment of companypensation for the lands so taken and under s. 189 of the enactment the railway companypany was empowered with the companysent of the Governor General-in-Council to take Crown lands for the use of the railway. Section 109 of the British North America Act which companyresponds to Art. 294 ran All lands, mines, minerals, and royalties belonging to the several Provinces of Canada, Nova Scotia and New Brunswick at the Union, and all sums then due or payable for such lands, mines, minerals, or royalties, shall belong 1 1926 A. C. 715. to the several Provinces of Ontario, Quebec, Nova Scotia and New Brunswick in which the same are situate or arise, subject to any trusts existing in respect thereof, and to any interest other than that of the Province in the same. The right of the Provinces to companytinue to retain and enjoy their property so vested was further emphasized by s. 11 7 which read The several Provinces shall retain all their respective public property number otherwise disposed of in this Act, subject to the right of Canada to assume any lands or public property required for fortifications or for the defence of the companyntry. The Governor-General of Canada referred to the Supreme Court questions as to the effect of these provisions and its companypetence in relation to Provincial Crown Lands. It would be seen that the lands were number required either for fortifications for the defence of the companyntry within s. 117. The Supreme Court of Canada held that the provision applied to the Provincial lands and was companypetently enacted by the Dominion Parliament, Sir John Simon appearing for the appellant-Province made two submissions 1 That on a proper companystruction of the Railway Act, it companyld be held applicable only to Crown Lands vested in the Dominion and number to Provincial Crown Lands, relying for this purpose largely on the provision in s. 189 of the impugned Act for taking the companysent of the Governor-General-in-Council., By reason of Provincial Crown Lands being vested in the appellant by s. 109 of the Imperial Act, read with s. II 7, the Provinces were entitled to retain their respective property number otherwise disposed of by the Act, and that the purpose for which the Railways Act made provision did number fall within the last limb of s. 117 vesting in the Dominion Government a right to take property for certain limited purposes. For this reason, if the Act on its proper companystruction involved interference with Provincial Lands the same was unconstitutional. The agreement for the respondent--the Dominion-was that when s. 117 of the, British North America Act vested in the Dominion the power to take Dominion land for defence etc. it was a reference to executive and number legislative action. They submitted that the section was number intended to ensure that the Provinces retain their public property for all time but was meant merely as a distribution of public property on the date of the Confederation. Viscount Cave, after disposing of the question relating to the companystruction of s. 189 in the following terms The section applies in terms to all lands of the Crown lying on the route of the railway, numberdistinction being made between Dominion and Provincial Crown lands. dismissed as number very material the companytention raised that as reference had been made to the Governor Gcneral-in-Council it indicated that it was only Dominion property that was intended to be companyered by that provision. Dealing with the main companystitutional objection to the validity of the taking of Provincial property, Viscount Cave pointed out that it was number the first occasion when the impact of Dominion legislative power under s. 91 of the British North America Act upon the property vested in the Provinces arose before the Privy Council, for in Attorney- General for British Columbia v. Canadian Pacific Railway Co. 1906 A. C. 204 the argument had been advanced that the legislative power of the Dominion ought number to be companystrued so as to deprive the Provinces of their proprietary interest in what had been vested in them by the British North America Act. Viscount Cave quoted the passage in the judgment we have already extracted and companytinued It was argued that the effect of ss. 109 and 1.17 of the British North America Act was to vest in each of the Provinces the beneficial Interest in the Crown land situate in the Province, subject only to the right of Canada under the reservation companytained in s. 117 to assume lands required for purposes of defence. But the reservation in question appears to refer to executive, and number to legislative, action and while the proprietary right of each Province in its own Crown lands is beyond dispute, that right is subject to be affected by legislation passed by the Parliament of Canada within the limits of the authority companyferred on that Parliament where the legislative power cannot be effectually exercised without affecting the proprietary rights both of individuals in a Province and of the Provincial Government, the power so to affect those rights is necessarily involved in the legislative power. Re. 3 . Power to acquire land was vested under the Government of India Act, 1935, by Entry 9 in List II of the Seventh Schedule, exclusive. by in the Provinces. For any purpose companynected with a matter in respect of which the Central Legislature was companypetent to enact laws the Central Executive companyld require the Province to acquire land on behalf of and at the expense of the Union. This however did number mean that incidental to the exercise of the right to legislate in respect of Railways, Ports, Lighthouses, power to affect the right of the citizens and companyporations and of Provinces in land was number exercisable. As already observed even under Constitutions where a larger slice of sovereignty remains effectively vested in the companyponent unity such as the United States of America power to legislate vested in the Central or national subjects includes the power to legislate so as to extinguish rights in State property. Under the Government of India Act, 1935 the Central Government companyld require the Province to acquire lands on behalf of the Union if it was private land, and to transfer it to the Union if it was the State land. The Provincial Government had manifestly numberoption to refuse to companyply with the direction. Provision for fixation of companypensation did number affect the nature of the right which the Central Govern- ment companyld exercise. In broad outline the governmental structure under the Constitution vis-a-vis the Union and the States is based on the relationship which existed between the Central Government and the Provinces under the Government of India Act, 1935, and that in this respect the Constitution has borrowed largely from the earlier companystitutional document. But even with the Provinces being autonomous within the spheres allotted to them and there being a distribution of property and assets between the Central Government and the Provinces under part III of Ch. VII in almost the same terms as is found in the companyresponding Arts. 294 and 298, it was number companysidered an infraction of the autonomy of the Provinces to vest such a power in the Central Government, for s. 127 of the Government of India Act enacted The Federation I may, if it deems it necessary to acquire any land situate in a Province for any purpose companynected with a matter with respect to which the Federal Legislature has power to make laws, require the province to acquire the land on behalf, and at the expense, of the Federation or, if the land belongs to the Province, to transfer it to the Federation on such terms as may be agreed, or, in default of agreement, as may be determined by an arbitrator appointed by the Chief justice of India. and thus property vested in a Province under s. 172 companyld be required to be transferred to the Central Government if it was needed for a central purpose. It would therefore be manifest that the right of the Centre to require the Province to part with property for the effective performance of central functions was number companysidered as detracting from provincial autonomy. What however is of relevance is the presence of s. 127 in that enactment which empowered the Central Government to require the Provinces to part with property owned by them if the same was needed for the purposes of the Government of India. It was however suggested that the companypulsory acquisition of provincial property by the Central Government was there specifically provided for and that the absence of such a provision made all the difference. But this, in our opinion, proceeds on merely a superficial view of the matter. A closer examination of the scheme of distribution of legislative power in regard to companypulsory acquisition of property under the Government, of India Act discloses that though the power to companypulsorily acquire property was exclusively vested in the Provinces, the Central Government companyld satisfy its requirements of property for Central purpose by utilising provincial machinery, and that it was in that companytext that a specific provision referring to the Provinces having at the direction of the Central Government to transfer provincial property was needed. It is therefore difficult to appreciate the ground on which the existence of a provision in the Government of India Act for assessment of companypensation for land which the Provinces were bound to transfer on being so required by the Central Government and the deletion of that provision in enacting the Constitution may affect the exercise of the power vested in the Union Parliament. Re. 4 The Australian Constitution companytains an express power authorising legislation by the Parliament of Australia for acquisition of State property But the Constitutions of the United States of America and Canada companytain numbersuch express provision. The power of the Union Parliament to enact legislation affecting title of the companystituent States to property vested in them, is on that account number excluded. If the other provisions of our Constitution in terms of sufficient amplitude companyfer power for enacting legislation for acquiring State property, authority to exercise that power cannot be defeated because the express power to acquire property generally does number specifically and in terms refer to State property. Re. 5 In the Constitution of India as originally, enacted there was an elaborate division of powers by providing three entries relating to acquisition and requisition of property. List I entry 33 Acquisition or requisitioning property for purposes of the Union. List II Entry 36 Acquisition or requisitioning of property, except for the purpose of the Union, subject to the provisions of Entry 42 of List 111 List III Entry 42 principles on which companypensation for property acquired or requisitioned for the purpose of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such companypensation is to be given. Bythe Constitution Seventh Amendment Act, 1956 the three Entries were repealed, and a single Entry 42 in the Concurrent List Acquisition and Requisition of property was substituted. Power to acquire or requisition property may since the amendment, be exercised companycurrently by the Union and the States. But on that account companyflicting exercise of the power cannot be envisaged. Article 31 2 Which deals with acquisition of all property requires two companyditions to be fulfilled 1 acquisition or requisitioning must be for a public purpose 2 the law under which the property is acquired or requisitioned must provide for payment of companypensation either fixed thereby or on principles specified thereby. By cl. 3 of Art. 31 numbersuch law as is referred to in cl. 2 made by the legislature of a State shall have efficacy unless such law has been reserved for the companysideration of the President and has received his assent. As the President exercises his authority with the advice of the number Ministry, Conflict by the effective exercise of power of acquisition in respect of the same subjectmatter simultaneously by the Union, and the State or by the State following upon legislation by the Union cannot in practice be envisaged even as a possibility. Article 254 also negatives the possibility of such companyflicting legislation. By cl. 1 of that Article if a law made by the legislature of a State is repugnant to any provision of a law companypetently made by Parliament, the State lady is, subject to cl. 2 , Vold, Clause 2 recognises limited validity of a State law on matters in the Concurrent List if that law is repugnant to an existing or earlier law made by Parliament, only it such law has been reserved for the companysideration of the president, and has received his assent. By the proviso authority is reserved to the Parliament to repeal a law having even this lining validity. Assent of the President to State legislation intended to nulls a law enacted by Parliament for acquisition of State property for the purposes of the Union lies outside the realm of practical possibility. Re. 6 The submission that Art. 31 has numberapplication to the acquisition or requisition of property of a State is based on numbersolid foundation. This argument was based on three grounds- Fundamental rights are declared in favour or citizens and others against legislative or executive action of the Government and the Parliament of India and the Government and the legislatures of the States and all local or other authorities within the territory of India, or under the companytrol of the Government of India and number in favour of the States against Union action. Article 31 gives protection to the rights of persons, and a State is number a person within the meaning of that Article. Entry 42 in the Concurrent List is by virtue of Art. 13 and 245 subject to Art. 31. Therefore private property may be acquired companysistently with the prohibitions in the Constitution, but State property may be acquired without a public purpose and without payment of companypensation. It is difficult to agree with the view that under the scheme of the Constitution fundamental rights may be claimed by individuals or companyporations only and never by the State. By Art. 13 1 all laws in force before the Constitution to the extent of inconsistency with Ch. III are declared void and by cl. 2 the State is prohibited from making any law which takes away or abridges fundamental rights, and the laws made in companytravention of the prohibition are void. The fundamental rights are primarily for the protection of rights of individuals and companyporations enforceable against executive or legislative action of a Governmental agency, but it has to be remembered that all laws preexisting which are inconsistent with and post companystitutional laws which companytravene the prohibitions are to the extent of the inconsistency or companytravention void. Some of these rights are declared in form positive but subject to the restric- tions authorising the State to make laws derogating from the fullness of the protection e. g. 15 4 , 16 3 , 16 4 , 16 5 19 2 , 3 , 4 , 5 , 6 , 22 3 , 22 6 , 23 2 , 25 2 , 28 2 3 there arc certain articles which merely declared rights c. g. 17, 25 1 , 26, 29 1 and 30, 1 and there are others merely prohibitory without reference to the right of any person, body or agency to enforce them e.g. 18 1 , 23 1 , 24 and 28 1 . Prima facie, these declarations involve an obligation imposed number merely upon the State, but upon all persons to respect the rights so declared, and the rights are enforceable unless the companytext indicates otherwise against every person or agency seeking to infringe them. The rights declared in the form of prohibition must have a companycomitant positive companytent without such positive companytent they companyld be worthless. Relief may be claimed from the High Court or from this Court, against infringement of the prohibition, by any agency, unless the protection is expressly restricted to State action. There are still other Articles in the form number of rights but fundamental disabilities e. g. 18 2 , 18 3 , 18 4 . Again there are certain Articles e.g. 19 g , Part 11, 24 2 which appear to recognise affirmative rights of the States. Article 31 is companyched in negative form, but recognises the existence of at least one important power vested in every sovereign State, number by virtue of its Constitution, but springing from its very existence as a State viz, the power to acquire property for public purposes on payment of companypensation which the American jurists call eminent domain. Article 31 2 enunciates the restriction subject to which this power of eminent domain is to be exercised. For the purposes of the present case it is unnecessary to companysider whether Art. 31 1 recognises the existence of the police power. Before Art. 31 was amended by the Constitution Fourth Amendment Act, 1955 , there was companyflict of opinion in this Court as to the interrelation of cl. 1 and 2 . Some judges held that cl. 1 2 dealt with subject of eminent domain other judges were of the opinion that Art. 31 1 dealt with the police power and Art. 31 2 with eminent domain some judges did number express any definite view. After the amendment by the Constitution Fourth Amendment Act, 1955, cl. 1 , 2 and 2A of Art. 31 read as follows - No person shall be deprived of his property save by authority of law. No property shall be companypulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for companypensation for the property so acquired or requisitioned and either fixes the amount of the companypensation or specifies the principles on which, and the manner in which the companypensation is to be determined and given and numbersuch law shall be called in question in any Court on the ground that the companypen- sation provided by that law is number adequate. 2A Where a law does number provide for the transfer of the ownership or right to possession of any property to the State or to a companyporation owned or companytrolled by the State, it shall number be deemed to provide for the companypulsory acquisition or requisitioning of property, numberwithstanding that it deprived any person of his property. In Kavalappara Kottarathil Kochuni v. State of Madras 1 , it was held that cls. 1 and 2 of Art. 31 as amended grant a limited protection against the exercise of different powers. By cl. 2 of Art. 31 property is protected against companypulsory acquisition or requisition. The clause grants protection in terms of widest amplitude against companypulsory acquisition or requisition of property, and there is numberhing in the Article which indicates that the property protected is to be of individuals or companyporations. Even the expression person which is used in cl. 1 is number used in cls. 2 and 2A , and the companytext does number warrant the interpretation that the protection is number to be available against acquisition of State property. Any other companystruction would mean that properties of municipalities or other local authorities--which would admittedly fall within the definition of State in Part III either cannot be acquired at all or if acquired may be taken without payment of companypensation. Entry 42 in List III and cl. 2 of Art. 31, operate in the same field of legislation the former enunciates the companytent of legislative power, and the latter restraints upon the exercise of that power. For ascertaining whether an impugned piece of legislation in relation to acquisition or requisition of property is within legislative companypetence, the two provisions must be read together. The two provisions being parts of a single legislative pattern relating to the exercise of the right which may for the sake of companyvenience be called of eminent domain the expression property in the two provisions must have the same import in defining the extent of the power and delineating restraints thereon. In other words Art. 31 2 imposes restrictions on the exercise of 1 1960 3 S.C.R. 887. legislative power under Entry 42 of List Ill. Property vested in the State may number therefore be acquired under a statute enacted in exercise of legislative power under Entry 42 unless the Statute companyplies with the requirement of the relevant clauses of Art. 31. Re. 7 In Director of Rationing and Distribution v. The Corporation of Calcutta 1 , it was held by this Court by a majority The law applicable to India before the Constitution was as authoritatively laid down by the Privy Council in L. R. 73 I. A. 271. The Constitution has number made any change in the legel position. On the other ban it has clearly indicated that the laws in force before January 26, 1950, shall companytinue to have validity even in the new set-up except in so far as they were in companyflict with the express provisions of the Constitution. The rule of interpretation of statutes that the State is number bound by a statute unless it is so provided in express terms or by necessary implication, is still good law. It was observed at p. 172 The immunity of Government from the operation of certain statutes, and particularly statutes creating offences, is based upon the funda- mental companycept that the Government or its officers cannot be a party to companymitting a crime-analogous to the prerogative of perfec- tion that the King can do numberwrong. Whatever may have been the historical reason of the rule, it has been adopted in our companyntry on grounds of public policy as a rule of inter- pretation of statutes. That this rule is number 1 1961 1 S.C.R. 158. peculiar or companyfined to a monarchical form of Government. The Court thereby approved the principle of exemption of the sovereign from the general words of a Statute enunciated by the Judicial Committee in Province of Bombay v. Municipal Corporation of Bombay in the following terms The general principle to be applied in company- sidering whether or number the Crown is bound by general words in a statute is number in doubt. The maxim of the law in early times was that numberstatute bound the Crown Unless the crown was expressly named therein, Roy nest lie par ascun statute si il ne soit expressement numberme. But the rule so laid down is subject to at least one exception. The Crown may be bound, as has often been said, by necessary implication. If, that is to say , it is manifest from the very terms of the statute, that it was the intention of the Legislature that the Crown should be bound, then the result is the same as if the Crown had been expressly named. It must then be inferred that the Crown, by assenting to the law, agreed to be bound by its provisions. But the rule that the State is number bound, unless it is expressly named or by necessary implication in the statute is one of interpretation. In companysidering the true meaning of words or expression used by the Legislature the Court must have regard to the aim, object and scope of the statute to be read in its entirety. The Court must ascertain the intention of the Legislature by directing its attention number merely to the clauses to be companystrued but to the entire Statute it must companypare the clause with the other parts of the law, and the setting in which the clause to be interpreted occurs. Again in interpreting a Constitutional document provisions companyferring legislative power must numbermally be interpreted liberally 1 1946 L.R, 73 I.A. 271, 274. and in their widest amplitude. Vide-Navinchandra Mafatlal The Commissioner of Income-tax, Bombay City 1 ,Entry 42 in List III does number, prima facie, companytain any indication that the expression Property therein is to be understood in any restricted sense number do the other provisions of the Constitution for reasons already stated suggest a restricted meaning. The ground of absolute sovereignty of the States which may number be interfered with by taking property vested in the States by Parliamentary legislation has numberlegal basis. Again denial of power to the Union Parliament to legislate on allotted topics of legislation, in a manner affecting the property vested in a State, may render Parliamentary legislation virtually ineffective. No provision in the Constitution suggesting a restricted meaning of the word property in the companytext of legislative power has been brought to our numberice. Regard being had to the extensive powers which the Union Parliament and Executive have for using State property, in the larger public interest, the restrict on suggested that the power does number extend to the acquisition of property of the States does number seem to be companytemplated. By making the requisite declarations under Entries 54 of List 1, the Union Parliament assumed power to regulate mines and minerals and thereby to deny to all agencies number under the companytrol of the Union, authority to work the mines. It companyld scarcely be imagined that the Constitution makers while intending to companyfer an exclusive power to work mines and minerals under the companytrol of the Union, still prevented effective exercise of that power by making it impossible companypulsorily to acquire the land vested in the States companytaining minerals. The effective exercise of the power would depend-if such an argument is accepted-not upon the exercise of the power to undertake regulation and companytrol by issuing a numberification under Entry 54, but upon the will of the State in the territory of which mineral bearing land is situate. Power to legislate for regulation and development of mines and minerals 1 1955 1 S.C.R. 829. under the companytrol of the Union, would by necessary implication include the power to acquire mines and minerals. Power to legislate for acquisition of property vested in the States cannot therefore be denied to the Parliament if it be exercised companysistently with the protection afforded by Art. 31. The following findings will accordingly be recorded on the issues Issue 1in the affirmative. 2not such as to disentitle the Union Parliament to exercise its legislative power under Entry 42 List III. 3answer companyered by answer on issue 2. 4in the negative. 5in the negative. Finding on additional issuein the affirmative. The suit will therefore stand dismissed with companyts. SUBBA RAO, J.-I regret my inability to agree. The summary of the pleadings and the issues raised thereon are set out in the judgment of the learned Chief justice and I need number restate them. Learned Advocate-General of West Bengal companytended that the State of West Bengal and the Union of India are sovereign authorities in their respective spheres allotted to them by the Constitution, and therefore it would be inconceivable that one sovereign authority companyld acquire the property of the other they companyld do so only by mutual agreement. That apart, the argument proceeded, on a true companystruction of the relevant entry, i. e., entry 42 of List III, in the companytext of the scheme of the Constitution and particularly of Art. 31 thereof, it would be clear that the said entry companyld number be invoked by the Union to acquire the land of the State. Learned companynsel appearing for the States of Madhya Pradesh, Orissa., Assam and Madras supported the Advocate- General of West Bengal. The Advocate-General of Punjab, while supporting the argument of the Advocate-General of West Bengal, also raised an alternative companytention, namely, that if the acquisition of State property was necessarily incidental to the effective exercise of any of the powers companyferred on Parliament under Lists I and III of the Seventh Schedule to the Constitution, it companyld make a law for acquiring such property, provided it did number interfere with the exercise of the governmental functions of the State and that the power to acquire land of the State was number necessarily incidental to the regulation of mines. Learned Government pleader for the State of Bihar supported the Union of India in its companytention that Parliament can make a law providing for the acquisition of State property by virtue of entry 42 of List III. Learned Attorncy-General, appearing for the Union of India, argued that entry 42 of List III, on its natural and grammatical companystruction, sustains the impugned law- he would also seek to support it on the basis of entries 52 and 54 of List I and entry 33 of List 111. In any event, he companytended, the impugned law companyld be made by Parliament by virtue of Art. 148 of the Constitution and entry 97 of List He also questioned the companyrectness of the proposition that the Union and the States are sovereign authorities in their respective fields and advanced the theory that under our Constitution the States are subordinate to the Union. Before I attempt to companystrue the relevant provisions of the Constitution, it would be companyvenient to have a companyspectus of the Constitution as far as it is material to the present enquiry, as the arguments, to some extent, are linked With the scope and nature of the powers of the Union and the States thereunder. The Constitution purports to have been enacted by the people of India who have solemnly resolved to companystitute India into a sovereign democratic republic. India is described as a Union of States. The preamble to the Constitution indicates that the political sovereignty of the companyntry rests in the people of India and the legal sovereignty is divided between the companystitutional entities of the Republic of India, namely, the Union and the different States. Part V of the Constitution deals with the Union and the instrumentalities through which it is authorized to function, namely, the legislature, the executive and the judiciary. Part VI provides for the States and the organs through which they can function, namely, the legislature, the executive and the judiciary. Part XI lays down the relation between the Union and the States it distributes the legislative powers and regulates the administrative relationship between them it devises various methods to resolve companyflicts that may arise in the exercise of their powers. Article 246 demarcates the legislative fields with precision and emphasizes the exclusive power of the Union and the States to make laws in respect of the matters enumerated in the Lists in the Seventh Schedule and allotted to the Union or the States, as the case may be. Even in regard to the executive power, Arts. 73 and 162 mark out the respective fields of the Union and the States. Chapter 11 of Part XI provides for the companytrol of the Union over the States in certain specified cases. Part XII deals with finance, property, companytracts, rights, liabilities, obligations and suits it distributes the revenues between the Union and the States, provides for the allocation between them of certain taxes companylected by the Union, creates separate companysolidated funds described as the companysolidated fund of India and the companysolidated fund of the State, and enacts certain exemptions, among others, of State properties from Union taxation and Union properties from State taxation and authorizes the Union as well as the States to borrow money on the security of their respective properties subject to certain limitations. Chapter III of part XII deals with acquisition of property, assets, rights, liabilities and obligations in certain cases under Art. 294, As from the companymencement of this Consti- tution- a all property and assets which immediately before such companymencement were vested in His Majesty for the purposes of the Government of the Dominion of India and all property and assets which immediately before such companymencement were vested in His Majesty for the purposes of the Government of each Governors Province shall vest respectively in the Union and the companyresponding State, and b all rights, liabilities and obligations of the Government of the Dominion of India and of the Government of each Governors Province, whether arising out of any companytract or otherwise, shall be rights, liabilities and obligations respectively of the Government of India and the Government of each companyresponding State . Under Art. 296, any property accruing by way of eschewal or lapse, or as bona vacantia, if it is property situate in a State, shall vest in the State and in any other case it shall vest in the Union. Article 297 vests all lands, minerals and other things of value underlying the ocean within the territorial matters of India in the Union. Article 298, which was substituted by the Constitution Seventh Amendment Act, 1956, extends the executive power of the Union and of each State to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of companytracts for any purpose subject to the legislative powers of the Union, or of the State, as the case may be. Article 300 says that the Government of India and the Government of a State may sue or be sued by the name of the Union of India or by the name of the State, as the case may be, i.e., they may be sued as jurists personalities. Chapter 1 of Part XIV provides for the mode of recruitment and regulation of companyditions of service of different services in the Union and the States. Part XV provides for an independent machinery for elections to the Parliament and the State Legislatures. Part XVIII deals with emergency provisions hereunder the President, when the security of India or any part of the territory thereof is threatened by war, external aggression or internal disturbances or when the companystitutional machinery of the States fails or when the financial stability or credit of India or any part thereof is threatened, may, by proclamation, declare an emergency to that effect in those events, subject to certain safeguards, the Centre is authorized to take over the administration of the State in whole or in part for a specified period. Article 368 provides for the amendment of the Constitution and in regard to certain provisions thereof, such as the Lists in the Seventh Schedule, the representation of the States in Parliament, the amendment shall also require to be ratified by the Legislatures of number less than one-half of the States by a resolution to that effect passed by those Legislatures. Under the scheme of our Constitution, sovereign powers are distributed between the Union and the States within the spheres allotted to them. The Union exercises the sovereign powers within its sphere throughout the territories of India, and the States exercise their sovereign powers within their respective territories in respect of their allotted fields. The Legislatures of the States as well as the Parliament are elected on adult franchise. The legislative field of the Union is much wider than that of the States and in case of companyflict in the companymon field allotted to them, the Union law generally prevails over the State law. In regard to Bills passed by a Legislature of a State, the Governor may, and in the case of bills derogating from the powers of the High Court shall, reserve them for the companysideration of the President though this is in theory a limitation on the legislative power of the State, in practice the Governor only acts on the advice of the ministry which has the companyfidence of the Legislature. Except in the case of a bill derogating from the powers of the High Court when the Governor is bound to refer it to the President, in other cases it is number likely that the Governor would refer a bill to the President companytrary to the advice of the ministry. In a few cases of legislation where inter- State element or companyflict of laws are involved, sanction of the President is made a companydition precedent for their validity see Arts. 200, 254, 304 etc. Coming to the executive field, both the Union and the State are manned by ministers responsible to their respective Legislatures elected on adult franchise. The executive powers of the Union as well as of the States extend to matters in respect of which they have power to make laws, though the executive of the Union can give directions to a State to ensure companypliance with the laws made by Parliament and any. existing law which applies in that State. The State is also enjoined to exercise its powers in such a way as number to impede or restrict the exercise of the power of the Union executive and the executive of the Union is empowered to give directions to the State as may be necessary for that purpose. So too, the Union executive can give directions to a State as to the companystruction and maintenance of means of companymunications declared to be of national importance. It is also authorised to companyfer powers on States in respect of matters to which the executive power of the Union extends. By and large, with minor exceptions, the Union as well as the State executive functions in its exclusive field, and the Union executives directives are intended to facilitate the carrying out of the Union purposes. Every State has its judiciary and the highest companyrt in a State is the High Court of judicature. The expenditure of the State judiciary is charged on the companysolidated fund of the State companycerned but the judges of the High Court are appointed by the President and appeals lie to the Supreme Court of India in certain matters and it has also extraordinary powers to entertain appeals in other matters or to issue writs to enforce fundamental rights. But both the High Courts and the Supreme Court interpret the State and the Union laws and resolve companyflicts, if any. An integrated system of judiciary has been accepted by the Constitution and the judicial companytrol operates both ways, though the final word is with the Supreme Court. That cannot by itself affect the federal principle, as even in Australia an appeallies to the Privy Council, under certain circumstances, from the decisions of the High Court of the Common. wealth of Australia. In financial matters,, though the States and the Union have companysolidated funds of their own, the sources allotted to the States are companyparatively meagre and those allotted to the Union appear to be perennial the States also depend upon the Union for allocation of funds from and out of the taxes companylected by it and also for grants though there is numberdirect companytrol by the Union over the field of finance of the States, there will always be indirect pressure on the States in that field, The Union, being in charge of the purse strings, can always, to use an euphemistic term, pursuade the States to take its advice. In case of emergencies, such as, war, external aggression, internal disturbances, failure of the companystitutional machinery and financial instability, extraordinary powers are companyferred on the Union, subject to certain limitations, to interfere with the States administration but the provisions relating to emergency situations are really in the nature of safety valves to protect the companyntrys future. Parliament has also the power to change the boundaries of the territories or form new territories, but that is also an extraordinary provision to meet certain emergencies. There is also another side of the picture. Parliament shall companysist of the President and two Houses respectively known as the Council of States and the House of the people the Council of States shall companysist, apart from the 12 numberinated members, number more than 238 representatives of the States and the Union territories. A part of the Parliament is, therefore, companyprised of the representatives of the State Legislatures. Though the powers of the Council of States are number companyequal with those of the House of the People,. to the extent it exercises its legislative powers the States also have companytrol over the Union. The States are also entitled to be companysulted in the matter of the amendment of certain provisions of the Constitution vide Art. 368. The foregoing resume of the provisions of the Constitution reveals the following picture The political sovereign is the people of India and the legal sovereignty is divided between the companystitutional entities i.e., the Union and the States, who are juristic personalties possessing properties and functioning through the instrumentalities created by the Constitution. Though the jurisdiction of the Union is companyfined to some subjects, it extends throughout India, whereas that of the States is companyfined to their territorial limits. Within their respective spheres both in the legislative and executive fields they are supreme their inter se relationship is regulated by specific provisions. The relation between the Union and the States cannot be found in the legislative fields demarcated by the Lists, but can only be discovered in the specific companystitutional provisions forging links between them, The emergency powers of the Union to meet extraordinary situations do number affect its exclusive fields of operation in numbermal times. On the basis of a companyparison of the Indian Constitution with that of America, it is argued that numbere of the important criteria of a federation is present in the Indian Constitution. Federalism in the United States embraces the following elements 1 as in all federations, the union of several autonomous political entities, or States, for companymon purposes 2 the division of legislative powers between a National Government, on the one hand and companystituent States, on the other, which division is governed by the rule that the former is a government of enumerated powers while the latter arc governments of residual powers 3 the direct operation, for the most part, of each of these centers of Government, within its assigned sphere, upon all persons and property within its territorial limits 4 the provision of each center with the companyplete apparatus of law enforcement, both executive and judicial 5 the supremacy of the National Government within its assigned sphere over any companyflicting assertion of state power 6 dual citizenship. The aforesaid elements are numberdoubt present in the American Constitution, but it is number possible to companytend that unless all the said criteria exist a companystitution cannot be described as a federal one. Though on paper the American Constitution is a typical federation, in practice the Supreme Court of the United States of America by evolving and developing many legal doctrines and implied powers has invested the Federal Government with large powers to enable it to interfere indirectly in the States field. Even in regard to judicial power, though the American Supreme Court was originally companyceived to be a Federal Court companycerning itself with federal laws, in fact it authoritatively interprets the State laws when they companye into companyflict with federal laws. The point is that even in America there is numberfederation in the orthodox sense of the term. So too, the Constitution of Australia clearly demarcates the exclusive fields of the Commonwealth and the States and jealously guards the State rights, but in practice the States have been reduced to the position of agencies of the Commonwealth Government. This was brought about because of the financial grip the Centre has over the State see Wheare on Federal Government. But in Canada the position is the reverse. Though the Centre and the Provinces have their distinctive Lists of powers, the Central Government has certain limited powers of companytrol over the governments of the ten Provinces of Canada the residuary powers are given to the Centre and number to the States. Though undoubtedly some elements of unitary form of government are present, the companystitutional custom evolved practically a federal State and, as one author puts it, numberdominion government which attempts to stress the unitary elements in the Constitution at the expense of the federal elements would survive. It is, therefore, clear that in every federal Constitution there are either textually or customarily some unitary elements. The real test to ascertain whether a particular Constitution has accepted the federal principle or number is whether the said Constitution provides for the division of powers in such a way that the general and regional governments are each within its sphere substantially independent of the other. The reservation of the residue of power or the power to interfere with States affairs in emergencies in the Union may affect the balance of power in a federation, but does number destroy its character. Some Constitutions show a marked bias towards the Federation and the others towards the States, but numberwithstanding the varying emphasis they accept the federal principle as their basis. Though some authors, accepting the American Constitution as the yardstick for a federation, prefer to describe Constitutions with a bias towards Union as quasi-federations, I do number think it is inappropriate to describe all Constitutions which substantially accept the federal principle as Federations. Applying this test, I have numberdoubt that the Indian Constitution is a federation, as the units in numbermal times exercise exclusive sovereign powers within the fields allotted to them. A further distinction is sought to be made between the American Constitution and the Indian Constitution on the basis of the historical evolution of the two companyntries. While in America, the argument proceeds, the pre-existing sovereign States were brought together under a federation, in India the Constitution companyferred certain powers on the existing administrative units or such units newly companystituted. The status of a political entity Under a particular companystitution does number depend upon its history but upon the provisions of the companystitution. The pre-existing independent States may number be given any appreciable power under a companystitution, while newly formed States may enjoy larger power under another companystitution. A federal structure is mainly companyceived to harmonize existing companyflicting interests and to provide against future companyflicts. India is a vast companyntry indeed, it is described as a sub-continent. Historically, before the advent of the Constitution, there were different Provinces enjoying in practice a fair amount of autonomy and there were innumerable States with varying forms of government ranging from pure autocracy to guided democracy. There were also differences in language, race, religion etc. There were also foreign pockets expected sooner or later to be incorporated, with the main companyntry. In those circumstances our Constitution adopted a federal structure with a strong bias towards the Centre. Under such a structure, while the Centre remains strong to prevent the development of fissiparous tendencies, the States are made practically autonomous in ordinary times within the spheres allotted to them. With this background I shall number proceed to companysider the arguments advanced by learned companynsel. I shall first take up the argument based upon entry 42 of List 111, i.e., acquisition and requisitioning of property. The provisions relevant to the said question are as follows., Article 245 1 Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for, tile whole or any part of the State. No law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation. Article 246 1 Notwithstanding anything in clauses 2 and 3 , Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule in this Constitution referred to as the Union List . Notwithstanding anything in clause 3 , Parliament and, subject to clause 1 , the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule in this Constitution referred to as the Concurrent List . Subject to clauses 1 and 2 , the Legislature of a State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List 11 in the Seventh Schedule in this Constitution referred to as the State List . The entries relevant to acquisition, as they stood before the Constitution Seventh Amendment Act, 1956. read as follows Entry 33 of. List I. Acquisition or requisitioning of property for the purpose of the Union. Entry 36 of List II. Acquisition or requisitioning of property, except for the purposes of the Union, subject to the provisions of entry 42 of List Ill. -Entry 12 of List III. Principles on which companypensation for property acquired or requisitioned for the purposes of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such companypensation is to be given. After the said amendment, entry 33 of List I and entry 36 of List II were omitted and entry 42 of List 111, as substituted by the Seventh Amendment reads Acquisition and requisitioning of property. Article 31. 1 No person shall be deprived of his property save by authority of law. No property shall be companypulsorily acq- uired or requisitioned save for a public purpose and save by authority of a law which provides for companypensation for the property so acquired or requisitioned and either fixes the amount of the companypensation or specifies the principles on which, and the manner in which, the companypensation is to be determined and given and numbersuch law shall be called in question in any companyrt on the ground that the companypensation provided by that is number adequate. 2A Where a law does number provide for the transfer of the ownership or right to possession of any property to the State or to a companyporation owned or companytrolled by the State, it shall number be deemed to provide for the companypulsory acquisition or requisitioning of property, numberwithstanding that it deprives any person of his property. No such law as is referred to in clause 2 made by the Legislature of a State shall effect unless such law, having been reserved or the companysideration of the President, has received his assent. I have already held that the sovereign powers have been distributed between the companystitutional entities, namely, the Union and the States one such sovereign power is the power to acquire or requisition the property of a citizen for a public purpose. The doctrine of Eminent Domain is defined by Willis as the legal capacity of sovereign, or one of its governmental agents to take private property for a public use upon the payment of just companypensation. Nicholas in his book on Eminent Domain, Vol. I, describes it as a power of the sovereign to take a property for public use without the owners companysent In Chiranjit Lal Chowdhri v. The Union of India 1 , Mukherjea, J., as he then was, accepted this definition when he said It is a right inherent in every sovereign to take and appropriate private property belonging 1 1950 S.C.R. a69,901-902. to individual citizens for public use. This right, which is described as eminent domain in American law, is like the power of taxation, an offspring of political necessity, and it is supposed to be based upon an implied reservation by Government that private property acquired by its citizens under its protection may be taken or its use companytrolled for public benefit irrespective of the wishes of the owner. It is, therefore, clear that the power to acquire the property of a citizen for a public purpose is one of the implied powers of the sovereign. In our Constitution,, before the Constitution Seventh Amendment Act, 1956, this power was divided and distributed between the Union and the States the Union, by virtue of entry 33 of List I companyld acquire a property for Union purposes, and by virtue of entry 36 of List II a State companyld acquire a property for State purposes the result was that a State companyld number acquire a property of a citizen for a Union purpose, and the Union companyld number acquire a property of a citizen for a State purpose. To avoid this difficulty entry 33 of List I and entry 36 of List II were omitted and the present entry 42 of List III has been substituted for the earlier entry 42 in the said List. Now both Parliament and the Legislature of a State can make a law providing for the acquisition and requisitioning of property for Union or State purposes. But the crucial point that is implicit in the power of acquisition by a sovereign is that it must relate only to the property of the governed, for a sovereign cannot obviously acquire its own property. This sovereign power of Eminent Domain under our Constitution is companyferred on, or divided between, the Union and the States. Prima facie, therefore, entry 42 of List III can only mean acquisition and requisitioning of private property by a State. It is also implicit in the companycept of acquisition or requisition- ing that the acquisition or requisitioning shall be for a public purpose on payment of just companypensation. The said companycept has acquired a well defined companynotation number only in the foreign companyntries from which it is borrowed, but also in the legislative history of our companyntry. That is why our Constitution laid down in express terms that any law made shall number violate the fundamental rights. One of the funda- mental rights is that enshrined in Art. 31 2 and it says that numberproperty shall be companypulsorily acquired or requisitioned save for a public purpose and save by authority of law, which provides for companypensation for the property so acquired or requisitioned. The scope of entry 42 of List III would be apparent if it is read along with the said article. Unless it is held that Art. 31 2 applies also to a law of acquisition of a State property by the Union, the result will be that Parliament can make a law providing for the acquisition of a property of a State for a purpose which is number a public purpose and without payment of companypensation, while it cannot do so in the case of acquisition of a private property. If Art. 31, does number govern the law of acquisition of a State property, it indicates that entry 42 of List III does number deal with acquisition of a State property, for otherwise it would lead to the anomaly of acquisition of a State property by a law of Parliament without safeguards inherent in the doctrine of Eminent Domain. That is why the learned Attorney-General made an attempt to persuade us to hold that Art. 31 2 applies also to a law providing for the acquisition of a State property. He companytended that after the Constitution Fourth Amendment Act, 1955, Art. 31 1 is separated from Art. 31 2 and that the phraseology of Art. 31 2 , if independently companystrued, is wide enough to take in acquisition of a State property. And for this position be relied upon the judgment of this Court in Kavalappara Kottarathil Kochuni v. The State of Madras 1 . There, this Court held that after the Constitution Fourth Amendment Act, 1955, cls. 1 , 2 and 2A of Art. 31 dealt with 1 1960 3 S.C.R. 887. different subjects-cls. 2 and 2A dealing with acquisition and requisitioning, and cl. 1 with deprivation of property with authority of law. That decision has numberbearing on the companystruction of cl. 2 of the said Article vis-a-vis the question of acquisition of a State property. The fact that this Court held that the two clauses of the Article deal with two different subjects does riot mean that cl. 1 has numberbearing on the interpretation of cl. 2 of the same Article. Clause 2 of Art. 31 reads No property shall be companypulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for companypensation for the property so acquired or requisitioned and either fixes the amount of the companypensation or specifies the principles on which, and the manner in which, the companypensation is to be determined and given and numbersuch law shall be called in question in any companyrt on the ground that the companypensation provided by that law is number adequate. Clause 2A thereof reads Where a law does number provide for the transfer of the ownership or right to possession of any property to the State or to a companyporation owned or companytrolled by the State, it shall number be deemed to provide for the companypulsory acquisition or requisitioning of property, numberwithstanding that it deprives any person of his property. It is true that cl. 1 opens out with the words numberperson whereas cl. 2 does number repeat that expression but in the companytext, I find it difficult to hold that cl. 1 deals with property of a person and cl. 2 deals with property of persons and States. Article 31 deals with a fundamental right in regard to property-cl. 1 with deprivation of property, and cl. 2 with acquisition of property. As cl. 1 makes it clear that property shall be of a person, it is number necessary to, mention over again that the property acquired should be of a person. The idea of companypulsory acquisition and requisitioning in cl. 2 indicates that the acquisition or requisitioning is by a State of a persons property. That is made clear by cl. 2A which says that the law of acquisition shall provide for the transfer of ownership or right to possession of any property to the State or to a companyporation owned or companytrolled by the State. The transfer of property is to the State and a fortitude the transferor must be one other than the State. In the companytext it can only mean the person mentioned in cl. 1 . The use of the definite article in the expression the State is a further indication that transfer inter se between State and State or Union and State is number companytemplated by that clause. if that was the intention it would have provided expressly for a transfer between a State and a State. Even so, the learned Attorney-General companytends that State is also a person. Person has number been defined in the Constitution but a perusal of the various provisions of Part III clearly shows that the expression Person is used in companytradistinction to State. Indeed, most of the fundamental rights are companyferred on a person or a citizen against infringement of his rights by a State. The expression person in Arts. 14, 18, 20, 21, 22, 25 and 27 does number and cannot include a State. Indeed, there is numberother article in this part wherein the expression person is used in the sense of State. Prima facie, therefore, the expression person in Art. 31 will number include State. There is numberhing in the said Article which companypels me to give a strained meaning particularly when the Article is companysistent with the recognized companycept of Eminent Domain and fits in squarely with the scheme of fundamental rights. But it is said that if a State cannot be a Person, a companyporation or a companypany will have to be excluded from its scope. There is numberdefinition of the expression person in the Constitution but it is defined in the General Clauses Act, 1897, as including any companypany or association or body of individuals, whether incorporated or number. Though this definition is an enlargement of the natural meaning of the expression person, even the extended meaning does number include the State. Anyhow the question whether the said expression takes in a companyporation or number, does number call for a decision in this case. In this companytext two decisions of this Court may usefully be referred to. In Director of Rationing and Distribution v. The Corporation of Calcutta 1 , it was held that the rule of interpretation of statutes that the State is number bound by a statute unless it is so provided in express terms, or by necessary implication, is still good law. Though that rule has been laid down in the companytext of a statute, there is numberreason why a different principle should apply in the companystruction of the Articles of the Constitution. If that rule of interpretation is applied to Art. 31 2 of the Constitution, it will have to be held that, as the said rule does number in terms or by necessary implication provide for the acquisition of State property, a State property cannot be the subject-matter of the said rule. Reliance is placed upon another judgment of this Court in The State of Bihar v. Rani Sonabati Kumari 2 , in support of the companytention that the expression person embraces a State. There, the decision was that when the State disobeyed the order of injunction issued by the companyrt, the said order companyld be enforced against the State in the mariner prescribed by 0. XXXIX, r. 2 3 , of the Code of Civil Procedure. A plaintiff may apply to the companyrt for a temporary injunction to restrain a defendant from companymitting the injury companyplained of. Under 0. XXXIX, r. 2 3 of the companye, In case if disobedience, or of breach of any 1 1961 1 S.C.R. 158. 2 1961 1 S.C.R. 728. such terms, the Court granting an injunction may order the property Of the person guilty of such disobedience or breach to be attached, and may also order such person to be detained in the civil prison for a term number. exceeding six months, unless in the meantime the Court directs his release. This Court, on a companystruction of cls. 1 and 3 of r. 2 of XXXIX of the Code of Civil Procedure held that the expression person in r. 2 3 has been employed companypendiously to designate everyone in the group Defendant, his agents, servants and workmen and number for excluding any defendant against whom the order of injunction has primarily been passed. But at the same time, this Court made it clear that the provision for detention does number apply to the State and this companyld only be because the State is number a Person who companyld be detained. The decision is based upon the phraseology of the two clauses of 0. XXXIX, r. 2 of the Code of Civil Procedure and does number lay down as a general proposition that the expression person wherever it appears shall include a State. The historical background of Art. 31 and entry 42 of List III also does number bear out the companystruction that acquisition of a State property is companytemplated by the entry 42 of List III. In the Government of India Act, 1935, acquisition was a provincial subject, being entry 9 of List 11, Section 299 of the Government of India Act, 1935, read No person shall be deprived of his property in British India save by authority of law. Neither the Federal number a Provincial Legislature shall have power to make any law authorising the companypulsory acquisition for public purposes of any land, or any companymercial or industrial undertaking, or any interest in, or in any companypany owning, any companymercial or industrial undertaking, unless the law provides for the payment of companypensation for the property acquired and either fixes the amount of the companypensation, or specifies the principles on which, and the manner in which it is to be determined. Broadly, cls. 1 and 2 of s. 299 of the said Act companyrespond respectively to cls. 1 and 2 of Art. 31 of the Constitution, under the said Act, the Federal Legislature companyld number make a law acquiring the land of a Province for the simple reason that the subject of acquisition of land was exclusively a Provincial subject. But s. 127 provided for the companytingency of the Federation requiring the land belonging to a Province. The section read The Federation may, if it deems it necessary to acquire any land situate in a Province for any purpose companynected with a matter with respect to which the Federal Legislature has power to make laws, require the Province to acquire the land on behalf and at the expense, of the Federation or, if the land belongs to the Province, to transfer it to the Federation on such terms as may be agreed or, in default of agreement, as may be determined by an arbitrator appointed by the Chief Justice of India. A companybined reading of the said provisions indicates that though under the Government of India Act the federal Legislature companyld number make a law empowering the Federation to acquire the land belonging to a Province, the Federation may require the Province to transfer to it the land owned by the Province on terms agreed upon between them or, in default of agreement, determined by an arbitrator that is to say, under the Government of India Act transfer of lands owned by a Province to the Federation companyld be effected only under an agreement or an award. Under the Constitution, before it was amended in 1956, Parliament as well as State Legislatures were empowered to make laws for acquisition of lands for their respective purposes-Parliament for the Union purposes and a State Legislature for the purposes of the State. Prima facie the relevant entries, namely, entry 33 of List I and entry 36 of List II, companyld have related only to acquisition of private lands for purposes of the Union or the State, as the case may be. But if the Union or the State wanted the land held by the other, it companyld secure the same only under Art. 298 1 , as it stood then. The said article read The executive power of the Union and of each State shall extend, subject to any law made by the appropriate Legislature, to the grant, sale, disposition or mortgage of any property held for the purposes of the Union or of such State, as the case may be, and to the purchase or acquisition of property for those purposes respectively, and to the making of companytracts. The phraseology used in this article clearly shows that the land held by the Union or the State for the Union or the State purposes respectively, companyld be transferred to the other only in the manner indicated in Art. 298 1 . By the Constitution Seventh Amendment Act, 1956, the subject of acquisition and requisitioning of land was placed in List III as entry 42, and entry 33 of List I and entry 36 of List II were deleted and Art. 298 was substituted by a new Article. The changes made in Art. 298 are number material for the present purposes. It is, therefore, manifest that under the Government of India Act, 1935, companypulsory acquisition of land was a provincial subject, that tinder the Constitution, as it originally stood, Parliament companyld make a law for acquiring such a property, for the Union purposes and the State Legislature for the State purposes by virtue of different entries and that, after the amendment, both Parliament and State Legislatures companyld make a law for the acquisition of such a property by virtue of entry 42 of List 111. But if the Federation or a province under the Government of India Act, or the Union or the State under the Constitution wanted a property owned by the other, it companyld secure it only under an agreement and number otherwise. This scheme clearly demonstrates that a law whether made by Parliament or by a State Legislature cannot provide for the acquisition of property owned by the other. I, therefore, hold that Parliament cannot make a law by virtue of entry 44 of List 111 for the acquisition by the Union of the property owned by a State. Reliance is then placed upon Art. 248 of the Constitution, read along with entry 97 of List I of the Seventh Schedule to sustain the wider power of the Parliament. Article 248 reads Parliament has exclusive power to make any law with respect of any matter number enumerated in the companycurrent List or State List. Such power shall include the power of making any law imposing a tax number mentioned in either of those Lists. Entry 97 of List I. Any other matter number enumerated in List II or List III including any tax number mentioned in either of those Lists. It is companytended that if acquisition of a State property does number fall under entry 42 of List III it must fall under entry 97 of List 1. Emphasis is laid upon the words any matter in Art. 248 and a companytention is advanced that the expression any matter has the widest companynotation and, therefore, it empowers the Parliament to make a law in regard to any subject, including taking over of the property of a State. There are two answers to this argument firstly, a residuary entry cannot travel beyond the scope of the division of powers. The sovereign legislative power is divided between different entitles. The entire legislative field is divided between the Union and the States. The method of allocation adopted is by enumeration of subjects. The residuary article and the entry are the devices adopted to entrust to the Union any subject omitted by mistake or otherwise. The residuary legislative field cannot possibly companyer inter-State relation, for that matter is number distributed between the Union and the States by way of legislative Lists. That apart, when a specific provision is made for acquisition of a property, it would be incongruous to companyfine that entry to properties other than those of the States and to resort to the residuary power for acquiring the properties of States. If the power of acquisition can be companystrued to mean only acquisition of properties in the States and number properties belonging to the States, it must be held that the power of acquisition is limited to that extent. Further if Art. 31 2 applied only to a law of acquisition of a private property as I have already held, the anomaly that arises if the said clause does number apply to entry 42 of List III will equally arise in respect of entry 97 of List II would, therefore. hold that Parliament cannot make a law for the acquisition of a State property by virtue of entry 97 of List 1. There would be many anomalies in the working of the Constitution if the companytention of the Union was accepted. As the subject of acquisition and requisitioning is in the Concurrent List both Parliament and a State Legislature can make different laws for acquiring the property of the State or of the Union, as the case may be. Under the law made by Parliament, the State property can be acquired and on acquisition it becomes the Union property then under the law made by tile State, the same property can be reacquired by the state as the Union property. It is said that this vicious circle cannot arise under the Constitution. Reliance is first placed upon Art. 31 3 of the Constitution, which says No such law as is referred to in clause 2 made by the Legislature of a State shall have effect unless such law, having been reserved for the companysideration of the President, has received his assent. But I have held that Art. 31 2 has numberapplication to a law providing for the acquisition of a State property and if so, cl. 3 thereof will also number apply to such a law. Even if Art. 31 3 applies, there is numberhing which prevents the President from giving his companysent to a State to acquire the Union property, though the Union executive may ordinarily be relied upon number to do so. But we must test the validity of a companytention on the legal possibilities and number on what a particular executive may or may number do. If so, Art. 31 3 cannot always prevent the companyflict indicated above. It is -said that Art. 254 1 would invariably resolve such companyflicts in favour of the law made by the Parliament. But Art. 254 1 can companye in aid of the law made by Parliament only if there is repugnancy between that law and that made by the. State Legislature. But in the illustration given there is numbersuch repugnancy, for the law made by Parliament provides for the acquisition of the property of the State, whereas the law made by the State provides for the acquisition of the property owned by the Union. The moment the State property is acquired by the Union it becomes the property of the Union. In such a companytext there is numberrepugnancy between the two laws though the purpose of the Union law can be defeated by the exercise of a power under a State law. Article 254 2 also saves the laws of the States if the previous companysent of the President has been taken such a companysent is legally possible, though ordinarily the Central Executive can beexpected to withhold it. The Constitution companyldnot have intended such an unresolved companyflictbetween the Union and the States. Secondly,if the companytention of the Union be companyrect, Parliament can make a law making a provision for acquiring the entire property of a State without companypensation. It can indirectly prevent the State from functioning it can acquire the buildings owned by the State and used for its offices it can take away the substratum of the States jurisdictiony acquiring number only its offices but also its buildings and works, which are maintained for the public good. Though Parliament may number be expected to create such a situation, numberhing will prevent it from doing so. A companystruction which may prevent the State from functioning as visualized by the Constitution cannot easily be accepted unless it is clearly expressed in the Constitution itself. It is said that Parliament can destroy the State under Art. 3 of the Constitution and, therefore, numberhing more untoward can happen to a State if this limited power is companyceded, as a larger power has already vests in the Parliament. Article 3 only enables the Parliament to make a law for the formation of anew State, alteration of boundaries of any State, increase or decrease of the area of any State or alteration of the name of any State. Such a power is expressly given to the Parliament and, therefore, it can function under that Article. But that has numberhing to do with a power to acquire the property of a State. Thirdly, when the Constitution created legal entities and distributed the sovereign powers between them, it is unreasonable to companystrue the ambiguous provisions of the Constitution in such a way as to create companyflicts between them or to make one a creature of the other. It is said that if such a power is number companyceded to the Union, the States may number companyperate with the Union, in the implementation of the policies companyceived in the interest of the whole companyntry. This argument may have some relevance in America or in Australia where the States are powerful under their respective Constitutions, but absolutely numbere under our Constitution whereunder the States are practically beholden to the Union in many ways. It was necessary in America to evolve implied powers to implement national policies in India the Constitution has companyferred on the Union ample powers in that direction. In such a situation this Court should be very reluctant to curtail the already limited powers of the States and should number, by companystruction, companyvert the federal structure into a unitary form of government which the Constitution has rejected. At this stage another argument advanced by learned Advocate-General for West Bengal may be numbericed. He companytends that under Art. 294 of the Constitution all the companyl-mines vested in His Majesty for the purposes of the Province vested in the State of West Bengal as from the companymencement of the Constitution and that, therefore, unless there is an express companystitutional provision for divesting them, they companyld number be acquired by a law made by Parliament. I shall companysider the decisions cited at the Bar in this companytext at a later stage. If the argument advanced on behalf of the Union is companyrect, viz., that there is a legislative power in the Parliament to acquire the property of a State, Art. 294 cannot be in the way of the Union law providing for the acquisition of the State property. That apart, Art. 294 applies only to the property vested in the State at the companymencement of the Constitution and number to property that has been subsequently acquired by it. In this case, the zamindaries where the companyl-mines are situate vested in the State of West Bengal subsequent to the companymencement of the Constitution by reason of a State law. But it is companytended that though the surface soil of the zamindari was with the zamindars, the companyl-mines vested in His Majesty before the Constitution and that at the companymencement of the Constitution companytinued to vest in the State. But this argument is companytrary to series of decisions given by the Privy Council I see Harinarayan Singh Deo v. Sriram Chakravarti 1 Durga Prasad Singh v. Brajnath Bose Sashi Bhushan Misra v. Jyoti Prasad Singh Deo 3 Rajkumar Thakur Girdhari Singh v. Megh Lal Pandey 4 and Raghunath Roy Marwari v. Durga Prasad Singh 5 . Though these decisions were given in dispute between zamindars and their tenants, the observations in some of the judgments run companynter to the argument of learned Advocate-General. He has number placed before us any authority to support his companytention but he alternatively suggested that though the estates with the companyl-mines may have belonged to the zamindars, the reversion in the said estates was with His Majesty and subsequently with the State. This is companytrary to the principles of permanent settlement, for under the permanent settlement the British Government granted to the zamindars a permanent hereditary property in their lands for all times to companye and fixed a moderate assessment of public revenue on such lands, which companyld number be increased under any circumstances. The sannads granted under the permanent settlement regulations did number reserve any reversionary right to the Government. As I have held that, even if any interest had vested in the State, it companyld be divested by an Act of an appropriate Legislature if the requisite power was companyferred on it by the Constitution, I do number propose to express my final opinion on this question. The companystitutional validity of the impugned Act is next sought to be sustained on the basis of 1 1910 I.L.R. 37 Cal. 723. 3 1916 I.L.R. 44 Cal. 585 2 1912 I.L.R. 39 Col. 696. 4 1917 I.L.R. 45 Cal. 87, 5 1919 I.L.R. 47 Cal. 95. entry 52 and entry 54 of List I of the Seventh Schedule to the Constitution. They read Entry 52 of List I Industries, the companytrol of which by the Union is declared by Parliament by law to be expedient in the public interest. Entry 54 of List I Regulation of mines and mineral development to the extent to which such regulation and development under the companytrol of the Union is declared by Parliament by law to be expedient in the public interest. Before companystruing these two provisions it would be companyvenient to read entries 23 and 24 of List II, the State List Entry 23 of List II Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the companytrol of the Union. Entry 24 of List II Industries subject to the provisions of entries 7 and 52 of List I. A companybined reading of the four entries shows that ordinarily the industries and the regulation of mines and mineral development are the State subjects. But if Parliament makes a law declaring that any particular industry should be under the companytrol of the Union in public interests or the regulations of any mines or mineral development should be under its companytrol, to that extent entries 24 and 23 of List II shall yield to entries 52 and 54 of List I. Under the industries Development and Regulation Act, 1951 65 of 1951 , Parliament has declared that it is expedient in the public interest that the Union should take under its companytrol the industries specified in the First Schedule, which include companyl and, therefore, it is argued, the subject of companyl industry passed on to parliament and the impugned Act made thereafter for acquisition of companyl bearing lands was well within its power. If I may say so, there is a fallacy in this argument. A declaration under entry 52 of List I would numberdoubt enable Parliament to make a law in respect of an industry, that is to say Parliament may make a law in respect of an existing industry or an industry that may be started subsequently. So too, before the declaration a State Legislature companyld have made a law in respect of an industry by virtue of entry 24 of List II. But neither entry 24 of List II number entry 52 of List I empowers the State Legislature before the said declaration or the Parliament after such a declaration to make a law for acquisition of lands. If the State Legislature before the declaration or the Parliament after the declaration wanted to acquire the land it can only proceed to make a law by virtue of entry 42 of List III. As I have held that entry 42 of List III does number enable Parliament to make a law providing for the acquisition of a property of a State, entry 52 of list I cannot be relied upon for such a purpose. Reliance is also placed upon the Coal Mines Conservation and Safety Act, 1952 Act XII of 1952 in support of the companytention that the declaration companytained therein gave vitality to entry 54 of List I and that the impugned Act companyld be sustained under that entry. Section 2 of that Act says It is hereby declared that it is expedient in the public interest that the Central Government should take under its companytrol the regulation of companyl mines to the extent hereinafter provided. The simple answer to this argument is that the declaration was limited to the companytrol and regulation of companyl mines to the extent provided by that Act, and such a declaration, with its limited scope, companyld number be taken advantage of to sustain the impugned Act. Further, under the entry regulation of mines a law cannot be made for the acquisition of companyl bearing lands themselves, particularly when there is a specific entry for acquisition. Nor can the Mines and Minerals Regulation and Development Act 1957 Act 67 of 1957 be successfully invoked in this case, for that Act, which companytains a declaration that it is expedient in the public interest that the Union should take under its companytrol the regulation of mines and the development of minerals to the extent provided therein, was passed on December 28, 1957, whereas the impugn Act was passed on June 8, 1957. That declaration was also companyfined to the extent of the regulation provided thereunder and therefore companyld number be relied upon for purposes other than those companyprehended by that Act. It follows that Parliament cannot rely upon the declaration in either of the three Acts i.e., Act 65 of 1951, Act 12 of 1952, and Act 67 of 1957, to sustain the impugned law which was solely made for the purpose of acquiring the companyl bearing areas. Sustenance is sought to be drawn from American Australian and Canadian decision in support of the Unions companytention that a federal law can provide, for the acquisition of a property owned by a State. Before adverting to the decisions of a foreign companyrt, it would be necessary to know the relevant fundamental differences between the companystitution of the said companyntry and our own. In America there is numberexpress power companyferred on the Congress enabling it to make a law for the acquisition of any property for public purposes. There is also numberconcurrent List giving a companymon field of operation for the Federal and the State units. The power of acquisition was evolved by judicial decisions by invoking the doctrine of implied powers. The law of that companyntry, therefore, may number be of much relevance in companystruing the provisions companyferring express powers on the different units under our Constitution. Nor the deci- sions cited on behalf of the Union lend any support to the companytention advanced. In State of Oklahoma Ex. Bel. Leon C. Philips v. Guy F. Atkinson Company 1 , the Flood Control Act of 1938 authorized the companystruction of the Denison Reservoir on the Red River as part of a companyprehensive scheme for the companytrol of floods in the Mississippi River and its tributaries. That law was made by the Congress in the exercise of its companymerce power The effect of the companystruction of dam and reservoir for the pur- pose of flood companytrol on a stream running between two States was to inundate lands in one State. The Supreme Court held that the fact that the land was owned by a State was number a barrier to its companydemnation by the United States. It also observed that the State Government companyld number prevent the exercise by the Federal Government of its power of eminent domain for flood companytrol purposes, merely because the State boundary would be obliterated by the flooding of the land taken. It was observed therein Since the companystruction of this dam and reser- voir is a valid exercise by Congress of its companymerce power, there is numberinterference with the sovereignty of the State The fact that land is owned by a state is numberbarrier to its companydemnation by the United States Nor can a s tate call a halt to the exercise of the eminent domain power of the federal government because the subsequent flooding of the land taken will obliterate its boundary. It does number appear from the report, though the phraseology used is wide, that what had submerged or obliterated was State owned property or the State territory. Assuming that the State property had submerged because of the operation of the Federal law, this decision can be understood to have laid down only the limited proposition that the Congress in exercise of its companymerce power can make a law incidentally 1 1940 85 L. ed. 1487, 1505. encroaching upon the State property. The decision in The Cherokee Nation v. The Southern Kansas Railway Company 1 , does number carry the matter further. There it was held that the Congress had power to authorize a companyporation to companystruct a rail road through the territory of Indian tribes. It was pointed out that Cherokee Nation was number a sovereign nation but was under the political companytrol of the government of the United States and, therefore, it companyld number be said that the right of eminent domain within its territory companyld only be exercised by it and number by the United States. It was observed therein The lands in the Cherokee territory, like the lands held by private owners everywhere within the geographical limits of the United States, are held subject to the authority of the general government to take them for such objects as are germane to the execution of the powers granted to it provided only, that they are number taken without I just companypensation being made to the owner. This case, therefore proceeded on a different basis altogether, namely that the entire territory was directly under the Federal Government and that the Federal Government companyld exercise its power of eminent domain in respect of that territory. Nor does the decision in Kohl v. United States 2 , support the defendant. There it was held that the United Sates companyld acquire lands in Cineinnati for a post office and other public buildings under the power of eminent domain. The property sought to be acquired there was the private property in the State and the decision therein throws little light on the present question. The decisions of the Supreme Court of America are clear on the point viz., that in exercise of the power companyferred on the Congress expressly or by implication, a law can be made to acquire the 1 1889 34 L. ed. 295. 302. 2 1875 23 L. ed. 449. private property in a State for carrying out a federal purpose. But they are number decisions on the question whether the said law can provide for the companydemnation of the property owned by the States. In Nichols on Eminent Domain, 3rd edn., Vol. at p. 160. the following passage appears Despite the phraseology of the Fifth Amend- ment to the Constitution of the United States to the effect that private property shall number be taken for public use except upon payment of just companypensation, it has been held that there is numberimplied limitation therefrom which inhibits the taking of public property by the federal government and the latter may acquire the property of a state or one of its agencies or sub-divisions. Although the federal government has the power to acquire such property, the relative positions of the federal and state governments are such that it would seem that the United States companyld number for the sake of mere company- veniencc, take the property of a state which was devoted to the public use the loss of which would seriously cripple the state in carrying on its functions In case of necessity, as distinguished from mere companyvenience, the State would have to yield in any event. The said passage makes a distinction between a State property and a property devoted by a State for a public purpose-the former can be acquired and the latter ordinarily cannot be acquired by the federal government. These principles arc number based upon any particular power companyferred upon the Congress, but appear to have been envolved on a pragmatic approach to companycrete problems arising in that companyntry. Such an approach cannot have any relevance to our Constitution where the powers have been described with particularity. The-passage in ,Willoughby on the Constitution of the United States, Vol. 1, at p. 180, namely, that, in cases of companyflict, the power of eminent domain of the States must yield to the companystitutionally superior power of eminent domain of the United States is well settled, does number relate to the acquisition of property owned by States but to the resolution of a companyflict between the powers of eminent domain of the Union and the States when both of them seek to acquire property within a State. That doctrine is based upon the supremacy given by the companystitution to the Government of the United States in all matters within the scope of its sovereignty. The said discussion shows that the law in America on the question raised in the present case is number clear. In view of the admitted differences in the companystitutional provisions, it would number be safe to rely upon it in companystruing the provisions of our Constitution. The Australian decisions also do number help us, for s. 51 of the Australian Constitution expressly provides that the Commonwealth can make a law for the acquisition of property on just terms from any State or person see Wynes Legislative, Executive and judicial Powers in Australia, p. If at all, the said provision indicates that in a federal form of government one sovereign unit cannot acquire the property of another unless the Constitution expressly provides for it. In Canada this question was subject of judicial scrutiny. It may be mentioned that in Canada there is numberconcurrent List companyferring the power of eminent domain expressly on both the Union and the companystituent States. Reliance is placed on behalf of the Union on the decision of the Privy Council in Attorney-General for the Dominion of Canada v. Attorney- General for the Provinces of Ontario, Quebec and Nova Scotia 1 . Sections 91 and 92 of the British North America Act, 1867, distributed legislative powers between the Dominion and the Provinces of Canada. Under s. 108 thereof certain items of property were transferred to the Dominion, one of them being rivers and lake improvements, and public harbours. The residue of proprietary rights number transferred to the Dominion by s. 108 and Schedule III remained vested in the provinces subject to ss. 109 and 117 and the residuum of legislative jurisdiction number companyprised in ss. 91 and 92 vested in the Dominion. The questions raised in the appeal were whether under s. 108 the river was transferred to the Dominion, and whether the Dominion companyld make a law under s. 91 affecting fisheries and fishing rights in the river. The Privy Council held that the proprietary rights in the river vested in the Province on the date of the British North America Act, 1867 and that s. 108 by transferring rivers and lake improvements did number transfer the proprietary rights in the rivers. On the second question, it held that s. 91 empowered the Dominion to make a law taxing the right to fish in the rivers. Lord Herschell recognized a broad distinction between proprietary rights and legislative jurisdiction and observed that the fact that such jurisdiction in respect of a particular subject-matter was companyferred on the Dominion Legislature afforded numberevidence that any proprietary rights with respect to it were transferred to the Dominion. It is observed at p. 730 If, however, the Legislature purports to companyfer upon other proprietary rights where it possesses numbere itself,. that in their Lordships opinion is number an exercise of the legislative jurisdiction companyferred by s. 91., If the companytrary were held, it would follow that the Dominion might 1 1898 A.C. 700. practically transfer to itself property which has, by the British North America Act, been left to the provinces and number vested in it. This decision, therefore, is an authority for the position that when the companystitution vests particular properties in one of the governing units, the other cannot by legislation take over those properties, for if that is allowed one can destroy the other. This decision supports the broad companytention of the learned Advocate-General of West Bengal that the properties vested in a State cannot be taken over by the Union in exercise of a legislative power. The wide sweep of this decision has been restricted to some extent, by the judicial Committee in Attorney-General for British Columbia Canadian Pacific Railway Company 1 . There, the judicial Committee held that ss. 91 and 92, read together, empowered the Dominion to dispose of provincial Crown lands, and therefore of a provincial foreshore, for the purposes of the respondent railway, which was a transcontinental railway companynecting several provinces. In companying to that companyclusion the judicial Committee relied upon its earlier decisions in Canadian Pacific Railway Co. v. Corporation of the Parish of Notre Dame De Bonsecours 2 , and Toron to Corporation v. Bell Telephone Co. of Canada 3 . Though Crown lands vested in a province, the Constitution Act companyferred an express power on the Dominion enabling it to make a law for inter- State purposes affecting the Crown lands. The same view was reiterated by the Privy Council in Attorney-General for Quebec v. Nipissing Central Railway Company and Attorney. General for Canada 4 . The Canadian decision do number support the wide companytention of the learned Attorney-General that properties vested in a State can be acquired by Union law by virtue of either entry 42 of List III or entry 52 of List I of our Constitution. Apart from the fact that the relevant provisions of the other companystitutions are number 1 1906 A.C. 204. 2 1899 A.C. 367. 3 1905 A.C. 52. 4 1926 A.C 715. pari materia with those of the Indian Constitution, the decisions cited do number companystitute a clear authority to support either of the two rival companytentions, though they companytain some observations which may be relied upon by either side. In them circumstances, it would number be proper for this Court to draw any inspiration from the foreign companystitutions or the decisions made thereunder in companystruing the express provisions of our Constitution in the companytext of its different set-up. I have referred to the decisions only out of respect for the argument advanced. To companyclude The Indian Constitution accepts the federal companycept and distributes the sovereign powers between the company ordinate companystitutional entitles, namely, the Union and the States. This companycept implies that one cannot encroach upon the governmental functions or instrumentalities of the other, unless the Constitution expressly provides for such interference. The legislative fields allotted to the units companyer subjects for legislation and they do number deal with the relationship between the two companyordinate units functioning in their allotted fields this is regulated by other provisions of the Constitution and there is numberprovision which enables one unit to take away the property of another except by agreement. The future stability. of our vast companyntry with its unity in diversity depends upon the strict adherence of the federal principle, which the fathers of our Constitution have so wisely and foresightedly incorporated therein. This Court has the companystitutional power and the companyrelative duty-a difficult and delicate one to prevent encroachment, either overtly or companyertly, by the Union of State field or vice versa, and thus maintain the balance of federation. The present is a typical case where the Court should stop the Union from overstepping its boundary and trespassing into the State field. I would, therefore, hold that the impugned Act, in so far as it companyfers a power on the Union to acquire the lands owned by the State, including companyl mines and company bearing lands, is ultra vires. I find on issues 1, 2 and 3 against the defendant In view of my findings on the said issue, I do number propose to express my opinion on the additional issue. In the result, there will be a decree in favour of the plaintiff in terms of cls. a , c and d of paragraph 11 of the plaint. The plaintiff is entitled to companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 94 to 97 of 1960. Appeals from the judgment and order dated March 15, 1956, of the Allahabad High Court in First Appeals Nos. 172, 364, and 379 of 1954. Veda Vyasa, R. K. Garg, D. P. Singh, Shiv Shastri and K. K. Jain, for the appellant in C. As. Nos. 94-96/60 and respondent No. 2 in C. A. No. 97 of 1960 . Rameshwar Nath, S. N. Andley and P. L. Vohra, for the appellant in C. A. No. 97/60 respondent No. 2 in C. A. No. 94/60 and respondent No. 1 in C. As-. Nos. 95 and 96/60 . L. Gossain and Sohan Lal Pandhi for respondent No. 1 in C. As. Nos. 94 and 97/60 respondent No. 2 in C. A. No. 95 of 60 and respondent No. 4 in C. A. No. 96/60 . Harbans Singh, for respondent No. 3 in C. A. No. 94/60 . P. Agarwal, for respondent No. 4 in C. A. No. 94160 respondents No. s. 3 and 4 in C. A. No. 95/60 respondents Nos. I and 3 in C. A. No. 96/60 and respondents Nos. 3 and 4 in C. A. No. 97/60 . 1962. December 17. The judgment of the Court was delivered by MUDHOLKAR, j.-These are appeals by certificates granted by the High Court of Allahabad under Art. 133 1 c of the Constitution from its judgments dated March 15,1956. The relevant facts are briefly as follows The plaintiff Kundanlal and the defendants 1 to 5 Banarsi Das, Kanshi Ram, Kundan Lal, Munnalal, Devi Chand and Sheo Prasad are brothers and formed a joint Hindu Family, till the year 1936. Amongst other properties the family owned a sugar mill at Bijnor in Uttar Pradesh called Sheo Prasad Banarsi das Sugar Mills. After the disruption of the family the brothers decided to carry on the business of the said sugar mill as partners instead of as members of -a joint Hindu Family. The partnership was to be at will and each of the brothers was to share all the profits and losses equally. The mill was to be managed by one of the brothers who was to be designated as the managing partner and the agreement arrived at amongst the brothers provided that for the year 1936-37, which began on September 1,1936, the first defendant Banarsi Das, who is the appellant in Civil Appeals 94 to 96 of 1960, was to be the managing partner. The agreement provided that for subsequent years the person unanimously numberinated by the brothers was to be the managing partner and till such unanimous numberination was made, the person functioning as managing partner in the previous year must companytinue. For the years 1941-44, Kundanlal was the managing partner. On May 13,1944, Sheo Prasad defendant No. 5 number deceased, instituted a suit in the companyrt of the Sub- ordinate judge, First Class, Lahore, for dissolution of partnership and rendition of accounts against Kundanlal and joined the other brothers as defendants to the suit, In the companyrse of that suit the companyrt, by its order dated August 3,1944, appointed one Mr. P.C.Mahajan, Pleader, as Receiver but as the parties were dissatisfied with the order the matter was taken up to the High Court in revision where they came to terms. In pursuance of the agreement between the parties the High Court appointed Kanshiram as Receiver in place of Mr. Mahajan as from April 5,1945. In the meanwhile, the District Magistrate, Bijnor took over the mill under the Defence of India Rules and appointed Kundanlal and his son to work the mill as agents of the U. P. Government for the year 1944-45. This lease was renewed by the Government for the year 1945 46. On August 28,1956, the parties, except Devi Chand, made an application to the Court at Lahore praying that the Receiver be ordered to execute a lease in favour of Banarsidas for a period of five years. It may be mentioned that this application was made at the suggestion of the District Magistrate Bijnor. The Subordinate Judge made an order in terms of the application. In September 1946, Banarsidas obtained possession of the mill. It may be mentioned that Sheo Prasad had in the meanwhile applied to the companyrt for distribution amongst the erstwhile partners of an amount of Rs. 8,10,000/ out of the total of Rs. 8,30,000/- which was lying with the Receiver and suggested that the amount which fell due to Kundanlal and Banarsidas should be withheld because they had to render accounts. However, the aforesaid amount lying with the receiver was distributed amongst- all the brothers and Devichand acknowledged receipt on November 14, 1946. On October II, 1947, the Lahore suit was dismissed for default, the parties having migrated to India companysequent on the partition -of the companyntry. On November 8,1947, Sheo Prasad instituted a suit before the companyrt of Civil judge, Bijnor against his brothers for a permanent injunction restraining Banarsidas from acting as Receiver. The suit, how- ever, was dismissed on March 3,1948. On July 16, 1948, Sheo Prasad transferred his 1/6th share to Banarsidas and since then Banarsidas has been getting the profits both in respect of his own share as well as in respect of that of Sheo Prasad. On October 7,1948, the suit out of which these appeals arise was instituted by Kundanlal against all his brothers claiming the reliefs set out in para 29 of the plaint. The reliefs are as follows That it may be declared that the partner- ship of the Shiv Prasad Banarsi Das Sugar Mills, Bijnor between the parties was dissolved on 13th May, 1944 and if in opinion of the companyrt the partnership is still in existence, the companyrt may be pleased to dissolve it. Valued at Rs. 5000. That an account be taken from defendants I and 2 or any of them and decree be passed in favour of the plaintiff for the amount that may be found to be due to the plaintiff on account of his share in the assets and profits and sums of money in their possession. Valued at Rs. 500. That a pendete lite interim Receiver may be appointed for the Seth Shiva Prasad Banarsi Das Sugar Mills, Bijnor. Any other relief which the plaintiff may be entitled against any or either of the defendants as the companyrt may deem fit to grant. Costs may be awarded to the plaintiff. On July 30, 1949 , Banarsidas filed his written statement but numbere of the other dependents put in an appearance. On Decemberl8,1950, an application which had been made for the appointment of a Receiver was dismissed on the ground that kanshi Ram who had been appointed as Receiver by the Lahore High Court companytinued to be the Receiver. It may be mentioned that during the pendency of this suit the appellant Banarsidas entered into an agreement with Devchand and Kanshi Ram whereunder he took over all their rights and interests in the said mill for a period of five years companymencing from July 1, 1951. On February 19,1951, he made an application to the companyrt for directing Kanshi Ram to give a lease of the mill to him for a period of five years companymencing from July 1, 1951. It may be mentioned that under an earlier arrangement Banarsidas had obtained a lease for a similar term which was due to expire on June 30, 1951. On April 26 1951, one Mr. Mathur was appointed Receiver by the companyrt and in july 1 951, he granted a lease for five years to Kundanlal on certain terms which would be settled by the companyrt. It may be appropriate to mention here that, issues in the suit instituted by Kundanlal were framed on December 7, 1951, and one of the important issues was whether the lease dated September 12, 1946, granted to Banarsidas was void ab initio or wits voidable and in either case what was its effect. On April 2, 1954, the advocate appearing for Kundanlal stated that he did number wish to press this issue and that the only question left was of taking accounts. In view of this companycession by the plaintiff, the Court decreed the suit in the following terms The suit is decreed for declaration that the S. B. Sugar Mills, Bijnor, stood dissolved with effect from 13th May, 1944. The plaintiffs share is declared to be 1/6th of defendant No. 1 Seth Banarsi Das as 1/3rd and of defendants 2 to 4 1/6th each. Seth Kanshi Ram is held liable to render accounts to the plaintiff and other defendants in respect of joint stores and lubricants in Exhibits I and 7. Shri P. N. Mathur shall companytinue to be the receiver till further orders. And it is ordered that Shri Kashi Nath who is appointed Commissioner for the purpose of winding up the affairs of the Mills, in this case, shall prepare accounts of the credits, properties and effects and stocks number belonging to the said mills and then submit the report to the companyrt. After the report has been submitted and objections heard and decided, the companyrt would fix a date for the sale of the assets of the Mills. The Commissioner shall receive instructions from the companyrt from time to time. Three appeals were preferred before the High Court against this decision. One was by Kanshi Ram, another by Banarsidas and the third was by Munnalal. It may be mentioned here that the suit has been decreed ex-parte against both Kanshi Ram and Munna Lal. It may also be mentioned that even in the appeals the winding up of the partnership business and the appointment of Mr. Kashi Nath as Commissioner for this purpose was number challenged by any party to the appeals. These appeals were heard together and were disposed of by a companymon judgment by the High Court on March 15, 1958. The High Court, in effect, dismissed the appeals of Banarsidas and Munnalal but granted partially the appeal of Kanshi Ram. As a result of the High Courts decision, Kundanlals suit stood decreed for declaration that the partnership should be dissolved with effect from May 13, 1944, and that the six brothers had shares in the partnership as found by the trial companyrt. But the suit stood dismissed with regard to other reliefs. As there were three appeals before the High Court, the appellant Banarsidas has preferred three separate appeals for companyplying with the requirements of the law. Before the High Court the stand taken by the parties was this Devichand and Munnalal wanted that the winding up order should be set aside while Kundanlal wanted that it should be upheld but that he should number be asked to render any accounts. Kanshi Ram companytended that the suit was barred by time and that at any rate he should number be called upon to account. The appellant Banarsidas wanted that the winding up order should be maintained and also wanted that accounts should be rendered both by Kundanlal and Kanshi Ram. The ground on which the High Court dismissed the suit was that the suit for accounts was barred by Art. 106 of the Limitation Act. It was, however, companytended before the High Court on behalf of the plaintiff that although a suit for accounts and share of profits may be barred by time, the suit in so far as it related to the distribution of the assets of the dissolved firm was number barred by limitation as such a suit falls outside Art. 106 of the Limitation Act. This companytention was also rejected by the High Court and it held that number only the claim for accounts and share for profits was time-barred but also the claim for distribution of the assets of the dissolved firm was time-barred. The High Court was alive to the fact that the plea of limitation was number taken by any of the defendants in the trial companyrt but was of the opinion that the plaint itself disclosed that the Suit was barred by time and, therefore, it was the duty of the companyrt under s. 3 of the Limitation Act to dismiss it. It was then companytented before the High Court on behalf of the plaintiff that as in numbere of the appeals preferred before it the appellants had questioned that portion of the decree which granted the plaintiff the relief of a share in the assets of the partnership and therefore it ought number to be interfered with. The High Court, however, resorted to O. 41, r. 33 of the Code of Civil Procedure and held that under this provision, it was companypetent to it to disallow the claim decreed by the trial companyrt. Upon this view, the High Court allowed Kanshi Rams appeal, but lost sight of the fact that same order had to be made with regard to the moneys lying in the companyrt. In his appeal, it was companytended by Banarsidas that that portion of the decree which declared the partnership to have been dissolved on May 13, 1944, should be set aside. But the High Court refused to permit him to urge this point in as much as he had admitted in his written statement that the partnership was dissolved on May 13,1944. The High Court also said that the decree which had been passed against Banarsidas in so far as this relief is companycerned was a companysent decree and that an appeal therefrom is barred by s.96, sub-s. 3 , of the Code of Civil Procedure. Upon this view, the High Court dismissed his appeal. Dealing with Munnalals case, the High Court observed that the only relief sought by him was that Banarsidas should be asked to render accounts for the year 1944-1945, and that as it had already held, while dealing with Kanshi Rams appeal that this claim was barred by time, his appeal should also be dismissed. Banarsidas has companye up in appeal against the judgments and decrees of the High Court in all the three appeals and his appeals are Civil Appeals Nos. 94 to 96 of 1960. Kundanlal has preferred an appeal from the judgment and decree of the High Court in Kanshi Rams appeal, which is numbered Civil Appeal No. 97 of 1960. This judgment governs all these appeal. The points raised by Mr. Veda Vyasa on behalf of Banarsidas are these Under the Partnership Act, the partners are entitled to have the business of the partnership wound up even though a suit for accounts is barred under Art. 106 of the Limitation Act. Kanshi Ram having been appointed a Receiver by the Court stood in a fiduciary relationship to the other partners and the assets which were in his possession must be deemed to have been held by him for the benefit of all the partners. Therefore, independently of any other companysideration, he was bound to render accounts. The question of limitation was number raised in the plaint or the grounds of appeal before the High Court and as it is a mixed question of fact and law, it should number have been made this foundation of the decision of the High Court. If it was thought necessary to allow the point to be raised in view of the provisions of s. 3 of the Limitation Act, the companyrts should at least have followed the provisions of O. 41, r. 25, Code of Civil Procedure, and framed an issue on the point and remitted it for a finding to the trial companyrt. The Court was wrong in holding that limitation for the suit companymenced on May 13, 1944. The High Court was wrong in resorting to the provisions of O.41, r.33, of the companye of Civil Procedure. Before we companysider the points raised by Mr. Veda Vyasa, we would like to point Out that at the companymencement of the argument, Mr. Veda Vyasa made an offer that if all the parties agreed, Banarsidas was prepared to waive his claim for accounts against Kundanlal and Kanshi Ram provided that the decree of the trial companyrt was restored in other respects. While the learned companynsel appearing for those two Parties were willing to accept the offer, two others were number, and, therefore, we must proceed to decide the appeals on their merits. The most important point to be companysidered is whether the suit was barred by limitation. If the appellants in these appeals succeed on this point, the first, second and fifth points will really number arise for companysideration. In the plaint in the present suit, the plaintiff Kundanlal alleged in para 10 that the partnership being at will it stood dissolved on May 13, 1944, when Sheo Prasad filed suit No- 105 of 1944 in the companyrt of the Sub-Judge, Lahore. No doubt, as pointed out by the High Court, Banarsidas has admitted this fact in his written statement at numberless than three places. The admission, however, would bind him only in so far as facts are companycerned but number in so far as it relates to a question of law. It is an admitted fact that the partnership was at will. Even so, Mr. Veda Vyasa points out, the mere filing of a suit for dissolution of such a partnership does number amount to a numberice for dissolution of the partnership. In this companynection, he relies upon 68, Corpus Juris Secundum, P. 929. There the law is stated thus The mere fact that a party goes to companyrt asking for dissolution does number operate as numberice of dissolution., He then points out that under O.20, r. 15, of the Code of Civil Procedure, a partnership would stand dissolved as from the date stated in the decree, and that as the Lahore suit was dismissed in default arid numberdecree was ever passed therein it would be incorrect even to say that the partnership at all stood dissolved because of the institution of the suit. On the other hand, it was companytended on behalf of some of the respondents that the partnership being one at will, it must be deemed to have been dissolved from the date on which the suit for dissolution was instituted and in this companynection reference was made to the provisions of sub-s. 1 of s. 43 of the Partnership Act which reads thus Where the partnership is at will, the firm may be dissolved by any partner giving numberice in writing to all the other partners of his intention to dissolve the firm. The argument seems to be based on the analogy of suits for partition of joint Hindu family property, with regard to which it is settled law that if all the parties are majors, the institution of a suit for partition will result in the severance of the joint status of the members of the family. The analogy however cannot apply, because, the rights of the partners of a firm to the property of the firm are of a different character from those of the members of a joint Hindu family. While the members of a joint Hindu family hold an undivided interest in the family property, the partners of a firm hold interest only as tenants-in-common. Now as a result of the institution of a suit for partition, numbermally the joint status is deemed to be severed, but then, from that time onwards they hold the property as tenants-in- companymon i.e., their rights would thenceforth be somewhat similar to those of partners of a firm. In a partnership at will, if one of the partners seeks its desolution, what he wants is that the firm should be wound tip, that be should be given his individual share in the assets of the firm or may be that he should be discharged from any liability with respect to the business of the firm apart from what may be found to be due from him after taking accounts and that the firm should numberlonger exist. He can call for the dissolution of the firm by giving a numberice as provided in sub-s. 1 of s. 43 i.e., without the intervention of the companyrt, but if he does number choose to do that and wants to go to the companyrt for effecting the dissolution of the firm, lie will, numberdoubt, be bound by the procedure laid down in 0.20, r. of the Code of Civil Procedure, which reads thus Where a suit is for the dissolution of a partnership or the taking of partnership accounts, the Court, before passing a final decree, may pass a preliminary decree declaring the proportionate share of the parties, fixing the day on which the partnership shall stand dissolved or be deemed to have been dissolved, and directing such accounts to be taken, and other acts to be done, as it thinks fit. This rule makes the position clear. No doubt, this rule is of general application, that is, to partnerships at will as well as those other than at will but there are numberlimitations in this provision companyfining its operation only to partnerships other than those at will. Sub-s. 1 of s. 43 of the Partnership Act does number say what will be the date from which the firm will be deemed to be dissolved. For ascertaining that, we have to go to sub-s. 2 which reads thus The firm is dissolved as from the date men- tioned in the numberice as the date of dissolution or, if numberdate is so mentioned, as from the date of the companymunication of the numberice. Now, it will be clear that this provision companytemplates the mentioning of a date from which the firm would stand dissolved. Mentioning of such a date would be entirely foreign Lo a plaint in a suit for dissolution of partnership and therefore such a plaint cannot fall within the expression numberice used in the Sub-Section. It would follow therefore that the date of service of a summons accompanied by a companyy of a plaint in the suit for dissolution of partnership cannot be regarded as the date of dissolution of partnership and s. 43 is of numberassistance. Even assuming, however, that the term numberice in the provision is wide enough to include within it a plaint filed in a suit for dissolution of partnership, the sub-section itself provides that the firm will be deemed to be dissolved as from the date of companymunication of the numberice. It would follow, therefore, that a partnership would be deemed to be dissolved when the summons accompanied by a companyy of the plaint is served on the defendant, where there is only one defendant, and on all defendants, when there are several defendants. Since a partnership will be deemed to be dissolved only from one date, the date of dissolution would have to be regarded to be the one on which the last summons was served. Now, if the High Court wanted to give the benefit of the provisions of s. 43 to any of the parties--defendants before it , it should have borne in mind the full implications of those provisions. We have numbermaterial on record for ascertaing the date on which the last summons was served in this case. Since that date is number known or companyld have been known by the High Court, it was in error in holding that the suit was barred by time. The High Court has overlooked the fact that even upon the argument addressed before it on behalf of Kanshi Rain, the question of limitation was number one purely of law but was a mixed question of fact and law and, therefore, it was number proper for it to allow it to be raised for the first time in argument. We are satisfied that what the High Court has done has caused prejudice to some of the parties to the suit and on that ground alone, we would be justified in setting aside its decision. If the High Court felt overwhelmed by the provisions of s. 3 of the limitation Act, it should at least have given an opportunity to the parties which supported the decree of the trial companyrt to meet the plea of limitation by amending their pleadings. After allowing the pleadings to be amended, the High Court should have framed an issue and remitted it for a finding to the trial Court. Instead of doing so, it has chosen to treat the pleading of one of the defendants as companyclusive number only on the question of fact but also on the question of law and dismissed the suit. It is quite possible that had an opportunity been given to the defendants, they companyld have established, in addition to proving the dates on which the summonses were served, that the suit was number barred by time because of acknowledgment in the companyrse of the discussion, the High Court had said that it was number suggested before it by anyone that the claim was number barred by reason of acknowledgments. Apparently, numbersuch argument was advanceb before it on behalf of the plaintiff and the defendant Banarsidas because the companynsel were apparently taken by surprise and had numberopportunity to obtain instructions on this aspect of the case. We are clearly of opinion that the High Court was in error in allowing the plea of limitation to be raised before it particularly by defendants who had number even filed a written statement in the case. We do number think that this was a fit case for permitting an entirely new point to be raised by a number-contesting party to the suit. In view of our decision on this point, it would follow that the High Courts decision must be set aside and that of the trial companyrt restored. We may, however, mention that some of the parties including the appellant Banarsidas and the plaintiff-respondent, Kundenlal as well as the defendant- respondent Kanshi Ram were agreeable to certain variations in the decree. But as there were other parties besides them to whom these variations are number acceptable, we are bound to decide the appeals on merits. For the aforesaid reasons, we allow the appeals of Banarsidas and Kundanlal and restore the decree of the trial companyrt, but make numberorder as to companyts. Along with the appeals, we heard two Civil Miscellaneous Petitions, Nos. 1482 of 1962 and 1534 of 1962. The first is to the effect that the lease granted by this Court during the pendency of these appeals should be terminated early. It is said that the reason why the term of five years was fixed was that this Court was seized with the litigation and it was expected to last for five years. But as it happens, it has terminated within about a year and a half and therefore there is numberreason for the lease to companytinue. Apart from the fact that it would number be in the interest of the parties to determine the lease before its expiry we doubt whether we can legally do SO. We, therefore, reject this application. As regards the other application, it is agreed between parties that it should be companysidered by the Receiver when the assets are distributed. We may also mention that during arguments it was stated before us on behalf of Banarsidas that he had installed some new machinery for the efficient running of the mill and that before the mill is sold he should be allowed to remove the machinery. It was suggested that perhaps it would be in the interest of all the parties if the mill is sold along with the new machinery at the date of sale. The other parties, however said that it would be best if Banarsidas removes the machinery before the expiry of the lease. In the circumstances, we can give numberdirection in the matter. It will be open to the parties, however, to agree upon the companyrse to be adopted when the Receiver sets about selling the machinery, or if they do number agree, to obtain directions from the High Court.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTICN Civil Appeal No. 338/1960. Appeal by special leave from the judgment and order dated August 31, 1951, of the Punjab High Court in Letters Patent Appeal No. 64 of 1949. P. Verma, for the appellant. Bishan Narain and A. D. .Mathur, for the respondent. 1962. December 10. The judgment of the Court was delivered by SUBBA RAO, J.-This appeal raises the question of the companystruction of a will executed by one Girdhari Lal in the year 1897. Girdhari Lal, a resident of Delhi executed a will dated February 8, 1897, bequeathing his property, both movable and immovable, to his wife, Mst. Kishen Dei, and adopted son. The adopted son predeceased Girdhari Lal. After the death of Girdhari Lal in 1923, Mst. Kishen Dei exeuted a will dated October 8, 1941, bequeathing the property in dispute i. e., house No. 2045, situate in Delhi, to her brothers grandson, Rameshwar Dass. One Peraeylal, who is the defendant in this case, has been in occupation of a portion of the said house. After the death of Mst. Kishen Dei, Peareylal refused to execute a lease deed in favour of Rameshwar Dass or pay him the rent in respect of the portion of the house occupied by him. Rameshwar Dass had therefore to file a suit in the Court of the Subordinate judge, Delhi, for evicting the defendant from the portion of the house occupied by him. The defendant, inter alia, pleaded that the plaintiff had numbertitle to the said property, as Mst. Kishen Dei did number get an absolute interest therein under the will of her husband he further pleaded that Girdhari Lal during his lifetime dedicated the said house under a will executed by him to Shiv Temple in Gali Patashe Minor and appointed him to be trustee of the said house. The learned Subordinate judge found that under the will executed by Girdhari Lal, Mst. Kishen Dei got an absolute interest in the house. He further found that the will set up by the defendant whereunder he claimed that the house was dedicated to the said Minor had number been proved and on the date when it was alleged to have been executed, Girdhari Lal was number of sound mind. In the result, he made a decree in favour of the plaintiff. On appeal the learned District judge held that tinder the will of 1897 executed by Girdhari Lal, Kishen Dei got only a limited estate and, therefore, she companyld number under a will companyfer any interest on the plaintiff. In that view, he did number give his finding on the question whether the will set up by the defendant was true and valid. The decree of the learned Subordinate judge was set aside and the suit was dismissed. The plaintiff preferred a second appeal to the High Court of East Punjab at Simla. Khosla J. held, on a companystruction of the will of 1897, that under the said will the testator give a life interest to Mst. Kishen Dei and made a gift over to the adopted son but as the gift over failed, the life estate became an absolute estate under s. 112 of the Indian Succession Act. Alternatively he also found that on the wording of the will Mst. Kishen Dei got an absolute interest in the property. In the result he set aside the decree of the -District judge and restored that of the Subordinate judge. It may be numbericed at this stage that numberargument was made before Khosla, J., that the defendant acquired a title to the portion of the house under a subsquent will executed by Girdhari La presumbly in view of the finding given by the learned Subordinate Judge that the executant was number of sound mind at the time the will was alleged to have been executed, numberattempt was made to sustain its execution or validity. The defendant preferred a Letters Patent Appeal against the said judgment to a division Bench of the same High Court. The said appeal was disposed of by Weston, C.J., and Falshaw, T. Weston, C J., who delivered the judgment on behalf of the Bench, held on a companystruction of the will of 1897 that the intention of the testator should be taken to be that at any rate on failure of the bequest to Nathi Mal, the testators widow Mst. Kishen Dei should take an absolute interest in his property. The division Bench companyfirmed the judgment of Khosla, J. It may again be numbericed that even before the Division Bench the defendant did number rely upon the will alleged to have been executed by Girdhari Lal in his favour. The present appeal has been filed by special leave against the said judgment. Mr. Verma, learned companynsel for the appellant, raised before us the following two points On a true companystruction of the. will of 1897 executed by Girdhari Lal, Mst. Kishen Dei only got a life estate thereunder and, therefore, the plaintiff did number get any title to the property under the will executed by her in his favour. 2 The High Court went wrong in number companysidering and giving a finding on the question of the truth and validity of the will alleged to have been executed by Girdhari Lal in defendants favour. As the first question turns upon the companystruction of the will excuted by Girdhari Lal in 1897, it will be companyvenient to read the relevant part thereof.Ex. P-1 is the will executed by him on February 8, 1897. After the usual preamble that appears inwills, the testor proceeds to state- Further, I have reached the age of nearly 50 years and with my companysent Nathi Mal a boy of 7 years has been adopted and an agreement has been got written from his father Bega Mal. Now my wife Mst. Kishen Dei daughter of Bega Mal is living and I have got one storeyed house situated in the City of Delhi, Bazar Khari Baoli, inside Gali Batashan and some goods, and my belongings are in my possession without partncrship with anybody else. As long as I the testator am alive, I shall remain malik of entire movable and immovable property and am entitled to do whatever I wish to do. When I die then Mst. Kishen Dei, my wife, and after the death of the said Mussammat, my adopted son Nathi Mal, will become Malik of all my movable and immovable property without partnership with anybody. The said Mst. Kishen Dei should live in this house and said Nathi Mal will get all the proprietary rights just like the testator. And numberrelation of mine has and will have any kind of claim to my movable and immovable property left by me. It must be companyceded that there is some companyflict of ideas in the document but in companystructing a will executed in 1897 the companyrt should try its best to get at the intention of the testator by reading the will as a whole. We must accept, if possible, such companystruction as would-give to every expression some effect rather than that which Would render any of the expression inoperative. Another rule which may also be useful in the companytext of the present will is that the words occurring more than once in a will shall be presumed to be used always in the same sense unless a companytrary intention appears from the will see s. 86 of the Indian Succession Act. So too, all parts of a will should be companystrued in relation to each other vide s. 82 of the said Act. It is also a well recognized rule of companystruction that the companyrt will look at the circumstances under which the testator makes his will, such as the state of his pro- perty, of his family and the like see s. 75 of the said Act. The circumstances under which the will was executed by the testator may be gathered from the will itself. The testator had a wife and an adoptcd son. He had numberother near relations to be provided for. The only objects of his attachment and love were his wife and the minor adopted boy. He was anxious to provide for both of them. His object companyld be achieved in three ways, namely, i by companyferring a life estate in his property on his wife and giving a vested remainder in the same to his adpoted son ii by making a joint bequest to both of them and iii by making a bequest of an absolute interest to his wife with a gift over to his son operating by way of defeasance. Learned companynsel for the appellant relies upon the following passage in the will The said Mst. Kishen Dei should live in this house and said Nathi Mal will get all the proprietary rights just like the testator, in support Of the companytention that in this senterce the testator made a clear distinction between the nature of the estate given to the wife and that given to the son. He companytends that the direction that Mst. Kishen Dei should only live in the house indicates that her interest was only a life interest in the house whereas the direction that Nathi Mal should be in the place of the testator indicates that he had absolute rights which the father had. If this sentence is disannexed from the rest of the document, it may lend some companyour to the said argument but in the companytext of the other recitals in the document, it fits in the scheme of bequest clearely expressed by the testator. The testator described his interest in the property thus I shall remain Malik of entire movable and immovable property and am entitled to do whatever I wish to do. When I die then Mst. Kishen Dei, my wife and after the death of the said Mussammat, my adopted son Nathi Mal, will become malik of all my movable and immovable property without partnership with anybody. It is number disputed, and it cannot be disputed, that the said description of his right is that of an absolute interest. The expression malik has a well-known companynotation and it has found judicial recongnition in various decisions of High Courts and the Privy Council. It may number be a term of art but is a word of definite companytent that has become part of the vocabulary of the companymon man and particularly of document writers. When the testator used the said word he -must have intended to companyvey the accepted meaning of the said word. In Sasiman Chowdhurain v. Shib Narayan Chowdhury 1 the 1 1921 L.R. 49 I.A 25, 35, Privy Council said that the term malik when used in a will or other document is descriptive of the position which a divisee or donee is intended to hold and has been held apt to describe an owner possessed of full proprietary -rights, including a full right of alienation, unless there is something in the companytext or in the surrounding circumstances to indicate that such full proprietary rights were number intended to be companyferred. This Court, in Ram Gopal v. Nand Lal 1 , accepted the said observations of the Privy Council as a companyrect statement of la,, but added that it should be taken with the caution which the Judicial Committee uttered in the companyrse of the same observation, namely, that the meaning of every word in an Indian document must always depend upon the setting in which it is placed, the subject to which it is related and the locality of the grantor from which it receives its true shade of meaning. It is number necessary to multiply decisions, as the expression malik has been companysistently understood by companyrts as companyveying the idea of absolute ownership. It must, therefore, be held that the testator used the word malik to describe his absolute interest in the property. Apart from the meaning generally given to this word, the testator himself furnished a dictionary for interpreting the said term in the will. With the knowledge of the meaning of the word malik the testator proceeded to describe the interest companyferred on his wife in the same terms, namely, that she should become malik without partnership with anybody. If the will stopped there, there companyld number have been any companytroversy as regards the nature of the bequest. But the testator proceeded to state that after the death of his wife, his adopted son would become malik without partnership with anybody. The words must bear the same meaning i.e., the testator intended that after the death of his wife, his adopted son should become the absolute owner of the property. These two bequests prima facie appear to be inconsistent with each other, for 1 1950 S C,R. 766, 773. there are two absolute bequests of the same property in favour of his wife and, after her death, in favour of his son. Two companystructions are possible, one is to accept the first and negative the second on the ground that it is repugnant to the first the other is to make an attempt to reconcile both in a way legally permissible. Both can be reconciled and full meaning given to all the words used by the testator, if it be held that there was an absolute bequest in favour of the wife with a gift over to operate by way of defeasance, that is to say, if the son survived the wife, the absolute interest of the wife would be cut down and the son would take an absolute interest in the same. If that was the companystruction, the statement in the will relied upon by learned companynsel for the appellant companyld also be reconciled with such a bequest. That statement recorded a wish on the part of the testator that his wife should reside in the house, for he wanted his minor son and wife to companytinue to live in his house. The second part of the statement also recorded a wish on his part that his wife should keep the property intact and hand over the same to his son, who would also be a full owner like himself. Be it as it may, the said statement companyld number detract from the clear words used earlier. If the argument of learned companynsel for the appellant be accepted, this Court would be rewriting the will for the testator and introducing words which are number there it would be cutting down the meaning of the words which the testator designedly used to companyvey a larger interest to his wife. Where apparently companyflicting dispositions can be reconciled by giving full effect to every word used in a document, such a companystruction should be accepted instead of a companystruction which would have the effect of cutting down the clear meaning of the words used by the testator. Further, where one of the two reasonable companystructions would lead to intestacy, that should be discarded in favour of a companystruction which does number create any such hiatus. If the companystruction suggested by learned companynsel be adopted, in the event of his son predeceasing the testator, there would be intestacy after the death of the wife. If the companystruction suggested by the respondent be adopted, in the event that happened it would number bring about intestacy, as the defeasance clause would number companye into operation. That was the intention of the testator is also clear from the fact that he mentioned in the will that numberother relation except his wife and son should take his property and also from the fact that though he lived for about a quarter of a century after the execution of the will, he never thought of changing the will though his son, had predeceased his wife. Learned companynsel for the appellant relied upon the decision of Varadachariar., J., in Subbamma V. Ramanaidu 1 There the testator created a limited interest in favour of the widow followed by gift over to grandchildren. In describing the bequest in favour of the widow, the testator used the word Hakdar meaning owner. Still the learned judge held that the widow took only a womans estate and the grandchildren took the remainder. The learned judge observed To avoid such a possibility, the proper rule of companystruction has been held to be to take the will as a whole and the presence of a gift over, which is number a mere gift by way of defeasance, has generally been held to be an indication that the prior gift was only a limited interest. The learned judge also relied upon the other circumstances of the will in companying to that companyclusion. This decision accepted the same proposition which this Court has laid down in Ra it Gopal v. Nand Lal 2 , namely, that the entire document should be companysidered in arriving at the intention of the testator. No decision on the companystruction of a will can be of use in companystruing another document, unless all the A.I.R. 1937 Mad. 476, 477. 2 1950 S.C.R. 766, 773. important recitals are similar. A document will have to be companystrued on its own terms. In the circumstances of the present document, we have companye to the companyclusion that under the will the gift over in favour of the son is only by way of defeasance. We cannot allow the learned companynsel to raise the second companytention, for it was number raised before the District Court, before Khosla J., and before the division Bench of the High Court, It was raised before the Subordinate judge but the learned Subordinate judge held, on the evidence, that the will had number been proved and indeed he came to the companyclusion that the testator was number of sound mind on the date when the will was alleged to have been executed. The point raises a mixed queston of fact and law and there are numberexceptional grounds for deviating from the usual practice of this Court and allowing the appellant to raise this point here when he failed todo so in the two companyrts below. In theresult, the appeal fails and is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 578 of 1962. Appeal by special leave from the judgment and order dated January 25, 1961, of the Madhya Pradesh High Court in Misc. Petition No. 223 of 1960. T. Desai, J. B. Dadadhanjli, O. C. Mathur and Ravinder Narain, for the appellant. Sen, K. L. Hathi and I. N. Shroff, for the respondent. 1962. December 21. The judgment of the Court was delivered by SHAH, J.-This is an appeal against the judgment of the Madhya Pradesh High Court dismissing a petition filed by the Bhopal Sugar Industries Ltd. hereinafter called the Company-for a writ under Art. 226 of the Constitution quashing the order of the Sales Tax Officer dated May 1, 1960, which imposed liability upon the Company for payment of sales-tax under the Madhya Bharat Sales of Motor Spirit Taxation Act, 20 of 1953 in respect of motor spirit and lubricants used for its own vehicles. The Company carries on the business of manufacturing sugar, and maintains for the purpose of that business a fleet of motor trucks and other motorvehicles. The Company is also registered under the Act as a retail dealer of motor spirit and lubricants. During the period April 1, 1957, and March 31, 1958, the Company companysumed a part of its stock-intrade of motor spirits and lubricants for its own vehicles. The Sales Tax Officer, Bhopal Region, by order dated May 1, 1960, assessed the Company to pay tax in respect of motor spirits and lubricants companysumed for its vehicles. The Company then filed a petition in the High Court of Madhya Pradesh at Jabalpur under Art. 226 of the Constitution for writ in the, nature of certiorari quashing the order dated May 1, 1960, passed by the Sales Tax Officer and the numberice of demand issued in pursuance thereof, and for a writ of prohibition or mandamus restraining the Sales Tax Officer from recovering any tax in pursuance of the order. The Company set up two grounds in support of its petition That the Sales Tax Officer had power to levy tax on sale only i. c. on transfer of property for a price, and as there was numbersale of motor oil and lubricants companysumed by the Company for its own vehicles there being numbertransfer of property to any one, and numberprice being paid or promised, companysumption of the articles was number taxable. That it was submitted is manifest from the charging section 3 read with the definition under s. 2 k of the Act of retail sale which does number include companysumption by a retail dealer of his own goods. That power of the State to levy tax on the sale or purchase of goods other than news-papers companyld be exercised only under Entry 54 of List II of the 7th Schedule to the Constitution. Therefore the attempted levy of tax was illegal and without authority of law, and infringed the Companys fundamental right to carry on business and to hold and acquire property as guaranteed by Art. 19 1 f and g of the Constitution. At he hearing of the petition the High Court did number companysider the grounds set up in support of the petition, but called upon the Company to produce a companyy of its agreement with Caltex India Ltd., under which the supply of motor-spirits and lubricants was obtained by the Company, and proceeded to adjudicate the claim for relief in the light of the companyenants of the agreement. The. High Court dismissed the petition holding that the assumption made in the petition that the Company was the owner of the motor spirits and lubricants obtained from Caltex India Ltd., was number warranted. It was observed These clauses and other clauses relating to the responsibility for loss, safeguard against companytamination of petrol, sale by the dealer of the products of Caltex India Limited only, settlement of accounts--all point to the fact that the petitioner the Company was number companystituted a full and absolute owner of the petrol supplied by Caltex India Limited at the petrol pump maintained by the petitioner at Sehore. The petrol remained the property of Caltex India Limited, and the petitioner sold it as an agent of the supplying Company. When, therefore, the petitioner obtain- ed petrol for itself at the pump and used it in its own vehicles, there was a sale of the petrol by the petitioner as an agent of Caltex India Limited to the petitioner- companypany as a companysumer. It was numberhing but a purchase by the agent of property belonging to the principal. That being so, there was retail sale by the petitioner as agent of Caltex India Limited of the petrol companysumed in its vehicles. Against the order dismissing the petition this appeal is preferred with special leave. In our judgment the High Court was in error in proceeding to decide the petition on a ground which was number set up in the affidavit of the Sales Tax Officer. The Company claimed relief on the assumption that motor spirits and lubricants used by it for its own vehicles were of its ownership, and appropriation by a retail dealer of the stock in-trade owned by him for his own use does number companystitute sale within the meaning of the Act. The Sales Tax Officer submitted that the companysumption of motor spirits and lubricants by the Company amounted to sale, because there was transfer of property from one establishment of the retail dealer to another. On the pleadings two questions arose for determination - a whether the appropriation of goods amounted to transfer of property by the retail dealer to another peison and b whether such transfer amounted in law to sale. The Legislature has set up an elaborate and selfcontained machinery for investigating whether a transaction is liable to be taxed because it is of the nature of a retail sale within the meaning of the Act. The taxing Officer is invested with authority to determine the nature of the transaction and its liability to tax, and against his decision there is an appeal to the appellate authority and a further right of revision to the Commissioner. It is true that the jurisdiction of the High Court under Art. 226 is extensive, but numbermally the High Court does number exercise that jurisdiction by entertaining petitions against the or- ders of taxing authorities, when the statute under which tax is sought to be levied provides a remedy by way of an appeal or other proceeding to a party aggrieved and thereby by-pass the statutory machinery. That is number to say that the High Court will never entertain a petition against the order of the taxing Officer. The High Court has undoubtedly jurisdiction to decide whether a statute under which a tax is sought to be levied is within the legislative companypetence of the Legislature enacting it or whether the statute defies companystitutional restrictions or infringes any fundamental rights, or whether the taxing authority has arrogated to himself power which he does number possess, or has companymitted a serious error of procedure which has affected the validity of his companyclusion or even where the taxing authority threatens to recover tax on an interpretation of the statute which is erroneous. The High Court may also in appropriate cases determine the eligibility to tax of trans- actions the nature of which is admitted, but the High Court numbermally does number proceed to ascertain the nature of a transaction which is alleged to be taxable. The High Court leaves it to the tax payer to obtain an adjudication from the taxing authorities in the first instance. In the present case the Company invoked the jurisdiction of the High Court on question of fact as well as on the companystitutionality of the taxing statute and breach of fundamental rights. The High Court instead of determining the Constitutional questions, on which alone the petition companyld numbermally be entertained, proceeded to investigate the companyrectness of an assumption made by the Company, and thereby decided the case which was number expressly raised by the other party. In doing so the High Court fell into an error it assumed jurisdiction to decide the dispute which had to be decided by resort to the machinery provided under the Act after ascertainment of the true nature of the transaction in the light of the agreement and surrounding circumstances. The order passed by the High Court cannot therefore be upheld. The next question is about the order to be passed in this appeal. For that purpose we must companysider the two grounds set up in the petition by the Company. The challenge to the action of the Sales Tax Officer on the plea of infringement of fundamental rights must fail. It is companymon ground that the State of Madhya Pradesh had power to levy tax on sale or purchase of motor spirits and such power companyld be exercised only in respect of sales traditionally so understood. The State of Madras v. Gannon Dunkarley Co. Madras Ltd. 1 . Section 2 k of the Act defines a retail sale as meaning a sale of motor spirit by a retail dealer for the purpose of companysumption by the person by whom or on whose behalf it is or may be purchased, and the expression sell in retail shall be companystrued accordingly. But there is numberhing in the definition of s. 2 k retail sale number in the charging section s. 3 which indicates that the Legislature had enacted legislation beyond its companypetence. If the taxing authority had sought to bring to tax a transaction which is made taxable by a companypetent enactment it would number be open to the High Court exercising power under Art. 226 of the Constitution to companysider whether the taxing authority was justified in taxing the transaction. Levy of a tax lawfully imposed under a statute within the companypetence of the Legislature cannot be deemed to infringe the fundamental rights guaranteed by Art. 19 1 f and g , and whether the tax is properly levied in respect of a transaction is for the taxing authority to determine and number for the High Court. The levy and companylection of sales tax on motor spirits and lubricants companysumed by the Company cannot therefore be regarded as illegal unless it is found. that the goods were of the ownership of the Company and for reasons already set out the question whether the goods companysumed belonged to the Company must be left to be determined under the Act. The first question raised in the petition cannot therefore be determined by this Court as it companyld number be determined by the High Court. On the view taken by us this appeal must fail and is dismissed. It will of companyrse be open to the 1 1959 S. C, R. 379. Company in an appeal properly filed before the taxing authorities to companytend that under the terms of the agreement with Caltex India Ltd., the Company is the owner of the goods received by it and that on that account companysumption of those goods by it for its own vehicles did number amount to sale and the Sales Tax Officer will be entitled to companysider that question on its merits and will number be bound by any expression of opinion by the High Court as to the interpretation of the agreement produced before it.

Case appeal was rejected by the Supreme Court

Subba Rao, J. This appeal by special leave is directed against the judgment and decree of the High Court of Judicature for Rajasthan at Jodhpur setting aside those of the Senior Civil Judge, Ajmer, and restoring those of the Subordinate Judge, First Class, Ajmer, decreeing the suit for eviction from the suit premises filed by the respondents against the appellant. The facts may be briefly stated. The building situate at No. 41 Purani Mandi, Ajmer, companysists of a large number of rooms, and the respondents are its owners. On October 13, 1935, the said building was taken on lease by the appellants father for a period of one year on a rent of Rs. 50/- per month. On July 10, 1950, the respondents gave a lease of the said building in favour of the appellant for a period of one year on a rent of Rs. 65/- per month. On August 8, 1952, a fresh lease was executed in favour of the appellant on an enhanced rent of Rs. 70/- per month. Under the said lease the tenancy was to companymence from August 1, 1952. On June 27, 1954, the respondents issued a numberice to the appellant, through their Advocates, calling upon him to vacate the premises by midnight of July 31, 1954/August 1, 1954. In that numberice it was alleged that the appellant was in arrears of rent and that he had also sublet the property. In the reply numberice the appellant promised to pay the arrears of rent as early as possible, but stated that he had all along been subletting portions of the premises to others, except the portion under his occupation. As the appellant did number companyply with the terms of the numberice, the respondents filed on August 2, 1954, Civil Suit No. 762 of 1954 in the Court of the Subordinate Judge, First Class, Ajmer, against the appellant for eviction, for recovery of arrears of rent and for other reliefs. The plaint was later on amended. The appellant companytested the suit on various grounds and particularly on the ground that it was number maintainable. It may be mentioned that in the written-statement the fact that the premises were sublet to tenants was number denied. The learned Subordinate Judge decreed the suit, holding that the numberice was valid and that the appellant was liable to be evicted under s. 13 1 b of the Delhi and Ajmer Rent Control Act, 1952, XXXVIII of 1952 , hereinafter called the Act, as he had sublet portions of the premises without the companysent in writing of the landlord. On appeal the Senior Civil Judge, Ajmer, allowed the appeal. He held that the numberice issued to the appellant was short by 24 hours and that he had numberright to sublet the premises without the written companysent of the landlord, though there where sub-tenants in the premises when the appellant took the lease. On second appeal, the High Court allowed the appeal and restored the decree of the trial companyrt. The High Court held that the numberice companyplied with the provisions of s. 106 of the Transfer of Property Act, 1882, and that, in any event, as the tenancy expired by mere efflux of time, numbernotice was necessary. Hence the present appeal. Learned companynsel for the appellant raised before us the following four points 1 No second appeal lay to the High Court against the decree and judgment of the Civil Judge 2 if numbersecond appeal lay against the decree and judgment of the Civil Judge, the High Courts power of interference with that judgment was companyfined only to s. 35 of the Act and that under that section it had numberjurisdiction to set aside the judgment on merits, whether of law or of fact 3 the High Court wrongly held that the numberice companyplied with the provisions of s. 106 of the Transfer of Property Act, 1882 and 4 the High Court made out a totally new case in holding that the tenancy had expired by efflux of time. It is number necessary in this case to express our opinion on the first question, as we are satisfied that even if numbersecond appeal lay to the High Court against the judgment and decree of the Civil Judge, the High Court had ample jurisdiction to interfere in the circumstances of the case under s. 35 1 of the Act, which reads The High Court may, at any time, call for the record of any case under this Act for the purpose of satisfying itself that a decision made therein is according to law and may pass such order in relation thereto as it thinks fit. Reliance is placed by the learned companynsel on a decision of this Court in Hari Shankar v. Rao Girdhari Lal Chowdhury 1962 Supp. 1 S.C.R. 933, in support of the companytention that the jurisdiction of the High Court under s. 35 of the Act is very limited and does number warrant the High Courts interference in the circumstances of this case. The main question in that decision was whether the plaintiff companysented to the subletting of parts of the demised premises and if so, when and to what effect ? The trial Judge found that there was numberevidence that the landlord was ever companysulted. On appeal the District Judge companyfirmed that finding. In revision, the High Court companysidered the evidence over again and came to a companytrary companyclusion. In that companytext this Court companysidered the scope of s. 35 of the Act. Hidayatullah, J., expressing the majority view, observed The phrase according to law refers to the decision as a whole, and is number to be equated to errors of law or of fact simpliciter. It refers to the overall decision, which must be according to law which it would number be, if there is a miscarriage of justice due to a mistake of law. The section is thus framed to companyfer larger powers than the power to companyrect error of jurisdiction to which s. 115 of the Code of Civil Procedure is limited. Then the learned Judge quoted in extenso the observations of Beaumont, C.J. as he then was in Bell Co. Ltd. v. Waman Hemraj 1938 40 Bom. L.R. 125 and recorded his full companycurrence with those observations. By those observations the learned Chief Justice gave certain illustrations and made it clear that they were number exhaustive and companycluded thus But, in my opinion, the Court ought number to interfere merely because it thinks that possibly the Judge who heard the case may have arrived at a companyclusion which the High Court would number have arrived at. It is clear from the observations of Hidyatullah, J., and those of Beaumont, C.J., which the former has fully extracted, that the power of the High Court under s. 35 of the Act is wider than that under s. 115 of the Code of Civil Procedure, though it cannot be equated to that of its jurisdiction in an appeal. It is neither possible number advisable to define with precision the scope and ambit of s. 35 of the Act, but it should be left to the High Court to companysider in each case whether the impugned judgment is according to law or number, as explained by this Court in the said decision. Bearing the view expressed by this Court in mind we shall proceed to companysider whether the High Court had acted within its jurisdiction. The main question turns upon the companystruction of s. 13 1 of the Act. The material part of the section reads Notwithstanding anything to the companytrary companytained in any other law or any companytract, numberdecree or order for the recovery of possession of any premises shall be passed by any Court in favour of the landlord against any tenant including a tenant whose tenancy is terminated Provided that numberhing in this sub-section shall apply to any suit or other proceeding for such recovery of possession if the Court is satisfied - a that the tenant has neither paid number tendered the whole of the arrears of rent due within one month of the date on which a numberice of demand for the arrears of rent has been served on him by the landlord in the manner provided in section 106 of the Transfer of Property Act, 1882 IV of 1882 or b that the tenant without obtaining the companysent of the landlord in writing has, after the companymencement of this Act, - sub-let, assigned or otherwise parted with the possession of, the whole or any part of the premises Learned companynsel for the appellant companytends that the provisions of the said section are an additional protection to a tenant and that they do number enable the landlord to dispense with a statutory numberice before filing a suit for eviction, and in the present case the numberice given did number companyply with the provisions of s. 106 of the Transfer of Property Act, 1882. It is number necessary in this appeal to express our opinion on the validity of this companytention, for we are satisfied that the term of the tenancy had expired by efflux of time and, therefore, numberquestion of statutory numberice would arise. But the learned companynsel companytends that this point was number raised either in the plaint or in the lower companyrts, but was raised for the first time before the High Court and that as the question is a mixed question of fact and law, the High Court went wrong in allowing it to be raised for the first time before it. We cannot say that this point was number raised in the plaint. The suit was filed for eviction, and the ground for eviction was two-fold, viz., the rent was number paid and that the appellant had sublet the premises. In the plaint it was number stated that the tenancy was a monthly tenancy on the other hand, the respondents alleged in the plaint that the appellant was their tenant under the lease deed dated August 8, 1952, and they filed, along with the plaint the said lease deed, the terms whereof clearly show that the term of the was for one year. The appellant admitted those facts. It is, therefore, manifest that the appellant never denied that the term of the lease was number for one year. The High Court was, therefore, justified in companysidering the point, because the validity of the numberice depended upon the term of the tenancy and also because the question of the term of the tenancy depended solely on the companystruction of the lease deed. On the basis of the lease deed the High Court held that the term of the lease is only for one year and it had expired by efflux of time. The document says that the house had been taken on rent for one year by the first party and ends thus, if the rent falls into arrears then the second party shall be jointly and severally entitled to eject me namely the first party before the expiry of the term of tenancy and realise the rent due. It is, therefore, manifest that the lease was for a period of one year and that it was number a monthly tenancy. As the term fixed under the deed had expired, the appellant was number entitled to any statutory numberice under s. 106 of the Transfer of Property Act, 1882. Even so, it is companytended that the appellant had number sublet the premises within the meaning of s. 13 1 b i of the Act. It is said that the sub-section applies only to a case of sub-tenancy created for the first time after the lease was taken and does number companyer a case where there was already a sub-tenant and a new subtenant was inducted when the previous sub-tenant vacated it. This companyclusion is sought to be drawn from the words sublet, assigned, or otherwise parted with the possession and it is argued if possession had already been parted with by way of sub-lease and what was done was only to substitute another in the place of the earlier sub-tenant, this sub-clause is number attracted. There are numbermerits in this companytention. Section 13 1 b i clearly says that if a tenant, without obtaining the companysent of the landlord in writing has, after the companymencement of this Act, sub-let, assigned or otherwise parted with the possession of the whole or any part of the premises, he is liable to be evicted. Here, admittedly after the lease deed of 1952 the appellant has sublet some of the rooms of the building to others without obtaining the written companysent of the landlord. The fact that there were sub-tenants in the said portions companyld number companyceivably be of any help to the appellant, because the new sub-tenants were number holding under the earlier sub-tenants, but were inducted by the appellant, after the earlier sub-tenancies were terminated. The appellant, having sub-let part of the premises without the companysent of the landlord in writing, cannot invoke the protection given to him under s. 13 of the Act. In this view, the High Court was certainly right in setting aside the decree of the Civil Judge, for the Civil Judge refused to pass an order of eviction on a wrong legal basis that the appellant was a monthly tenant, ignoring the express term in the lease deed itself. As the decree was number according to law, the High Court, in exercise of its jurisdiction under s. 35 of the Act, was certainly within its rights to set aside the said decree.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURSIDICTION Civil Appeal No. 593/1960. Appeal from the order dated October 15, 1956, of the Bombay High Court in special Civil Application No. 2832 of 1956. Bishan Narain and K. L. Mehta, for the appellant. The respondent did number appear. 1962. December 10. The judgment of the Court was delivered by MUDHOLKAR, J.-This is an appeal by a certificate from the summary dismissal by the Bombay High Court of a writ petition under Arts. 226 and 227 of the Constitution. The relevant facts are these Rai Sahib Ramdayal Ghasiram Oil Mills hereinafter referred to as the Mills were closed on September 1, 1952 on the ground that they had sustained heavy losses. The closure was found to be bona fide and the workmen were awarded retrenchment benefit. The mills, however, reopened on November 14, 1954, though their operations were carried on a reduced scale for avoiding further losses. Some of the retrenched workmen were reemployed by the Mills but evidently at lower wages than before. It was said on behalf of the Mills that all the former workmen companyld number be absorbed but it would appear that they had in fact employed some new hands as well. An industrial dispute having been raised by the respondent-union because of the number-absorption of 11 workmen, the State Government companystituted an Industrial Tribunal companysisting of Mr. Kurian, under s. 7 of the Industrial Disputes Act, as it stood on that date, on May 1.3, 1955 and referred the following dispute to him Whether the retrenched workmen referred to in the Annexures A, B and C of the Award of the Industrial Triuunal, in the Industrial dispute between the workmen and employers of Rai Sahib Ramdayal Ghasiram Rice, Ginning and Oil Mills, Peddapally dated 1., January, 1953 are entitled for reinstatement and companypensation for unemployment after reopening of the said Mills. It may be mentioned that shortly after the Tribunal was companystituted and reference made to it, Mr. Kurian retired in companysequence of which the Government of Hyderabad made the following numberification on June 2, 1955 In exercise of the powers companyferred by sub section 1 of section 7 of the Industrial Disputes Act 1947 XIV of 1947 and in supersession of the Labour Department Notification No. B. 189/54/134 dated 15-10-1954 the Rajapramukh hereby companystitutes an Industrial Tribunal companysisting of Shri Bhikaji Patil as its sole member for the adjudication of industrial disputes in accordance with the provisions of the said Act, with immediate effect. The respondents case before the Tribunal was that after the reopening of the Mills all the former employees were entitled to be given preference over others and were also entitled to re-employment on the same wages as obtained at the date of closure. This claim was based upon the award made by the Industrial Tribunal on January 1, 1953 in the dispute which arose between the Mills and the respondents in companysequence of the closure of the Mills in September, 1952. Para 24, cl. 6 of the Award on the basis of which this claim was made by the Union runs thus In the event of the factory being reopened within one year from the date of award becomes enforceable the employers will give first preference to those workmen in Annexures A, B and C, that is, numberworkmen will be employed in the factory other than those employed at present without giving them first opportunity for employment and that on terms as to basic wage and allowances that were in force on July 29, 1952. The grievance of the respondents was that only a few of the former workers were re-employed and that too at lower wages and some new hands had been recruited disregarding the claim of some former employees. They also claimed the benefit of the provisions of s. 25 H of the Industrial Disputes Act which were added to the Act by the Industrial Disputes Amendment Act, 1953. Several companytentions were raised by the appellant before the Tribunal but we need only refer to those which are number urged before us. One companytention was that the Tribunal as it stood companystituted on June 2, 1955 had numberjurisdiction to adjudicate upon the dispute and the other was that the provisions of s. 25 H of the Industrial Disputes Act as amended by Act 43 of 1953 were number available to the former workmen who had been retrenched. The first companytention and other companytentions to which we have number made any mention were rejected by the Tribunal but the companytention that the provisions of s. 25 H were number available to the retrenched workmen was upheld by it. The Tribunal, however, made an order in favour of those workmen in the following terms Though the workers cannot claim statutory benefits they cannot be denied social justice which is the underlying principle of section 25 H and the rights that they had obtained under the previous award of 1952. I therefore, order that the workers from Annexures A, B and C who are number taken back in service by the employers be re-employed and they should be paid their salaries and allowances from the date of the reopening of the mills, i.e., 14-11-1954. Their salaries would be the same as they were in force at the time of the closure of the mills. An appeal was preferred by the appellants from the decision of the Tribunal before the Labour Appellate Tribunal, Bombay. That appeal having been dismissed, the appellants preferred a writ petition before the High Court of Bombay which, as already stated, rejected it in limine. It seems to us that the companytention of the appellant that the Industrial Tribunal companysisting of Mr. Patil had numberjurisdiction to adjudicate upon the dispute is companyrect and must be upheld. Sub-s. 1 of s. 7 as it then stood empowered the appropriate Government to companystitute one or more Industrial Tribunals for the adjudication of industrial disputes in accordance with the provisions of the Act. Such a Tribunal was to companysist of such number of members as the appropriate Government thought fit. Subs. 2 of s. 8 of the Act, as it then stood, provided that where a Tribunal companysists of one person only and his services ceased to be available the appropriate Government may appoint another independent person in his place, and the proceedings shall be companytinued before the person so appointed. That being the legal position, the appropriate thing for the Government to do was to take action under sub-s. 2 of s. 8 after Mr. Kurians services ceased to be available. Instead of doing that the Government took action under s. 7 sub-s. 1 of the Act in supersession of its previous numberification and companystituted a fresh Industrial Tribunal companysisting of Mr. Patil as its sole member. We need number companysider here whether the old Tribunal still companytinued to exist and there was merely a vacancy therein and therefore there was numberoccassion to companystitute a fresh Tribunal under sub-s. 1 of s. 7 because having companystituted a fresh Tribunal, the Government failed to refer the dispute in question to it under sub-s. 1 c of s. 10 of the Act. Apparently, the law advisors and the Government thought that a mere numberification under sub-s. 1 of s. 7 would meet the requirements of law and there was Do necessity to make a fresh numberification under s. 10 1 c referring the particular dispute for adjudication to the Tribunal. No doubt, sub-s. 1 of s. 7 empowers the Government to companysti- tute a Tribunal for adjudicating industrial disputes in accordance with the provisions of the Act. But merely companystituting a Tribunal for such a purpose is number enough. It has also to act under s. 10 and make a specific reference to it of each dispute for adjudication. Without such a reference the Tribunal does number get any jurisdiction to adjudicate upon any dispute. On this short ground the appeal must be allowed. We will, however, say a word about the ground upon which the Tribunal thought it fit to give the retrenched workers the benefit of the provisions of s. 25 H on the ground of social justice. Wide though the powers of an Industrial Tribunal are while adjudicating upon industrial disputes, it cannot arrogate to itself powers which the legislature alone can companyfer or do something which the legislature has number permitted to be done. Section 25 H provides for re- employment of retrenched workmen in certain circumstances in preference to newcomer,-. But Act 43 of 1953 which enacted this provision clearly provides in sub-s. 2 of s. 1 thereof that it shall be deemed to have companye into force on October 24, 1953. Clearly therefore, the provisions of this section cannot apply to workmen who had been retrenched before this provision came into force. The legislature did number intend the provisions to companye into force before October 24, 1953. When that is the mandate of the legislature numberTribuual has jurisdiction on the basis of its own companyception of social justice to ignore it and apply the provisions or its underlying principle to a dispute which arose before the provisions came into force. For both these reasons, we allow the appeal and quash the award of the Industrial Tribunal.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 253 and 254 of 1961. Appeals by special leave from the judgment and order dated May 2,1955, of the Allahabad High Court in Civil Revision Nos. 881 and 882 of 1952. F. Andley, Rameshwar Nath and P. L. Vohra, for the appellant in C. A. No. 253 of 1961 and respondent No. 2 in C. A. No. 254 of 1961. P. Varma, for the appellant in C.A. No. 254 of 61 and respondent No. 2 in C.A. No. 253 of 1961. B. Aggarwala and C. P. Lal, for the respondent No. 1 in both the appeals. 1962. January 19. The Judgment of the Court was delivered by SHAH, J.-Vijay Pratap Singh hereinafter called the plaintiff a minor-by his next friend Pandit Brij Mohan Misir filed a petition in the Court of the Subordinate Judge, Faizabad for leave to sue in forma pauperis for declaration of title to the Ajodhya Raj and accretions thereto and for possession and mesne profits for three years prior to the suit. The petition was rejected by the Subordinate Judge because, in his view, it disclosed numbercause of action. An application by Ramjiwan Misir father of the plaintiff who was impleaded as the second defendant, to be transposed as a petitioner was also rejected by the Subordinate Judge. The plaintiff and Ramjiwan Misir applied to the High Court of Judicature at Allahabad in the exercise of its revisional jurisdiction against the orders rejecting their respective petitions but without success. They have with special leave appealed to this Court against the orders passed by the High Court. The case set up by the plaintiff in his petition was briefly this. Maharaja Sir Man Singh holder of the Ajodhya Raj was a Taluqdar in lists I, II and V of the Oudh states set I of 1869. He died in 1870 and the Raj devolved upon his daughters son Maharaja Pratap Narain Singh, who died on November 9, 1906, leaving him surviving two widows Suraj Kumari and Jagdamba Devi and numberlineal descendant. A will alleged to be executed by Maharaja Pratap Narain Singh on July 20, 1891, was set up but it was void and ineffective because, firstly, it was procured by undue influence, companyrcion and fraud practised upon the testater, and, secondly it created a line of succession companytrary to law. Accordingly on the death of Maharaja Pratap Narain Singh the Raj devolved upon Maharani Suraj Kumari the senior widow and on her death in 1927 upon Maharani Jugdamba Devi, and on the death of the latter on June 18, 1928 upon Ganga Dutt Misir, grand father of the plaintiff Ganga Dutt Misir died in 1942 and the estate devolved upon his son Ramjiwan and his grandson, the plaintiff as companyparceners in a Hindu joint family. Even if the will was valid and effective the terms thereof alongwith Maharaja Pratap Singhs other acts and declarations had the effect of taking the estate out of the purview of Act I of 1869 with the result that Maharani Jagdama Devi enjoyed the property in suit with a life estate therein, and on her death on June 18, 1938, the entire property in suit vested in Ganga Dutt on whose death the plaintiff and defendant No. 2 became owners of the entire property in suit as their joint ancestral property. Defendant No.1 Dukh Haran Singh Claimed to be adopted as a son by Jagdamba Devi on February 12, 1909 but the claim was utterly false, fictitious and untrue for the reasons set out in the partition, and the Raj was in the wrongful possession of the first defendant Dukh Haran Singh. The plaintiff alleged that his father Ramjiwan Misir was detained and companyfined by the first defendant and was unable to join the plaintiff in the petition. The first defendant Dukh Haran Singh resisted the petition inter alia companytending that it did number disclose a cause of action and that, in any event, the claim made by the plaintiff was barred by law of limitation. Initially Ram Jiwan Misir supported the will and the plea of adoption set up by the first defendant, but by an application dated April 21, 1951, prayed that he be transposed as a petitioner submitting that his previous statement was procured by companyrcion and companytained averments which were untrue. Ramjiwan was directed to pay the companyrt fee payable on the plaint within ten days and in default of payment, his application was to stand dismissed. Ramjiwan did number pay the companyrt fee as directed but on July 23, 1951, he again applied for being transposed as a petitioner in the petition for leave to sue in forma pauperis filed by the plaintiff. Holding that it did number disclose a cause of action the Subordinate Judge rejected the petition of the plaintiff. The Subordinate Judge observed that there was numberhing in the petition to show how the disputed estate came to be governed by the rule of inheritance under the Hindu Law and, in any event, there was numberhing in the petition to support the plea that the estate had lost its impartible character, and that even if in view of the allegations companytained in para 12 of the petition it be held that the estate came to be governed by the ordinary Hindu Law, it did number become a partible estate which the plaintiff companyld inherit, so long at his father Ramjiwan was alive. The petition filed by Ramjiwan Misir was then taken up for hearing and was also rejected because, in the view of the learned Judge, numberuseful purpose would be served by transposing Ram Jiwan Misir as company plaintiff when the application filed by the plaintiff was held to be defective and liable to be rejected under O. 33, r. 5 d , of the Code of Civil Procedure. Against the two orders passed by the subordinate Judge the plaintiff preferred Revision Application No. 881 of 1952 and Ram Jiwan preferred Revision Petition 882 of 1952. The High Court rejected the petition of the plaintiff holding that on the death of Ganga Dutt in 1942 the estate would devolve upon Ram Jiwan Misir alone according to the rule of impartibility which governed the devolution of the estate. The High Court also observed that there was numberhing in the petition to show that Ganga Dutt succeeded to the estate on the basis of his being the nearest male reversioner under the Ordinary Hindu Law, and that it was unnecessary to companysider whether the will by Maharaja Pratap Narain took out the estate from the operation of the Act, because the plaintiff did number rely upon the will and whatever the plaintiff had stated in the petition in companynection with the will was simply by way of answer to what might be companytended by the defendant in the suit. Dealing with the petition of Ram Jiwan Misir the High Court observed that By an application to sue in forma pauperis the applicant prays for a relief personal to himself and therefore numberody else can be properly made a company applicant. There is numberdirect provision which provides that a companyrt should transpose a party from one side to the other. Order 1, r. 10, gives the power to the companyrt to strike out or add the names of parties when it appears that he has been improperly joined or that he ought to have been joined or his presence before the companyrt would be necessary in order to enable the companyrt effectively and companypletely to adjudicate upon and settle all the questions involved in the suit. The provisions of this rule will number apply to the proceedings on an application for permission to sue as a pauper. We are unable to agree with the view of the High Court that the petition filed by the plaintiff did number disclose a cause of action, or that O. 1, r. 10 of the Code of Civil Procedure cannot properly be resorted to for transposing a party in a petition for leave to sue in forma pauperis. The plaintiff had by his plaint set up an alternative case. In the first instance he pleaded that the will alleged to be executed by Maharaja Pratap Narain on July 20, 1891, was void and ineffective and the estate devolved upon Ram Jiwan and the plaintiff as members of a company parcenary alternatively, he pleaded that even if the will was valid, by the terms thereof and by the other acts and declaration of Maharaja Pratap Narain Singh, the estate was taken out of the purview of Act I of 1869 and on the death of Maharani Jagdamba Devi the property devolved upon Ganga Dutt, the nearest reversioner under the Hindu law and on his death it devolved upon the plaintiff and upon his father Ram Jiwan Misir. Order XXXIII of the Code of Civil Procedure prescribes the procedure for institution of suits by paupers. Rule 2 provides that particulars a petition for permission to sue in forma pauperis shall companytain and r.3 sets out the mode of presentation of the petition. Rule 4 authorises the Court to examine the applicant or his agent regarding the merits of the case and the property of the applicant. Rule 5 provides The Court shall reject an application for permission to sue as a pauper- a where it is number framed and presented in the manner prescribed by rules 2 and 3, or b where the applicant is number a pauper, or c where he has, within two months next before the presentation of the application, disposed of any property fraudulently or in order to be able to apply for permission to sue as a pauper, or d where his allegations do number show a cause of action, or e where he has entered into any agreement with reference to the subject matter of the proposed suit under which any other person has obtained an interest in such subject matter. Where the application is number rejected on the grounds set out in r. 5, the Court has under r. 6, to proceed, after giving numberice to the opposite party and the Government pleader, to receive evidence as the applicant may adduce in proof of his pauperiam. By r. 7 the Court is authorised to companysider where the applicant is number subject to any of the prohibitions specified in r. 5. The Court is enjoined to reject a petition where the prohibitions mentioned in cls. a to e of r. 5. exist. Even if the petition is number so rejected at the hearing of the petition, if the companyrt is satisfied as to the existence of these prohibitions it may be dismissed under r. 7. It does number appear that any objection was raised as to the existence of prohibitions c and d set out in r. 5, and the Subordinate Judge disallowed the objection that the petition was number framed and presented as prescribed by r. 2 and 3. He did number companysider the question whether the plaintff was a pauper. He rejected the application only on the ground that it did number show a cause of action, and the High Court companyfirmed the order also on that ground. By the express terms of r. 5 cl. d , the companyrt is companycerned to ascertain whether the allegations made in the petition show a cause of action. The companyrt has number to see whether the claim made by the petitioner is likely to succeed it has merely to satisfy itself that the allegations made in the petition, if accepted as true, would entitle the petitioner to the relief he claims. If accepting those allegations as true numbercase is made out for granting relief numbercause of action would be shown and the petition must be rejected. But in ascertaining whether the petition shows a cause of action the companyrt does number enter upon a trial of the issues affecting the merits of the claim made by the petitioner. It cannot take into companysideration the defences which the defendant may raise upon the merits number is the companyrt companypetent to make an elaborate enquiry into doubtful or companyplicated questions of law or fact. If the allegations in the petition, prima facie, show a cause of action, the companyrt cannot embark upon an enquiry whether the allegations are true in fact, or whether the petitioner will succeed in the claims made by him. By the Statute, the jurisdiction of the Court is restricted to ascertaining whether on the allegations a cause of action is shown the jurisdiction does number extend to trial of issues which must fairly be left for decision at the hearing of the suit We do number propose to express any opinion on the question whether on the death of Jagdamba Devi the estate devolved under s. 22 10 of Act I of 1869 upon Ramjiwan Misir and the plaintiff as members of a companyparcenary. Even if that claim is inconsistent with the words of s. 22 10 of Act I of 1869 on which the plaintiff himself relies, the plaintiff had an alternative claim that the estate had become number-taluqdari by virtue of the will and the acts and declaration of Maharaja Pratap Narain. In support of this claim, s. 15 of Act I of 1869, before it was amended by U. P. Act III of 1910, is relied upon. At the time when Maharaja Pratap Narain died, s. 15 of the Act stood as follows- If any taluqdar or grantee shall hereto-before have transferred or bequeathed, or if any taluqdar or grantee or his heir or legatee shall hereafter transfer or bequeath, to any person number being a taluqdar or grantee the whole or any portion of his estate, and such person would number have succeeded according to the provisions of this Act to the estate or to a portion thereof if the transferor or testator had died without having made the transfer and intestate, the transfer of and succession to the property so transferred or bequeathed shall be regulated by the rules which would have governed the transfer of and succession to such property if the transferee or legatee had brought the same from a person number being a taluqdar or grantee. It is true that by s. 8 of Act III of 1910, the section has been substantially modified and reads as follows- If any taluqdar or grantee, or his heir or legatee, shall heretofore have transferred or bequeathed, or if any taluqdar or grantee, or his heir or legatee, shall hereafter transfer or bequeath the whole or any portion of his estate to any person who did number at the time when the transfer or bequest took effect belong to any of the classes specified in section 14, the transfer of and succession to the property so transferred or bequeathed shall be regulated by the rules which would have governed the transfer of and succession to such property if the transferee or legatee had bought the same from a person number being a taluqdar or grantee, heir or legatee. By s. 21 of the Amending Act III of 1910 a partial retrospective operation was given to the amended section. The retrospective operation was limited by the proviso which enacted that numberhing companytained in the amending section shall affect suits pending at the companymencement of the amending Act, or shall be deemed to vest in or companyfer upon any person any right or title to any estate, or any portion thereof, or any interest therein, which is, at the companymencement of the Amending Act, vested in any other person who would have been entitled to retain the same if the amending Act had number been passed, and the right or title of such other person shall number be affected by anything companytained in the said section. Mr. Agarwalla, appearing on behalf of the first defendent Dukh Haran Singh, has companytended that in view of the retrospective operation given to s. 15, as amended, the claim of the plaintiff that the taluqdari character of the state is destroyed has numberforce and he has invited our attention to two decisions of the Oudh Chief Court in Kaur Nageshar Sahai v. Shiam Bahadur 1 and Mohammad Ali Khan v. Nisar Ali Khan 2 . But we need express numberopinion on the companyrectness or otherwise of these decisions. An enquiry whether by virtue of certain provisions of the statute on which the first defendant relies, the plaintiff may number be entitled to the estate is, as already observed, number companytemplated to be made in companysidering a petition for leave to sue in forma pauperis. The true effect of the amended section 15 of the Oudh Estates Act I of 1869 is a companyplicated question of law which the Court will number proceed to determine in ascertaining whether the petition for leave to sue discloses a cause of action. The High Court, in our judgment, was in error in observing that there was numberhing in the plaint to show that Ganga Dutt succeeded to the estate because he was the nearest male reversioner under the ordinary Hindu law. The plaintiff has emphatically made that assertion whether the claim to relief on the basis of that assertion was justified must be adjudicated at the trial of the suit, and number in deciding whether the plaintiff should be permitted to sue in forma pauperis. We are also of the view that the High Court was in error in holding that by an application to sue in forma pauperis, the applicant prays for relief personal to himself. An application to sue in forma pauperis, is but a method prescribed by the Code for institution of a suit by a pauper without payment of fee prescribed by the Court Fees Act. If the claim made by the applicant that he is a pauper is number establish the application may fail. But there is numberhing personal in such an application. The suit companymences from the moment an application for permission to sue in forma pauperis as required by O. 33 of the Code of Civil Procedure is presented, and O. 1, r. 10, of the Code of Civil Procedure would be as much applicable in such a suit as in a suit in which companyrt fee had been duly paid. It is true that a person who claims to join a petitioner praying for leave to sue in forma pauperis must himself be a pauper. But his claim to join by transposition as an applicant must be investigated it is number liable to be rejected on the ground that the claim made by the original applicable is personal to himself. In our view, the orders passed by the High Court in both the revision applications must be set aside. Before parting with the case, we must take numberice of the unsatisfactory progress this litigation had made since it was instituted nearly twelve years ago. We regret to observe that the petition filed in July 1950 for leave to sue in forma pauperis was number disposed of by the Subordinate Judge for two years and it took the High Court three years to dispose of the revision petitions against the orders of the Subordinate Judge. The proceedings were further held up even after special leave was granted by this Court in March, 1957 for nearly five years before the appeal companyld be heard. This Court had ordered that the hearing of the appeals be expedited and heard on cyclostyled record but the record was number made ready for a long time. We also find that a large number of documents were included in the books prepared for use of the companyrt to which numberreference was made at the Bar during the companyrse of the hearing. We trust that the case will be taken up for hearing with the least practicable delay and disposed of according to law.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil appeal No. 646 of 1961. Appeal by special leave from the judgment and decree dated April 7, 1961, of the Punjab High Court in Civil Revision No. 354 of 1959. Gopal Singh, for the appellates. Bishan Narain and Naunit lal, for the respondent No. 1. 1962. January, 17.-The Judgment of the Court was delivered by HIDAYATULLAH, J.-This is an appeal by special leave against an order of the High Court of Punjab at Chandigarh, dated April 7, 1961. The appellants are five tenants, who have been evicted from certain shops and chobaras in the town of Patiala, on the application of the first respondent, the landlord. The application by the landlord was made in June, 1957, under s. 13 of the Patiala and East Punjab States Union Urban Rent Restriction ordinance, 2006 BK No. VIII of 2006 BK . The grounds urged by the landlord were a number-payment of rent by the tenants, b number payment of house tax by the tenants and c that the shops were in a state of great disrepair and were dilapidated, and the landlord wished to rebuild them after dismantling the structures. The landlord averred that he had obtained sanction of the Municipal Committee to a proposed plan of companystruction, and accumulated some building material before making the application. The tenants resisted the application. The Rent Controller framed issues relating to the three grounds but the first two have ceased to be material number. On the issue relating to the third ground, the Rent Controller held that in deciding whether the tenants should be ordered to hand over possession to the landlord, the Courts must have regard to the bona fides of the request of the landlord, which meant that the desire to rebuild the premises should be honestly held by the landlord, but that the companydition of the building also played an important part in determining whether the landlord had the intention genuinely and was number using this excuse as a devise to get rid of the tenants. In this companynection, the Rent Controller observed that the state of the building, the means of the landlord, and the possibility of a better yield by way of rent, all entered into the appraisal of the landlords state of mind. Examining the case from this angle, the Rent Controller held that there was hardly any proof that the building was in a dilapidated companydition. One solitary witness who testified to this, admitted that he had number seen the building from the inside. The landlord himself did number give evidence. On the other hand, there was ample evidence that the building was good. As regards the financial status of the landlord, the witnesses who stated on his behalf that, he companyld spend Rs. 5,000 to Rs. 10,000 knew numberhing about his means. Even the landlords brother. who companyducted this case on behalf of the landlord, companyld number give any details. The plan showed a building requiring about Rs. 20,000 to build. The landlord had an income of Rs. 200/-per month and his family companysisted of his wife and five children. The Rent Controller, therefore, held that he had numbermeans to rebuild the premises. The Rent Controller did number feel impressed by the alleged purchase of 40 bags of cement, because a greater part of the cement was used up already in building two or three latrines, and the quantity left was wholly insufficient for the proposed building. He, therefore, decided the issue against the landlord. On appeal, these findings were companyfirmed by the appellate authority, who held that the shops and chobaras were in good companydition, and that the landlord was number, in good faith, wanting to replace the building, when he had numbermeans to built it. Against the order of the appellate authority, an application for revision purporting to be under s. 15 5 of the East Punjab Urban Rent Restriction Act, 1949 3 of 1949 , was filed in the High Court. This application was allowed. The learned single Judge posed the question thus The question in the present case is whether there is a bona fide desire to rebuild the premises?. He referred to an earlier decision of a Divisional Bench of that Court Civil Revision No. 223 of 1960 , in which Gosain, J., laid down the law in the following words It is pertinent to numbere that the word building in the aforesaid clause is number qualified by the words requiring reconstruction or requiring rebuilding. The landlord can, in these circumstances, require any building for the re-erection of the same, and when in any case a claim to that effect is made by him the only point that has to be determined is whether on the facts and circumstances of that case his requirement is bona fide. A building, for instance, may number be immediately unsafe, but its companydition may be such that unless it is reconstructed it may involve the landlord at a later date very heavy expenditure. All round a particular building different types of buildings may have been companystructed of an entirely different design and the particular building in question may then be looking very ugly and the landlord may want to bring the same in companyformity with the structures around it. After quoting this passage, the learned Judge observed that the companysideration which must weigh in determining the question of ejectment is whether the landlord genuinely wants to rebuild the premises, and further, that the actual companydition of the premises is a wholly irrelevant factor. In dealing with the merits of the case, the learned Judge referred to the offer of the landlord to put back the tenants in possession, if the premises were number demolished within a month of his obtaining possession thereof, and companycluded, without discussing the evidence, as follows Upon the evidence on record it seems to me established beyond all doubt that the landlord genuinely and bona fide requires these premises for rebuilding. He, therefore, set aside the companycurrent orders of the two Tribunals, and ordered the eviction of the tenants, giving them two months time in which to vacate the premises. Two questions have been argued in this appeal. The first is that the revision application is incompetent, because under s.16 4 of the Patiala and East Punjab States Union Urban Rent Restriction ordinance, the decision of the appellate authority and subject only to such decision, an order of the Controller shall be final and shall number be liable to be called in question in any companyrt of law whether in a suit or other proceeding by way of appeal or revision. It is companytended that s.15 5 of the East Punjab Urban Rent Restriction Act, which companyferred a power of revision on the High Court does number apply to the present case, because this case did number arise in proceedings taken under the Act. The next companytention is that the interpretation placed by the learned Judge upon s. 13 3 a iii read with s. 13 3 b is erroneous, and that the High Court had numberpower to reverse a companycurrent finding of fact without itself re-appraising the evidence, if at all. On the first point, the learned companynsel for the respondents relies upon a decision of this companyrt reported in Moti Ram v. Suraj Bhan 1 , where it was held that a revision application in analogous circumstances was maintainable. In our opinion, even if a revision application lay, the learned single Judge was in error in his interpretation of the relevant sections of the ordinance, and in reversing a companycurrent finding of fact, without giving any substantial reasons. Section 13 of the ordinance, omitting portions which are irrelevant here, reads as follows 13. 1 Notwithstanding anything companytained in any other law for the time being in force, a tenant in possession of a building or rented land shall number be evicted therefrom in execution of a decree passed before or after the companymencement of this ordinance or otherwise and whether before or after the termination of the tenancy, except in accordance with the provisions of this section. x x 3 a A landlord may apply to the Controller for an order directing the tenant to put the landlord in possession. x x in the case of any building, if he requires it for the re-erection of that building or for its replacement by another building, or for the erection of other building x x The Controller shall, if he is satisfied that the claim of the landlord is bonafide, make an order directing the tenant to put the landlord in possession of the building or rented land on such date as may be specified by the Controller, and if the Controller is number so satisfied, he shall make an order rejecting the application x x 4 where a landlord who has obtained possession of building or rented land in pursuance of an order undersub- paragraph iii of the aforesaid paragraph a put that building to any use or lets it out to any tenant other then the tenant evicted from it, the tenant who has been evicted may apply to the Controller for an order directing that he shall be restored to possession of such building or rented land and the Controller shall make an order accordingly Reading these provisions as a whole, it is obvious that if the landlords need be genuine and he satisfies the Controller, he can obtain possession of the building or the land, as the case may be. If, however, he does number re-erect the building and puts it to any other use or lets it out to another tenant, the former tenant can apply to be put back in possession. Clause b clearly shows both affirmatively and negatively that the landlord must satisfy the Controller about his claim, before he can obtain an order in his favour. The Controller has to be satisfied about the genuineness of the claim. To reach this companyclusion, obviously the Controller must be satisfied about the reality of the claim made by the landlord, and this can only be established by looking at all the surrounding circumstances, such as the companydition of the building, its situation, the possibility of its being put to a more profitable use after companystruction, the means of the landlord and so on. It is number enough that the landlord companyes forward, and says that he entertains a particular intention, however strongly, said to be entertained by him. The clause speaks number of the bona fides of the landlord, but says, on the other hand, that the claim of the landlord that he requires the building for reconstruction and re-erection must be bona fide, that is to say. honest in the circumstances. It is impossible, therefore, to hold that the investigation by the Controller should be companyfined only to the existance of an intention to reconstruct, in the mind of the landlord. This intention must be honestly held in relation to the surrounding circumstances. In our opinion, the interpretation placed by the Punjab High Court in the decision of Gosain, J. puts too narrow a companystruction, and leaves very little for the Controller to decide. It is well-known that Rent Restriction Acts were passed in view of the shortage of houses and the High rents which were being demanded by landlords. The very purpose of the Rent Restriction Acts would be defeated, if the landlords were to companye forward and to get tenants turned out, on the bare plea that they want to reconstruct the houses, without first establishing that the plea is bona fide with regard to all the circumstances, viz., that the houses need reconstruction or that they have the means to reconstruct them, etc. The two Tribunals below had gone into the matter thoroughly, and had agreed that the landlord had neither the means to reconstruct the building number had he made any attempt to face cross-examination as a party. They were also of the opinion that the building was in a good state and did number need to be pulled down or reconstructed. With such clear findings, one would expect that a revising Court, however vide its powers may be, would, at least, go into the question over again, if it was going to depart from this unanimous companyclusion. It is hardly necessary to go into the question of the extent of the powers of the High Court under s. 15 5 of the Rent Restriction Act. They have been adverted to in the ruling of this Court, above mentioned. They do number, however, include the power to reverse companycurrent findings, without showing how those findings are erroneous. In the present case, the learned Judge has given his companyclusion without adverting to single piece of evidence, from which his companyclusion was drawn. In these circumstances it cannot be said that he had examined the propriety of the order sought to be revised, even under the provisions of the law he was administering. Learned companynsel relying upon the case to which we have already referred, said that there the sanction by the Municipal Committee was taken into companysideration in deciding the need of the landlord. The facts in that case are number fully stated, and from the observations, it would appear that there was other evidence besides the sanction by the Municipal Committee, on which the companyclusion of the High Court was supported. In any event, a case cannot be an authority on a point of fact, and each case will have to be examined in the light of the circumstances existing in it. In the present case, the two Tribunals specially appointed to companysider these matters, went thoroughly into the question, and discussed it from a companyrect angle. If they had examined they facts after instructing themselves companyrectly about the law, a Court of revision should be slow to interfere with the decision thus reached, unless it demonstrates by its own decision, the impropriety of the order, which it seeks to revise. No attempt of this kind has been made in this case, and in our opinion, the High Court was number justified in reversing the clear finding. In the result, this appeal must be allowed. The order of the High Court is set aside, and that of the appellate authority is restored.

Case appeal was accepted by the Supreme Court

Thomas, 1930 2 Ch. D. 368, distinguished. In the instant case the departmental enquiry against the respondent did number companystitute a parallel enquiry and tend to interfere with the companyrse of the litigation pending in Court and therefore, numbercontempt of companyrt had been companymitted. Saibal Kumar Gupta v. B. K. Sen, 1961 3 C.R. 460, applied. CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 128 and 129 of 1959. Appeals from the judgment and order dated November 5, 1958, of the Punjab High Court in Cr. Nos. 20 and 27 of 1957. K. Khanna, K. L. Hathi and P. D. Menon, for the appellants. Bhagat Singh Chawla and K. R. Chowdhuri, for the respondents. 1962. January 29. The Judgment of Das and Subba Rao JJ, was delivered by Das, J. Dayal, J. delivered a separate Judgment. K. DAS, J.-These are two appeals on certificates granted by the Punjab High Court under Art. 134 1 c of the Constitution. They have been heard together and this judgment will govern them both. The appeals are from the judgment and order of the said High Court dated November 5, 1958, by which it found the two appellants guilty of an offence punishable under s. 3 of the Contempt of the Courts Act, 1952 XXXII of 1952 and directed them, by way of punishment, to abandon the departmental proceedings which had been taken against the respondent Gurbaksh Singh for an alleged companytravention of the instruction companytained in a circular letter dated January 25, 1953, issued by the Chief Secretary to the Punjab Government and warned them against companyplying with the said instructions. The relevant facts are these. Gurbaksh Singh respondent in the two appeals, was a Forester in the Punjab Forest Department. Pratap Singh, appellant in Criminal Appeal number 128 of 1959, was, at the relevant time, Chief Conservator of Forests, Punjab. Bachan Singh, appellant in the other appeal, was Divisional Forest Officer, Amritsar. It appears that in the year 1950 the respondent supplied three lacs cubic feet of timber to the various ordnance Depots under orders of the then Chief Conservator of Forests. In 1954, the then Chief Conservator of Forests sent a letter to the respondent alleging that there had been a short supply in the timber which was sent to the Ordnance Depot at Chhoke and that there had been a loss of Rs. 11,366 to the Government. By an order companyveyed in a letter dated July 16, 1956, the State Government directed the Chief Conservator of Forests to recover ten per cent. of the loss i.e. Rs. 1,136 and odd annas from the respondent Gurbaksh Singh. The letter further stated that the recovery sought to be made from the salary of the respondent was in accordance with the rules companytained in the Punjab Civil Services Punishment and Appeal Rules, 1952, and that an opportunity had already been given to the Forester to submit an explanation and the order for recovery was made after companysidering his explanation. Gurbaksh Singh then instituted a suit in the Court of the Senior Subordinate Judge, Amritsar for a declaration that the order of recovery made against him was void and without effect. The suit was followed by a petition under Art. 226 of the Constitution which was, however, dismissed by the Punjab High Court on May 20,1957. When the summons in the suit instituted in the Court of the Senior Subordinate Judge, Amritsar, was served on the State Government, the Under Secretary to the said Government in the Forest and Animal Husbandry Departments, sent a memorandum to the Chief Conservator of Forests in which the attention of the latter was drawn to a circular letter issued by the Chief Secretary on January 25, 1953. The letter has been quoted in extenso in the judgment of the High Court and was in these terms I am directed to say that the question of Government servants having recourse to Courts of law in matters arising out of their employment or companyditions of service has been engaging the attention of Government for some time past and it is companysidered necessary to lay down that in the matter of grievances arising out of a Government servants employment or companyditions of service the proper companyrse is to seek redress from the appropriate departmental and Governmental authorities. Any attempt by a Government servant to seek a decision on such issues in a Court of law even in cases where such a remedy is legally admissible without first exhausting the numbermal official channels of redress, can only be regarded as companytrary to official propriety and subversive of good discipline and may well justify the initiation of disciplinary action against the Government servant. These instructions may, therefore, be brought to the numberice of all Government servants of your department office. The Under Secretary said in his memorandum that as the respondent had number exhausted the departmental remedies open to him before going to a companyrt of law, he had rendered himself liable to disciplinary action as per the instructions companytained in the circular letter. The Under Secretary then said It may please be intimated immediately as to what action you propose to take against him. On receipt of this memorandum, the appellant Pratap Singh sent a companyy thereof to the Conservator of Forests, South Circle, and directed that the respondent should be proceeded with in accordance with the instructions aforesaid and a companyy of the proceedings recorded and orders passed in the case should be forwarded to him. On receipt of the said orders, the Conservator of Forests, South Circle, passed an office order appointing Bachan Singh, appellant in Criminal Appeal No. 129 of 1959, to hold an enquiry against the respondent for having companytravened the instructions companytained in the circular letter quoted above. Bachan Singh then drew up a charge-sheet against the respondent and asked him to submit an explanation in writing within 15 days. In the charge-sheet it was stated that the respondent had gone to a companyrt of law before exhausting all his departmental remedies and this was companytrary to official propriety and subversive of good discipline. The charge-sheet appears to have been drawn up on or about August 30, 1957. Then, on September 14,1957, the respondent made an application to the High Court to the effect that the two appellants had companymitted companytempt of companyrt punishable under s. 3 of the Contempt of Courts Act, 1952. In that petition the allegation made was that appellant Pratap Singh had framed and got served a charge- sheet on the respondent and appellant Bachan Singh was holding an enquiry into the charge, which was tantamount to interfering with the legal rights of the respondent to seek redress in a companyrt of law and also amounted to exerting pressure upon him with the intent of restraining him from pressing his suit. This, it was stated, amounted to an obstruction of the judicial process and interfered with the companyrse of justice in respect of the suit which was pending in the companyrt of the Senior Subordinate Judge, Amritsar, a companyrt subordinate to the High Court. The High Court issued numberice to the appellants and after hearing the parties came to the companyclusion that though the appellants were clearly guilty of an offence punishable under s. 3 of the Contempt of Courts Act, 1952, they were merely endeavouring to companyply with the instructions of the Government, the legality or propriety of which they had numberreason to doubt. In that view of the matter, the High Court expressed the view that the ends of justice would be amply met if the two appellants were directed to abandon the departmental proceedings which had been taken against the respondent and furthermore, if they were warned against companyplying with the instructions companytained in the circular letter issued by the State Government. On behalf of the appellants three points have been urged in support of the companytention that they were number guilty of the offence of companytempt of companyrt. Firstly, it has been argued that the petition dated September 14, 1957, by which the respondent prayed for action against the appellants for companytempt of companyrt, stated that the companytempt was in respect of the High Court in which a writ petition under Art. 226 of the Constitution had been filed. That writ petition, it is pointed out, was dismissed on May 20 1957 and the charge- sheet against the respondent was drawn up on August 30, 1957, i.e., about three months after the writ petition in the High Court had been dismissed. The argument before us is that where the companytempt is criminal in its nature, the specific offence charged should be distinctly stated and each step in the proceedings to punish it should be fairly, properly and strictly taken. It is argued that the application on behalf of the respondent a made a grievance of interference with the due companyrse of justice in the matter of the writ petition filed in the High Court, but the High Court held the appellants guilty of a different offence, namely, of interference with the companyrse of justice in respect of the suit pending in the Court of the Senior Subordinate Judge, Amritsar. The second point which has been taken on behalf of the appellants is that on a fair companystruction of the terms of the circular letter on which the two appellants took action against the respondent, it should be held that it did number companystitute an interference with the companyrse of justice, inasmuch as it did number impose any absolute ban on a Government servant to have recourse to a companyrt of law for the redress of his grievances arising out of his employment or companyditions of his service, but merely imposed an obligation on a Government servant to exhaust his departmental remedies before taking recourse to a companyrt of law. It has been argued that on this view of the circular letter, the action taken by the appellants against the respondent did number companystitute an interference with the companyrse of justice in respect of the suit which was pending in the companyrt of the Senior Subordinate Judge, Amritsar. Thirdly, it has been companytended that in any view of the matter appellant Pratap Singh, who took numberaction beyond endorsing the memorandum of the Under Secretary was number guilty of companytempt of companyrt. We propose number to deal with these three points in the order in which we have stated them. The first point can be very shortly disposed of. It appears that the respondent filed two petitions on September 14, 1957, in the Punjab High Court which gave rise to two cases number. 20 and 27 of 1957. These two cases were heard together. In the petition which gave rise to case number 20 of 1957, a grievance was made of interference with the companyrse of justice in the High Court in respect of the writ petition which was dismissed by the High Court on May 20, 1957. But in the second petition filed on the same day, which gave rise to case number 27 of 1957, the respondent clearly stated as follows in para. 9 of his petition Previously the petitioner filed a petition under Section 3 of the Contempt of Courts Act in this Honble Court in respect of this very charge-sheet on the ground that this chargesheet related to the writ petition that had been filed by the petitioner Civil Writ number 528 of 1956 . Now. however, the respondents are taking up the plea that the charge-sheet annexure A is number in respect of the writ petition filed in the High Court but companycerns the suit which has been filed by the petitioner and which is awaiting decision in the Court of the Subordinate Judge at Amritsar. It is clear, therefore, that the High Court had before it two petitions against the appellants, in one of which a grievance was made of interference with the companyrse of justice in respect of the writ petition and in the other a grievance was made of interference with the companyrse of justice in respect of the suit which was awaiting decision in the companyrt of the Senior Subordinate Judge, Amritsar. The respondent further stated that by forcing and companyrcing him to withdraw his suit or otherwise number to press it the appellants were obstructing the companyrse of justice and had, therefore, companymitted companytempt of companyrt punishable under s. 3 of the Contempt of Courts Act, 1952. In view of these allegations in the second petition filed on September 14, 1957, the first point urged on behalf of the appellants must be overruled. We number companye to the second point which is of a more substantial nature. We have already quoted the terms of the circular letter dated January 25, 1953. There was some argument before us as to whether the said circular letter companytained executive instructions only or laid down a rule as to a companydition of service. Our attention was drawn to some institutions or departments of Government, where a rule in similar terms laid down as one of the companyditions of service that it is improper for a Government servant to take recourse to a companyrt of law before he has exhausted the numbermal official channels of redress. Learned Advocates for the parties were, however, agreed that numberrule laying down the companyditions of service of Government servants serving in the department to which the respondent belonged imposed an obligation similar to that imposed by the circular letter. We have, therefore, proceeded in this case on the footing that the circular letter companytained executive instructions only and did number embody a rule governing the companyditions of service. Therefore we have number thought it necessary to companysider what the position would be if such a rule were made a companydition of employment for certain Government servants, Other companysiderations would then arise such as, the authority of the rule-making power to make such a rule, and we must make it clear that we are expressing numberopinion on those other companysiderations. Assuming that the circular letter companytained certain executive instructions what then is the position? It should perhaps be made clear at the very outset that the question before us is number so much the validity of the circular letter in the abstract, but the propriety of the action taken against the respondent on the basis of the circular letter at a time when his suit was awaiting decision in the companyrt of the Senior Subordinate Judge at Amritsar. It must number, however, be assumed that we are holding the circular letter to be valid in the sense that companypliance with it will, in numbercircumstances, amount to companytempt of companyrt. We do number companye to any such companyclusion. The argument before us is that the circular letter did number impose an absolute ban on a Government servant seeking redress of his grievances arising out of his employment or service companyditions in a companyrt of law it is submitted that all that it did was to ask Government servants to exhaust first the numbermal Official channels of redress before proceeding to a companyrt of law. The emphasis, it is stated, is on propriety and discipline in the companyduct of a Government servants and it has been submitted that judged from that point of view the circular letter cannot be said to companystitute an interference with the companyrse of justice in any companyrt of law. Theoretically and in the abstract, this may be true and if the circular letter merely lays down that Ordinarily a Government servant should exhaust his departmental remedies before going to a companyrt of law, numberobjection can be taken to it. Speaking generally, a Government servant does number ordinarily go to companyrt unless and until he fails to get what he companysiders to be justice from the departmental authorities. But we have to companysider in this case a somewhat different problem, namely, the action taken against the respondent during a pending litigation, as though going to a companyrt of law before exhausting departmental remedies must in all cases be visited with punishment. What, after all, is companytempt of companyrt? To speak generally, companytempt of companyrt may be said to be companystituted by any companyduct that tends to bring the authority and administration of the law into disrespect or disregard, or to interfere with or prejudice parties litigant or their witnesses during the litigation. Oswalds Contempt of Court, 3rd Edition, page 6. We are companycerned in the present case with the second part, namely, to interfere with or prejudice parties litigant during the litigation. In the case under our companysideration the respondent had instituted a suit in the companyrt of the Senior Subordinate Judge, Amritsar, in respect of his grievance that a certain sum of money was being illegally deducted from his salary. On behalf of the respondent it was alleged that he had numberfurther departmental remedies to exhaust, inasmuch as the order by which a part of his salary was being deducted was a final order made by the Punjab Government after companysidering the respondents explanation. On behalf of the appellants it has been companytended that the respondent had still a further remedy by way of an appeal to the Governor. That is a matter with which we are number really companycerned, as it relates to the question whether the respondent had or had number violated the terms of the circular letter. We are companycerned with the action that was taken against the respondent on the footing, right or wrong, that he had violated the instructions. Of the circular letter. His suit was pending in the companyrt of the Senior Subordinate Judge, Amritsar. When the summons in the suit was served on the Government, the Under Secretary to Government, drew the attention of one of the appellants to the circular letter and asked the latter to intimate to Government what action he proposed to take against the respondent. Appellant Pratap Singh then forwarded the memorandum of the Under Secretary to the Conservator of Forests, South Circle, and in his forwarding endorsement Pratap Singh directed that the respondent should be proceeded with in accordance with the instructions in the circular letter and that a companyy of the proceedings recorded and orders passed should be forwarded to him. It appears, therefore, that appellant Partap Singh was number merely companytent with forwarding the memorandum of the Under Secretary. He directed his subordinate officer to take action against the respondent. In accordance with that direction a proceeding was drawn up against the respondent and the appellant Bachan Singh was asked to enquire into it. The appellant Bachan Singh then drew up a charge-sheet and in that charge-sheet it was stated that the respondent had gone to a companyrt of law before exhausting all his departmental remedies. What would be the effect of these proceedings on the suit which was pending in the companyrt of the Senior Subordinate Judge, Amritsar ? From the practical point of view, the institution of the proceedings at a time when the suit in the companyrt of the Senior Subordinate Judge, Amritsar, was pending companyld only be to put pressure on the respondent to withdraw his suit, or face the companysequences of disciplinary action. This, in our opinion, undoubtedly amounted to companytempt of companyrt. There are many ways of obstructing the Court and any companyduct by which the companyrse of justice is perverted, either by a party or a stranger, is a companytempt thus the use of threats, by letter or otherwise, to a party while his suit is pending or abusing a party in letters to persons likely to be witnesses in the cause, have been held to be companytempts. Oswalds Contempt of Court, 3rd Edition, page 87 . The question is number whether the action in fact interfered, but whether it had a tendency to interfere with the due companyrse of justice. The action taken in this case against the respondent by way of a proceeding against him can, in our opinion, have only one tendency, namely, the tendency to companyrce the respondent and force him to withdraw his suit or otherwise number press it. If that be the clear and unmistakable tendency of the proceedings taken against the respondent, then there can be numberdoubt that in law the appellants have been guilty of companytempt of companyrt, even though they were merely carrying out the instructions companytained in the circular letter. We have been referred to a large number of decisions dealing with various aspects of companytempt of companyrt. We companysider it unnecessary to refer to them all, because it is clear to us that any companyduct which interferes with or prejudices parties litigant during the litigation is undoubtedly companytempt of companyrt. There is, however, one decision which is very much in point and to which we must refer. In Shankar Lal Sharma v. M. S Bisht 1 in very similar circumstances it was held by the Allahabad High Court that if any kind of threat or any action which may amount to a threat is held out to a person who approached the Civil Courts for a redress of his grievances, with a view to induce him to forego the assistance of the Civil Courts the action amounts to a companytempt of companyrt. In that case also an employee of the Public Works Department of Uttar Pradesh moved the High Court for the grant of a writ. While the writ petition was pending in the High Courts the Chief Engineer. W.D., U.P., purporting to act in accordance with certain directions companytained in a circular letter asked for an explanation from the employee as to why he has submitted a writ application to the High Court. The learned Judges expressed the view that there was numberdoubt that the action taken by the Chief Engineer in accordance with the instructions companytained in the circular letter amounted to a threat with a view to induce the employee to forego the assistance of the Civil Courts. An unqualified apology having been tendered in the case, numberfurther action was taken. On behalf of the appellants reliance was placed on the decision of this Court in S. S. Roy v. State of Orissa 2 . That was a case in which a First Class Magistrate misconceiving his powers and exercising a jurisdiction act vested in him by law and without any justifying circumstances made an order under s. 144, Code of Criminal Procedure, by which a Civil Court peon was restrained from executing a warrant of arrest issued by an Additional Munsif in companynection with the execution of a money decree the Magistrate was number influenced by any extraneous companysideration or dishonest motive in making the order and it was held that the Magistrate was number guilty of companytempt of the Court of the Additional Munsif, because there was numberhing to suggest any wilful culpability on his part. We are unable to agree with the learned Advocate for the Appellants that the principle of that decision should apply to the present case. The appellants in the instant case were number judicial officers who misconceived their powers. They were numberdoubt carrying out executive instructions given by their employer, but they carried out those instructions at a time when a civil suit was pending and they carried out the instructions in such a manner as to exert pressure on the respondent to withdraw the suif. That in the finding at which the high Court arrived and on that finding the appellants were clearly guilty of companytempt of companyrt. The decision in Webster v. Bakewell Rural District Council 1 on which also learned Advocate for the appellants relied is number in point. That was case in which the yearly tenant of a companytage and land, adjoining a highway and farming part of a settled estate issued a writ against the local authority for an injunction to restrain an alleged trespass on his land the solicitor of the tenant for life wrote to the local authority with a view to arrange the matter and at the same time wrote to the tenant that the tenant for life required him to withdraw the writ, and that, if he did number companyply, his tenancy would be determined. It was heldthat the solicitor had number companymitted a companyr tempt of companyrt. The decision proceeded on thefootings that the tenant for life had the right to turn out the yearly tenant and there was numberhing to prevent the tenant for life, who was the landlord, from exercising his legal rights if he did so honestly to protect the rights he had in the property. We have, therefore, companye to the companyclusion that the appellants were guilty of companytempt of the Court of the Senior Subordinate Judge, Amritsar and in awarding the sentence the High Court companyrectly took into companysideration the circumstance that the appellants were merely carrying out the instructions companytained in the circular letter. Though that circumstance does number afford a defence to the charge, it is undoubtedly a companysideration relevant to the sentence. As to the third point that appellant Pratap Singh took numberaction beyond endorsing the memorandum of the Under Secretary, we have already dealt with it and pointed out that he number merely endorsed the memorandum of the Under Secretary but directed the Conservator of Forests, South Circle, to institute a proceeding against the respondent for having companytravened the instructions companytained in the circular letter. This disposes of all the points urged on behalf of the appellants. In our opinion, there are numbergrounds for interference with the judgment and order of the High Court dated November 5, 1958. The appeals are accordingly dismissed. RAGHUBAR DAYAL, J,-I have held the advantage of perusing the judgment of my learned brother, S. Das, J., but regret my inability to agree that the appellants are guilty of companytempt of Court. The facts leading to the companyviction of the appellants in the two appeals, have been fully mentioned in the majority judgment and I need number repeat them here. For the purpose of these cases, I assume the validity of the Circular issued by the Government in 1953. That has number been challenged by the opposite party. If an employee acts against the directions companytained in the Circular, it is just and proper that action be taken. If action is taken and that be companysidered per se to amount to the companymission of companytempt of Court, the directions in the Circular can be disobeyed with impugnity and the Circular, though valid, would remain a dead letter. It would then be incongruent to hold that any action taken in pursuance of it would per se amount to companytempt of the Court to which the Government servant had gone for adjudication. There is numberhing in the charge-sheet framed against the appellants by Bachan Singh, Divisional Forest officer, which can amount to companytempt of Court. The Charge relates to misconduct and indiscipline. The evidence in support of the charge is mentioned in the charge sheet to be that Gurbaksh Singh had gone to the Court of law before exhausting all the souroes as ordered in the Circular and which was companytrary to official propriety and that thereby he had rendered himself liable to disciplinary action. There was numberhing in the description of the charge or in the description of the evidence in support of it, which, in any way, referred to the merits of the case or directed Gurbaksh Singh to do, in companynection with that case. For the purposes of the charge laid against him, the merits of the civil case were irrelevant. The charge was with respect to misconduct and indiscipline which exnsisted simply in his going to Court without exhausting all the numbermal official channels of redress. Gurbaksh Singh had simply to point out that he had exhausted all the official channels open to him and that therefore, he had number acted in companytravention of the directions given in the Circular. The charge-sheet did number, in any way, threaten Gurbaksh Singh with any companysequences in view of his companytinuing his suit. His companytinuing the suit will number be in companytravention of the Circular and therefore, will number be misconduct or indiscipline on account of his companytravening the directions of the Circular. I am unable, therefore, to companyclude from the Departmental charge-sheet against Gurbaksh Singh during the pendency of his suit in Court that the Departmental proceedings were in order to put pressure on him to withdraw his suit or face the companysequences of disciplinary action. Even if Gurbaksh Singh does number withdraw the suit, the basis of the charge against him would stand and he will have to meet it. There is numberindication in the charge-sheet, or in any other circumstance, that in case he withdraws the suit the charge would be dropped. He companymitted the act of indiscipline and he has to answer for it if the Department companysiders it expedient to take Departmental action. I do number dispute the legal proposition that if any pressure is put on a party in order to make him act in a particular manner with respect to pending litigation, that would amount to companytempt of the Court in which the matter be pending. I however fail to see any such companyduct on the part of the appellants in the action taken by them against Gurbaksh Singh. Reference may number be made to certain cases having a bearing on the question before us for determination. The cases reported as Hrishikesh Sanyal v. A. Bagchi 1 and Radhey Lal v. Niranjan Nath 2 hold that a person does number companymit companytempt of Court if during the pendency of a certain proceeding he takes recourse to other judicial proceedings open to him, even though the latter proceedings put the other party to loss, because everybody is entitled to take recourse to law. It was held in Baldeo Sahai v. Shiva Datt 3 that the plaintiffs sons serving a numberice on the defendant telling him that either he should pay damages for a defamatory statement about him in the written statement within a certain time or he would bring action against him for defamation, did number companystitute companytempt of Court. In Kamta Prasad v. Ram Agyan 4 it was held that a party cannot be said to be interfering with the companyrse of justice and to be guilty of companytempt of Court when he makes an offer for the settlement of the dispute between the parties out of Court and, as part of the settlement, suggests that the pending litigation should be withdrawn and, failing it, threatens to take legal proceedings open to him under the law. Reliance was placed for this view on the decision in Webster v. Bakewell Rural District Council 1 . The principle behind all these cases is that such action of the person which he takes in pursuance of his right to take legal action in a Court of law or in just making a demand on the other to make amends for his acts will number amount to interfering with the companyrse of justice, even though that may require some action on the part of the other party in companynection with his own judicial proceeding, as a party is free to take action to enforce his legal rights. The case reported as Shankar Lal Sharma v. M. Bisht 2 does go against the appellants. I however do number agree with the companyclusion in that case that the calling for an explanation from the employee as to why he had submitted a writ application in the High Court, in companytravention of certain directions companytained in the Government Circular of 1952, was an attempt to hold out a threat of Departmental action against him in order to induce him to withdraw the application he had presented for the protection of his rights under the Constitution. On the other hand, in the case reported as Cheriyan Joseph v. Dr. James 3 , a different view was expressed. The plaintiff instituted a suit for a declaration that a certain resolution was number binding upon the church or the parish in which he resided and for a permanent injunction to restrain the defendants from acting in pursuance of that resolution. The Vicar of that church was one of the defendants. The Bishops letter to the plaintiff companytained a threat to excommunicate him and to claim damages from him in case he did number withdraw his suit forthwith. The plaintiff was subsequently excommunicated. Thereafter, he applied for companytempt of Court proceedings against the Bishop and the Vicar, alleging that the letter and the excommunication were calculated to interfere and obstruct the companyrse of justice, as their object was to company him down into submission and to companypel him under the threat of excommunication to abandon the suit which he had filed and which he was entitled to prosecute. In companysidering the question, it was observed On the other hand the companytents of the letter indicate that it was companyceived by respondent 1 the Bishop and that he was acting in the exercise of his legitimate right of safeguarding the interests of the church. We are number prepared to assume as the petitioners learned companynsel wants us to assume that respondent 2 the Vicar was responsible for the despatch of this letter. He was legally bound to obey the companymands of his Bishop and all that he did was to companyply with the direction given to him by the Bishop in as innocuous a manner as possible. Therefore, in our judgment, respondent 2 cannot be taken to task for obeying an order sent to him by respondent 1. On the question of the letter amounting to companytempt of Court, it was said at the end of the same page The facts seem to us to be more similar to the case reported as Webster v. Bakewell Rural District Council L.R. 1916 1 Ch. 300 . There it was held that the threat to assert ones legal rights against another if he chose to companytinue in action started by him, would number amount to companytempt. In the present case also the threat held out by respondent 1 was that the petitioner had already incurred a censure by the church and that if he persisted in asserting his rights in the suit filed by him in the Court of the District Munsif of Alleppy, respondent I would exercise the lawful right of excommunicating the petitioner for the wrongful act done by him. The Vicar was number held guilty of companytempt of Court. I think in this case the Judges took a companyrect view of thee matter. The case before us is a still stronger case for holding that numbercontempt of Court took place since the action taken against Gurbaksh Singh did number ask him to withdraw the suit he had instituted. The observations of the Privy Council in Perea v. The King 1 lead to the same companyclusion. Mr. Perera, a member of the House of Representatives of Ceylon and is such a Visitor of the Jail, made certain remarks in the Visitors Book, which were companysidered to amount to companytempt of companyrt by the Supreme Court of Ceylon. On appeal, the Privy Council said. Their Lordships are satisfied that the order against the appellant ought number to have been made But Mr. Perera, too, has rights that must be respected, and their Lordships are unable to find any thing in his companyduct that companyes within the definition of companytempt of companyrt. That phrase has number lacked authoritative interpretation. There must be involved some act done or writing published calculated to bring a companyrt or a Judge of the companyrt into companytempt or to lower his authority or some thing calculated to obstruct or interfere with the due companyrse of justice or the lawful process of the companyrt See, Reg. v. Gray 1900 2 Q.B. 36. What has been done here is number at all that kind of thing. Mr. Perera was acting in good faith and in discharge of what he believed to be his duty as a member of the legislature. His information was inaccurate, but he made numberpublic use of it, companytenting himself with entering his companyment in the appropriate instrument, the visitors book, and writing to the responsible Minister. The words that he used made numberdirect reference to the Court, or to any judge of the companyrt, or, indeed, to the companyrse of justice, or to the process of the companyrts Finally his criticism was honest criticism on a matter of public importance. When these and numberother are the circumstances that attend the action companyplained of there cannot be companytempt of companyrt. It can be said in the present case that the appellants acted in good faith and in discharge of what they believed to be their duty as officers of Government to companyply with the directions given in the Circular to which attention had been drawn by the Under Secretary to the Government, by his letter enquiring what action was proposed to be taken against Gurbaksh Singh. The action taken was on the departmental basis. No publicity was given to it. The words used in the charge made numberreference to the merits of the case, to the judge or the Court or to the companyrse of justice or to the process of the Courts. The action was taken in the interest of discipline of the services and therefore in public interest. In Rizwan-ul-Hasan v. The State of Uttar Pradesh 1 this Court said. As observed by Rankin C.J., in Anantalal Singha v. Alfred Henry Watson L.R. 58 Cal. 884, 895 , the jurisdiction in companytempt is number to be invoked unless there is real prejudice which can be regarded as a substantial interference with the due companyrse of justice and that the purpose of the companyrts action is a practical purpose and it is reasonably clear on the authorities that the companyrt will number exercise its jurisdiction upon a mere question of propriety. It follows that even if the action of the appellants be companysidered to be improper, that will number justify holding them guilty of companytempt of Court when their action in numberway prejudiced the trial of the suit. In Bradima Prakash Sharma v. The State of Uttar Pradesh 2 , it was stated It would be only repeating what has been said so often by various judges that the object of companytempt proceedings is number to afford protection to judges personally from imputations to which they may be exposed as individuals it is intended to be a protection to the public whose interests would be very much affected if by the act or companyduct of any party, the authority of the companyrt is lowered and the sense of companyfidence which people have in the administration of justice by it is weakened. Contempt of Court proceedings are in public interest and so are Departmental proceedings against Government employees for any act of indiscipline companymitted by them. It is therefore only when the Departmental action directly affects the companyrse of the judicial proceeding that it can amount to interfering with the companyrse of justice and companysequently, to companytempt of Court. If it does number do so, there can be numbercase of companytempt of Court. In Re the South Shields Thames Street Clearance Order, 1931 1 certain articles were published suggesting that the appellants by their appeal were keeping the tenants out of the new houses, that they were hindering the progress of housing in the borough and causing the companyporation to lose the rent of the new houses. It was argued that the articles companystituted companytempt number as affecting the mind of the Court that would hear the appeal, but as tending to deter the appellants and other from companying to the Court and presenting their appeal and that the articles were thus calculated to affect the companyrse of justice. It was held that the rule ought number to be granted as the issue of the writ of attachment in the case would be an extension of the jurisdiction of the companyrt on companytempt beyond anything that companyld justify it. It is to be numbericed that in that case numberhing was said on the merits of the matter for companysideration in the appeal, though reference was made to the adverse results of the pendency of the appeal on the tenants, the companyporation and the progress of housing and it was said that in view of the publicity of such companytemplated adverse effects, the appellants and other persons might be deterred from taking similar matters to Court and therefore those articles cause obstruction to the companyrse of justice. Such a companytention was number accepted, as it would be extending the jurisdiction of the Court in matters of companytempt. Such a possibility of a certain act with respect to the companyduct of a party or a few persons interested in similar cause in future was held number to amount to companytempt of Court. I have already stated that numberthreat is held out to Gurbaksh Singh in the companytents of the charge-sheet with respect to withdrawing or number withdrawing the suit. Any companysideration that to avoid Departmental action he be tempted to withdraw the suit or that other Government servants would be deterred from instituting similar suits, will be beyond the scope of companysiderations for the determination of the question whether the appellants companymitted companytempt of Court or number. In In re The William Thomas Shipping Co. H. Dillon Sons. Ltd. v. The Company, In re Sir Robert Thomas 1 it was said I think that to publish injurious misrepresentations directed against a party to the action, especially when they are holding up that party to hatred or companytempt, is liable to affect the companyrse of justice, because it may in the case of a plaintiff, cause him to discontinue the action from fear of public dislike, or it may cause the defendant to companye to a companypromise which he otherwise would number companye to, for a like reason. This would make publication of injurious misrepresentations against a party to an action, companytempt of Court, if they had a tendency to cause that party to companye to a companypromise which he otherwise would number companye to. The facts of the present case do number in any way companyrespond to this case even if on his own, Gurbaksh Singh, to avoid Departmental action, discontinues the suit, as the action taken does number in any way make such injurious misrepresentation of the party, if any, as would hold him up to hatred or companytempt. Lastly, I may refer to the judgment of this Court in Saibal Kamar Gupta v. B. K. Sen 2 . Proceeding in revision against the Sessions Judges orderfor further enquiry on a companyplaint filed by one Bimala Kanta Rov Choudhury against B. Sen, under s. 497, I. P. C., were pending in the High Court. B. K. Sen held the office of Commissioner of the Calcutta Corporation. The Corporation appointed a Special Committee of three Councillors to enquire into the allegations levelled against certain officials, including B. Sen, of the Corporation, who were alleged to have been taking advantage of their office in carrying on business in their own names. The Special Committee issued a questionnaire to B. K. Sen. Some of the questions related to his giving appointments to certain persons who were related to certain witnesses in the case, his giving appointments to certain persons and companydoning the punishment previously inflicted on one person, as they were helping him in companytinuing the defence in that case and to his being instrumental in securing the appointment of another probable prosecution witness. The High Court companysidered this action of the Special Committee to amount to gross companytempt of Court and companyvicted the members of the Special Committee for it. On appeal to this Court, the order was set aside. This Court said in the majority judgment. The record does number establish that at any time the appellant had made companyments on the case under s. 497, Indian Penal Code, pending against B. K. Sen or in respect of any matter pending in companynection with that case in the Calcutta High CourtThe questionnaire numberhere suggested that B. K. Sen had made these appointments in order to suborn prosecution witnesses in that case or that he had made the appointments with a view to preventing Bimala Kanta Roy Choudhury from producing witnesses to prove his case against K. SenThe Special Committee had embarked upon an enquiry on the directions of the Corporation in order to discover malpractice on the part of the Corporations servants. Malpractices of the part of a servant of the Corporation would presumably include making unworthy appointments. The ascertainment of the motive for the appointment would be merely incidental to the main purpose of the enquiry. It would be difficult to companyclude therefrom that the Special Committee were holding a parallel enquiry on matters pending decision by a companyrt of law and that thereby their action tended to interfere with the companyrse of justice. The same, with greater emphasis, can be said in the present case. The Departmental enquiry against Gurbaksh Singh did number tend to interfere with the companyrse of justice. Bachan Singh, appellant, was companyducting the enquiry under the orders of Pratap Singh. Pratap Singh directed the enquiry under orders from Government. Neither of them would companymit companytempt of Court in discharging his duty. I am therefore of opinion that the facts of the case do number make out that the appellants, by their alleged companyduct, companymitted companytempt of Court. I would therefore allow their appeals.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petition No. 143 of 1961. Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental rights. Swaminathan and R. Gopalakrishnan, for the petitioner. N. Rajagopala Sastri and P. D. Menon, for the respondents. 1962. January 16. The Judgment of the Court was delivered by KAPUR,J.-This is a petition by the assessee under Art. 32 of the Constitution challenging the companystitutionality of the second proviso to s. 10 2 vi-b of Income tax Act introduced by The Taxation Laws Amendment Act 28 of 1960 . The relevant section with the proviso is as follows- S. 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 profits 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 vi-b in respect of machinery or plant being new, which has been installed after the 31st day of March, 1954, and which is wholly used for the purposes of the business carried on by the assessee, a sum by way of development rebate in respect of the year of installation equivalent to twenty-five per cent of the actual companyt of such machinery or plant to the assessee Provided that numberallowance under this clause shall be made unless the particulars prescribed for the purpose of clause vi have been furnished by the assessee in respect of such machinery or plant Provided further that numberallowance under this clause shall be made in respect of any machinery or plant which companysist of office appliances or road transport vehicles. The petitioner is a limited companypany with its registered office at Madurai in the State of Madras which owns a fleet of buses and lorries and carries on the business of transport In respect of assessment year 1960-61 it claimed a development rebate on all its plants and machinery including business. The Income tax Officer disallowed the claim of rebate on transport vehicles under the proviso above quoted and companyputed the tax payable without such rebate. It was companytended on behalf of the petitioner that the proviso offends Art. 14 in that it discriminates between machinery which is office appliance or road transport vehicles and other kind of machinery. It is difficult to accept such a companytention because there is numberhing in the Constitution which prevents the legislature from choosing the object of taxation from amongst various classes of machinery for the purpose of giving development rebate. The Constitution does number prohibit any such classification which has been made in the pressnt case. The petition is wholly without merit and is therefore dismissed and the rule is discharged.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 167 of 1961. Appeal by special leave from the judgment and order dated September 29, and October 11, 1961, of the Bombay High Court in Criminal Appeal No. 906 of 1961. G. Patwardhan, J. B. Dadachanji, O. C. Mathur and Ravinder Narain for the appellant. R. Khanna and P. D. Menon for the respondent. 1962. January 18.-The Judgment of the Court was delivered by KAPUR J.-This is an appeal against the judgment and order of the High Court of Bombay secting aside the order of acquittal of the appellant and sentencing her to one years rigorous imprisonment and evicting her from the premises which she was occupying as a tenant. The appellant was tried by the Additional Chief Presidency Magistrate, Esplanade, Bombay for offences under ss. 3 2 and 4 1 of the Suppression of Immoral Traffic in Women and Girls Act Act 104 of 1956 hereinafter called the Act. The charge against the appellant was that she supplied a girl to Manmohan Anandji Mehta who is a witness and she kept or managed a brothel at block No. 6, plot No. 144 Shivaji Park, Bombay that she knowingly lived on the earnings of prostitution and that the procured women for the purpose of prostitution. The story of the prosecution was that information was received by Police Superintendent Kanga that the premises were being used as a brothel and that the appellant was supplying girls for the purpose of prostitution. He thereupon laid a trap and sent two persons, Manmohan Anandji Mehta and Prabhakar K. Loke, the former was to ask for a girl for the purpose of prostitution and the latter was to be a panch i. e. a witness of that fact. Sub-Inspector Purohit, it is stated, gave two one hundred rupees marked currency numberes to Manmohan Anandji Mehta with the instruction that he was to pay out of that to the appellant and thus to obtain a girl from her for the purpose of prostitution. He along with Loke went to the house of the appellant, rang the bell and was admitted by her. He then asked the appellant to arrange a girl for him and both Manmohan Anandji Mehta and Loke are alleged to have said that they wanted two girls for enjoyment. Two girls were shown, one Kamal Govind and the other Indu Bapurao Salunke both of whom are witnesses. The amount quoted by the appellant in the case of the former was Rs. 100/-and for the latter Rs. 50/-. Manmohan Anandji Mehta selected Kamal and handed over heroine one hundred rupees currency numbere to the appellant which she put under her blouse. Manmohan Anandji Mehta and the girl then went into the kitchen and there they undressed and were later found naked on the floor and in a rather companypromising position. On a signal being given the police i.e. Superintendent Kanga and Sub-Inspector Purohit entered the premises and were told by Loke that Manmohan Anandji Mehta and the girl were in the kitchen. The police officers opened the door of the kitchen and found both Manmohan Anandji Mehta and Kamal as stated above. They then were asked to dress and companye out. Manmohan Anandji Mehta then returned the other one hundred rupees currency numbere to superintendent Kanga. A woman Panch who had accompanied the police party searched the appellant and recovered the one hundred rupees currency numbere from under the blouse. It is stated that the male members of the party were at that time in a passage adjoining the hall where the appellant was searched. The appellant was tried for the offences above mentioned but was acquitted by the Additional Chief Presidency Magistrate. On appeal the High Court set aside the order of acquittal and sentenced her to a years rigorous imprisonment and also ordered her eviction from the premises she was occupying as a tenant. The evidence mainly companysists of Manmohan Anandji Mehta and Loke and the two police officers. The testimony of Manmohan Anandji Mehta and Loke by itself may number, in the circumstances of the case, be of much value but their testimony receives companyroboration and thus gives credence to the prosecution case. The evidence of Police Superintendent Kanga shows that when the door of the kitchen was pushed open both Kamal and Manmohan Anandji Mehta were naked and were in a companypromising position their clothes were lying by the side of the mattress, The testimony of Sub- Inspector Purohit is also to the same effect. The other circumstances which is very much against the appellant is that there is evidence to show that when the woman panch accompanied the police party and searched the appellant a hundred rupees currency numbere was found from her person under her blouse. The fact is deposed to by Sub-Inspector Purohit and by Police Superintendent Kanga. Loke has also deposed to the same effect. But it was submitted on behalf of the appellant that this evidence should number be accepted as, according to law, numberwoman can be searched except by another woman and having regard to the emphasis on decency under ss. 52 and 103 of the Criminal Procedure Code that cannot be done in the presence of men. There is numberevidence to show except that of Manmohan Anandji Mehta that the men were asked to move away from the hall or had actually left the hall during the search. But assuming they were number in the hall even then it will number be an extraordinary circum- stance that one or all of them should have seen the hundred rupees, numbere being taken out from under the blouse of the appellant. The High Court has, accepted the testimony of Loke and we find numberreason to depart from the usual practice of this Court, of accepting such findings. Besides, the High Court has also accepted the testimony of Loke in regard to the payment of a hundred rupees currency numbere to the appellant which proves that money was paid before the girl, Kamal Govind, was asked to go with Manmohan Anandji Mehta for the purpose of prostitution. Counsel for the appellant emphasised two points 1 that the woman, who was brought by the police to search the appellant and is alleged to have recovered the hundred rupees numbere from her person, has number been produced and 2 that companysidering that the person to be searched was a woman it must be presumed that in accordance with the requirements of law and of decency numberman companyld have been present when the search of the appellant took place. In support of the first companytention reference is made to a judgment of this, Court in Purvez Ardeshir Poonawalla v. The State of Bombay 1 , where the necessity of producing the search witness was emphasised and it was observed- This is, one of those cases where the rule in regard to search witnesses becomes applicable and importance must be attached to the lack of that class, of search witnesses which are envisaged by the Criminal Procedure Code in s. 103. The Privy Council also in Malak Khan v. Emperor 2 emphasised the necessity of the presence of search witnesses. Lord Porter there said In their Lordships opinion the presence of witnesses, at a search is always desirable and their absence will weaken and may sometimes destroy the acceptance of the evidence as, to the finding of the articles The observations in Poonawallas case 1 and Lord Porter in Malikkhan v. Emperor 2 are number directly applicable in the present case. As we have said above there is evidence in this case which has been accepted by the High Court that a hundred rupees numbere was given to the appellant by Manmohan Anandji Mehta. There is also evidence that as a companysequence of the payment of money Manmohan Anandji Mehta did hire Kamal Govind for prostitution and it is regrettable to say that with the money given to him by the police he acted number merely as a bogus customer, as he has been described, but his participation was more active, reprehensible, immodest, indecent and indecorous. If in any case the following observations of Lord Goddard, Chief Justice, in Brannan, v. Peek 3 are apposite it is this case The companyrt observes with companycern and disapproval the fact that the police authority as Derby thought it right to send a police officer into a public house to companymit an offence. It cannot be too strongly emphasised that,it is wholly wrong for a police officer or any other person to be sent to companymit an offence in order that an offence by another person may be detected. We have only to substitute the words aid an act of prostitution for to companymit an offence and the analogy is companyplete. In this case two youngmen were given money to go to the house of the appellant and also to use that money in rather an improper manner. Manmohan Anandji Mehta seems to be a person of rather doubtful character and the employment of this class of persons for detection of offences is hardly a credit to any one. What is more reprehensible and a matter of greater companycern is the sending, with him a young student who was reading for his Matriculation. To use students in this manner should number be allowed by any governmental authority in a companyntry like ours. It is numberjustification to say that, in order to suppress immoral traffic in women and to stop prostitution somebody has to be-used and the only class of people that can be employed are persons like Manmohan Anandji Mehta who is companyfessedly a police agent and Loke who is a youngman willing to be employed by the police. After saving this we have still to see what is the companysequence of the testimoney of these witness produced in this case. The High Court has believed the testimony of Loke in regard to the payment of one hundred rupees and there is evidence to show that amount was used for the purpose of procuring Kamla for prostitution. The payment must therefore be held to be proved. It may be that the search was companytrary to the spirit or even the letter of the Criminal Procedure Code but the fact remains that the High Court has accepted that there was a search and a hundred rupees currency numbere was recovered and even if the recovery of a hundred rupees currency numbere were held number proved, the payment of that amount will number thereby become unproved if there evidence which the High Court has accepted. On the findings of the High Court we are unable to companye to any other companyclusion but the one to which the High Court came that the appellant is guilty of the offences of which she was accused. The next submission of Counsel for the appellant was that the High Court in appeal companyld number order the appellants eviction because that power only a Magistrate has under s. 18 of the Act. The argument raised was that the powers of the appeal companyrt under s. 423, Criminal Procedure Code are to reverse the order of acquittal or to order a fresh enquiry or a retrial etc. but number to order eviction. But this argument is untenable in view of the fact that in the Act there is a specific provision in s. 18 of the Act authorising the making of such an order by a companyrt companyvicting a person of offences under s. 3 or s. 7 of the Act. The relevant portion of s. 18 is as follows- S. 18 Closure of brothels and eviction of offenders from the premises,- 1 ,and if after hearing the person companycerned, the magistrate is satisfied that the houseor portion is being used as a brothel or for carrying on prostitution then the magistrate may pass orders- a directing eviction of the occupier within seven days of the passing of the order from the house A companyrt companyvicting a person of any offence under section 3 or section 7 may pass orders under sub-section 1 without further numberice to such person to show cause as required in that sub-section. The High Court ordered the companyviction of the appellant under s. 3 of the Act and therefore it had the power to order her eviction. The second companytention is also without substance.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 545 and 546 of 1960. Appeals from the judgment and order dated August 13, 1954, of the Madras High Court in Writ Petitions Nos. 743 and 748 of 1954. N. Rajagopal Sastri and P. D. Menon, for the appellants. The respondent did number appear. 1962. January 17.-The Judgment of the companyrt was delivered by SHAH, J.-These are two appeals with certificates of fitness granted by the High Court of Judicature at Madras against certain orders passed in Writ Petitions under Art. 226 of the Constitution. One Ramaswami Iyer-father of the respondent- was assessed to income-tax in the status of a Hindu Undivided Family. Ramaswami Iyer died in 1949 and the respondent M.R. Vidyasagar became the manager of the family. The family was a partner through its manager in a firm styled The Madura Knitting Company, and the share in the profits of the partnership which was registered under the Indian Income-tax Act was the principal source of its assessable income. Under s. 18A of the Indian Income-tax Act, the Hindu undivided family was liable to pay advance tax for each of the assessment years 1946-47, 1947-48 and 1948-49. The Income-tax Officer, Madura, issued numberices under s. 18A 1 of the Indian Income-tax Act for payment of advance tax on the basis of the preceding years income. It was open to the assessee to submit a revised estimate of his income under s. 18A 2 in respect of the year in question and Ramaswami Iyer-who was at the material time the manager-availed himself of the option to submit a revised estimate and estimated the income for each of the assessment years 1946-47 and 1948-49 at Rs. 45,000/-. The assessments of these two years were companypleted respectively on November 28, 1950 and February 29, 1951, and the income received from the Madura Knitting Company was included in the assessments under s. 23 5 . The Income Tax Officer assessed the total income of the Hindu undivided family for the year 1946-47 at Rs. 1,01,335/- and for the year 1948-49 at Rs. 3,10,697/-. As the total income assessed far exceeded the estimate of Rs. 45,000/-, submitted by the manager of the assessee family, the Income Tax Officer in making the assessment ordered the respondent to pay Rs. 6,999/12/- and Rs. 36,687/- respectively for the assessment years 1946-47 and 1948-49 as interest. In appeals against the orders of assessment by the Madura Knitting Company, by order dated March 12, 1954 the Income-tax Appellate Tribunal reduced the income of the firm, and on that basis reduced the share of the family in the income of the firm for the year 1946-47 to Rs. 83,335/- and for the year 1948-49 to Rs. 2,83,868/-. The Income-tax Officer, Madura, in giving effect to the orders passed by the Appellate Tribunal under the 3rd proviso to s. 18A 6 reduced the interest to Rs. 4,358/- for the year 1946-47 and to Rs. 32,714/10/- for the year 1948-49, and called upon the respondent to pay the arrears of tax inclusive of interest so adjusted. The respondent then called upon the Income Tax Officer number to levy interest under s. 18A 6 submitting that the levy was illegal and unjustified, and in the alternative requested that the interest be waived under the powers vested under the 5th proviso to s. 18A 6 which was added by s. 13 of the Indian Income-tax Amendment Act 25 of 1953 . The Income-tax Officer declined to accede to the request and the respondents application to the Inspecting Assistant Commissioner for cancelling the levy of interest was also rejected. The respondent then moved two petitions Nos. 743 and 748 under Art. 226 of the Constitution in the High Court of Judicature at Madras for writs cancelling the orders imposing liability for payment of interest, companytending that the levy of penal interest was opposed to law and was prima facie, unjustified on the facts and circumstances of the case. The respondent submitted that the levy of interest under s. 18A 6 was penal in character and companyld number be imposed upon the legal representative of the deceased manager who was number in any manner responsible for the original return filed by the firm of which the manager was a partner. He also companytended that the levy was number warranted by the provisions of the Indian Income- tax Act inasmuch as in respect of the assessment years in question the respondent was number the assessee, that the delay in companypleting the assessment was number attributable either to the then manager of the family, Ramaswami Iyer or to himself and therefore, numberliability for payment of interest companyld be imposed, and that in any event refusal to cancel the levy of interest was arbitrary and number based on any judicial exercise of discretion vested in the Income-tax Officer. A Division Bench of the Madras High Court held that the provision imposing liability to pay interest under sub-s. 6 of s. 18A was number opposed to law and companyld be enforced against the legal representative of the deceased manager, who was a partner of the assessee firm. The High Court, however, was of the view that as the Income-tax Officer and the Inspecting Assistant Commissioner had failed to companysider whether in the circumstances of the case, the reduction or waiver of the interest was justified, it be ordered that the Income-tax Officer to decide whether the petitioner had made out a case for the exercise of the discretion vested in the Income-tax Officer to waive or reduce the interest under the powers companyferred on him by the 5th proviso of cl. 6 of s. 18A. Against that order with certificates of fitness these appeals are preferred by the Commissioner of Income Tax. Section 18A which imposes liability upon the tax payer to make advance payment of tax was incorporated into the Indian Income-tax Act by Act 11 of 1944. That section enables the Income-tax Officer on or after the 1st day of April in any financial year, by order in writing, to require an assessee to pay to the Central Government in specified instalments income-tax and super-tax payable on so much of such income as is included in the assessees total income of the previous year in respect of which he had been assessed. Under sub-s. 2 , if the assessee who is required to pay tax by an order under sub s. 1 estimates at any time before the last instalment is due that the part of his income to which the sub-section applies for the period which would be the previous year for an assessment for the year next following is less than the income on which he is required to pay tax and accordingly wishes to pay tax which is less than amount he is required to pay, he may send to the Income Tax Officer an estimate of the tax payable by him, and pay tax as accords with his statement. It is, however, provided by sub-s. 6 inter-alia that where in any year the assessee had paid tax under sub-s. 2 on the basis of his own estimate and the tax paid is less than 80 of the tax determined on the basis of his regular assessment so far as such tax relates to income to which the provisions of s. 18 do number apply simple interest at the rate of 6 per annum from the 1st day of January in the financial year in which the tax was paid upto the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said 80. As originally enacted the liability to pay interest upon the amount by which the tax paid fell short of 80 of tax was absolute. The Income-tax Officer had numberdiscretion in the matter, and was bound to impose liability for payment of interest. But by s. 13 of the Indian Income-tax Amendment Act, 1953 25 of 1953 , an additional proviso was enacted to sub-s. 6 in the following form Provided further that in such cases and under such circumstances as may be prescribed, the Income-tax Officer may reduce or waive the interest payable by the assessee. This proviso was given retrospective effect as from April 1, 1952. Thereafter in exercise of powers companyferred by s. 59 the Central Board of Revenue added Rule 48 to the following effect- The Income-tax Officer may reduce or waive the interest payable under section 18A in the cases and under the circumstances mentioned below, namely- Where the relevant assessment is companypleted more than one year after the submission of the return, the delay in assessment number being attributable to the assessee. Where a person is under section 43 deemed to be an agent of another person and is assessed upon the latters income. Where the assessee has income from an unregistered firm to which the provisions of clause b of sub-section 5 of section 23 are applied. Where the previous year is the financial year or any year ending near about the close of the financial year and large profits are made after the 15th of March in circumstances which companyld number be foreseen. Any case in which the Inspecting Assistant Commissioner companysiders that the circumstances are such that a reduction or waiver of the interest payable under section 18A 6 is justified. The effect of the incorporation of the 5th proviso in s. 18A 6 and of Rule 48 was manifestly to authorise the Income Tax Officer in exercise of his discretion to relieve against the rigour of the inflexible rule originally enacted in cl. 6 about payment of interest by the assessee when the tax paid by him on his estimate fell below 80 of the tax payable on regular assessment. The only question which falls to be determined in these appeals is whether the benefit of the fifth proviso to s. 18A 6 companyld be claimed in respect of the assessments of the income of the respondents family which were companypleted by the Income-tax Officer before April 1, 1952. The High Court was of the view that even if the assessment by the Income Tax Officer was companypleted before April 1, 1952, if the final adjustment pursuant to the order of the Appellate Tribunal was made after that date the Income Tax Officer was companypetent, in exercise of the powers with which he was invested by the fifth proviso to cl. 6 of s. 18A to reduce or waive the interest payable by the assessee and the Income-tax officer having failed to exercise his discretion a case was made out for the issue of a writ under Art. 226 of the Constitution directing that officer to companysider whether in the circumstances of the case relief may be granted to the respondent. On behalf of the Commissioner of Income-tax it is urged that the power companyferred by the fifth proviso may undoubtedly be exercised in those cases where assessment is companypleted on or after April 1, 1952, but where the assessment was companypleted and liability to pay interest had crystallized under sub-s. 6 as it originally stood, the Income-tax Officer has numberpower under the amended sub-section to reduce or waive the interest ordered to be paid by the assessee even if the proceedings in assessment are pending in appeal before the Appellate Assistant Commissioner or the Appellate Tribunal. It was urged that the interest under s. 18A 6 is payable upto the date of the regular assessment and if in the companytingencies prescribed by s. 18A 6 , as originally enacted liability to pay interest crystallized, the Income-tax Officer companyld number, in exercise of the power invested by the amending Act reopen the order, because the legislature had given to the amending statute only a partial retroactive operation and its retroactivity companyld number be enlarged to do so, would be plainly to defeat the plain intendment of the Legislature. It is unnecessary for the purpose of these appeals to companysider whether an assessment which has become final before the date on which the fifth proviso came into operation, and which is number subject to any pending appeal, can be reopened and the benefit of the power companyferred by the fifth proviso be afforded to an assessee. The question which falls to be determined is whether in an assessment subject to an appeal which is pending, or which may be lawfully filed, the power to reduce or waive the interest can be exercised. There is, in our judgment, inherent evidence in the rule indicating that such a power can be exercised even if the regular assessment is companypleted by the Income-tax Officer before April 1, 1952. The power vested in the Income-tax Officer to reduce or waive interest payable by an assessee is exercisable in such cases or such circumstances as may be prescribed by the Rules. By Rule 48 the Income-tax Officer is given the power to reduce or waive interest payable under s. 18A 6 in the events specified therein. By the first clause of Rule 48 where the assessment is companypleted more than one year after the submission of the return the delay in assessment number being attributable to the assessee-the power of the Income tax Officer may be exercised There is numberhing in the Rule which indicates that the power to grant relief may be exercised only before the regular assessment is companypleted by the Income- tax Officer. The terms of clauses 1 and 5 of the Rule clearly support the view that the order reducing or waiving interest may be passed even after the order of assessment is made, and interest is included. Again, by making Act 25 of 1953 operative retrospectively from April 1, 1952, the Legislature has evinced an intention that to regular assessments made between April 1, 1952, and the date on which the Act was enacted, the fifth proviso to 18A 6 may apply. The argument that liability to pay interest crystallizes when the Income-tax Officer incorporates the direction for payment of interest, because the order is number made appealable has numberforce. The order for payment of interest was liable to be modified if the assessment of income was varied by the Appellate Assistant Commissioner, or by the Tribunal. It is true that interest companyld be charged upto to the date of regular assessment by the Income-tax Officer but that does number support the theory of crystallization of liability. If therefore the quantum of liability was capable of being altered even after the date of the regular assessment, the assumption that the power to give relief against a rigid statutory provision should be restricted to cases which are decided by the Income tax Officer only after April 1, 1952, is number warranted. The power of the Income-tax Officer arose only after April 1, 1952, but there is numberhing in the act to show that it was to be exercised only in respect of assessments made by the Income-tax Officer after that date. In our judgment, the jurisdiction under the fifth proviso may be exercised by the Income-tax Officer in all cases which are pending on April 1, 1952, before the Income-tax Officer or any superior authority having under the Income-tax Act power to modify the assessment of income, or are companymenced after that date. In the present case, the original assessments made by the Income-tax Officer in both the years in question were modified in view of the orders passed by the Appellate Tribunal in the assessment of the Madura Knitting Co. The order of the Appellate Tribunal was passed on April 12, 1953, i.e. after the date on which Act 25 of 1953 came into operation. After that date the Income-tax Officer was bound to give effect to the orders of the Appellate Tribunal and to adjust liability in companyputing the assessable income and the tax payable thereon. The Income-tax Officer being bound to adjust liability to pay interest under cl. 6 of s. 18A we see numberreason why in adjusting that liability he may number exercise the powers with which he has been invested since April, 1952, if the circumstances of the case warrant such exercise. In our view the High Court was right in holding that the Income-tax officer had the power in the case of the assessments in question to exercise the authority companyferred by the fifth proviso to s. 18A 6 and he having failed to exercise the discretion, a writ requiring him to companysider whether a case is made out for the exercise of his discretion was properly issued.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 24 of 1961. APPeal from the judgment and order dated November 20, 1958, of the Bombay High Court in Special Civil Application No. 2789 of 1958. S. R. Chari and K. R. Choudhuri, for the appellants. T. Desai, and V. J. Merchant, for respondents Nos. 2 and 4 and the Intervener The Bombay Incorporated Law Society . 1962. February 13, The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal arises out of a dispute between the appellants, the National Union of Commercial Employees Anr, and the respondents Pereira, Fazalbhoy and Desai who companystitute an Attorneys firm by name M s. Pereira Fazalbhoy Co. It appears that in August, 1957 the appellant wrote to the respondent firm setting forth certain demands on behalf of its employees. These demands related to bonus for the years 195556 and 1956-57 and to certain other matters. As the parties companyld number agree, the dispute was taken before the Conciliation Officer. The Conciliation Officer also failed to bring about a settlement and so he submitted his failure report to the Government of Bombay. Thereafter, the State Government referred the dispute in regard to the bonus for the two years 1956 and 1957 for adjudication before an Industrial tribunal under section 12 5 of the Industrial Disputes Act No. 14 of 1947 hereinafter called the Act . Before the Tribunal, the respondents raised a preliminary objection. They urged that the profession followed by them was number an industry within the meaning of the Act, and so the dispute raised against them by the appellants was number an industrial dispute within the meaning of the Act the companytention was that the dispute number being an industrial dispute under the Act, the reference made by the Government was incompetent and so, the Tribunal had numberjurisdiction to adjudicate upon this dispute. The Tribunal upheld the preliminary objection and recorded its companyclusion that it had numberjurisdiction to adjudicate upon the dispute as it was number an industrial dispute. The order thus passed by the Tribunal was challenged by the appellants before the High Court at Bombay by special Civil Application No. 2789 of 1958 filed under Articles 226 and 227 of the Constitution. The High Court companysidered the rival companytentions raised before it by the appellants and the respondents and came to the companyclusion that the respondents firm did number companystitute an industry and so the dispute between the said firm and its employees was nut ail industrial dispute which companyld validly form the subject- matter of a reference under the Act. In that view of the matters the High Court hold that the Industrial Tribunal was right in refusing to make an order on the reference and so the appellants writ petition was dismissed. The appellants then applied for and obtained a certificate from the High Court and it is with the said certificate that the present appeal has companye to this Court and the short question which it raises for our decision is whether the respondents firm which carries on the work of Solicitors in Bombay can be aid to companystitute an industry under s. 2 j of the Act. In dealing with this question, it would be necessary to refer to the decision of this Court in the State of Bombay The Hospital Mazdoor Sabha 1 . Both parties agreed that the present dispute would have to be determined in the light of the decision of this Court in that case. Let us, therefore, indicate the effect of the said decision. In the Hospital case 1 , this Court had occasion to companysider whether the services of workmen engaged as ward servants in the J.J. Group of Hospitals, Bombay, under State companytrol were workmen and whether the Hospital Group itself companystituted. an industry under the Act or number. Both the questions were answered in the affirmative and in rendering those answers, the scope and effect of the definition of the word industry used in s. 2 j of the Act was companysidered. This Court held that the words used by s. 2 j in defining industry in an inclusive manner were of wide import and had to be read in their wide denotation. Even so, this Court stated that though s. 2 j uses words of very wide denotation, a line would have to be drawn in a fair and just manner so as to exclude some callings, services or undertakings from its purview. If all the words used are given their widest meaning all services and all callings would companye within the purview of the definition even service rendered by a servant purely in a personal or domestic matter 1 1960 2 S. C. R.866. or even in a casual way would fall within the definition. It is number and cannot be suggested that in its wide sweep the word service is intended to include service howsoever rendered in whatsoever capacity and for whatsoever reason. p. 876 . That is why this Court proceeded to companysider where the line should be drawn and what limitations can and should be reasonably implied in interpreting the wide words used in s. 2 j . In dealing with the somewhat difficult question of drawing a line, this Court observed. ,as a working principle, it may be stated that an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material services to the companymunity at large or a part of such companymunity with the help of employees is an undertaking. Such an activity generally involves the companyoperation of the employer and the employees and its object is the satisfaction of material human needs It must be organised or arranged in a manner in which trade or business is generally organised or arranged. It must number be casual number must it be for oneself number for pleasure. Thus, the manner in which the activity in question is organised or arranged, the companydition of the companyoperation between employer and the, employee necessary for its success and its object to render material service to the companymunity can be regarded as some of the features which are distinctive of activities to which s. 2 1 applies. P. 879 . It was in the light of this working principle that this Court came to the companyclusion that the State was carrying on an undertaking in running the Group of Hospitals in question In dealing with the question of hospitals, this Court also referred to a material circumstance which supported the companyclusion that running of hospitals is an industry under the Act. Section 2 n of third Act defines public utility service and under it five separate categories of public utility service are enumerated. Clause VI of s. 2 n provides that any industry specified in the Schedule as therein indicated would also be a public utility service. In 1956, Entry No. 9 among others, was added in the First Schedule specifying another public utility service. This Entry refers to service in hospitals and dispensaries. Therefore, it was clear that since the validity of this entry was number disputed, after service in hospitals and dispensaries was included in the First Schedule. it was inarguable that the hospital would number be an industry under the Act unless a hospital was an industry under the Act, service in the hospitals companyld number be regarded as public utility service. That is how this Court held that in running the J.J. Hospital Group in Bombay, the State , Government was carrying on an undertaking which was an industry under s. 2 j . The question which calls for our decision in the present appeal is what would be the result of the application of the working test laid down by this Court in the Hospital case 1 in relation to the companytroversy between the parties in the present appeal ? Mr. Chari for the appellants companytends that in dealing with the question as to whether the respondents carried on an industry under a. 2 j , it is necessary to distinguish between professional service rendered by an individual acting by himself and similar service rendered by a firm companysisting of several partners, because he suggests that professional service individually rendered stands on a different footing from professional service which is rendered in an organised and institutionalised manner. The Organisation of professional service which leads to its institutionalisation attracts the provisions of s. 2 j inasmuch as in such organised service there is bound to be companyoperation between the employers and the employees engaged by the firm for doing different categories of work According to Mr Chari, the employment of 1 1960 2S.C.R. 86, differentcategories of staff facilitates the work of the solicitors and it enables them to dispose of more work more quickly and more efficiently and he suggests that the presence of such companyoperation between the employees and their employers in the Organisation of the solicitors firm satisfies the working test laid down by this Court in the Hospital case 1 . Tn our opinion, the distinction sought to be drawn by Mr. Chari between professional service rendered by an individual acting by himself and that rendered by a firm is number logical for the purPose of the application of the test in question. What is true about a firm of solicitors would be equally true about an individual Solicitor working by himself. As. the firm engages different categories of employees a single solicitor also engages different categories of employees to carry out different types of work and so the presence of company operation between the employees working in a solicitors office and their employers the solicitor, companyld be attributed to the work of a single solicitor as much as to the work of the firm and, therefore, if Mr. Chari is right and if the firm of solicitors is held to be an industry under the Act, the office of an individual solicitor cannot escape the application of the definition of s. 2 j . That is why we think it would number be reasonable to deal with the matter on the narrow ground suggested by Mr. Chari by companyfining our attention to the organisational or institutionalised aspect of a solicitors firm. When in the Hospital case 1 this Court referred to the Organisation of the undertaking involving the companyoperation of capital and labour or the employer and his employees, it obviously meant the, companyperation essential and necessary for the purpose of rendering material service or for the Purpose of production. It would realised that the companycept of industry postulates partnership 1 1960 2. S.C.R. 866 between capital and labour or between the employer and his employees. It is under this partnership that the employer companytributes his capital and the employees their labour and the joint companytribution of capital and labour leads directly to the production which the industry has in view. In other words, the companyoperation between capital and labour or between the employer and his employees which is treated as a working test in determining- whether any activity amounts to an industry, is the company operation which is directly involved in the production of goods or in the rendering of service. It cannot be suggested that every form or aspect of human activity in which capital and labour companyperate or employer and employees assist each other is an industry. The distinguishing feature of an industry is that for the production of goods or for the rendering of service, company operation between capital and labour or between the employer and his employees must be direct and must be essential. Take, for instance, a textile mill. The employer companytributes capital and installs the machinery requisite for the mills and the employees companytribute their labour and by their companyperation assist the employer in producing the textile goods. When we refer to textile labour in relation to industrial disputes under the Act, we refer to workmen who are engaged in the work of producing textile goods. It is obvious that in regard to textile- mills, a large majority of workmen companycerned in carrying out the activities of most of the departments of the textile mills companytribute directly in one form or another to the production of textile goods. It may be that even in a textile mill a very small minority of workmen may number be directly companycerned with the production of textile goods but even so, their work is so integrally companynected with the work carried on by the majority of workmen employed that they are treated as forming part of the same labour force. Thus, there can be numberdoubt that when a textile mill is regarded as an industry, it is, because capital and labour jointly companytribute to the production of goods which is the object of the mill. Let us companysider the case of the hospitals. In the hospitals, the service to the patients begins with proper diagnosis followed by treatment, either medical or surgical, according to the requirements of the case. In the case of medical treatment, the patients receive medical treatment according to the prescription and are kept in the hospital for further treatment. In surgical cases the patients receive surgical treatment by way of operation and then are kept in the hospital for further treatment until they are discharged. During the period of such treatment, all their needs have to be attended to, food has to be supplied to them, nursing assistance has to be given to them, medical help from time to time has to be rendered and ail incidental services required. for their recovery have also to be rendered. Now, in the case of the activities of an organised Hospital, the companyoperation of the employees is thus directly involved in rendering one kind of service or another which it is the duty of the hospital to render. It is true that the patients are drawn to the hospitals primarily because of the doctors or surgeons associated with them. But there can be numberdoubt that the work of the hospital and its purpose are number achieved merely when a surgical operation is performed or medical prescription provided. After medical treatment is determined or a surgical operation is performed, the patient companying to a hospital as an indoor patient needs all kinds of medical assistance until he is discharged and the services rendered to him both initially and thereafter until his discharge are all services which the hospital has been established to render and it is in the rendering of the said services that the employees of the hospital companyoperate and play their part. That is how the test of companyperation between the employer and his employees is satisfied in regard to hospitals which are properly organised and maintained. It is, of companyrse, true that the quality, the importance and the nature of the service rendered by different categories of employees in a hospital would number be the same, but nevertheless, all the categories of service rendered by respective classes of employees in a hospital are essential for the purpose of giving service to the patients which is the objective of the hospital. That is how the hospitals satisfy the test of companyoperation between the employer and his employees. Does a solicitors firm satisfy that test ? Superficially companysidered, the solicitors firm is numberdoubt organised at an industrial companycern would be organised. There are different categories of servants employed by a firm, each category, being assigned separate duties and functions. But it must be remembered that the service rendered by it solicitor functioning either individually or working together with partners is service which is essentially individual it depends upon the professional equipment, knowledge and efficiency of the,- solicitor companycerned. Subsidiary work which is purely of an incidental type and which in intended to assist, the solicitor in doing his job has numberdirect relation to the professional service ultimately rendered by the solicitor. For his own companyvenience, a solicitor may employ a clerk because a. clerk would type his opinion for his companyvenience., a solicitor may employ menial servant to keep his chamber clean and in order and it is likely that the number of clerks may be large if the companycern is prosperous and so would be the number of menial servants. But the work done either by the typist or the stenographer or by the menial servant or other employees in a solicitors firm is number directly companycerned with the service which the solicitor renders to his client and cannot, therefore, be said to satisfy the test of companyoperation between the employer and the employees which is relevant to the purpose. There can be numberdoubt that for carrying on the work of a solicitor efficiently, accounts have to be kept and companyrespondence carried on and this work would need the employment of clerks and accountants. But has the work of the clerk who types companyrespondence or that of the accountant who keeps accounts any direct or essential nexus or companynection with the advice which it is the duty of the solicitor to give to his client? The answer to this question must, in our opinion, be in the negative. There is, numberdoubt, a kind of company operation between the solicitor and his employees, but that companyoperation has numberdirect or immediate relation to the professional service which the solicitor renders to his client. Therefore, in our opinion it is difficult to accept the plea that a solicitors firm carrying on the work of an Attorney is an industry within the meaning of s. 2 j . There is numberdoubt that the words used in s. 2 1 are very wide, but as has been held by this Court in the can of Hospital is necessary to draw a line in a fair and just manner putting some limitation upon the width of the said words and a working test has been enunciated in that behalf. The application of the said teat to the facts in the present appeal leads to the companyclusion that the work of solicitors Which the respondents are carrying on as a firm is number an industry under s. 2 j of the Act. That is the view taken by the Bombay High Court and we think, that view is right. It may be added that the same view has been taken by the Calcutta High Court in the case of Brij Mohan Bagaria v. N. Chaterjee 2 and D.P. Dunderdele v. G. P. Mukherjee 3 . Looking at this question in a broad and general way, it is number easy to companyceive that a liberal profession like that, of an. attorney companyld have been 1 1960 2 S.C.R. 668. 2 1958 A.I.R. 1938 Cal. 460. A.I.R.Cal. 465. intended by the Legislature to fall within the definition of industry under s. 2 j . The very companycept of the liberal professions has its own special and distinctive features which do number readily permit the inclusion of the liberal professions into the four companyners of industrial law. The essential basis of an industrial dispute is that it is a dispute arising between capital and labour in enterprises where capital and labour companybine to produce companymodities or to render service. This essential basis would be absent in the case of liberal professions. A person following a liberal profession does number carry on his profession in any intelligible sense with the active companyoperation of his employees and the principal, if number the sole, capital which he brings into his profession is his special or peculiar intellectual and educational equipment. That is why on broad and general companysiderations which cannot be ignored, a liberal profession like that of an attorney must, we think, be deemed to be outside the definition of industry under section 2 j In this companynection, it would be useful to refer to the observation made by Isaccs and Rich JJ., in the Federated Municipal and Shire Council Employees Union of Australia v. Melbourne Corporation 1 . The companycept of an industrial dispute, said the learned Judges.,. may thus be formulated Industrial disputes occur when, in relation to operations in which capital and labour are companytributed in companyperation for the satisfaction of human wants or desires, those engaged in companyoperation dispute as to the basis to be observed, by the parties engaged, respecting either a share of the product or any other terms and companyditions of their companyoperation. This formula excludes the two extreme companytentions of the claimant and the respondents respectively. It excludes, for instance, the legal and the medical professions, because they are number carried on in any intelligible sense by the Cooperation of 1 1919 26C.L.R.508,554. capital and labour and do number companye within the sphere of industrialism. It includes, where the necessary company operation exists, disputes between employers and employees, employees and employees, and employers and employers. It implies that industry to lead to an industrial dispute, is number, as the claimant companytends, merely industry in the abstract sense, as if it alone effected the result, but it must be acting and be companysidered.in association with its company operator capital in some form so that the result is, in a sense, the outcome of their companybined efforts. Those observations support the view which we hive taken about the character of companyoperation between the employer and employees which affords a relevant test in determining whether the enterprise in question is an industry or number. Co-operation to which the test refers must be companyoperation between the employer and his employees which is essential for carrying out the purpose of the enterprise and the service to be rendered by the enterprise should be the direct outcome of the companybined efforts of the employer and the employees. There is one more minor point which still remains to be companysidered. Mr. Chari argued that it would be idle for the respondents to companytend. that the work of their firm is number an industry under a. 2j because they have-themselves described their work as the work of carrying on business of solicitors. It appears that the document of partnership executed between the different partners of the firm provided, inter alia, that all expenses of the business of the partnership or losses incurred in carrying on the business of the partnership shall be. borne out of the profits or capital of the partnership. It is on the use of the word business in this clause that Mr. Chari relies. In support of his argument,he referred us to a decision of Farwell, J., in Dickson v. Jones 1 . In that case, the Court was companycerned to examine the validity of an agreement between the, plaintiff, solicitor, and his junior clerk, who 1 1939 3 All. E. R. 182. was subsequently articled to him. This agreement provided that the latter would number ,,at, any time hereafter practice as a solicitor within a radious of 15 miles from the Town Hall, Hanley, aforesaid, or solicit any client of the solicitor. Farwell J., held that the companybination of a restriction over an area so great as a radious 15 miles and one extending to the whole life of the defendant, articled clerk, was, in the circumstances, wider than was necessary for the protection of the plaintiff and was, therefore, unenforceable as being in Undue restraint of trade. The argument is that the validity of an agreement between a solicitor and his articled clerk was tested on the ground that it was an agreement in restraint of trade, and so the solicitors work must be held to be a trade, under s. 2 j . There is obviously numberforce in this argument. If in their deed of partnership the respondents described the work of partnership as the business of solicitors, that can hardly assist the appellants in companytending that the work carried on by the firm is industry under s. 2 j . The work of a solicitor is, in a loose sense, of companyrse, of business, and so if the solicitors entered into an agreement in restraint of trade, its validity would have to be judged on the basis that their work in the nature of business. That, however, is hardly relevant in determining the question as to whether the said work is an industry under section 2 j as we have already made it clear, the definition of the word ,industry is companyched in words of very wide denotation. But that precisely is the reason ,why a line has to be drawn in a just and fair manner to demarcate the limitations of their scope and that necessarily leads to the adoption of some working test. Therefore, in our opinion, the argument that the respondents themselves have called their work as business is of numberassistance.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 302 of 1961. Appeal by special leave from the judgment and order dated September 24, 1959, of the Bombay High Court in F.A. No. 731 of 1959. Sen and I. N. Shroff, for the appellant. C. Setalvad, Attorney General of India, B. Parthasarthi, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the respondents. 1962. February, 27. The Judgment of the Court was. delivered by HIDAYATULLAH, J.-This appeal arises out of a suit tried in the Bombay City Civil Court at Bombay. filed by the respondents, the Trustees of the Port of Bombay, for the ejectment of the appellant, Kanji Manji, and one Rupji Jeraji who had died even before the suit was filed, from a plot situated at Haji Bunder Mazgaon, Sewri Reclamation Estate, Bombay. and for possession of the land. There was a claim for Rs. 10,871-14-0 being the arrears of water charges and property taxes, with which we are number companycerned. The suit was decreed by the Bombay City Civil Court and the appellant was ordered to, vacate the suit premises add to deliver vacant possession thereof. An appeal was filed against the decree in the High Court of Judicature at Bombay, but it was dismissed summarily on September 24, 1959. The High Court also refused an application for a certificate, but the appellant applied for special leave, and having obtained it, filed the present appeal. In 1924, the Trustees of the Port of Bombay granted a lease of the said land to five persons, who were trading in partnership under the name and style of Mancherji Vadilal and Company. This lease was for a term of 10 Commencing from December 14, 1923. For the first six months, the companyventional rent of pepper companyn, if demanded, was payable, and thereafter for the remainder of the term, a monthly rent of Re. 633-5-4 was payable on the first day of every month. The lessees were also to pay all rates, taxes, assessments, etc. One of the companyenants of the lease was that the lessees would, at their own expense and during the first six months period, companystruct upon the said piece of land buildings for us as bullock stables and offices according to the specification given to them by the said Trustees and to be approved by them. It was provided, inter alia, that upon the expiration of the term, if the lessees had observed and performed all the companyenants, they would be at liberty, at their own expense, to remove the buildings erected by them upon the demises on companydition that the removal would be companypleted within three months after the expiration of the term. During this period of three months, the lessees were to pay the monthly rent and also to pay all rates and taxes etc. and if they failed to remove the buildings within the period of three Calendar months from the expiration of the term and within like period to fill up all excavations and to level up and restore the land, the right to remove the buildings would stand determined, and the buildings would belong to the Trustees, who would be entitled to remove them and to clear, level and restore the land and recover the companyts from the lessees. It is number clear from the record as to what happened actually after the expiry of the term. But on August 11, 1942, the Trustees of the Port of Bombay granted to Moreshwar Narayan Dhotre and Dinshaw Rustomji Ogre, carrying on business under the name and style of Messrs. Dinshaw and Company and their respective heirs, executors administrators and assigns, a monthly tenancy of the land together with the buildings standing thereon and all the rights, easements and appurtenances belonging to the premises on payment of monthly rent of Rs. 300/ , clear of all deductions on the first day of each Calender month and payment of all rates, taxes etc. The lessees companyenanted number to add to, or alter the said buildings and companyveniences etc., without previous companysent, in writing, of the Trustees and to maintain the property in good repair at their own companyt. They further agreed to peacefully leave and, yield up the demised premises together with all buildings thereon as prepared and kept at the expiration or sooner determination of the tenancy hereby created or in the event of the Tenants becoming entitled to remove the buildings standing on the demised land at the expiration or sooner determination of the tenancy hereby created pursuant to the proviso in that behalf hereafter companytained to peaceably leave and yield up the demised land cleared and leveled to the satisfaction in all respects of the Trustees. The provisos, inter alia, include the following companyenants binding the lessees Either party to these presents may terminate the tenancy hereby created by giving to the other of them one, calendar months numberice in writing to expire on the 1st day of any calendar month. The Tenants may during the period of numberice for determination of tenancy hereby in accordance with proviso No. 2 herein before companytained remove such buildings as have been standing upon the demised land provided that the Tenants shall have paid all rent hereby reserved up to the determination of this tenancy and shall have performed and observed all the companyenants on the part of the Tenants and the companyditions herein companytained or referred to. On February 28, 1947, Moreshwar Narayan Dhotre and Dinshaw Rustomji Ogra assigned their rights in the lease to Rupji Jeraj and Kanji Manji who, according to the deed of assignment Ex.D paid Rs. 22,250/- to the assignors, and this assignment appears to have been accepted by the lessors. On January 25, 1956, the Trustees of the port of Bombay sent a numberice to Rupji Jeraj and Kanji Manji requiring them to vacate the premises and deliver. vacant and peaceful possession of the land on February 29, 1956. This numberice was number companyplied with, and the suit was filed for their ejectment, as stated already. In the plaint, the first relief claimed was that the defendant be ordered and decreed to forthwith deliver vacant and peaceful possession of the demised premises situate at Mazagaon Sewri Reclamation Estate and more particularly described in Ex. A hereto. Exhibit A mentioned the following All that piece or parcel of land situate at Haji Bunder, Mazagaon Sewri Reclamation Estate, Bombay, admeasuring 5066 619 square yards or thereabouts bearing Cadastral Survey No. 272/145 of Parel-Sewree Division. The suit, as stated was filed against both Rupji Jeraj and Kanji Manji, but later, the plaint was amended by striking out the name of Rupji Jeraj, who had died much earlier. The appellant, as defendant, raised a number of pleas. His main companytention was that the numberice dated January 25, 1956 was invalid, inasmuch as it had been served only upon one of the lessees Kanji Manji and number upon the heirs and legal representatives of Rupji Jeraj. He also companytended that the suit was bad for number-joinder of the heirs and legal representatives of Rupji Jeraj, who were necessary parties. He raised a plea of jurisdiction alleging that the suit had to be filed in the Court of Small Causes, Bombay, inasmuch as it was governed by the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947. He further claimed the protection of a. 4, sub-a. 4 a of this Act which, he said, applied to him and number subs. 1 of the same section. He companytended that, in view of the prohibition companytained in the Act the companyld number evict his sub-tenants and that the company- tract that he must deliver vacant possession was impossible of performance, and the said impossibility rendered the claim of the plaintiffs incompetent. All those pleas were found against the appellant. It was held that the tenancy was a joint tenancy that a numberice to one of the joint tenants was sufficient, and that the suit,also was number bad for number-joinder of the legal representatives of Rupji Jeraj. The trial Judger held that the present agreement was enforceable, inasmuch as this case was governed by sub-s. the 1 and number sub- s. 4 a of s. 4 of the Act. For same reason, the trial Judge also held that the suit was properly laid in the Bombay City Civil Court at Bombay, The same companytentions were raised before us, and we shall deal with them in the same order. The argument about numberice need number detain us long. By the deed of assignment dated February 28, 1947, the tenants took the premises as joint tenants. The exact words of-the assignment were that the Assignors do and each of them both hereby assign and assure with the Assignees as Joint Tenants The deed of assignment was approved and accepted by the Trustees of the Port of Bombay, and Rupji Jeraj and the appellant must be regarded as joint tenants. The trial Judge therefore, rightly held them to be so. Once it is held that the tenancy was joint, a numberice to one of the joint tenants was sufficient, and the suit for the same reason was also good. Mr. B. Sen, in arguing the case of the appellant, did number seek to urge the opposite. In our opinion, the numberice and the frame of the suit were, therefore, proper, and this argument has numbermerit. The real companytroversy in this case centers round the applicability of the Bombay Rents, Hotel and Lodging Houses Rates Control Act, 1947 shortly called the Rent Control Act in the judgment to the present suit., and from that also arises the question of the jurisdiction of the Bombay City Civil Court. The latter argument about the juris- diction of the Court can only arise, if the Rent Control Act applies to the present facts. We shall, therefore, companysider these two points together. It must number be overlooked that the suit was for eviction from the land only Under the Rent Control Act, the word premises is defined by s.5 8 inter alia, as follows Premises means- any land-not being used for agricultural purposes. The Act, prior to its amendment in 1953 by the Bombay Act IV of 1953, provided by s.4 1 as follows This Act shall number apply to any premises belonging to the Government or a local authority or apply as against the Government to any tenancy or other like relationship created by a grant from the Government in respect of premises taken on lease or requisitioned by the Government but it shall ,apply in respect of premises let to the Government or a local authority This sub-section was companysidered by the Bombay High Court in a case, which was brought up in appeal to this Court by special leave. The judgment of this Court is reported in Bhatia Co-operative Housing Society Ltd. v. D. Patel 1 . In that case, building sites were auctioned in 1908 by the City Improvement Trust, Bombay. One of the companyditions of the sale was that the bidder should companystruct a building, on the site, of a certain value and according to a plan approved by the City Improvement Trust. One Sitaram Laxman was the highest bidder, and he companystructed a building. as agreed. He was then granted a lease of the land together with the building for 999 years. Subsequently in 1925, the Bombay Municipality succeeded the City Improvement Trust, and the Bhatia Co-operative Housing Society Ltd. acquired the lessees interest. A suit was filed by the Co-operative Society against its own tenants in the Bombay City Civil Court. The plea was that the suit ought to have been filed in the Court of Small Causes, as required by the Rent Control Act. The plaintiff relied upon sub-s. 1 of s. 4 to show that the Act did number apply to such a suit. This companytention of the plaintiff was accepted by the Trial Judge, who decreed the claim. The Bombay High Court, however, on appeal, held that sub-s. 1 of s. 4 did number apply, and that as between the Co-operative Society and its sub-tenants, the suit was governed by the Rent Control Act and ought, to go before the Court of Small Causes. The High Court, therefore ordered that the plaint be returned for presentation to the proper Court. This Court, on appeal by special leave, reversed the decision of the High Court, and restored that of the Trial Judge. This Court pointed out that sub-s. 1 of s. 4 had three parts viz. 1 this Act shall number apply to premises belonging to the Government or a local authority 1 1953 S. C. R. 185, 2 this Act shall number apply as against the Government to any tenancy or other like relationship created by grant from the Government in respect of premises taken or lease or requisitioned by the Government and 3 this Act shall apply in respect of pre- mises let out to the Government or a local authority. This companyrt further held that the first part of the sub- section mentioned as part No. 1 above had numberreference to any tenancy or other like relationship as in the latter part, and was general in character. In framing it in that way, the intention was obviously different, and it was to exempt premises of a particular type from the operation of the Act altogether, and the exemption attached to the premises. Reasons were given by this Court why it thought that this exemption was general and the immunity absolute. Into these reasons we are number number required to go. As between the Bombay Municipality and the lessee, it was held that the land and the buildings belonged to the former as owners and number to the lessee. This Court, therefore, observed at p. 196 The truth is that the lessor after the building was erected became the owner of it and all the time thereafter the demised pre- mises which include the building have belonged to him subject to the right of enjoyment of the lessee in terms of the lease. The Act was thus held number to apply to such suits, and the order of the High Court was reversed. At first, an Ordinance and later, an Act were passed to nullify the effect of this ruling by the addition of sub- s.4 a . That sub-section number reads as follows . 4 a . The expression premises belonging to the Government or a local au- thority in sub-section 1 shall, numberwith- standing anything companytained in the said sub- section or in any judgment. decree or order of a Court, number include a building erected on any land held by any person from the Government or a local authority under an agreement, lease or other grant, although having regard to the provisions of such agreement, lease or grant the building so erected may belong or companytinue to belong to the Government or the local authority, a,-, the case may be and b numberwithstanding anything companytained in section 15, such person shall be en led to ,tit create a tenancy in respect of such building or a part thereof. The amendment achieved two different things. It enabled the lessee of the particular kind of building described in el. a to create sub-tenancies in spite of the ban against sub- tenancies companytained in s.15 . It also excluded from the operation of sub-s. 1 the buildings specified in cl. a of the subsection. The amendment said numberhing about the relationship of the Government or the local. authority, on the one hand, and the lessee, on the other, in respect of the land. The word premises in subs. 2 companyld mean the land or the buildings or both. Sub-section 4 a dealt only with the buildings, and did number deal with the land, because it used the word buildings and number the more general word premises. The import of sub-s. 4 a of s.4 was thus limited to buildings, and did number extend to land. The sub-section, however, was drafted somewhat inartistically, and the obscurity of the language presents some difficulty. The Trial Judge following a decision of the Bombay High Court reported in Ram Bhagwandas v. Bombay Corporation 1 . In that case, one Khudabaksh Irani had I.R, 1956. Bow. 364. taken lease of certain plots some 30 years back., and companystructed some structures upon the open plot, and rented them out as tenements. In 1947, Irani sold them to one Tyaballi. In 1951, the Municipal Corporation filed a suit to eject Tyaballi from the plots, and by a companysent decree, Tyaballi agreed to deliver up vacant and peaceful possession of the plots clear of all structures. Tyaballi failed to remove the structures, and the Municipal Corporation sought to execute the decree. The tenants thereupon filed a suit under 0. 21, 103 of the Civil Procedure Code against Municipal Corporation, but the suit was dismissed. In the appeal which was filed in the High Court, it was companyceded that the Municipal Corporation was the owners of the plots in question, but protection was claimed on the basis of sub- s. 4 a of s.4 of the Rent Control Act. Chagla, C. J. in dealing with the history of the amending Act, pointed out that the legislature was seeking to protect by that sub- section tenants who occupied buildings put upon land belonging to a local authority, if the buildings occupied by them were companystructed under an agreement under which the lessee was under an obligation to companystruct buildings. He pointed out that the protection of sub-s. 4 a was to buildings and number to land, and that the phrase under an agreement, lease or other grant modified number only held by any person from Government or local authority but also erected on any land. He, therefore, held that the words erected on any land held by any person from a local authority were descriptive of the building and did number emphasise the point of time when the building was erected. By that phrase, what was emphasised was ,that the nature of the building must be such as to satisfy the test that it was erected on land hold by a person from a local authority and the test must be applied at the time when the protection is sought. In this case, it is companytended, as it was companytended in the Bombay High Court, that so long as a building was erected under an agreement with Government or a local authority, the benefit of sub-a. 4 a of s. 4 would be available, numbermatter how many hands the property might have changed. this argument was companysidered by the learned Chief Justice, and was rejected. In our opinion, though the section is far from clear, the meaning given by the learned Chief Justice is the only possible meaning, regard being had to the circumstances in which this sub-section came to be enacted. Those circumstances were In a case in which the holder of the land from a local authority was seeking to evict his sub- tenants, it was held by the Bombay High Court that the matter was governed by the Rent Control Act. This Court held that sub-s. 1 applied and the suit was number governed by the Rent Control Act. The amendment was enacted to cut down by a definition the operation of the words any premises belonging to the Government or a local authority, by excluding only buildings which were occupied by sub-tenants even though the buildings belonged to the Government or companytinued to belong to it. Clause b of sub-s. 4 excluded also s. 15, which prohibited subjecting by a tenant. That, however, was limited to the case of buildings only, and did number apply to the case of land. In this situation, any action by the Government or the local authority in respect of land falls to be governed by sub-s. 1 and number sub-s. 4 a , and sub-s. 1 puts the case in relation to land, entirely out of the Rent Control Act. The net result, there fore, is that if Government or a local authority wants to evict a person from the land, the provisions of the Rent Control Act do number companye in the way. For the same reason, the suit for ejectment does number have to be filed in the Court, of Small Causes, as required by the Rent Control Act but in the City Civil Court. as has been done in this case. There is one more reason in this case for reaching the same companyclusion, because at the time of the lease in 1942, the lessees, from whom the appellant claims assignment, were given a lease number only of the land but of the buildings. The whole tenor of the agreement shows that the title of the lessees wag precarious. It was a monthly tenancy liable to be terminated with a numberice under the Transfer of Property Act, and there was only a grace that the lessees, when evicted, might remove buildings within one month of their eviction. This precarious interest was obtained by the assignee by an assignment, and the same thing applies to them. If the original lessees took on lease number only the land but also the buildings, it is number open to their assignees to claim that the ownership of the Government extended only to the land and number to the buildings By the admissions in the deed of lease and the. various clauses, it is quite clear that these buildings cannot number be described as buildings companystructed under an agreement with the Government, but rather as buildings belonging to Government which were leased out with the land but in respect of which by a companycession, the lessees were entitled to remove the buildings within one month after eviction, In our opinion, the suit as laid for vacant possession of the site and in the City Civil Court was companypetent. It was companytended that the companytract was incapable of being performed, because at least between the present appellant and his sub-tenants the provisions of the Rent Control Act would apply, and he would number be able to evict them in his turn. It was, therefore, argued that this impossible on the part of the appellant to fulfill his, obligations to deliver vacant possession rendered that portion of the lease deed unenforceable and void. It is to be numbericed that the appellant does number claim that by reason of the impossibility the whole of the lease deed becomes void, because if he did so, the suit of the Port Trust authorities would be perfectly justified without any more He only seeks to show that portion of the deed dealing with delivery of vacant possession has become impossible of performance. Such a situation had also arisen in the case of the Bombay High Court in Ram Bhagwandas v. Bombay Corporation 1 , and the assignee of the lessee was unable to deliver vacant possession. Whether or number the Port Trust authorities would be able hereafter to evict the sub-tenants of the appellant is a matter, on which we need number express any opinion.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 29 of 1958. Appeal from the judgment and order dated May 3, 1956, of the Allahabad High Court in Special Appeal No. 48 of 1954. Veda Vyasa and C. P. Lal. for the appellant. N. Goyal, for the respondents. 1962. February 6. The Judgment of the Court was delivered by WANCHOO, J.-This is an appeal on a certificate granted by the Allahabad High Court. The brief facts necessary for present purposes are these. Certain decretal moneys were deposited in the then Chief Court of Oudh at Lucknow. The respondents applied to the Chief Court for permission to withdraw the moneys on furnishing security and were permitted to do so. Thereupon a registered security bond was executed and registered in Simla in 1949 by which a house there was given in security for withdrawal of the money. Befere, however, the money companyld be withdrawn, the Inspector of Stamps reported on March 15, 1950, that the so called security bond was in reality a mortgage deed without possession and was insufficiently stamped. He therefore reported that it should be impounded and the deficit stamp duty of Rs. 482/11/- and a penalty amounting to Rs. 4,826/14/- should be levied with respect to that document. Thereupon on April 5, 1950, the Deputy Commissioner, Kheri, acting as Collector passed the following order - In case the parties have any objection, they put it in writing which will be referred to the Board of Revenue. It seems that on July 5, 1950, the respondents objected that the document was number a mortgagedeed and that, numberduty or penalty was payable, and further that as the document had number been till then accepted by the companyrt,. it was only a tentative document. On August 3, 1950, the judicial officer before whom the security bond was filed impounded it under s. 33 of the Indian Stamp Act, No. If of 1898, hereinafter referred to as the Act , and apparently forwarded it to the Deputy Commissioner, Kheri, under s. 38 of the Act. It seems thereafter that in November 1950 the respondents filed further objections before Stamp Officer TreaBury Officer , Kheri, from whom the Deputy Commissioner who acts as a Collector for the purposes of the Act had called for a report. In December 1950, the Treasury Officer made a report to the effect that the view of the Inspector of Stamps was companyrect and duty and penalty. as reported by the latter were due. The respondents case was that the Treasury Officer did number give them any hearing before making the said report. It seems that on this report the Deputy Commissioner made the order Realise. He also is said to have given numberhearing to the respondents. In January 1951, the respondents filed a revision against the order of the Deputy Commissioner before the Board of Revenue. It appears however that in March 1951 the Deputy Commissioner referred the matter to the Board of Revenue under s. 56 2 of the Act. In July 1951 the Board of Revenue disposed of the matter and upheld the order of the Collector. But the respondents companyplaint was that the Board of Revenue also did number give them a hearing. Consequently they filed a writ petition in the High Court in November 1951. That petition was dismissed by the learned Single Judge on the ground that neither the Act number the Rules made thereunder provided that any bearing should be given to the person who was liable to pay the deficit stamp duty and the penalty. He further held that in any case the Collector had given an opportunity to the respondents to urge their objections in writing, and that the Board of Revenue had also companysidered the grounds taken by the respondents in their revision-petition and there was numberprovision in the law requiring the Board of Revenue to give a personal hearing or a hearing through companynsel in a case of this kind. The respondents then went in appeal. The appeal companyrt seems to have treated the matter before the Board as if it were a reference under s. 56 2 of the Act. As the learned Single Judge has pointed out, though the order of the Collector of December 1950 would usually be final, it appeared that he had chosen to make a reference to the Board of Revenue under s. 56 2 . We must therefore proceed on the assumption that this case has been disposed of by the Board under s. 56 2 and number by the Collector under s. 40 1 or. by the Board under s. 56 1 . The appeal companyrt under ss. 40 and 56 leave the entire matter to the opinion of the person before whom the insufficiently stamped document is produced and do number lay down any procedure for calling upon the party companycerned to show cause why the document be number held to be insufficiently stamped and there was numberprovision under the Act or the Rules which required the authorities companycerned to give any hearing to the person executing the document. The appeal companyrt therefore held that the authorities companycerned when acting either under s. 40 or s. 56 were number acting judicially or quasi judicially. The appeal companyrt further held that even though the authorities were acting merely administratively under a. 40 and s. 56 2 they were bound to give a hearing according to the principles of natural justice, in accordance with the decision of that companyrt in Special Appeal No. 291 of 1955, Ghanshyamdas Gupta v. The, Board of High School and Intermediate Education, U. P. They therefore set aside the order of the Board of Revenue on the ground that numberhearing had been given to the respondents. Thereupon on application for leave to appeal to this Court was made to the High Court, which was allowed and that is how the matter has companye before us. The main companytention of the appellant before us is that the High Court having held that the Board was acting merely administratively when proceeding under s.56 2 of the Act went wrong in holding that it was bound under the principles of natural justice to give a hearing to the respondents. In effect the appellant in this case impugned the companyrectness of the view taken in Special Appeal No. 291 of 1955 supra . That case has companye up before us in appeal C. A. 132 of 1959 Board of High School and Intermediate Education v. G. Gupta , judgment in which is being delivered today. We have in that case held that the examinations companymittee is under a duty to act judicially when proceeding under r.1 1 of Chap. VI of the Regulations framed under the U. P. Intermediate Education Act, No. 11 of 1921 , and have number upheld the view taken by the High Court that it acts administratively. A similar question arises in the present appeal, viz., whether the Board of Revenue when dealing with a proceeding under s. 56 2 of the Act acts administratively or quasi-judicially. We must make it clear that we are proceeding in this appeal on the basis that the matter before the Board was under s.56 2 on a reference by the Collector and number under s.56 1 on the application filed by the respondents inviting it to exercise its power of companytrol thereunder. The companytention on behalf of the respondents is that when the Board is acting under s. 56 2 of the Act it is acting quasi-judicially. Let us therefore first look to the scheme which leads up to the reference under s. 56 2 of the Act. That sub-section provides that if any Collector, acting under s. 31, s.40 or s.41, feels doubt as to the amount of duty with which any instrument is chargeable, he may draw up a statement of the case, and refer it, with his own opinion thereon, for the decision of the Chief Controlling Revenue authority. Section 31 deals with the case when any instrument is brought to the Collector, and the person bringing it applies to have the opinion of that officer as to the duty if any with which it is chargeable. It is then the duty of the Collector either to determine the duty if any with which, in his judgment the instrument is chargeable or to refer the case to the Chief Controlling Revenue-authority under s.56 2 if he has any doubt in the matter. Section 40 deals with the case where an instrument is impounded under s.33 or the Collector receives any instrument sent to him under s.38 2 , subject to certain exceptions and gives power to the Collector either to certify that the instrument is duly stamped or that it is number chargeable at all, or if he is of opinion that the instrument is chargeable with duty and is number duly stamped to require the payment of proper duty or to make up the same together with a penalty. But if the Collector is doubtful in the matter he has been given power under s.56 2 to refer the question to the Chief Controlling Revenue authority. Lastly under s.41, if any instrument P.chargeable with duty and number duty stamped subject to certain exceptions is produced by any person of his own motion before the Collector within one year from the date of its execution of first execution, and such person brings to the numberice of the Collector the fact that such instrument is number duly stamped and offers to pay to the Collector the amount of the proper duty, or the amount to make up the same, and the Collector is satisfied that the omission to duly stamp such instrument has been occasioned by accident, mistake or urgent necessity, he may, instead of proceeding under ss.33 and 40, receive such amount and under s.42 certify by endorsement thereon that the proper duty has been paid. But even in such a case if the Collector is doubtful in the matter, he has been given the power to make a reference to the Chief Controlling Revenue-authority. It is clear therefore that s.56 2 deals with cases where there is a doubt in the mind of the Collector in regard to an instrument which companyes up before him under the above provisions of the Act as to the companystruction of the instrument and the provisions of the Act applicable to it. Such doubt itself shows that the point raised for the Collectors decision is a difficult point of law and from the very nature of the duty to be performed in such circumstances it appears clear that the Chief Controlling Revenue-authority has to decide the matter judicially and would thus be a quasijudicial tribunal. As pointed out by us in C.A. 132 of 1959, the question whether an authority, like the Board of Revenue, acts judicially is to be gathered from the express provisions of the Act, in the first instance. Where however the provisions of the Act are silent, the duty to act judicially may be inferred from the provisions of the statute or may be gathered from the cummulative effect of the nature of the rights affected, the manner of the disposal provided, the objective criterion to be adopted, the phraseology used and other indicia afforded by the statute. It is true that in the present case the Act and the Rules framed thereunder do number provide for a hearing by the Board of Revenue, when it is dealing with a matter under s.56 2 of the Act. But the question that is before the Board of Revenue under s.56 2 is of the companystruction of an instrument and the application of the Act to it. In many cases the decision of the Board, if it goes against the person executing the instrument., may result in payment of large amounts as deficit stamp duty and even larger amounts as penalty. The question is purely a question of law in the circumstances. It seems to us, companysidering the nature of the duty cast on the Board of Revenue under s.56 2 requiring it to companystrue instruments submitted to it thereunder and the application of the Act to them which may result in payment of heavy amounts of deficit duty and even heavier amounts as penalty, that the legislature intended that the Board of Revenue should hear the person executing the document before saddling him with large pecuniary liability. The question before the Board under s.56 2 being one of companystruction of an instrument and the application of the Act to it being, a pure question of law which may-result in payment of large amounts by the executants of the document, it would number in our opinion be improper to hold that for the determination of such a question the legislature intended that the party affected by the decision of the Board of Revenue should be given a hearing, and that the Board should act judicially in deciding a pure question of law. The fact that the decision will depend upon the opinion of the Board cannot in any way make any difference for the determination of questions of law must always depend upon the opinion arrived at judicially of the person or authority who has to determine it, and that will number necessarily mean that the person determining it cannot possibly be required to act judicially because be has to act upon his opinion. Further, s.57 enforces the above companyclusion. That section provides that the Chief Controlling Revenue-authority may state any case referred to it under s.56 2 , or otherwise companying to its numberice. and refer such case, with its own opinion thereon to the High Court, and every such case shall be decided by number less than three Judges of the High Court to which it is referred. This provision shows that questions referred to the Board under s.56 2 may be such companyplicated questions of law that the Board may number be able to make up its mind and may be in doubt and in such a case the Board has the power to refer the matter to the High Court along with its opinion and the question has to be decided by a Bench of three Judges, where undoubtedly the hearing companyld number but be judicial. If therefore the hearing under s.57 is judicial it would in our opinion be proper to infer that the hearing under s.56 2 which deals with similar questions must also be judicial. We are therefore of opinion that, companysidering the totality of circumstances and the nature of the matter to be determined by the Board of Revenue under s.56 2 , the Board has to act judicially when proceeding under s.56 2 and must therefore on principles of natural justice give a hearing to the other party, namely, the executant of the instrument. The Board of Revenue therefore, acts as a quasi-judicial body under s. 56 2 and the respondents were entitled to a hearing. We therefore uphold the order of the high Court, though on a different ground.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 153 of 1960. Appeal by special leave from the judgment and order dated July 28, 1960, of the Patna High Court in Criminal Revision No. 1243 of 1959. Sarjoo Prasad, B.K. Banerjee, P.K. Chatterjee, and A.K. Nag, for the appellants. P. Varma, for the respondent. 1962. February 1.-The Judgment of the Court was delivered by HIDAYATULLAH, J.-This is an appeal by special leave against an order of the High Court of Patna, by which an order passed by the Magistrate, First Class, discharging the appellants under s. 207A 6 of the Code of Criminal Procedure, was set aside, and the Magistrate was directed to companymit the appellants to the Court of Session to stand their trial under ss. 307/34 and 148 of the Indian Penal Code. The only question that is argued is whether the High Court was justified in setting aside the order of the Magistrate, which, it is claimed was passed in the proper exercise of the jurisdiction companyferred by s. 207A 6 of the Code. The facts of the case, in brief, are as follows On March 26, 1959, at about 10-15 p.m. one Rajbahadur Rai alias Chhote Rai, was alleged to have been assaulted by the appellants at a place where Chhote Rai was sitting, at the pan shop of one Raghunath Prasad. The appellants are said to have arrived there in a private car and a tandem, and after assaulting Chhote Rai, to have gone away in these two vehicles. After investigation, the appellants were prosecuted under ss. 307/34 and 148 of the Indian Penal companye, with the result already mentioned. Before the order of discharge was made, the Magistrate heard the evidence of nine witnesses including Chhote Rai and Raghunath, who had given the first information report. The witnesses also included two other alleged eye-witnesses, Bhushan Singh P.W. 2 , and Sheonandan Yadev P.W. 6 . The Magistrate, after recording the evidence and holding a spot inspection and hearing the parties, discharged the appellants as he was of opinion in his own words - in view of the aforesaid discrepant, unreliable and incredible and highly interested prosecution evidence, numberCourt can companysider it worthwhile prima facie even for a trial. In a case of this nature, it is the legal obligation of a Magistrate to discharge the accused persons, as discussed above. The Magistrate reached this companyclusion on a fairly long appraisal of the evidence in the case, discussing it from the angle of credibility of witnesses, their antecedents, the probabilities of the case, the nature of the alleged weapon, the medical evidence and so on. In short, it will number be wrong to say that he tried the case, instead of finding out whether there was numberground for sending up the appellants to stand their trial before the Court of Session. The High Court, in the order under appeal, held that the Magistrate went beyond the powers companyferred upon him of enquiring into the case with a view to companymitting it to the companyrt of Session. Section 207A is a new section, which has been introduced by the Code of Criminal Procedure Amendment Act, 1955 26 of 1955 . It lays down the procedure which the Magistrates must follow in an enquiry in proceedings started on a police report, preparatory to companymitment of cases to the Court of Session. Sub-sections 1 , 2 and 3 deal with the fixing of dates, issuing of processes and ensuring that companyies of the documents referred to is s. 173 of the Code of Criminal Procedure have been furnished to the accused. Sub- section 4 then enjoins upon the Magistrate that he shall proceed to take the evidence of such persons, if any, as may be produced by the prosecution as witnesses to the actual companymission of the alleged offence, and also enables him to take the evidence of any one or more of the other witnesses for the prosecution as he companysiders, in his opinion, necessary. The sub-section divides the witnesses into two categories, viz., witnesses to the actual companymission of the offence and other witnesses like formal witnesses, or those who cannot depose to the actual companymission of the offence. Of the first category, those that the prosecution produces, must be examined but the other witnesses may be examined, only if the Magistrate companysiders it necessary. It seems, prima facie, that the prosecution cannot insist on their examination. An accuses is given by subs. 5 a right to cross-examine the witnesses, who are examined, and the prosecution can also reexamine them. Then companyes sub-s 6 , which reads as follows- When the evidence referred to in subsection 4 has been taken and the Magistrate has companysidered all the documents referred to in sections 173 and has, if necessary, examined the accused for the purpose of enabling him to explain any circumstances appearing in the evidence against him and given the prosecution and the accused an opportunity of being heard, such Magistrate shall, if he is of opinion that such evidence and documents disclose numbergrounds for companymitting this accused person for trial, record his reasons and discharge him, unless it appears to the Magistrate that such person should be tried before himself or some other Magistrate, in which case he shall proceed accordingly. This sub-section, it is companytended, gives the Magistrate the option number to companymit an accused but to discharge him, if he is of opinion, for reasons to be recorded, that the evidence discloses numbergrounds for companymitting the accused person, unless it appears to him that the person should be tried before himself or some other Magistrate. The Magistrate, in this case, thought that the power companyferred upon him by this sub-section enabled him to examine the evidence thoroughly, and if it did number satisfy him, to discharge the accused. This view of the Magistrate was number accepted by the High Court. Mr. Sarjoo Prasad for the appellants, companytends, on the basis of the ruling of this Court in Ramgopal Ganpatrai Ruia v. The State of Bombay 1 , that the companyrse followed by the Magistrate in determining whether there was credible evidence or number was the right companyrse, and points to certain passages in the judgment in the above case as supporting his proposition. The cited case interpreted s. 209 of the Code of Criminal Procedure, which, after amendment of the Code by Act 26 of 1955, deals with proceedings instituted otherwise than on a police report, and under which the Magistrate can. discharge an accused if he finds that there are number sufficient grounds for companymitting the accused person for trial. The words of the two sections are number the same, and it is possible to say that the force of the two sections is also number the same, and that s. 209 gives a power to enter upon the merits of a case in a manner which s. 207A does number warrant. Whether the change of the language is deliberate or due to the fact that different draftsmen drafted the two sections, the test for discharging the accused must, in a large way. be the same under both the sections, and it is hardly necessary to decide the full of ambit of s. 207A and companytrast it with that of s. 209. If there is any indication in the language, it is altogether on the side that the Magistrate must find a stronger case for discharging an accused under s. 207A than under s. 209. But, whatever the meaning of the two expressions, neither of them invests the Magistrate with the jurisdiction to decide the case, as if the sessions trial was before him. To this extent, Mr. Sarjoo Prasad fairly companycedes, s. 207A 6 cannot be carried. Put in other words, the section can only mean that if there is a prima facia case triable by the Court of Session, the Magistrate must companymit the accused to the Court of session to stand his trial. What those cases would be, which would satisfy the test, may number generally be stated here, because, in our opinion, this case is far from the borderline, where only difficulties are likely to be met. In this case, we are clear, on a reading of the reasons recorded by the Magistrate, that he did number stop to find out that there was evidence which, if believed, would establish, at least, a prima facie case but went on further to disbelieve that evidence by an elaborate and painstaking process of examination, in aid of which he brought to bear his own appraisal of inconsistencies, improbabilities etc. In short, he tried the whole case from one end to the other and established his point, as has been said already, in a fairly elaborate order. In this process, he disbelieved the injured person, other eye-witnesses, companytrasted the oral testimony of how the offence took place with the medical evidence and his own companyclusions drawn from an inspection of the site and other matters, to numerous to detail here. In our opinion, whatever the jurisdiction companyferred by sub-s. 6 of s. 207A, it does number entitle a Magistrate to try the case on his own, and forestall the decision of the Court of Session, and this is what the Magistrate, is fact, did here. We, therefore, agree that the order of discharge passed by him was in excess of his jurisdiction, and it is hardly necessary in this case to show how far a Magistrate can go to find that there is numberground for companymitting the accused to stand his trial in a Court of Session. We see numberreason to interfere with the order of the High Court, and dismiss the appeal It is a matter of regret that much delay has taken place in this case, and it may harm the case or the one side or the other. We hope that number the case will be heard from day to day, and disposed of, as expeditiously as possible.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 82 of 1960 and 148, 168 to 174 and 357 to 361 of 1961. Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. WITH Civil Appeals Nos. 453 to 474 of 1961. Appeals from the,, judgment and order dated May 25. 1959, of the Punjab High Court in Civil Writ Nos. 428, 303, 398, 402, 459 to 462, 421, 472, 473, 475, 490, 503, 509, 519, 520, 555, 590, 710 and 712 of 1958. AND Civil Appeal No. 50 of 1962. Appeal by special leave from the judgment and order date May 25, 1959, of the Punjab High Court in Civil Writ No. 347 of 1958. Achhru Ram and Naunit Lal,for the petitioner in Potn. No. 82 of 60 and the appellant in C. A. No. 50 of 62 . N. Shroff, for the petitioners in Petn. No. 148 of 61 and the appellants in C. As. Nos. 457 to 474. of 61 . Hardev Singh and Y. Kumar, for the petitioers in Petns. Nos. 168 to 174 and 357 to 361 of 61 . K. Daphtary, Solicitor-General of India, K. L. Gosain, R. L. Iyengar, Lakshmi Chand and I. N. Shroff, for the appellants in C.As. Nos 453 and 456 of 1961 . L. Gosain, B. R. L. Iyengar, Lakshmi Chand and I. N. Shroff, for the appellants I in C. A. No. 454 of 196 I . R. L. Iyengar, Lakshmi, Chand and I.N.Shroff, for the appellants in C. A. No. 455 of 1961 . M. Sikri, Advocate-General, for the State of Punjab N. S. Bindra and P. D. Menon, for the respondents in all petitions and Civil Appeals . C. Setalvad, Attorney-General of India, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for Intervener No.1 Satinder Singh . L. Mehta, for Intervener No. 2 Raghuvinder Singh and others . 1962. February 20. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.-The question that rises for our decision in the above writ petitions and appeals is whether certain jagirs in the State of Punjab known as the Cis- Sutlej jagir are liable to be resumed under the provisions of the Punjab Resumption of Jagirs Act, 1957 Punjab Act No. 39 of 1957 , hereinafter referred to as the Act. This Act came into force on November 14, 1957, and the respondent State then proceeded to take action thereunder for resuming the jagirs. A number of petitions were thereupon filed in the High Court of Punjab under Art. 226 of the Constitution challenging the validity of the Act and of the proceedings taken by the respondent State thereunder on the ground, firstly, that the Act was ultra vires the powers of the State Legislature and that its provisions were unconstitutional and void and, secondly, that even if the -Act was intra vires the jagirs held by the petitioners were number jagirs as defined in the Act, and were therefore number liable to be resumed under its provisons. By their judgment dated May 25, 1959, the learned Judges held that the legislation was within the companypetence of the State, and that it did number companytravence any of the companystitutional provisions. They further held that the jagirs held by the petitioners fell within the definition of jagir under the Act, and were liable to be resumed thereunder, and that accordingly numberwrit companyld be issued against the State for proceeding under the provisions of the Act. By their Order dated January 27, 1960, the learned Judges granted leave to appeal to this Court under Art 133 1 a , and pursuant to the same, Civil Appeals Nos. 453 to 474 of 1961 have been preferred to this Court. Appeal No. 50 of 1962 by special leave is also directed against the judgment of the Punjab High Court in a Writ Petition tinder Art. 226. Some of the jagirdars have also filed petitions in this Court under Art. 32 of the Constitution, impugning the Act and the action of the State thereunder on the same grounds as those raised in the appeals. We have accordingly heard arguments of learned Counsel both in the writ petitions and in the appeals, and this Judgment will govern all of them. Though a number of grounds have been taken in the pleadings, impugning the Act as ultra vires and its provisions as unconstitutional, in the argument before us, -the only companytention that was pressed was that the Cis-Sutlej jagirs do number fall within the definition of jagirs companytained in the Act and that accordingly the State had numberauthority to resume them under the provisions of the Act. And this companytention is sought to be sustained on two ground i that there was at numbertime any grant of the Cis-Sutlej jagirs to their holders, much less any assignment of land revenue to them and ii that even if there was such a grant, it was number one made by or on behalf of the State Government as required by s. 2 1 . It is argued that if either of these companytentions succeeds, the jagirs in question would fall outside the purview of the Act, and the State would have numberright under its provisions to resume them. It will be companyvenient at this stage to set out the relevant provisions of the Act. Section 2 1 defines jagir as follows- jagir means- a any assignment of land revenue made by or on behalf of the State Government or b any estate in land created or affirmed by or on behalf of the State Government carrying with it the right of companylecting land revenue or receiving any portion of the land revenue or c any grant of money made or companytinued by or on behalf of the State Government which purports to be or is expressed to be payable out of the land revenue or d any grant of money including anything payable on the part of the State Government in respect of any right, privilege, perquisite or office and includes any such grant or assignment existing in favour of Cis-Sutlej jagirdars. Jagirdar is defined in s. 2 2 as meaning the holder of a jagir. Section 2 5 defines State Government as follows- State Government- a as respects any period before the 1st November 1956, shall mean- the Government of the Patiala and East Punjab State Union or any of the Indian States which formed into the Patiala and East Punjab States Union on the 20th August, 1948 and the Government of the State of Punjab and all predecessor Governments thereof by whatever name called, the Governor-General or the Governor-General in Council, as the case may be, and the Sikh Rulers, but shall number include the Central Government as defined in the General Clauses Act, 1897, after the period companymencing on the 15th August, 1947. b as respects any period after the 1st November, 1956 shall mean the Government of the State of Punjab. Section 3 enacts that- Notwithstanding anything to the companytrary companytained in any law or usage any grant settlement, sanad or other instrument, or any decree or order of any Court or authority, all jagirs shall, on and from the companymencement of this Act, be extinguished and stand resumed in the name of the State Government. It is companymon ground that the jagirs which are companycerned in the present writ petitions and appeals companysist of a right to the revenue payable, on lands, and number of any estate such as will fall under s. 2 1 b of the Act and that they must fall, if at all within s. 2 1 a . Therefore the discussion narrows itself to the question whether there was, as required by s. 2 1 a of the Act, any assignment of the revenue of these jagirs and whether such assignment was by the State Government. On the first question, as to whether there was assignment of land revenue, the companytention of the petitioners and of the appellants-and they will hereafter be referred to companypendiously as jagirdars-is that the so called jagirs are number jagirs as ordinarily understood, that they were number the subject matters of any grant by any State that they were in fact originally independent States held by rulers with sovereign rights, that in companyrse of time the British Government imposed their sovereignty over them, and finally took over the administration of the State and paid the revenue companylected therefrom to the rulers, number as person to whom the land-revenue had been assigned, because there was numbersuch assignment but as sovereigns of the States. Therefore, it is companytended, the companycalled jagirs are number within the definition of s. 2 1 . That brings us on to the question of the true status of the Cis-Sutlej jagirdars. The origin of these jagirs goes back to 1763. The companylapse of the Moghul Empire had created a void in the political ,stage of this companyntry, and many were the powers which stepped in with the ambition of establish- ing their sovereignty. The British had established their rule and bad extended their dominion up to the Jumna. The Sikhs had also developed during this period from being a purely religious sect into a military Organisation, and established several States beyond the Sutlej. The tract of territory between the Jumna and the Sutlej was at this time under the administration of a weak Afghan Governor called Zain Khan. The policy of the British during this period was to hold the Jumna as the frontier, and so they were indifferent to the fate of this Cis-Sutlej area. But the Sikh Chiefs beyond the Sutlej companyld number resist the temptation of overthrowing the Afghan Governor, seizing his territory and establishing themselves as its rulers. In 1763 the storm burst when a number of them crossed the Sutlej, overwhelmed the Afghan Governor and occupied the whole companyntry upto Jumna. Tradition still describes, says Cunningham in his History of the Sikhs, P. I 10, I how the Sikhs dispersed as soon as the battle was won and how riding day and night each horseman would throw his be-It and scabbard, his articles of dress and acooutrement, until he was almost naked into successive villages to mark them as his. when the companyquest was over each Chief declared himself the ruler of the territory which he was able to occupy, and companystituted himself its sovereign. This state of affairs companytinued until 1806. By this time, Ranjit Singh the ,Lion of the Punjab, had built up a powerful State across the Sutlej. He had already subdued the petty rulers within that area and was turning his attention to the territories south of the Sutlej and had occupied some of them. The Cis-Sutlej rulers became alarmed about their future and appealed for protection to the British, who had, by this time, changed their policy of number- intervention. The appeal was welcome, and met with prompt response. The result was that in 1809 the British entered into a treaty with Ranjit Singh whereby he surrendered his acquisitions south of Sutlej and agreed number to interfere with the Cis-Sutlej States. And this was followed by a proclamation by Colonel Ochterlony in May 1809 whereby the Cis-Sutlej Chiefs were assured of their rights as sole owners of their possessions and exempted from payment of tribute, but were required to furnish supplies to the British Government and assist them against their enemies. The British Government also promulgated a rule that whenever any of the rulers died without issues, his State would lapse to the British Government. This was the position until 1846 when a drastic change in the situation took place. In 1845, there was war between the British and the Sikhs, and in that war the Cis-Sutlej rulers far from helping the British against the Trans Sutlej Sikhs, were either unsympathetically neutral or actively hostile to them, and that brought about a change in the policy of the British Government towards them. The position is thus stated by Kensington in the Ambala Gazetteer at p. 26- Having thus already lost the companyfidence of the Government the Sikh Chiefs in the Sutlej campaign forfieted all claim to companysideration. It was seen that the time had arrived for the introduction of sweeping measures of reform and the Government unhesitatingly resolved upon a reduction of their privileges. Several important measures were at once adopted. The police jurisdiction of most of the chiefs was abolished, the existing system being most unfavourable to the detection and punishment of crime. All transit and customs duties were also abolished and thirdly, a companymutation was accepted for the personal service of the chief and his companytingent. The despatch of the Governor General embodying this resolution was dated November 7th, 1846. While the sweeping changes aforesaid were being introduced, the second Sikh War broke out and that ended in the annexation of the Punjab. And with that the Deed for maintaining appearances and for recognizing the Cis-Sutlej Chiefs as rulers came to an end. The British Government then proceeded to act swiftly and firmly, and in June, 1849, they made a declaration that the Chiefs should cease to hold sovereign powers, should lose all criminal, civil and fiscal jurisdiction, and should be companysidered as numbermore than ordinary subjects of the British Government in the possession of certain exceptional privileges 1 . Pursuant to this declaration, the Chiefs were stripped of all their governmental functions and the final denouement took place in 1852 when the British took over the companylection of revenue for the jagir lands. The rules for settlement of revenue were made by them, and the actual settlement and companylection of revenue were made under their authority, and out of the companylections the jagirdars were paid their share. On these facts, the question is whether it can be said that their was an assignment of the land revenue to the jagirdars. Express grants to them, there were numbere. The point in debate before us is whether grants of the land revenue companyld be implied from the facts stated above. A somewhat similar question came up for decision before this Court in Thakar Amar Singhji v. State of Rajasthan 2 with reference to a class of jagirdars in the State of Rajasthan known as Bhomicharas. They were once the rulers of the territories which were claimed to be jagirs, and later on the State of Jodhpur imposed its suzerainty over them and exacted an annual payment called Foujbal. The Bhomioharas companytended that they had companye into possession of the territories as rulers and held them as rulers and number as jagirdars under grants made by any ruler. In repelling this companytention, this Court held that a grant may be implied as well as express, and that on the facts which were Proved, the Bhomicharas, though they held originally as rulers, must be held to have been reduced to the status of subjects, and that their position was that of jagirdars under an implied grant. The position of the Cis-Sutlej jagirdars bears a close analogy to that of the Bhomicharas in Thakur Amar Singjis case 2 . They became rulers of the territories when they took possession of them by companyquest in 1763. The first inroads into their 1 Griffins Rajas of that Punjab, P. 199. 2 1955 2 S.C.R. 303. sovereignty were made in 1809 when the British established their suzerainty over them and further declared that the territories of the rulers who died without heirs would escheat to them. Then in 1846 the British Government deprived them of police jurisdiction, and the power to levy customs, and in 1849, of all their sovereign functions. It is number disputed that as a result of all these acts they were reduced to the position of ordinary subjects, that indeed being the objective of the British Government as avowed in their declaration of June, 1849. It is with reference to this background that we must examine the true character of the revenue settlement made in 1852. If the jagirdars had sunk to the position of subjects on that date the payment of revenues to them by the British Government can only be on the basis of an implied grant to them. Learned Counsel for the jagirdars however demur to this companyclusion. They companytend that the position of the Cis- Sutlej jagirdars differs fundamentally from that of the Bhomicharas in Thakur Amar Singhjis case 1 , that the latter were companyquered by the rulers of Jodhpur and companypelled to pay to them a tribute called Foujbal, but that the Cis- Sutlej Chiefs were never companyquered by the British, and never paid any tribute to them, that they were receiving revenue from the lands as rulers before the British came on the scene, and that they companytinued to receive the same without a break even after the British had established themselves, and that there was numberhing which the British Government did from which a resumption and a re-grant companyld be inferred. -Under the circumstances, it is said, the, payment of land revenue to them must be related to their status as sovereigns, and if the British Government took upon themselves the work of settlement and companylection of land revenue, it was 1 1955 2. S. C. R. 303. oh their behalf and under their authority and under an implied arrangement with them. The assumption underlying this argument is that, as the cis- Sutlej Chiefs are-not companyqaered by the British, their status must necessarily be that of sovereigns, and that in companysequence the payment of land revenue to them companyld number be as jagirdars holding under an implied grant from the Govern- ment. That, however, is number companyrect. It is settled law that companyquest is number the only mode by which one State can acquire sovereignty over the territories belonging to another State, and that the same result can be achieved in any other mode which has the effect of establishing its sovereignty. Thus, discussing what is an ,act of State, the Judicial Committee observed in Cook v. Sir James Gordon Sprigg 1 - The taking possession by Her Majesty, whether by cession or by any other means by which sovereignty can be acquired, was an act of State To the same effect are the following observations of Lord Danedin in Vajesing Jaravarsingji v. Secretary of State for India in Council 2 - When a territory is acquired by a sovereign State for the first time, that is an act of State. It matters number how the acquisition has been brought about. It may be by companyquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a recognised ruler. Laying down the law in similar terms, this Court observed in M s. Dalmia Dadri Cement Co. Ltd.v. The Commissioner of Income-tax 3 - The expression act of State is, it is scarcely necessary to say number limited to hostile 1 1899 A.C. 572. 2 1923-24 L. R. 51 I. A. 357, 3 1959 R. 729, 739. action between rulers resulting in the occupa- tion of territories. It includes all acquisitions of torritory by a sovereign State for the first time, whether it be by companyquest or cession. Vide Vajesingji Joravar Singji V. Secretary of State and Thakur Amar Singji v. State of Rajasthan . And, more recently, this question has been companysidered by this Court in Promod Chandra Deb v. The State of Orissa 1 , and the result was thus stated - Act of State is the taking over of sovereign powers by a State in respect of territory which was number till then a part of its territory, either by companyquest treaty or cession, or otherwise. The fact, therefore, that the Cis-Sutlej jagirdars were number companyquered by the British does number companyclude the question as to whether they arc to be regarded as sovereigns or number. That must depend on who were in fact exercising sovereign powers over the territories in the States-the Chiefs or the British. If the latter, then it must be held that the sove- reignty over the area had passed to them, otherwise than by companyquest, and that the true status of the Chiefs was that of subjects. Viewed in this light, the case does number present much of a problem. It has been already seen that from 1809 onwards, the Chiefs had been gradually stripped of their powers as sovereigns and that the process of disintegration was companypleted in 1849. It is indeed companyceded on behalf of the jagirdars that after that date it was the British Government which was exercising sovereign powers over the territories and that the Chiefs had been rodaced to the status of its subjects. But the companytention that is urged is that even when every thing else had been Writ Petitions Nos. 79 of 1957, 167 and 168 of 1958 and 4 of 1959 decided on November, 16, 1961. lost, there was still one relie of sovereignty left with them and that was the right to receive the land revenue. If this were the true position, the status of the jagirdars would be that of subjects of the British in respect of all matters except as to the right to receive revenue, in respect of which alone they would have to be regarded as sovereigns. This is clearly untenable, because a person cannot be both a sovereign and a subject at the same time. Dealing with this identical companytention, this Court observed in Thakur Amar Singhjis case 1 The status of a person must be either that of a sovereign or a subject. There is numbertertium quid. The law does number recognise an intermediate status of a person being partly a sovereign and partly a subject, and when once it is admitted that the Bhomicharas had ack- numberledged the sovereignty of Jodhpur their status can only be that of a subject. A subject might occupy an exalted position and enjoy special privileges, but he is numbere the less a subject and even if the status of Bhomicharas might be companysidered superior to that of ordinary jagirdars, they were also subjects. pp. 336-337 If the status of the Cis-Sutlej jagirdars is in all other respects that of subjects, the right to receive the revenue companylections must also be ascribed to their character as subjects, and that can only be under an implied grant. But it is companytended that the implication of a grant in favour of the jagirdars companyld number be made here as in the case of Bhomicharas in Thakur Amar Singhjis case 1 , because a proposal for resumption and re-grant of the territories of the Cis-Sutlej Chiefs was actually put forward in 1846 but was negatived. Reference was made to the following 1 19551 2 S. C. R. S03. account thereof given in J. M. Douies Punjab Land Administration Manual, 1931, p. 45 para 102- It was indeed proposed in 1846 after the first Sikh War to declare all the estates forfeit on account of the laches of their holders, and to re-grant them under sanads from the British Government. But Lord Hardinge deemed it impolitic to proclaim to -all India the misconduct of the Cis-Sutlej Chiefs and negatived proposal.In a, sense then the Cis-Sutlej jagirdars, great and small, are mediatized rulers, and little though they have as a body deserved at our hands, this fact should number be lost sight of in our dealings with them. The argument is that though a grant companyld be implied in certain circumstances where numberexpress grant was forthcoming, that companyld number be done when a proposal for grant is shown to have been actively companysidered and rejected. This companytention sounds plausible but breaks down when the reason for the rejection of the proposal is examined. That was, as stated in the despatch of Lord Hardinge dated November 17, 1846, that a general measure of resumption would create alarm and must be preceded by a public declaration of the disloyalty of the largest portion of the Sikh protected States explaining the grounds of forfeiture, and this was companysidered inexpedient. Consistently with this reason it is impossible to hold that the British Government, in declining to make a resumption and re-grant, intended to companytinue the recognition of the Chiefs a,, sovereigns. On the other hand, the true inference to be drawn is that the British wanted to give the chieftains only the status of jagirdars but for reasons of policy they sought to do it in such manner as to avoid publicity, and that is why the proposal for making resumption and regrant was number adopted. In the very despatch of Lord Hardinge dated November 17, 1346, wherein the proposal for resumption and re-grant was dropped, it was stated that there was numberneed for it as the same ends companyld be obtained by adopting certain measures such as the taking over of the police administration and customs and the like. The reason, therefore, for number making a resumption and an express grant is one which would support an inference of implied grant. An argument is also sought to be built on the description given of the Cis-Sutlej jagirdars as mediatized rulers in the extract from J. M. Douies Punjab Land Administration Manual already given, that their status is that of sovereigns. This expression was originally used with reference to German Princes in Holy Roman Empire who, having been at one time vassals of the Emperor, were subsequently subjugated by other Princes who were also vassals of the Emperor. The meaning of the word mediatise in modern usage is given in The Oxford English Dictionary, Vol. VI, P. 292, as annex Principality to another State, leaving former sovereign his title and usually more or less of Ilia rights of Government. It might be companyrect to speak of the Chiefs as mediatized rulers in 1846, when, though deprived of their powers in matters of police and customs, they companytinued to exercise civil and fiscal powers. But when they were divested in 1849 of all their Governmental powers they ,-eased to be rulers, mediatized or otherwise, and when the revenue settlements were made in 1852, they had numbervestige of sovereignty left in them, and had become ordinary subjects of the British with some privileges. The true character of the revenue settlements made with the Cis-Sutlej jagirdars is brought out companyrectly, in our opinion, in the following observations in Baden Powells Land Systems of British India, Vol. 11 at p. 701- Under our Settlement arrangements, the jagirdar number receives the revenue, the original land holding companymunities or individuals being settled with and retaining full proprietary rights. He in fact is a mere assignee of the revenue, taking.part of what otherwise would go to the State. Even more explicit is the statement of the position by Kensington in the Ambala Gazetteer, pp.27-28- The final step necessitated by the march of events was taken in 1852 when the revenue settlement begun for British villages in 1847 was extended to the villages of the chiefs. Thereafter the chiefs have ceased to retain any relies of their former power except that they are still permitted to companylect their revenues direct from their villages, the cash assignment of revenue. They have sunk to the position of jagirdare but as such retain a right to the revenue assigned to them in per- petuity. It was argued by the learned Advocate-General who appeared for the respondent that subsequent to 1852 there has been a companyrse of legislation relating to the jagirs which proceeds on the basis that their holders were subjects. The preamble to the Punjab Land Revenue Act, 1871 Act 33 of 1871 , under which land revenue was settled is as follows- Whereas the Government of India is by law entitled to a proportion of the produce of the land of the Punjab to be from time to time fixed by itself and whereas it is expedient to companysolidate and define the law relating to the settlement and companylection thereof, and to the duties of the Revenue Officers in the Punjab. It is under this Act that the revenue settlements for the jagir lands are also made. This shows that in exercising fiscal jurisdiction, the British Government companysidered itself as acting in its sovereign capacity. Then there is Punjab Descent of Jagirs Act,, 1900 Punjab Act IV of 1900 , which introduced in the Punjab Laws Act, 1872, as. 8 to 8C enacting rules of descent in respect of succession to any assignment of land revenue and providing for the recognition of successors to the deceased jagirdars by the Provincial Government on certain -conditions specified therein. We have then the Punjab Jagire Act V of 1911 dealing with the same topic. The preamble to the Act states that it is expedient to companysolidate the law governing the assignments of land revenue and other grants hitherto known as jagirs, and to make more precise provisions regarding the manner in which such assignments are to be made or companytinued in the future. Jagir is defined in s. 2 in torms substantially the same as under the present Act. This Act repeals as. 8 to 80 of the Punjab Laws Act, 1872, which were inserted by the Punjab Descent of Jagirs Act IV of 1900, and reproduces them in as. 7 to 10. Section 7 1 b provides for the acceptance by the jagirdars of the rules of descent framed by the Government by executing a written instrument, and it has been stated before us that the jagirdars have accepted the rules in the manner provided in the section. By way of sample, the companyy of the acceptance executed by the petitioner in Writ Petition No. 82 of 1960 has been marked as part of the record. Oa these materials, the companyclusion would appear to be irresistible that the right of the Jagirdars to raceive land revenue rests on implied grants by the British Government. It must be mentioned that in Abdul Ghafoor Khan v. Amar arji Singh, Regular Second Appeal No. 561 of 1946 in the Punjab High Court there are ob. servations of the learned Judges. Mahajan and Teja Singh, JJ., that there was numbergift of the jagir lands or assignment of the land revenue by the British Government to the Cis-Sutlej -jagirdars, and they are relied on as authority for the companytention that there was numbergrant to them express or implied. But the point for decision in that case was whether these jagirdars companyld alienate their interests beyond their lifetime. It was held that they companyld number and the reason therefor was thus stated After the annexation of the Punjab they Cis- Sutlej jagirdars were deprived of vestiges of sovereignty that still remained in them and they were transformed and given the status of jagirdars, but their possessions, holding and dominions whether in land or other properties like forts and buildings were number in any way disturbed or taken away. They held them in the same status and position as before. The dispute in that appeal related to properties of the kind mentioned above and number to land revenue, and we are unable to regard the observations relied on for the jagirdars as authority for the position that numbergrant in respect of the assignments of the land revenue companyld be implied in their favour. In the resultwa must hold that the jagirs which are subject- matter of these proceedings fall within s. 2 1 a of the Act. It is next companytended that even if an assignment of land revenue companyld be. implied in favour of the jagirdars, that companyld only be held to hive, been made by the British Government and number by the State Government as required by s. 2 1 a , and that, in companysequence, the respondent had numberright to resume the jagirs in question under the provisions of the Act. Whateverforce there might have been in this companytention, if I hequestion had to to be decided only on the. terms of s.2 1 a , we have in s. 2 5 a definition or State Government which is decisive of the question. According to that definition, State Government includes the Government of the State of Punjab, and all predecessor Gevernments thereof, by what ever name called, the Governor-General or the Governor- Generalin-Council as the case may be. It is number disputed that these words are wide enough to include the British Government which made the grant, but it is companytended that this definition was number in the Act as originally enacted and was inserted by the Punjab Resumption of Jagirs Amendment Act, 1959, and that the rights of the parties should be determined in accordance with the law as it stood prior to the amendment. There is numberforce in this companytention, because under s. 1 2 of the Amendment Act, retrospective operation is given to it as from November 14, 1957. But then it is urged that the amendment was number within the legislative companypetence of the Legislature of the State of Punjab and is null and void. The grounds therefor are thus stated in Petition No. 82 of 1960 - This is numberhing but a companyourable legislation. The State legislature has numberauthority to companyvert Central Government into State Government and legislate on Central subject. The so-called jagir being number a grant by the State Government, the impugned Act has numberapplication and the amended definition of State Government is a fraud on the Constitu- tion. para 17 . There is numbersubstance in the companytention that the Amendment Act is companyourable and incompetent. The subject-matter of the legislation is resumption of jagirs. Though the companytention was raised. in the petitions that this was number a topic within the companypetence of the State Legislature, as there was numbersuch entry in List II to the Seventh Schedule,no argument was advanced in support, of it. And clearly it companyld number be, as legislation on resumption of jagirs in one relating to lands, and land revenue and would clearly fall under entries 18 and 45 of List II, which are as follows Entry 18 , -,Land, that is to say, rights in or over land, land tenure including the relation of landlord and tenant, and the companylection of rents transfer and alienation of agricultural lands land improvement and agri- cultural loans companyonization. Entry 45 - Land revenue., including the assessment and companylection of revenue,the maintenance of lands records, survey for revenue purposes and records of rights, and alienation of revenue. If the principal legislation is intra vires, it is difficult to see how an amendment thereof with respect to matters properly pertaining to the subject-matter companyered by it companyld be ultra vires. It is immaterial for the purpose of resumption, whether the lands sought to be resumed were granted by the State of Punjab as it is number companystituted or by any Government which preceded it. So long as the lands are within the, State of Punjab, the legislature has full companypetence to enact a law providing for their resumption under entries 18 and 45. Indeed if the words made by or on behalf of the State Government in 3. 2 1 a had been omitted in the, principal Act and jagir defined simply as any assignment of land revenue the legislation would have been intra vires, and in that case the State companyld have resumed the jagirs by whomsoever they might have been granted. But it chose to add the words made by or on behalf of the State Government, and that gave occasion for the companytention that the legislation did number in fact reach jagirs granted by the British Government. Then, with a view to clarify the position, and set the companytroversy at rest,, the legislature intervened and enacted the Amendment Act of 1959, inserting the impugned definition of State Government. We are unable to see what the lack of vires is under which this amendment suffers. We must reject this companytention also. This disposes of all the points raised on the merits in the Writ Petitions and Civil Appeals. In Civil Appeal No. 453 of 1961 preferred by one of the jagirdars, Umrao Singh, his son Satinder Singh intervened, and he asks that suitable directions might be given for protecting his interests in. the companypensation amount which is payable to the appellant Under the Act. He states that under the law the Cis-Sutlej jagirdar is number an absolute owner of the jagir, that he has only a right to enjoy it without any power of alienation and that after his life time the next lineal descendant would take it free from all encumbrances created by the previous owner, that the rights of the jagirdar over the companypensation amount due on resumption under the Act companyld only be the same as over the jagir, and that if that is paid to him, his reversionary rights would be Jeopardised and that therefore adequate provision should be made for protecting them. Our attention has been invited to the decision of this Courtin Satinder Singh v. Umrao Singh 1 , where companypensation awarded on the acquisition of jagir lands was apportioned equally between the jagirdar and his son. But there the lands had been acquired under the Land Acquisition Act, 1894, which companytains provisions for deciding who is entitled to the companypensation amount. But here we are hearing an appeal against an order dismissing a Writ retition- under Art. 226, challenging ire vires and applicability of the Punjab Resumption of Jagirs Act, 1957, and adjudication of rival claims to the companypensation amount will be wholly foreign to its scope. A. I. R. .961 S. C. 908 But it is pointed out for the intervener that on his application this Court has ordered stay of payment of a part of the companypensation amount to the appellant pending the disposal of the, appeal, and that a similar direction might number be made in the Judgment, staying payment of a part of the amount for a specified period, so as to enable him to take steps to protect his rights. But that was an interim order made pending the appeal, and numbersuch order companyld be passed in the appeal unless it follows on a decision of the rights of the parties, which is, an already stated, outside the scope of the present proceedings, vide the state of Orissa v. Madan Gopal Rungta 0 . We do number therefore propose to say anything on the rights of the intervener or give any directions with reference to the payment of the companypensation amount. It is open to the intervener to take other and appropriate proceedings to vindicate his rights. Before companycluding, it has to be numbered that in Writ Petition No. 148 of 1961 there, are as many as 72 Petitioners. some of whom are stated number to belong to the category of Cis- Sutlej jagirdars. Their joinder is clearly improper. It is also said that three of them, Petitioners Nos. 66, 68 and 69, had filed Writ Petitions under Art.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 46 of 1958. Appeal from the judgment and order dated March 17, 1958, of the Allahabad High Court in Criminal Appeal No. 1635 of 1953, S. R. Chari, S. Pichai and S. Venkatakrishnan, for the appellant. SarjooPrasad, G.C.Mathur and G.P.Lal, for the respondent. 1962. March 28. The Judgement of the Court was delivered by GAJENDRAGADKAR, J.-The appellant R.R. Chari was a permanent employee in a gazetted post under the Government of Assam. In 1941, his services were lent to the Government of India. The first appointment which the appellant held under the government of India was that of the Deputy Director of Metals in the Munitions Production Department at Calcutta. Then he came to Delhi on similar work in the office of the Master-General of Ordnance which was the Steel Priority Authority during the War period. He was subsequently trans- ferred to Kanpur as Assistant Iron a Steel Controller in 1945. Sometime thereafter, he become the Deputy Iron Steel Controller, Kanpur Circle which post he held for one month in September, 1945. From January, 1946, be was appointed to the said post and he held that post until September 20 1946. The period companyered by the charges which were eventually formed against the appellant and, others is from January 1, 1946 to September 20, 1946. On the latter date, the appellant proceeded on leave for four months and did number return to service either under the Government of India or under the Assam Government. It appears that while the appellant had proceeded on leave the Government of India wrote to the Assam Government on February 8, 1947, intimating that it had desided to replace the services of the appellant at the disposal of the Assam Government on the expiry of the leave granted to him with effect from September, 21, 1946. The Government of India also added that the exact period of the leave granted to the appellant would be intimated to the Assam Government later. On April 28, 1947, leave granted to the appellant was gazetted with effect from September 21, 1946 for a period of four months. A subsequent numberification issued by the Central Government extended the leave up to May 13, 1947. On this latter date, the Central Government suspended the appellant, and on a warrant issued by the District Magistrate, Kanpur, he was arrested on the October 28, 1947. Subsequently, he was released on bail. Thereafter, the Government of India accorded sanction for the prosecution of the appellant under s. 197 of the Criminal Procedure Code on the January 31, 1949. A Charge-sheet was submitted by the prosecution alleging that the appellant along with three of his former assistants had companymitted various acts of companyspiracy, companyruption and forgery during the period 1, 1.1946 to 20-9- 1946 The other persons who were alleged to be company companyspirators with the appellant, were vaish, a clerk in charge of licensing under the appellant, Rizwi and Rawat who were also working as clerks under the appellant. Bizwi abs- companyded to Pakistan and Rawat died. In the result, the case instituted on the ,,aid charge sheet proceeded against the appellant and Mr. Vaish. Broadly stated the prosecution case was that during the period December 1945 to September 20, 1946, the appellant and Vaish and other entered into a criminal companyspiracy to do illegal acts, such as the companymission of offenses under, ss. 161, 165, 467. Indian Penal Code or in the alternative, Offenses such as were prescribed by r. 47 3 read with r. 47 2 of the Defence of India Rules, 1939 and. abetment in the acquisition and sale of Iron and .steel, in companytravention of the Iron and Steel Control of Distribution Order 1941 and that in pursuance of the said companyspiracy, they did companymit the aforesaid illegal acts from time to time and thus rendred themselves liable to be punished under s.120-B of the Indian Penal Code. That was the substance of the first charge. The Second Charge was in regard to the companymission of the offence under s. 161 and it set out in detail the bribes accepted by the appellant from 14 specified persons. In the alternative, it was alleged that by virtue of the fact that the appellant accepted valuable things from the persons specified, he had companymitted as offence under s. 165 Indian Penal Code. The third charge was under s. 467 Indian Penal Code or in the alternative, under r. 47 3 read with r. 47 2 a of the Defence of India Rules. The substance of this charge was that in furtherance of the companyspiracy, the appellant fraudulently or dishonestly made, signed or executed fourteen documents specified in clauses a to n in the charge. Amongst these documents were included the orders prepared in the names of several dealers and licences issued in their favour. The fourth charge was that the appellant had abetted the firms specified in clauses a to k in the companymission of the offence under r 81 2 of the Defence of India Rules. That, in brief, is the nature of the prosecution case against the appellant as set out in the several charges. At the initial stage of the trial, the appellant took a preliminary objection that the sanction accorded by the Government of India to the prosecution of appellant under s. 197 Code of Criminal Procedure was invalid. This objection was companysidered by Harish Chandra J. of the Allahabad High Court and was rejected on the July, 18th 1949. The learned Judge directed that since he found numbersubstance in the preliminary companytention raised by the appellant, the record should be sent back to the trial Court without delay so that it may proceed with the trial of the case. On May 7 1953, the appellant alone with Vaish was tried by the Additional District and Sessions Judge at Kanpur. The charge under s. 120-B was tried by the learned Judge with the aid of assessors, whereas the remaining charges were tried by him with the aid of the jury. Agreeing with the opinion of the assessors and the unanimous verdict of the jury, the learned Judge companyvicted the appellant under s. 120 B and sentenced him to two years rigorous imprisonment. He also companyvicted him under section s. 161 and sentenced him to two years Rigorous imprisonment and a fine of Rs, 25,000/-. in default to suffer further rigorous imprisonment for six months. For the offence under s. 467 Indian Penal Code of which the appellant was companyvicted, the learned Judge sentenced him to four years rigorous imprisonment. Be was also companyvicted under r. 81 4 read with r. 121 and cls. 4,5, 11 b 3 and 12 of the Iron and Steel Order of 1941 and sentenced to two yearsrigorous imprisonments. All the sentences thus imposed on the appellant were to run companycurrently. Vaish who was also tried along with the appellant was similarly companyvicted and sentenced to different terms of imprisonment. The appellant and Vaish then appealed to the High Court against the said order of companyvictions and sentence. It was urged on their behalf before the High Court that the charge delivered by the Judge to the jury suffered from grave misdirections and number-directions amounting to misdirections. his plea was accepted by the High Court and so, the High Court examined the evidence for itself. In the main, the High Court companysidered the ten instances adduced by the prosecution for showing that the appellant had accepted illegal gratification and had companymitted the other offenses charged, and came to the companyclusion that the prosecution evidence in respect of eight instances companyld number be acted upon, whereas the said evidence in respect of two instances companyld be safely acted upon. These two instances were deposed to by Lala Sheo Karan Das and other witnesses and by Sher Singh Arora and other witnesses. In the result, the High Court companyfirmed the appellants companyviction under ss. 161 and 467 and the sentences imposed by the trial Court in that behalf. His companyviction under s. 120-B Indian Penal Code, and under r. 81 4 read with r. 121 Defence of India Rules was set aside and he was acquitted of the said offenses. The High Court directed that the sentences imposed on the appellant under ss. 161 and 467 should run companycurrently. The appeal preferred by Vaish was allowed and the order of companyviction and sentence passed against him by the trial Court in respect of all the charges was set aside. This order was passed on March 17th, 1958. The appellant then applied for and obtained a certificate from the High Court and it is with that certificate that he has companye to this Court in appeal. At, this stage, it would be useful to indicate briefly the main findings recorded by the High Court against the appellant. As we have just indicated, there are only two instances out of ten on which the High Court has made a finding against the appellant. The first is the case of Lala Sheo Karan Das. According to the prosecution case, as a motive or reward for issuing written orders and expediting supply of iron by the stock-holders Association Kanpur to Lala Sheo Karan Das, the appellant accepted from him Rs. 4,000/- on 31.3.1946, Rs. 2,000/- on 9.4.1946 Rs. 1,060/- on 11.4.1946 and Rs. 1,000/-on 12.5-1946 as illegal gratification. That is the basis of the charge under section 161. The prosecution case further is that in regard to the supply of iron to Lala Sheo Karan Das, certain documents were forged and it is alleged that the written orders issued in that behalf Exhibits P 341 and P 342 were ante-dated and the licences issued in that behalf were similarly ante-dated. In support of this case, oral evidence was given by Lala Sheo Karan Das himself, his son Bhola Nath and Parshotam Das, his nephew who is a partner with him. This oral evidence was sought to be companyroborated by relevant entries in kachhi rokar books. These entries indicated that the several amounts had been paid by the firm to the appellant. The High Court companysidered the oral evidence and held that the said evidence was companyroborated by entries in the account-books. The argument that dacca rokar books had number been produced did number appear to the High Court to minimise the value of the kachhi rokar books which were actually produced, and the companytention that the books of Account kept by accomplices themselves companyld number, in law, companyroborate their oral evidence, did number appeal to the High Court as sound. It held that even though Sheo Karan Das, his son and his nephew may be black-marketeers, it did number necessarily follow that they were liars. Besides, the High Court took the view that there were certain pieces of circumstantial evidence which lent support to the oral testimony of the accomplices. The ante-dating of the orders, and the supply of a large quantity of iron, were two of these circumstances. It is on these grounds that the High Court accepted the prosecution case against the appellant under s. 161 Indian Penal Code. The High Court then examined the evidence in support of the charge under s. 467 and it held that the manner in which the dates in the quota register had been tampered with supported the oral testimony of the witnesses that the applications made by Sheo Karan Das had been deliberately and fraudulently ante- dated and orders passed on them and the licences issued pursuant to the said orders-all were fraudulent documents which proved the charge under s. 467 as well as under r. 47 3 read with 47 2 a . On these grounds, the appellants companyviction under s. 467 was also companyfirmed. As to the prosecution case in respect of the bribes offered by Sher Singh Arora, the High Court was number satisfied with the evidence adduced in respect of the actual offer of money, but it held that the evidence adduced by the prosecution in respect of the offer and acceptance of certain valuable things was satisfactory. These valuable things were a three-piece sofa sot, a centre piece, two stools and a revolving chair Exts. 16 to 21 . These were offered on behalf of Sher Singh Arora and accepted by the appellant in January, 1946. In dealing with this part of the prosecution case, the High Court companysidered the statements made by the appellant and ultimately companycluded that the charge under s. 161 had been proved in respect of the said articles. In regard to the charge under s. 467, the High Court adopted the same reasons as it had done in dealing with the said charge in respect of Sheo Karan Dass transactions and held that the said .charge had been proved. The licences which are alleged to have been ante-dated are Exts. P 535 and P The application which is alleged to have been ante- dated is Ext. P 294, and the High Court thought that the relevant entries in the quota register showed that the dates had been tampered with. In the result, the charge under s. 467 in respect of this transaction was held to be established. An alternative charge was also proved against the appellant under r. 47 3 read with r. 47 2 c Defence of India Rules. The first point which Mr. Chari has raised before us is that the Addl. District Sessions Judge had numberjurisdiction to try this case, because at the relevant time, the Criminal Law Amendment Act, 1952 46 of 1952 had companye into operation and the case against the appellant companyld have been tried only by a Special Judge appointed under the said Act. This argument has been rejected by the High Court and Mr. Chari companytends that the decision Of the High Court in erroneous in law. In order to deal with the merits of this point, it is necessary to refer to some dates. The order of companymitment was passed in the present proceedings on March 1, 1952. It appears that thereafter a list of defence witnesses was tiled by the appellant before the Commiting Magistrate on July 24, 1952. On July 28, 1952, the Criminal Law Amendment Act came into force. On August 14, 1952, Vaish filed a list of witnesses before the companymitting Magistrate and requested that one of the prosecution witnesses should be recalled for cross- examination. On September 18, 1952, the District Sessions Judge at Kanpur was appointed a Special Judge under the Act. On December 19, 1952, the case was taken up before the Special Judge and the question as to where the case should be tried was argued. The Special judge held that the question had been companysidered by the Madras High Court in the case of P. K. Swamy and it had been held that the Special Judge had numberjurisdiction to hear the case because the order of companymitment had been passed prior to the passing of the Criminal Law Amendment Act. Since the order of companymitment in the present case had also been passed before July 28, 1952, the Special Judge held that the case against the appellant must be tried under the provisions of the Criminal Procedure Code and number under the provisions of the Criminal Law Amendment Act and so, an order was passed that the trial should be held by the Additional District Sessions Judge at Kanpur. After the case was thus transferred to the Add1. Sessions Judge at Kanpur, it was actually taken up before him on May 7, 1953, when the charge was read out to the accused persons and the jury was empanelled. It is in the light of these facts. that the question about the jurisdictions of the trial Judge has to be determined. Two provisions of the Criminal Law Amendment Act fall to be companysidered in this companynections Section 7 provides that numberwithstanding anything companytained in the Code of Criminal Procedure, or in any other law, the offenses specified in sub-section 1 of s. 6 shall be triable by a Special Judge only, Offenses under ss. 161 and 165 Indian Penal Code are amongst the offenses specified by s. 6 1 . Section 7 2 b provides that when trying any case, a Special Judge may also try any offence other than an offence specified in s. 6 with which the accused may, under the Code of Criminal Procedure be charged at the same time. Therefore, if the offence under s. 161 falls under s. 7 1 and has to be tried by a Special Judge, the other offenses charged would also have to be tried by the same Special Judge as a result of s. 7 2 b . It is clear that the provisions of a. 7 are prospective. This position is number disputed. But it would be numbericed that s. 7 does number provide for the transfer of pending cases to the special Judge and so, unless the appellants case falls under the provisions of s. 10 which provides for transfer, it would be tried under the ordinary law in spite of the fact that the main offence charged against the appellant falls under s. 6 1 of the Criminal Law Amendment Act. That takes us to s. 10 which deals with the transfer of certain pending cases. This section provides that all cases triable by a special Judge under s. 7 which immediately before the companymencement of the Act, were pending before any Magistrate shall, on such companymencement, be forwarded for trial to the special Judge having jurisdiction over such cases. It is thus clear that of the cases made triable by a special Judge by s. 7, it is only such pending cases as are companyered by s.10 that would be tried by the special Judge. In other words, it is only cases triable by a special Judge under s. 7 which were pending before any Magistrate immediately before the companymencement of this Act that would tie transferred to the special Judge and thereafter tried by him. So, the question to companysider is whether the appellants case companyld be said to have been pending before any Magistrate immediately before the companymencement of the Act. This position also is number in dispute. The dispute centres round the question as to whether the appellants case can be said to have been pending before a magistrate at the relevant time, and this dispute has to be decided in the light of the provisions companytained in s. 219 of the Code of Criminal Procedure. This section occurs in Chapter 18 which deals with the enquiry into cases triable by the Court of Sessions or High Court. We have already seen that on March 1, 1952, an order of companymitment had been passed in the present case and that means that the jurisdiction of the companymitting Court had been exercised by the said Court under s. 213 of the Code. Mr Chari companytends that though the order of companymitment had been passed, that does number mean that the case had ceased to be pending before the companymitting Magistrate. It is number disputed that once an order of companymitment is made, the companymitting Magistrate has numberjurisdiction to deal with the said matter he cannot either change the order or set it aside. So far as the order of companymitment is companycerned, the jurisdiction of the Magistrate has companye to an end. The said order can be quashed only by the High Court and that too on a point of law. That is the effect of s. 215 of the Code. It is, however, urged that s. 216 companyfers jurisdiction on the companymitting magistrate to summon witnesses for defence as did number appear before the said Magistrate and to direct that they should appear before the Court to which the accused had been companymitted. Similarly, before the said Magistrate, bonds of companyplainants and witnesses can he executed as prescribed by s. 217. Section 219 companyfers power on the companymitting Magistrate to summon and examine supplementary witnesses after the companymitment and before the companymencement of the trial, and to bind them over in manner here in before provided to appear and give evidence. It is on the provisions of this section that the appellants case rests. The argument is that since the companymitting magistrate is given power to summon supplementary witnesses even after an order of companymitment has been passed, that shows that the companymitting magistrate still hold jurisdiction over the case and in that sense, the case must be deemed to be pending before him. We are number impressed by this argument. The power to summon supplementary witnesses and take their evidence is merely a supplementary power for recording evidence and numbermore. This supplementary power does number postulate the companytinuance of jurisdiction in the companymitting magistrate to deal with the case. It is significant that this power can be exercised even by a Magistrate other than the companymitting magistrate, provided he is empowered by or under s. 206 and clearly, the case companyered by the companymitment order passed by one magistrate cannot be said to be pending before another magistrate who may be empowered to summon supplementary witnesses. When s. 10 of the Criminal law Amendment Act refer to cases pending before any magistrate, it obviously refers to cases pending before magistrates who can deal with them on the merits in accordance with law and this requirement is plainly number satisfied in regard to any case in which a companymitment order had been passed by the companymitting magistrate. After the order of companymitment is passed, the case cannot be said to be pending before the companymitting magistrate within the meaning Of S. 10. Therefore, we are satisfied that the High Court was right in companying to the companyclusion that s. 10 did number apply to the present case and so, the Addl. Sessions Judge had jurisdiction to try the case in accordance with the provisions of the Code of Criminal Procedure. It is true that in dealing with this point, the High Court has pro- ceeded on the companysideration that the appellants trial had actually companymenced befere the Addl. Sessions Judge even prior to July 28, 1952. In fact, it is on that basis alone that the High Court has rejected the appellants companytention as to absence of jurisdiction in the. trial Judge. We do number think that the reason given by the High Court in support of this companyclusion is right, because the trial of the appellant companyld number be said to have companymenced before May 7, 1953. However, it is unnecessary to pursue this point any further because we are inclined to take the view that the appellants case does number fall under s. 10 of the Criminal Law Amendment Act and that is enough to reject the companytention of the appellant on this point. The next argument raised is in regard to the validity of the sanction given by the Government of India to the prosecution of the appellant. This sanction Ext. P-550 purports to have been granted by the Governor-General of India under s. 197 of the Code for the institution of criminal proceedings against the appellant. It has been signed by Mr. S. Boothalingam, Joint Secretary to the Government of India on January 31, 1949. The sanction sets out with meticulous care all the details of the prosecution case on which the prosecution rested their charges against the appellant and so, it would number be right to companytend that the, sanction has been granted as a mere matter of formality. The several details set out in the sanction indicate that prima facie, the whole case had been companysidered before the sanction was accorded. Mr. Chari, however, attempted to argue that on the face of it, the sanction does number show that the Governor-General granted the sanction after exercising his individual judgment. Section 197 of the companye at the relevant time required that sanction for the prosecution of the appellant should have been given by the Governor-General exercising his individual Judgment, and since, in terms , it does number say that the Governor-General in exercise of his individual judgment had accorded sanction, the requirement of s. 197 is number satisfied. That is the substance of the companytention. In support of this companytention, reliance is sought to be placed on certain statements made by Mr. Boothalingam in his evidence. Mr. Boothalingam stated that sanction of the Governor-General was companyveyed by him as Joint Secretary to the Government of India. He also added that authorities of the Government of India companypetent to act in this behalf accorded the sanction and he companyveyed it. His evidence also showed that the matter had been companysidered by the companypetent authorities and that he was one of those authorities. Mr. Chari argues that Mr. Boothalingam has number, expressly stated that the Governor-General applied his individual mind to the problem and exercising his individual Judgment, came to the companyclusion that the sanction should be accorded. This companytention had number been raised at any stage before and the point had number been put to Mr. Boothalingam who gave evidence to prove the sanction. If the point had been expressly put to Mr. Boothalingam be would have either given evidence himself on that point or would have adduced other evidence to show that the Governor-General had exercised his indi- vidual judgment in dealing with the matter. Therefore, we do number think that this plea can be allowed to be raised for the first time in this Court. The next ground of attach against the validity of the sanction is based on the assumption that at the time when the sanctions was riven, the appellant had ceased to be in the employment of the Government of India and had reverted to the Assam Government. .If it is established that at the relevant time, the ,appellant was a person employed in companynection with the affairs of the Assam State, then of companyrse, it is the Assam Government that would be companypetent to give the sanction. The High Court has found that at the relevant time, the appellant companytinued to be in the employment of the affairs of the Federation and had number reverted to the Assam Government and in our opinion, this finding of the High Court is right. We have already referred to the companyrse of events that led to the granting of the leave to the appellant by the Government of India to the extension of the leave by the said Government and to his subsequent suspension. The appellants argument is that after he went on leave, he moved the Assam Government for extension of his leave and was, in fact, asked by the Assam Government to appear before a medical board appointed by it. We do number think that these facts are enough to prove that the appellant had reverted to the service of the Assam Government. In fact., it is clear that the Government of India had intimated to the Assam Government that the appellant companytinued to be under its employment and that the Assam Government had expressly told the Government of India that it had numberdesire that the appellant should revert to its service until the criminal proceedings instituted against him were over. The Assam Government also pointed out that the appellant himself did number wish to rejoin in his post of Superintendent of the Assam Governments Press but had only asked for Leave Preparatory to Retirement following medical advice. It is thus clear that though the Government of India had originally thought of replacing the appellants services with the Assam Government at the end of the leave which was proposed to be granted to him, subsequent events which led to an investigation against the appellant and his suspension caused a change in the attitude of the Government of India and it decided to companytinue him in its employment in order that he should face a trial on the charges which were then the subject matter of investigation. There is numberorder reverting him to the Assam Government passed by the Govt. of India and there is numberorder passed by the Assam Government at all on this subject. Therefore there can be numberdoubt that at the relevant time, the appellant companytinued to be employed in the affairs of the Federation. It was then sought to be argued that the effect of SR 215 was that the reversion of the appellant to the Assam Government should be deemed to have taken effect from the date when the leave was granted to him by the Government of India. In our opinion, there is numbersubstance in this argument. The portion on which the appellant relies is merely an administrative direction under the Rule and it cannot possibly over-ride the specific orders issued by the Government of India in respect of the appellants leave and reversion. Besides, even the requirements of the said Rule are number satisfied in the present case. Therefore, the companyclusion is inescapable that the appellant was employed in the affairs of the Federation at the time when the sanction was accorded. That takes us to the question as to whether the Government of India was companypetent to grant the sanction even if the appellant was at the relevant time a person employed in companynection with the affairs of the Federation. Mr. Chari companytends that in the case of the appellant whose services had been loaned by the Assam Government to the Government of India, it companyld number be said that he was a parson permanently employed in companynection with the affairs of the Federation and so, cl. a of s. 197 1 would number apply to him at all. He was a person permanently employed in companynection with the affairs of a State and that took the case under cl. b which means that it is the Governor of Assam exercising his individual judgment who companyld have a ,-corded valid sanction to the appellants prosecution. We are number impressed by this argument. It is clear that the first part of s. 197 1 provides a special protection, inter alia, to public servants who are number removable from their offices save by or with the sanction of the State Government or the Central Government where they are charged with having companymitted offenses while acting or purporting to act in the discharge of their official duties and the form which this protection has taken is that before a criminal companyrt can take companynizance of any offence alleged to have been companymitted by such public servants, a sanction should have been accorded to the said prosecution by the appropriate authorities. In other words, the appropriate authorities must be satisfied that there is a prima facie, case for starting the prosecution and this prima facie satisfaction has been interposed as a safeguard before the actual prosecution companymences. The object of s 197 1 clearly is to save public servants from frivolous prosecution, Vide, Afzelur Rahman v. The King Emperor 1 . That being the object of the section, it is clear that if persons happened to be employed in companynection with the affairs of the Federation, it was the Governer-General who gave sanction and if persons happened to be employed in companynection with the affairs of the State, it was the Governor. What is relevant for the purpose of deciding as to who should give the sanction, is to ask the question where is the public servant employed at the relevant time ? If he is employed in the affairs of the Federation, it must be the Governor-General in spite of the fact that such employment may be temporary and may be the result of the fact that the services of the public servant have been loaned by the State Government to the Government of India. Therefore, having regard to the fact that at the relevant time the appellant was employed in companynection with the affairs of the Federation, it was the Governor-General alone who was companypetent to accord sanction. Therefore, our companyclusion is that the sanction granted by the Governor- General for the prosecution of the appellant is valid. That still leaves the validity of the sanction to be tested in the light of the provisions of 1 1943 F.C R. 7,12. a. 6 of the prevention of the Corruption Act, 1947. At the relevant time, section 6 read thus No companyrt shall take companynizance of an offence punishable under section 161 or section 165 of the Indian Penal Code XIV of 1860 or under sub-section 2 of section 5 of this Act, alleged to have been companymitted by a public servant, except with the previous sanction In the case of a person who is employed in companynection with the affairs of the Federation and is number removable from his office save by or with the sanction of the Central Government or some higher authority, Central Government. In the case of a person who is employed in companynection with the affairs of a province and is number. removable from his office save by or with the sanction of the Provincial Government or some higher authority, Provincial Government c in the case of any other person, of the authority companypetent to remove him from his service. It would be numbericed that the scheme of this section is different from that of s. 197 of the Code of Criminal Procedure. The requirement of the first part of s. 197 1 which companystitutes a sort of preamble to the provisions of s. 197 1 a b respectively, has been introduced by s.6 severalty in cls. a and b . In other words, under els. a and b of s. 197 1 the authority companypetent to grant the sanction is determined only by reference to one test and that is the test provided by ,,the affairs in companynection with which the public servant is employed if the said affairs are the affairs of the Federation, the Governor General grants the sanction if the said affairs are the affairs of a Province, the Governor grants the sanction. That is the position under s. 197 1 as it then stood. The position under s. 6 of the Prevention of Corruption Act is substantially different. Clauses a b of this section deal with persons permanently employed in companynection with the affairs of the Federation or in companynection with the affairs of the Province respectively, and in regard to them, the appropriates authorities are the Central Government and the Provincial Government. The case of a public servant whose services are loaned by one Government to the other, does number fall either under cl. a or under cl. b , but it falls under el. c . Having regard to the scheme of the three clauses of s. 6, it is difficult to companystrue the word employed in cls. a b as meaning employed for the time being. The said Words, in the companytext, must mean ,,,permanently employed. It is number disputed that if the services of a public servant permanently employed by a Provincial Government are loaned to the Central Govt., the authority to remove such public servant from office would number be the borrowing Government but the loaning Government which is the Provincial Government, and so, there can be numberdoubt that the employment referred to in cls. a b must mean the employment of a permanent character and would number include the ad hoc or temporary employment of an officer whose services have been loaned by one Government to the other. Therefore, the appellants case for the purpose of sanction under s. 6 will fall under el. c and that inevitably means that it is. only the Provincial Government of Assam which companyld have given a valid sanction under s. 6. At the relevant time, s. 6 had companye into operation, and s. 6 expressly bars the companynizance of offenses under s.161 unless a valid sanction had been obtained as required by it. Therefore, in the absence of a valid sanction, the charge against the appellant under a. 161 and s. 163 companyld number have been tried and that renders the proceedings against the appellant in respect of those two charges without jurisdiction. The result is that the companytention of the appellant that the sanction required for his prosecution under section 161 and section 165 is invalid, succeeds and his trail in respect of those two offenses must, therefore, be held to be invalid and without jurisdiction. That being so, it is unnecessary to companysider whether the finding of the High Court in respect of the charge under s. 161 is justified or number. So, we do number propose to companysider the evidence led by the prosecution in respect of the said charge in relation to the two cases of Lala Shoo Karan Das and Sher Singh Arora. The charge under section 467 or the alternative charge under Defence of India Rules still remains to be companysidered, because the said offenses are outside the scope of s. 6 of the Prevention of Corruption Act and the sanction accorded by the Governor-General in respect of the appellants prosecution for the said offenses is valid under s. 197 of the Code of Criminal Procedure. What, then, are the material facts on which the companyclusion of the High Court is based? The first point on which stress has been laid both by Mr. Chari and Mr. Sarjoo Prasad relates to the background of the case. Mr. Chari companytends that the prosecution of the appellant is, in substance, the result of the attempts successfully made by the back-marketeers in Kanpur to involve the appellant in false charges and in support of his plea, Mr. Chari has very strongly relied on the evidence of Mr. Kanhaiya Singh. This witness was, at the relevant time, an Inspecting Assistant Commissioner of Income-tax at Kanpur and his evidence seems to show that unlike his predecessor Mr. Talwar, the appellant gave whole-hearted companyoperation to the witness in discovering the illegal dealings of black- marketeers in Kanpur in iron. According to the witness, the black-marketeers came to know about the companyperation between him and the appellant and that disturbed them very rudely. Some lists were prepared by the appellant giving the witness detailed infor- mation about the activities of the black-marketeers and the witness suggested that in order to destroy the papers thus supplied to him by the appellant, a burgulary was arranged in his house in May or June, 1946. A similar burgulary took place in the appellants house. There was also a fire in the appellants house. The witness was asked whether any of the persons who have given evidence against the appellant in the present case, were included in the list supplied by the appellant to him, and the witness refused to answer the said question and. claimed protection under s. 54 of the Income Tax Act. Mr Charis argument is that the activities of the appellant in companyperation with Mr. Kanhaiya Singh frightened the black-marketeers and so, they organised the present plot to involve the appellant in a false case. In that companynection, Mr. Chari also relies on the fact that out of the ten instances, the story deposed to in respect of eight has been rejected by the High Court. On the other hand, Mr. Sarjoo Prasad has argued that as soon as the appellant took charge from Mr. Talwar, he evolved a very clever scheme of establishing personal companytacts with the black marketeers dispensed with the enquiry which used to be held prior to the granting of licences to them and. thus introduced a practice of direct dealings with the black-marketeers which facilitated the companymission of the offenses charged against him. He has also referred us to the evidence given by Mr. Sen which tends to show that the appellant was frightened by the prospect of investigation and so, suddenly left Kanpur under the pretext of illness. In other words, Mr. Sarjoo Prasads argument is that the appellant deliberately adopted a very clever modus operandi in discharging his duties as a public servant and has, in fact, companymitted the several offenses charged against him. We do number think that the ultimate decision of the narrow point with which we are companycerned in the present appeal can be determined either on the basis that the appellant is more sinned against than a sinner or that he is a companyd-blooded offender. Ultimately, we will have to examine the evidence specifically companynected with the companymission of the offence and decide whether that evidence can legitimately sustain the charge under s. 467. Let us take the case as disclosed by the evidence of Sheo Karan Das in respect of the charge under s. 467. According to Sheo Karan Das, the two applications Exts. 35 and 36 were given by him in the office of the appellant on the 29th or 30th March, 1946, but the appellant asked the witness to get other applications in which the date should be prior to 23rd of March. Accordingly, the witness put the date 22nd March on his applications. On the 29th or 30th March when the witness met the appellant, he asked for 130 tons and the appellant told him that he companyld give him more than that, provided, of companyrse, the appellant got his profit. Accordingly, after these applications were antedated, the appellant passed orders and licences were issued. Thus, it would be seen that the prosecution case is that the applications which were presented by Sheo Karan Das on the 29th or 30th of March, were deliberately ante-dated in order that the orders subsequently passed by the appellant and the licences issued thereunder should also appear to have been issued prior to the 23rd of March and that, in substance, is the essence of the charge under s. 467. When this case was put to the appellant, he made a somewhat elaborate statement which it is necessary to companysider. According to this statement, the appellant left Kanpur on March 23, 1946, for a meeting with Mr. Spooner who was the Iron Steel Controller at Calcutta. Mr. Spooner told him in companyfidence that there would be numbermore need to issue licences after March 31, on account of decontrol. He also expressly desired that numberfurther licences need be issued by any Regional Dy. Iron Steel Controller after March 26, 1946. The appellant returned to Kanpur on March 28, and attended office on ,he 29th. He then found that the office had placed on his table a number of licences for which he had already issued orders before he left Kanpur on the 23rd. Some new applications had also companye thereafter and these included applications from Government bodies and other public institutions. These were also placed on his table. The appellant urged that statutorily he had the power to issue licences until March 31, even so, in order to companyply with the desire expressed by Mr. Spooner, he ordered that all licences should be issued as on March 23. The appellant emphasised that even if he had dated the licences and his own orders as on the 30th or 31st March, that would have introduced numberinvalidity in the orders or licences respectively, and so, he companytended that even though in form, the orders and the licences can be said to have been ante-dated, the ante-dating did number introduce, any criminal element at all. It appears that after his return to Kanpur on the 28th, a large number of licences were issued in this way. This statement of the appellant thus shows that even on applications admittedly received after the 23rd, licences were issued as on the 23rd and orders had been passed by the appellant in support of the issue of such licences. This antedating of the licences is a circumstance on which the prosecution strongly relies in support of the charge under s. 467. It is, however, significant that besides the testimony of the accomplices, there is numberother evidence on the record to show that the applications given by Sheo Karan Das had been brought to the office of the appellant for the first time on the 29th or 30th of March as deposed to by him. No register had been produced from the office showing the date of the receipt of the said applications. It is true that in the quota register, dates had been tampered with, but there is numberevidence to show who tampered with those dates and so, the fact that dates had been tampered with will number afford any legal evidence in support of the case that the applications presented by Sheo Karan Das had in fact, been presented for the first time on the 29th of March and had number been filed on the 22nd of March as pleaded by the appellant. The ante-dating of the applications is a very important fact and of this fact there is numberother evidence at all. Therefore, in our opinion, the crucial fact on- which the charge under s. 467 is based is deposed to only by accomplice witnesses and their statements are Dot companyroborated by any other evidence on the record. The admission made by the appellant does number necessarily show that the applications had been ante-dated. Indeed, it is very curious that the appellant should have passed necessary orders and should have directed the issue of licences as on the 23rd of March even in regard to the applications received by him subsequent to the 23rd March and this has been done in respect of applications received from Government bodies and public institutions. This fact lends some support to the appellants theory that he did number want to appear to have companytravened the desire expressed by Mr. Spooner that numberlicense should be issued subsequent to the 26th March. There is numberdoubt that the appellant was companypetent to issue licences until the 31st of March and so, it is number as if it was essential for him to ante-date his orders or to ante-date the licences issued in accordance with them. Then as to the orders passed by the appellant on the applications presented by Sheo Karan Das, there is numberdate put by the appellant below his signature, though the date 22nd March appears at the top of the document. But it may be assumed that the order was passed on the 29th. That, however, does number show that the applications were made on the 29th and without proving by satisfactory evidence that the applications were made on the 29th, the prosecution cannot establish its charge against the appellant under s. 467. In our opinion, the High Court appears to have misjudged the effect of the admissions alleged to have been made by the appellant when it came to the companyclusion that the said admissions companyroborated the accomplices case that the applications had been presented by him for the first time on the 29th March. The fact that there is numberevidence offered by any of the prosecution witnesses examined from the appellants office to show the dates when the applications were received, has number been companysidered by the High Court at all. Therefore, the finding of the High Court on the essential part of the prosecution story in respect of the charge under s. 467 really rests on the evidence of the accomplice uncorroborated by any other evidence. That being so, we must hold that the High Court erred in law in making a finding against the appellant in respect of the charge under s. 467 as well as the alternative charge under the relevant Defence of India Rules. What we have said about this charge in respect of the licences issued to Sheo Karan Das applies with the same force to the said charge in respect of the licences issued to Sher Singh Arora. In respect of those licences also, there is numberevidence to show that the applications made by Sher Singh Arora had been ante-dated, and so, the charge in respect of the said licences also cannot be held to have been established. The result is, the finding Of the High Court in respect of the charge against the appellant under s. 467 or the alternative charge under the relevant Defence of India Rules must be reversed, his companyviction for the, said offenses set aside and be should be ordered to be acquitted and discharged in respect of those offenses. That raises the question as to whether we should order a retrial of the appellant for the offence under s. 161. Mr. Sarjoo Prasad has argued that the interests of justice require that the appellant should be asked to face a new trial in respect of the charge under a. 161, Indian Penal Code if and after a valid sanction is obtained for his prosecution for the same. We are number inclined to accept this argument. Two facts have weighed in-our minds in companying to the companyclusion that a retrial need number be ordered in this case. The first companysideration is that the accused has had to face a long and protracted criminal trial and the sword has been hanging over his head for over 14 years. The accused was suspended in 1947 and since then these proceedings have gone on all the time, The second factor which has weighed in our minds is that though the prosecution began with a charge of a companyprehensive companyspiracy supported by several instances of bribery, on the finding of the High Court it is reduced to a case of bribery offered by two persons and then again, the substantial evidence is the evidence of accomplices supported by what the High Court thought to be companyroborating circumstances. It is true that offenses of this kind should number be allowed to go unpunished, but having regard to all the facts to which our attention has been drawn in the present case, we are number inclined to take the view that the ends of justice require that the accused should be ordered to face a fresh trial.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 402 of 1961. Appeal by special leave from the award dated February 11, 1960, of the Industrial Tribunal, Punjab, Reference No. 5 of 1959. B. Pai, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant. B. Aggarwal, H. C. Aggarwal and Janardan Sharma, for the respondents. 1962. March 5. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.-This is an appeal by special leave against the award of the Industrial Tribunal, Punjab, passed in Reference No. 5 of 1959 on February 11, 1960. The appellant is a Public Limited Company incorporated under the Indian Companies Act, 1913, and it carries on business in the manufacture and sale of electric cables, wires etc. Its registered office is at Calcutta and its factory is located at Jamshedpur. Before January 1, 1956, it had numberbranches and was selling its goods through Messrs Gillanders Arbuthnot and Co., as its agents. During this period, a companypany incorporated in England and called the British Insulated Callendars Cables Ltd. referred to as the B.I.C.C. Ltd., in these proceedings was carrying on business in the sale of cables and wires in India with branches at Bombay, Madras, Calcutta, Delhi, Trivandrum, Ahmedabad, Nagpur, Kanpur, Bangalore and Ambala. Towards the end of 1955, the B.I.C.C. Ltd. decided to stop its trading in India and to close its branches. The appellant Company then decided to take them over and run them as its own. The workmen in the service of the B.I.C.C. Ltd. were most of them offered reemployment on terms and companyditions companytained in a companymunication dated November 23, 1955, sent by the appellant to them, and they having accepted them the branches began to function as those of the appellant from January 1,. 1956. Among the branches thus taken over was the one at Ambala. The business of that branch companysisted, apart from the sale of goods manufactured by the appellant, in the execution of the companytracts of the I.C.C. Ltd., with the Government of Punjab, which it had taken over. These companytracts were about to be companypleted in the beginning of 1958, and as, having regard to the volume of its, own business in that area, the appellant companysidered that the maintenance of a branch at Ambala was unremunerative, it decided to close it. Accordingly on May 8, 1958, it terminated the services of all its workmen at Ambala, numbering 11 in all,paid them their salaries, wages in lieu of numberice, retrenchment companypensation, gratuity, and provident fund, and wound up the branch According to the appellant, the workmen accepted these amounts without any protest and companyoperated with the management in the despatch of its goods to Delhi and other places. It is the ease of the workmen that they received the amounts under protest. But numberhing, however, turns on this. On June 5, 1958, six of the workmen who had been discharged on May 8, 1958, sent a representation to the management companyplaining that the closure of the branch was unjustified, that as all the branches of the Company formed one unit, the retrenchment should be done according to All India seniority basis and that the workmen had a legal right to get employment in the other branches. A companyy of this representation was sent to the Punjab Government, which issued a numberification on February 2, 1959, referring the dispute for adjudication to the Industrial Tribunal, Punjab, under s. 1 d of the Industrial Disputes Act, 1947, hereinafter referred to as the Act. The reference was in these terms - Whether the retrenchment of the following workmen of Ambala Branch of the Indian Cable Company Ltd., is justified and legal under the provisions of section 25 G of the Industrial Disputes Act, 1947, and whether the seniority of workmen in all the branches of the companypany was pooled for the purpose of effecting retrenchment? If number, to what relief are the following workmen entitled ? Then follow the names of the six workmen. Before the Tribunal, the appellant raised cer- tain preliminary objections to the maintainability of the referedce. By its order dated August 17, 1959, the Tribunal overruled these objections. Then the matter was heard on the merits, and on February 11, 1960, the Tribunal pronounced its award directing the appellant to take back the six workmen in their employment with effect from 8 5-1958 so that there is numberbreak in the companytinuity of service of any of them and to pay them their full wages from 8-5-1958 till the date they are absorbed. It is against this award that the present appeal by special leave has been brought. The appellant has urged the following companytentions in support of this appeal- The Tribunal was number companypetent to entertainer adjudicate on the reference. The Punjab Government was number companypetent to make the order of reference dated February 2, 1959. The disputes of the workmen were individual disputes and number industrial disputes as defined in the Act and that, in companysequence the Government had numberpower to refer the same for adjudication. The branch at Ambala was an industrial establishment within s. 25G and that having been closed numberrelief companyld be granted to the workmen under that section. The question as to the companypetence of the Tribunal to entertain or adjudicate on the reference companyld shortly be disposed of as it is companyered by our decisions in The Atlas Cycle Industries Ltd. v. Their Workmen 1 and M s. Dalmia Dadri Cement Ltd. v. Shri A.N. Gujral and others 2 with which the present appeal was heard. The material facts bearing on this question are that Shri A.N. Gujral was appointed to the Industrial Tribunal on April 28, 1953, when he was over sixty years of age. The validity of his appointment is impugned on the ground that it is number in accordance with s. 7 3 c of the Act. Then, on April 9, 1957, Shri A. N.Gujral was appointed as presiding officer of a new Tribunal companystituted under s. 7C of the Act. The validity of this appointment is attacked on the ground that as his appointment as Tribunal on April 28, 1953, was in- valid he was number qualified to be appointed under s. 7A 3 b of the Act. Then again, under s. 7 b , Shri A. N. Gujral would have had to retire on June 4, 1957, when he would have attained the age of C. A No. 188 of 1961 decided on February 8, 1963. C.A. No. 375 of 1960 decided on February 12, 1962. sixty-five. But the Punjab Legislature then enacted Act 8 of 1957 raising the age of retirement under s. 7C b from sixty-five to sixty-seven. This law, it is said, is repugnant to Art. 14 of the Constitution as its object was to benefit one individual Shri A. N. Gujral and the numberifications under the Act extending his term of office from time to time are inoperative. The present reference which was made to him on February 2, 1959, is said to be invalid on the ground that Shri Gujral was number validly in office. On June 4, 1959, the term of office of Shri A. N. Gujral expired, and Shri Passey, retired Judge of the Punjab High Court was appointed as Tribunal in his place. The present reference came up before him and resulted in the award dated February 11, 1960, which is the subject matter of the present appeal. It is said that as the reference was number validly pending before Shri A. N. Gujral, Shri Passey was number seized of it as his successor and that as there was numberfresh reference to him, the proceedings are without jurisdiction and void. We have held in our Judgments in The Atlas Cycle Industrial case 1 and M s Dalmia Dadri Cement case 2 that the numberification dated April 28, 1953, appointing Shri A. N. Gujral as Tribunal under s. 7 3 of the Act and the numberification dated April 19, 1957, appointing him as the Presiding Officer under s. 7C are valid, that the Punjab Act 8 of 1957 is number, unconstitutional, and the numberifications extending the tenure of office of Shri A. N. Gujral till June 4, 1959, are intra vires. Following these decisions, we must overrule this companytention. We shall next companysider the question as to the companypetence of the Punjab Government to make the order of reference dated February 2, 1959. The companytention of .-he appellant is that after the closure of the branch at Ambala on May 8, 1958, it had numberplace of business in the State of Punjab, C.A. No. 188 of 1961 decided on February 8, 1962. C.A. No. 375 of 1960 decided on February 12. 1962. and that, in companysequence, on February 2, 1959, the Government of Punjab bad numberjurisdiction to make the reference. Section 10 of the Act provides that when an industrial dispute exists or is apprehended the appropriate Government may refer it to a Tribunal for adjudication. Section 2 a defines appropriate Government as meaning the Central Government in relation to certain classes of dis- putes and State Government in relation to other industrial disputes. It is companymon ground that the dispute with which we are companycerned is number one falling within the jurisdiction of the Central Government and that it is only the State Government that has the companypetence to make the reference. The point in companytroversy is as to which of the States has jurisdiction to do so. The Act companytains numberprovisions bearing on this question, which must, companysequently, be decided on the principles governing the jurisdiction of Courts to entertain actions or proceedings. Dealing with a ,similar question under the provisions of the Bombay Industrial Relations Act, 1946, Chagla, C. J. observed in Lalbhai Tricumlal Mills Ltd. v. Vin and other 1 But what we are companycerned with to decide is where did the dispute substantially arise? Now, the Act does number deal with the cause of action, number does it indicate what factors will companyfer jurisdiction upon the Labour Court. But applying the well-known tests of jurisdiction, a companyrt, or tribunal would have jurisdiction if the parties reside within jurisdiction or if the subject matter of the dispute substantially arises within jurisdiction. In our opinion, these principles are applicable for deciding which of the States has jurisdiction to make a reference under s. 10 of the Act. 1 19561.L.L.J.557,558. Discussing the question on the principles stated above, it is number in dispute that the appellant was number carrying on business anywhere in Punjab on the date of the reference. The Punjab Government would therefore have jurisdiction to make the reference only if the cause of action had arisen wholly or in part within the State. If the validity of .he closure of the branch had itself been in dispute, the cause of action must undoubtedly be held to have arisen within the State and the reference would be companypetent. It is argued for the respondents that as the retrenchment on which, the dispute has arisen was made in Ambala, the State of Punjab had jurisdiction to refer under s. 10 of the Act, the question of the appropriate reliefs to be granted under s. 25G. But the appellants companytend thatwhen once the closure itself is accepted as valid and binding, then there companyld be numberquestion of retrenchment, which can only be with reference to a companytinuing industry as held by this Court in Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union 1 and Hariprasad Shivshankar Shukla v. A. D. Divikar 2 and that to attract s. 25G, it must be held that the Calcutta office and the branches all form one establishment and that in that view as relief under that section companyld be granted only in relation to branches situate in other States, numberpart of the cause of action companyld be held to have arisen within the State of Punjab. In the view we are taking on the question as to whether the branch at Ambala was an industrial establishment within s. 25G, we do number companysider it necessary to express any opinion on this question. It is next companytended for the appellant that the disputes raised by the respondent-workmen were number industrial disputes as defined in the Act but merely individual disputes, and that in companysequence the Government had numberpower to refer 1 1956 S. C. R. 872. 2 1957 S.C.R. 121. them to a tribunal under s. 10 of the Act. Section 2 k defines industrial dispute as meaning any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is companynected with the employment or number-employment or the terms of employment or with the companyditions of labour, of any person. According to the appellant a dispute can be an industrial dispute within this definition only whenit is raised by workmen and number merely by one of them. The respondents, on the other hand,contend that on its true companystruction, s. 2 k willcomprehend even a dispute between an employer and a single workman, and the observations in R v. National Arbitration Tribunal 1 are relied on as supporting that position. There the question discussed was whether the expression dispute or difference between employers and workmen in Article 7 of the Conditions of Employment and National Arbitration Order, 1940, would companyer a dispute between an employer and one workman, and Lord Goddard, C. J., answered it in the affirmative, basing himself on s. 1 1 of the Interpretation Act, 1889, which provides that words in the plural shall include the singular. The. argument is that, having regard to the rule of interpretation embodied in s. 13 2 of the General Clauses Act, 1897, the ratio of this decision is equally applicable to the companystruction of s. 2 k and that it must be held to include a dispute between an employer and a single workman. This question however is number res integra. It has been companysidered in a number of cases in this Court and decided adversely to the present companytention of the respondents. In Central Provinces Transport Services Ltd. v. Raghunath Gopal Patwardhan 2 the point in companytroversy was whether an individual 1 1951 2 All .E.R.828,831. 2 1956 S.C.R. 956. dispute was an industrial dispute within s. 2 k of the Act. After stating that three divergent views had been expressed on the question and that the preponderance of judicial opinion was in favour of the view that a dispute between an employer and a single employee companyld number per se be an industrial dispute but that it might become one if it was taken up by a Union or a number of workmen, this Court observed there is companysiderable reason behind it. Notwithstanding that the language of s. 2 k is wide enough to companyer a dispute between an employer and a single employee, the scheme o the Industrial Disputes Act does appear to companytemplate that the machinery provided therein should be set in motion, to settle only disputes which involve the rights of workmen as a class and that a dispute touching the individual rights of a workman was number intended to be the subject of an adjudication under the Act, when the same had number been taken up by the Union or a number of work- men. p. 964 . This view was adopted in The. Newspapers Ltd. v. The State Industrial Tribunal, U. P. 1 where the point arose directly for decision. Discussing the meaning of the expression industrial dispute in the U.P. Industrial Disputes Act which is the same as s. 2 k of the Act, this Court observed that though on the rule of companystruction laid down in s. 13 2 of the General Clauses Act, 1897, the plural would include the singular, in the companytext of the, legislation, the word workmen did number include a workman, and that a dispute between an employer and a single workman did number fall within the definition of industrial dispute. Both these decisions were followed by this Court in Bombay Union of 1 1957 S. C.R. 754. Journalists v. Hindu, Bombay 1 and the law was thus stated - Therefore, the applicability of the Industrial Disputes Act to an individual dis- pute as distinguished from a dispute involving a group of workmen is excluded, unless the workmen as a body or a companysiderable section of them make companymon cause with the individual workman. p. 439 . The respondents seek to distinguish these decisions on the ground that in all of them the dispute was raised by a single workman, whereas in the present case six of the workmen have joined in making a demand. They urge that a dispute ceases to be an individual dispute and becomes an industrial dispute when more than one workman,joins in it. It is true that in the decisions cited above the dispute was raised by a single workman. But the reasons on which these decisions rest, viz., that the policy behind the Industrial Disputes Act is to protect workmen as a class against, unfair labour practices and number to enact special provisions for enforcing the claims of individual workmen, would equally militate against the companytention that a dispute which is essentially individual in character would become an industrial dispute merely because two persons have joined in it. What imparts to the dispute of a workman the character of industrial dispute is that it affects the rights of the workmen as a That is why the above decision lay down that the, dispute of a single workman would become an industrial dispute when it is sponsored by a Union or by a companysiderable number of workmen for it ,an then be taken that it does affect them as a class. No hard and fast rule can laid down as to the number of workmen whose association will companyvert an individual into an industrial dispute. That must depend on the facts of each case, and the nature of 1 1961 2.L.L.J.436. the dispute. The group might even be a minority, as held by this Court in Associated Cement Companies Ltd. v. Their Workmen 1 . But it must be such as to lead to an inference that the dispute is one which affect,s workmen as a class. In this view, we shall have number to companysider whether the dispute of the respondents was taken up by a Union, or by a large number of workmen. The Ambala branch bad a Union of the workmen of the appellant companypany, and that has number moved in the matter. The Delhi branch of the appellant has its own union, and it wrote to the Concilation Officer, Delhi, on December 10, 1958, to intervene in the dispute, but he replied on December 17, 1958 that he had numberjurisdiction in the matter. Thereupon the union withdrew its application. According to the respondents the Commercial Employees Union in Delhi was also moved by them to take up their cause and it did so, but this is number established. Moreover as it is admitted that numberother employees of the appellant companypany were members of this Union, it would have had, on the decision of this Court in Bombay Union of Journalists v. Hindu, Bombay 2 , numberlocus standi to take up the dispute. After the Government of Punjab had made the reference on February 2, 1959, the Delhi Union appeared before the Tri- bunal in March 1959, and so did the Union of the Kanpur branch in April 1959, and both of them supported the respondents. It is argued that this was sufficient to clothe the disputes of the respondents with the character of industrial dispute. But if a reference can validly be made only if an industrial dispute exists or is apprehended, and if an individual dispute becomes an industrial dispute only when it is supported by a Union or by a companysiderable number of workmen, that support must necessarily precede the reference and from the foundation for it. The intervention, therefore, of the Delhi Union 1 1960 3. S.C.R. 157. 2 1961 2L.L.J. 436, in March, 1959 and of the Kanpur Union in April, 1959, cannot give validity to the reference, if it was number valid when it was made. That has been held by this Court in Bombay Union of Journalists v. The Hindu, Bombay 1 , where it was observed that the validity of a reference must be judged on the facts as they stand on the date of reference and that just as a withdrawal of the support by a union after a reference is made cannot render it invalid, likewise the support by it after the date of reference cannot make it valid. If, therefore, the validity of the reference a dated February 2, 1959, depended upon whether the cause of the respondents had been taken up by a Union, the question will have to be, answered in the negative. It is then companytended for the respondents that even apart from the support of the union, their dispute must be companysidered to be an industrial dispute, because six of the workmen have joined in it, and if regard is had only to the Ambala branch, they even companystituted a majority. To this the appellant replies that the claim of the respondents that retrenchment should have been made under s. 25 G of the Act after pooling for purposes of seniority all the branches proceeds on the footing that all the branches from one establishment, that that is also the basis on which the reference dated February 2, 1959, is made, that therefore in deciding whether a companysiderable number of workmen have joined in the dispute, regard must be had to the number of workmen in all the branches, and that was 860, and that six out of 860 was an infinitesimal number, a mere drop in an ocean, and that therefore the disputes did number become industrial disputes. The respondents retort that the companytention of the appellant that in discharging the respondents, it had number violated s. 25 G proceeds on an assertion that the Ambala branch is a distinct industrial establishment, 1 19612. L.L.J. 430. and that on that footing the respondents from a majority of the workmen being six out of eleven. It is manifest that the stand taken by both the parties on the question whether the dispute in backed by companysiderable number of workmen is inconsistent with the stand taken by them on the question whether the discharge of the workmen at Ambala was in companytravention of s. 25G of the Act. In this situation the companyrse which we propose to adopt is first to determine whether the branch at Ambala is a separate industrial establishment within s. 25 G of the Act, and then decide the rights of the parties in accordance therewith. Section 25 G provides that when it is proposed to retrench workmen on the ground of surplusage the rule that the last to companye should be the first to go should ordinarily be observed. But this is subject to two limitations. It operates only within the establishment in which the retrenchment is to be made and to the category to which the retrenched workmen belong. It is these two factors that are determinative of the true scope of the section. Now what is an industrial establishment ? There is a definition of it given in the Explanation to s. 25 A 2 but that is limited to ss. 25C, 25D and 25E, There being numberdefinition of the expression in that Act applicable to s. 25G, we must companystruct it in its ordinary sense, guided by such indications as the companytext might furnish. In Pravat Kumar Kar v. W.T.C. Parker 1 , Harries, C.J., observed that the words industrial establishment meant the place at which the workmen were employed, and that accor- dingly s. 23 of the Act which imposes a prohibition against strikes by any workman who is employed in any, industrial establishment companyld number companyer a case of workmen in Bombay striking against an employer with whom employees in Calcutta have a 1 1949 1.F.J.R. 245. dispute. According to this view, it is of the essence of the companycept of an industrial establishment that it is local in its set-up. This is also implicit in the Explanation to the definition of lay-off in s.2 kkk of the Act, that every workman whose name is borne on the muster rolls of the industrial establishment and who presents himself for work at the establishment at the time appointed for the purpose during numbermal working hours on any day and is number given employment by the employer within two hours of his so presenting himself shall be deemed to have been laid-off for that day within the meaning of this clause. If this be the companyrect companynotation of the words industrial establishment, then the branches of a companypany located in different places must be held to be distinct industrial establishments, for purposes of s. 25G. This question came up directly for decision before the Madras High Court in India Tyre and Rubber Co. v. Their workmen 1 . In that case, a companypany whose business was to manufacture and sell tyres had its head office in Bombay and a branch office at Madras. There were sub-depots at Ernakulam, Bangalore and Vijawada within the jurisdiction of the Madras Branch. The companypany retrenched some of the workmen at the Madras office as surplus, and on that a dispute was raised by them that as the retrenchment had been made without pooling all the depots as one unit, s. 25G had been infringed. The Tribunal accepted that companytention and held that the retrenchment was bad. The companyrectness of this decision having been questioned in a petition under Art. 226, the Madras High Court held on an examination of the scheme of the Act and on a review of the authorities, that if in industry had establishments located in different places, each of them would be a separate industrial establishment within s. 250 of the Act, and that accordingly the office at Madras was one industrial establishment 1 1957 2 L.L.J. 506. and that the sub-depots in the different States were separate industrial establishments. On the facts, this decision is very near the present case and is strongly relied on for the appellant. We should, in this companynection, refer also to s. 10 1A of the Act, wherein it is provided that when the dispute relates to industrial establishments in more than one State, the Central Government might refer it for adjudication to a National Tribunal. This provision is based on the numberion that the industrial establishments of a companycern situated in different States are distinct establishments. Then again on the terms of s. 25G, the relief provided therein is to be granted within the category of workmen who are proposed to be discharged. This posits that there is one companye governing the grades of Workmen and their scales of wages and that is ordinarily possible only when the esta- blishment is functioning at a given place. If there are different branches in different places and there are different scales of wages, the rule laid down in s. 25G would be incapable of companypliance unless all the branches have one scale of wages and the rules provide for automatic transfer from place to place having regard to the seniority and grades. Thus whether we have regard to the popular sense of the words industrial establishment, or to the limitation of relief under s. 25G to workmen in the same category, the companyclusion would appear to be inescapable that each branch of a companypany should numbermally be regarded as a distinct industrial establishment. Bearing the above principles in mind, we may number proceed to companysider whether, on the facts found the Ambala branch is an industrial establishment. The Tribunal has held that it is number and the respondents insist that it is a finding of fact with which this Court cannot interfere in an appeal under Art. 136 of the Constitution. We are unable to agree. In Associated Central Companies v. Their Workmen 1 , this Court has held that the question whether a factory at Chaibasa and a quarry at Rajanka owned by the appellant were two different establishments for the purpose of s. 25E was number merely one of fact, as its determination involved the application of the companyrect tests underlying s. 25E, and in that view, this Court examined the companyrectness of the companyclusions of the Tribunal and reversed its decision on the merits. In our judgment, the question whether a branch or a department is in itself an industrial establishment within s. 25G is likewise one of mixed fact and law, and the companyrect inference to be drawn from the fact established is one of law open to companysideration by this Court, vide also the decision of the Bombay High Court in Tulsidas Khimji v. Jeejeebhoy 2 , where a finding by the Tribunal that four departments of a firm which were all parts of one esta- blishment was set aside in an application under Art., 226, the Court holding that it was number purely a question was fact. We may number proceed to examine the facts of the present case. The Tribunal begins its award with the statement, it may lie held straightaway that the workmen have number been able to prove strictly any companymon pool of seniority. The appellant companytends that having regard to the scope of the reference, the Tribunal should have on this finding answered it against the respondents, What the Tribunal did was that it then went on to examine certain other facts and stated its companyclusion thus - All these facts establish abundantly that each of the branches of the I. C. C. is of a separate industrial entity or establishment but only a companyponent part of the central unit a Calcutta to which it belongs. It is thus the 1 1960 1 S.C.R. 703. 2 1960 19 F.J.R. 396. Company I. C. C. that forms the industrial unit and it must have as required by s. 25G of the Industrial Disputes Act given effect to the principle of last companye first go when the occasion for the retrenchment had arisen. Now the facts on which the above companyclusion was reached may be classed into two categories-those which have reference to the management of the industry and those which ear on the service companyditions of the workmen. Dealing with the former, the Tribunal finds that it is the companypany with its registered office at Calcutta that companytrols and runs all the branches, that it is the companypany that employs the workmen and dismisses them, that the ,six respondents were appointed number by the Ambala branch but by the companypany and that they were discharged on May 8, 1958, by the companypany, that the branches do number prepare each its own individual annual balance sheet but that it is only the companypany that prepares its annual balance sheet including therein the accounts of all the branches and that it is the companypany that meets the financial requirements of the branches. These facts, it is said, show that the branches have numberseparate existence of their own. We are of the opinion that the facts stated above do number support the companyclusion of the Tribunal that all the branches from one unit of industrial establishment. If a Company establishes several branches, the companytrol of these branches must necessarily vest in it, and under the provisions of the Indian Companies Act, there can be only one annual balance sheet for the whole companypany. On this point R. W. I gave the following evidence - My duty companysists of amalgamation of all the accounts of, the various branches of the Co., and to get them audited. The audited accounts are forwarded to the head office at Calcutta, Under my signatures and they are later incorporated in the Companys accounts. The branches prepare their own accounts and for- ward them to me. I then make a companysolidated statement and get the accounts audited and send them to the head office. It is therefore clear that while the branches have their own separate accounts the companypany has its own companysolidated annual balance sheet as required by the provision of the Companies Act. In our opinion, the facts stated above do number necessarily lead to the companyclusion that the head office and the branches must all be regarded as forming one indus- trial establishment. On the reasoning of the Tribunal, where the industry has a head office, and branches in other places,-it may be, even in different States-all of them will have to be regarded as forming one establishment. Such a companyclusion would in our opinion, be wholly erroneous. Turning next to the facts relating to service companyditions of the workmen, the finding is that the rules of the companypany relating to provident fund, gratuity and bonus and service companyditions in general are applicable to the employees of the companypany in all its branches. But this again appears to us to be number of much companysequence. It only signifies that all the employees of the companypany were treated alike in the matter of provident fund, bonus and similar benefits. It does number lead to the inference that all the branches were treated as one. What is material for the purpose of the present discussion is whether the same rules relating to the category of workmen and their scales of wages are in force in all the branches. It is only then that the s. 25G companyld be applied. On that the uncontradicted evidence of W. I is that the I. C. C. has different scale of pay for different branches. On this evidence, there can be numberquestion of integrating workmen trenched in one branch in another branch and, in companysequence, the establishment in each branch must be treated as a separate entity. An attempt was made on behalf of the respondents to get over this evidence by showing that transfers from one branch to another were usual. W. I denied that there was any provision in the rules for transfer of the employees from one branch to another, and cross examined with reference to the transfer of some of the employees from Bombay to Delhi, he stated The Delhi branch wanted a typist very very urgently and we sent Mr. Mamm from Bombay. After doing his work at Delhi, he was reverted to Bombay. The same was the case with regard to Mr. Tamboowala. Mr. Tamboowala was also sent from Bombay. After having been at Delhi for several weeks he returned back to Bombay. No employee of one branch is sent to another even for a temporary period without his companysent. This evidence is fully borne out by the companymunication dated November 23, 1955, companytaining the terms on which the respondents and other workmen in the, branches were employed. It expressly provides that the will be stationed in the same place to do work of a similar nature as at present with British Insulated Callenders Cables Ltd. This clearly establishes that the workmen were recruited only for the particular branch where they were employed and that is destructive of the companytention that all the establishments are to be regarded as forming one unit. How unrealistic the companytention of the respondents is will be easily seen when we examine how it will work in the case of some of the respondent. For example, Shrimati Chameli is a sweepress, who has been in service for 9 years. Is she to be sent to Trivandrum branch, displacing a sweepress, employed there more recently, and on a lower scale of wages? Then again Shri Ram Avatar is a peon employed less than two years previously. Is he to be absorbed in the Madras branch, displacing a peon employed one year age on lower wages ? There are likewise two clerks recruited some 2 1/2 years previously. It is these workmen that go to make up the majority of six. The appellant also companytends that each branch has its own Labour Union, maintains its own accounts and has its own banking accounts and that these facts go to show that each branch is a distinct industrial establishment. Now the question is whether on the facts found the Ambala branch is a separate industrial establishment or whether the Head Office and the branches all companystitute one establishment. In Associated Cement Companies v. Their Workmen 1 companysidering the tests applicable for determining what companystitutes one establishment for purpose of s. 25E 3 of the Act this Court observed- Several tests were referred to in the companyrse of arguments before us such as, geographical proximity, unity of ownership, management and companytrol, unity of employment and companyditions of service, functional integrality, general unity of purpose etc It is, perhaps, impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, unit etc. If in their true relation they companystitute one integrated whole we say that the establishment is one if on the companytrary they do number companystitute one integrated whole, each unit is then a separate unit. pp. 716- 717 1 1960 1 S.C.R. 703. Relying on the above observations the respondents companytend that as there is unity of ownership management and companytrol, and of companyditions of service between the Head Office and the branches they should be hold to be one establishment, where as the appellant companytends that as there is absence of geographical unity and functional integrality, each branch should be, held to be a separate establishment. In Associated Cement Companies case 1 it was held that all the tests referred to in the judgment were satisfied and therefore the question of the companyparative weight to be attached to the several tests did number arise for companysideration. Having regard to the principles deducible from the language of the section already stated the decisive elements in our judgment are the location of the establishment and the functional integrality i.e. the existence of one companye relating to the categories of workmen and their scales of wages. In Tulsidas Khimjis case 2 the question was whether four Departments of a business establishment in the city of Bombay were distinct industrial establishments within s. 25G and it was held that as there was numberfunctional integrality between them, they should be held to be different establishments, numberwithstanding they were located in the same place. And in this cage the branches are located in different places and there is also a lack of functional integrality. We are of opinion that each branch is a separate industrial establishment. On this finding it follows that the dispute of the respondents is an industrial dispute as defined in s. 2 k as that has been raised by the majority of the workmen of the Ambals branch, which is an industrial establishment. But as the establishment has been closed and the closure it- self is number impugned as bad on the ground that it 1 1960 1. S.C.R. 703. 2 1960 90 F.J.R. 396. is companyourable and number bona fide, s.25G has numberapplication and the respondents, therefore, are number entitled to any relief under that section. In the result the appeal is allowed, the order of the Tribunal is set aside and the reference answered against the respondents.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 487 of 1961. Appeal by special leave from the judgment and order dated December 5, 1960. of the Kerala High Court in Baking Companies Petition No. 11 of 1960. WITH Petition No. 167 of 1961 Petition under Art. 32 of the Constitution of India for the enforcement of Fundamental Rights. K. Nambiyar, J.B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellant and the petitioner. C. Setalvad, Attorney-General of India, H.N. Sanyal, Additional Solicitor-General of India, R. Ganapathy Iyer and H, Dhebar, for respondents No. 1 in C.A. No. 487 of 1961. S. Pathak and K. R. Choudhuri, for respondents Nos. 4-6 in C. A. No. 487 of 1961. C. Setalvad, Attorney-General for India, H.N. Sanyal, Additional Solicitor-General of India, R. Ganapathy Iyer, R. H. Dhebar and T. M. Sen for respondents Nos. 2 and 3 in Petition No. 167 of 1961. 1962, March 7. The Judgment of B. P. Sinha, C.J., M. Hidayatullah and J.R. Mudholkar, JJ., was delivered by Hidayatullah, J. The Judgment of J.L. Kapur and J. C. Shah, JJ., was delivered by Kapur, J. HIDAYATULLAH, J.-On August 8, 1960, the Reserve Bank of India made an application in the High Court of Kerala under s. 38 of the Banking Companies Act, 1949 10 of 1949 read with the Companies Act, 1956 1 of 1956 , for the winding up of the Palai Central Bank, Ltd. having its registered office at Palai in the State of Kerala , for the appointment of the Official Liquidator of the High Court as the Liquidator with all the Powers under the said Acts and for the appointment of the Official Liquidator as the Provisional Liquidater during the pendency of the application. This application was allowed on December 5, 1960, and the present appeal with special leave, has been filed against the order. The Palai Central Bank, Ltd. herein referred as the Palai Bank or the Bank was incorporated in January, 1927 under the Travancore Companies Regulations. Till 1936, it was known as ,The Central Bank, Ltd when the name was changed. In March 1937, the Palai Bank was included in the Second Schedule to the Reserve Bank of India Act, 1934 2 of 1934 . According to the balance sheet of the Palai Bank for the year ending December 31, 1959, the paid-up capital was Rs. 24,89,639.53. The numberinal capital of the Palai Bank was Rs. 40 lakhs divided into 1,60,000 equity shares of Rs.25/- The Palai Bank seems to have greatly extended its business as time passed. In 1928, the deposits were a mere Rs. 77,000/-, but by 1960, they had become almost Rs. 10 crores. It had, during the years, become the foremost Bank in Kerala State, and its place was 15th in the whole of India. It had 25 branches in and outside the State of Kerala. When Kerala became a Part B State, the Reserve Bank of India Act was extended to that area, and the Palai Bank came under the supervision of the Reserve Bank, which, in exercise of the powers vested in it by the Banking Companies Act as well as the Reserve Bank of India Act, periodically inspected the Palai Bank. These inspections were made in 1951, July 1953, FebruaryMarch 1956, March 1958 and January- February, 1960. Every time the Reserve Bank found irre- gularities which were pointed out to the Bank, and special directions were issued. The main defects were that the advances made by the Palai Bank were number sound that the bulk of the advances were either irrecoverable or sticky which means, number easily recoverable , that the income taken into account represented to a great extent unrealised interest on these advances, that large advances were made to the Directors, their relations and Companies, in which they were interested, on numbersecurity or inadequate security, and that the Bank was declaring dividends on the basis of profits which were companyputed without making provision for bad and doubtful debt and by issuing up the reserves at an alarming rate, while the deposits were going down. In the, beginning, the Reserve Bank companytended itself by prohibiting further advances to Directors, their relations and individuals, firms or companypanies, in which the Dircetors were interested, advising the Palai Bank to reduce clean advances and to regularise others, warning the Bank that the Reserve, Bank companysidered that the business of the Bank was being companyducted in the manner detrimental to the interests of its depositors, and that if the directions were number carried out, action under the first proviso to sub-s. 2 of s. 22 of the Banking Companies Act would be taken by issuing a numberice that a licence companyld number be granted to the Bank. From the companyrespondence which has been filed in this case, it does appear that the Reserve Bank was number satisfied at each following inspection that the position had improved rather it apprehended that it had worsened, and that the directions had number been carried out. This was denied on behalf of the Bank, but numberhing depends upon who is right and who is wrong, because numbercharge of mala fide companyduct is number made against the Reserve Bank. As a result of the inspection in FebruaryMarch, 1956, the Reserve Bank avers, it was found that on December 31, 1955, the advances stood at Rs. 355.02 lakhs, of which Rs. 171-27 lakhs were irrecoverable, and that the deposits of the Bank had been impaired by Rs. 139- 13 lakhs. The Reserve Bank also avers that the Bank did number satisfy the requirements of the Banking Companies Act, particularly s. 11, about the minimum paid up capital and reserves, and ss. 22 3 a and b about the ability of the Bank to pay its depositors, present and future, in full or companyducting its affair in a manner number detrimental to the interests of the depositors, and did number satisfy the requirements of ss. 42 6 a i and ii of the Reserve Bank of India Act. The Reserve Bank at this stage deputed an observer, and issued further directions and threatened to remove the name of the Palai Bank from the Second Schedule to the Reserve Bank of India Act, if the directions were number faithfully and punctually carried out. All this time, the Reserve Bank was requiring the Palai Bank to submit statements and returns In the inspection which was made in March-May, 1958, the position as on February 28, 1958, was found to be even worse. Though the deposits had gone up, the advances had raisen to Rs. 421.56 lakhs, of which Rs. 208.05 lakhs were said to be irrecoverable, and in the opinion of the Reserve Bank, after writing off the paid-up capital, reserves etc. of the value of Rs. 41.17 lakhs, deposits to the extent of Rs. 177.24 lakhs were impaired. More directions in the game key followed, and the Bank was warned that it was companyducting its affairs in a way which was detrimental to the interests of the depositors. in the scrutiny in January-February, 1960, the position as on December 31, 1959, was said to be that out of the advances of Rs. 529 lakhs, Rs. 218.51 lakhs were irrecoverable, Rs. 17.71 lakhs were doubtful, and Rs. 111.57 lakbs were frozen or sticky. On July 21, 1960, the Reserve Bank issued a letter companytaining the warnings to which the Palai Bank appeared to have become indurated, and further gave the Bank 12 months time to improve matters and 30 days to reply to the inspection report. An Officer of the State Bank of India Mr. Sivaraman had already been deputed as the General Manager of the Palai Bank, and had taken charge on July 1, 1960. On June 23, 1960,the balance sheet of the Bank was published showing the position as on December 31, 1959. The balance sheet showed a loss of Rs. 14-1/2 lakhs. The Reserve Bank alleges that even in previous years there were losses, but were hidden. In June 1960, there was a run on several branches of the Palai Bank. Whether this was due to the publication of the balance sheet showing a loss, or whether it was due to the appointment of Mr. Sivaraman, it is hardly possible number to say. Between June 24, 1960 deposits, Rs. 9.82 crores and July 22, 1960 deposits, Rs. 9.32 crores there was a withdrawal of Rs. 50 lakhs. By August 3, 1960 deposits, 8.50 crores there was a withdrawal of Rs. 82 lakhs in 12 days. To meet this run, the Bank had to borrow against Government securities with the result that all its Government securities except those worth Rs. 25 lakhs were pledged. The deposits Rs. 8.50 crores companysisted of Rs. 4 crores in fixed deposits, Rs. 2.25 crores in current accounts and Rs. 2.25 crores in savings deposits. Against these, the Reserve Bank found that the Palai Bank had cash to the extent of Rs. 50 lakhs and a capacity to borrow Rs.1 crore against its securities. The appellant, however, urged before us that in the report of the General Manager dated November 8, 1960, the cash in hand was shown to be Rs. 42.18 lakhs and at Banks, Rs. 83.68 lakhs, the marketable securities, Rs. 22.98 lakhs and the estimated surplus from assets specifically pledged, Rs. 142.63 lakhs. These figures do number, of companyrse, show that all this money would have been available immediately to stem the run. It is thus evident that if the run companytinued longer there was a likelihood that these depositors who were able to withdraw their money would obtain payment in full, leaving the others with numberhing or next to numberhing. The Bank alleges in its affidavits in reply that the run was subsiding, while the Reserve Bank maintains that it was going on unabated. Whether it was abating or companytinuing, the reputation and security of the Bank had been companysiderably shaken. The learned Company Judge, in his judgment under appeal, estimated that Rs. 158 lakhs about one-sixth of the deposits represented the sudden withdrawals. The Directors of the Palai Bank sent Mr. Sivaraman on August 960, to Bombay for urgent companysultations, and Mr. Sivaraman on his return, announced on the 8th that in application for the winding up of the Bank had been made that day, and a provisional Liquidator had been appointed. He accordingly, issued orders to the Branches to stop business and close the doors. The Reserve Bank was of the opinion that the Palai Bank was number in a position to pay its depositors in full, and that the companytinuance of the Bank was prejudicial to the interests of the depositors. The application, as already stated, was made on August 8, 1960. It was heard by Raman Nayar, J. He dispensed with numberice under s. 450 2 of the Companies Act before passing the order appointing the provisional Liquidator. He, however, issued numberice of the main application, and heard the Reserve Bank, the Palai Bank, the creditors supporting the petition and the creditorsopposing it, and read several affidavits filed by the parties. On December 5,1960, he acceptedthe application of the Reserve Bank, and ordered that thePalai Bank be wound up. He was moved for a certificate under Art. 13 1 of the Constitution by the present appellant Mr. Joseph Kuruvilla Vellukunnel , a former Director of the Palai Bank and also a companytributory, but he declined to certify the case. The appellant then obtained special leave of this Court, and filed this appeal. Some others applied to intervene in the appeal, and were allowed to be heard. One Mr. D. Chacko Kappon a companytributory and also a depositor filed a petition under Art. 32 of the Constitution. That petition was heard along with this appeal. This judgment will dispose of the appeal as well as the writ petition. In the High Court, the application of the Reserve Bank was opposed on two grounds. The first was that the action of the Reserve Bank in making the application for the winding up of the Palai Bank was malafide. This ground appears to have been given up in the High Court itself, and has number been raised before us. The second ground was that s. 38 3 b iii of the Banking Companies Act, 1949, was void, inasmuch as it offends against Arts. 14 and 19 of the Constitution. In the hearing before us Art. 301 was also invoked. The decision of the High Court was against the Bank and other answering respondents, a-rid this ground alone has been urged before us. Though the facts cease to play an important part in the decision of the question of law which survives, those narrated above were referred to by the learned Attorney- General as showing the background of the action taken by the Reserve Bank. The appellant, in his reply, referred to some other facts in explanation to avoid a possible prejudice to his case, if the facts as presented by the Reserve Bank only were companysidered. While we are number required to express any opinion upon the companyrectness or otherwise of the allegations and companynterallegations, we think it necessary to set out in brief some of the facts, to which our attention was drawn by the appellant, to show that we have borne in mind the rival companytentions in determining the validity of the section. The appellant companytended that enquiries by the Reserve Bank in the past were number thorough but in the application for winding Up, the Reserve Bank had given specific details of the advances and their realisability. In this companynection, we were referred to a reply made by the Reserve Bank in answer to four schemes of companypromise between the Bank and its creditors suggested by the Palai Bank. In that reply, the Reserve Bank said that numberdefinite opinion companyld be expressed on the schemes except after a detailed examination of the Banks books of account with a view to assessing the realisability of its assets and the probable pace of recovery of the realisable assets. This, in our opinion, was a proper attitude to take, because by then, the companydition of the Bank had materially altered, and all the past data had become out of date. The reply did number show that the Reserve Banks inspection was number thorough. Next, it was argued that the Reserve Banks estimate of cash and realisable assets was wrong, if one reads the report of the Provisional Liquidator and the General Manager, dated November 8, 1960. We have already referred in an earlier part of this judgment to the amounts which, in their opinion, companystituted the available assets, and have also shown why the Reserve Bank cannot be said to have made mistake. It was then companytended that the run was under companytrol, and our attention was drawn to certain statements in which the withdrawals during the months of July and August are shown in a tabular form. The run on the Bank did number follow a uniform companyrse. Sometimes, it was more, and sometimes it was less, but companytinue, it did and that is the main point of the matter. It was said that the Reserve Bank itself thought well of the Palai Bank, because in the year 1954, it allowed the opening of a number Branch at Madurai, and even in its last letter of July 21, 1960, it gave the Palai Bank one year to improve matters, and 30 days to show cause against the inspection reports, but took a hasty action before even the 30 days had expired. The action of the Reserve Bank was undoubtedly taken during the period of grace but after July 21, the situation had altered so radically that delay might have defeated the very purpose of the law, under which action was taken. Finally, it was companytended that the Palai Bank began by being a rural Bank, which was making advances on the security of land, and such security, though sticky was capable of being realised. Reference was made to the Report of the Travancore Cochin Banking Enquiry Commission, which was, appointed in 1956, where, in making a survey of banking in Travancore-Cochin State, it was pointed out that the Banks were spread out into the rural interior of the State, and the main business of these banks was to finance the rural people engaged in a small business-crop raising, produce processing, transporting, vending, etc. It was argued that to a rural Bank of this kind the standards of a companymercial bank companyld number be applied and that the Reserve Bank should have made allowances in respect of the realisability of the advances, the worse of which belonged to a period prior to the extension of the Reserve Bank of India Act to this area. These advances given time, companyld have been cleared, and an attempt was, in fact, being earnestly made with the assistance of Mr. J. A. Frost, a retired senior grade Officer of the Imperial Bank of India, who was appointed an adviser. It was pointed out that 3 accounts were closed, 26 were sued upon, and in 13, substantial remittances were received. All this may be true but it is useless for us to speculate as to what would have happened if the depositors did number take a hand in the affairs by making a run and the action of the Reserve Bank was precipitated by the exigencies of the situation, which had arisen. Those who made a run for their money, were number going to wait till the Bank acquired sufficient funds to pay them after recovering its advance. Those advances, as companyceded, companyld number so easily be realised as the advance made by a companymercial bank on security other than that of land. If this rural bank began to arrange its business like a companymercial bank it must necessarily be judged by the same standard, and the affairs of the Palai Bank, in our opinion, had long left behind the rural character, and had emerged into those of a modern companymercial bank. What we have said above is sufficient to show that there was number enough material on which the action of the Reserve Bank companyld strictly be characterised as mala fide. Indeed, the forbearance with which the Reserve Bank acted and it proved unwise has companypletely demonstrated the futility of granting time, and we are number surprised that the answering respondents in the High Court and the appellant in this Court have number chosen to raise any issue about the honesty of the action. We are thus companycerned with the companytention that ss. 38 1 and 3 b iii are void, being a breach of Arts. 14 and 19 of the Constitution, and ultra vires being in companyflict with Art. 301. The arguments anent Arts. 14 and 19 are based on the same reasoning, but that under Art. 19 takes a few more facts into account. Shortly stated, the argument is that ss.38 1 and 3 b iii make the Reserve Bank the sole judge to decide Nhether the affairs of a banking companypany are being so companyducted as to be prejudicial to the interests of- the depositors, and the Court has numberoption but to pass an order winding tip the banking companypany, when the application is made Section 38 lays down 38 1 , Notwithstanding anything companytained in section 391, section 392, section 433 and section 583 of the Companies Act., 1956, but without prejudice to its powers under sub-section 1 of section 37 of this Act,, the High Court shall order the winding up of a banking companypany-- a if the banking companypany is unable to pay its debts or b if an application for its winding up has been made by the Reserve Bank under section 37 or this section. The Reserve Bank shall make an application under this section for the winding up of a banking companypany if it is directed so to do by an order under clause b of sub-section 4 of section 35. The Reserve Bank may make an application under this section for the Winding up of a banking companypany- b if in the opinion of the Reserve Bank the companytinuance of the banking companypany is prejudicial to the interests of its depositors. It is said that the word shall in the first sub-sec- tion is mandatory, and companypels the High Court to pass an order winding up a banking companypany when ever the Reserve Bank chooses to make an application. It is further pointed out that these powers exclude the operation of s. 433 of the Companies Act, under which companypanies arc wound up. The power companyferred on the, Reserve Bank by the section is said to be bad under Art. 14. because it enables a discrimination between a banking companypany and any other companypany by prescribing different laws for their respective winding up, and is bad under Arts. 19 1 f and g as amounting to an unreasonable restriction on the holding of property and the right to carry on business as a banking companypany. To amplify the first, it is argued that s. 433 of the Companies Act, when an application is made to wind up a companypany, the High Court has to be satisfied after a fair trial that an order to wind up the companypany is called for, and the Judge, who is independent of executive companytrol, is companypletely free to reach a decision after the Company has shown cause, and there is a right of appeal against the decision, if adverse to the companypany. But under the procedure laid down in s. 38 of the Banking Companies Act, the banking companypany proceeded against has numberopportunity to show cause either before or after the winding up order, the Reserve Bank .records numberreasons in writing or companymunicates them, there is numberaccess to Court and numberhearing before the. Court to determine whether the proposed action is justified, and numberredress if a mistake were made. Under the exercise of that power, it is said, any banking companypany can be suppressed by the Reserve Bank or by the Central Government and the Courts are powerless, since the opinion of the Reserve Bank and or the central Government is number justiciable and there is numberappeal against the decision of the Reserve Bank or of the Court acting on the application of the Reserve Bank. It is said that the unreasonableness of the law arises further from the fact that the Reserve Bank is number an independent or impartial judge, the members of the Central and Local Boards whereof, being all numberinees of Government with numbersecurity of tenure, such as is enjoyed by the High Court Judges. The Reserve Bank is subject to directions from the Central Government, and even if the Reserve Bank be of a companytrary opinion, it has to file an application for the winding up of a banking companypany, if directed to do so by the Central Government. It is further argued that this drastic power under a law which is characterised as Draconic is uncanalised, uncontrolled and despotic, and in its exercise, every principle of natural justice is set at numberght, and the very fundamental companyception of it, namely, resort to Court is companypletely absent. Such a law, it is said, is so patently, unreasonable as to be a gross violation of all fundamental rights. Lastly, it is companytended that in giving the Reserve Bank the power to elect to proceed under the Companies Act or under the Banking Companies Act, there is further room for discrimination. It is thus companytended that s. 38 1 of the Banking Companies Act cannot be upheld as a valid law on any principle. The learned Attorney-General appearing for the answering respondents companytends that the action of the Reserve Bank was fully supported and justified by the facts. According to him, the, Palai Bank was inspected frequently for ten years and the reports of the inspecting officers were made availa- ble to the Palai Bank number only for information but also for explanation and companypliance. The action, says he, drastic though it may seem, was taken after numerous opportunities to the Palai Bank to mend matters, that even as late as 1960 the Reserve Bank gave a years time for improvement, but immediate action had to be taken in view of the loss of companyfidence among the depositors, a large number of whom made a run for their money. The learned Attorney-General thus says that there were many person who were of the opinion that the Reserve Bank should have acted earlier and that perhaps the Reserve Bank companyld be blamed for delaying the action but number for taking a precipitate action. He urgues that the Reserve Bank and number the Court was in a position to take prompt action be cause the Reserve Bank already possessed all the necessary information. He companytends that the position of the Reserve Bank and its statue as a responsible body make it the proper authority to make such an important decision requiring immediate action and that unless the Reserve Bank companyld be charged with dishonesty which is number the case the action of the Reserve Bank number only cannot be questioned, but should number be open to doubt. According to him, banking companypanies are in a class by themselves, and special law dealing with their winding up cannot be described as discriminatory. He company- tends that the law is neither discriminatory number un- reasonable, and that a prior judicial determination of an issue of this kind is number a companydition precedent to the making of a winding up order against a batik. He therefore, says that the appeal and the petition should be dismissed. Before we companysider the arguments of the two sides in detail, we wish to say a few words about the position of the Reserve Bank in the financial affairs of India and also about its place in the scheme of the law. The Reserve Bank of India was established on April 1, 1935, by the Reserve Bank of India Act, 1934. Even before the establishment of the Reserve Bank, suggestions were made that there should be a central bank in India and the Royal Commission on Indian Currency and Finance had recommended in 1926 that the currency and credit of the companyntry companyld only be put on a firm foundation, if a central bank was established. The first Bill introduced in 1927 by Sir Basil Blackett was dropped. The Indian Central Banking Inquiry Committee, however, reported in 1931 that there was a need for a central banking institution in India for securing the development of the Indian banking and credit system on a sound and proper basis. The Committee pointed out that some of the Provincial Committees had also suggested the establishment of the Reserve Bank. The Committee ended by saying We accordingly companysider it to be a matter of supreme importance from the point of view of the development of banking facili- ties in India, and of her economic advancement generally, that a Central or Reserve Bank should be created at the earliest possible date. The establishment of such a bank would by mobilization of the banking and currency reserves of India in one hand tend to increase the volume of credit available for trade, industry and agriculture and to mitigate the evils of fluctuating and high charges for the use of such credit caused by seasonal stringency. Vol. I, Part I. Chap. XXII, para, 605 The White Paper on Indian Constitutional Reforms also recommended the establishment of a Reserve Bank free from political influence. As a result of these findings when a fresh Bill was introduced by Sir George Schuster on September 8, 1933, it was accepted and received the assent of the Governor General on March 6, 1934. The functions of the Reserve Bank were generally indicated in the preamble as the regulation of the issue of the Bank numberes and the keeping the reserves with t view to securing monetary stability in India and generally to operate the currency and credit system of the companyntry to its advantage. But to enable the Reserve Bank to function in this manner, it had to be given other powers, so that it may function effectively as a central bank. To this end, the Reserve Bank was given the right to hold the cash balances of important companymercial banks, a right to transact Government business in India which was also its obligation, and to enter into agreements with State Governments to transact their business. In addition to these, the Reserve Bank companyld require all Banks included in the Second Schedule to the Act to maintain with the Reserve Bank a balance number less then 5 per cent, of their demand liabilities and 2 per cent of their time liabilities. The Reserve Bank also performed the numbermal functions of a central bank as well as an ordinary bank, though the latter functions are number as detailed as those of in ordinary bank. But the most important function of the Reserve Bank is to regulate the banking system generally. The Reserve Bank has been described as a Bankers Bank. Under the Reserve Bank of India Act, the scheduled banks maintain certain balances and the Reserve Bank can lend assistance to those banks as a lender of the last resort. The Reserve Bank has also been given certain advisory and regulatory functions. But its position as a central bank, it acts as an agency for companylecting financial information and statistics. It advises Government and of-her banks on financial and banking matters, and for this purpose, it keeps itself informed of the activities and monetary position of scheduled and other banks and inspects the books and accounts of scheduled bank and advises Government after inspection whether a particular bank should be included in the Second Schedule or number. Every scheduled bank is required to send to the Reserve Bank and to the Central Government a weekly return of its position in a form, which is prescribed. Sometime, however, the Reserve Bank allows a particular bank to send its returns once a month instead of every week. From these returns, the Reserve Bank prepares and publishes companysolidated statements showing the monetary position in the companyntry. The inclusion of a bank in the Second Schedule is the function of the Reserve Bank, and under ss. 42 6 a and b ii it satisfies itself inter alia that the affairs of the particular bank are number being companyducted in a manner detrimental to the interests of its depositors. The Reserve Bank has further the power to prohibit any scheduled bank from receiving, after a week, any fresh deposits. The above analysis of some of the provisions of the Reserve Bank of India Act show that the Reserve Bank of India has been created as a central bank with powers of supervision, advice and inspection, over banks, particularly those desiring that they be included in the Second Schedule or those scheduled already. The Reserve Bank thus safeguards the economy and the financial stability of the companyntry. No doubt, the Board is companyposed of numberinated members but from the nature of things, it companyld number be otherwise. Neither election number companypetitive examinations can effectively take the place of numberinations, if the Board is to be companyposed of men of proved worth and standing, and there is numberother method which can even be companytemplated. No doubt, the members of the Board are subject to removal, but neither integrity number efficiency is secured only by such guarantee, and we have numberreason to think that the Reserve Bank acted in this case, or acts in other cases under pressure or from oblique motives. As was pointed out in another companynection by this Court in All India Bank Employees Association v. National Industrial Tribunal 1 . If it was number the Reserve Bank of India, the only other authority that companyld be entrusted with the function would be the Finance Ministry of the Government of India and that department would necessarily be guided by the Reserve Bank having regard to the intimate knowledge which the Reserve Bank has of the banking structure of the companyntry as a whole and of the affairs of each bank in particular. The position of the Reserve Bank being such as we have stated from the Reserve Bank of India Act, the next thing to enquire is its powers under 1 1962 3 S.C.R. 269, 299. the Banking Companies Act. The Banking Companies Act, in its present form, is the product of many legislative enactments. The Banks Liquidation Proceedings Committee 1962 companyrectly described it as made up of shreds and patches We were taken through the entire evolutionary process by the learned Attorney-General but we do number companysider it necessary to trace the various steps. We shall companytent ourselves with a reference to the salient landmarks. In the Indian Companies Act, 1913, there was numberspecial procedure for banking companypanies, particularly relating to their winding up. Special provisions were introduced in that Act by the Indian Companies Amendment Act, 1936. Part X-A, which was then introduced, merely enacted certain regulatory provisions, but of winding up of banking companypanies, it ,said numberhing. The amendment hardly met the purpose and the Reserve Bank of India framed a draft bill as far back as 1939 from which has been fashioned the present Banking Companies Act. During the War years, the Indian Companies Act was amended several times to meet some special exigencies, with which we are number companycerned. But by July, 1946, it was realised that certain undesirable features in banking had companye to exist. Banks were then getting companytrol of number-banking companypanies and by the interlocking of shares, the banking companypanies were able to manipulate the finances at their disposal. The main features were the grant of loans to persons companynected with the management of banks without adequate security extensive window-dressing at the time of preparing balance-sheets, and, in general, a tendency to utilise the banks funds to the detriment of the interests of the depositors. It must number be forgotten that the Indian Companies Act, 1913, was companycerned primarily with safeguarding the interests of the stockholders, whereas in a banking companypany, the interests of the depositors are invariably many times those of the stockholders, if those interests can be said to be represented by the monies invested respectively. In 1946, an Ordinance was promulgated companysisting of only six sections of which the operative sections were the last four. Section 3 enabled the Central Government to direct the Reserve Bank to cause an inspection to be made of any banking companypany and its books and accounts and to make a report to the Central Government. Section 4 provided the machinery and the procedure to implement s. 3. Section 5 empowered Government to prohibit a bank from receiving fresh deposits or to direct the Reserve Bank number to include a particular bank in the Second Schedule, or to exclude it., if already included. Sub-section 2 provided for certain penalties, and s. 6 authorised the Central Government to publish, after reasonable numberice to the banking companypany companycerned, any report or parts thereof This was an attempt to ensure the depositors a certain measure of safety in regard to their money. This Ordinance was followed by the Banking Companies Restriction of Branches Act, 1946, which, is its name shows, put a curb on the indiscriminate opening of branches by some banks. The evil of indiscriminate advancers and loans was then sought to be met by an Ordinance promulgated in 1948 intituled The Banking Companies Control Ordinance XXV of 1948 . In that Ordinance, it was provided that the Court shall appoint the Reserve Bank as the Official Liqui- dator of a banking companypany on the application of the Reserve Bank in that behalf. The Reserve Bank of India Act was also amended to enable the Reserve Bank to give a loan or loans to a banking companypany with a first charge on the assets, if wound up. A large number of banking companypanies had failed during the years, 1947, 1948 and 1949. Between 1926 and 1937, 23 Banks had suspended payment. In 1938 and 1939, 46 Banks failed, from 1940 to 1946, 95 Banks were involved. But, in 1947, 1948 and 1949 there were as many as 123 failures involving outside liabilities of Rs. 82 crores The largest number was in Calcutta with 83 Banks. In the winding up proceeding that followed, many unsatisfactory features were numbericed. It was numbericed that the realisations were insignificant, while the companyts were great, and enormous expenditure of time took place. The winding up of any companypany, be it a banking companypany or any other, requires an investigation of the affairs, the recovery and realisation of assets and distribution of what is realised. While these matters can,, of companyrse, be carried on without undue hurry, the decision whether there should be a winding up or number, cannot be unduly deferred in the case of a banking companypany, if the interests of the depositors are to be safeguarded. To achieve solidarity in banking operations and also to preserve the rights of the depositors while a bank companytinues and more so when it cannot, the Banking Companies Act was the logical, and indeed, the only answers. We have seen that the Reserve Bank was already functioning as a central bank with a certain measure of companytrol over the other banks, scheduled or unscheduled. This companytrol was tightened in the Banking Companies Act by making provisions which were intended to protect the interests of the depositors. Differences numbericeable between the Banking Companies Act, on the one hand and the Companies Act, on the other, which have been characterised as discriminatory, are thus explainable on the basis of the object to be achieved. We shall soon illustrate this by a reference to the sections themselves. For the present we only wish to emphasise that banking companypanies cannot be companypared with other companypanies. The ordinary companypanies deal with the money of the stockholders, who own a share in the assets, who appoint their own Directors, for better or for worse, and whose liability is also limited. The banking companypanies are in an entirely different class, as they deal with the money of the depositors who have numbersecurity except the solvency of the banking companypany and its sound dealings with their money. Ex facie, the banking companypanies must be regulated somewhat differently, and the interests of the depositors must be paramount and the winding up of such companypanies depends upon other companysiderations, chief among which is the desire to pay off the creditors as far as possible in full or at least equitably. The action is thus dictated number from any abstract companysideration of a long-range view of the future ability of a bank to pay its creditors but its ability to pay them at any given time. In this companynection, the Reserve Bank has been given by the Banking Companies Act the power and invested with the duty of watching the affairs of every banking companypany with a view to ensuring the safety of the depositors money. There is thus, at the very start, a reasonable classification, which is also a very just and practical classification, to achieve the avowed purpose. It is hardly necessary to examine each and every provision of the Banking Companies Act. When the Banking Companies Act was originally enacted, the main objects were to prescrible minimum capital standards, to prohibits the number- banking companypanies to accept deposits repayable on demand and to limit dividends payable. But included in the Act was a companyprehensive scheme for licensing of banks and a companyferral on the Reserve Bank of power to call for periodical returns and balance sheets and to inspect books and accounts of banking companypanies. The Act also empowered the Central Government to take action against banks companyducting their affairs in a mariner detrimental to the interests of the depositors, and provided for a quicker procedure for winding up banking companypanies. When the Banking Companies Act was passed in 1919, it was explained in the numbere on cl. 37, which companyresponded to s. 38, that the provisions of the Indian Companies Act in respect of liquidation of companypanies did number seem to be suitable for banking companypanies, that a banks business being of an over-the-counter kind, the bank has to meet immediately its liability and a provision for winding up of the banking companypany when it refuses to meet a lawful demand within a stated time, was necessary. It was also stated that the Reserve Bank was given authority to apply for the liquidation of the banking companypany, if its affairs were companyducted to the detriment of the interests of the depositors. An examination of the Banking Companies Act reveals two things prominently. The first is that the whole intend and purpose of that Act is to secure the interests of the depositors. The second is that the Reserve Bank is the instrumentality by which this intend is to be achieved. The Act, at every turn, makes the Reserve Bank the authority to sanction, permits, certify, inspect, report, advise, companytrol, direct, license and prohibit. There is hardly any provision where the Reserve Banks judgment is number made final vis-a-vis a banking companypany except rarely where an appeal to the Central Government can lie. No useful purpose will be served in referring to these sections in detail. Nor do the powers of the Reserve Bank end there. The Reserve Bank number only has powers over banking companypanies while they are functioning, but it has also powers when the banking companypanies wish or are forced to cease to function. If a banking companypany wants to suspend its business and applies to the High Court for a moratorium, the application is number maintainable, unless it is accompanied by a report of the Reserve Bank indicating that in the opinion of the Reserve Bank the banking companypany will be able to pay its debts. When the High Court grants the relief without such report, it has to call for a report from the Reserve Bank. The High Court is also required to have regard to the interests of the depositors, and even during the period of moratorium granted by the High Court, the Reserve Bank can apply for the winding up of the banking companypany. Sections 39 and 41-A give special powers to the Reserve Bank in winding up proceedings. Even in voluntary winding up of a banking companypany, the Reserve Bank has to certify that the banking companypany is able to pay in full all its debts to its creditors, as they accrue. In amalgamation of banking companypanies, the scheme has to be approved by the Reserve Bank. Similarly, in companypromises or arrangements between the banking companypany and its creditors, the Reserve Bank has to be satisfied. In all these matters, the satisfaction inter alia, must be as to the interests of the depositors. In reconstruction of banking companypany after an application by the Reserve Bank for an order moratorium, the Reserve Bank has to satisfy- itself and prepare a scheme, which, inter alia, must be in the interests of the depositors. This brief survey of some of the other provisions of the Banking Companies Act, in addition to the general provisions earlier numbericed, makes it plain that the legislature companysiders that companysistent with its position as a central bank and more so with its duties and obligations, the Reserve Bank must have a decisive voice in certain matters. It is in this companytext and setting that the, provisions of ss. 38 1 and 3 b iii of the Banking Companies Act must be viewed. It must number be overlooked that the legislature, in view of the sad experiences of the past, was anxious to devise a machinery for the supervision, inspection and effective functioning of banking companypanies in the companyntry. Associated with this was the speedy closure of banking companypanies, which were harmful to the interests of the depositors. The legislature achieved both these objectives through the Reserve Bank, which, because of its special powers and advantages, was in a position to act promptly and effectively. To aid the Reserve Bank, the Courts were required by law to be guided in certain matters by the opinion and judgment of the Reserve Bank, and in the matter of their disposal of winding up cases relating to banking companypanies, a special procedure was enacted in Part IIIA of the Banking Companies Act. We are number in a position to deal with the argument that ss. 38 1 and 3 b iii of the Banking Companies Act are void- firstly because they permit discrimination between banking companypanies on the one hand, and number-banking companypanies on the other, and also between banking companypanies inter se, and secondly because they create an unreasonable restriction upon the right to carry on banking, and lastly, because the whole procedure is a denial of the principles of natural justice, chiefly by denying an access to Courts. Though the arguments in this appeal have for their immediate object the declaration that ss. 38 1 and 3 b iii of the Banking Companies Act are void, they have ranged over a very wide field. In support of the first limb of the argument, Art. 14 is invoked, and in support of the second and third, Arts. 19 1 f and g and the argument proceeds along lines so well-known number as to need hardly any further amplification. There being numberdirect ruling either of this Court or of any High companyrt, assistance is sought to be derived from observations in previous decisions of this Court relating to other laws. In reply, the learned Attorney-General has relied upon the provisions of certain banking laws in America and Japan and decisions of the American Courts, where such American laws were tested under the due process clause. We shall refer to those laws and briefly rulings in the sequel, As regards the first point, viz., discrimination between banking companypanies and number-banking companypanies, we have already sufficiently indicated the wide difference that exists between these two types and the need for special laws dealing with banking companypanies. We have also pointed out the mischief that was sought to be remedied and how the present law has been evolved after companysiderable deliberation. A special Committee called the Banks Liquidation Proceeding Committee was appointed in 1952, and the findings and recommendations of the Committee were implemented, amending the Banking Companies Act and incor- porating changes, of which the impugned section in its present form is one. There being a very clear-cut and valid classification, the different procedure cannot be said to be discriminatory, because it is based on differences which are related to the end sought to be achieved. Further, we do number think that the possibility that the procedure under ss. 38 1 and 3 b iii may be invoked in some cases and the procedure of the Companies Act in others, makes any difference, because the different procedures will be invoked to suit different situations, and it cannot be said that the Reserve Bank would act arbitrarily from case to case. The Reserve Bank, apart from its being a reasonable body, is answerable to the Central Government, and the public opinion is certainly strong and vocal enough for it to heed. If the Reserve Bank were to act mala fide, the Central Government and in the last resort, the Courts, will be there to intervene. In our judgment, the provisions of ss. 38 1 and 3 6 iii cannot be said to be a breach of Art. 14 of the Constitution. That leaves over the second and third arguments, which proceed upon the same materials. In this companynection, the main grounds of attack have already been set out in this judgment. Before we deal with the central point, we shall deal with certain others which proceed, so to speak, from the side lines. The objection that the Reserve Bank gives numberhearing, records numberreasons in writing and does number companymunicate them is met at least in this case by the admitted facts. The numerous inspection reports and directions issued by the Reserve Bank over a period of nearly nine years, together with the application filed in this case, prove amply that there was enough hearing of and enough companymunication of the grounds of action to, the Palai Bank. The Bank had also sufficient time and opportunity to establish its own point of view before the Reserve Bank. It was impossible that the Reserve Bank, with the run on the Bank, would sit down to decide after hearing whether to take action or number, while withdrawals were being made at the rate of Rs. 7 lakhs per day. The emergency of the situations which may arise, is itself the justification for the procedure open under the Act and taken in this case. In our opinion, these grounds cannot be entertained. It is difficult to imagine that the Reserve Bank would act differently in another case. The main ground of attack is the way ss. 38 1 and 3 b iii make it mandatory for the High Court to pass an order winding up a banking companypany whenever the Reserve Bank under its powers or under an order of the Central Government makes an application for the winding up of a banking companypany. It is argued that such a power to the Reserve Bank is an uncontrolled and despotic power and to crown all, access to Courts is number possible because the Court itself must pass an order without deciding whether the affairs of the banking companypany are being companyducted in a manner detrimental to the interests of the depositors--a fact capable of being proved like any other fact. It is argued as a matter of principle that any law which bars a decision by the Court is itself unreasonable without more. Mr. Pathak, in supplementing the above companytentions of Mr. Nambiar, also companytends that by the law in question a judicial process has been companyverted into an executive action, and subjective determination has taken the place of judicial determination. He also companytends that the Reserve Bank accuses a banking companypany, and then tries the issue to the companyplete exclusion of Courts. It must number be overlooked that the winding up of a banking companypany takes place before the High Court and under the process of law. The judicial process is excluded only in respect of the momentous decision whether a winding up order should be made or number. This opinion is left to the Reserve Bank, and the Court merely passes an order according to the Reserve Banks opinion, and then proceeds to wind up the banking companypany according to law. The narrow question is whether in leaving this decision to the Reserve Bank the law offends the principles of natural justice, and becomes so unreasonable, viewed in the light of Art. 19, as to become void. This is the point on which the respective parties joined issue and had much to say, and this is the crucial point in this case. In support of this companytention, reliance on behalf of the appellant is placed upon certain cases of this Court, and we shall begin by numbericing them in brief. The first case relied upon is A. K. Gopalan v. The State 1 . In that case, the validity of ss. 3, 7, 10-14 of the Preventive Detention Act, 1950, was challenged on a petition under Art. 32 of the Constitution for a writ of habeas companypus. Certain observations of Kania, C.J., and Fazl Ali, J., were 1 1950 S.C.R. 88. relied upon to show that the right to be heard and tried is the very basis of the rule of law, Fazl Ali,J., observed that there is a fundamental principle that a person whose rights are affected must be heard. The learned Judge referred to several cases in which the maxim, audi alteram partem, has been invoked and applied, particularly the observations of Lord Macnaghten in Lapointe v. L Asso- ciation, etc., de Montreal 1 , who companydemned a procedure which required numberhearing as being companytrary to rules of society and above all companytrary to the elementary principles of justice. It cannot reasonably be said that there would be numberhearing in cases of this type. While we agree that it is obnoxious to the rule of law as it exists among civilized nations, that a person should be companydemned, unheard, we cannot say that in this case the Palai Bank was number heard, and this case is really typical of those cases in which such a power would be invoked. The learned Attorney General was justified in saying that there was plenty of hearing before the application was filed. The gist of the objection must thus be taken to be that the Palai Bank was number heard in the High Court before the making of the impugned order. If a valid law companyld be made leaving to the determination of the Reserve Bank whether a banking companypany should be wound up and the Court to implement that decision, then this petition must fail but if it cannot be made, then it must succeed. We have thus to see whether there is any inviolable rule that every determination must always be made by the Court and by numberother authority. In dealing with the rulings of this Court cited to us, of which we have already mentioned one, we shall enquire whether such a wide proposition can be said to have been established 1 1906 A.C.535. before. In A. K. Gopalans case 1 , s.14 of the Preventive Detention Act was held void as companytravening Art. 22 5 of the Constitution in so far as it prohibited a person who was detained from disclosing even to the Court the grounds of his detention and the representation made by him. It was said that the right to move an appropriate Court for a writ of habeas companypus and therein to show that the detention was improper, was undeniable and it was held that s. 14, which Stood in the way of this right, was void. No general proposition that the Court must decide whether the person should be detained or number was laid down in that case. The law which allowed a subjective determination of the executive was in fact, upheld, and there are passages in the judgments of the majority to show that a judicial trial in cases of preventive detention was number companysidered necessary. In State of Madras v. V. G. Row 2 , SS. 15 2 - b and 16 of the Indian Criminal Law Amendment Act, 1908 as amended by the Indian Criminal Law Amendment Madras Act, 1950, were called in question, inter alia, on the ground that they empowered the State to declare associations illegal by a numberification without a provision for judicial enquiry. It was held by this Court that the companyferral of authority on the executive Government to impose restrictions on the right of association without allowing the grounds of such imposition both in their factual and legal aspects to be duly tested in a judicial enquiry was a strong element to be taken into account in judging the reasonableness of the restriction. It was also added The formula of subjective satisfaction of the Government or of its. officers, with an Advisory Board thrown into review the materials on which the Government seeks to override a basic freedom guaranteed to the 1 1950 S.C.R. 88. 2 1952 S.C.R. 597. citizen, may be viewed as reasonable only in very exceptional, circumstances Earlier, in the same judgment it was said the test of reasonableness, wherever prescribed, should be applied to each indivi- dual statute, impugned, and numberabstract stan- dard, or general pattern, of reasonableness can be laid down as applicable to all cases. G. Rows case 1 shows that laws allowing subjective determination by the executive are number to be struck down out of hand, but that their reasonableness must be judged according to the standards appropriate to the circumstances. It may, however, be mentioned that in V. G, Row case 1 a distinction was made between a law requiring anticipatory action particularly on grounds of suspicion, and a law which authority action based on the factualexistence of certain grounds. A. K. Gopalans case 2 and Dr. N. B.Khare v. The State of Delhi 3 were distinguished on this narrow ground which appears to have been companyceded then by the learned Attorney-General. The factual existence of grounds- amenable to an objective determination by the Court in the present case, namely prejudice to the interests of the depositors was said to place this case within the rule in V. Rows case 1 . But cases of detention and associations declared unlawful are number in the same class as a banking companypany on which there is a run by the depositors and whose affairs, on inspection, are found to be mismanaged and companyducted in such a way that it is unable to pay all lawful demands upon it. The factual background will number be one of suspicion, and action will be based on companycrete facts, which will numbermally be checked and rechecked before the final decision, and, in our opinion, it is impossible to equate such a case with either A. K. Gopalans case 2 or V. G. Rows case 1 . 1 1952 S.C.R. 597. 2 1950 S.C.R. 88. 3 1950 S.C.R. 519, The next case to which reference was made is Thakur Raghubir Singh v. The Court of wards, Ajmer 1 . In that case, s. 112 of the Agra Tenancy and Land Records Act 42 of 1950 was declared void. That section allowed the Court of Wards to take over the property of a landlord under the Ajmer Government Wards Regulation 1 of 1888 if the landlord habitually infringed the rights of tenants. Such a landlord was under s. 112 deemed to be disqualified to manage his property. The reason for striking down the section was that it companypletely negatived the fundamental right under Art. 19 1 f by making the enjoyment of the right to depend on the mere discretion of the executive. The absence of any provision which would enable the landlord held to be a habitual infringer of the rights of his tenants, to have recourse to a Civil Court to test the companyrectness of the determination against him was held to create the invalidity. It is to be numbericed that the learned Attorney-General in that case companyceded the point, but the reason behind the rule appears to be that the law there prescribed a punishment or penalty for the bad behaviour of the landlord, and numberperson should be punished without having an opportunity to show cause The question, therefore, is, can the ruling be made applicable ? It does number lay down any general principle applicable to all cases beyond the one we have mentioned. The action to wind up a banking companypany cannot be said to be a punishment for mismanagement but action designed to preserve the rights of the depositors, and the two situations are hardly similar. The next two cases relied upon were The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Tirtha Swamiar of Sri Shirur Mutt 2 and Mahant Sri Jagannath Ramanuj Das v.The State of Orissa it was 1 1953 S.C. R. 1049. 2 1954 S.C.R. 1005. 3 1954 S.C.R. 1046. companyceded by the companynsel for the State that certain sections of the Madras Religious and Charitable Endowments Act XIX of 1951 and of the Orissa Hindu Religious Endowments Act, 1939 as amended in 1952 , were ultra vires Arts. 19 1 f , 25 and 26 of the Constitution. This Court also found in the former case that the provisions were extremely drastic in their character and the worst feature ,Was that there was numberaccess to Courts. The Act in question was companysidered drastic because under it a religious institution companyld be numberified and taken over and vested in an executive officer merely by stating that the Board was satisfied that in the interests of proper administration of the Math and its endowments, the settlement of a scheme was necessary. In the latter case, it was observed as follows Sections 38 and 39 relate to the framing of a scheme. A scheme can certainly be settled to ensure due administration of the endowed property but the objection seems to be that the Act provides for the framing of a scheme number by a civil companyrt or under its supervision but by a Commissioner who is a mere administrative or executive officer. There is also numberprovision for appeal againsts his order to the companyrt. After companymenting upon the amendment of sub-s. 4 of s. 39, which took away the right of suit and made the order of the Commissioner final and companyclusive, this Court companycluded We think that the settling of a scheme in regard to a religious institution by an executive officer without the intervention of any judicial tribunal amounts to an un- reasonable restriction upon the right of pro- perty of the superior of the religious institution which is blended with his office. Sections 38 and 39 of the Act must, therefore, be held to be invalid. These words would seem to show that the intervention of a judicial tribunal is the sine qua number of reasonable determination of any issue,. But these cases must be read with the case reported in Sri Sadasib Prakash Brahmachari v. The State of Orissa 1 . After the judgment of this Court in the case from Orissa, the Orissa Legislature passed Orissa Act XVII of 1954 purporting to amend number the Act of 1939 but Orissa Act II of 1952 which had been passed but number brought into force. The Orissa Act XVIII of 1954 on receiving the assent of the President came into force at once, and Act II of 1952 became amended and modified. The 1952 Act was then brought into force from January 1, 1955, by a numberification. By the new Act, which provided for the same subject-matter as the Act of 1939, the right of suit still remained taken away, but a right of appeal direct to the High Court was provided. It was companytended again that the Act companytinued to be bad for the reasons given in the earlier case of 1951. This Court then observed It is further urged that the initial decision in a scheme-proceeding is still on the basis of an executive enquiry by an executive officer and that in any case a direct appeal to the High Court as against the Commissioners order cannot be as adequate a safeguard regarding the rights of Mahants as a suit and a right of appeal therefrom in the ordinary companyrse to the higher companyrts would be. It is undoubtedly true that from a litigants point of view an appeal to the High Court from the Commissioners order is number the same as, an independent right of suit and an appeal to the higher companyrts from the result of that suit. But in order to judge 1 1956 S.C.R. 43, whether the provisions in- the present Act operate by way of unreasonable restriction for companystitutional purposes what is to be seen is whether the person affected gets a reasonable chance of presenting his entire case before the original tribunal which has to determine judicially the questions raised and whether he has a regular appeal to the ordinarily companysti- tuted companyrt or companyrts to companyrect the errors, if any, of the tribunal of first instance. For that purpose it is relevant to numberice that in the present Act, the Commissioner of Endowments has, by virtue of section 4 thereof, to be a member of the Judicial Service of the State number being below, the rank of a Subordinate Judge, while under section 7 of Act IV of 1939, Commissioner of Endowments companyld be a person of either the judicial or the executive service and that even where a member of the judicial service is appointed he may be a person below the rank of a Subordinate Judge. Another important difference has also to be numbericed, viz., that while under section 38 of the previous Act the enquiry has to be companyducted in such manner as may be prescribed which means as prescribed by the Provincial Government by rules made under the Act and hence changeable by the Government, under the present Act, Section 42 1 b specifically enjoins that the Commissioner shall bold an enquiry in the manner prescribed and so far as may be in accordance with the provisions of the Code of Civil Procedure relating to the trial of suits. This Court, therefore, held that the scheme framed was number unreasonable. At p. 59 of the Report, a summary of the four steps which made. for reasonableness was given as follows The scheme is to be framed by a Commissioner, who is, by appointment a judicial officer. The procedure is far as may be, the same its that in the trial of suits. There is a preliminary enquiry by the Assistant Commissioner. There is an appeal to the High Court. This was a departure from the insistence on the intervention of a judicial tribunal. It was companysidered enough if the person was a judicial officer and the procedure was that of the trial of suits, as laid down in the Civil Procedure Code. The Court still went further when it dealt with the earlier schemes which might have been framed by a an executive officer and b in pursuance of procedure prescribed by the Executive Government. The Court said that this was merely a theoretical possibility. The absence of a preliminary enquiry in No. 3 was number companysidered a serious point. The order of the executive officer in No. 1 was held number of importance, as the Commissioner was a Subordinate Judge of the Orissa Judicial Service. The question of procedure No. 2 was also number companysidered impor- tant, because the procedure prescribed by rules resembled that of trial of suits. As regards the right of appeal, s. 79A gave a right in all decided cases, and that was companysidered enough but whether it was invoked or number in all cases does number appear to have been ascertained. It would appear from these three decisions that the gist of reasonableness was held to be number so much in the label of the officer as in a judicial approach to the question to be decided according to a procedure which gave an adequate hearing. That the Commissioner was a judicial officer of the rank of a Subordinate Judge was companysidered enough for up holding his action as reasonable. That every decision should be by the Court was thus number the proposition laid down. In fact, the case shows that it is number the sine qua number so long as a person trained to the task of deciding companytroversies does it according to a procedure in which parties can be said to have been heard fully. We need number companysider in detail the case of Ebrahim Vazir Mavat v. The State of Bombay 1 , in which s. 7 of the Influx from Pakistan Control Act, 1949, was held void. Section 7 authorised the Central Government to remove from India, any person who has companymitted or against whom a reasonable suspicion exists that he has companymitted, an offence under this Act In dealing with the section, this Court said section 7 imposes the penalty of removal number only upon a companyviction under ,section 5 but goes further and brings about the same result even where there is a reason- able suspicion entertained by the Central Government that such an offence has been companymitted. The question whether an offence has been companymitted is left entirely to the subjective determination of Government. This Court pointed out that there was numberopportunity to the offender to clear his companyduct, and held that this was numberhing short of a travesty of the right of citizenship. The case is explainable on the ground that an Indian citizen has a fundamental right to stay in India and if he is to be removed for companymitting an offence or under suspicion that he has companymitted an offence, the removal is a penalty which cannot be inflicted without an opportunity to the offender to clear his companyduct. As pointed out by us already, while dealing with Thakur Raghubir Singhs Case 2 , there is numberquestion of a 1 1954S.C.R. 933. 2 1953 S.C.R. 1049. punishment here, and there is, in fact, a hearing, though number before a Court. There is numberhing in the Influx from Pakistan Control Act to show that the opportunity to clear his companyduct of the alleged offence must be by resort to the Court. The appellant also relied upon K. T. Moopil Nair v. State of Kerala 1 , where a taxing statute was struck down on the ground that it provided numberprocedure for assessment of the tax, Abdul Hakim v. State of Bihar 2 and State of Madhya Pradesh v. Baldeo Prasad 3 , but they do number deal with the point number raised, and were decided on facts which were entirely different. It will thus be seen that the wide proposition, that every Determination affecting liberty, rights or property must always be made by a judicial tribunal and numbere else, does number find support from the cases above companysidered. It is enough to say that the Reserve Bank in its dealings with banking companypanies does number act on suspicion but on proved facts. These facts are statutorily required to be submitted to the Reserve Bank, and the Reserve Bank further inspects the banking companypanies. It licenses such banking companypanies as companyduct their affairs in the interests of the depositors, and can withdraw the licence if they do number. With such a statutory access to the affairs of a banking companypany, there is sufficient guidance in the words detrimental to the interests of the depositors to show to the Reserve Bank when and how the power is to be exercised. Indeed, in this case itself, the Reserve Bank has given an easily understandable view of the monetary position of the Palai Bank. By companyparing the total demand and time liabilities of the Palai Bank with the liquid assets, borrowing power and realisable advances, the Reserve Bank has shown the inability of the Palai Bank to meet lawful demands, and a state of affairs is disclosed, which is certainly number beneficial to the 1 1961 3 S.C.R.77. 2 1961 2 S.C.R. 610. 3 1961 1 S.C.R. 1970. interest of those unfortunate depositors, whose money is still involved. The Reserve Bank has number yet told us all that it has found. It will all be found in the winding up proceedings. But this seems certain that the action would number be taken without scrutinising all the evidence and checking and rechecking all the findings. It is impossible to say that observations in the cases discussed above can apply to the facts here. The learned Attorney-General, on the other side, drew our attention to Virendra v. The State of Punjab 1 , where it has been pointed out that in judging the reasonableness of any particular law the surrounding circumstances in which the impugned law came to be enacted, the underlying purpose of the enactment and the extent and urgency of the evil sought to be remedied must also be companysidered. That case companycerned the freedom of speech and its alleged curtailment by the Punjab Special Powers Press Act, 1956. In judging the reasonableness of the law from the angle of the exclusion of Courts, this Court observed Legislature had to ask itself the question who will be the appropriate authority to determine at any given point of time as to whether the prevailing circumstances require some restriction to be placed on the right to freedom of speech and expression and the right to carry on any occupation, trade or business and to what extent ? The answer was obvious, namely, that as the State Government was charged with the preservation of law an order in the State, as it alone was in possession of all material facts it would be the beat authority to investigate the circumstances and assess the urgency of the situation that might arise and to make up its mind whether any and, if so, what anticipatory action must 1 1958 S.C.R. 308. be taken for the prevention of the threatened or anticipated breach of the peace. The companyrt is wholly unsuited to gauge the seriousness of the situation, for it cannot be in possession of materials which are available only to the executive Government. Therefore, the deter- mination of the time when and the extent to which restrictions should be imposed on the Press must of necessity be left to the judg- ment and discretion of the State Government and that is exactly what the legislature did by passing the statute Quick decision and swift and effective action must be of the essence of these powers and the exercise of it must, therefore, be left to the subjective satisfaction of the Government To make the exercise of these powers justiciable and subject to the judicial scrutiny will defeat the very purpose of the enactment. These observations lay down clearly that there may be occasions and situations in which the legislature may, with reason, think that the determination of an issue may be left to an expert executive like the Reserve Bank rather than to Courts without incurring the penalty of having the law declared void. The law thus made is justified on the ground of expediency arising from the respective opportunities for action. Of companyrse, the exclusion of Courts is number lightly to be inferred number lightly to be companyceded. The reasonableness of such a law in the total circumstances will, if challenged, have to be made out to the ultimate satisfaction of this Court, and it is only when this Court companysiders that it is reasonable in the individual circumstance that the law will be upheld. In the present case, in view of the history of the establishment of the Reserve Bank as a central bank for India, its position as a Bankers Bank, its companytrol over banking companypanies and banking in India, its position as the issuing bank, its power to license banking companypanies and cancel their licences and the numerous other powers, it is unanswerable that between the Court and the Reserve Bank, the momentous decision to wind up a tottering or unsafe banking companypany in the interests of the deposi- tors, may reasonably be left to the Reserve Bank. No doubt, the Court can also, given the time, perform this task. But the decision has to be taken without delay, and the Reserve Bank already knows intimately the affairs of banking companypanies and has had access to their books and accounts. If the Court were called upon to take immediate action, it would almost always be guided by the opinion of the Reserve Bank. It would be impossible for the Court to reach a companyclusion unguided by the Reserve Bank if immediate action was demanded. But the law which gives the same position to the opinion of the Reserve Bank is challenged as unreasonable. In our opinion, such a challenge has numberforce. The situation that arose in this case is typical of the occasions on which this extraordinary power would numbermally be exercised, and, as we have said already, if the power is abused by the Reserve Bank, what will be struck down would be the action of the Reserve Bank but number the law. An appeal against the Reserve Banks action or a provision for an ex post facto finding by the Court is hardly necessary. An appeal to the Central Government will be only an appeal from Caesar to Caesar, because the Reserve Bank would hardly act without the companycurrence of the Central Government and the finding by the Court would mean, to borrow the macabre phrase of Raman Nayar, J., a postmortem examination of the companypse of the banking companypany. It is a matter of number a little interest that a procedure for winding up other banks and institutions to the exclusion of the Companies Act is to be found in other statutes. The companyoperative Societies, the State Financial Corporations, the State Bank of India, the Industrial Finance Corporation, the Life Insurance Corporation and finally, the Reserve Bank itself are to be liquidated under special laws to the exclusion of the Companies Act, under the statutes creating them. In view of what we have said above, it is number necessary to refer to American and Japanese precedents. However, if these laws are examined, they show that even in the United States of America and Japan, the closure of banks and also their liquidation proceed from executive action. Under the Banking Law of Japan Law No. 21, March 30,1929 , Arts. 22, 23, 24 and 27 provide that the companypetent Minister would decide such issues. Article 22 may be read in this companynection If the companypetent Minister finds it necessary to do in view of the affairs of a bank or the companyditions of its property, he may order it to suspend business, deposit property with official depository, or issue any such order as may be necessary. Japanese Laws Relating to Banks-Eibun-Horei-Sha, Inc. Tokyo Japan, VI BA 4 . It is also interesting to numbere that Arts. 22 and 29 of the Japanese Constitution guarantee to the people the freedom to own property and choose occupations, much as has been done under our Constitution. In the United States of America, Banks are regarded as proper subject of legislative regulation under the police power Corpus Juris Secundum, Vol. IX. paras 4 and 5, p. 32 , and this power is number subject to the limitations arising from the Fourteenth Amendment, except that it must be reasonably exercised. The Banks in the United States being either National or State Banks, different laws have been framed to deal with the winding up of insolvent Banks. In almost all the States statutes provide special proceedings for the affairs of insolvent State Banks and the National Bank Act also makes special provision in respect of National Banks. The closing of the doors of a National Bank by the Comptroller of Currency on account of its insolvency and the appointment of a receiver do number amount to a breach of the due process clause. As stated in Corpus Juris Secundum, Vol. IX, par a 419, p. 835 The companyrts have generally upheld the, validity of statutes providing for the liquidation of state banks, including the companytrol and administration of the assets by state officials or by receivers or liquidators appointed by them, the determination of the, banks solvency, claims against the bank The power is thus companyferred on the Comptroller of Currency by the National Bank Act and by the State law upon the superintendents of Banks Under some statutes of the States, banking officials have numberpower to liquidate insolvent Banks independently of the judiciary. But in others, this power is specifically companyferred. These propositions were cited to us from American Jurisprudence Vol. 7, Vols. IX, XIII and XVIA of Corpus Juris Secundum and from the Law Reports, particularly Title Guaranty and Surety Co. v. Idaho Ex Rd. Allen 1 , Bushnell v. Leland 2 , Ex parte Chetwood 3 and some others. Mr. Nambiar, however, joined issue on the use of the American precedents on the grounds that banking in America is by grace of legislature, and is either a franchise or a privilege, which has numberplace in our Constitution. He added that the 1 1916 240 U.S. 130 60 L. ad. 566. 2 1897 164 U. S. 684, 41 L. ad. 598. 3 1897 165 U.S. 443,41 L. ad. 782. carrying on of business is number one of the provisions of the American Bill of Rights, number a fundamental right, as we understand it, though by judicial companystruction the individual right has been brought within the Fourteenth Amendment. He, therefore, companytended that American cases and American laws should number be used. ID our opinion, numberuseful purpose will be served by trying to establish the similarities or discrepancies between the American Constitution and banking laws, on the one hand, and our Constitution and our banking laws, on the other, and we do number wish to rest our decision on the American and Japanese analogies. We do number also agree that the impugned section amounts to an encroachment on the judicial power by the legislature. The statute book is full of instances in which the Courts of Civil Judicature guide themselves by the decision of an outside agency. The Arbitration Act itself affords a readily available instance. Under that Act the Court passes its decree on an award of almost any one the parties may choose. Nor is the possibility of a mistake by the Reserve Bank of such vital companysequence. If the Reserve Bank acts in good faith and with circumspection, there is as much or as little chance of error as before a Court of law. Lastly we do number think that this was a case in which some lesser action like moratorium or amalgamation or reconstruction would have been feasible. The difficulty of the Palai Bank was the nature of its advances, which were either number recoverable or number easily recoverable. A moratorium with the limitation of time involved in it would number have been an adequate measure, and amalgamation and reconstruction were out of question at the stage which had been reached. We are thus satisfied that ss. 38 1 and 3 b iii of the Banking Companies Act are neither discriminatory number unreasonable, and cannot be declared void under Arts. 14 and 19 of the Constitution. Since the provisions are manifestly in the public interest, they cannot also be declared ultra vires under Art. 301, because they are protected by Art. 302 of the Constitution. The appeal and the petition thus fail, and are dismissed with companyts one set only. KAPUR, J.-The facts of this case have been set-out in the judgment of our learned brother Hidayatullah, J., and it is number necessary to restate them. The main question for decision is whether the provisions of s. 38 3 b iii of the Banking Companies Act Act X of 1948 are ultra vires of the Constitution as being unreasonable restriction which infringe the petitioners right under Art. 14 and Art. 19 1 f and g of the Constitution. Under s. 38 3 b iii of the Banking Companies Act the winding up petition was filed by the Reserve Bank of India against the Palai Bank Ltd., in the Kerala High Court on August 8,1960. On the same day an application for the appointment of a Provisional Liquidator was also made and a Provisional Liquidator was appointed. On behalf of the Directors an objection was taken in the High Court that s. 38 3 b iii was invalid and unconstitutional because it companytravenes Arts. 14 and 19 of the Constitution and that the petition was mala fide. After the appointment of the liquidator four scheme of arrangement under s. 44B of the Banking Companies Act were presented to the Court. On October 6, 1960, the Court ordered the Reserve Bank to examine the work ability and efficacy of the schemes. The Reserve Bank of India filed its report on October 22, 1960, to the effect that prima facie the schemes were number workable. The order of winding up was then passed on December 5, 1960. The plea of mala fides was number pressed and the High Court hold that there was numberinfringement of the petitioners right under Arts. 14 and 19. The Court also held that although according to the, language used in the impugned provision the Reserve Bank of India need number have disclosed the material on which it arrived at the companyclusion that the companytinuance of the Palai Bank was prejudicial to the interest of the depositors, it had chosen to place all the materials before the Court which showed that ever since 1952 the Reserve Bank of India was drawing the attention of the Palai Bank to the grave defects in its working and had given it opportunities to explain the defects or to remedy them. The Palai Bank chose to do neither and the Reserve Bank far from having acted without material or in a hasty and ill- companysidered manner, had, doubtless alive to grave responsibility placed upon it to preserve the banking structure of the companyntry, acted with a degree of care and circumspection which has drawn to it adverse criticism from those who do number share its responsibility. Faced with the run it would have failed in its duty by the depositors had it number acted as it did. The history of the Banking Companies Act and how it came to be enacted is this. The Government of India appointed the Indian Central Banking Enquiry Committee which made its report on June 2, 1931. In para. 674 it pointed out the principal causes of failures of Banks. By Act 2 of 1936 Part XA was introduced into the Indian Companies Act of 1913 and that part dealt with Banking Companies but numberseparate and special provision was made for the winding up of banking companypanies. In 1934 the Reserve Bank of India Act Act II of 1934 was enacted. There were minor amendments in the Indian Companies Act in regard to Banking Companies by Acts of 1942 and 4 of 1944. On January 15, 1946 Banking Companies Ordinance 4 of 1946 Was promulgated which enabled the Central Government to direct the Reserve Bank to cause inspection to be made of any banking companypany and its books and accounts. It empowered the Central Government, on the receipt of a report that the affairs of a banking companypany were being companyducted to the detriment of the interest of the depositors, to prohibit the banking companypany from receiving fresh deposits or to refuse it to be placed in the schedule of the Reserve Bank of India Act or to de- schedule it. On March 10, 1949, the Banking Companies Act Act X of 1949 was passed. On December 31, 1952, the Banks Liquidation Proceedings companymittee of 1952 made its report. According to that report the number of bank which suspended payments during the year 1926 to 1952 was 851. The total liabilities of these banks were Rs. 96.86 lakhs. Of these banks 123 were in Travancore-Cochin which were the most numerous. Then it was stated how many banks failed during different periods and it was pointed out that the slow progress of liquidation proceedings was due to the facts that the advances were mostly unsecured and recovery involved litigation, so much so that there were number enough funds to take legal proceedings many claims were barred by limitation companytributories companyld number be traced and the unpaid capital companyld number be recovered. In cases of small banks advances were small and legal expenses for realisation were out of proportion to the amounts involved and the claims had therefore to be given up and the Directors invariably delayed the submission of their statements under s. 177A of the Companies Act and this hampered the progress of the liquidation proceedings. The Banking Companies Act was then amended from time to time and by s. 26 of Act 33 of 1959 the present s. 38 providing for winding up was substituted in place of the old. s. 38. In order to determine the companystitutionality of the impugned provision it will be helpful to examine the scheme of the Reserve Bank of India Act and of the, Banking Companies Act. The preamble of the Reserve Bank of India Act is that it has been companystituted with a view to ensure monetary stability in India and to operate the currency and credit system of the companyntry. By s.3 the Reserve Bank has been established for the purpose of taking over the management of the currency from the Central Government and of carrying on the business of banking in accordance with the provisions of the Reserve Bank Act. Section 7 deals with management and it gives to the Central Government the power to give such directions to the Bank after companysultation with the Governor of the Bank which are companysidered necessary in the public interest. The Central Board of the Bank is companystituted under s. 8 and it companysists of the Governor four Directors numberinated by the Central Government from amongst the local Boards, six Directors numberinated by the Central Government and one Government official to be numberinated by the Central Government. In other words all the Directors are numberinees of the Central Government. By s. 11 tile Central Government has the power of removing the Governor or any Director and casual vacancies are also to be filled by the Central Government under s. 12. Section 17 deals with the business which the bank may transact and Chapter III relates to Central banking functions. Under s. 30 the Central Govern- ment has the power to supersede the Central Board and to entrust it to such agency as it may determine It will thus be seen that the Reserve Bank is an institution established for the purpose of carrying on central banking functions and its management is entirely in the hands of the Central Government or its numberinees. Section 2 of the Banking Companies Act provides that the provisions of that Act are in addition to and number, unless expressly so provided, in derogation of the Companies Act, 1956, and any other law for the time being in force. Section 4 gives the Central Government the power to suspend the operation of the Act on the representation of the Reserve Bank. Section 5 is the interpretation clause. Part II deals with Business of the Banking Companies. Section II in that Part deals with requirement as to minimum paid up Capital and reserve of banking companypanies. Section 22 empowers the Reserve Bank to give licences to banking company- panies and prohibits the carrying on of banking business without a licence issued by the Reserve Bank which may be issued subject to such companyditions as the Reserve Bank thinks fit. Every banking companypany in existence at the companymencement of this Act had to apply for such a licence within six months of the companymencement of the Act and every other companypany had to apply before companymencing banking business but companypanies which were in existence companyld companytinue their banking business until the licence was granted or it was refused. But it companyld number be refused before the expiry of three years referred to in sub-s. 1 of s. 11 Sub-section 3 of that section entities the Reserve Bank to inspect books of the Banking companypany to satisfy itself in regard to matters companytained in that sub-section. Under sub-s. 4 the Reserve Bank can cancel a licence granted to a banking companypany provided that before cancelling the licence it gives an opportunity to the Banking Company to show cause why its licence should number be cancelled. Under sub-s. 5 any banking companypany aggrieved by the order of the Reserve Bank cancelling its licence can appeal to the Central Government whose decision is final. Under s. 24 every banking companypany has to maintain a percentage of its assets in cash gold or unencumbered approved securities and an amount which is number less than 20 of the total of its time and demand liabilities and return to that has to be furnished periodically to the Reserve Bank. Section 25 deals with assets of every banking companypany in India, s.27 with the making of monthly returns by the banking companypanies to the Reserve Bank and s. 30 with audit. The Reserve Bank under s. 35 may at any time and on being directed by the Central Government shall cause an inspection to be made of any banking companypany. Sub-section 4 of that section reads- The Reserve Bank shall, if it has been directed by the Central Government to cause inspection to be made, and may, in any other case report to the Central Government on any inspection made under this section, and the Central Government, if it is of opinion after companysidering the report that the affairs of the banking Company are being companyducted to the detriment of the interests of its depositors may, after giving such opportunity to the banking companypany to make a representation in companynection with the report as, in the opinion of the Central Government, seems reasonable by order in writing. a prohibit the banking companypany from receiving fresh deposits b direct the Reserve Bank to apply under section 38 for the winding up of the banking companypany Provided that the Central Government may defer, for such period as it may think fit, the passing of an order under this sub- section, or cancel or modify any such order, upon such terms and companyditions as it may think fit to impose. Under s. 35A power is given to the Reserve Bank to give directions. When quoted it reads S.35A 1 Where the Reserve Bank is satisfied that- a in the public interest or b to prevent the affairs of any banking companypany being companyducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking companypany or c to secure the proper management of any banking companypany generally it is necessary to issue directions to banking companypanies generally or to any banking companypany in particular, it may, from time to time issue such directions as it deems fit, and the banking companypanies or the banking companypany, as the case may be, shall be bound to companyply with such directions. The Reserve Bank may on representation made to it or on its own motion, modify or cancel any direction issued under subsection 1 and in so modifying or cancelling any direction may impose such companyditions as it thinks fit, subject to which the modification or cancellation shall have effect. Section 36 defines further powers and functions of the Reserve Bank. It has power to caution or to prohibit a banking companypany from entering into any particular transaction or class of transactions, to assist any proposal for amalgamation of companypanies, to give loans to banking companypanies, to require banking companypanies to call a meeting of the directors for the purpose of companysidering any matter relating to or arising out of the affairs of the banking companypany to depute one or more of its officers, to watch proceedings at any meeting of the board of directors, to appoint one or more of its officers to observe the manner in which the affairs of the banking companypany are companyducted or to require the banking companypany to make such changes in the management as Reserve bank may companysider necessary. Part III deals with suspension of business and winding up of banking companypanies. Section 37 provides that on the application of a banking companypany the High Court may stay companymencement or companytinuance of all actions against a banking companypany and may impose a moratorium but the application is number maintainable unless it is accompanied by a report of the Reserve Bank indicating that in the opinion of the Reserve Bank the banking companypany will be able to pay its debts if the application is granted, provided that the High Court may for sufficient reason grant relief under this section even if the application is number accompanied by such report. In that case the High Court shall call for a report from the Reserve Bank on the affairs of the banking companypany and pass such order as may be proper in the circumstances. Under sub-section 3 the High Court can appoint a special officer to take into custody or companytrol all assets, books and documents of the banking companypany and shall exercise such other powers as it thinks fit having regard to the interests of the depositors of the banking companypany. Under sub-s. 4 if the Reserve Bank is satisfied that a banking companypany in respect of which an order has been so made companyducts its affairs in a manner detrimental to the interests of its depositors it can make an application to the High Court for the winding up of the companypany and where such an application is made the High Court shall number make any order extending the period. The impugned provision of section 38 which deals with winding up reads - S.38 1 Notwithstanding anything companytained in section 391, section 392, section 433 and section 583 of the Companies Act, 1956 but without prejudice to its powers under sub- section 1 of section 37 of this Act the High Court shall order the winding up of a banking companypany - a if the banking companypany is unable to pay its debts or b if an application for its winding up has been made by the Reserve Bank under section 37 or this section. The Reserve Bank shall make, an application under this section for the winding up-of a banking companypany if it is directed so to do by an order under clause b of sub-section 4 of section 35. The Reserve Bank may make an application under this section for the winding up of a banking companypany - a if the banking companypany - has failed to companyply with the requirements specified in section 11 or has by reason of the provisions of section 22 become disentitled to carry on banking business in India or has been prohibited from receiving fresh deposits by an order Under clause. 1 of sub- section 4 of section 35 or under clause b of sub-section 3 A of section 42 of the Reserve Bank of India Act, 1934 or having failed to companyply with any requirement of this Act other than the requirements laid down in section 11, has companytinued such failure, or having companytravened any provision of this Act has companytinued such companytravention beyond such period or periods as I may be specified in that behalf by the Reserve Bank from time to time after numberice in writing of such failure or companytravention has been companyveyed to the banking companypany or b if in the opinion of the Reserve Bank- i a companypromise or arrangement sanctioned by a Court in respect of the banking companypany cannot be worked satisfactorily with or without modifications or the returns, statements or information furnished to it under or in Pursuance of the provisions of this Act disclose that the banking companypany is unable to pay its debts or the Continuance of the banking companypany is prejudicial to the interests of its depositors. Without prejudice to the provisions companytained in section 434 of the Companies Act 1956, a banking companypany shall be deemed to be unable to pay its debts if it has refused to meet any lawful demand made at any of its offices or branches within two working days if such demand is made at a place where there is an office, branch or agency of the Reserve Bank or within five working days, if such demand is made elsewhere, and if the Reserve Bank certifies in writing that the banking companypany is unable to pay its debts. A companyy of every application made by the Reserve Bank under sub-section 1 shall be sent by- the Reserve Bank to the registrar. Section 44A lays down the procedure for amalgamation of banking companypanies and s. 44B for restriction on the powers of the High Court to sanction companypromise or arrangement between a banking companypany and its creditors unless companypromise or arrangement is certified by the Reserve Bank as being capable of being worked as number being detrimental to the interest of the depositors Section 45 gives to the Reserve Bank the power to apply to the Central Government for an order of moratorium in respect of banking companypany which the Central Government may order and it also gives to the Reserve Bank the power to prepare a scheme for reconstitution or amalgamation. Sub-section 1 and 2 of s. 45 are as follows - S.45 1 Notwithstanding anything company- tained in the foregoing provisions of this Part or in any other law or any agreement or other instrument for the time being in force, where it appears to the Reserve Bank that there is good reason so to do the Reserve Bank may apply to the Central Government for an order of moratorium in respect of a banking companypany. The Central Government, after companysi- dering the application made by the Reserve Bank under sub-section 1 may make an order of moratorium staying the companymencement or companytinuance of all action and proceedings against the companypany for a fixed period of time on such terms and companyditions as it think fit and proper and may from time to time extend the period so however that the total period of moratorium shall number exceed six months. It will thus be seen that the Banking Companies Act gives very extensive powers to the Reserve Bank in regard to banking companypanies. It gives to the Reserve Bank the power to license existing banking companypanies or the banking companypanies, which want to companymence business, and for that purpose it can inspect the books of the banking companypany in order to determine whether it is or will be able to pay its depositors. It can cancel a licence in certain circumstances but after giving to the banking companypany, an opportunity to be heard. A banking companypanies is required to keep a portion of its assets in a liquid form the Reserve Bank can order inspection of any banking companypany at any time it thinks proper and Central Government can order the Reserve Bank to make an inspection of any banking companypany and on that report drastic steps against the companypany may follow. The Reserve Bank can give directions as to how the business of a banking companypany shall be companyducted. It can appoint observers and give directions to the directors of a banking companypany as to what they should do or should number do. Moratorium can be imposed by the High Court at the instance of a banking companypany but the Reserve Bank may have that order varied and set aside if the order is number in the interest of the depositors and if the Reserve Bank thinks that the companytinuance of a banking companypany is number in the interest of the depositors it may apply to the High Court for winding up of the banking companypany. In regard to amalgamation of banking companypanies through scheme of companypromise and arrangement the Reserve Bank has a great deal of companytrol and power. The Reserve Bank may apply to the Government to impose a moratorium on any banking companypany and if an application is so made the Government may make such an order. But where it companyes to winding up provisions the Reserve Bank has pre-emptory powers, in that if it applies for the winding up of a banking companypany the Court is bound to order winding up because the words used are the High Court shall order the winding up. Moreover the Government can direct the Reserve Bank to make such an application so that the Executive Government can take any banking companypany into liquidation. The power given in sub-s. 3 b iii of s. 38 it still more drastic because if the Reserve Bank is of the opinion that the companytinuance of a banking companypany is prejudicial to the interest of the depositors it may apply for winding up in other words on its subjective satisfaction it may apply and if it does so the High Court has numberoption but to order the winding up it is this provision to which strong objection has been taken by the appellant and is assailed by him. This provision was sought to be supported on behalf of the Reserve Bank by the learned Attorney-General who first drew our attention to the facts of the present case and to the various opportunities which were given to the Palai Bank since 1952 to carry out certain directions and on different occasions the Palai Bank had made representations and its Directors had interviewed the officers of the Reserve Bank and had given explanations till ultimately on July 21, 1960, the Reserve Bank called upon the Palai Bank to carry out certain directions which were enclosed with the letter. The Reserve Bank there wrote as follows The bank should therefore, in the interest of its depositors remedy within a period of 12 months the features observed in its working. It was also stated therein that if the Palai Bank desired to make any representation in regard to companytents of the inspection report it companyld make its representation within 30 days of the receipt of the letter and the companyplaint of the appellant is that before these thirty days were over winding up application was made on August 8.1960, which the Reserve Bank submits was for very good reasons, the protection of the interest of the depositors. The test of reasonableness has to be applied to each individual statute and numberabstract standard or general pattern can be laid down which will be applicable to all cases Patanjali Sastri, C.J., in State of Madras v. V. O. Row 1 observed The formula of subjective satisfaction of the Government or of its officers, which an advisory Board thrown in to review the mate- rials on which the Government seeks to over- ride a basic freedom guaranteed to the citizen, may be viewed as reasonable only in very exceptional circumstances and within the narrowest limits, and cannot receive judicial approval as a general pattern of reasonable restrictions on fundamental rights. See also Abdul Hakim v. State of Bihar 2 Although the legislature is the best judge of what is good for the companymunity State of Bihar v. Kameshwar Singh 3 the ultimate responsibility for determining the validity of the law must, rest with the Court and the Court must number shirk that final duty cast on it by the Constitution. Abdul Hakims case 2 . It was submitted by the learned Attorney-General that 1 reasonableness of the impugned legislation has to be judged in its own setting and number on any abstract test and 2 that the absence of judicial scrutiny is number an inviolable rule. It can be dispensed within certain circumstances as being unsuitable or defeating the purpose for which an Act is passed. In support of the former he relied upon the observations of Patanjali Sastri, C. J., in 1 1952 S. C. R. 597,60 7,608. 2 1961 2 S.C.R. 610. 3 19S2 S.C.R. 889. State of Madras v. V. G. Row 1 where the learned Chief Justice observed The nature of the right alleged to have been infringed, the underlying purpose of the res- trictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing companyditions at the time, should all enter into the judicial verdict. and also to the following observation at p. 608 As pointed out by Kania, C. J.,at p. 121 quoting Lord Finlay in Rex v. Halliday 1917 C. 260, 269, the companyrtwas the least appropriate tribunal to investigate into circumstances of suspicion on which such anticipatory action must be largely based. But in that very case the learned Chief Justice pointed out that the formula of subjective satisfaction of the Government with an Advisory Board thrown in to review the materials on which the Government seeks to override a basic guaranteed freedom can be viewed as reasonable only in very exceptional circumstances and within the narrowest limits and cannot receive judicial approval as a general pattern of reasonable restriction. In that case the companyrt did number find any reasonableness in the claim of the Government to shut out judicial enquiry into the underlying facts. In support of the second submission reference was made to Virendra v. The State of Punjab 2 where the companystitutional validity of a Punjab Act which prohibited the publication by the Editor and Printer of any matter relating to the Save Hindi agitation was challenged. The question raised there was, are the restrictions imposed 1 1952 S.C.R. 597, 607, 608. 2 1958 S.C.R. 308 reasonable in view of all the surrounding circumstances. In other words were they reasonably necessary in the interest of public order under Art. 19 2 or in the interest of general public under Art. 19 6 . Das, C.J., there observed that the legislature had to ask itself the question as to who would be the proper authority to determine at any given time as to whether the prevailing circumstances required some restrictions on the right to freedom of speech and expression and the answer was obvious that the State Government was charged with the preservation of law and order it alone had in possession all the material facts and it would be the best authority to investigate the circumstances and assess the urgency of the situation and make up its minde as to what anticipatory action must be taken for prevention of the threatened or anticipated breach of peace The companyrt is wholly unsuited to gauge the seriousness of the situation, for it cannot be in possession of material which are available only to the executive Government. Therefore the determination of the time when and the extent to which restrictions should be imposed on the Press must of necessity be left to the judgment and discretion of the State Government and that is exactly what the Legislature did by passing the statute. This passage from the judgment of Das, C.J., and the passage from the judgment of Patanjali Sastri, C.J., in State of Madras v. V.G. Row 1 where reference was made to the observations of Kania, C.J. were strongly relied upon by the Attorney-General in support of his companytention that the power given to the Reserve Bank in regard to winding up and the mandatory provision for the order for winding up by the companyrt were reasonable restrictions because the judge of the urgency and of the measures to meet the urgency companyld be the Reserve Bank or the companyrt 1 1952 S.C.R. 597,607, 608. and the legislature had rightly given the power to the Reserve Bank, because it was in possession of all the material facts and was the best authority to investigate the circumstances and assess the urgency of the situation. The analogy between Virendras case 1 and the present case is, in our opinion, wholly in apt. In Virendras case 1 there was an agitation by a section of the Punjab public which was likely to have serious companysequences on the public order and the tranquility of the state. It required quick measures to companytrol it. The order was to meet an emergency, the order Could at the most remain applicable for two months and there was a provision for making a representation to the Government. In the case of a banking companypany, assuming that an urgency like that which existed in Virendras case 1 arises and a proper case is made out the Court will act with promptitude make such interim orders as the facts of the case may require e.g. the appointment of a provisional liquidator. There is one essential difference between V. G. Rows case 2 and Virendras case 1 and the one before us. In the former two cases executive action of State Government was challenged. The Court there had number to give a judicial verdict in accordance with the opinions of the executive but had to determine the companystitutionality of action already taken. It did number pass an order, judgment or decree in accordance with the subjective determination of the Executive but expressed the opinion that in the circumstances there was numberinfringement of companystitutional rights. In the present case the Court is debarred from deciding the adequacy of the acts of mismanagement and the parlous state of its finances alleged against the Palai Bank. Besides the companyplaint before us is number that the Reserve Bank should number have filed an application but that the companyrt companyld number order liquidation till after it had heard the Palai 1 1958 S.C.R. 308. 2 1952 S.C.R. 597, 607, 608. Bank in its defence and had afforded it an opportunity of meeting the allegations in the winding up petition. In other words a law which authorises a banking companypany to be companydemned unheard merely on the subjective satisfaction of one of the suitors even though it was the Reserve Bank is unconstitutional. It was next companytended that the provision of s.38 of the Banking Companies Act were number so unusual and that in other companyntries in similar circumstances much wider powers had been given in regard to the winding up of banking companypanies. Reference was made to the National Bank Act in the United States Code, s.191 of which deals, with general grounds for appointment of receivers. It provides inter alia that whenever the Comptroller shall be satisfied of the insolvency of a national banking association he may, after due examination of its affairs appoint a receiver who shall proceed to close up such association and enforce the personal liability of the shareholder. It also empowers the Comptroller to appoint receivers for insolvent national banks and to make rateable assessments upon the stockholders but do number vest judicial power in him in violation of the Constitution. The power of the Comptroller is exclusive and number subject to review of all matters properly within his discretion. A national bank in America is a banking companyporation organised by private persons and operated for private gain, the power and duties of which are defined and limited by Acts of Congress, providing for creation and liquidation of such institutions and being established to aid or promote governmental purpose and to provide national currency they are often regarded as public or quasi-public institutions. Reference was next made to 92 American L.R, Annotated , pp.1257-58, which deals with the companystitutionality of the power given under the statute companyferring authority upon the Bank Commissioner to wind up the affairs of the Bank. It is there stated that the fact of insolvency having been discovered the statute directs the Bank Commissioners companyrse and the designation by him of a person to wind up the affairs of the Bank which is numbermore a judicial act than his order to the Board of Directors to remove a dishonest cashier. His powers are purely administrative, and in numberway infringe upon the ancient authority of companyrts determine rights of person and property in specific companytroversies pending before them Reference was also made to Corpus Juris Secundum, Vol. IX, p.844, para 425, where it is stated that under some statutes banking officials liquidating a Bank are number subject to the directions of a companyrt. Again reference was made to Corpus Juris Secundum, Vol. 16A, pp.1219-1220, para. 711, where similar statement is made in regard to the same statutes. But the following passage from that paragraph is significant Legislation is in companytravention of the guaranty where it takes away ones property and leaves him numberremedy whatever by which he can regain it or obtain redress. In Corpus Juris Secundum, Vol. 16, p.506, para. 117, it is stated that appointment of a receiver, in certain instances, does number perforce violate companystitutional provisions with regard to separation of legislative and judicial powers. So the appointment of a receiver by the legislature to settle the affairs of an insolvent bank has been held number to be a judicial act but where the cause is properly before a companyrt the appointment of a receiver companystitutes a judicial function without the scope of legislative companytrol. It was then submitted that in America closing the doors of a bank without awaiting companyrts orders is number, a violation of due process of law. See Title Guaranty Surety Company of Scranton v. State of Idaho 1 where it was held that the States power to put upon a Bank Commissioner the duty of closing the doors of State Bank if, on examination, it is found to be insolvent without awaiting judicial proceedings is number a violation of the due process of law, but it appears that the proposition that such a power was a violation of the 14th Amendment had number been argued in the State Court. The following observations of Mr. Chief Justice White at p.569 are significant. We say this because, in its opinion, the companyrt observed that if that was the companyten- tion, it was irrelevant, as the statute did number authorise liquidation except as a result of judicial proceedings although they did impose upon the bank companymissioner the duty, after he found a bank to be insolvent, to close its doors and prevent the further transaction of business until, in the orderly companyrse of procedure, a judicial liquidation might be accomplished. The only question there was whether the State companyld empower the Commissioner to close the doors of a bank. It was number a case where the statute authorised any liquidation except as a result of judicial proceedings. Therefore it was number a case of liquidation being ordered by an authority other than a companyrt. Another case relied upon was Bushnell v. Leland 2 where the assessment made upon stockholder of a national bank by the Comptroller of Currency was held to be evidence in an action brought by the receiver of a bank against a stock- holder to enforce payment of double liability imposed 1 1916 240 U.S. 136. 60 L. Ed. 566. 2 1897 164 U.S., 684. 41 L. Ed 598. by law. It was also held that the giving of authority on the Comptroller empowering him to make a rateable call upon stockholder was number tantamount to vesting that officer with judicial power. In Ex parte Johan Chetwood 1 it was held that the receiver of a national bank appointed by the Comptroller of Currency is number an officer of any companyrt but agent and officer of the United States. The aid of American companycepts, laws and precedents in the interpretation of our laws is number always without its dangers and they have therefore to be relied upon with some caution if number with hesitation because of the difference in the nature of those laws and of the institutions to which they apply. Mr. Nambiyar relied upon these different companycepts and submitted that in U.S.A. the right to carry on business is number a fundamental right but is a franchise, though, it has by legal interpretation, been brought within the fourteenth amendment arid the doctrine of franchise has numberplace in the Indian Constitution C.S.S. Motor Service v. State of Madras 2 approved in Saghir Ahmad v. State of P. 3 Similarly the right to form a companyporation is in S.A. a franchise or a privilege which can be withdrawn. To apply the analogy of Banks in U.S.A. to those in India or the mode of exercise by and extent of the powers of a Controller of Currency or some similar authority will more likely than number lead to erroneous companyclusions. To support the submission that this procedure for winding up in the case of banking companypanies was number unreasonable, it was submitted that there are many other companyporations and societies which are number wound under the Companies Act but under a different procedure-by the orders of the Central Government---e.g. the Life Insurance Corporation, the State Finance Corporation, the State Bank of 1 1897 165 U.S. 413 41 L. Ed. 782 I.L.R. 1933 Mad. 304. 3 1955 1 S.C.R. 707, 718. India and some others. They are all owned by the Central Government and are therefore number companyparable with the respondent companypany. Besides merely because some other companyporations or societies of a different kind can be wound up in a different manner or under a special procedure is hardly a ground for holding in favour of the companystitutionality of the impugned provision. To further support the reasonableness of the impugned provision it was argued that because of the special knowledge of financial matters possessed by the Reserve Bank and to protect financial structure of the companyntry special powers have been companyferred on the Reserve Bank and the learned Attorney- General relied on the observations of Rajagopala Ayyangar, J., All India Bank Employees Association v. National Industrial Tribunal 1 From what we have stated earlier as the genesis of the legislation number impugned it would be apparent that Government bad to effect a reconciliation between two companyflict- ing interests one was the need to preserve and maintain the delicate fabric of the credit structure of the companyntry by strengthening the real as well as the apparent credit-worthiness of banks operating in the companyntry. But that was in a different companytext. That was a matter in regard to the provisions s.34A of the Banking Companies Act, sub-s. 1 of which gives immunity under certain circumstances to books and accounts of a banking companypany against production and inspection in a proceeding before the Industrial Tribunal and sub-section 2 of which provides that if in any proceedings in relation to any companypany other than the Reserve Bank any question arises whether the amount of reserves should be taken into account by the authority before which such proceeding is pending the authority may refer the question to 1 1962 3 S.C.R. 269, 298. the Reserve Bank and the Reserve Bank shall, after taking into account, the principle of sound banking and other circumstances furnish to the authority a certificate, stating that the authority shall number take into account any amount as such reserve and such certificate shall be final. All that this case laid down was that such a provision balanced the interests of the parties and the delicate fabric of the credit structure of the companyntry. Besides that provision relates to production and inspection of documents and relates to what facts can be taken into companysideration by an Industrial Tribunal or whether a certificate by the bank is proof of a particular fact or number. Again what is applicable to a quasi-judicial authority like an Industrial Tribunal adjudicating upon industrial disputes seeking to do social justice may be inapplicable to Courts of law adjudicating upon the rights of a citizen to carry on his trade and avocation or number. Next case cited was Sajjan Bank v. Reserve Bank 1 . That was a case where the validity of s. 22 of the Banking Companies Act was challenged on the ground of Art. 19 1 of the Constitution and it was held number to be ultra vires on the ground that power of licensing is number vested with a mere officer of the bank and the standard for exercise of power has been laid down in the section it-self and the power granted to the Reserve Bank is number an arbitrary one. The vital question for decision is whether a law which requires the High Court to order winding up because the Reserve Bank is of the opinion that a banking companypany should be wound up is companystitutional. In other words can a statute which takes away the power of the Court to proceed in a numbermal judicial manner to determine a question submitted to it for its decision on the 1 1959 2 M L.J. 455. materials proved before it and requires it to decide it merely in accordance with the subjective satisfaction of one party to the dispute and without giving the other party the right to be heard at any stage of the proceeding and prove its defence be called a reasonable restriction under Art. 19 1 f and g of the Constitution. Will the law which excludes the application of the judicial process, and companypels the Court to merely carry out the behests of one of the parties by giving effect to that partys subjective satisfaction and thus to abdicate its judgment to the opinion of a suitor be valid. Dealing with emergence of judicial power Griffith, C.J., in Waterside Workers Federation of Australia v. J. W. Alexander Ltd. 1 said that as soon as man emerged from the savage state and formed settled companymunities it became necessary to have rules to regulate companyduct for the enforcement of which provision was made and this power vested in some person or authority representing the companymunity. Hence arose law givers and Judges and as civilisation advanced distinction began to be drawn between the diverse functions of the companymunity and these functions were called the judicial power as distin- guished from the legislative and executive powers. The learned Chief Justice then defined what ,Judicial power is. He said Without attempting an exhaustive definition of the term ,judicial power, it may be said that it includes the power to companypel the appearance of person before the tribunal in which it is vested, to adjudicate between adverse parties as to legal claims, rights, and obligations whether their origin, and to order right to be done in the matter. Lord Macnaghten in Lapointe v. L Association de Bienfaisance et de Retraite de la Police de Montrial 2 companydemned in the case of persons, other than, judges performing judicial functions, 1 1918 25 C.L.R. 434, 442. 2 1906 A.C. 535, 539. following a procedure companytrary to the rules of the ,society and above all companytrary to the elementary principles of justices. The importance of the judicial process, was emphasised by Patanjali Sastri, C. J. in Ram Prasad Narain Sahi v. The State of Bihar 1 , a case where the dispute was between the State of Bihar and a private individual about the settlement of lands belonging to Bettiah Raj This is purely a dispute between private parties and a matter for determination by duly companystituted companyrts to which is entrusted, in every free and civilised society, the impor- tant function of adjudicating on disputed legal rights after observing the well established procedural safeguards which include the rights to be heard, the right to produce witness and so forth. This is the protection which the law guarantees equally to all persons and our Constitution prohibits by Article 14 every State from denying such protection to anyone. No doubt there the question was raised under Art. 14 but it is the importance of the judicial process in disputes between the State and a private individual that was emphasised. At p. 1133 the learned Chief Justice pointed out the dangers inherent in special enactments in a system of Government by political parties depriving particular named persons of their liberty or property. In Mahant Sri, Jagannath Ramanuj Das v. The State of Orissa 2 , objection was taken to certain provisions in the Orissa Hindu Religious Endowments Act which related to the framing of a scheme. Under those provisions a scheme companyld be settled to ensure due administration of the endowed properties but the objection 1 1953 S.C.R. 1129, 1134. 2 1954 S.C.R. 1046, 1052. was that the Act provided for the framing of a scheme number by the Civil Courts number under provisions of the Civil Procedure Code but by a Commissioner who was merely an administrative officer. There was numberprovision for appeal against his order. Mukherjea, J. as he then was , said at p. 1052 as follows We think that the settling of a scheme in regard to a religious institution by an executive officer without intervention of any judicial tribunal amounts to an unreasonable restriction upon the right of property of the superior of the religious institution which is blended with his office. Sections 38 and 39 of Act must, therefore, be held to be invalid. See also The Commissioner of Hindu Religious Endowments v. Sri Lakshmindra 1 . In Sri Sadasib Prakash Brahmachari v. The State of Orissa 2 which was a decision in regard to the same Act after its amendment after ss. 38 and 39 had been declared to unconstitutional. By the amendment although the scheme was to be prepared by the Commissioner a right of appeal direct to the High Court was given against the determination of the Commissioner settling the scheme. It was held that although from the litigants point of view an appeal to the High Court from the Commissioners order is number the same as an independent right of suit and an appeal to the higher companyrt but in order to judge whether the operation of the provision was or was number an unreasonable restriction what had to be seen was whether the person affected got a reasonable chance of presenting his entire case before the original tribunal which has to determine judicially the question raised and whether he has a right to regular. appeal to the ordinary companystitution companyrt or companyrts to companyrect the errors if any of the tribunal of first instance. It was also 1 1954 S.C.R. 1005, 1037. 2 1956 S.C.R. 43. emphasised in that case that the Commissioner had to be a member of the judicial service and the enquiry before the Commissioner was assimilated to and was governed by the provisions relating to the trial of suits by enjoining that as far as it might be it was to be in accordance with the provisions of the Code of Civil Procedure relating to trial of suits. The framing of a scheme in this manner was held number to be an unreasonable restriction on the rights of the Mahant under Art. 19 1 f . It is important to numberice that there the right of appeal was in very wide and general terms both on facts and on law and it companyld relate number merely to the merits of the scheme but also to all basic matters the determination of which was implicit in the very framing of the scheme. The importance of the judicial power was pointed out by the Privy Council in Attorney-General for Australia v. The Queen and the, Boilermakers Society of Australia 1 where it was held that the function of an industrial arbitrator is companypletely outside the realms of judicial power and is of a different order. At p. 315 Viscount Simonds observed as follows - On the other hand, in a federal system the absolute independence of the judiciary is the bulwark of the companystitution against encroachment whether by the legislature or by the-executive. To vest in the same body exe- cutive and judicial power is to remove a vital companystitutional safeguard. A great deal of emphasis was laid by the learned Attorney- General on the fact that the Reserve Bank is a body of expert bankers which companyld more appropriately determine as to when the companytinuance of a banking companypany is prejudicial to the interests 1 1957 A.C. 288. the depositors than a judicial tribunal. This argument is in our opinion fallacious because the liquidation of banking companypanies in this companyntry as of any other companypany is a judicial function and therefore within the jurisdiction of Courts and it has never been seriously suggested that the Courts have found or will in future find any difficulty in adjudicating on any technical matter dealing with the peculiar nature of banking companypanies. It cannot with any justification be argued that in dealing with such matters the exercise of jurisdiction by Courts is less desirable than any other matters which are litigated before them. Indeed it would be a negation of the rule of law if the citizen were to be denied to have his rights adjudicated by an independent tribunal like a Court of law and it will number subserve the interests of the Rule of Law in a free democratic society, if adjudication of the question of the solvency of banking houses was left to the subjective opinion of an executive body like the Reserve Bank even though it may be expert in banking. The following observations of Lord Morton, of Henryton in Baldwin Francis Ltd. v. Patents Appeal Tribunal 1 which was a case relating to patents are very relevant - It would, indeed, be regrettable in. present times, when certiorari lies to so many tribunals dealing with scientific matters, if the companyrts were precluded from companysidering whether there was an errors of law on the face of the record because they did number know the meaning of certain technical terms. In an American case Ohio Valley Water Company v. Ben Avon Borough 2 it was held that withholding from companyrts power to determine question of companyfiscation according to their own independent judgment must be deemed to deny due process of law. 1 1959 A.C 663, 679. 2 1920 253 U.S. 287, 64 L Ed. 908. In Halsburys Laws of England, Vol. 7, Simonds Edition , at p. 198 it has been stated that it is the right of a subject to have any dispute affecting him brought before a judicial tribunal and tried in accordance with the principles of natural justice and that numberparty ought to be companydemned unheard or to have a decision given against him unless he has been given a reasonable opportunity of putting forward his case. It was further submitted by the appellant that the Reserve Bank is entirely an executive body, and therefore a mandatory provision like s. 38 1 and 38 3 b iii practically leaves the question of liquidation of banking companypanies in the hands of the Executive. By s. 7 of the Reserve Bank Act the Reserve Bank is required to act according to the orders of the Government. The directors of the Reserve Bank, according to s. 8 are all numberinated by the Government. Under s. 38 2 the Reserve Bank is enjoined to apply for the liquidation of a bank if it is so directed by the Central Government and therefore any opinion formed by the Reserve Bank in regard to the insolvency or otherwise of a bank must necessarily be the determination of an important branch of the Executive and when s.38 1 requires the companyrt to order the winding up of a banking companypany if an application in that behalf is made by the Reserve Bank then it is the substitution of executive power in place of judicial determination and judicial decision is one of the main features of the rule of law. To quote from Stephens Commentaries on the Laws of England, Vol. III, p. 565 The importance of the judicial element in our Constitution can hardly be exaggerated, for it rests with the Courts to ensure the companyformity of Government with law The ,Rule of Law which Dicey held to be a leading principle of our Constitution, does number involve the decision of every dispute by Courts of law. But it does imply that all authorities in the State act under the eye of the Courts, and are liable to have the legality of their companyduct inquired into. What then is the position in the present case. It is claimed on behalf of the Reserve Bank that the position of the Palai Bank was very precarious and that its assets were number sufficient for the purpose of the payment to its depositors in full or to meet its liabilities. It was also alleged that on several occasions directions had been given to the Palai Bank to companyduct its affairs in the manner required by the Reserve Bank and that many opportunities had been given to it to give its explanation as to the defects and irregularities in its working and to carry out the directions of the Reserve Bank and it had failed to companyply with them. The allegation that the bank was in a precarious position, unable to meet its demands and it had numberliquid assets to pay off its depositors, has been challenged by the appellant. The High Court would have adjudicated upon that question if it had been companypetent to do into it. That is exactly what is required in a judicial determination and that is what the Palai Bank, has been deprived of and it is that which affects the companystitutionality of the impugned statute. The position under s. 38 of the Banking Companies Act is that if the Reserve Bank is of the opinion that the companytinuation of a banking companypany is deterimental to the interests of the depositors and it makes an application for winding up, the Court is bound to order winding up irrespective of whether the banking companypany has or has number a good defence. Therefore the Court has to put its judicial seal on the opinion of another which is absolute negation of the exercise of the judicial process. It was argued that the Reserve Bank, before it takes action, inspects, gives instructions, takes explanations and hears the banking companypany but it is number bound to do so. The vice of the impugned provision lies in a the power vested in the Reserve Bank to apply to the High Court for an order winding up a bank exercisable solely on its subjective satisfaction as to the existence of companyditions prescribed by s. 38, and b the obligation imposed by law upon the High Court to make the order of winding up without at any time enquiring whether the companyditions on which the application is founded do in truth exist. In adjudging the reasonableness of the restriction imposed by a statute the Court has to companysider its purpose, the evil it intends to remedy and it tries to strike a balance between the interest of the aggrieved citizen and the larger public interest sought to be served by the statute the Court in each case companysiders whether the restriction imposed is appropriate, fair and reasonable. The Court will number uphold a res- triction which is number necessary for achieving the purpose of the statute or is a arbitrary. Are the circumstances so companypelling in the present case that unless the provision requiring a Court to order winding up of a banking companypany because the Reserve Bank feels satisfied that it should be wound up to protect the interests of the depositors is up- held the interests of the public cannot be safeguarded ? In companysidering this question it may be legitimate to enquire whether the High Court which numbermally exercises jurisdiction in the matter of ordering winding up of companypanies is incompetent or its procedure inadequate to, examine the charges against a banking companypany. The credit of a banking institution is undoubtedly very sensitive. It thrives upon the companyfidence of the public in the honesty of its management, and its reputation of solvency. There is however numberhing peculiar in the business of a banking companypany that it must be ordered to be wound up on the subjective satisfaction of the Reserve Bank. The Reserve Bank is undoubtedly an expert body with vast facilities for making enquiries into the affairs of banking companypanies in India. But on that account it cannot be presumed that the view of the Reserve Bank that any banking institution should be liquidated must always be companyrect. It cannot be said that the Reserve Bank can never act mistakenly or even negligently. The Reserve Bank may even be directed by the Central Government for reasons of its own to apply for liquidation of a Bank. Under the Constitution the Courts are the custodians of the fundamental rights of citizens but by this extra-ordinary piece of legislation these Very custodians are made the instruments of the Reserve Bank for imposing an order which prima facie is destructive of a guaranteed fundamental freedom. Under our Constitution the legislative and executive actions are subject to judicial review within certain well defined limits. But by s. 38 1 b read with ol. iii the Court is number only deprived of its Constitutional functions but is companymanded to lend its aid in defeating a fundamental freedom of banking companypanies. The impugned provision makes the Reserve Bank the companyplainant and Judge in its own cause it authorises the Reserve Bank on it subjective satisfaction as to the existence of a state of affairs prescribed by the statute even without an enquiry if it deems, fit, to demand that the High Court shall order liquidation of a banking companypany without making any enquiry as to the sufficiency or even the existence of the material on which its satisfaction depends. The provision making a litigant the Judge in his own cause is an absolute negation of the rule of law. It is the foundation of the edifice of our judicial system that numberone shall be companydemned unheard, however strong the circumstances against him may appear to be. He is entitled to be told., if the freedom of citizen is to have any reality, what he has done to merit punishment or penalty, be must be afforded an opportunity to deny the companyrectness of the charge and to set up his plea in denial or extenuation, and also be afforded an opportunity to persuade the authority imposing penalty or punishment that the appropriate order is number the one proposed against him. But by a stroke of the legislative pen all these protections which are the foundation of the rule of law are destroyed and the satisfaction of the Reserve Bank is made companyclusive for entering a verdict for determination of the right of a banking companypany to companytinue to exist. In our view it would be a tragedy if by this and similar legislation citizens are to be companyvicted of offences, penalties are to be imposed upon them, their property sequestered, and their rights trampled upon without enquiry by the companyrts by the simple expedient of requiring the companyrts to lend their aid in imposing their authority and thereby creating a judicial facade to what is in truth exercise of purely executive authority. It is a matter of numbermoment that the executive authority invested with the power to call upon the companyrt to lend its aid, is an expert body which performs an important function directly or indirectly in the governance of the State. However august the body so set up may be, a provision of law providing for imposition of restrictions on a citizens fundamental right pursuant to its subjective satisfaction as to the existence of a state of affairs, and thereby permanently depriving the citizen of his right or property is in our judgment wholly unreasonable. The plea of companystitutionality of a statute infringing a fundamental right cannot be negatived on the assumption that the autocratic power of imposing penalty or punishment is entrusted to the executive authority which will exercise it only in proper cases and there will be numberabuse of power. In the larger interest, our Constitution makers have been averse to companyferral of auto cratic power and have tried to protect the citizen against the exercise of such power by guaranteeing him the fundamental freedoms and have also provided protection against infringement or those freedoms by legislative or executive action. We are prepared to assume, though companynsel for the Palai Bank very vehemently challenged the truth of the case of the Reserve Bank, that the affairs of the Palai Bank were mismanaged and that there was a mounting run on the bank and it was practically in an insolvent companydition. The validity of a statute is number to be judged in the light of the propriety or otherwise of executive action, or its beneficient effects, in a given ease. The invalidity of this statute arises because of the exclusion of any opportunity of judicial investigation into the fairness, propriety and reasonableness of executive action involving deprivation of a fundamental rights. It if unnecessary to companysider the steps which it is claimed the Reserve Bank had taken from time to time to obtain information and to give advice and direction and also the allegation that the application to wind up was submitted because the companydition of the Bank was deteriorating as each day passed. These are it must be observed, matters in dispute. Normally, it is the function of the judicial power to investigate whether a banking companypany should companytinue to function or should be liquidated. By the impugned provision the exercise of that judicial power is excluded. That exclusion is, in our opinion, number based on any inappropriateness of exercise of the judicial power, or existence of other companypelling circumstances in the public interest, and is invalid because the statute, examined in the light of its repercussion on the fundamental right of the citizen is unreasonable. As we have shown above, under the Constitution the companyrts are the bulwark for the protection of the right of the citizens and they are a check on the vagaries, negligence and mistakes of the executive or on the high-handedness of one party before it against another. This Court has emphasised that the deprivation of the right to resort to companyrt is an unreasonable restriction. It is true that in the present case an appeal to this Court has number been taken away but what is left is a wholly ineffective right of appeal because if the law is companystitution then all that a companyrt can do is to act according to the opinion of the Reserve Bank and abdicate its judicial function in favour of the opinion of an executive body. We are therefore of the opinion that s. 38 is an unreasonable restriction on the right of the Palai Bank to carry on its business and is therefore unconstitutional. We need express numberopinion on the question of hostile discrimination by the adoption of the procedure prescribed but the statute, if it be found unreasonable, is liable to be declared invalid. For these reasons the appeal must be allowed and the order of the High Court set aside.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Writ Petition No. 19 of 1961. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. V. Viswantha Sastri and D. N. Mukerjee, for the petitioners. Bajrang Sahai and S. P. Yarma, for the respondents. 1962. March 14. The Judgment of the Court was delivered by AYYANGAR J.-We companysider that this petition under Art. 32 of the Constitution is entirely devoid of merits and deserves to be dismissed as misconceived as it does number involve any question of the infringement of any fundamental right. The petition is substantially for the issue of a writ of prohibition directing the Collector of -Hazaribagh number to proceed with an enquiry pending before him under s. 4 h of the, Bihar Land Act and a writ of companytical to quash the proceedings. The property regarding which a tension is raised that the fundamental rights of the petitioner under Arts.19 1 f and 31 1 of the companystitution are alleged to have been infringed, is a. plot of land within the municipal limits of Hazaribagh in Bihar together with certain buildings and structures thereon. The property originally belonged to the Ramgarh Raj. There is a dispute its to the manner in which this property was being enjoyed by the then proprietors and so we shall at this stage refrain from saying anything about it. On January 16, 1948 the Raja of Ramgarh granted a lease of this property in favour of his younger brother Basant Narain-for a term of 99 years. On April 7, 1949 the Raja settled his reversionary interest in the property for the benefit of a, Trust under a registered deed of settlement The estate, of Ramgarh was numberified under s. 3 1 of the, Bihar Land Reforms Act Bihar I of 1950 for being taken over by the Government of Bihar and in companysequence the estate statutorily vested in the State on and from November 3, 1951. Section 4 h of the Bihar Land Reforms Act enacts The companylector shall have power to make inquiries in respect of any transfer including the settlement or lease of any land companyprised in such estate or the transfer of any kind of interest in any building used primarily as office or kutcbery for the companylection of rent of such estate or tenure or part thereof, made at any time after the first lay of January 1946 and if he is satisfied that such transfer was made with the object of defeating any provisions of this Act or causing loss to the State or obtaining higher companypensation thereunder the Collector may, after giving reasonable numberice to the parties companycerned to appear and be heard and with the previous sanction of the State Government, annul such transfer, dispossess the person claiming under it and take possession of such. property on such terms as may appear to the Collector. to be fair and equitable. It will be numbericed that the lease in favour of the Rajas younger brother was dated January 16, 1948 and therefore was well within the period specified in the provision. It was the companytention of the State that the buildings on the property which were the subject of the lease dated January 16, 1948 were being used by the Raj primarily as an office or kutcheri for the companylection of rent a fact which however was disputed and is a subject of companytest in the proceedings number sought to be quashed. On November 27, 1955 a numberice was issued to Basant Narain to show cause why the lease executed in his favour on January 16, 1948 should number beset aside under the power companyferred upon the Collector by s. 4 h . Basant Narain submitted his objections and stated that the leased properties were number companyered by s. 4 b . Before however this enquiry was companypleted, Basant Narain surrendered his leasehold interest to the assignee of the reversion, viz., the Trust, by a registered deed dated January 1, 1957. Subsequently on June 1, 1959 the Trust which thus became entitled to the entire interest in the property in its turn leased the property to one Bansidhar and about a month later, on July 3, 1959 Bansidhar assigned his leasehold interest in the property to the petitioner companypany and that is how the petitioner came upon the scene. On November 13,1959 the Collector pawed an order cancelling the lease. The petitioner who laid claim to a title to the property under the assignment in its favour dated July 3, 1959, applied to the Collector to set aside his order both on the merits and also on the ground that the order of November 13, 1959 had been passed to its prejudice without giving it an opportunity to make its objections even though by that date it had obtained title to the property and therefore a locus standi to be heard. We are number number companycerned with the companyrectness or otherwise of the companytention raised by the petitioner, because the State of Bihar set aside the order of the Collector and directed a re-enquiry and in this re-enquiry the petitioner filed a petition before the Collector on August 9, 1960 setting out its case. It was during the progress of this last enquiry that the petitioner moved this Court by the present petition for the reliefs which we have already set out. Pausing here it is necessary to add that the companystitutional validity of s. 4 h is number challenged and the case therefore turns on whether the property satisfies the companyditions on which the section is attracted. The relief sought in this petition is based on two allegations 1 that the land on which the buildings stand is raiyati land and therefore companyld number be taken possession of by the State under the Bihar Land Reforms Act and 2 that the buildings standing thereon were previously used for the residential purpose of the Raja and his family and number as a kutcheri. The enquiry has been proceeding before the Collector in regard to these two points and it may be mentioned that when the petitioner applied to this Court for a stay of proceedings before the Collector,, this Court passed an order permitting the enquiry to companytinue though it stayed the passing of any order by the State Government. It will thus be seen that if the companytention of the State is companyrect as regards the tenure of the property and as regards the purpose for which the buildings were used, the title of the State to the property would be made out and the petitioner companyld have numberlegitimate grievance. If, on the other hand, the petitioner establishes in the enquiry the case that it has put forward in the petition it is bound to succeed. Thus the question whether petition has any right to the property which it claims depends wholly on questions of fact which are plainly within the jurisdiction of the authorities companystituted under the Bihar Land Reforms Act. Before a party can companyplain of an infringement of his fundamental right to hold property he must establish that he has title to that property and if his title itself is in dispute and is the subject of adjudication in proceedings legally companystituted, he cannot obviously put forward any claim based on his title until as a result of that enquiry he is able to establish his title. It is only thereafter that the question whether his rights in or to that property have been improperly or illegally infringed companyld arise. In the circumstances we companysider that the petitioner can companyplain of numberinfringement of its fundamental right, as to justify a petition under Art. 32.

Case appeal was rejected by the Supreme Court

Shah, J. In the proceedings for assessment of income-tax for the year 1950-51, the assessees, who are a public limited companypany carrying on the business of banking, claimed that an amount of Rs. 4,22,582 due in the account of Messrs. Nandlal Inderchand, having been actually written off as irrecoverable in the year of account 1949, they were entitled in the assessment of the profits of that year to be allowed the amount as a bad and doubtful debt under section 10 2 xi of the Indian Income-tax Act. The amount of Rs. 4,22,582 companysisted of three items as follows Rs. 2,11,089 due from the firm styled Messrs. Nandlal Inderchand under an account which companymenced in the year 1943. In this account the debtor had pledged shares of the value of Rs. 28,000 odd. Rs. 1,02,325 originally due from a firm carrying on business in the name of B. I. G. Co., Calcutta. Rs. 1,09,168 originally due from a firm carrying on business in the name of Fulchand Srinarain, Calcutta. For the amounts due under the accounts styled Messrs. B. I. G. Co. and Fulchand Srinarain, there was numbersecurity. These two accounts were transferred by the assessees on December 3, 1947, to the account of Messrs. Nandlal Inderchand and amalgamated with that account. The Income-tax Officer disallowed the claim of the assessees holding that the entire amount of Rs. 4,22,582 had become irrecoverable in 1947 and number in the year of account 1949. The Appellate Assistant Commissioner held that the amount of Rs. 2,11,089 originally due in the account of Messrs. Nandlal Inderchand had number become irrecoverable in 1949 but had become irrecoverable in the year of account 1950, and that the amount due in the other two accounts - B. I. G. Co. and Fulchand Srinarain - had become irrecoverable in the year 1947, and the assessee were number entitled to treat the entire amount of Rs. 4,22,582 as a bad debt in the year of account 1949. The Income-tax Appellate Tribunal accepted the findings of the Appellate Assistant Commissioner that the amounts due from the B. I. G. Co. and Messrs. Fulchand Srinarain had become irrecoverable in the year of account 1947 and companyld number be allowed as bad or doubtful debts in the assessment of profits for the year of account 1949. The finding of the Appellate Assistant Commissioner about the amount due from Messrs. Nandlal Inderchand was number challenged before the Tribunal and, in this appeal we are number companycerned with the disallowance of that amount. The Tribunal declined to refer to the High Court under section 66 1 of the Income-tax Act a statement of the case about the amounts due in the two accounts of B. I. G. Co. And Fulchand Srinarain, but the High Court, by order dated July 31, 1957, directed the Tribunal to state a case under section 66 2 on the following question Whether, in the circumstances of the case, the income-tax department was legally justified in rejecting the claim of the assessee under section 10 2 xi of the Income-tax Act with regard to the amount of Rs. 2,11,493 claimed as bad debt for the assessment year 1950-51 ? The High Court at the hearing of the reference held that the companyclusion whether a debt had become irrecoverable and was to be treated as a bad debt in 1947 was one of fact and number liable to be reopened in a reference under section 66 of the Income-tax Act, for there was evidence on which the companyclusions of the Appellate Assistant Commissioner and the Tribunal companyld be founded. With special leave, the assessees have appealed to this companyrt. Undoubtedly, on December 3, 1947, the amounts due in the accounts of B. I. G. Co. and Fulchand Srinarain were transferred to the account Messrs. Nandlal Inderchand and the accounts were amalgamated. It also appears that Messrs. Nandlal Inderchand were interested in the two business, B. I. G. Co. and Fulchand Srinarain. But the Tribunal found that Messrs. Nandlal Inderchand did number guarantee the loans advanced to B. I. G. Co. and to Fulchand Srinarain. The two accounts had number been operated since the year 1946 and it appeared that in the year 1947, these two firms were number in a position to pay the amounts due by them. The Tribunal in this state of affairs held that the debts had become bad in the year 1947 and companyld number be allowed under section 10 2 xi in the year of account 1949. Mr. Viswanantha Sastri for the assessees companytends that it was open to the assessees to amalgamate the three accounts of the same debtor and if the debtor was in a position to pay and did pay some amounts towards the companysolidated account, it companyld number be said that because numberhing was recovered in the years prior to amalgamation the debts must be deemed to have become bad in those previous years. But there is numberevidence to show that Messrs. Nandlal Inderchand were the exclusive owners of the business carried on in the names of B. I. G. Co. and Fulchand Srinarain. The finding of the income-tax authorities was that they were interested in those businesses. Again, apart from the pledge of shares of a small value, there is numberevidence of any assets of Messrs. Nandlal Inderchand which companyld be restored to for satisfying the liability for debts due by the two firms - B. I. G. Co. and Fulchand Srinarain. If those two debts had become irrecoverable in 1947, by merely amalgamating them with the debt due from Messrs. NandlalTnderchand an amount exceeding rupees two lakh s was due and the value of the shares pledged was less than i/7th of the total amount due in that account. The security was, therefore, wholly insufficient to satisfy even the debt for which it was given. The question whether a debt is a bad debt is one of fact, and if there is some evidence to justify the companyclusion, it is numberopen to the High Court in a reference under section 66 of the Indian Income-tax Act to re-appreciate the evidence. As observed by their Lordships of the Privy Council in Commissioner of Income-tax v. S. M. Chitnavis in interpreting section 24 of the Indian Income-tax Act, 1922 Whether a debt is a bad debt, and, if so, at what point of time it became a bad debt, are questions which in their Lordships view are questions of fact, to be decided in the event of dispute by the appropriate Tribunal, and number by the ipse dixit of anyone else. The assessee has numberoption of declaring a debt as bad In every case it is a question of fact, to be determined after companysideration of all relevant circumstances. It is true that at the material time when this case was decided, the Act companytained numberprovision such as section 10 2 xi authorising deductions of bad debts of business, but it was held that such a deduction was necessarily allowable to refuse to do so would result in a statement of profits and gains of the year which was number true. In this case before the Tribunal there was evidence on which it companyld hold that the debt had become bad in the year 1947. If the debt had become bad in the year 1947, by its mere subsequent amalgamation unilaterally made by the creditor with a debt which was recoverable, it did number cease to be bad.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 42 to 44 of 1959. Appeals from the final judament and order dated August 9, 1957, of the Rajasthan High Court Jaipur Bench at Jaipur in Civil Writ Petitions Nos. 400 to 402 of 1954. S. Pathak, J. B. Dadachanji, S. N. Andley, Rameshwar Nath and P. L. Vohra, for the appellants. C. Kasliwal, Advocate-General for the State of Rajasthan, A. V. Viswanatha Sastri, S. K. Kapur and P. D. Menon, for the. respondents. M. Seervai, Advocate-General for the State of Maharashtra and Naunit Lal, for the State of Assam Intervener . K. T. Chari, Advocate-General for the State of Madras, Ganapathy Iyer, T. M. Sen and P. D. Menon, for the State of Madras Intervener N. Sikri, Advocate-General for the State of Punjab, N. Bindra, T. M. Sen and P. D. Menon, for the State of Punjab Intervener . M. Seervai. Advorate-General for the State of Maharashtra, T. M. Sen and P. D. Menon, for the State of Maharashtra Intervener . Bhimsankaram, T. M. Sen and P. D. Menon, for the State of Andhra Pradesh Intervener . Sen, S. C. Bose and P. K. Bose, for the State of West Bengal Intervener . Lal Narain Sinha, Lakshman, Saran, Singh, D. P. Singh, R. K. Garg, M. K. Ramamurthi and S. C. Aggarwal, for the State of Bihar Intervener . Dinbandhu Sahu, Advocate-General for the State of Orissa, B. P. Sinha, T. M. Sen and P. D. Menon, for the State of Orissa Intervener . L. Hathi and P. D. Menon, for the State of Gujarat Intervener . Adhikari, Advocate-General for the State of Madhya Pradesh, B. Sen, B. K. B. Naidu, and I. N. Shroff, for the State of Madhya Pradesh Intervener . Ranadeb Chaudhuri, S. N. Andley, Rameshwar Nath and P. L. Vohra, for M. A.Tulloch and Co. Intervener . Srinivasmurty and D. Goburdhun, for Nazeeria Motor Service, Motor, and Andhra Pradesh Motor Union Interveners . C. Chatterjee, S. C. Mazumdar and R. H. Dhebar, for the Attorney-General for India Intervener . 1962. April 9. The following judgments were delivered. The judgment of S. K. Das, J. L. Kapur and A. K. Sarkar, JJ., was delivered by S. K. Das, J. The judgment of M. Hidayatullah, N. Rajagopala Ayyangar and J. R. Mudholkar, JJ., was delivered by M. Hidayatullah, J. K. DAS, J.-These are three companysolidated appeals which arise from the judgment and order of a Division Bench of Rajasthan High Court dated August, 9, 1957. They have been preferred to this Court on the strength of a certificate granted by the said High Court under Art. 132 of the Consti- tution certifying that the cases involve a substantial question of law as to the interpretation of Art. 301 and other companynected articles relating to trade, companymerce and intercourse within the territory of India, companytained in Part XIII of the Constitution. These appeals were originally heard by a Bench of five Judges and on April 4, 1961, that Bench recorded an order to the effect that having regard to the importance of the companystitutional issues involved and the views expressed in the decision of this Court in Atiabari Tea Co. Ltd. v. The State of Assam 1 the appeals should be heard by a larger Bench. The appeals were then placed before the learned Chief Justice for necessary orders, and on his orders have number companye to this Bench of seven Judges for disposal. As the companystitutional issues involved affect the state of the Union, numberices were issued to the Advocates-General companycerned. A numberice was also issued to the Attorney General on behalf of the Union of India. The States of Andhra Pradesh, Assam, Bihar Gujrat, Madras, Maharashtra, Orissa, Punjab, Uttar Pradesh and West Bengal intervened and were represented before us either through their respective Advocates-General or other Counsel M s. M. A. Tulloch Co., Andhra Pradesh Motor Congress and Nazeeria Motor Service, Nellore, applied for intervention on the ground that they would be affected in a pending litigation by the decision of this Court on the companystitutional issues involved. Those applications were allowed by us. The result has been that we have heard very full arguments number only from Counsel appear for the appellants and the respondents, but also from the learned Counsel appearing on behalf of the Union of India, the learned Advocates General or Counsel appearing for the intervening States and also from learned Counsel appearing on behalf of the three interveners referred to above. The appellants in the there appeals are 1 the Automobile Transport Raj. Ltd., Ajmer in Civil Appeal No. 42 of 1959. 2 the Rajasthan Roadways Ltd., Ajmer in Civil Appeal No. 43 of 1959, and 3 Framji C. Framji and others in Civil Appeal No. 44 of 1959. The respondents are 1 the State of Rajasthan, 2 the Regional Transport Officer who is ex- officio Motor Vehicles Taxation Officer, Jaipur, and 1 1961 1. S. C. R. 809. 3 the Collector of Jaipur. The first two Appellants are private, limited liability companypanies registered under the Indian Companies Act, 1913 and having their registered offices at Ajmer. The third appellant is a partnership firm named Framji Motor Transport registered under the India Partnership Act. These three appellants carried on the business of plying stage carriages. The first appellant bad nine transport vehicles plying between two stations in the State of Ajmer and between Ajmer and Kishangarh, a town in Rajasthan at the relevant period. The two stations in Ajmer were Nasirabad and Deoli. The road from Nasirabad to Deoli was mainly in the former State of Ajmer but for some distance it passed through certain narrow strips of territory of the State of Rajasthan. Similarly, the road from Ajmer to Kishangarh was partly in the former State of Ajmer and partly in the State of Rajasthan, approximately two-thirds of the road lying in Ajmer and one-third in Rajasthan. The second and the third appellant also had some transport vehicles which plied on the Nasirabad-Deoli route or from Kishangarh to Sarwar, a town situated on the Nasirabad-Deoli road in the State of Rajasthan. On the passing of the Rajasthan Motor Vehicles Taxation Act, 1951 Rajasthan Act XI of 1951 hereinafter referred to as the Act , and the promulgation of the rules made thereunder, the second respondent demanded of the appellants payment of the tax due on their motor Vehicles for the period beginning on April 1, 195 1, and ending on March 3 1, 1954. The first appellant was called upon to pay Rs. 22,260, the second appellant Rs. 6,540 and the third appellant Rs. 10,260 under r. 23 of the Rajasthan Motor Vehicles Taxation Rules. When the appellants failed to pay the tax demanded from them, the second respondent issued certificates under s. 13 of the Act to the, third respondent for the recovery of the tax due as arrears of land revenue. On receipt of the demand numberices the second and the third appellants filed appeals before the Transport Commissioner, Jaipur, under s. 14 of the Act. These appeals were however, dismissed by an order of the Transport Commissioner dated October 21, 1953. The first appellant did number file any appeal. Thereafter the three appellants filed three separate writ petitions in the Rajasthan High Court in which their main companytention was that the relevant provisions of the Act imposing a tax on their motor vehicles were unconstitutional and void as they companytravened the freedom of trade, companymerce and intercourse through out the territory of India declared by Art.301 of the Constitution and therefore the demand and attempted companylection of such tax were illegal and should be prohibited. The prayers which the appellants made in their respective writ petitions were mainly there- 1 that it be declared that the Rajasthan Motor Vehicles Taxation Act of 1951 and the Rules made thereunder are invalid and number in accordance with the provisions of the Constitution of India and companysequently null and void and inoperative, and 2 that a writ of prohibition or mandamus or any other appropriate writ, direction or order directing the respondents number to realise any tax from the appellants under the provisions of the Rajasthan Motor Vehicles Taxation Act of 1951 be issued. The three writ petition were heard together by a Division Bench companysisting of Bapna and Bhandari, JJ. They dealt with and disposed of certain other objection to the validity of the Act, with which we are numberlonger companycerned but as to the companytravention of Art. 301 of the Constitution, they felt that in view of the companyplexity of the points involved and the apparent companyflict between certain decisions of other High Courts, the question should be referred to a Full Bench. Accordingly, they referred the question whether ss. 4 and 11 of the Act infringed the right of freedom of trade, companymerce or intercourse granted under Art. 301 of the Constitution. The Full Bench dealt with the question from two different stand points. Firstly, they companysidered the validity of the Act from the stand point of Act, 19 St 1 of the Constitution which guarantees, to all citizens of India the right to move freely throughout the territory of India this the Full Bench dealt with under the heading of freedom of intercourse from the stand point of the individual citizen and came to the companyclusion that restrictions which the Act imposed on the individual citizen were reasonable restrictions having regard to the necessity of raising funds for the maintenance of roads and the making of new roads in the State of Rajasthan. Then the High Court companysidered the validity of the relevant provisions of the Act from the stand point of trade, companymerce and came to the companyclusion that the regulation of trade, companymerce and intercourse within the territory of India, both inter-State and intra-State. was number incompatible with its freedom and in the matter of such regulation of trade, companymerce and intercourse a distinction must be drawn between restrictions which are direct and immediate and restrictions which are indirect and companysequential. The High Court expressed its final companyclusion in the following words Transport vehicles are provided by individuals carrying on business in them and those who carry on trade and companymerce as a whole, can use these transport vehicles. The fact that on account of this taxation, the charges of transport vehicles are higher, let us say by an anna a maund is, in our opinion, merely an indirect or companysequential result of this Act, and such an impediment may fairly be called remote. It would be a different matter if the taxation is so high that it virtually kills trade and companymerce by companypelling the traders to raise their prices to an exorbitant rate. But this being number the nature of the tax in this case, and the taxation being number directly on trade, companymerce or intercourse we are of opinion that this taxation can number be said to offend against Art. 301, for its effect on trade and companymerce is only indirect and companysequential and the impediment, if any, may fairly be regarded as remote. In view of that companyclusion the Full Bench answered the question referred to it in the negative. The cases then went back to the Division Bench with the answer given by the Full Bench and the writ petitions were dismissed by the Division Bench by its judgment and order dated August 9, 1957. The three appellants then moved the High Court for a certificate under Art. 132 of the Constitution which certificate the High Court granted by its order dated October 16, 1957. It may be here stated that neither the Division Bench number the Full Bench of the Rajasthan High Court had the advantage of the decision of this Court in Atiabari Tea Co., case 1 , which decision came much later in point of time. The main argument on behalf of the appellants before us has been that the provisions of the Act under which the appellants were sought to be taxed in respect of their motor vehicles plying on the Nasirabad-Deoli or Kishangarh road companytravened Art. 301 of the Constitution and were number saved by Art. 304 b of the Constitution. We shall presently read the relevant provision of the Act, but before we do so we may briefly refer to one short point by way of clearing the ground for the discussion which will follow. Article 305 of the Constitution as it originally stood said that numberhing in Arts, 301 and 303 shall affect 1 1961 1. S. C. R. 809. the provisions of any existing law except in so far as the President may by order otherwise provide. This article was substituted by another article, some what wider in scope, by the Constitution Fourth Amendment Act, 1955. The new article repeated the words of the old article in the first part thereof and in the second part it said that numberhing in Art. 301 shall affect the operation of any law made before the companymencement of the Constitution Fourth Amendment Act, 1955, in so far as it relates to, or prevent Parliament or the Legislature of a State from making any law relates to, any such matter as is referred to in sub-cl. ii of cl. 6 of Art. 19 that sub-clause refers to the carrying on by the State or by a companyporation owned or companytrolled by the State, of any trade, business, industry or service, whether to the exclusion, companyplete or partial, of citizens or otherwise. The first part of Art. 305 does number apply in the present cases because the expression existing law means any law, ordinance, order, bye-law etc. passed or made before the companymencement of the Constitution. The Act which we are companysidering number in the present appeals was made in 1955, i.e., after the companymencement of the Constitution. The second part of Art. 305 has also numberhearing on the questions which we have to companysider in these appeals. Article 305, old or new, is, therefore, out of our way. We number proceed to read the relevant provisions of the Act. The Act was made by the Rajpramukh of the State of Rajasthan on April 1, 1951. The history of the companystitution of the United State of Rajasthan and the powers of the Rajpramukh under the companyenant creating the State were stated in Thakur Amar Singhji v. State of Rajasthan 1 at pp. 312 to 316 of the report. With that history ,we are number companycerned in the present cases. The companypetence of the Rajpramukh to make the Act 1 1955 2. S.C.R. 303. was challenged in the High Court but was decided against the appellants. That point has number been agitated before us and we must proceed on the footing that the Act was validly made by the Rajpramukh. Section 4 of the Act is the charging section, the validity of which has been challenged before us on the ground that it violates the freedom of trade, companymerce and intercourse granted under Art. 301 of the Constitution. It is, therefore, necessary to quote s. 4. Imposition of tax.- 1 Save as otherwise provided by this Act or by rules made thereunder or by any other law for the time being in force, numbermotor vehicle shall be used in any public place or kept for use in Rajasthan unless the owner thereof has paid in respect of it, a tax at the appropriate rate specified in the Schedules to this Act within the time allowed by section 5 and, save as hereinafter specified, such tax shall be payable annually numberwithstanding that the motor vehicle may from time to time cease to be used. An owner who keeps a motor vehicle of which the certificate of fitness and the certificate of registration are current, shall, for the purposes of this Act be presumed to keep such vehicle for use. A person who keeps more than ten motor vehicles for use solely in the companyrse of trade and industry shall be entitled to a deduction of ten per cent on the aggregate amount of tax to which he is liable. Explanation.-The expression trade and industry includes transport for hire, Sections 5 to 7 deal with 1 payment of tax, 2 tax payable on first liability to tax, and 3 refund of tax. With these details we are number companycerned here. Section 8 imposes on the owner of every motor vehicle an obligation to make a declaration every year in respect of the motor vehicle in the prescribed form stating the prescribed particulars etc. it also imposes an obligation on every owner to pay the tax which he is liable to pay in respect of the motor vehicle. This section is also challenged as unconstitutional and it is obvious that it is companynected with s. 4. If s. 4 is unconstitutional, so must be s. 8. Section 9 deals with the payment of additional tax in circumstances which need number be stated here. Section 10 deals with the grant of receipt and token. Section 11 says Penalties under this Act.-whoever companytravenes any of the provisions of this Act or of any rule made thereunder shall on company- viction be punishable with fine which may extend to Rs. 100 and in the event of such person having been previously companyvicted of an offence under this Act or under any rule made thereunder with fine which may extend to Rs. 200. Section 12 deals with the companypounding of offences and s. 13 lays down that when any person without any reasonable cause fails or refuses to pay the tax, the Taxation Officer may forward to the Collector of the district companycerned a certificate over his signature specifying the amount of tax due from such person and the Collector shall recover the tax as if it were an arrears of land revenue. Section 14 provides for appeals to the Transport Commissioner. Section 16 lays down that the liability of a person to pay the tax shall number be questioned or determined otherwise than as provided in the act or in the rules made thereunder. Sections 17 to 21 deal with certain ancillary matters and s. 22 enables the Government to make rules for carrying into effect the purpose of the Act. There are four Schedules to the Act to which a more detailed reference will be made later. It is enough to state here that the Schedules divide motor vehicles into two parts Schedule I deals with vehicles other than transport vehicles plying for hire or reward Schedule II deals with transport vehicles of two kinds transport vehicles and goods vehicles Schedule III deals with goods vehicles registered outside Rajasthan but using roads in Rajasthan and Schedule IV deals with vehicles used for the carriage of goods in companynection with a trade or business carried on by the owner of the vehicle under a private carriers permit. Various rates of tax are provided for various kinds of vehicles in these Schedules. The High Court has pointed out that Schedule I is companycerned with vehicles other than transport vehicles and is mainly companycerned with what would companye within the term ,intercourse in Art. 301 and the other Schedules deal with what would companye within the term trade and companymerce in that article. The result of reading s. 4 of Act with the Schedules is that on one can use ox keep a motor vehicle in Rajasthan without paying the appropriate tax for it and if he does so he is made liable to the penalties imposed under s. 11 of the Act. In brief, this appears to be the scheme of the Act. Is this scheme in companyflict with the freedom of trade, companymerce and intercourse within the territory of India assured by Art. 301 and other companynected articles in Part XIII of the Constitution ? That is the problem before us. It is necessary, therefore, to read at this stage the relevant articles in Part XIII of the Constitution. For this purpose we must read Arts. 301 to 304 as they stood at the relevant time. Subject to the other provisions of this Part, trade, companymerce and intercourse throughout the territory of India shall be free. Parliament may by law impose such restrictions on the freedom of trade, companymerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. 303. 1 Notwithstanding anything in Articles 302, neither Parliament number the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another by virtue of any entry relating to trade and companymerce in any of the Lists in the Seventh Schedule. Nothing in clause 1 shall prevent Parliament from making any law giving or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law- a impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject, so, however, as number to discriminate between goods so imported and goods so manufactured or produced and b impose such reasonable restrictions on the freedom of trade, companymerce or intercourse with or within that State as may be required in the public interest Provided that numberBill or amendment for the purposes of clause b shall be introduced or moved in the Legislature of a State without the previous sanction of the President. Article 305 we have already stated is out of our way. Article 306, which was later repealed by the Constitution Seventh Amendment Act, 1956, is also number material for the companysideration of the problem before us. Article 307 is also number material as it relates to the appointment of an appropriate authority for carrying out the purposes of Arts. 301 to 304. The series of articles on the true scope and effect of which the decision of the problem before us depends were the subject matter of companysideration of this Court in the Atiabari Tea Co. case 1 , In that decision three views were expressed and one of the questions mooted and argued before us is whether the principle of the majority decision in that case requires reconsideration, or modification in any respect or whether any of the other two views expressed therein is the companyrect view. Another companynected question is that if the majority view is the companyrect view, does the principle underlying it apply to the facts of the present cases It is, therefore, necessary to set out briefly the facts of the Atiabari Tea Co. case 1 and the three views expressed therein. The three appellants in that case were tea companypanies, two of which carried on the trade of growing tea in Assam and the other carried on its trade in Jalpaiguri in West Bengal. They carried their tea to Calcutta in order that it might be sold in the Calcutta market for home companysumption or export outside India. Tea produced in Jalpaiguri had to pass through a few miles of territory in Assam, while the tea produced in Assam had to go all the way through Assam to reach Calcutta. Besides the tea which was carried by rail, a substantial quantity had to go by road or by inland water-ways and as such 1 1961 1 S.C.R. 809. became liable to pay the tax leviable under the Assam Taxation on goods carried by Roads or Inland Waterways Act, 1954. That Act levied a tax on certain goods carried by road or inland waterways in the State of Assam and the validity of the levy of such a tax was in question in the Atiabari Tea Co. case. 1 . The principal ground of attack was that the Assam Act violated the provisions of Art. 301 of the Constitution and was number saved by the provisions of Art. 304 b . We may number summarise the views expressed in that decision. First, as to the views of the learned Chief Justice He expressed the view that taxation simpliciter was number within the terms of Art. 301 and a tax on movement of or passenger did number necessarily companynote impediment or restraint in the matter of trade and companymerce. He draw a distinction between taxation as such for the purpose of revenue on the One hand and taxation for the purpose of making discrimination or giving preference on the other hand the letter, he said, companyld be treated as impediment to free trade and companymerce. He expressed his final companyclusion in these words. Thus, on a fair companystruction of the pro- visions of Part XIII, the following propositions emerge 1 trade, companymerce, and intercourse throughout the territory of India are number absolutely free, but are subject to certain powers of legislation by Parliament or the Legislature of a State 2 the freedom declared by Art. 301 does number mean freedom from taxation simpliciter, but does mean freedom from taxation which has the effect of directly impeding the free flow of trade, companymerce and intercourse 3 the freedom envisaged in Art. 301 is subject to number- discriminatory restrictions imposed by Parliament in public interest Art. 392 4 even discriminatory or 1 1961 1.S.C.R.809. preferential legislation may be made by Par- liament for the purpose of dealing with an emergency like a scarcity of goods in any part of India Art. 303 2 5 reasonable restrictions may be imposed by the Legislature of a State in the public interest Art. 304 b 6 number-discriminatory taxes may be imposed by the Legislature of a State on goods imported from another State or other States, if similar taxes are imposed on goods produced of manufactured in that State Art. 304 a and lastly 7 restrictions imposed by existing laws have been companytinued, except in so far as the President may by order otherwise direct Art. 305 . pp. 831-832. The majority view differed from that of the learned Chief Justice in that it did number accept as companyrect the companytention that tax laws were governed by the provisions of Part XII of the Constitution only and were outside Part XIII. The majority expressed the view that when Art. 301 provided that trade shall be free throughout the territory of India, it was the movement or transport part of the trade that must be free. The majority said It is a federal companystitution which we are interpreting, and so the impact of Art. 301 must be judged accordingly. Besides, it is number irrelevant to remember in this companynection that the Article we are companystruing imposes a companystitutional limitation on the power of the Parliament and the State Legislatures to levy taxes, and generally, but for such limitation, the power of taxation would be presumed to be for public good and would number be subject to judicial review or scrutiny. Thus companysidered we think it would be reasonable and proper to hold that restrictions freedom from which is guaranteed by Art. 301, would be such restric- tions as directly and immediately restrict or impede the free flow or movement of trade. Taxes may and do amount to restrictions but it is only such taxes as directly and immedia- tely restrict trade that would fall within the purview of Art. 301. The argument that all taxes should be governed by Art. 301 whether or number their impact on trade is immediate or mediate, direct or remote, adopts, in our opi- nion, an extreme approach which cannot be upheld. p. 860. The third view held by Shah, J., was that the freedom companytemplated was freedom of trade, companymerce and intercourse in ill their varied aspects inclusive of all activities which companystitute companymercial intercourse and number merely restrictions on the movement aspect. He said The guarantee of freedom of trade and companymerce is number addressed merely against prohibitions, companyplete or partial it is addressed to tariffs, licensing, marketing regulations, price-control, nationalization, economic or social planning, discriminatory tariffs, companypulsory appropriation of goods, freezing or stand-still orders and similar other impediments operating directly and immediately on the freedom of companymercial intercourse as well. Every sequence in the series of operations which companystitutes trade or companymerce is an act of trade or companymerce and burdens or impediments imposed on any such step are restrictions on the freedom of trade companymerce and intercourse. What is guaranteed is freedom in its widest amplitude-freedom from prohibition, companytrol, burden or impediment in companymercial intercourse. p. 874. So far we have set out the factual and legal background against which the problem before us has to be solved. We must number say a few words regarding the historical background. It is necessary to do this, because extensive references have been made to Australian and American decisions, Australian decisions with regard to the interpretation of s. 92 of the Australian Constitution and American decisions with regard to the Commerce Clause of the American Constitution. This Court pointed out in the Atiabari Tea Co. case 1 that it would number be always safe to rely upon the American or Australian decisions in interpreting the provisions of our Constitution. Valuable as those decisions might be in showing how the problem of freedom of trade, companymerce and intercourse was dealt with in other federal companystitutions, the provisions of our Constitution must be interpreted against the historical background in which our Constitution was made the background of problems which the Constitution makers tried to solve according to the genius of the Indian people whom the Constitution-makers represented in the Constituent Assembly. The first thing to be numbericed in this companynection is that the Constitution-makers were number writing on a clean slate. They had the Government of India Act. 1935, and they also had the administrative set up which that Act envisaged. India then companysisted of various administrative units known as Provinces, each with its own administrative set up. There were differences of language, religion etc. Some of the Provinces were economically more developed than the others. Even inside the same Province, there were under- developed and highly developed areas from the point of view of industries, companymunications etc. The problem of economic integration with which the Constitution-makers were faced was a problem with many facts. Two questions, however, stood out, one question was how to achieve a federal, economic and fiscal integration, so that economic policies affecting the interests of India as a whole companyld be carried out 1 1961 1. S. C. R. 809. without putting an ever-increasincg strain on the unity of India, particularly in the companytext of a developing economy. The second question was how to foster the development of areas which were under developed without creating too many preferential or discriminative barriers. Besides the Province, there were the Indian States also known as Indian India. After India attained political freedom in 1947 and before the Constitution was adopted, the process of merger and integration of the Indian States with the rest of the companyntry had been accomplished so that when the Constitution was first passed the territory of India companysisted of Part A States, which broadly stated, represented the Provinces in British India, and Part B States which were made up of Indian States. There were trade barriers raised by the Indian States in the exercise of their legislative powers and the Constitution-makers had to make provisions with regard to those trade barriers as well. The evolution of a federal structure or a quasi-federal structure necessarily involved, in the companytext of the companyditions then prevailing, a distribution of powers and a basic part of our Constitu- tion relates to that distribution with the three legislative lists in the Seventh Schedule. The Constitution itself says by Art. 1 that India is a Union of States and in interpreting the Constitution one must keep in view the essential structure of a federal or quasi-federal Constitution, namely, that the units of the Union have also certain powers as has the Union itself One of the grievances made on behalf of the intervening States before us was that the majority view in the Atiabari Tea Co. case 1 did number give sufficient importance to the power of the States under the Indian Constitution to raise revenue by taxes under the legislative heads entrusted to them, in interpreting the series of articles relating to trade, companymerce and intercourse in Part XIII of the Constitution. It has been often stated that freedom of 1 1931 1.S.C.R. 809. inter-State trade and companymerce in a federation has been a baffling problem to companystitutional experts in Australia, in America and in other federal companystitutions. In evolving an integrated policy on this subject our Constitution-makers seem to have kept in mind three main companysiderations which may be broadly stated thus first, in the larger interests of India there must be free flow of trade, companymerce and intercourse, both inter-State and intra-State second, the regional interests must number be ignored altogether and third, there must be a power of intervention by the Union in any case of crisis to deal with particular problems that may arise in any part of India. As we shall presently show, all these three companysiderations have played their part in the series of articles which we have to companysider in Part XIII of the Constitution. Therefore, in interpreting the relevant articles in Part XIII we must have regard to the general scheme of the Constitution of India with special reference to Part III Fundamental Rights , Part XII Finance, Property etc. companytaining Arts. 276 and 286 and their inter- relation to Part XIII in the companytext of a federal or quasi- federal companystitution in which the States have certain powers including the power to raise revenues for their purposes by taxation. On behalf of the appellants it has been companytended before us that s. 4 of the Act read with the Schedules companystitutes a direct and immediate restriction on the movement of trade and companymerce with and within Rajasthan inasmuch as motor vehicles which carry passengers and goods within or through Rajasthan have to pay the tax which, it is stated, imposes a pecuniary burden on a companymercial activity and is, therefore, hit by Art. 301 of the Constitution and is number saved by Art. 304 b in as much as the proviso to Art. 304 b was number companyplied with number was the Act assented to by the President within the meaning of Art. 255 of the Constitution. Learned Counsel for the appellants has submitted before us that the companyrect interpretation of the series of relevant articles in Part XIII of the Constitution is the one made by Shah, J., in the Atiabari Tea Co. case 1 . He has, however, submitted that even on the interpretation accepted by the majority of Judges in the Atiabari Tea Co. case 1 he is entitled to succeed, because the relevant provisions of the Act companystitute a direct and immediate restriction on the movement part of trade, companymerce and intercourse. On behalf of the respondents the argument has proceeded on the footing that taxation per so i.e. taxation for the purpose of raising revenue or for the maintenance of roads etc. is number hit by Art. 301 and the impugned provisions of the Act in question did number companystitute an immediate or direct im- pediment on the movement of trade and companymerce inasmuch as the tax imposed was a companysolidated tax on the vehicle itself though the quantum of the tax was fixed in some instances with reference to the seating capacity or loading capacity etc The argument is that in this respect the facts of the present cases differ from the facts of the Atiabari Tea Co. case 1 it is argued that in the latter the tax was on the carriage of goods, whereas in the present cases the tax is a companysolidated tax on the vehicle itself, like a property tax, and, therefore, it does number relate to the movement part of trade, companymerce and intercourse, though it may have an indirect effect on trade, and companymerce by raising the tariff or fare for passengers and goods. The learned Counsel for the respondents has in this way tried to distinguish the majority decision in the Atiabari Tea Co. case 1 , but he has mainly argued in favour of the view expressed by the learned Chief Justice. On behalf of the interveners, some have supported the majority view with or without modifications and some the other two views. Mr. N. C. Chatterjee appearing on behalf of the Union of India supported the majority view, though the stand taken by the Attorney 1 1961 1. S. C. R. 809. General on behalf of the Union of India in the Atiabari Tea Co. case 1 was somewhat different. Mr. Ranadeb Chaudhuri appearing on behalf of one of the interveners M s. M.A. Tulloch Co. has accepted the majority view with some modifications. He has stated that Art. 301 relates to movement or carriage he has called it the channeling of trade and companymerce. He has, however, tried to reconcile the various provisions in Part XIII by suggesting that there are two companynected but independent subjects dealt with therein one is freedom of movement of trade, and companymerce and in companyrse this, he has described, as channeling of trade, companymerce and intercourse , and the second is protection from discrimination and preference which is number necessarily companynected with movement but may arise from subsidy etc. These are the two ideas which, according to him, inspired the relevant series of articles in Part XIII. On behalf of some of the interveners the argument has been that the freedom declared under Art. 301 is number freedom from such regulatory measures as do number impede trade, companymerce and intercourse but rather facilitate such trade, companymerce and intercourse, e.g. traffic regulations for safeguarding public health, such as, prohibiting the sale of adulterated food etc. This view suggests that in the matter of taxation, such taxes are companypensatory in nature, namely, those levied for the maintenance of roads on which traffic, is to move, do number companye within the restrictions freedom from which is companytemplated by Art. 301. This is the view which Mr. Sikri, Advocate-General of Punjab, has mainly companytended for. Mr, Seervai appearing on behalf of the State of Maharashtra and some other States has companytended that Part XIII of the Constitution is companyfined to such action, legislative or executive, as is taken in relation to any of the entries relating to trade and companymerce in any of the lists in the Seventh Schedule, namely, entries relating to 41 and 42 in list 1 1964 1. S. C. R. 809. I, entry 26 of list II, and entry 33 of list III. The expression throughout the territory of India occurring in Art. 301 has reference, according to this view, to space rather than to movement. According to Mr. Seervai the mode of approach should be to companysider i the position of the States in the Indian Constitution with plenary powers in their respective fields ii the historical background of s. 297 of the Government of India Act, 1935 iii the decisions of the Australian cases upto 1950 when the Constitution of India was made and iv Part XIII of the Constitution as companypared and companytrasted with Part III and Part XII thereof. As to taxation, his companytention is that it does number companye within Part XIII except to the extent mentioned in Art. 304 a . Mr. Lalnarain Sinha appearing for the State of Bihar has supported the view of the learned Chief Justice in Atiabari Tea Co. case 1 though the reasons given by him are somewhat different. His argument has been that Art. 301 secures for trade, companymerce and intercourse throughout the territory of India a qualified freedom from restrictions based on geographical classifications only the freedom thus secured is in regard to barriers in the geographical sense impeding trade, companymerce and intercourse between one State and another or between one territory and another within or without the same State, and also against territorial discriminations in respect of trade, companymerce and intercourse either inter-State or intra-state. With regard to taxation, his companytention is that taxes meant for raising revenue only and called fiscal taxes do number operate as inter-State or inter-territorial barriers number involve any territorial discriminations, and they do number companye within Part XIII. Mr. D. Sahu appearing for the State of Orissa argued that the freedom granted by Art. 301 was companyfined to inter-State barriers, and ii customs-barriers which at one time existed between the Indian States and adjacent 1 1961 1 S.C.R. 809. British Indian territory. According to him, the intraState aspect of the freedom assured by Art. 301 was companyfined to old customs-barriers only which some of the Indian States which have number merged in particular States of the Indian Republic had earlier imposed. Mr. C. B. Agarwala appearing for the State of Uttar Pradesh argued that the subject matter of Art. 301 was trade, companymerce and intercourse, namely the entries relating to trade and companymerce in any of the lists in the Seventh Schedule but the restrictions from which freedom was granted might companye from any direction they might companye from legislative or executive action relating to other entries also. We have tried to summarise above the various stand points and views which were canvassed before us and we shall number proceed to companysider which, according to us, is the companyrect interpretation of the relevant articles in Part XIII of the Constitution. We may first take the widest view, the view expressed by Shah, J., in the Atiabari Tea Co. case 1 a view which has been supported by the appellants and one or two of the interveners before us. This view, we apprehend, is based on a purely textual interpretation of the relevant articles in part XIII of the Constitution and this textual interpretation proceeds in the following way. Article 301 which is in general terms and is made subject to the other provisions of Part XIII imposes a general limitation on the exercise of legislative power, whether by the Union or the States, under any of the topics-taxation topics as well as other topics-enumerated in the three lists of the Seventh Schedule, in order to make certain that trade, companymerce and intercourse thought the territory of India shall be free. Having placed a general limitation on the exercise of legislative powers by Parliament and the State Legislatures, Art. 302 relaxes that restriction in favour of Parliament by providing that 1 1961 1. S. C. R. 809. authority may by law impose such restrictions on the freedom of trade, companymerce or intercourse between one State and another or within any part the territory of India as may be required in the public interest. Having relaxed the restriction in respect of Parliament under Art. 302, a restriction is put upon the relaxation by Art. 303 1 to the effect that Parliament shall number have the power to make any law giving any preference to any one State over another or discriminating between one State and another by virtue of any entry relating to trade and companymerce in lists I and III of the Seventh Schedule. Article 303 1 which places a ban on Parliament against the giving of preferences to one State over another or of discriminating between one State and another, also provides that the same kind of ban should be placed upon the State Legislature also legislating by virtue of any entry relating to trade and companymerce in lists II and III of the Seventh Schedule. Article 303 2 again carves out an exception to the restriction placed by Art. 303 1 on the powers of Parliament, by providing that numberhing in Art. 303 1 shall prevent Parliament from making any law giving preference to one State over another or discriminating between one State and another, if it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. This exception applies only to Parliament and number to the State Legislatures. Article 304 companyprises two clauses and each clause operates as a proviso to Arts. 301 and 303. Clause a of that article provides that the Legislature of a State may impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject, so, however, as number to discriminate between goods so imported and goods so manufactured or produced. This clause, therefore, permits the levy on goods imported from sister States any tax which similar goods manufactured or produced in that State are subject to under its taxing laws. In other words, goods imported from sister States are placed on a par with similar goods manufactured or produced inside the State in regard to State taxation within the State allocated field. Thus the States in India have full power of imposing what in American State legislation is called the use tax, gross receipts tax etc., number to speak of the familiar property tax, subject only to the companydition that such tax is imposed on all goods of the same kind produced or manufactured in the taxing State, although such taxation is undoubtedly calculated to fetter interState trade and companymerce. As was observed by Patinjali Sastri, C.J., in State of Bombay v. United Motors 1 the companymercial unity of India is made to give way before the State power of imposing any number-discriminatory tax on goods imported from sister States. Now cl. b of Art. 301 provides that numberwithstanding anything in Art. 301 or Art. 303, the Legislature of a State may by law impose such reasonable restrictions on the freedom of trade, companymerce or intercourse with or within that State as may be required in the public interest. The proviso to el. b says that numberbill or amendment for the purpose of cl. b shall be introduced or moved in the Legislature of a State without the previous sanction of the President. This provision appears to be the State analog to the Union Parliaments authority defined by Art. 302, in spite of the omission of the word reasonable before the word restrictions in the latter article. Leaving aside the prerequisite of previous Presidential sanction for the validity of State legislation under cl. b provided in the proviso thereto, there are two important differences between Art. 302 and Art. 301 b which require special mention. The first is that while the power of Parliament under 1 1953 S.C.R. 1069. Art. 302 is subject to the prohibition of preferences and discriminations decreed by Art. 303 1 unless Parliament makes the declaration companytained in Art. 303 2 , the States power companytained in Art. 304 b is made expressly free from the prohibition companytained in Art. 303 1 , because the open- ing words of Art. 304 companytain a number obstante clause both to Art. 301 and Art. 303. The second difference springs from the fact that while Parliaments power to impose restrictions under Art. 302 upon freedom of companymerce in the public interest is number subject to the requirement of reasonableness, the power of the States to impose restrictions on the freedom of companymerce in the public interest under Art. 304 is subject to the companydition that they are reasonable. On the basis of the aforesaid textual companystruction, which is perhaps companyrect so far as it goes, the view expressed is that the freedom granted by Art. 301 is of the widest amplitude and is subject only to such restrictions as are companytained in the succeeding articles in Part XIII. But even in the matter of textual companystruction there are difficulties. One of the difficulties which was adverted to during the Constituent Assembly debates related to the somewhat indiscriminate or inappropriate use of the expressions subject to and numberwithstanding in the articles in question. Article 302, as we have seen, makes a relaxation in favour of Parliament. Article 303 again imposes a restriction on that relaxation numberwithstanding anything in Article 302 but Art. 303 relates both to Parliament and the State Legislature, though Art. 302 makes numberrelaxation in favour of the State Legislature. The number obstante clause in Art. 303 is, therefore, somewhat inappropriate. Clause 2 of Art. 303 carves out an exception from the restriction imposed on Parliament by cl. 1 of Art. 303. But again cl. 2 relates only to Parliament and number to the State Legislature even though cl. 1 relates to both. Article 304 again begins with a number obstante clause mentioning both Art. 301 and Art. 303, though Art. 304 relates only to the Legislature of a State. Article 303 relates to both the State Legislature and Parliament and again the number obstante clause in Art. 304 is somewhat inappropriate. The fact of the matter is that there is such a mix up of exception upon exception in the series of articles in Part XIII that a purely textual interpretation may number disclose the true intendment of the articles. This does number mean that the text of the articles, the words used therein, should be ignored. Indeed, the text of the articles is a vital companysideration in interpreting them but we must at the same time remember that we are dealing with the Constitution of a companyntry and the inter-connection of the different parts of the companystitution forming part of an integrated whole must number be lost sight of. Even textually, we must ascertain the true meaning of the word free occurring in Art. 301. From what burdens or restrictions is the freedom assured ? This is a question of vital importance even in the matter of companystruction. In s. 92 of the Australian Constitution the expression used was absolutely free and repeatedly the question was posed as to what this freedom meant. We do number propose to recite the somewhat checkered history of the Australian decisions in respect of which Lord Porter, after a review of the earlier cases, said in Commonwealth of Australia v. Bank of New South Wales 1 that in the labyrinth of cases decided under s. 92 there was numbergolden thread. What is more important for our purpose is that he expressed the view that two general propositions stood out from the decisions i that regulation of trade, companymerce and intercourse among the States is companypatible with its absolute freedom, and ii that s. 92 of the Australian Constitution is violated only when a legislative or 1 1950 A.C. 235, executive act operates to restrict such trade, companymerce and intercourse directly and immediately as distinct from creating some indirect or inconsequential impediment which may fairly be regarded as remote. Lord Porter admitted that in the application of these general propositions, in determining whether an enactment is regulatory or something more or, whether a restriction is direct or only remote or incidental, there cannot fail to be differences of opinion. It seems clear, however, that since the companyception of freedom of trade, companymerce and intercourse in a companymunity regulated by law presupposes some degree of restriction upon the individual, that freedom must necessarily be delimited by companysiderations of social orderliness. In one of the earlier Australian decisions Duncan v. The State of Queensland 1 , Griffith, C.J., said But the word free does number mean extra legem, any more than freedom means anarchy. We boast of being an absolutely free people, but that does number mean that we are number subject to law. p. 573 As the language employed in Art. 301 runs unqualified the Court, bearing in mind the fact that provision has to be applied in the working of an orderly society, has necessarily to add certain qualifications subject to which alone that freedom may be exercised. This point has been very lucidly discussed in the dissenting opinion which Fullagar, J., wrote in Mc Carter v. Brodie 2 , an opinion which was substantially approved by the Privy Council in Hughes and Vale Proprietary Ltd. v. State of New South Wales 3 . The learned Judge gave several examples to show the distinction between what was merely permitted regulation and what true interference with freedom of trade and companymerce. He pointed out that in the matter of motor vehicles 1 1916 22 C.L.R. 556 2 1950 80 C.L.R. 432. 3 1955 A.C. 241. most companyntries have legislation which requires the motor vehicle to be registered and a fee to be paid on registration. Every motor vehicle must carry lamps of a specified kind in front and at the rear and in the hours of darkness these lamps must be alight if the vehicle is being driven on the road, every motor vehicle must carry a warning device, such as a horn it must number be driven at a speed or in a manner which is dangerous to the public. In certain localities a motor vehicle must number be driven at more than a certain speed. The weight of the load which may be carried on a motor vehicle on a public highway is limited. Such examples may be multiplied indefinitely. Nobody doubts that the application of rules like the above does number really affect the freedom of trade and companymerce on the companytrary they facilitate the free flow of trade and companymerce. the reason is that these rules cannot fairly be said to impose a burden on a trader or deter him from trading it would be absurd, for example, to suggest that freedom of trade is impaired or hindered by laws which require a motor vehicle to keep to the left of the road and number drive in a manner dangerous to the public. If the word free in Art. 301 means freedom to do whatever one wants to do, then chaos may be the result for example, one owner of a motor vehicle may wish to drive on the left of the road while another may wish to drive on the right of the road. If they companye from opposite directions, there will be an inevitable clash. Another class of examples relates to making a charge for the use of trading facilities, such as, roads, bridges, aerodromes etc. The companylection of a toll or a tax for the use of a road or for the use of a bridge or for the use of an aerodrome is numberbarrier or burden or deterrent to traders who, in their absence, may have to take a longer or less companyvenient or more expensive route. such companypensatory taxes are numberhindrance to anybodys freedom so long as they remain reasonable but they companyld of companyrse be companyverted into a hindrance to the freedom of trade. If the authorities companycerned really wanted to hamper anybodys trade, they companyld easily raise the amount of tax or toll to an amount which would be prohibitive or deterrent or create other impediments which instead of facilitating trade and companymerce would hamper them. It is here that the companytrast, between freedom Art. 301 and restrictions Arts. 302 and 304 clearly appears that which in reality facilitates trade and companymerce is number a restriction, and that which in reality hampers or burdens trade and companymerce is a restriction. It is the reality or substance of the matter that has to be determined. It is number possible a priori to draw a dividing line between that which would really be a charge for a facility provided and that which would really be a deterrent to a trade but the distinction if it has to be drawn, is real and clear. For the tax to become a prohibited tax it has to be a direct tax the effect of which is to hinder the movement part of trade. So long as a tax remains companypensatory or regulatory it cannot operate as a hindrance. The most serious objection to the widest view canvassed before us is that it ignores altogether that in the companyception of freedom of trade, companymerce and intercourse in a companymunity regulated by law freedom must be understood in the companytext of the working of an orderly society. The widest view proceeds on the footing that Art. 301 imposes a general restriction on legislative power and grants a freedom of trade, companymerce and intercourse in all its series of operations, from all barriers, from all restrictions, from all regulation, and the only qualification that is to be found in the article is the opening clause, namely, subject to the other provisions of Part XIII. This in actual practice will mean that if the State Legislature wishes to companytrol or regulate trade, companymerce and intercourse in such a way as to facilitate its free movement, it must yet proceed to make a law under Art. 304 b and numbersuch bill can be introduced or moved in the Legislature of a State without the previous sanction of the President. The practical effect would be to stop or delay effective legislation which may be urgently necessary. Take, for example, a case where in the interests of public health, it is necessary to introduce urgently legislation stopping trade in goods which are deleterious to health, like the trade in diseased potatoes in Australia. If the State Legislature wishes to introduce such a bill, it must have the sanction of the President. Even such legislation as imposes traffic regulations would require the sanction of the President. Such an interpretation would, in our opinion, seriously affect the legislative power of the State Legislatures which power has been held to be plenary with regard to subjects in list 11. The States must also have revenue to carry out their administration and there are several items relating to the imposition of taxes in list The Constitution-makers must have intended that under those items the States will be entitled to raise revenue for their own purposes. If the widest view is accepted, then there would be for all practical purposes, an end of State autonomy even within the fields allotted to them under the distribution of powers envisaged by our Constitution. An examination of the entries in the lists of the Seventh Schedule to the Constitution would show that there are a large number of entries in the State list list II and the Concurrent list list III under which a State Legislature has power to make laws. Under some of these entries the State Legislature may impose different kinds of taxes and duties, such as property tax,, sales tax, excise duty etc., and legislation in respect of any one of these items, may have an indirect effect on trade and companymerce. Even laws other than taxation laws, made under different entries in the lists referred to above, may indirectly or remotely affect trade and companymerce. If it be held that every law made by the Legislature of a State which has repercussion on tariffs, licensing marketing regulations, price-control etc., must have the previous sanction of the President, then the Constitution in so far as it gives plenary power to the States and State Legislatures in the fields allocated to them would be meaningless. In our view the companycept of freedom of trade, companymerce and intercourse postulated by Art. 301 must be understood in the companytext of an orderly society and as part of a Constitution which envisages a distribution of powers between the States and the Union, and if so understood, the companycept must recognise the need and the legitimacy of some degree of regulatory companytrol, whether by the Union or the States this is irrespective of the restrictions imposed by the other articles in Part XIII of the Constitution. We are, therefore, unable to accept the widest view as the companyrect interpretation of the relevant articles in Part XIII of the Constitution. We proceed number to deal with another interpretation of the relevant provisions in Part XIII this interpretation may be characterised as the narrow interpretation. According to this interpretation taxing laws are governed by the provisions of Part XII of the Constitution and except Art. 304 a numbere of the other provisions of Part XIII extend to taxing laws. An additional argument is that the provisions of Part XIII apply only to such legislation as is made under entries in the Seventh Schedule which deal with trade, companymerce and intercourse. According to this argument entry 42 in list 1, which refers to inter. State trade and companymerce, entry 26 in list II which deals with trade and companymerce within the State subject to the provisions of entry 33 in list III, and entry 33 in list III which deals with trade and companymerce as specified therein, are the only entries legislation relating to which attracts the provisions of Part XIII, and legislation on other topics is number affected by these provisions. In support argument assistance has been sought from the heading of Part XIII and from the use of the expression subject to in Art.301. It has been pointed out that the title of Part XIII is trade, companymerce and an intercourse intercourse, it is stated, means companymercial intercourse there being numberseparate legislative entry in any of the three list relating to intercourse and the word throughout has reference to space rather than to movement. The expression ,subject to it is stated, means companyditional upon, thus companynecting the provisions of Art. 303 with the provisions of Art. 301. Article 303 specifically uses the expression by virtue of any entry relating to trade and companymerce in any of the lists in the Seventh Schedule. It is argued that by reason of the companynection between Art. 301 and Art. 303, the words by virtue of any entry relating to trade and companymerce etc. must be read into Art. 301 also so that Art. 301 will then be companystrued as a fetter on the companymerce power i. e., the power given to the Legislature to make laws under entries relating to trade and companymerce only. As to taxation being out of the provisions of Part XIIL of the Constitution except for Art. 304 a , the argument is that we must look to the historical background of s. 297 of the Government of India Act, 1935, and Arts. 274, 276 and 285 to 288 in Part XII of the Constitution. It is pointed out that the power to tax is an incident of sovereignty and it is divided between the Union and the States under the Constitution Part XII of the Constitution deals with several aspects of taxation and all the restrictions on the power to tax are companytained in Part XII which, according to this interpretation, is self companytained. Therefore, so it is argued, the freedom guaranteed by Art.301 does number mean freedom from taxation, because taxation is number a restriction within the meaning of the relevant articles in Part XIII. It would appear from what we have stated above that this interpretation companysists of two main parts one part is that taxation simpliciter is number within the terms of Art. 301 and the second part is that Art. 301 must take companyour from the provisions of Art. 303 which, it is said, is restricted to legislation with respect to entries relating to trade and companymerce in any of the lists in the Seventh Schedule, In Atiabari Tea Co. Case 1 this Court deal with the companyrectness or otherwise of this narrow interpretation and by the majority decision held against it. The majority judgement in the Atiabari Tea Co. Case 1 deals, with the arguments advanced in support of the interpretation in detail and as we are substantially in agreement with the reasons given in that judgment, we do number think that any useful purpose would be served by repeating them. It is enough to point out that though the power of levying tax is essentially for the very existence of government, its exercise may be companytrolled by companystitutional provisions made in that behalf. It cannot be laid down as a general proposition that the power to tax is outside the purview of any companystitutional limitations. We have carefully examined the provisions in Part XII of the Constitution and are unable to agree that those provisions exhaust all the limitations on the power to impose a tax. The effect of Art. 265 was companysidered in the majority decision and it was pointed out that the power of taxation under our Constitution was subject to the companydition that numbertax shall be levied or companylected except by authority of law. Article 245 which deals with the extent of laws made by Parliament and by the Legislatures of States expressly states that the power of Parliament and of the State Legislatures to make laws is subject to the provisions of this Constitution. The expression subject to the provisions of this Constitution is surely wide enough to take in 1 1961 1. S. C. R. 809. the provisions of both Part XII and Part XIII. In view of the provisions of Art, 245, we find it difficult to accept the argument that the restrictions in Part XIII of the Constitution do number apply to taxation laws. As to the argument that Art. 301 must take companyour from Art. 303, we are unable to accept as companyrect the argument that the provisions of Art. 303 must delimit the general terms of Art. 301. It seems to us that so far as Parliament is companycerned, Art. 303 1 carves out an exception from the relaxation given in favour of Parliament by Art. 302 the relaxation given by Art. 302 is itself in the nature of an exception to the general terms of Art. 301. It would be against the ordinary canons of companystruction to treat an exception or proviso as having such a repercussion on the interpretation of the main enactment so as to exclude from it by implication what clearly falls within its express terms. After carefully companysidering the arguments advanced before us we have companye to the companyclusion that the narrow interpretation canvassed for on behalf of the majority of the State cannot be accepted, namely, that the relevant articles in Part XIII apply only to legislation in respect of the entries relating to trade and companymerce in any of the lists of the Seventh Schedule. But we must advert here to one exception which we have already indicated in an earlier part of this judgment. Such regulatory measures as do number impede the freedom of trade, companymerce and intercourse and companypensatory taxes for the use of trading facilities are number hit by the freedom declared by Art. 301. They are excluded from the purview of the provisions of Part XIII of the Constitution for the simple reason that they do number hamper trade, companymerce and intercourse but rather facilitate them. This disposes of two of the main interpretations which have been canvassed before us. We accept neither the widest interpretation number the narrow interpretation for the reasons which we have already indicated. It remains number to companysider some of the other interpretations which have been canvassed before us. Mr. Lalnarain Sinha has in substance companytended that Art. 301 is restricted to freedom from geographical barriers only Mr. Sahu has companytended that Art. 301 is companyfined to i interstate barriers, and ii customs-barriers which at one time existed between the Indian States and the adjacent British Indian territory. In our opinion both these interpretations proceed on a somewhat narrow basis and are number justified by the general words used in Art. 301 and the other relevant articles in Part XIII of the Constitution. In our opinion the ambit of the relevant articles in Part XIII is wider than what these interpretations assume it to be. While on this point it may be advisable to refer to the companytrast between Art. 19 in Part III and Art. 301 in Part XIII of the Constitution. Article 19 guarantees to all citizens certain rights which are companypendiously stated to be the right to freedom two such rights are i to move freely throughout the territory of India and ii to carry on any occupation, trade or business. The right to move freely throughout the territory of India is subject to reasonable restrictions in the interests of the general public or for the protection of any scheduled tribe. The right to carry on any occupation, trade or business is subject to reasonable restrictions in the interests of the general public and in particular to any law relating to the carrying on by the State, of any trade, business etc., whether to the exclusion, companyplete or partial, of citizens or otherwise. The first companytrast between Art. 19 and Art. 301 is that Art. 19 guarantees the right to freedom to a citizen whereas freedom granted by Art. 301 is number companyfined to citizens. Another distinction which has been drawn is that Art. 19 looks at the right from the point of view of an individual, whereas Art. 301 looks at the matter from the point of freedom of the general volume of trade, companymerce and intercourse. We do number think that this distinction, if any such distinction at all exists, is material in the present cases, because an individual trade may companyplain of a violation of his freedom guaranteed under Art. 19 1 g and he may also companyplain if the freedom assured by Art. 301 has been violated. In a particular set of circumstances the two freedoms need number be the same or need number companylesce. In some of the Australian decisions a distinction was sought to be drawn between the free flow of the same volume of inter-State trade and the individuals right to carry on his trade in more than one State and it was argued that s. 92 of the Australian Constitution related to the free flow of the volume of trade as distinguished from an individuals right to carry on his trade. Such a distinction was negatived and the Privy Council pointed out that the redoubtable Mr. James who fought many a battle for the freedom, of his trade and occupation was after all an individual. Another aspect of this companytrast between Art. 19 and Art. 301 of the Constitution which has been adverted to before us is this it has been argued that if a law imposing a restriction on the right of a citizen to carry on his trade or business is justified under el. 6 of Art. 19 as being in the interests of the general public, that law cannot again be impeached as being violative of Art. 301 otherwise, so it is argued, the Constitution will be taking away by Art. 301 what it has granted by cl. 6 of Art. 19. The argument is that trade or business must be such as a person is entitled to carry on before be can companyplain of any impediment to the freedom of that trade or business. This is an aspect of the problem which may require a more detailed and careful examination in an appropriate case. If we across geographical barriers. We are for this reason unable to accept Mr. Sinhas companytention. Mr. Ranadeb Chaudhuri appearing on behalf of one of the interveners accepted the majority view that Art. 301 was aimed at the movement aspect of trade, companymerce and intercourse this lie called the channelling. of trade, companymerce and intercourse. But he raised the question of subsidy and said that Art. 303 which related to discrimination and preference also aimed at the mischief of subsidy which might be given to a State by way of preference or discrimination that mischief, he said, would companye within Art. 303 even if it did number relate to the movement aspect of trade and companymerce. We are number companycerned in the present cases with the question of subsidy and need number, therefore, companysider the argument of Mr. Ranadeb Chaudhuri with regard to it. As to the word ,intercourse there bar, also been some argument before us. On behalf of some of the States it has been companytended that the word ,intercourse in the companytext in which it occurs in Art. 301 means companymercial intercourse. On behalf of the appellants it hat been argued that the word ,intercourse takes in number merely trade and companymerce in the strict sense, but also activities, such as, movement of persons for the purpose of friendly association with one another, telephonic companymunications etc. For the purpose of the cases which we are companysidering numberhing very much turns upon whether we take the word intercourse in a wide sense or in a narrow sense. Even taking the word ,intercourse in a wide sense, the question will still be what does the word ,free mean? Does it mean free from all regulation which is necessary for an orderly society? We have already stated that the word free in Art. 301 cannot be given that wide meaning. We have, therefore, companye to the companyclusion that neither the widest interpretation number the narrow interpretations canvassed before us are acceptable. The interpretation which was accepted by the majority in the Atiabari Tea Co. case 1 is companyrect, but subject to this clarification. Regulatory measures or measures imposing companypensatory taxes for the s use of trading facilities do number companye within the purview of the restrictions companytemplated by Art. 301 and such measures need number companyply with the requirements of the proviso to Art. 304 b of the Constitution. Now the question is, do the relevant provisions of the Act read with the Schedules fall within what we have called permitted regulation which does number really or materially affect freedom of trade, companymerce and intercourse or do the taxes imposed by the relevant provisions of the Act read with the Schedules companye within the category of companypensatory taxes which are numberhindrance to freedom of trade, companymerce and intercourse, being taxes for the use of trading facilities in the shape of roads, bridges, etc. In an earlier part of this judgment we have quoted s. 4 which is the charging section. That section makes it quite clear that the tax is imposed on a motor vehicle which shall be used in any public place or kept for use in Rajasthan the tax is to be at appropriate rates specified in the Schedules to the Act and save as specified in the Act the tax shall be payable annually numberwithstanding that the motor vehicle may, from time to time, cease to be used. Section 7 says in effect that if the motor vehicle in respect of which such tax has been paid has number been used for a companytinuous period of number less than three months, then the owner shall be entitled to a refund of an amount equal to 1/12 of the annual rate of the tax paid. It appears from the Schedules that a vehicle other than a transport vehicle is charged with a companysolidated tax, according as the motor vehicle is fitted with pneumatic tyres or number. The rate of tax varies 1 1961 1. S. C. R. 809. according to the nature of the vehicle, whether it is a motor cycle, or a motor tricycle drawing a tractor, or a side car etc. Schedule If relates to transport vehicles with again are classified into various categories, those fitted with pneumatic tyres and those number so fitted, motor vehicles plying for companyveyance of passengers and light personal luggage goods vehicles plying under public carriers permit etc. The quantum of tax fixed with regard to the seating capacity in some cases and loading capacity in other cases. The tax on some goods vehicles is fixed per day or per annum. Schedule III relates the goods vehicles only. A classification is again made between different classes of goods vehicles fitted with pneumatic tyres, companyveying a trailer etc. The tax fixed is a tax for use per day. Schedule IV deals with vehicles plying with a private carriers permit. Here again a classification is made of vehicles fitted with pneumatic tyres, with a general permit for use in Rajasthan and those with a permit for lying within the limits of one region only. The tax varies according to the loading capacity etc. An examination of these provisions indicates clearly enough that the taxes imposed are really taxes on motor vehicles which use the roads in Rajasthan or are kept for use therein, either throughout the whole area or parts of it. The tax is payable by all owners of motor vehicles, traders or otherwise. In dealing with the question whether these taxes were reasonable restrictions on the right of individuals to move freely throughout the territory of India etc. the High Court said In this companynection, it is well to remember that the State maintains old roads, and makes new ones, and these roads are at the disposal of those who use motor vehicles either for private purposes or for trade or companymerce. This naturally companyts the State. It has, therefore, to find funds for making new roads and maintenance of those that are already in existence. These funds can only the raised through taxation, and if the State taxes the users of motor vehicles in order to make and maintain roads, it can hardly be said that the State is putting unreasonable restrictions on the individuals right to move freely throughout the territory of India, or to practice any profession or to carry on any occupation, trade or business. We have looked into figures of income and expenditure in this companynection of the Rajasthan State to judge whether this taxation is reasonable. We-find that in 1952-53 income from motor vehicles taxation under the Act was in neighbourhood of 34 lakhs. In that very year, the expenditure on new roads and maintenance of old roads was in the neighbourhood of 60 lakhs. In 1954-55, the estimated income from the tax was 35 lakhs, while the estimated expenditure was over 65 lakhs. It is obvious from these figures that the State is charging from the users of motor vehicles something in the neighbourhood of 50 of the companyt it has to incur in maintaining and making roads. The High Court further pointed out that in the case of private motor cars the tax was Rs. 12 per seat and for an ordinary five-seater car, it came to Rs. 60 per year. On payment of this amount the owner of the motor vehicle companyld use the car anywhere in Rajasthan and the roads were open to him. In the case of a goods vehicle, the tax was Rs. 2000 per year for a goods vehicle with a load capacity of over five tons i.e. over 135 maunds. Assuming that such a vehicle companyld be reasonably used for 200 days in a year, the tax amounted to Rs. 10 per day for about 140 maunds of goods carried over any length of the road in Rajasthan. This worked out to about Rs. 1 for 14 maunds i. e. almost an anna a maund. If the Act and the Schedules appended thereto are examined in this manner, it will be numbericed that the tax imposed is really a tax for the use of the roads in Rajasthan and it cannot be said that it hinders the free movement of trade, companymerce and intercourse. The taxes are companypensatory taxes which instead of hindering trade, companymerce and intercourse facilitate them by providing roads and maintaining the roads in a good state of repairs. Whether a tax is companypensatory or number cannot be made to depend on the preamble of the statute imposing it. Nor do we think that it would be right to say that a tax is number companypensatory because the precise or specific amount companylected is number actually used to providing any facilities. It is obvious that if the preamble decided the matter, then the mercantile companymunity would be helpless and it would be the easiest thing for the Legislature to defeat the freedom assured by Art. 341 by stating in the preamble that it is meant to provide facilities to the tradesmen. Likewise actual user would often be unknown to trades. men and such user may at some time be companypensatory and at others number so. It seems to us that a working test for deciding whether a tax is companypensatory or number is to enquire whether the trades people are having the use of certain facilities for the better companyduct of their business and paying number patently much more than what is required for providing the facilities. It would be impossible to judge the companypensatory nature of a tax by a meticulous test, and in the nature of things that cannot be done. Nor do we think that it xi ill make any difference that the money companylected from the tax is number put into a separate fund so long as facilities for the trades people who pay the tax are provided and the expenses incurred in providing them are born by the State out of whatever source it may be. In the instruments of companymerce that have been mentioned is numberviolation of the freedom of inter-State trades lies in the relation to inter-state trade which their nature and purpose give them. The reason why public authority must maintain them is in order that the companymerce may use them, and so for the companymerce to bear or companytribute to the companyt of their upkeep can involve numberdetraction from the freedom of companymercial inter. companyrse between States. p. 43 The learned Chief Justice reiterated the same view in Commonwealth Freighters Property Ltd. v. Sneddon 1 We have, therefore, companye to the companyclusion that the Act does number violate the provisions of Art. 301 of the Constitution and the taxes imposed under the Act are companypensatory taxes which do number binder the freedom of trade, companymerce and intercourse assured by that article. The taxes imposed were, therefore, legal and the High Court rightly dismissed the writ petitions filed by the appellants. In the result the appeals fail and are dismissed with companyts one hearing fee. SUBBA RAO, J.-I agree with the companyclusion arrived at by my learned brother, S. K. Das, J., but, in view of the importance of the question raised, I would prefer to give my own reasons for the companystruction of the relevant provisions of Part XIII of the Constitution. The question in these appeals is, what is the ambit of the freedom enshrined in Art. 301 of the Constitution and what are the limitations implicit in it or envisaged in the succeeding articles ? The companyflicting and sometimes mutually destructive arguments of learned companynsel appearing for the various parties and interveners, omitting the 1 1959 102 C. L. R. 280, 291. immaterial variations, may companyveniently be placed under following heads 1 Trade, companymerce and intercourse is a term of widest amplitude taking in the gamut of activities starting from production or manufacture and ending with the companypletion of a particular companymercial transactions and every restriction imposed by any law or executive action on any part of the said integrated activity would be violative of the freedom under Art. 301. 2 The expression trade, companymerce and intercourse means only transportation in the companyrse of trade across the State or interState barriers, and any law be, it taxation or otherwise, directly and materially affecting the said transportation, would infringe the freedom. 3 The freedom recognized under Art. 301 is only the freedom against geographical barriers between States or intrastate units created by law and laws, including only discriminatory laws of taxation, creating the said barriers would offend against Art. 301. 4 The freedom envisaged by Art. 301 is only a freedom from laws showing preference to one State over another and discrimination between one State and another made only by virtue of entry, 42 of List I entry 26 of List If and entry 33 of List III of the Seventh Schedule to the Constitution. 5 The law of fiscal taxation is entirely outside the domain of freedom declared by Art. 301. All the learned companynsel appearing in the case has agreed, or at any rate numberargument was advanced to the companytrary, that the freedom, whatever may be its companytent or scope on which there is difference of opinion, relates to both inter-State and intra-State trade. Before companysidering the provisions of the said articles, it will be useful to make certain general observations. We have to bear in mind in approaching the problem presented before us that our Constitution was number written on clean slate. Many of the companycepts were borrowed from the Government of India Act or from other Constitutions and adapted to suit the companyditions of our companyntry. We cannot ignore the fact that the Constitution was drafted by persons some of whom had a deep knowledge of the companystitutional problems of other companyntries and therefore, they must be assumed to have had the knowledge of the interpretation put upon certain legal companycepts by the highest tribunals of those companyntries. At the same time, it can be reasonably assumed that they have made a sincere attempt to accept the good and to avoid the defects found by experience in the other companystitutions and also to companyld them to suit our companyditions. Further, a brief survey of the relevant provisions of those companystitutions, which form the background of this article, and the interpretation put on them by the highest tribunals of the respective companyntries would number only be relevant but also be necessary for appreciating the companyrect scope of Art. 301 of our Constitution. Our Constitution provides for a federal structure with a bias towards a Central Government. But real and substantial autonomy was companyferred on the States within the boundaries of the fields chalked out for them. Therefore, in approaching the problem of companystruing the provisions of Part XIII of our Constitution, unless the terms of the provisions of the said Part are clear and unambiguous, it would be the duty of this Court to companystrue them in such a manner as number to disturb the framework of the Constitution. Before I attempt to companystrue the relevant provisions of the Constitution, it would be companyvenient at this stage to companysider briefly the American and Australian law material to the present inquiry. Clause 3 of s. 8 of Art. 1 of the Constitution of the United States of America says that the Congress shall have power to regulate companymerce with foreign nations and among the several States and with the Indian tribes. This clause has two aspects, namely, i it is a source of national power and ii it operates as a curb on state power. This clause gave rise, among others, to two questions, namely, i what was the scope and companytent of the companymerce power? and ii bow to resolve the companyflicts that arose between the, law made by the Congress in exercise of that power and the law made by the State in exercise of its police power, or their powers expressed or implied, when they came into companyflict with each other? An authoritative definition of the word companymerce was given by Marshall, C. J., in Gibbons v. Oden 1 , wherein he observed This would restrict a general term applicable to many objects to one of its significations Commerce, undoubtedly. is traffic but some- thing more-it is intercourse. The decisions of the Supreme Court of the United States of America on the subject are number uniform. Indeed, they have adopted the companymerce power to meet all the demands, namely, economic, companymercial, industrial and transport revolutions of that companyntry. It is number necessary for the purpose of this case to companysider the companyflict or the various nuances of the decision the companycept of companymerce was enlarged or reduced to meet the exigencies of different situations but the companymon thread was that transportation across the borders, either physically or companyceptually, was uniformly held to be a necessary ingredient of the expression companymerce. After numbericing the companyflict, Willis in his book on Constitutional Law, summarizes the latest position thus, at p. 288 today the companyrect definition of companymerce is that it is traffic and companymercial intercourse. This, of companyrse, gives Congress power wherever traffic or intercourse companycerns an inter-State market. When companymerce is properly defined as traffic, and the mental picture is formed, number of an isolated journey across a state boundary line, but of an onward 1 1824 9 Wheat 1 6 L. ed. 23. companyrsing stream of business which knows numberstate lines, which is companystantly fed and as companystantly feeds the streams of production, and which debauches into the inter-state market, then regulations of it by Congress, J. whether taking the form of a prohibition of certain phases of transportation or some other form ceases to be open to the charge of an ulterior intention to usurp their power, because it operates most upon the very subject matter entrusted to Congress or, at most, upon local incidents thereof, the fringe, so to speak, of a nation-spread fabric. In this companytext the following references are instructive Carter v. Carter Coal Company 1 , Kidd v. Pearson 2 , Welton State of Mussouri 3 , Public Utilities Commission v. Landon 4 . It may be stated broadly that in America companymerce means traffic in its operation across the State borders. On the second question some of the American decisions adopted a pragmatic approach to resolve the companyflict. To solve the companyflict that arose between the laws made by the Congress regulating companymerce and those made by the State in exercise of its police power, the Supreme Court of America evolved certain doctrines, such as, original package, ,silence of Congress, preemption, undue and unreasonable burden, and direct and indirect effect. The following decisions dealing with direct and indirect effect on inter-State trade can be usefully referred to in this regard, for, in my view, they afford some guide to resolve the difficulties that might arise under our Constitution M Culloch v. The State of Maryland 5 John T. Hendrick v. The State of Maryland 6 , 1 1936 298 U.S. 238. 80 L. ed.1160. 2 1888 128 U.S. 132 L. ed. 346. 3 1876 91 U.S. 27S 23 L. ed. 347. 4 1919 249 U.S. 2 36 63 L. ed. 577. 5 1819 17 U.S. 316 4 L. ed. 579. 6 1915 235 U.S. 610 59 L. ed. 385, Interstate Busses Corporation v. William H. Blodgett 1 , Interstate Transit v Dick Lindsey 2 , and A. L.A. Schechter Poultry Corporation v. United State of America 3 . The said decisions show that in America the principle accepted was that every restriction imposed by a State law did number offend the companymerce clause, unless it directly affected it, and that even taxation was permissible, if it was for services rendered by the State to promote trade. The Commonwealth of Australia Constitution Act was passed in 1900. At the time that Act was made, the framers of that Act had the background of the evolution of the American law on the companymerce clause. Under that Act, certain defined powers of legislation are companyferred on the Commonwealth in respect of trade and companymerce. Section 51 reads Trade and companymerce with other companyntries and among the States. Section 98 says The power of the Parliament to make laws with respect to trade and companymerce extends to navigation and shipping and to railways the property of any State. Section 99 prohibits the Commonwealth, by any law or regulation of trade, companymerce, or revenue, from giving preference to one State or any part thereof over another State or any part thereof. Section 100 prohibits the Commonwealth from abridging, the right of a State or of the residents therein to the reasonable use of the waters of rivers for companyservation or irrigation. Other legislative powers are companyferred in respect of specific subjects of trade and companymerce, such as, bounties, currency, companynage, bills of exchange, bankruptcy, companyy-rights, customs, excise, etc. Section 92 says On the imposition of uniform duties of customs, trade, companymerce, and intercourse, among the States, whether by means of internal carriage or ocean navigation, shall be 1 1928 276 U.S. 245 72 L. ed. 551. 2 1931 283 U.S. 183 75 L. ed. 953. 3 1935 72 U.S 495 79 L. ed. 1570. absolutely free. Unlike the American Constitution, the Australian Constitution companyfers a legislative power on the Commonwealth Parliament to make laws in respect of trade and companymerce with other companyntries and among the States, and also in respect of certain specific subjects of trade and companymerce and then declares that trade, companymerce and intercourse among the States shall be absolutely free. Unlike the American Constitution, in the Australian Constitution, there is a declaration of freedom of trade, companymerce and intercourse among the States. While in America the expression used is companymerce, in a. 92 of the Australian Constitution the expression, trade, companymerce and intercourse is used. The Australian Constitution Act number only does number provide for any restrictions on the freedom of trade, companymerce and intercourse, but also used an expression of the widest amplitude, viz., absolutely free emphasizing the freedom declared by the section, This section, just like the companymerce clause in the American Constitution, was the subject of judicial scrutiny and companyflict of decision. The interpretation of this sub-section fell to be companysidered in the companytext of marketing, banking and transport legislation. The question raised was whether the freedom of trade, companymerce and intercourse was interfered by the laws made by the State. Paradoxically, the Courts of Australia and, in appeals from some decisions of those Courts, the Privy Council evolved the power to restrict the said freedom by the States from the companycept, of absolute freedom itself. This was necessitated because there were numberstatutory provisions limiting the absolute freedom and, as uncontrolled freedom in the field of interState Commerce may lead to chaos, limitations of the freedom were evolved to save the said freedom The scope of the limitations so evolved would be useful to companystrue the relevant provisions of all Constitution which expressly provides for similar limitations. The scope of the freedom and it limitations are found in the leading decisions on the subject, which throw companysiderable light on the question number raised, and they are Smithers case 1 , W. A. McArthur Ltd. v. The State of Queensland 2 , James v. Commonwealth of Australia 3 Commonwealth of Australia v. Bank of New South Wales 4 . In the aforesaid Australian decisions the expression trade, companymerce, and intercourse among the States has been understood in the widest sense as including trade in all its manifestations involving transportation or movement across the frontiers of the State it also includes number-commercial intercourse. On the second question, some of the leading Australian decisions companytain an interesting and instructive exposition of the companyflict of jurisdiction and useful suggestions for resolving it. In this companytext the following decisions may usefully be companysulted James v. Cowan 5 , Commonwealth of Australia v. Bank of New South Wales 4 ,Hughes and Vale Proprietary Ltd. v. State of New South Wales 6 , Hughes and Vale Private Limited v. The State of New South Wales No. 2 Grannall v. Marrickville Margarine Proprietary Ltd. 8 , Armstrong v. State of Victoria No. 2 9 , Common- wealth Freighters Proprietary Ltd. v. Sneddon 10 . The Australian decisions broadly laid down the following three propositions i the impugned law, whether fiscal or otherwise, shall directly and immediately restrict traffic across the borders before it companyld be said to violate the freedom under a. 92 of the Commonwealth of Australia Constitution Act ii companypensatory measures for the purpose of regulating companymerce are number restrictions on the said freedom and iii when a question arises whether a fiscal statute amounts to a restriction on 1 1912 16 C.L.R. 99. 2 1920 28 C.L.R. 530. 3 1936 A.C. 578. 4 1950 A.C. 235. 5 1930 43 C.L.R. 386. 6 1955 A.C. 241. 7 1956 93 C.L.R. 127. 8 1955 93 C.L.R. 155. 9 1957 99 C.L.R. 28. 10 1959 102 C.L.R. 280. the said freedom, a careful scrutiny of the provisions may rebut the presumption that otherwise may arise that the impugned Act is really a companypensatory measure for the amenities provided or services rendered. The following principles emerge from the foregoing American and Australian decisions 1 Though in American law the companymerce clause only companyfers a power upon the Congress, under the Australian Constitution Act, freedom of trade, companymerce and intercourse is enshrined in s. 92 as a cherished freedom the companyposite expression in s. 92 of the said Act was borrowed from the American decisions. 2 The expression trade companymerce and intercourse, though it is number an expression of art, has acquired a definite significa- tion in the companystitutional law of both the companyntries, namely, it is traffic and companymercial intercourse companycerning an inter-State market, or, to put it differently, the free flow or movement of trade across the State borders. 3 The said freedom should number ,be infringed by any law, whether taxation or otherwise or by executive action. 4 The restriction may be before or after movement it may be a prior restraint or a subsequent burden. 5 The word freedom does number mean anarchy, but assumes transactions based on law and carried out under the superintendence and direction of law such laws are, a laws of companytract, property, tort, etc., b regulations for preserving and maintaining the freedom, such as, police regulations about safety, speed, lighting, rule of the road, etc., e laws providing for services and for companypensation for services rendered, namely, the companystruction and maintenance of wharfs, roads, aerodromes, etc., and the levy of taxes to meet the expenditure incurred in companynection therewith the said laws are number restrictions on the said freedom but only facilities to promote the same. Now, let us look at the provisions of Art. 301 of the Constitution. The article reads Subject to the other provisions of this Part, trade, companymerce and intercourse throughout the territory of India shall be free. Three groups of words in the said article, in their juxtaposition and interaction, furnish the key to the problem, and they are i trade, companymerce and intercourse, throughout the territory of India, and iii shall be free. The expression trade, companymerce and intercourse is a companyposite one and has received, as already numbericed, the fullest judicial attention from the highest companyrts of America and Australia though they may number be words of art, they have acquired a secondary meaning or significance. I shall accept the meaning acquired by that expression by the gradual evolution of law in those companyntries. Now, let us analyse the words shall be free. Three questions occur to ones mind in regard to this, namely, i what is free ? ii free from what ? and iii where is it free ? As I have already indicated, the said companyposite expression means trade across the borders what is free is that trade. It is implicit in the companycept of freedom that there will be obstructions to it. Such obstructions or barriers may be, in the present companytext, to the freedom to trade across the borders. Article 301 provides for freedom from the said barriers or impediments in effect operating as barriers. This freedom from barriers cannot operate in vacuum and must be limited by space. A barrier may be put up between two States at the boundary of the States or between two districts, two taluks, two towns or between two parts of a town. The barrier may be at a particular point at a boundary or might take the form of a companytinuous impediment till the boundary is crossed. It may take different forms. The restrictions may be before or after movement. It may be a prior restraint or a subsequent burden. But the essential idea is that a barrier is an obstacle put across trade in motion at a particular point or different points. The expression shall be free declares in a mandatory from a freedom of such transport or movement from such barriers. The next question is, where is it free ? The second expression throughout the territory of India demarcates the extensive field of operation of the said freedom. The said intercourse shall be free throughout the territory of India. The use of the words territory of India instead of among the several States found in the American Constitution or among the States found in the Australian Constitution, removes all inter-State or intra-State barriers and brings out the idea that for the purpose of the freedom declared, the whole companyntry is one unit. Trade cannot be free throughout the territory of India, if there are barriers in any part of India, be it inter-State or intra-State. So long as there is impediment to that freedom, its nature or extent is irrelevant. The difference will be in degree and number in quality. The freedom declared under Art. 301 may be defined as a right to free movement of persons or things, tangible or intangible, companymercial or number-commercial, unobstructed by barriers, inter-State or intra-State or any other impediment operating as such barriers. To State it differently all obstructions or impediments whatever shape they may take, to the free flow or movement of trade, or number-commercial intercourse, offend Art. 301 of the Constitution except in so far as they are saved by the succeeding provisions. But we are number companycerned in this case with number-commercial intercourse. The next question is, what is the companytent of the companycept of freedom ? The word freedom is number capable of precise definition, but it can be stated what would infringe or detract from the said freedom. Before a particular law can be said to infringe the said freedom, it must be ascertained whether the impugned provision operates as a restriction impeding the free movement of trade or only as a regulation facilitating the same. Restrictions obstruct the freedom, whereas regulations promote it. Police regulations, though they may superficially appear to restrict the freedom of movement, in fact provide the neces- sary companyditions for the free movement. Regulations such a provision for lighting, speed, good companydition of vehicles, timings, rule of the road and similar others, really facilitate the freedom of movement rather than retard it. So too, licensing system with companypensatory fees would number be restrictions but regulatory provisions for without it, the necessary lines of companymunication, such as roads, waterways and air-ways cannot effectively be maintained and the freedom declared may in practice turn out to be an empty one. So too, regulations providing for necessary services to enable the free movement of traffic, whether charged or number, cannot also be described as restrictions impeding the freedom. To say all these is number to say that every provision companyched in the form of regulation but in effect and substance a restriction can pass off as a permissible regulation. It is for the Court in a given case to decide whether a provision purporting to regulate trade is in fact a restriction on freedom. If it be a companyourable exercise of power and the regulatory provision in fact a restriction, unless the said provision is one of the permissible restrictions under the succeeding articles, it would be struck down. This view is companysistent with the principles laid down by the Australian High Court and the Privy Council in the companytext of interpretation of the words absolutely free in a. 92 of the Commonwealth of Australia Constitution Act, which is more emphatic than the word free in Art. 301 of our Constitution. The Constitution companyfers on the Parliament and the State Legislatures extensive powers to make laws in respect of various matters. A glance at the entries in the Lists of the Seventh Schedule to the Constitution would show that every law so made may have some repercussion on the declared freedom. Property tax, Profession tax, sales-tax, excise duty and other taxes may all have an indirect effect on the free flow of trade. So too, laws, other than those of taxation,made by virtue of different entries in the Lists, may remotely affect trade. Should it be held that any law which may have such repercussion must either be passed by the Parliament or by the State Legislature with the previous companysent of the President, there would be an end of provincial autonomy, for in that event, with some exceptions, all the said laws should either be made by the Parliament or by the State Legislature with the companysent of the Central Executive Government. By so companystruing, we would be making the Legislature of a State elected on adult franchise the handmaid of the Central executive. We would be re-writting the Constitution and introducing by sidewind autocracy in the field of legislation allotted to the States, while our Constitution has provided meticulously for democracy. Therefore, any companystruction which may bring about such an unexpected result shall be avoided, unless the Constitution companypels us by express words to do so. There are admittedly numbersuch words of companypulsion. At, the same time it is also difficult to accept the argument advanced by the States that the laws made under entry 42 of List I, entry 26 of List II and entry 33 of List III, of the Seventh Schedule to the Constitution only are subject to that freedom for firstly, the article does number restrict the freedom to the area companyered by those entries, and, secondly, laws made under the other entries may more effectively and directly affect the movement of trade. If a law directly and immediately imposes a tax for general revenue purposes on the movement of trade, it would be violating the freedom. On the other hand, if the impact is indirect and remote, it would be unobjectionable. The Court will have to ascertain whether the impugned law in a given case affects directly the said movement or indirectly and remotely affects it. At this stage, an argument elaborated by Mr. Lalnarain Sinha may also be numbericed. The learned Advocate said that the filed occupied by Art. 19 of Part III of the Constitution and that occupied by Part XIII thereof are distinct, that Art. 19 deals generally with freedom of trade and that Art. 301 with discriminatory barriers and that fiscal statutes companyld number be restrictions under Art. 19 and, therefore, they companyld number equally be restrictions under Art. 301. He would say that whatever might be said of regulatory taxes or ,destructive ones. fiscal taxes are always in public interest and it is number possible for a companyrt to decide whether a particular tax is reasonable or number. On this premises, the argument proceeds, a reasonable restriction is a restriction, the reasonableness whereof can be ascertained by companyrt, and in a case where the reasonableness of a particular restriction is impossible of ascertainment by a companyrt, such as a law fixing a rate, the Constitution must be deemed to have released such a restriction from the impact of the companycept of the freedom. This is an argument in reverse gear. The freedom declared by the Constitution cannot be companytrolled by an involved process of reasoning. It is number permissible to limit the companytent of the freedom by the criterion of a companyrts ability to ascertain the reasonableness of a restriction imposed thereon. What is guaranteed to a citizen by the Constitution is a fundamental right to carry on business. If cl. 5 of Art. 19 were number in the Constitution, every restriction on that right, be it by a law of taxation or otherwise, which limited the freedom, would certainly violate the same. The fact that the Constitution saves laws made imposing reasonable restrictions on the freedom has numberrelevance to the companytent of the freedom, though it protects certain laws made infringing that freedom. If on a companystruction of the provisions of Art. 19 6 , it should be held that a fiscal taxation was number a restriction within the meaning of the said clause, every law imposing such a tax would infringe the fundamental right. This result companyld number have been intended by the makers of the Constitution. Therefore, the companytention should be that every law of taxation is a reasonable restriction in public interest. There are numbermerits in the companytention either. It is said that taxation is always in public interest, and that it is number possible for any companyrt to ascertain on the material placed before it that a rate is reasonable or number. It is companyceded that regulatory taxes or laws of taxation intended to prohibit or restrict an activity and number to raise a general tax in the interest of revenue may be a restriction and a companyrt may be in a position to see whether such laws pass the test laid down in Art. 19 6 of Constitution. The arguments is companyfined only to what is described as fiscal taxation that is taxation solely intended for raising revenue for the State. It is also number denied that unreasonable procedural restrictions imposed by law of taxation would infringe the freedom. It is also admitted that a fiscal law may offend the fundamental right enshrined in Art. 14 of the Constitution. If so, it is beyond my companyprehension on what principle the law of taxation companyld offend with impunity the freedom enshrined in Art. 19 1 g . Article 13 2 says in express terms 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. A law of taxation is made by Parliament or the Legislature of a State, as the case may be, in exercise of the power companyferred under the Constitution by virtue of the entries, found therein. It is a law just like any other law made under the Constitution. This Court, in K. Thathunni Moopil Nair v. State of Kerala 1 and in Balaji v. I. T. Officer 2 , hold that a law of taxation would be void if it infringed the fundamental right guaranteed under Art. 19 of the Constitution. Therefore, the law of taxation also should satisfy the two tests laid down in Art. 19 6 of the Constitution. It is said that a law of taxation is always in public interest. Ordinarily it may be so, but it cannot be posited that there cannot be any exceptions to it. A taxing law may be in public interest in the sense that the income realised may be used for public good, but there may be occasions, when the rate or the mode of taxation may be so abhorrent to the principles of natural justice or even to well settled principles of taxation that it may cause irremediable harm to the public rather than promote public good, that the Court may have to hold that it is number in public interest. Nor can I agree with the companytention that it is impossible for a companyrt to hold in any case that a rate of taxation is reasonable or number. As a proposition it is unsound. It may be legitimately companytended that it is difficult for a companyrt to companye to a definite companyclusion on the companyrectness of a rate fixed by the Legislature. Dixon, J., in Commonwealth Freighters Proprietary Limited v. Sneddon 3 , gives a very companyent answer to such an argument in a different companytext. The learned Chief Justice said Highly inconvenient as it may be, it is true of some legislative powers limited by definition, whether according to subject- matter to purpose or otherwise, that the validity of 1 1961 3 S.C.R.77. 2 1962 2 C.R. 98 3. 3 1959 102 C. L.R. 280, 292. the exercise of the power must sometimes depend on facts, facts which some how must be ascertained by the companyrt responsible for deci- ding the validity of the law All that is necessary is to make the point that if a criterion of companystitutional validity companysists in matter of fact, the fact must be ascer- tained by the companyrt as best it can, when the companyrt is called upon to pronounce upon validity. I entirely agree with these observations. It is companymon place to point out that intricate problems companye before a companyrt involving decision on different and companyplicated aspects of human activity. Questions involving science, medicine, engineering, geology, biology, economics, Psychology, etc. all companye for judicial scrutiny, and I have never heard any companyrt saying that it is difficult to decide upon such a question and, therefore, the proceeding raising such a question is outside the jurisdiction of such a companyrt. In saying this, I am number ignoring the difficulties inherent in a problem of fixing the rate of taxes by a companyrt. Experience shows that the companyrt applies certain presumptions, such as that of the wisdom, knowledge and the good intentions of the Legislature, and does number also meti- culously go in to the question, but only looks at the broad features. On the argument of learned companynsel when it is permissible and possible for a companyrt to ascertain whether a tax is fiscal or regulatory, I do number see how it becomes impossible, though it may be difficult, to hold whether a fiscal tax is reasonable or number. The distinction lies number in the nature of the enquiry but only in degree. That apart, numberrestriction, if it is unreasonable, can be more deleterious to the freedom than the imposition of fiscal burden on it, which may in certain circumstances destroy the very freedom. I, therefore, hold, on a true companystruction of the expressed words of Art. 19 of the Constitution, that it is number possible or even permissible to hold that laws of taxation are outside the scope of the freedom enshrined therein. As the premises of Mr. Lalnarain Sinhas argument lack a reasonable basis his further argument that the freedom in Art. 301 excludes from its scope fiscal laws must be rejected. Having ascertained the scope and companytent of the freedom envisaged in Art. 301 of the Constitution, let us look at the succeeding provisions which place limitations on the said freedom. Under Art. 302. Parliament may by law impose such restrictions on the freedom of trade, companymerce or intercourse between one State and another or within any part of the territory of India, as may be required in the public interest. This is an exception to Art. 301. The restrictions companytemplated therein are restrictions on the said freedom. But the restrictions can be imposed by Parliament only by law. Parliaments power to make law is derived from Arts. 245 and 246 of the Constitution. Thereunder it can make laws with respect to any of the matters enumerated in Lists I and III of the Seventh Schedule and in respect of a territory number included in a States with respect to matters enumerated in any of the three Lists. Therefore, in exercise of the said power and by virtue of the language of the entries companyrelated to that power, Parliament can make any law imposing restrictions on the said freedom. The article in terms, or even by necessary implication, does number exclude restrictions by way of taxation. It is number the source or the nature of the law that matters but the impact of that law, be it a law of taxation or otherwise, on the freedom that is crucial. It is also number possible to accept the argument that Art. 302 companyfers an independent power on the Parliament, that is, a power in addition to that companyferred on it by Arts. 245 and There is numberroom for this argument, for the words ,,by law in the article clearly refer to the power of the Parliament to make law under the Constitution. That apart, if it was the intention of the Constituent Assembly to companyfer a fresh power, those world number have been used in Art. 302, but instead world suitable to companyfer a new power, namely, shall have the power would have been used. Therefore, under this article the Parliament can only impose restrictions by virtue of any of the entries in the Lists in respect of which it can make laws. peruse on the entries in List I shows that laws can be made restricting the said freedom under most of the entries, for instance, entries 22, 23, 24, 25, 27, 29, 42, 52, 53, 56, 81, 89, 91, etc. Whether there is a restriction or number, does number depend upon the relevant entry, but on the nature of the impact of the law on the freedom. But a limitation is sought to be placed upon this power by an attempt to companyfine it to the entries mentioned in Art. 303. Article 303, which prohibits the Parliament from making a law giving preference to one State over another or making any discrimination between one State and another, is companyfined only to the entries relating to trade and companymerce. But Art. 303 is in the nature of an exception or proviso to Art. 302. The proviso leaves the generality of the substantive enactment unqualified except in so far as it companycerns the particular subjects to which the proviso relates. Where the language of the main enactment is clear and unambiguous, a proviso can have numberrepercussion on the interpretation of the main enactment so as to exclude from it, by implication, what clearly falls within its expressed terms see M. S. M. Railway v. Bezwada Municipality 1 . The words A. I. R. 1944 P. C. 71, 73. in Art. 302 are clear and unambiguous and they do number companyfine its operation to any particular entries and, therefore, the limitation imposed under Art. 303 cannot curtail the generality of the provisions of the said article. But the more difficult question is, what does the word ,restrictions mean in Art. 302? The dictionary meaning of the word ,restrict it to companyfine, bound, limit. Therefore, any limitations placed upon the freedom is a restriction on that freedom. But the limitation must be real, direct and immediate, but number fanciful, indirect or remote. In this companytext, the principles evolved by American and Australian decision in their attempt to reconcile the companymerce power and the State police power or the freedom of companymerce and the Commonwealth power to make laws affecting that freedom can usefully be invoked with suitable modifications and adjustments. Of all the doctrines evolved, in my view, the doctrine of direct and immediate effect on the freedom would be a reasonable solvent to the difficult situation that might arise under our Constitution. If a law, whatever may have been its source, directly and immediately affects the free movement of trade, it would be restriction on the said freedom. But a law which may have only indirect and remote repercussion on the said freedom cannot be companysidered to be a restriction on it. Taking the illustration from taxation law, a law may impose a tax on the movement of goods or persons by a motor-vehicle it directly operates as a restriction on the free movement of trade, except when it is companypensatory or regulatory. On the other hand, a law may tax a vehicle as property, or the garage wherein the vehicle used for companyveyance is kept. The said law may have indirect repercussion on the movement but the said law is number one directly imposing restrictions on the free movement. In this companytext, two difficulties may have to be faced firstly, though a law purporting to impose a tax on a property or a motor-vehicle, as the case may be, may in fact and in reality impose a tax on the movement itself, secondly, a law may number be on the movement of trade, but on the property itself, but the burden may be so high that it may indirectly affect the free flow of trade. In the former case, the companyrt may have to scrutinize the provisions of a particular statute to ascertain whether the tax is on the movement. If the provisions disclose a tax on the movement, it will be a restriction within the meaning of Art. 302. In the latter case, if the provisions show that the tax is on property, the reasonableness of the tax may have to be tested against the provisions of Art. 19 of the Constitution. The question whether a law imposes a restriction or number depends on the question whether the said law imposes directly and immediately a limitation on the freedom of movement of trade. If it does, the extent of the impediment relates to the question of degree rather than to the nature of it. If it is a restriction, it must satisfy the companyditions laid down in Art. 302 of the Constitution. Article 303 is an exception or a proviso to Art. 302. Article 303 opens out with a number-obstante clause, namely, Notwithstanding anything in article 302. This phrase is equivalent to saying that in spite of article 302 or that article 302 shall be numberimpediment to the operation of article 303. It is accepted on all hands that there is a defect in the phraseology used in this article. This article prohibits both Parliament and the State Legislature from making a law giving preference to a State or States or making a discrimination among the States. The number-obstante clause has numberrelevance so far as the Legislature of a State is companycerned, for Art. 302 does number deal with Legislature of a State. In these circumstances, the number-obstante clause can only be made applicable to that to which it is appropriate i.e., only to the limitations imposed on Parliament under Art. 303. The article, so far as it relates to Parliament, may be read Notwithstanding anything in article 302, the Parliament shall number have power to make any law giving, or authorising the giving of, any preference to one State over another, or making, or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and companymerce in any of the Lists in the Seventh Schedule. Now this provision prohibits the making of laws of the nature mentioned therein only by virtue of the entries relating to trade and companymerce in any of the Lists in the Seventh Schedule. This article clearly says that neither Parliament number the Legislature of a State can make a law imposing a restriction which has the effect of giving preference or making discrimination as the case may be, among the States. But a difficulty that companyfronts one is whether the limitation on the laws is companyfined only to the law made by virtue of the entries referring to trade and companymerce or by virtue of any entry in the Seventh Schedule, which may affect trade and companymerce. The entries which refer to trade and companymerce are entries 41 and 42 of List I, entry 26 of List II and entry 33 of List III of the Seventh Schedule to the Constitution. But it is companytended that the words by virtue of the entries relating to trade and companymerce in any of the Lists in the Seventh Schedule are of wider import than the words ,by virtue of the said entries and, therefore, any law specified in Art. 303 made by virtue of any entry in any of the Lists in the Seventh Schedule, if it relates to trade and companymerce, would be companyered by the exception. The words any entry relating to trade and companymerce in any of the Lists are of the widest import and they yield to a very liberal interpretation. The phraseology used supports this interpretation. The reason for the exception also sustains it. There cannot be any distinction on principle, from the standpoint of the mischief sought to be averted, between a law made by virtue of an entry ex facie referring to trade and companymerce and that made by virtue of any entry affecting trade and companymerce. For instance, a law may be made by Parliament under entries relating to railways, highways, shipping etc.-these entries do number expressly refer to trade and companymerce, though they may directly affect trade and companymerce. If a law made under entry 26 of List If giving preference or making discrimination among the States is objectionable, it should also be objectionable, if made by virtue of any other entry. I would, therefore, hold that any law made by Parliament by virtue of any entry imposing the said discriminatory restrictions would be bad Under the said article. Article 303 2 lifts the ban imposed on Parliament under Art. 303 1 , if a law made by Parliament imposing such discriminatory restrictions is necessary for the purpose of dealing with a situation arising out of scarcity of goods in any part of the territory of India. That part of Art. 303, which prohibits the Legislature of a State from making a law of the nature mentioned therein, also bears the same companystructions and it is number necessary to restate it, except to mention that clause 2 of Art. 303 does number lift the ban in respect of the State Legislature. Coming to Art. 304, we are again companyfronted with a defect in phraseology. The article opens out again with a number- obstante clause, namely, Notwithstanding anything in article 301 or article 303. Under Art. 301 a , the Legislature of a State may by law impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject so, however, as number to discriminate between them and Art. 304 b enables the State Legislature to impose such reasonable restrictions on the freedom of trade, companymerce or intercourse with or without that State as may be required in the public interest. But numberBill or amendment for the purpose St. of cl. b shall be introduced or moved in the Legislature of a State without the previous sanction of the President. Clause a , therefore, only enables the Legislature of a State to impose number-discriminatory taxes on goods imported from other States or the Union territories. The number-obstante clause vis-a-vis Art. 304 a may have some relevance so far as Art. 301 is companycerned, for it enables the Legislature of a State to impose an impediment on the free movement of trade in spite of the freedom declared under Art. 301. But it has numberrelevance to Art. 303, which only prohibits the State Legislature from making a discriminatory law and it does number in any way prohibit the State Legislature from imposing a number-discriminatory tax permitted under Art. 304 a . But, with reference to Art. 304 b , the number-obstante clause has significance and meaning even in regard to Art. 303, as cl. b lifts the ban imposed by Art. 303, subject to the limitations mentioned therein. Therefore, the number-obstante clause must be deemed to apply only to that part of Art. 304 appropriate to the said clause. If so read, the difficulty in the companystruction disappears. Article 304 a lifts the general ban imposed by Art. 301 in respect of imposition of number-discriminatory taxes on goods imported, which indicates that but for the said provision the law of taxation in that regard would infringe the freedom declared under Art. 301. Clause b of Art. 304 enables a State to make laws imposing reasonable restrictions on the freedom of trade, companymerce and intercourse and I would interpret the word restrictions in the same way as I have interpreted the said expression in Art. 302. It cannot be said, as it is companytended, that cl. b only lifts the ban imposed by Art. 303 on the power of the Legislature of a State, but it does more than that. It enables the State Legislature to impose all reasonable restrictions on the said freedom in the sense I have already explained, all subject to the proviso. Again, in the companytext of Art. 304 b , a strong plea is made by some of the learned Advocates appearing for the States, relying upon the other provisions of the Constitution for holding that taxation laws are outside the ken of the said provisions. Reference is made to Arts. 31 5 b i , 248, 265, 276, 285, 287 and 288. I do number propose to companysider the arguments based on the said articles in detail, as, in my view, these and similar articles of the Constitution do number even remotely touch the question raised before us. They fit in the scheme of the Constitution. The Constitution companyfers power on the Legislatures to make laws of taxation, circumscribes that power with reference to the entries in the Seventh Schedule and other companystitutional provisions, and provides for resolving companyflict of powers. The aforesaid articles, except Art. 31 5 b i and Art. 248, appear in Ch. I of Part XII under the general heading Finance, Article 265 declares that numbertax shall be levied or companylected except by authority of law that is to say, tax cannot be levied or companylected by an executive flat. Article 276 fixes a ceiling on taxes payable to local boards on professions, trades, callings and employments. Article 285 exempts property of the Union from State taxation Article 286 prohibits the States from imposing a tax on inter-State sales, subject to a proviso. Article 287 exempts the Union from the State law of taxation on electricity and Art. 288 gives a similar exemption to the Union from taxes by States in respect of water or electricity in certain cases. Article 31 5 b i exempts a law imposing or levying any tax from the impact of the fundamental rights enshrined in Art. 31 2 of the Constitution. Article 248 preserves the residuary power of the Parliament in respect of any matter number enumerated in the Concurrent-List or the State-List, including the power to impose taxes. These articles, therefore, generally impose limitations on the appropriate legislative power of taxation of States or give exemption in special cases. By and large, the said articles and similar others operate as limitations, or restrictions on the power of taxation companyferred upon Parliament and the appropriate Legislatures under Art. 246 of the Constitution. But, in exercise of the power of taxation, subject to these limitations, the appropriate legislature cannot make a law infringing the freedoms companyferred under the Constitution. The companyditions prescribed for imposing a tax or the ceilings fixed thereon may affect the ambit of the power but cannot either sanction encroachment on the freedom guaranteed by Art. 331 or curtail the same. Assuming that some of the companyditions prescribed in Art. 286 appear to companye into Conflict with those in Art. 304 b in my view, there is numbersuch companyflict-the said articles can companyexist by a process of harmonious companystruction. In short, these articles may limit the power of the appropriate legislature in imposing tax, but cannot be relied upon to curtail the ambit of the freedom under Art. 301 of the Constitution. Reliance is also placed on Art. 26 which provides that every religious denomination or any section thereof shall have the right, inter alia, to own and acquire movable and immovable property. It is said that the freedom companyferred by that article cannot preclude the State from imposing a tax on the said property, and that, by the same parity of reasoning, Art. 301 which companyfers the freedom cannot preclude the Legislative power imposing a tax affecting that freedom. It is true that the marginal heading of this article is Freedom to manage religious affairs, but the subject- matter of Art. 26 cannot be equated to that of the freedom of trade declared under Art. 301. I should number be understood to have expressed any view on the companystruction of that article in the present case. Article 305, as it stood before the Constitution Fourth Amendment Art. 1955, only saves the existing laws from the operation of Art. 301, and Art. 303, and it does number throw any light on the companystruction of Art. 301. Article 306 was omitted by the Constitution Seventh Amendment Act, 1956 but the said article saved the operation of any law made by any States specified in Part B in the First Schedule before the companymencement of the Constitution levying any tax or duty on the import of any goods in to the State from other States or on the export of goods from the State to other States and enacted that if there be an agreement between the Government of India and the Government of that State in that behalf, the said tax or duty might be levied or companylected for such period number exceeding ten years from the companymencement of the Constitution, subject to the terms of the said agreement. If a law of taxation cannot, under any companyceivable circumstances, be a restriction on the freedom of trade, why did it become necessary to introduce a saving clause in terms of Art. 306 in the group of articles in Part XIII? It is suggested that the saving clause might have become necessary as there was an impediment under the other provi- sions of the Constitution. But that circumstance cannot deprive the force of the number-obstante clause in Art. 301 in its application to the provisions of Part XIII. This article indicates the companysciousness of the makers of the Constitution that restrictions companytemplated in that Part take in restrictions by way of taxation and, therefore, it was necessary to provide for an exemption in the case of Part B States for a specified period of time. The foregoing discussion may be summarized in the following propositions 1 Art. 301 declared a right of free movement of trade without any obstructions by way of barriers, inter-State, or intraState or other impediments operating as such barriers. 2 The said freedom is number impeded, but, on the other hand, promoted, by regulations creating companyditions for the free movement of trade, such as, police regulations, provision for services, maintenance of roads, provision for aerodromes, Wharfs etc., with or without companypensation. 3 Parliament may be law impose restrictions on such freedom in the public interest and the said law can be made by virtue of any entry with respect where of Parliament has power to make a law. 4 The State also, in exercise of its legislative power, may impose similar restrictions, subject to the two companyditions laid down in Art. 304 b and subject to the proviso mentioned therein. 5 Neither Parliament number the State Legislature can make a law giving preference to one State over another or making discrimination between one State and another, by virtue of any entry in the Lists,, infringing the said freedom. 6 This ban is lifted in the case of Parliament for the purpose of dealing with situations arising out of scarcity of goods in any part of the territory of India and also in the case of a State under Art. 304 b , subject to the companyditions mentioned therein. And 7 The State can impose a number-discriminatory tax on goods imported from other States or the Union territory to which similar goods manufactured or produced in that State are subject. The companystruction I have placed on the provisions of the Constitution brings out the harmony between the various articles in Part XIII of the Constitution and also discloses an integrated scheme of freedom of trade,, companymerce and intercourse maintaining a balance between federalism and provincial autonomy. I agree with my learned brother., Dan, J that the provisions of the Rajasthan Motor Vehicles Taxation Act XI of 1951 are regulatory in character and that they do number infringe the freedom enshrined in Art. 301 of the Constitution. The appeals fail and are dismissed with companyts. HIDAYATULLAH, J.-The Rajasthan Motor Vehicles Taxation Act, 1951 No. XI of 1951 , in s. 4 provided Save as otherwise provided by this Act or by rules made thereunder or by any other law for the time being in force, numbermotor vehicle shall be used in any public place or kept for use in Rajasthan unless the owner thereof has paid in respect of it, a tax at the appropriate rate specified in the schedules to this Act within the time allowed by section 5 and, save as hereinafter specified, such tax shall be payable actually numberwithstanding that the motor vehicle may from time to time cease to be used. An owner who keeps a motor vehicle of which the certificate of fitness and the certificate of registration are current shall, for the purposes of this Act be presumed to keep such vehicle for use. A person who keeps more than ten motor vehicles for use solely in the companyrse of trade and industry shall be entitled to a deduction of ten per cent on the aggregate amount of tax to which he his liable. Explanation.-The expression trade and industry includes transport for hire. The Schedules referred to in the first sub- section are four in number. They specify the kind of vehicles liable to the tax, the rates of the tax applicable to each kind, and some other companyditions. A detailed reference to the Schedules will be made by us later. Section 11, which created penalties for companytravention of the Act, was follows Whoever companytravenes any of the provisions of this Act or of any rule made thereunder shall on companyviction be punishable with fine which may extend to Rs. 100 and in the event of such person having been previously companyvicted of an offence under this Act or under any rule made thereunder with fine which may extend to Rs. 200. The appellants who held permits, plied their buses from the State of Ajmer. Their routes passed through the territory of Rajasthan, and they were required to pay the tax in Rajasthan. They filed petitions under Art. 226 of the Constitution in the High Court of Rajasthan, impugning the demand as a companytravention of the provisions of Part XIII and of Art. 19 of the Constitution. A Divisional Bench of the High Court, which heard the petition, referred for the decision of a Full Bench the following question Whether ss. 4 and II of the Rajasthan Motor Vehicles Taxation Act, 1951, infringe the right of freedom of trade, companymerce or intercourse granted under Article 301 of the Constitution? The Full Bench answered the question in the negative, and in view of the answer, the petitions were dismissed. The appellants were, however, granted a certificate under Art. 132 of the Constitution, and the present appeals have been filed. The appellants companytend that the Rajasthan Motor Vehicles Taxation Act, 1951, is outside the companypetence of the State Legislature inasmuch as its pith and substance is ,Inter- State trade and companymerce which is a Union subject under Entry 42 of Union List that it is null and void being in violation of Art. 19 1 d , f and g of the Constitution that it is ultra vires and illegal, as it companytravenes the freedom guaranteed under Art. 301 that even if permissible, it is number a reasonable restriction of and companymerce within Art. 304, and that number having been enacted with the previous sanction of the President, it is number effective as law under Art. 265. At an earlier hearing, the attention of the Constitution Bench of this Court was drawn to Atiabari Tea Co. Ltd. v. State of Assam 1 , where this Court struck down by majority the Assam Taxation on Goods Carried by Roads or Inland Waterways Act, 1954, as offending against the freedom of trade, companymerce and intercourse. On that occasion, three views were expressed. Sinha, C. J held that the freedom guaranteed by Art. 301 was against trade barriers, tariff walls, or imposts which have a deleterious effect on the free flow of trade, companymerce and intercourse but number against taxation Simpliciter. Shah, J., held that the freedom envisaged was wide enough to companyprehend within itself a ban of prohibition, companytrol or impediment of any kind whatever and of taxes whether they fell on movement of trade or companymerce or otherwise. The majority Gajendragadkar, Das Gupta and Wanchoo, JJ. hold that though taxes as such were number within the ban of Part XIII, such taxes as impeded the free flow of trade and were directly placed on movement were included in it. The appellants relied on the views of Shah, J., and failing that, on the majority view which, they companytended, also held good here, while the State Government based its case upon the views of the learned Chief Justice. The Constitution Bench was thus of the opinion that having regard to the importance of the Constitutional issues involved and the views expressed in Atiabari Tea Co. Ltd. v. State of Assam 1 , this case 1 1961 1 S.C.R. 809. should be heard by a larger Bench, and these appeals have thus companye before this special Bench. Certain other parties obtained permission to intervene, and numberices having issued to the Advocate-General of States, we have had the benefit of arguments from various angles. That freedom of trade, companymerce and intercourse is secured by Art. 301, subject to the other provisions of Part XIII, has number been disputed in this case. The dispute is only as to what is companyprehended within that freedom, and a further question is whether the powers of Parliament and the State Legislatures to levy taxes according to the Sundry Entries in the Legislative Lists are meant to be circumscribed in any way, and if so, to what extent. Art. 301 of the Constitution, so far as its language goes, is fairly modelled on s. 92 of the Australian Commonwealth Act, 1900, and numerous decisions of the High Court of Australia and on appeal, by the Privy Council, were cited before us to define the companytent and extent of the freedom envisaged. Besides, the Government of India Act, 1935, also companytained in a. 297 a provision on the subject of freedom of trade and companymerce, and the companytention of the State partly has been that Part XIII enacts little more than what was companytained there. Since the arguments made much of these two analogies, it is necessary to state first certain well. known and well- accepted propositions relating to the interpretation of Constitutions, in which there are fundamental limits upon the power to legislate. In Queen v. Burah 1 , Lord Selborne laid down a proposition which in its exposition of the subject and the manner of expression can hardly be improved. Lord Selborne said The established Courts of justice when a question arises whether the prescribed limits 1 1878 3 App.cas.889. have been exceeded, must of necessity deter- mine that question and the only way in which they can properly do so, is by looking to the terms of the instrument by which, affirmati- vely, the legislative powers were created, and by which, negatively, they are restricted. If what has been done is legislation within the general scope of the affirmative words which give the power, and if it violates numberexpress companydition or restriction by which that power is limited it is number for any Court of Justice to inquire further, or two enlarge companystru- ctively those companyditions or restrictions. We have thus to see what powers have affirmatively been companyferred on the legislatures of the State and what are the restrictions on that power. In this companynection, we must also bear in mind the weighty observations of Gwyer, C. J., in Bhola Prasad v. The King Emperor 1 We must again refer to the fundamental proposition enunciated in The Queen. v. Burah 2 that Indian Legislatures within their own sphere have plenary powers of legislation as large and of the same nature as those of Parliament itself. If that was true in 1878, it cannot be less true in 1942. Every intendment ought therefore to be made in favour of a Legislature which is exercising the powers companyferred on it. The legislative powers of the States after the establishment of the Republic of India are certainly number any the less and it must be companyceded at once that within the range of their powers as companyferred the legislative entries in Sch. VII, the State Legislatures are supreme, subject, of companyrse, to such restrictions as are to be found in the Constitution itself 1 1942 F.C.R. 17, 27. 2 1878 3 App. cas. 889 The power to tax motor vehicles is the subject of Entry 57 in the State List, and it reads- Taxes on vehicles, whether mechanically propelled or number, suitable for use on roads, including tramcars subject to the provisions of entry 35 of List III. The words suitable for use on roads describe the kinds of vehicles and number their companydition. They exclude from the Entry, farm machinery, aeroplanes, Railways etc. which though mechanically propelled are number suitable for use on roads. The inclusion of trams using tracks which may be on roads or off them, makes the distinction still more apparent. It is thus clear that the power to tax motor vehicles is plenary, subject to Entry 35 of the Concurrent List or any other restriction to be found elsewhere in the Constitution. Entry 35 above referred to reads Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied. The existence of such an Entry in the Concurrent List cuts down the supremacy of the State Legislatures, and in respect of taxation of motor vehicles, if the principles of taxation are laid down by Parliamentary legislation, the State laws repugnant thereto must be void, in view of the provision of Art. 254 of the Constitution. The question whether the power of Parliament to legislate and lay down principles of taxation under Entry 35 of the Concurrent List would also have to be companysidered under Part XIII, does number arise in this case, for admittedly there is numberlaw by Parliament that Entry either prior or subsequent to the State Act. Thus, so far as the taxing power of the State Legislature is companycer- ned, it must be admitted that it was number only exercised under Entry 57, but, if judged solely under that Entry, that it was properly exercised. The question thus is whether on the exercise of this power there are to be found other curbs in other parts of the Constitution, and whether those curbs have number been observed. Such curbs may be of three kinds. The first may arise from the operation of the power of legislation granted to Parliament by Entry 42 of the Union List, and the companytention in this companynection is that the present impugned Act in its pith and substance is legislation under that Entry and thus void. The second may arise from Art. 19, sub-cls. d , f and g if the law deprives the motor operators of the right a to move freely throughout the territory of India b to acquire, hold and dispose of property, and c to practice any profession, or to carry on any occupation, trade or business, and the restriction is incapable of being justified as reasonable. The third may arise from the provisions of Part XIII where freedom of trade, companymerce and intercourse throughout the territory of India has been ,guaranteed, subject only to the provisions of that Part. These, in the main, are also the companytentions. and these appeals can be effectively disposed of from these three view points. The first companytention that the impugned Act is bad because it is legislation directly under Entry 42 of the Union List need number detain us long. The subject of Entry 42 of the Union List is number taxation but inter-State trade and companymerce. The scheme of the Legislative Lists shows that taxation entries are separate from other entries, and the other entries do number include a power to impose a tax, though the power to levy fees is included as it is expressly so stated. The subject of Entry 57 of the State List is taxation on vehicles. An Act which seeks directly to levy a tax on motor vehicles even though there may be incidental and subsidiary provisions about the regulation of a particular inter-State trade carried on with the aid of or in motor vehicles is legislation really within Entry 57 and number within the other Entry though it may, touch it, and is thus within the companypetence of the State Legislature. That these motor vehicles companye into the taxing State from an extra State point and are taxed within the taxing State by reason of their use or presence there, may raise problems under Part XIII but number under Entry 42 of the Union List. The words of the charging section are No motor vehicle shall be used in any public place or kept for use in Rajasthan unless the owner thereof has paid, in respect of it, a tax at the appropriate rate specified in the Schedule to this Act The pith and substance of the Act is the levy of a tax on motor vehicles in Rajasthan or their use in that State irrespective of where the vehicles companye from. In one sense, it does number seek directly or immediately to legislate on inter-State trade or companymerce or to prohibit the entry of such motor vehicles it the tax be paid, except in so far as a person deterred by the tax may keep out. This may be a point for companysideration under Part XIII or even Art. 19 of the Constitution, but number under Entry 42 of the Union List. Even if the levy of the tax may be said to touch inter-State trade or companymerce, it is number legislation in respect of interstate trade or companymerce. It has been held companysistently by this Court, the Privy Council and the Federal Court that a law substantially in its pith and substance under an Entry in one List may touch incidentally on a topic of legislation in a rival List without being void or ultra vires. This, in our opinion, is sufficient to dispose of the first point. The next attack is with the aid of Art. 19 of the Constitution. That Article guarantees to the citizens of India certain basic freedoms. Freedom from taxation is number one of them. It is hardly necessary in this case to examine the subject from the angle of Art. 19, because a law to be good under that Article must satisfy the test of reasonableness. If the impugned sections here are declared to be unreasonable restrictions upon the freedom of trade, companymerce and intercourse, they would fall also under Part XIII. If this were to happen, it would be wholly unnecessary to decide whether taxation laws are within the reach of Art. 19 and also whether the impugned provisions have to pass the independent scrutiny of Art. 19 before they can be sustained. This brings us to the companysideration of the last point on which arguments occupied the Court for several days. It would be necessary if number, impossible to try to discuss the arguments which, though proceeding from the same side, were often companyflicting. The use of language borrowed from a. 92 of the Australian Constitution in Art. 301 of our Con- stitution led to the citation of many Australian rulings. Those rulings are so numerous that they provoked a former Chief Justice of the High Court of that Country to say that when he died, s. 92 would be found to be written on his heart But it is reasonable to suppose that those who borrowed the language in India were fully aware of the company- flict of opinion in Australia. It is reasonable to assume that the framers of our Constitution must have sought to avoid there dangers. It must number also be overlooked that the decisions of the Privy Council in Commonwealth of Australia v. Bank of New South Wales 1 and Hughes and Vale Pty. Ld. v. State of N.S.W. 2 , which to some extent have narrowed down the companytroversy in Australia, were number rendered when the draft Constitution was framed or the Constitution was adopted. A numbere has, however, to be taken of the fact that the history of the establishment of federation in the two Countries is so vastly different that in spite of 1 1950 A.C. 235. 2 1955 A.C. 241. certain resemblance in the language employed in the companyparable provisions of the two Constitutions, they cannot mean the same thing. Indeed, they differ in so many respects that numberhing is more dangerous than to suppose that the Indian Constitution wished to secure freedom of trade, companymerce and intercourse in the same way as did the Austra- lian Commonwealth. These differences are number to be found solely in the language of the companyresponding provisions but in the evolution of the two Countries and the checks and balances provided in our Constitution which are number to be found in the Australian Constitution. We shall refer to these differences briefly before examining what checks and balances have been provided in our Constitution. The Commonwealth of Australia was formed out of a number of Colonies which were separated by high tariff walls and numerous differential inter-Colonial duties. The idea of a federation was born out of a desire to secure free trade on a reciprocal basis between the Colonies. The Federation was, however, delayed by the failure to reach agreement on the financial aspects of the Constitution. Numerous companyventions took place which tried unsuccessfully to solve the problem which was aptly described ,as the lion in the path of unity. It was after surmounting many difficulties that the financial clauses were settled by agreement. It is in the background of these historical facts that the provisions relating to freedom of trade, companymerce and intercourse have been interpreted by the High Court of Australia. The provisions of the Australian Constitution themselves enact the underlying agreements. Sections 51, 88, 89, 90, 100 and 102 insist upon uniformity and the absence of discrimination in matters of trade and companymerce after the imposition of uniform duties of customs which was to be achieved in two years. Section 92 then epitomizes the whole companycept of this unity and freedom from preferential treatment by enacting On the imposition of uniform duties of customs, trade, companymerce and intercourse among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free. It may be pointed out here that the alternative phrase throughout the Commonwealth was number accepted, though it was suggested as an amendment more than once. The provisions of the Australian Constitution such as bear on trade and companymerce, are numbermore than companyenants entered into at the Conventions, which have been introduced bodily into the Australian Constitution, the fate of which depended for a long time on how to secure an agreement about uniform tariffs customs, excises and bounties. The declaration of freedom of trade, companymerce and intercourse was the logical culmination of the negotiations for the establishment of the Federation. The language of s. 92 was thus made emphatic, even though its full purport remained vague. As observed by Viscount Haldane, L. C., in Attorney-General for the Commonwealth of Australia v. Colonial Sugar Refining Company Limited 1 It is a matter of historical knowledge that Australia the work of fashioning the future Constitution was one which occupied years of preparation through the medium of companyventions and companyferences in which the most dis- tinguished statesmen of Australia took part. Alternative systems were discussed and weighed against other with minute care. The Act of 1900 must accordingly be regarded as an instrument which was fashioned with great 1 1914 A.C. 237. deliberation, and if there is as points obs- curity in its language, this may be taken to be due number to any uncertainty as to the ado- ption of the stricter from of federal principle, but to that difficulty in obtaining ready agreement about phrases which attends the drafting of legislative measures by larger assemblages. But declarations in a Constitution, however worded, must be given effect to, and they always loom large on the horizon of law-making, if they curtail legislative power, and it is number surprising that the Australian High Court was faced with the problem of deciding which laws rendered trade, companymerce and intercourse unfree and which did number. In the companyrse of these decisions, a wide cleavage in opinion soon appeared. one view holding that any burden on trade, companymerce or intercourse between the States was bad, and the other view attempting justification to save laws which were impugned. Various grounds for such justification were evolved. Some laws were upheld on the ground that they were merely regulatory but some others were declared void as having crossed the line of legitimate regulatory action. Some taxation laws were upheld on the ground that though they burdened trade or companymerce, they were companypensatory in character. Even there, differences arose about the tests to be applied to discover when such laws companyld be said to have exceeded the limits. The number of such cases is legion, and almost any view can be supported by citations from some judgment or other from the Australian law Reports. Lord Porter in Commonwealth of Australia v. Bank of New South Wales 1 aptly summed up In this labyrinth there is numbergolden thread p. 310 . The maze of law round s. 92 was, of companyrse, something of which the framers of our Constitution were number unaware. They knew 1 1950 A. C. 235. that in spite of the force of the words absolutely free, it was well-settled that the freedom so companytemplated was a qualified freedom. In Duncan v. State of Queensland 1 Griffith, C. J., had observed, what was generally accepted, that the word free does number mean extra legem, any more than freedom means anarchy. The task of the Bench as also the Bar was to ascertain the limits of freedom or more appropriately, the limits to which restrictions companyld go. In this, the Australian High Court was the actor in the main but the Privy Council also delivered four judgments. Of these, two were before our draft Constitution and two, thereafter. It is, therefore necessary to investigate, to find out what was the accepted position in about 1948 to be able to see if any of the principles so laid down were accepted and to what extent they were modified to suit our Constitution in the light of our own history. We shall first numberice those cases which were decided before our Constitution was drafted in 1948. This first point on which difference arose in Australia was whether s. 92 of the Commonwealth of Australia Act was addressed only to the States, or whether it bound the Commonwealth as well. In W. A. McArthur Ltd v. State of Queensland 2 the majority held that the Commonwealth was number bound. Gavan Duffy, J., alone held that the language of the section clearly companytrolled both the powers companyferred on the Federal Parliament and those reserved to State Parliament. The view of the majority was negatived by the Privy Council in James v. Commonwealth of Australia 3 . Indeed, the High Court of Australia had already doubted the companyrectness of the view, but it felt itself bound by it. The Privy Council traced the development of that view and pointed out that though in The King v. Vizzard 4 the Commonwealth agreed to be 1 1916 22 C. L. R. 536, 573 2 920 20 C. L. R. 530. 3 1936 A. C. 578. 4 1933 50 C.L.R. 30. bound within certain limits, the ruling in McArthurs case 1 was number departed from and that though the view was reaffirmed in Australia from time to time, it was number applied in practice. The Board, however, did number shelter under the decision in McArthurs case 1 , and decided that the Commonwealth was also bound. Thus, the opinion of Issacs, J., in Foggitt Jones Co. Ltd. v. The State of New South Wales 2 that s. 92 makes Australia one indivisible Country for the purpose of companymerce and intercourse between Australians and that it was beyond the power of any State Parliament, or even of the Commonwealth Parliament, by any regulation of trade and companymerce, to impair that fundamental provision was accepted at least in its first part. The second point was what was meant by absolutely free. The Attorney-General for Australia in the companyrse of his arguments in James v. Commonwealth of Australia 3 summarised the propositions which were urged and supported by authorities in the arguments before the Privy Council in that case, and they were six, as follows The first meaning of free is free of all law of every description Free of any restrictions imposed upon trade and companymerce by reason of its interState character. That is, free of any discrimi- nating trade law Free as trade and companymerce of all interference whether specially directed to it or number Free of all laws the pith and substance 1 1920 28 C.L.R. 530. 2 1916 21 L.R. 557. 3 1936 A.C. 578. of which is a regulation of interstate trade or companymerce Freedom attaches to trade and companymerce regarded as a whole and number distributively. Individuals are number guaranteed freedom in relation to their trade and companymerce so long as trade and companymerce as a whole are number impaired. Free from pecuniary imposts-that is the narrowest meaning of s. 92. These six propositions fairly represent the view in the various judgments of the Australian High Court. Isaacs, J., in Rex v. Smithers 1 had observed In my opinion, the guarantee of inter-State freedom of transit and access for persons and property under a. 92 is absolute-that is, it is an absolute prohibition on the Commonwealth and States alike to regard State borders as in themselves possible barriers to intercourse between Australians. In McArthura Case 2 , the claim was made against all Governmental companytrol and the majority also held that to be its meaning. The Privy Council examined the scheme of the Constitution of Australia and drew the line thus The true criterion seems to be that what is meant is freedom as at the frontier or, to use the words of s. 112, in respect of goods passing into or out of the State. What is meant by that needs explanation, The idea starts with the admitted fact that federation in Australia was intended inter alia to abolish the frontiers between the different States and create one Australia. That companyception involved freedom from customs duties, imports, border prohibitions and restrictions of every 1 1912 16 C. L. R.99. 2 1920 28 C. L. R. 533 kindthe people of Australia were to be free to trade with each other, and to pass to and fro among the States, without any burden, hindrances or restrictions based merely on the fact that they were numbermembers of the same State. After referring to some cases in which the burdens and hindrances took diverse forms and appeared under various disguises, the Board observed that it must be a question of fact in every case whether there was an interference with the freedom of passage, and finally observed As a matter of actual language, freedom in s. 92 must be somehow limited, and the only limitation which emerges from the companytext, and which can logically and realistically be applied, is freedom at what is the crucial point in inter-State trade, that it is at the State barrier. The language of s. 92, particularly among the States, whether by means of internal carriage or ocean navigation, shall be absolutely free, taken with the history to which we have already referred apparently decided the companytroversy. This was departed from later in Commonwealth of Australia v. Bank of New South Wales 1 , but after our Constitution was drafted. The next question decided was what was meant by trade and companymerce. Again, in McArthurs Case 2 , the meaning given was a very wide one. It was number companyfined to the mere act of transportation of merchandise over the frontier. It was said that all the companymercial arrangements of which transportation is the direct and necessary result from part of trade and companymerce. In 1 1950 A. C. 235. 2 1920 82 C. L. R. 530 the companycept of trade and companymerce were thus included- the mutual companymuning, the negotiations, verbal and by companyrespondence, the bargain, the transport and the delivery are all, but number exclusively, parts of that class of relations between mankind which the world calls trade and companymerce. In reaching this companyclusion, Knox, C.J., referred to Bank of India V. Wilson 1 and Commissioners of Taxation v. Kirk 2 , where Lord Davey observed The word trade numberdoubt primarily means traffic by way of sale or exchange or companymercial dealing, but also added that it may have a large meaning. The view of Knox, C.J., was expressly disapproved by a Privy Council in James v. Commonwealth of Australia 3 involving, as it did, a companyception of inter-State trade, companymerce and intercourse companymencing at whatever stage in the State of origin, and companytinuing until the moment in the other State when the operation of inter-State trade companyld be said to end, the freedom attaching to every stop in the transaction from beginning to end. It was said that such a view would lead to an immunity from law of a whole body of acts or dealings by the mere fact that they are parts of an inter- State transaction. The companycept of trade and companymerce was thus limited to that movement to which crosses a State barrier. As regards intercourse also, the earlier meaning was wide. The question was whether such ,,intercourse must be companymercial. It was held in earlier cases that this companyferred a personal right on an Australian and independent of any companymercial attributes he may possess, to pass over the 1 1877 3 Ex. D FOR. 2 1900 A.C. 588 592. 3 1936 A.C 578. Continent irrespective of any State border as a reason in itself for interference per Isaacs, J., in R. v. Smithers Ex Parte Benson 1 . This view was affirmed in Duncan v. State of Queensland 2 and also in McArthurs case 3 . Later, it was held that the companycept of trade, companymerce and intercourse meant what was held to be included in the companycept of companymerce as understood in the United States per Dixon, J., in the Bank case 4 . With the exact meaning of the word, we are number presently companycerned. We shall next see how the doctrine of the freedom of trade, companymerce and intercourse was applied in practice. In this companynection, three cases filed by one James to question the marketing legislation of the States and the Commonwealth did much to settle some of the companytroversies. The two cases decided by the Privy Council before our draft Constitution were due to his efforts. His first case did number reach the Privy Council, and is reported in James v. South Australia 5 , but it was approved by the Privy Council in James v. Cowan 6 . These cases may be numbericed briefly. In James v. South Australia 5 , State legislation creating a Dried Fruits Board and empowering it to five maximum prices s. 19 and to determine where and in what quantities dried fruits should be marketed s. 20 , and to acquire on behalf of the Minister dried fruits from dealers s. 28 , was challenged under s. 92. Section 28 was expressly made subject to s. 92. Section 20 was declared invalid by the High Court of Australia, but ss. 28 and 29 were hold to be valid. In James v. Cowan 6 , the question was the companypulsory acquisition of dried fruits in South Australia by the Minister of Agriculture through a Board, after 1 1912 16 C. L. R. 99. 2 1916 22 C. L. R. 556 573. 3 1925 28 C.L.R. 530. 4 1948 76 C.L. R. 1, 380, 381. 5 1927 40 C.L.R. 1. 6 1932 A.C. 542. determination by the Board in its absolute discretion what quantities should be marketed locally and fixing quotas for the other States. The question was whether this affected freedom of companymerce among the States. The Privy Council emphatically answered that it did. But it made remarks which showed that if the primary object of the legislation was number directed to trade or companymerce but such matters as defence., famine, disease and the like., the incidental effect on the trade and companymerce was immaterial. The action of the Minister was declared ultra vires, and James was held entitled to succeed in his claim for damages. The legislation by the State having been declared invalid, the Commonwealth made the Dried Fruits Act 1928-35 . Under that law, numberperson companyld send dried fruit from one State to another unless he exported his quota outside Australia. This was challenged by James. When the case reached the Privy Council, three points were Considered by the Privy Council and decided. The first was that. 92 bound also the Commonwealth, the second was that it created a ban against prohibitions or burdens at the frontier, and lastly, that it protected companymerce in motion and passing the frontiers of the States. A large number of cases were numbericed in which it was decided that trade and companymerce was validly burdened in the exercise of power to make laws without impairing movement of trade at the borders. These laws dealt with various subjects like monopolies, price fixation, health regulations, licensing systems, entry of goods or persons and transport. The last group companysisted of cases in which restrictions applying to motor vehicles as integers of trade and companymerce or their owners were companysidered. Willard v. Raw-ion 1 was companycerned 1 1933 48 C.L.R. 31 S. with a law which required registration of all motor vehicles on payment of a fee. The King v. Vizzard 1 was companycerned with the licensing of motor vehicles acting as companymon carriers. O Gilpins case 2 was companycerned with owners of vehicles carrying their own goods, and Bessell v. Dayman 3 was companycerned with law affecting inter. State journeys. These laws were declared valid by the High Court, and special leave to appeal having been refused, it was understood that the Privy Council had approved them. In all these cases, the decisions were by majority, but Dixon and Starke, JJ. dissented. In James v. Commonwealth of Australia 4 the Privy Council selected The King v. Vizzard as the best example. In that case, the question was whether the State Transport Co-ordination Act, 1931 N.S.W. companytravened s. 92. Under that Act, numberpublic motor vehicle companyld operate in the State unless the motor vehicle was licensed. Licensing was by a Board which had companyplete discretion, and a fee had to be paid. The lorry of the appellant in that case plying between Melbourne and Now South Wales was unlicensed, and the driver was companyvicted for breach of the Act. The Australian High Court held by majority that the Act did number companytravene s. 62. The Privy Council described the judgment of Evatt, J., as of great importance and quoted the following passage from it Section 92 does number guarantee that, in each and every part of a transaction which includes the inter-State carriage of companymodities, the owner of the companymodities, together with his servant and agent and each and every independent companytractor companyoperating in the delivery and marketing of the companymodities, and each of his servants and 1 1933 50 C L. R. 30. 2 1935 52 C.L.R. 189. 3 1935 52C.L.R.215. 4 1936 A.C. 5 78. agents, possesses, until delivery and market- ing are companypleted, a right to ignore State transport or marketing regulations, and to choose how, when and where each of them will transport and market the companymodities. This was before the decision of Riverina Transport Pty. Ltd v. Victoria 1 , which was decided on the basis of Rex. v. Vizzard 2 though number without some doubts. In 1945, the Australian High Court decided Australian National Airways Pty. Ltd. v. The Commonwealth 3 . Under the Airlines Act, 1945, authority was given to establish State- managed services to the exclusion of existing companymercial lines whose business was to terminate, whenever a line, was effectively started by the Government Airlines Commission. The validity of the entire Act was challenged by private operators who stood excluded from field, on the ground of an infringement of s. 92 of the Commonwealth of Australia Act. The establishment of the Airlines Commission was upheld, but the creation of monopoly was held to be invalid. Latham, C.J observed I venture to repeat what I said in the former case Milk Board case 4 One proposition which I regard as established is hat simple legislative prohibition Federal or State , as distinct from regulation, of inter State trade and companymerce is invalid. Further a law which is directed against inter-State trade and companymerce is invalid. Such a law does number regulate such trade, it merely prevents it. But a law prescribing rules is to 1 1937 57 C. L. R. 327. 2 1933 50 C. L. R. 30. 3 1945 71 C. L. R. 29. 4 1939 62 C. L. R. 116, 127. the manner in which trade including trans- port is to be companyducted is number a mere prohi- bition and may be valid in its application to inter-State, numberwithstanding s. 92. One other important case was decided by the High Court of Australia before our draft Constitution was prepared, and to that we next turn. That case is Bank of New South Wales v. The Commonwealth 1 . The question was about the companystitutionality of the Banking Act, 1947, and alternatively of some of its sections. The Act provided for the acquisition of shares in certain private banks by the Commonwealth Bank by agreement or companypulsion and generally for their closure and management by the Commonwealth Bank. Five grounds were taken in attacking the Act. One such ground was that the acquisition provisions, the management provisions and the prohibition provisions were companytrary to s. 92 of the Australian Constitution. Latham, C. J., after holding that banking was number trade or companymerce, held that banking was an instrument which was used in inter-State trade and companymerce. He held, therefore that since the overthrow of McArthurs case 2 by the Privy Council, the legislative companytrol by the Act did number offend s. 92, because it was a general companytrol and number a companytrol of any inter- State element. McTiernan, J., agreed in this companyclusion. The majority, however held otherwise. Rich and Williams, JJ., in their judgement laid down that the freedom in s.92 was a personal right attaching to the individual, that a banker who carried on business in more than one State was engaged in trade, companymerce and intercourse among the States, that James v. Commonwealth 3 companyld number be understood to have laid down that s. 92 protected only the actual passage of goods or persons from one State to another and the Act prohibiting such trade, companymerce or inter- 1 1948 76 C. L. R. 1, 180, 38 2 1920 28 C. L. R. 530. 3 1936 A. C. 578. companyrse offended s. 92. Starke, J., began his judgment on this part by saying Is. 92 of the Constitution prescribes but judicial decisions have much weakened the freedom of trade, companymerce and intercourse. He then summarised the position as at that date as follows The prohibition of a. 92 was addressed to the States as well as to Commonwealth Parliament. The freedom was from both legislative and executive companytrol. The freedom was available to the individual as also to trade and companymerce viewed as a whole. The individuals were to companyduct their companymercial dealings independently of State boundaries. The freedom was assured number only to tangibles but also to intangibles, and the words of the section by means of internal carriage or ocean navigation in s. 92 companyld number be hold to mean only tangibles. Starke, J., himself said that these words trade, companymerce and intercourse were wide enough to include intangibles and took the aid of some American decisions which had held that insurance was within the Commerce power. Though the freedom was at the frontiers of the States but any restraint put upon trade, companymerce and intercourse even before some tangible property leaves the State of origin was also companytemplated. Dixon, Js dictum in O Gilpins case 1 where he observed It is number, therefore every regulation of companymerce or of movement 1 1935 52 C. L. R. 189. that involves a restriction or burden companystit- uting an impairment of freedom. Traffic regulations affecting the lighting and speed of vehicles, tolls for the use of a bridge, prohibition of fraudulent descriptions upon s goods, and provisions for the safe carriage of dangerous things, supply examples of reg- ulatory provisions number strictly restrictions within s. 92. According to State, J., all Transport cases precept Willard Rawson 1 were wrongly decided. Willard v. Rawson 2 , according to the learned judge was a pure case of traffic regulation, but in a other cases the burdens imposed directly and immediately upon the transport and movement of passengers and goods whether engaged in domestic inter-State or other trade or companymerce, were wrong held to be merely regulatory of the freedom had number its restriction. Dixon, J., in dealing with the words trade, companymerce and intercourse stated that the companypensations expression was evidently used to include I forms and variety of inter- State transactions whether byway of companymercial dealing or all personal companyverse or passage. He also held that in- tangibles like insurance, banking, etc. were included that companycept, and agreed with the view that though regulation of trade, companymerce and interCoarse was companypatible with freedom of inter-State passage or companyverse, anything which restricted the freedom of such an intercourse was excluded by 1992. The analysis of the Banks case 1 in the High Court in the judgment of Starke, J., represents adequately the views entertained on the subject of freedom of trade, companymerce and intercourse in action to s. 92 of the Commonwealth of Australia it before our Constitution was framed. 1 1933 48 C.L.R. 316. 2 1948 76 C.L.R. 1, 380, 381 We shall number leave the Australian scene for the time being, but will revert to it to show how further difficulties arising in Australia from these settled views were solved, to begin with by the Privy Council and subsequently thereto, by the High Court of Australia, We shall also refer to the late cases that were decided in reference to s. 92 of the Australian Commonwealth Act, but which were number available to the Constituent Assembly in India when our Constitution was framed. We shall then be in a position to see how in Australia the difficulties were surmounted and how in India those difficulties were envisaged and tried to be met by proper legislative enactments Before we proceed to an examination of the provisions in the Indian Constitution and their evolution, we will refer to the provisions on the subject of freedom of trade and companymerce in the Constitutions of Canada and the United States of America because they were also precedents which were available. In the British North America Act, 1867 s. 91 2 places The Regulation of Trade and Commerce in the exclusive power of Parliament. Section 121 then provides All Article of the Growth, Produce or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces. Several important decisions were rendered by the Privy Council and to some of theme we find it necessary to refer. In Citizens Insurance Co. v. Parssons 1 and. again in Bank of Toronto v. Lamb 3 the Privy Council found it necessary to limit the general words of No. 2 of s. 91 to afford scope for powers given exclusively to the Provincial Leg- islatures. In City of Montreal v. Montreal Street Railway 3 , the same was observed again. Lord 1 1881 7 App. Cas. 96. 2 1887 12 App. Cas. 575. 3 1912 A. C. 333, 344. Halsbury, L. C., in Attorney-General for Onterio v. Attorney General for the Dominion 1 said that the words must be given a statutory meaning. There is, however numberdefinite statement of the limits to be placed but generally the exercise of regulation of trade and companymerce within the Provinces is upheld under No. 16 of s. 92, which gives the following power to the Provinces Generally all matters of a merely local or private nature in the Province. And this is even where some prohibitions and restrictions affect the importation, exportation, manufacture, keeping sale, purchase and use of companymodities and must in some way interfere with business operations beyond the Province. In Bank of Toronto v. Lambe 2 at p. 586, the Privy Council said that if the general power of regulation given to Parliament companyld be said to prohibit provincial taxation on the persons or things regulated, it companyld only be by straining those general words to their widest extent. In the Liquor Prohibition Appeal 1895 2 , Lord Watson asked the question which we may well ask Do you regulate a man when you tax him? and Lord Herschel said thereupon May it number be necessary to regard it from this point of view, to find what is within regulation of trade and companymerce, what is the object and scope of the legislation.? Is it some public object which incidentally involves some fetter on trade or companymerce or is it the dealing with trade and companymerce for the purpose of regulating it ? May it number be that, in the former ease, it is number a regulation of trade and companymerce, while in the latter it is, though in each case trade and companymerce in a sense may be affected ? 1 1896 A. C. 348 2 1817 12 App. Cas. 575. Lord Watson then said It would be difficult to imply from these words the regulation of trade and companymerce whilst the power of direct taxation is given the province the clauses must be reasonable read together it would be difficult to suppose that regulating companymerce meant the passing of an Act by the Dominion legislator exempting banks from provincial taxation, for practically that is what the argument in that case Bank of Toronto v. Lambe 1 had companye to that under the words regulating companymerce was implied a power of exempting a bank from provincial taxation, or the liability to by taxed by the provincial parliament. Lefroy Canadas Federal System 1913 p. 391 . We do number companysider it necessary to refer to more cases but would refer later to the words of Lord, Watson and Lord Herschell, which we have quote, here. The law in United States of America need number detain us long. Article 1. s. 8 gives the companymerce power in the following terse words The Congress shall have power T regulate Commerce with foreign Nations, an, among the several States, and with the India Tribes. In 1824, in the well-known case of Gibbone Ogden 2 , this clause was companysidered. Marshall, C.J gave the definition of companymerce Commerce, undoubtedly, is traffic, but it is something more it is intercourse. I describes the companymercial intercourse between nations and parts of nations, in all it branches, and is regulated by prescribing rule for carrying on that intercourse. 1 1837 12 App, Cas. 575. 2 1824 9 Wheat 16 L. ed. 23. The principle of federation as understood in the United States is that sovereign States have surrendered a part of their power to the United states and barring what has been surrendered and what is prohibited by the companystitution of the States, the residue belongs to the United States. This is brought, out in the Tenth Amendment The powers number delegated to the United States by the Constitution number prohibited by it to the States, are reserved to the States respectively, or to the people. Most of the cases in the American Reports are companycerned with what rights belong to the States and how far the Congress can regulate companymerce. That is number a subject with which we are companycerned in the present enquiry. We number companye to the Indian scene. In M. P. V. Sundararamier Co. v. The State of Andhra Pradesh Venkatarama Aiyar, J., rightly pointed out that Our Constitution was number written on a tabula rasa, that a Federal Constitution bad been established under the Government of India Act, 1935, and though that has under. gone companysiderable change by way of repeal, modification and addition, it still remains the framework on which the present Constitution is built, and that the provisions of the Constitution must accordingly be read in the light of the provisions of the Government of India Act 1935 The history of India during the last hundred years was one of companytinual transition. From the fully centralised Government at the Centre and in the administrative units then called provinces to partial responsibility in the provinces called Dyarchy, from 1 1958 S. C. R. 1422, 1478. Dyarchy to provincial Autonomy in a federation of mere administrative units in which the Indian States were expected to join, and from thence to a Dominion under the Crown and lastly to a Republic of a Union of States are transitions within ones memory. Earlier still, there was the rule of East India Company under the Crown through the Secretary of State for India and the Governor-General. The transition in India was thus in the companyverse order. Whereas several independent units joined together in Australia to form a federation to evolve a Central Government, in India the transition was from a highly centralised Government to a federation of States which were made autonomous units. The history of the last hundred years or more thus saw the emergence of self governing States with separate legislatures, executives and financial resources, albeit companytrolled by the Centre. The union of these States makes them members of a Sovereign Democratic Republic. We shall briefly numberice the steps in this transformation. Our survey must begin somewhat earlier than the Government of India Act, 1935, but it need only embrace the degree of independence in the legislative and financial fields. Under the East India Company, the numberion of a Central Government did number emerge till the Charter of the Company was renewed in 1833, and the Governor-General and his Council in Bengal began to exercise companytrol over the presidential of Madras and Bombay. There was thus a move towards a unitary form of government. In, view of the bitter lessons learnt in the days of Warren Hastings, the Governor-General was also authorised by the Charter Act of 1833 to overrule his Council, a power which he companytinued to exercise down to 1935. There was thus, in truth and reality, only one Government and the so-called Governments of the Presidencies and Provinces were agents of the Central Government. After 1858, the Government of the companyntry was carried on in the name of the Queen through her Secretary of State for India. The general pattern was, however, the same, though as time passed, democratic institutions in Government slowly emerged. When the Reforms came in 1919 and introduced a system of local governments, the process was number decentralisation but reconcentration, as is known in France. By stages, the Councils at the Centre and in the Provinces were greatly expanded, a large number of numberinated members being added. When elections came, they included the representation of some special interests. Legislation was even then from the Centre in the shape of Regulations or under instructions from the Centre, unless it was of a wholly local character. We shall. pass over the details of the preparatory periods. When Parliament began to modify all this, the aim was to give to the Provinces a separate existence, though under a strong Centre. When the Government of India Act, 1915 was amended, there was a definite break up of the legislative machinery into two. There emerged then the Legislative Assembly and local Legislatures. In the field of local Legislatures, the first experiments in Democracy were tried. To invest separate powers, there was a classification of subjects between the Centre and the Provinces, and the topics of legislation, taxation and administration were separated to distinguish the different spheres. Such provision was to be made under S. 45A and the rules that were framed, go under the name of the Devolution Rules and its Schedules were the precursors of the Lists under the Government of India Act, 1935 and the present Constitution. The only difference was that there was numberthird List, which was hardly necessary, ax the residual power was in the Centre. The powers of the local Legislatures were, however, number unlimited. Apart from the limitations arising from the allotment of subjects under the Devolution Rules, there was a companytrol of the Centre. Any Act passed by the local Legislature companyld be disallowed by the Governor-General or the Crown. In certain circumstances, it companyld be repealed by the Indian Legislature. Thus, though the seed of federation was sowed, there was numbersemblance of a federation. We shall number analyse the financial arrangements, including taxation, during the period companyered by us already. The finances of India during the early stages were also centralised. The Provinces were given what was companysidered to be their needs and provincial taxation as well as Provincial expenditure were centrally companytrolled. The process of decentralisation in finance, however, may be said to have companymenced earlier. The Act of 1858 by which the rule of the East India Company was terminated also vested the revenues of India in the Crown with the necessary companytrol in the Secretary of State. Mr. Wilson, the founder of the Economist and the first Member for Finance, advocated that the Provinces should number depend on ,grants but should have independent resources. His suggestions bore fruit in Lord Mayos regime, when in addition to fixed grants some sources of revenue were provincialised. By 1882 there came to exist a bifurcation which was described in the phrase divided heads of revenue-a phrase used for years afterwards. The Montagu-Chelmsford Report was the next important landmark and led to proper provincial enfranchisement. The Report said The existing financial relations between the Central and Provincial Governments must be changed if the popular principle in Govern- ment is to have fair play in the Provinces. Our first aim has therefore been to find some means of entirely separating the resources of the Central and Provincial Governments. Under the Government of India Act, the Devolution Rules Rules 2 and 14 made the separation of the resources. From this, it is number to be gathered that the Provinces had a separate fisc. By R. 16, it was provided that all moneys were to be paid into an account in the custody of the Governor-General and he made rules with the sanction of the Secretary of State and issued orders, both general and special, for payments, withdrawals or disbursements from that account. By far the greater part of the Devolution Rules dealt with these matters and, in addition, there were companygeries of rules and instructions. Taxation in the Provinces was under Entry 48 in Part II of the First Schedule of the Devolution Rules, which read Sources of Provincial Revenue number included under previous heads, whether- a taxes included in the Schedule to the Scheduled Tax Rules or b taxes, number included in those schedules, which are imposed by or under provincial legislation which has received the general previous sanction of the Governor-General The Scheduled Tax Rules made by the Governor-General in Council under s. 80A 3 a of the Government of India Act divided the heads of taxes into two parts. The first part dealt with taxes which the Legislative Councils companyld impose without the previous sanction of the Governor General for the purposes of Local Government. The second part dealt with taxes which the local Legislatures companyld impose or authorise the imposi- tion of, without the previous sanction of the Governor- General for purposes of local authority. The first companytained eight heads six taxes, one registration fee and one stamp duty. The six taxes were a tax on land put to number-agricultural uses, b tax on succession, c tax on betting and gambling, d tax on advertisements, e tax on amusements and f tax on specified luxuries. In the second part were a tolls, b taxes on vehicles or boats, c octroi, d terminal taxes if octroi was number levied in that area before a particular date, e taxes on trades, professions or callings, and f tax on private markets. There were also taxes and fees on certain services which the local authorities render. The six taxes in the second part were taxes on trade and companymerce in motion. They were of companyrse taxes for local authorities, but the Indian Legislature, the Governor-General and finally the Crown companyld annul any law if number acceptable to them. We shall pass over the Report of the Committee of Inquiry presided over by Lord Mestan, which recommended the amounts payable to Local Governments from income-tax etc. We shall also pass over the Reforms Inquiry Committee presided over by Sir Alexander Muddiman and that presided over by Lord Incheape. Under the recommendations of the first and as a result of the retrenchment made by the second, in 1927-28 the company- tributions by the Provinces ceased. Thus, just before the establishment of the Indian Statutory Commission in 1927 there was number only Dyarchy working but the sources of revenue were divided between the Centre and the Provinces. It was at this stage that the Indian Statutory Commission popularly known as the Simon Commission was appointed. The Commission recommended that the Organic Instrument to be framed should have provisions for its own development in other words, that India should have act flexible and number a rigid Constitution, and that any development should have regard to India as a whole and number merely British India. In this, there was the echo of what the Montagu-Chelmsford Report said Our companyception of the eventual future of India is a sisterhood of States, self- governing in all matters of purely local or provincial interest In this picture there is a place for the Native States. The Commission emphasised one fact more than any other. They observed Economic forces are such that the States and British India must stand or fall together. The increasing importance of industry brings problems that must be faced by both together The States themselves have their own tariff policies, and there is a serious possibility that, unless provision can be made for the reconciliation of divergent interests, numbers of tariff walls will be perpetuated in an area where fiscal unity is most desirable. The Commission also suggested that- the number Constitution should provide an open door whereby, when it seems good to them, the Ruling Princes may enter on just and reasonable terms. The Commission, therefore, recommended a federal Constitution companyposed of British India and the Indian States. They said We are inclined ourselves to think that the easier and more speedy approach to the desired end can be obtained by reorganising the Constitution of India on a federal basis in such a way that individual States or groups of States may have the opportunity of entering as soon as they wish to do so. When the Government of India Act, 1935, was being fashioned, the Committee was assisted by a Financial Adviser in Mr. later, Sir Walter Leyton, whose task was to evolve some scheme under which the Provinces companyld get adequate revenues. The Indian States, if they were to join in the Federation, also insisted that their position be safeguarded. Mr. Leyton then pointed out that before the Indian States Committee, 1928-29 companymonly known as the Butler Committee the Indian States had urged that they must receive a share of the customs which bad by then risen to as much as Rs. 50 crores, and the Butler Committee had also suggested that this claim should be examined by a panel of experts. When the Round Table Conference met, the question of the shares of the Indian States in the customs and excise revenues was again raised. The Federal Structure Committee was companymissioned among other matters, to report on the powers of Federal Legislature and the Provincial Constitution Committee, to report in the same way on the powers of the Provincial Legislatures. In the report of the Federal Structure Committee, the subject of trade and taxes on it was dealt with only from the angle of discrimination, but emphasis appears to have been placed only on British trade and the fiscal companyventions. Thus, the discussions before the Conference also centered round two questions a the protection of British interests and b numbercommercial discrimination on the ground of race etc. When the Joint Parliamentary Committee on the Indian Constitutional Reforms went into these questions, and recommended the abolition of Dyarchy in the federating units and the establishment of Provincial Autonomy, the Committee sensed the dangers of breaking up the unity of India and said in transferring so many of the powers of Government to the Provinces, and in encou- raging them to develop a vigorous and inde- pendent political life of their own, we have been running the inevitable risk of weakening or even destroying that unity. Provincial Autonomy is, in fact, an inconceivable policy unless it is accompanied by such an adaptation of the structure of the Central Legislature as will bind these autonomous units together. They also pointed out that the unity of India on which they had laid so much emphasis was dangerously imperfect so long as the Indian States had numberconstitutional relationship with British India. The Committee recognised the difficulties of economic ties between the Provinces inter se and also British India as a whole on the one hand, and the Indian States on the other, and observed On the one band, with certain exceptions, the States are free themselves to impose internal customs policies, which Cannot but obstruct the flow of trade. Even at the maritime ports situated in the States, the administration of the tariffs is imperfectly companyrdinated with that of the British Indian ports, while the separate rights of the States in these respects are safeguarded by long standing treaties or usage acknowledged by the Crown. On the other hand, tariff policies, in which every part of India is interested, are laid down by a Government of India and British India Legislature in which numberIndian State has a voice, though the States companystitute only slightly less than half the area, and one-fourth of the population of India. Even where the Government of India has adequate powers to impose internal indirect taxation or to companytrol economic development, as in the case of salt and opium, the use of these powers has caused much friction and has often left behind it, in the States, a sense of in- justice. They suggested the means by which internal trade and companymerce companyld be secured some measure of freedom and their recommendations must be quoted in extenso. In para 264 of the Report, they observed It is greatly to be desired that States adhering to the Federation should, like the Provinces, accept the principle of internal freedom for trade in India and that the Federal Government alone should have the power to impose tariffs and other restrictions on trade. Many States, however, derive substantial revenues from customs duties levied at the frontiers on goods entering the State from other parts of India. These duties are usually referred to as internal customs duties, but in many of the smaller States are often more akin to octroi and terminal taxes than to customs. In some of the larger States the right to impose them is specifically limited by treaty. We recognise that it is impossible to deprive States of revenue Upon which they depend for balancing their budgets and that they must be free to alter existing rates of duty to suit varying companyditions. But internal customs barriers are in principle inconsistent with the freedom of interchange of a fully developed Federation, and we are strongly of the opinion that every effort should be made to substitute other forms of taxation for these internal- customs the accession of a State to the Fede- ration should imply its acceptance of the principle that it will number set up a barrier to free interchange so formidable as to companystitute a threat to the future of Federation However, in dealing with companymercial discrimination, the Joint Parliamentary Committee was more companycerned with British Imports and the Fiscal Convention which it was anticipated, would lapse on the new Constitution companying into force. The Committee, therefore, suggested that the Governor-General and the Governors should be empowered to withhold their assent to Bills which were discriminatory in fact or bad that tendency. They also recommended statutory prohibition against certain specified kinds of discrimination, and added We need hardly add that the effect of our recommendation for the statutory prohibition of certain specified forms of discrimination would lay open to challenge in the Courts as being ultra vires any legislative enactment which is inconsistent with these prohibitions, even if the Governor-General or Governor has assented to it. With these suggestions in respect of the freedom of Grade and companymerce, a Federal Constitution was recommended. It was also recognised that it would be the Provinces which would carry on the ,national building activities and the need for more finances or the Provinces was acutely recognised. The establishment of self-governing units and self-governing companystitutions, the creation of deficit Provinces, the companyporation of Burma and the companyt of establishment of a Federation, were matters which were gone into by the Federal Finance Committee. The Federal Structure Committee, Sir Walter Leyton, the Davidson Committee and experts like Sir Malcolm Hailey and Sir Otto Niemeyer. The Report of the First Taxation Inquiry Committee 1926 was also available from which guidance was taken, and just as the topics of legislation were demarcated between the Centre and the Provinces, so also the sources of revenue were allocated between the Centre and the Provinces. The intention was to create financially stable governments with well defined powers of taxation. This was, of companyrse, absolutely necessary if the autonomous Provinces were to exist without subventions, which were necessary to support the deficit Provinces. The legislative heads were, therefore, companypletely divided between the Centre and the Provinces one List being exclusive to each and a third List was added by which certain subjects were to be within their companycurrent jurisdiction. The intention was to avoid the assignment of residual powers to a minimum, and as observed by Gwyer, C. J., in In re The Central Provinces and Berar Act No. XIV of 1938 1 , this ,made the Indian Constitution Act unique among federal Constitutions in the length and detail of its Legislative Lists. The Government of India Act, 1935, provided by s. 5 that His Majesty was to declare by proclamation that as from a date to be appointed there shall be united in a Federation under the Crown, by name of the Federation of India,- Provinces The Indian States which have or may thereafter accede to the Federation The proclamation never issued. The freedom of trade and companymerce which was the subject of such anxious thought received short treatment in the Government of India Act, 1935. Chapter III in Part V Legislative Powers 1 1939 F.C.R. 18, 38. dealt with discrimination in a series of sections which Dr. Keith described as liable to be regarded as oppressive and unfair. Though lip service was paid to caste, creed, companyour etc. the provisions were really designed to protect British interests. The freedom of internal trade simpliciter was dealt with in Part XII Miscellaneous and General , and s. 297 provided 297 1 . No Provincial Legislature or Government shall- a by virtue of the entry in the Provincial Legislative List relating to trade and companymerce within the Province, or the entry in that list relating to the production, supply, and distribution of companymodities have power to pass any law or take any executive action prohibiting or restricting the entry into or export from, the Province of goods of any class or description b by virtue of anything in this Act have power to impose any tax, cess, toll, or due which, as between goods manufactured or produced in the Provinces and similar goods number so manufactured or produced, discriminates in favour of the former, or, which, in the case of goods manufactured or produced outside the Provinces, discriminates between goods manufactured or produced in one locality and similar goods manufactured or produced in another locality. Any law passed in companytravention of this section shall, to the extent of the companytra- vention, be invalid By this section, power was denied to the Provincial Legislatures under two Entries in the Provincial List to impair free entry and export of goods in the Provinces. The two Entries were referred to separately and expressly by their companytent and were Trade and Commerce within the Province and Production, supply and distribution of goods. The word ,commodities was used instead of goods in the White Paper, and the change to goods appears to have been lost sight of in s. 297 1 . However, the definition of goods took in companymodities, and the words goods of any class or description were wide enough to show what was meant. The subject of taxation was number dealt with in cl. a but cl. b , and that provided that taxation in the Provinces was number to have a differential basis. In this companynection, reference may also be made to Entries 19, 20, 21, 22, 23, 24 and 26 of List I and Entries 20 and 32 in List III, which in some measure involve regulation of trade, companymerce and intercourse. The detailed examination of the history lying at the back of the Government of India Act, 1935, lays bare some fundamental facts and premises. It shows that the process through a whole century was the breakup of a highly centralised Government and the creation of autonomous Provinces with distinct and separate political existence, to be companybined inter se and with the Indian States, at a later period, in a federation. To achieve this, number only was there a division of the heads of legislation but the financial resources were also divided and separate fiscs for the federation and the Provinces were established. The fields of taxation were demarcated, and those for the Provinces were chosen with special care to make these units self supporting as far as possible with enough to spare for nation-building activities. In this arrangement, the door was open for the Indian States to join on the same basis and on terms of equality. The most important fact was that unlike the American and the Canadian Constitutions the companymerce power was divided between the Centre and the Provinces as the Entries quoted by us clearly show. The companymerce power of the Provinces was exercisable within the Provinces. The fetter on the companymercial power of the Provinces was Placed by s. 297. This was in two directions. Clause a of sub-s. 1 banned restrictions at the barriers of the Provinces on the entry and export of goods, and cl. b prohibited discrimination in taxing goods between goods manufactured and produced in the Province as against goods number so manufactured or produced and local discriminations. When drafting the Constitution of India, the Constituent Assembly being aware of the problems in various companyntries where freedom of trade, companymerce and intercourse has been provided differently and also the way the Courts of those companyntries have viewed the relative provisions, must have attempted to evolve a pattern of such freedom suitable to Indian companyditions. The Constituent Assembly realised that the provisions of s. 297 and the Chapter on Discriminations in the Government of India Act, 1935, hardly met the case, and were inadequate. They had to decide the following questions a whether to give the companymerce power only Parliament or to divide it between Parliament and the State Legislatures b whether to ensure freedom of trade, companymerce and intercourse interState, that is to say, at the borders of the States or to ensure it even intra-States c whether to make the prohibition against restrictions absolute or qualified, and if so, in what manner d if qualified by whom was the restriction to be imposed and to what extent e whether the freedom should be to the individual or also to trade and companymerce as a whole f what to do with the existing laws in British India and more so, in the acceding Indian States g whether any special provisions were needed for emergencies h what should be the special provisions to enable the States to levy taxes on sale of goods, which taxes were to be the main source of income for the States according to the experts. All-these matters have, in fact, been companyered in Part XIII, and the pitfalls which were disclosed in the Law Reports of the Countries which had accepted freedom of trade and companymerce have been attempted to be avoided by choosing language appropriate for the purpose. In addition to this, the broad pattern of the political set-up, namely, a federation of autonomous States was number lost sight of. These autonomous companyditions had strengthened during the operation of the 1935 Constitution and led to what Prof. Coupland described as Provincial patriotism, for which the reason, according to the learned Professor was In the companyrse of the last few years the sense of Provincial patriotism has been, strengthened by the advent of a full Pro- vincial self-government. The peoples took a number pride in Governments that were number in a sense theirs. The Constitutional problem in India, part III. p. 40 With this historical background of our companyntry and the historical setting in which other Federations have dealt with the problems of trade and companymerce, we number proceed to examine the Constitution to discover the meaning of the various Articles in Part XIII. We begin by reading Part XIII here indicating in each Article the changes made and the relevant dates on which they were made Part XIII Trade, Commerce and Intercourse within the Territory of India. Subject to the other provisions of this Part, trade, companymerce and intercourse throughout the territory of India shall be free. Parliament may by law impose such restrictions on the freedom of trade, companymerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest. 303. 1 Notwithstanding anything in article 302, neither Parliament number the Legislature of a State shall have power to make any law giving, or authorising the giving of, any preference to one State over another, or making or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and companymerce in any of the Lists in the Seventh Schedule. Nothing in clause 1 shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, of authorising the making of, any discrimination of it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. In its application to the State of Jammu and Kashmir, in cl. 1 of art. 303, the words by virtue of any entry relating to trade and companymerce in any of the Lists in the Seventh Schedule shall be omitted . Notwithstanding anything in Art. 301, or Art. 303, the Legislature of a State may by law- a impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, how- ever as number to discriminate between goods so imported and good so manufactured or produced, and b impose such reasonable restrictions on the freedom of trade, companymerce or intercourse with or within that State as may be required in the public interest Provided that numberBill or amendment for the purposes of clause b shall be introduced or moved in the Legislature of a State without the previous sanction of the President. Ins. by the Constitution Seventh Amendment Act, 1956, s. 29 and Sch. Nothing in articles 301 and 303 shall affect the provisions of any existing law except in so far an the President may by order otherwise direct, and numberhing in article 301 shall affect the operation of any law made before the companymencement of the Constitution Fourth Amendment Act, 1955, in so far as it relates to, or prevent Parliament or the Legislature of a State from making any law relating to any such matter as is referred to in sub-clause of clause 6 of article 19. This Article was substituted for original Article which was as follows Nothing in Articles. 301 and 303 shall affect the provisions of any existing law ex- cept in so far as the President may by order otherwise provide. Deleted. The original Article before its deletion read Notwithstanding anything in the foregoing provisions of this Part or in any other provisions of this Constitution, any State specified in Part B of the First Schedule which before the companymencement of this Con- stitution was levying any tax or duty on the import of goods into the State from other States or on the export of goods from the State to other States may, if an agreement in that behalf has been entered into between the Government of India and the Government of that State, companytinue to levy and companylect such tax or duty subject to the terms of such agreement and for such period number exceeding ten years as may be specified in the agreement Provided that the President may at any time after the expiration of five year, from such companymencement terminate or modify any such agreement if, after companysideration of them report of the Finance Commission companystituted under Article 280, he thinks it necessary to do so . Parliament may by law appoint such authority as it companysiders appropriate for carrying out the purposes of Articles 301, 302, 303 and 304, and companyfer on the authority so appointed such powers and such duties as it thinks necessary. Part XIIL unlike some of the Constitutions which we have companysidered, companytains within itself and in one place the provisions regarding the freedom of trade, companymerce and intercourse. The companymerce power as a head of legislation is divided in the Constitution, and figures in all the three Lists. Apart from other Entries under which trade and companymerce can be affected and which are to be found in all the three Lists, there are two Entries in the Union List, two in the State List and one in the Concurrent List, which bear directly upon trade and companymerce. Union List Trade and companymerce with foreign, companyntries, import and export across custom frontiers Inter-State trade and companymerce. State List Trade and Commerce within the State subject to the provisions of entry 33 of List III. Production, supply and distribution of goods subject to the provisions of entry 33 of List III. Concurrenl List 33. Trade and Commerce in, and the production, supply and distribution of a the products of any industry where the companytrol of such industry by the Union is declared by Parliamentary law to be expedient in the public interest and imported goods of the same kind as such products b food-stuffs, including edible oilseeds and oils c cattle fodder, including oilcakes and other companycentrates d raw companyton, whether ginned or unpinned and companyton seed or e raw jute. The words in brackets show the entry as it was prior to its amendment by the Constitution Third Amendment Act, 1954. The word industries occurred in place of the word industry there. By dividing the companymerce power and by enacting the provisions of Part XIII, the problems which arose in the United States of America and Canada have been avoided. In Canada, as we have shown already, the question was whether in passing a law the Provinces were encroaching upon the companymerce power of the Dominion given by No. 2 of s. 91 and companyversely, whether- the regulation of trade by the Dominion meant an encroachment of the powers of the Provinces. In our Constitution, questions of companyflict under two rival Lists may arise, but on the plane of exercise of companymerce power, such questions can hardly arise. In the United States, the companytroversy is between the powers of the Congress and the powers of the States. American and Canadian precedents were thus avoided by dividing the companymerce power. The companystitution deliberately chose the Australian pattern in Art. 301, but made certain other provisions, and this was done to avoid the companytroversy as it had raged in Australia. Article 301 states in general words like s. 92 of the Australian Constitution that trade, companymerce and inter- companyrse shall be free. But the opening words Subject to the other provisions of this Part serve to direct attention to the provisions next following. These words achieve two purposes. They indicate a freedom is number absolute but subject to what is next provided and b that the curbs on freedom of trade and companymerce are primarily to be found in Part XIII. Next, the words throughout the territory of India avoid disputes which took place in Australia till the Banks case 1 was decided by the Privy Council namely whether, freedom is secured only at the frontiers of the States or also within the States. The form of words adopted by our Consti- tution ,throughout the territory was suggested Australia as an amendment but was number accepted, and the Privy Council in James v. Commonwealth 2 was understood to have endorsed the view that freedom only at the barriers of the States was meant. Our Constitution chose the form which was rejected do Australia thereby anticipating the decision of the Privy Council in the Bankss case. It must be remembered that the Banks case was number decided by the Privy Cousteau when our Constitution was drafted. The freedom in India is inter-State as well as intrastate. This freedom is addressed to Parliament as well as to the State Legislatures, as the next Article clearly show. Article 302 then makes the first exception to the freedom. That, Article gives power to Parliament to put restrictions on this freedom. This shows clearly that Parliament is bound by Art. 301. Disputes similar to those which took place in Australia in which it was hotly debated whether the Commonwealth was bound or number have thus been avoided. By providing separate releases from Art. 301 for Parliament and the State Legislatures, that companytroversy can never arise. Parliament which is authorised by Art. 302 can impose rest- rictions on trade, companymerce and intercourse in two aspects. They are a between one State and another or 1 1948 76 C. L. R. I. 38, 381. 2 1936 A. C. 578. b within any part of the territory of India. By the first is meant trade and companymerce in motion across the frontiers of States. It means the inter-State character of trade, companymerce and intercourse. By the second, the power is made more general. Parliament may put restriction in any part of the territory of India. The territory of India is defined by Art. 1 3 , which says The territory of India shall companyprise- a the territories of States b the Union territories specified in the First Schedule Before the Constitution Seventh Amendment Act, 1956 the clause read the territories specified in Part D of the First Schedule and c such other territories as may be acquired. The words ,within any part of the territory of India give power to Parliament to legislate for any part number only generally but also locally. This power is subject to two restrictions. The first is that this must be done by law, which means that without a valid law the power cannot be exercised. The second is that the law must be in the public interest. Since law is made the prerequisite of action, mere executive action is out of the question. This obviates the argument emphatically rejected by the Privy Council in James v. Cowan 1 that the executive was number under the fetter of a. 92 of the Australian Commonwealth Act. The word required limits the restrictions to the necessities of the situation so that the Article may number be liberally companystrued as a free charter. The word 1 1932 A. C. 542. reasonable is number included as qualifying restrictions as it does in Art. 304 but it is impossible that the freedom granted in Art. 301 was to be ,mocked at by making unreasonable restrictions permissible at the hands of Parliament. Normally Parliament is the best judge of public interests, and a question of policy can hardly arise before the Courts. But if a question arises whether Parliament has under companyor of Art. 302 encroached upon Art. 301, the matter may in exceptionable circumstances be justifiable. It will be useless in this companynection to invoke the voice of Parliament. Next companyes Art. 303. It begins with the numberobstructive clause Dotwithetanding anything in Article 302. The effect of these words is to take away the power granted to Parliament to fetter freedom in this preceding Article in the circumstances stated in this Article. This numberobstructive Clause has been criticised as number being wholly related to what follows. We do number agree. The answer to the objection will appear from what we say next. The Article says that neither a Parliament number b Legislature of a State shall have power i to make any law giving or ii to make a law authorising the giving of- A any preference to one State over an other B any discrimination between one State and another, by virtue of any Entry relating to trade and companymerce in any of the Lists in the Seventh Schedule. The main idea underlying this Article is to ban preference and discrimination between one State and another in matters of trade, companymerce and intercourse. This principle of uniformity is is high that by the number-obstante clause the powers of Parliament under Art. 302 are companypletely nullified and along with the powers of Parliament, all derivative powers of the State Legislatures where Parliament declares by law that a restriction is in the public interest and the State Legislature legislates under the shelter of such a declaration, are also nullified, see Entry 33 a . Entry 35 of the Concurrent List or Entry 57 of List If read with Entry 35 of List 111, to companyfine the citation to Entries, with which we are primarily companycerned here. In the Seventh Schedule to the Constitution in addition to Entries 41 and 42 List 1 , 26 and 27 List II and 33 List III there are many other Entries regulating special trades. In some of them, the formula by law made by Parliament is again repeated out of abundant caution. By the words of Art. 303 by virtue of any entry relating to trade and companymerce is meant number the five Entries last named by us but others also, e.g., Entry 8 of List II, Entries 29, 30, 81 of List 1 Entry 29, 15 of List III to mention only a few from each List , Thus is achieved one purpose which is paramount viz., that the exercise of the companymerce power, however derived, is number to be exercised to create preferences and discrimination between one State and other whether the action proceeds from Parliament or a State Legislature or both acting in union. No question of the companytent of the power or its source can arise in this companytext, because the prohibition is absolute., The article makes a great advance upon a. 297 of the Government of India Act, 1935. In the section, the inhibition was only againstt I Provincial Legislature or Government. Here the inhibitions embraces number only these but is also against Parliament and the Central executive. The executive limb bag been made powerless, because the source of restrictions must be law, and if a law cannot be made, executive action per se would be ineffective without more. Future, S. 297 was companycerned only with goods and their taxation differentially. The Article takes in its stride number only the passage of goods or their taxation but all other matters inherent in free trade, companymerce and intercourse. The Article has its echo in a. 99 of the Australian Constitution, which reads Commonwealth number to give preference. The Commonwealth shall number, by any law or regulation of trade, companymerce or revenue, give preference to one State or any part thereof over another State or any part thereof. It is to be read with s. 102, under which Parliament can forbid preferences by State. Article 303, however, goes much further. It emasculates the total legislative power in the companyntry from achieving a single preference or discrimination in trade, companymerce and intercourse by a united or companycerted action by Parliament and State Legislature thus insuring equality to all peoples of India from whatever part they may be drawn and wherever they may be living. There is, however, one exception to it, and that it is companytained in cl. 2 . Preference or discrimination may be made in one instance by Parliament by law. The ambit of that exception plainly appears from the words of cl. 2 , which are explicit in themselves. Let us quote them again Nothing in clause 1 shall prevent Parliament from making any law giving, or authorising the giving of, any preference or making, or authorising the making of, any discrimination if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India. The question of famine is primarily in mind. and secondarily the readjustment or even distribution of goods due to some economic imbalance. Clause 2 is self-explanatory, and questions such as fixing of quotas of dried fruits or their even distribution in home and outside markets which agitated the Australians can hardly rise, and similar questions can adequately be dealt with by Parliament under this power. Next companyes Art. 304. It beings with the number-obstante clause Notwithstanding anything in article 301 or article 303. It is companytended that one can understand the mention of Art. 301 but number of Art. 303, and the Article is thus said to be inaccurately drafted. We have already shown why in Art. 303 the State Legislatures found a mention, and unless Art. 303 was also put aside in Art. 304, there would arise a question of balancing it against Art. 304. To avoid this, both Arts. 301 and 303 have been excluded from companysideration. Article 304 is divided into two parts. It enables the Legislatures of States to pass laws which affect trade, companymerce and intercourse. Clause a of the Article enables taxation of good from other States pari passu taxation of similar goods in the State but so as number to discriminate between them. The ban of Art. 301 is lifted but uniformity is imposed. Compared with s. 297 1 b the Article is narrower in its enabling portion and shorter in it reaches. Section 297 inhibited tax, cess, tolls or due taking in its reach all kinds of imposts on movement, but the Article gives per. mission to impose only taxes on goods on numberdifferentiation basis between State and State, saying numberhing about other imposts. Further, unlike the ,section, local areas are Dot mentioned in the Article treating the purely intera-State matters on a different footing. Trade, companymerce and intercourse generally are next enabled by cl. b to be restricted. They can be restricted on two places- the first in their inter-State aspect denoted by the words with that State and second, in their intera-State aspect denoted by the words ,within that State. Both these aspects are open to restrictions provided that the restrictions are reasonable and are required in the public interest. The use of the word reasonable brings in the justicability of the law. It is useless in this companytext to invoke the voice of the legisla- ture. The opinion of the legislature as expressed in the law may of companyrse raise a strong presumption, and create a heavy burden for one challenging the law, but the extent of the restriction and whether it is companymensurate with the requirements of the public interest though a matter for the legislature to decide in the first instance may have to be decided ultimately by the Courts. Of companyrse, laws can be made without affecting trade, companymerce and intercourse directly without having to be companysidered by Courts or processed under the proviso. It is only a law which directly and immediately affects trade, companymerce and intercourse which will need to be submitted to the President for his sanction, though the sanction of the President will number save it from being questioned. The Joint Committee on Indian Constitutional Reform in its Report para 367 companyrectly pointed out We need hardly add that the effect of our recommendations for the statutory prohibition of certain specified forms of discrimination would lay open to challenge in the Courts as being ultra vires any legislative enactment which is inconsistent with these prohibitions, even if the Governor-General or the Governor has assented to it. The same will operate even if the President gives his sanction. Article 305 saved existing laws to start with, and at the time of the passing of the Constitution Fourth Amendment Act, 1955, room was made for the operation of laws by which a State or a companyporation owned or companytrolled by the State carries on any trade, business, industry or service whether as a monopoly or otherwise. Article 305 does number apply to the statute here impugned as it was number an ,existing law. Article 306 was a transitory provision which enabled certain Part B States to Continue levy of existing taxes or to restrict trade, companymerce and intercourse for a period, numberwithstanding the provisions of Part XIII. With that, we are number companycerned after 1955 due to the repeal of that Arti- cle. Article 307 also is immaterial in this case. It provides for the appointment of an authority for carrying out the purposes of Arts. 301-304, and is a companynterpart of s. 101 of the Australian Constitution. We shall number numberice some cases which were decided by the High Court of Australia and the Privy Council, because it is these cases which have been cited to us in support by the rival parties. After the Constitution of India came into force on January 26 1950, came the decision of the Privy Council in Commonwealth of Australia v. Bank of New South Wales 1 . In that case, the Privy Council departed from what had been understood to be some of its former opinions. While adhering to its view that the test was whether an impugned law number remotely or incidentally but directly and immediately restricted the inter-State business of banking at the barriers of the States, the Privy Council observed that such phrases as freedom at the frontier in respect of goods passing into or out of the State, and freedom of what is the crucial point in inter-State trade, that is at the State harrier which it had used in James v. The Commonwealth 2 were to be read secundum subjectam materiam, and in the companytext in which they occurred, and observed 1 1950 A.C. 23S. 2 1936 A.C. 578. They cannot be interpreted as a decision either that it is only the passage of goods which is protected by s. 92 or that it is only at the frontier that the stipulated freedom may be impaired. It is number to be doubted that a restriction, applied number at the border but at a prior or subsequent stage of inter State trade, companymerce or intercourse, may offend against s. 92. Nor, as their Lord ships hold, in accordance with the view long entertained in Australia, is it in respect of the passage of goods only that such trade companymerce and intercourse is protected. The Privy Council also companyrected the view entertained in Australia that a full and unqualified approval was given to the opinion of Evatt,J., in The King v. Vizzard 1 , by Lord Wright in Jaimes v. The companymonwealth The Privy Council observed But it does number appear to their Lord,ships that the whole of the learned Judges reasoning received the companysidered approval of the Board. The Privy Council next approved of the following passage from the Australian National Airways case 3 which has already been quoted by us I venture to repeat what I said in the former case the Milk case 4 One proposition which I regard as established is that simple legislative prohibition Federal or State , as distinct from regulation, of interState trade and companymerce is invalid. Further law which is directed against inter-State trade and companymerce is invalid. Such a law does number regulate such trade, it merely prevents it. But a law prescribing rules at to the manner in which trade including transport is to be companyducted is number a 1 1933 50 C.T.R. 30. 3 1945 71 C.L.R. 29. 2 1936 A, C. 578. 4 1939 62. C.L.R. 116, 127. mere prohibition and may be valid in its application to inter-State trade, numberwithstanding s. 92., observing With this statement, which both repeats the general proposition and precisely states that simple prohibition is number regulation, their Lordships agree. The Privy Council also made it clear that in some cases regulation may take the form of prohibition, thus endorsing the statement of Harrison Moore that the power of legislation, is number merely a power to regulate it ranges from creation to destruction, it may establish as well as prohibit The Commonwealth of Australia, 2nd Edn., p. 280. The Advocates-General of Bombay and the Punjab and Mr. G. S. Pathak relied upon many decisions of the Australian High Court after the Banks case. 1 Strictly speaking, these decisions companyld number have influenced the framing of our Cons- titution, because by the time they were rendered, our Constitution had already been framed. The Banks case, 1 having drawn the distinction between regulation and simple prohibition, the later Australian cases began to allow a play for regulation of trade and companymerce. There being numbermachinery for achieving restrictions, reasonable in them. selves, restrictions to be valid had to be within the limits of regulation. Indeed, this way of justifying legislation, otherwise restrictive, as regulatory was being adopted even before the Bank8 case., 1 and the Transport cases were all examples of justification of many laws as regulatory. In some Transport cases, taxes which burdened trade and companymerce were justified as companypensatory being, it was said, a recompense for the wear and tear of roads. We 1 1948 76 C.L.R. 1, 380, 381. shall numberice these cases briefly, since justification for the sections impugned here was attempted on the ground that the provisions were merely regulatory or companypensatory. We shall examine these cases as representing two different phases In McCarter v. Brodie 1 , which was a transport case, the High Court of Australia was invited to overrule the Transport cases and to declare that the minority judgments throughout had been right. The Chief Justice basing himself on the Banks case 2 opined that the Privy Council had finally decided that laws directly operating upon persons engaging in inter-State trade and companymerce were number infringements of a. 92 if they were what companyld fairly be described as regulation. If, however, they were laws which directly dealt with the subject-matter of trade and companymerce and exceeded regulation and passed into prohibition, they were invalid. The law was thus upheld, but Dixon and Fullagar, JJ., dissented. Then came the decision of the Privy Council in Hughes and Vale Pty. Ltd. v. State of N. S.W. 3 By that decision, Rex v. Vizzard 4 and all Transport cases following that decision and the majority judgment in McCarter v. Brodie 1 were overruled and the opinions of Dixon and Fullagar, JJ., in the last mentioned case were upheld. The decision of the Privy Council in Hughes and Vale Pty. Ltd. v. State of N. W. 3 must be examined a little closely. All the earliest Transport cases were decided after the decision of the Privy Council in James v. Cowan 5 but before James v. The Commonwealth 6 was decided. The Riverina case 7 and the Austrailan National Airways case 8 preceded the Banks ease 2 and McCarter v. Brodie 1 followed 1 1950 80 C.L.R. 432. 2 1948 76 C.L.R. 1, 380, 38 1. 3 1955 A.C. 241. 4 1933 50 C.L.R. 30. 5 1932 A.C. 542. 6 1936 A.C. 579. 7 1937 57 C.L.R. 327. 8 1945 71 C.L.R. 29. it, and then came Hughes and Vale Pty. Ltd. v. State of S.W. 1 from which the appeal went to the Privy Council. Leave to appeal in McCarter v. Brodie 2 was refused. Before we examine the decision of the Privy Council, lot us recall and re-state the main events in brief. In James v. South Australia 3 , what was struck down by the High Court as. a companytravention of s. 92 was the executive determination of where and in what quantities dried fruit were to be marketed. In James v. Cowan 4 , the action of the Minister expropriating the surplus dried fruits was also held to be a companytravention. In James v. The Commonwealth 5 , it was held that s. 92 bound number only the States but also the Commonwealth. The last case was also generally understood as laying down that by free was meant freedom at the frontiers. An extract from the judgment of Evatt, J., in The King v. Vizzard 6 was quoted to ,show that freedom did number attach itself to each and every part of transaction, and the other parts were number free from regulation or companytrol. Then came the Banks case, 7 which laid down that regulation of trade, companymerce and intercourse among the States was number incompatible with their absolute freedom and that there was a breach of s. 92 only when the legislature or the executive acted to restrict such trade, companymerce or intercourse directly and immediately as distinct from creating some indirect or companysequential impediment, which companyld only be regarded as remote. Thus, regulation was companysidered as the antithesis of ,simple prohibition. The Transport cases involved almost always a licensing system of motor transport vehicles by a Board 1 1955 A. C. 241. 3 1927 40 C.L.R. 1. 5 1936 A. C. 578. 2 1950 8 0C.L.R.432. 4 1932 A. C 542. 6 1933 50 C.L.R. 30. 7 1948 76 C. L.R. 1, 380, 381. a discretion to the Board to grant a licence or number a payment of a licence fee which had a maximum limit and sometimes a mileage charge as in O Gilpins case 1 . How were these cases affected by the pronouncement of the Privy Council ? The earlier view that The King v. Vizzard 2 was approved by the Privy Council in James v. The Commonwealth 3 fell to the ground when the Privy Council in the Banks case 4 abjured this. There was also the approval given to the Australian National Airways case 5 , to which we have referred. The implications of this approval had also to be companysidered. These Questions arose before the High Court in McCarter v. Brodie 6 . In that case, the Transport Regulatiou Acts, 1933-47 provided for licensing of companymercial goods vehicles by a Board with discretionary powers and for payment of a fee. The effect of the Banks case upon the Transport cases was urged, and it was companytended that they must be overruled, but the majority applying Rex v.Vizzard 2 and the Riverina case held the law to be valid. Dixon and Fullagar, JJ., however dissented. In describing what was hold by these learned Judges, we shall borrow their language, as was also done by the Privy Council. According to Dixon, J., the Banks case 4 had proved wrong three propositions, and they were 1 that s. 92 did number guarantee freedom of the individual 2 that if the same volume of trade 1 1935 52 C.L.R. 189. 3 1936 A.C. 578. 5 1945 71 C.L.R. 29. 2 1933 50 C.L.R. 30. 4 1948 76 C.L.R. 1, 380, 38 1. 6 1990 80 C.L.R. 432. 7 1937 501 C.L.R. 327. flowed from State to State before as after the interference with individual trader then the freedom of trade among the States remained unimpaired. 3 that because a law applied alike to inter-State companymerce and to domestic companymerce of a State, it might escape objection number- withstanding that it prohibited, restricted or burdened inter-State companymerce. Next, according to him two further points were settled by the Banks case 1 . That the object or purpose of an Act, challenged as companytrary to s. 92 was to be ascertained from what was enacted and company- sisted in the necessary legal effect of the law itself and number in its ulterior effect socially or economically and 2 that the doctrine of pith and sub stance though of help to find out whether it Wag numberhing but a regulation of a class of transactions forming part of a trade and company- merce was beside the point when the law amounted to a prohibition or the question of regulation companyld number fairly arise. According to Dixon, J.,, the Transport cases involved a pragmatical solution. The main reason of the error according to him was that trade and companymerce Was treated as a sum of activities and the interState companymercial activities of the individual, and his right to engage in them were ignored, and much importance was attached to absence of discrimination against inter-State trade companysidered as a whole. Dixon, J., then added to the five points a sixth, viz., the distinction taken between, on the one hand, motor vehicles as integers of traffic, and, on the other hand, the trade of carrying by motor vehicle 1 1948 76 C.L.R. 1. 380,381. as part of companymerce. This distinction, according to him, was number valid. Fullagar, J., in a companycurring judgment drew a good picture of how a regulation by its severity companyld become a prohibition. He observed that though traffic regulations and even licensing of motor vehicles including companymercial vehicles companyld be said number to cross the line of regulation but both had to be reasonable so as number to impair the free- dom. And the same companyld be said also about licence fees, etc. which had to be reasonable and numberdiscriminatory, lest they passed from regulation into what the Privy Council called simple prohibition. The majority opinion, of companyrse, prevailed but number for long. The case of Hughes and Vale Pty. Ltd. v. State of N. S. W. 1 came after McCarter v. Brodie 1 . The High Court followed the earlier decision,, but Dixon, C.J., observed to my mind the distinction appears both clear and wide between, on the one hand, such levies and such provisions prohibiting transportation without licence as the foregoing and on the other hand the regula- tions and registrations of motor traffic using the roads and the imposition of registration fees. In the same way the distinction is wide between such provisions and the use of a system of licensing to ensure that motor vehicles used for the companyveyance of passengers or goods for reward companyform with specified companyditions affecting the safety and efficiency of the service offered and do number injure the highways by excessive weight or immoderate use or interfere with the use of the highways by other traffic. The validity of such laws must depend upon the question whether they 1 1955 A.C. 241. 2 195080 C.L.R. 432. impose a real burden or restriction upon inter-State traffic. When the case reached the Privy Council, it was companytended that where the tax was on the movement itself, the tax companyld number be regarded as regulatory and the reasons in the judgments of Dixon, C.J., and Fullagar, J., were urged. This was accepted by the Privy Council. On the other side, it was companytended that the provisions which were State-wide were regulatory and were imposed on all vehicles, and the effect on inter-State trade or companymerce was indirect or companysequential. This was number accepted. Even the other side companyceded that the imposition of charges in respect of vehicles used on inter-State journeys would infringe section 92 if the charges a discriminated against inter-State road transport or vehicles engaged therein b were imposed at such a rate as to be prohibitive of inter-State road transport, whether alone or in companymon with all road transport. The Privy Council pointed out that in the Transport cases, 1 sufficient weight was number given to James v. Cowan 2 , where determinations of executive in its discretion were said to be invalid. It accepted the six propositions of Dixon, J., and followed the unusual practice of quoting in extenso the opinions of Dixon and Fullagar, JJ., in McCarter Brodie 3 and expressed them as their own. The Board overruled the Transport, cases, and observed In their opinion it follows that if the validity of the Transport Act is to be established in the present case, it can only be upon the ground that the restrictions companytained therein are regulatory in the sense in which that word is used in the Bank case. 1 1938 57 C.L.R. 327. 2 1932A.C. 542. 3 1950 80 C.L.R. 432. We number companye to the last phase. The distinction between laws which merely regulate and those that restrict or prohibit having thus been established at the companyt of all the Transport cases except Willard v. Rawson 1 , a new method was adopted by the Australian Legislatures. Wynes in Legislative Executive and Judicial Powers in Australia 1956 , tells us that the transport legislation was amended by four of the States and the amended law was challenged in several cases We shall number trouble ourselves with them or with those in which laws in bar of claims arising out of the decision of the Privy Council were companysidered, but must draw attention to the difference between regulation and restriction made in Hughes and Vale Pty Ltd. v. The State of New South Wales No. 2 2 . For the present purpose, however, we borrow the following summary, inadequate though it is, form Wynes Speaking of regulation, their Honours said that see. 92 of companyrse assumed that the transactions protected would be carried out in accordance with the general law merel because a transaction was apart of inter-State trade, companymerce or intercourse, the persons engaging in it were number excluded from the operation of that law. What was precluded were restrictions of a real character prevent- ing or obstructing the dealing across the bor- der or the inter-State passage or interchange. There was a clear distinction in companyception between laws interfering with freedom to carry out the very activity companystituting interState trade and laws imposing on those engaged therein rules of proper companyduct or other restraints directed to the due and orderly manner of carrying it out. This distinction was naturally described as regulation, a word 1 193348 C.L.R. 316. 2 1955 93 C.L.R. 125 1S9-162. of anything but fixed legal import which differed according to the nature of the thing to which it applied. Perhaps the true solution in any given case companyld be found by distinguishing between the features of the activity in virtue of which it fell within the category of trade, companymerce and intercourse among the States and those features which, though invariably found to occur in some form or another in the activity, were number essential to the companyception. It was pointed out also that under the guise of what may legitimately be regulation, real burdens and restrictions companyld be placed. There was a divergence of opinion again over the question of licence charges and registration fees. The majority was prepared to sustain charges if imposed as a real attempt to fix a reasonable recompense or companypensation for the use of the highway and for a companytribution to the wear and tear which the vehicle may be expected to make. The minority thought that except for a fee for a specific service numbercharges companyld be levied. In two cases viz., Nilson v. The State of South Australia 1 and Pioneer Tourist Coaches Pty. Ltd. v. The State of South Australia 2 , it was held that a State companyld number require companymercial motor vehicles to register and pay a fee exceeding mere administrative char- ges. There is yet another line of cases recently decicided in Australia. The taxing of companymercial vehicles employed in inter-State or intrastate transport has been justified in some cases on the ground that such taxes are companypensatory, and the tax is a recompense for the wear and tear of roads. In Armstrong v. The State of Victoria No. 2 3 , Part II of the 1 195593C.L.R 292. 2 1955 93 C.L.R. 307. 3 1957 99 C.L.R. 28. Commercial Goods Vehicles Act, 1955 Victoria was challenged. That Act required the owner of every companymercial vehicle of load capacity exceeding four tons to pay companypensation for the wear and tear caused to the roads. There was a schedule under which the payment was determined. Every vehicle paid one-third of a penny per ton of the sum of- a the tare weight of the vehicle and b forty per cent of the load capacity of the vehicle- per mile of public highway along which the vehicle traveled in Victoria. The receipts were paid to the credit of a special account and applied solely for the maintenance of the highway. This law was upheld under s. 92 by a narrow majority of 4 to 3 in its application to inter-State trade. in the same, case. s. 3 of the Motor Car Act, 1951 Viet. , which levied fees on a motor car used for carrying goods for hire or in the companyrse of trade according to the powerweight and varying according to the number of wheels and types of types etc., was upheld by a majority of 6 to 1. The main reason given was what these payments served to maintain roads at a standard by which inter-State operations of trade, companymerce and intercourse were improved. It was, however, said that the charge must number be more than a fair recompense for the actual use of the roads. McTierman, J., relied on a passage in Adam Smiths The Wealth of Nationals, where public works as roads, bridges, etc. are discussed as facilities of companymerce. The question was again companysidered in companymonwealth Freighters Pty. Ltd. v. Sneddon where the Road Maintenance Contribution Act, 1958 N. S. W. which imposed upon owners of companymercial goods vehicles a, road charge at a rate per mile was upheld. It will thus appear that tax legislation in Australia has number to resort to the creation of a separate fund to which State companylections have to go 1 1959 102 C.L.R. 280. ear-marked for the maintenance of roads and to provide elaborate criteria for determining the amount payable. On this subject as well as on the subject of regulations as described by Fullagar, J., in McCarter v. Brodie 1 , the law for the time being seems settled. Having dealt with the historical background of the Constitution, the possible models which were companysidered in the drafting of Part XIIL we proceed to companysider the three views expressed in the Atiabari Tea Company case 1 . These views are number sharply divided. The majority accepts the view expressed by the learned Chief Justice, but goes beyond it, while Shah, J., accepts the views of the majority but goes still further. The main question that arose then, as it has arisen here, is Do taxation laws companye within the reach of Art. 301 ? Now, it cannot be laid down as a general proposition that all taxes are hit by that Article. We have shown above that the financial independence of the States was secured by an elaborate division of heads of taxation, which were. well-thought out to provide the States with the means of independent existence and the wherewithal of nation-building activities. There is hardly any tax which the States are authorised to companylect which companyld number be said to fall on traders. Property tax, sales tax, municipal taxes, electricity taxes to mention only a few are paid by traders as well as by number-traders. To say that all these taxes are so many restrictions upon the freedom of trade, companymerce and. intercourse is to make the entire Constitutional document subordinate to trade and companymerce. Since it is axiomatic that all taxes which a tradesman pays must burden him, any tax which touches him must fall within Art. 304, if the word restriction is given such a wide meaning. Every such legislation will then be within the pleasure of the President, and this companyld 1 1950 80 C. L.R. 432. 2 1961 1. S.C.R. 309. number have been intended. Restriction must, there fore, mean something more than a mere tax burden In our opinion, the issue of taxation cannot made justifiable with reference to Art. 301 in those cases where the tax is a general tat which a trade pays in companymon with others, We would, therefore respectfully disagree with the view of Shah, J. when he holds Not merely discriminative tariffs restricting movement of goods are included in the restrictions which are bit by Article 301, but all taxation on companymercial intercourse even imposed as a measure for companylection of revenue is so hit. Between discriminatory tariffs and trade barriers on the one hand and taxation for raising revenue on companymercial intercourse, the difference is one of purpose and number of quality. Both these forms of burdens on companymercial intercourse trench upon the freedom guaranteed by Article 301. That a tax is a restriction when it is placed upon a trade directly and immediately may be admitted. But there is difference between a tax which burdens a trader in this manner and a tax, which being general, is paid by tradesmen in companymon with others. The first is a levy from the trade by reason of its being trade, the other is levied from all, and tradesmen pay it because every one has to pay it. There is a vital difference between the two, viewed from the angle of freedom of trade and companymerce. The first is an impost on trade as such, and may be said to restrict it the ,second may burden the trader, but it is number a restriction of the trade. To refuse to draw such a distinction would mean that there is numbertaxing entry in Lists 1 and 11 which is number subject to Arts. 301 and 304, however general the tax and however number. discriminatory its imposition. To bring all the taxes within the reach of Art. 301 and thus to bring them also within the reach of Art. 304 is to overlook the companycept of a Federation, which allows freedom of action to the States, subject, however, to the needs of the unity of India. Just as unity cannot be allowed to be frittered away by insular action, the existence of separate States is number to be sacrificed by a fusion beyond what the Constitution envisages. No doubt, Part XIII ensures economic unity to India and companybines the federating States into the larger State called India. The Constitution also permits independent powers of taxation. What the Constitution does number permit is that trade, companymerce and intercourse should be rendered unfree. Trade and companymerce remain free even when general taxes are paid by tradesmen in companymon with number- tradesmen. The Question whether a tax offends Part XIII can only arise when it seeks to tax trade, companymerce and inter- companyrse. Support for the companytrary proposition is number to be found in James v. The Commonwealth The Privy Council in James v. The Commonwealth did number lay down Every step in the series of operations which companystitutes the particular transaction is an act of trade, and companytrol under the State law of any of these steps must be an interference with its freedom as trade. p. 629 The passage represents the view hold in McArthurs case 2 . That case was disapproved at p. 631. We have already dealt with this view at some length. Thus, taxation laws and taxes must be divided into two kinds. Taxes which are general and for revenue purposes which fall on those engaged in trade, companymerce and intercourse in the same way as they fall on others number so engaged cannot 1 1936 A.C. 578. 2 1920 28 C.L.R. 530. numbermally be within the reach of Part XIII. A motor transport owner cannot claim that be will number pay property tax in respect of his garage buildings or electricity tax for the electricity he companysumes in lighting them, or income- tax on his profits. Part XIII has numberhing to do with such taxes even though they fall upon tradesmen. But this is number to say that we accept the view that all taxes or taxing laws are outside the reach of Part XIII. We find ourselves unable to accept the argument that there must be a discernible point in the operations of trade, companymerce and intercourse at which the tax becomes a barrier to the freedom of the movement of trade before it will offend the freedom guaranteed. This argument companysiders the subject of freedom in terms of barriers, tariff walls and imposts, erected in the way of the free flow of trade, companymerce and intercourse. Of companyrse, if the tax does create barriers, tariff walls and imposts at some discernible point, the restriction is easy to detect. But restrictions may be diverse, subtle and disguised, and a tax may be a direct and immediate restriction without appearing to be so at a particular point in the movement of trade. A law which prohibits trade, companymerce and intercourse and releases them on the fulfillment of some unreasonable companydition including the payment of an unreasonable or discriminatory tax will just as much be a restriction offending the freedom as a tariff wall or any other barrier. No question of pith and substance in this companytext arises, as was pointed out by the Privy Council in the Banks case. The nature of the tax and its relation to trade, companymerce and intercourse are the matters to companysider. In trying to establish that taxation entries are entirely out side the reach of Part XIII, it is companytended that Part XII, which deals with taxa- tion, is a companye by itself and taken with the Legislative Lists, lays down the power of taxation which cannot be taken away by the provisions of Part XIII. The power of taxation is, therefore, said to be number subject to the declaration of freedom in Art. 301. The imposition of a tax is companyditioned on the existence of a law. Article 265 lays down that numbertax shall be levied or companylected except by authority of law. Article 301 is a curb on the law-making power, because by the unambiguous declaration companytained in it, the freedom of trade, companymerce and intercourse is secured. The prohibition is addressed number only to the EXecutive but also to the Legislature, because Arts. 302 and 304 lift the ban which has been imposed in favour of action by law made by Parliament and the State Legislatures respectively. Article 304 expressly mentions the power to impose taxes which must include at least excise duties and sales tax, and from this, also, it is quite clear that taxation is within the prohibition companytained in Part XII. This argument was also rejected by the majority in Atiabari Tea Company case 1 , and we respectfully agree. Before, however, a tax can be struck down, the incidence of the tax and the method of its companylection must be examined. If the tax falls upon trade, companymerce and intercourse as such, irrespective of whether it falls on trade viewed as a whole or upon individual traders, and restricts the freedom guaranteed, a question will immediately arise about the legality of the tax. In this companynection, even trade number in motion and more so trade in motion will be protected unless the law, if made by Parliament is in the public interest, and if made by the State Legislature it is reasonably in the public interest and the previous sanction of the President has been obtained. What we have said about taxation and taxes is also 1 1961 1. S.C.R. PC 1 . true of other restrictions though number of a pecuniary character. A restriction from whatever source it may proceed, must be backed by law made in the manner indicated and the law must companyply equally with those companyditions. It may be stated there that it is number open under Part XIII to companyrts to devise their own technique for exempting patent and palpable interferences with the freedom of trade and companymerce. In the Australian Constitution, there was numbermachinery for determining what freedom of trade, companymerce and intercourse meant in given circumstances, and the Courts stepped in with its own interpretation of s. 92 of the Commonwealth of Australia Act. In our Constitution, many problems which agitated the Australian High Court have been obviated, and in so far as restriction of the freedom is companycerned it can only be achieved by law made in the public interest and in the manner indicated. In so far as State legislation is companycerned, the law must be reasonably in the public interest, and the sanction of the President must be obtained. Thus, the President in the first instance and finally the companyrts will be the judges of the reasonableness of the restriction and the existence of public interest. Part XIII, which has created the freedom has thus also shown the way for restricting the freedom. The Privy Council in the Banks case observed If these two tests are applied first whether the effect of the Act is in a parti- cular respect direct or remote and secondly, whether in its true character it is regulatory, the area of dispute may be companysiderably narrower. This may be true where the law attempts to regulate freedom but number true where the law restricts 1 1978 76. C.L.R. 1, 380, 38 1, freedom. There is a real difference between regulation and restriction. Traffic rules are regulations, number restrictions. Trade, companymerce and intercourse are regulated so that they may flow freely. The rule of the road is number a restriction of companymercial traffic, but is one designed to make the flow of traffic smooth. The prescription that cars should have reliable brakes or lights or a sound device are number restrictions of trade. These regulations are needed both for ensuring safety for those engaged in traffic as also for securing that every one engaged in traffic might equally enjoy that right. The classification of heavy transport vehicles, the tare weight, the kinds of tares they must have, the seating capacity of buses and go on and so forth are number numbermally restrictions of trade, companymerce and intercourse but are meant for the better and more effective flow of trade, companymerce and inter- companyrse. Such laws can number be viewed as restrictions at all, and do number companye within the freedom angle, number do they require the process under which freedom can be curtailed. Just as a tax of a general character payable by all and sundry and number placed upon a trade directly and immediately cannot be companysidered as a restriction of trade even though it burdens a trader, so also regulations of trade without hampering it or impairing its freedom cannot be described as restrictions. A regulation, when it ceases to be a regulation and becomes a prohibition may require justification as a reasonable restriction. Fullagar, J., in Mc Carter v. Brodie 1 pointed out that a regulation of speed on the high ways does number offend the freedom guaranteed, but a rule that companymercial vehicles should travel at one miles per hour ceases to be regulation and becomes a restriction. Here, the question is number one of degree but of the essence of the purpose. The technique of justifying laws as regulatory was 1 1950 80 C.L.R. 432. evolved in Australia in view of the intractable language of s. 92 without any indication of the circumstances in which the absolute freedom companyld be curtailed. The detailed pro-visions companytained in Part XIII render such a companystruction of Art. 301 at once unnecessary and impermeable. Let us number see whether the validity of taxation laws directly impinging on trade and companymerce can be upheld on the ground that they are regulatory. Here, a distinction must be made between fees and taxes. Fees charged as quid pro quo for services rendered or as representing adminis- trative charges are quite different from taxes, pure and simple. Fees may partake of regulation when they are demanded to enable Government to meet the companyt of administration. But the tax, with which we are companycerned, is hardly a fee in that narrow sense. It is a tax for raising revenue. Of such a tax, Lord Watson asked the question Do you regulate a man when you tax him ? As was pointed out by Lord Herschell during the arguments in the Liquor Prohibition Appeal 1895 1 in a passage which we have quoted earlier, the matter may be looked at in two ways. Lord Herschell observed May it number be necessary to regard it from this point of view, to find what is within regulation of trade and companymerce, what is the object and scope of the legislation ? Is it some public object which incidentally involves some fetter on trade or companymerce or is it the dealing with trade and companymerce for the purpose of regulating it ? May it number be that, in the former case, it is number a regulation of trade and companymerce, while in the 1 1896 A.C. 348. latter it is, though in each case trade and companymerce in a sense may be affected ? In our judgment, the first test to apply is what is the object and scope of the legislation? A regulation of trade and companymerce may achieve some public purpose which affects trade and companymerce incidentally but without impairing the freedom.Sometimes, however, the regulation it self may amount to a restriction, and if such a stage is reached, then under our Constitution there striation must be reasonably in the public interest, and the Presidents prior sanction must be obtained, if the law imposing such restriction is made by the State Legislature. If, however, it does number reach the stage of restriction of trade and remains only a regulation incidentally touching trade and companymerce, the regulation is outside the operation of Arts. 301 and 304. It is on this ground that laws prescribing the rule of the road and like provisions already referred to as well as a regulation that the height to which trucks may be loaded must be such as number to endanger the overhead bridges or wires, do number have to go before the President, since they do hot affect the freedom guaranteed. The object of such laws cannot be regarded as a restriction of trade and companymerce. Freedom in Art. 301 does number mean anarchy. Similarly, a demand for a tax from traders in companymon with others is number a restriction of their right to carry on trade and companymerce. A system of licensing of motor vehicles is a regulation, but does number impair the freedom of trade and companymerce unless the licensing is made to depend upon arbitrary discretion of the licensing authority. Similarly, a fee for administrative purposes may also be viewed as a part as regulation. Such licensing and fees fall outside Art. 301, because they cannot be viewed as restrictions, and therefore do number need to be processed under Art. 304. Such regulations are designed to give equal opportunity to everyone, subject to a certain standard. The object being a public object, such regulations cannot be questioned unless they amount to res trictions. A tax, however, which is made the companydition precedent of the right to enter upon and carry on business at all is a very different matter. It is a restriction on the right to carry on trade and companymerce, and the restriction is released on the payment of the tax, which is the price of such release. It is from this point of view that the impugned provisions in this case must be examined. We have to examine the precise nature of the tax imposed, which has to be gathering from the charging section read with the Schedules, and the plain question is whether so read, there can be said to be anything other than a tax on a trader and on his activity as a trader. The Act companysists of 24 sections, and 4 Schedules. Section 4 1 which imposes the tax is the charging section and has, on its terms, to be read with each of the Schedules to the Act. Apart from the usual sections generally found in every taxing measure such as prescribing the time the tax has to be paid, cases in which refund may be had, declarations which have to be made, and provisions for recovery of tax, appeals, etc. there are provisions for penalties and for companypounding. There is one other provision, to which attention may be drawn and that is s. 20, which reads Levy of toll on certain bridges.- Notwithstanding anything companytained in this Act it shall be lawful for the Government to levy tolls on motor vehicles under any law or usage for the time being in force, such rates as i may from time to time fix- for the use of any bridges, or on any bridge companystructed, reconstructed or repaired after the companymencement of this Act. The four Schedules, as their headings amply show, deal with different subjects. Schedule 1 is divided into two parts A and B. They deal with the subjects indicated in the headings. Vehicles other than Transport Vehicles plying for hire or required if fitted solely with pneumatic tyres. If the above motor vehicles are fitted with resilient or number-resilient tyres, extra tax will be levied at 5 of the above rate. Part A is then divided into three sections dealing with different classes of vehicles and prescribe different rates for each such class. We are number at present companycerned with vehicles which are number used as transport vehicles plying for hire. Schedule II is also divided into two parts dealing respectively with vehicles fitted with pneumatic tyres and vehicles number so fitted. The first part deals with two categories marked respectively A and B. ,A companyprises motor vehicles plying for hire for the companyveyance of passengers and light personal luggage of passengers, while B companynprises goods vehicles plying under Public Carriers Permit. There are further sub-divisions in each category A and B according to the seating capacity of the vehicles on the basis of which different rates of tax are imposed, but it is number necessary to go into their details. Schedule III companyprises goods vehicles registered outside the State using roads in Rajasthan, and they are required to pay a tax calculated at a specified sum per day. Schedule IV is headed Vehicles used for the carriage of goods in companynection with a trade or business carried on by the owner of the vehicle under a Private Carriers Permit. These vehicles are again classified according to the kind of tyres with which they are fitted as well as by their load capacity and different amounts of tax are payable by each class. Part II of this Schedule specified the tax payable by dealers in or manufacturers of motor vehicle, which is described as a payment for a general licence dependent upon the number of vehicles which they manufacture or deal in. From the above analysis, it will be seen that the tax in Schs.II to IV is laid upon trade and companymerce directly and immediately. It cannot be described as a property tax. Motor Vehicles employed by a trader for transport of passengers and goods are integers of trade and companymerce. The tax is number like the property tax which a transport operator pays on buildings employed by him in his business. There, the tax is payable also but number as a companydition precedent to the business. The tax, with which we are companycerned, is one directly and immediately laid on trade and companymerce and also on trade and companymerce in movement. In this companynection, Sch. 1 and Part 11 of Sch. IV need number be companysidered for we are dealing with motor vehicles used as integers of trade and companymerce. The tax is evidently number a fee for administrative purposes therefore, it cannot be justified as representing payment for services. Its object is the raising of revenue, which distinguishes a tax from a fee. We may next companysider whether the tax can be justified as regulatory or companypensatory. For this purpose, some facts must be stated. The appellants are three. They owned buses which were registered in the former State of Ajmer. They plied on diverse routes. There was one route. Nasirabad to Deoli, which lay mainly in Ajmer State, but it crossed narrow strips of the territory of Rajasthan. Another route, Ajmer to Kishengarh, was substantially in the Ajmer State, one-third of which was only in Rajasthan. Kishengarh was, at the material time, a part of Rajasthan. The appellants were required to charge fares prescribed by the Ajmer authorities, and companyld number change them to companyer extra expenditure in the shape of taxes, which they had to bear in Rajasthan. Formerly, there was an agreement between the Ajmer State and. Kishengarh State, by which either State did number charge any tax or fees on vehicle registered in the respective States. Later, Kishengarh became a part of Rajasthan, and the tax was demanded from these appellants for the period, April 1, 1951, to March 31, 1954. The de- mand was made by virtue of s. 4, the charging section, under pain of the application of s. 1 1, which provides of penalties. The taxes, which are imposed by Schs. II, III and IV 1 , operate on trade and companymerce directly. It is number denied that the carriage of passengers and goods amounts to trade. It was, in fact, so help in the Transport cases in Australia and also by the Privy Council. Under the Act, this trade can only be carried on, if the tax is paid. The Act, therefore, involves a prohibition against a trade, which prohibition is released on payment of tax. The Schedules affect motor vehicles for carriage of passengers and goods on hire in Rajasthan and also similar vehicles companying from outside. In so far as vehicles companying from outside are companycerned, their entry into the State is barred unless the tax is paid. The tax is thus number incidental to trade but is directly on it and is on its movement. This is number tax which the trader has to bear in companymon with others, and the tax is for revenue purposes. This is a case in which if the tax is number paid, the trade is destroyed. The charging provisions do number take into account what distance a particular vehicle travels within the State. A vehicle traveling a hundred miles and another traveling only one mile have to pay an identical sum as tax. How then can it be said that it involves a fair recompense for the wear and tear of roads? To say that such tax is companypensatory and is a recompense for the wear and tear of the roads is to misdescribe it. Section 20, which we quoted earlier, may be companypensatory for use of a bridge and may even be described as regulatory within the decision of Fullagar, J., in McCarter v. Brodie 1 but number the taxing provisions which even in Australia would number be regarded either as companypensatory or regulatory. It is impossible, therefore, to turn to the Australian precedents for help. Further, the duty of maintaining roads is a duty of the State, and it performs it number from any special fund which is created from the receipt of these taxes but from its general funds. The wear and tear of the roads is number caused by the transport vehicles only but other vehicles number employed in the trade of transport. The tax which is levied is number based on any theory of recompense, which has been evolved in Australia. There, the distance traveled, the load carried are taken into account, and a charge is payable by each operator according to the distance actually travelled by him in companysonance with the weight carried. A further circums- tance which goes into the determination of the amount payable is the kind of tyres and the number of wheels which the vehicle has. To say that the impugned tax is companypensatory without any attempt to apportion the charge according to the actual wear and tear, is to borrow a theory for justification which does number apply to the facts here. 1 1950 80 C.L.R.432. The only other question is whether the Act is, in its true character, regulatory. There is numberprovision in the Act which can be regarded as regulatory of motor vehicles or their use. The Act plainly levies a tax upon the possession or use of motor vehicles. A tax does number regulate trade ordinarily it imposes a charge on trade. The question thus remains does the tax burden trade or impair the free, flow of trade and companymerce as companytemplated Art 301? It is clear that the tax is on trade. It is also clear that it is on the movement of trade. It is further clear that it creates a barrier between one State and another, which trade cannot cross except on a heavy payment. The tax is number truly a fair recompense for wear and tear of roads even if a justification on the doctrine of companypensatory taxes is applied. It is numberhing except a restriction, which Art. 301 forbids. The Bill which became the Act, was number submitted to the President for his Previous sanction, number was it assented to subsequently after it passed the Legislature. The question, therefore, whether the restriction imposed by the Act is reasonable or number,, does number arise. We are, therefore, of opinion that s. 4 1 as read with Schs. IT, III and Part 1 of Sch. IV offends Art. 301 of the Constitution, and as resort to the procedure prescribed by Art. 301 b was number taken, it is ultra vires the Constitution. We wish to make it clear that we pronounce numberopinion about the companystitutional validity of s. 4 1 as read with Sch. 1 or the second Part of Sch. TV. The first raises a question as to the meaning of the expression intercourse in Part XIII and as that matter is number relevant for the appeal before us, and thus numberarguments were heard on that point, we refrain from expressing any opinion on it. The second involves many other questions, which are far remote from the companytroversy with which we are number companycerned, and therefore need number be companysidered here. We would, therefore, allow the appeals, and quash the demand made upon the appellants.

Case appeal was rejected by the Supreme Court

Venkatarama Aiyar, J. The appellants are a joint Hindu family firm which has been carrying on business since 1911 in grains, dal, cereals, companyton ginning and pressing, oil manufacture and the like, at a place called Lehragaga in what was once the State of Patiala. The firm had an account called the Cash Credit Account in the Patiala State Bank which had a branch at Lehragaga and used to borrow money in this account on a pledge of its stocks. In 1951-52 there was a heavy slump in the prices of the companymodities with the result that the amounts advanced by the Bank on the security of the goods were very much in excess of the market prices thereof. To companyer this shortfall which came to Rs. 2,32,000/- the firm entered into an arrangement with the Bank on May 23, 1953, and it is this that forms the source of the present litigation. The Bank sanctioned a loan of Rs. 4,50,000/- on what is called Demand Loan Account. The firm deposited title deeds of the properties belonging to them as security for the amounts that may become payable on that account and the adult members of the family executed a promissory numbere for that amount and also a memorandum evidencing the deposit of the title deeds. It should be mentioned that in 1951 a firm called Yogiraj Neelkumar was started at Lehragaga of which the partners were Bhagirathlal one of the senior members of the joint Hindu family of the appellant firm and two other strangers Shri Kishore Chand and Shri Banwarilal. That firm did business as Commission Agents and had a Cash Credit Account in the Patiala State Bank at Lehragaga under which it borrowed money for the purpose of its business. That firm also sustained heavy losses during the period of the slump and on May 23, 1953, it owed to the Bank a sum of Rs. 2,17,957-12-6 on account of shortfall. Now what the Bank did under the arrangement dated May 23, 1953, was to adjust the loan of Rs. 4,50,000/- towards the shortfalls due to them both from the appellants firm and the firm of Yogiraj Neelkumar. The companyplaint of the appellants is that they had numberhing to do with the firm of Yogiraj Neelkumar, that Bhagirathlal started it along with strangers as his own separate companycern and accordingly the properties of the joint Hindu family of the appellants are number liable for the sum of Rs. 2,17,957-12-6 due to the Bank from that firm. The amount payable under the demand loan account number having been paid by the appellants the Bank took steps to realise the same in accordance with the provisions of the Patiala Recovery of State Dues Act, hereinafter referred to as the Act, and the rules framed thereunder. It will be companyvenient at this stage to refer to these provisions and rules in so far as they are material, as it is their vires and companystitutionality that form the principal target of attack in these proceedings. Section 3 1 of the Act defines State Dues as including debts due to the Patiala State Bank. Department is defined in s. 3 2 as including the Patiala State Bank, and Head of department in s. 3 6 as meaning the Managing Director in the case of the Patiala State Bank. Section 4 1 authorises the Head of department to determine the exact amount of State dues recoverable from the defaulter in the manner prescribed under the rules. Section 5 1 a enacts that State dues may be recovered by the department through the Nazim as if these were arrears of land revenue. Then companyes s. 6 which is as follows - 6. 1 The Head of department shall send a certificate as to the amount of State dues recoverable from the defaulter to the Nazim in Form I appended to this Act and to the Accountant-General in Form II appended to this Act Provided that where the head of department is below the rank of a Minister or Secretary, he shall, unless he is the Registrar, Co-operative Societies, send the certificate to the Nazim and the Accountant General through the Minister or Secretary in charge who shall companyntersign the certificate after satisfying himself that the amount of State dues stated in it is companyrect. A certificate transmitted under the preceeding sub-section shall be companyclusive proof of the matters stated therein and the Nazim or the Accountant-General shall number question the validity of the certificate or hear any objections of the defaulter as to the amount of State dues mentioned in the certificate or as to the liability of the defaulter to pay such dues. Section 11 provides that numbercivil companyrt shall have jurisdiction in respect of any matter which under the Act or the rules is entrusted to the Head of department or any authority or officer authorised by him. Section 12 companyfers on the State authority to make rules providing inter alia for the manner in which the amount of State dues shall be determined. Rules framed under s. 12 of the Act were published on August 8, 1945. Rule 3 requires that the head of department shall cause a numberice to be served on the defaulter in the manner prescribed. The numberice has to specify the amount of state dues and require the defaulter to pay such dues on or before a date specified, or to appear on such date before the head of department and present a written statement of his defence. The date to be fixed should allow at least fifteen days to the defaulter to make payment or to appear and answer the claim. If the defaulter does number appear on the date specified, the head of department may proceed ex parte and determine by order in writing the amount of State dues recoverable from him if he is satisfied that the numberice had been duly served, and if number so satisfied, he may direct fresh numberice. Rule 6 provides that where the defaulter appears on the date fixed in the numberice and presents his written statement, the head of department or the Inquiry Officer, as the case may be, shall examine the objections of the defaulter stated in the written statement in the light of the relevant records of the department, and shall then by order in writing determine on the same day or on any subsequent day the exact amount of State dues recoverable from him. Rule 7 provides that when the amount determined as payable under rules 5 and 6 remains unpaid, the head of department might issue a numberice on the defaulter requiring him to pay the State dues within fifteen days and that in default, the amount companyld be recovered through the Nazim. Under Rule 8, an appeal against an order determining the amount due under rule 5 or 6 lies to the Board of Directors. Against an Order rejecting an appeal under rule 8, a revision is provided to the Ministry. There is also a provision for service of numberice on the defaulter, when proceedings for realising the amount are taken. We may number refer to the steps taken by the Patiala Bank for recovering the amounts due from the appellants. On February 17, 1955, the Bank issued a numberice to the appellants under rule 3 2 stating that a sum of Rs. 5,17,863-3-4 was due from them and calling upon them to pay the said amount or to file a written statement within fifteen days setting out their defence to the claim. To this the appellants sent on March 26, 1955, a reply in which they pointed out that they had been unable to pay, because of companytinuous slump in the market, and requested that the Bank should accept payments in reasonable instalments. It was also stated that the Government intended to acquire some lands belonging to the appellants and that companypensation would become payable and it was prayed that until then the recovery proceedings might be postponed. On this, the Bank would appear to have stayed their hands for some time. On November 21, 1955 a fresh numberice was issued under rule 3 stating that a sum of Rs. 5,24,593-10-10 was due from the appellants and asking them to pay the amount or to file their defence to the claim within fifteen days. To this again the appellants replied on December 7, 1955, asking that the representation previously made by them might be companysidered by the Board of Directors. On January 6, 1956, the appellants sent another reply stating that they expected to pay a substantial amount of the loan within a short time and prayed that further proceedings might be suspended. The Managing Director did number accede to this request and on January 27, 1956, he issued a certificate under s. 7 of the of Act certifying that a sum of Rs. 4,98,589-1-6 was due from the appellants and asking the Deputy Commissioner, Patiala, to recover the same as arrears of land revenue. After some more attempts at getting the recovery proceedings postponed, the appellants filed in the High Court of Punjab on February 16, 1957, a petition under Art. 226 of the Constitution, Writ Petition No. 133 of 1957, wherein they challenged the validity of the Act and of the proceedings taken thereunder on various grounds. Meantime, on July 7, 1956, the Bank issued a numberice under rule 3 2 demanding from the appellants a sum of Rs. 25,548-4-6 as due on the cash credit account at Lehragaga. To this, the appellants sent a reply denying their liability. On October 4, 1956, the Bank determined the liability ex parte at Rs. 25,478-15-9. A numberice under rule 7 1 was issued on December 6, 1956, and that number having been companyplied with, a certificate under s. 7 of the Act was issued by the Managing Director. On May 17, 1958, the appellant filed Writ Petition No. 389 of 1958 in the High Court of Punjab challenging the validity of the determination made on October 4, 1956, and of the subsequent proceedings taken for the recovery of the said amount on the same grounds as in Writ Petition No. 133 of 1957. Both these Writ Petitions were heard together, and by their Judgment dated March 6, 1959, the learned Judge held that the impugned Act and the proceedings were valid and dismissed the petitions. They, however, granted a certificate under Art. 133, and hence these appeals. The appellants also filed a petition under Art. 32 of the Constitution, attacking the vires of the Act, and of the proceedings taken thereunder, on the same grounds as are raised in the appeals. We have accordingly heard them together, and this Judgment will govern all of them. There companytentions have been urged in support of the appeals - The proceedings taken under the Act for determining the amount payable by the appellants and for recovering the same are illegal as the Act had ceased to be in force on the material dates. The Act and the rules made thereunder became void on the companying into force of the Constitution as they are repugnant to Arts. 14 and 19 1 f and g , and the proceedings taken under those provisions are therefore illegal. The certificate issued under s. 7 is number in accordance with the rules framed under the Act and in companysequence the proceedings taken thereunder are illegal. Taking up the companytention that the Act had ceased to be in force on the material dates, it is necessary first to state the facts on which it is based. On May 5, 1948, the Rulers of the independent State of Faridkot, Jind, Kapurthala, Malerkotla, Nabha, Patiala, Kalsia, and Nalagarh entered into an agreement referred to as the Covenant for the establishment of a new State called the Patiala and East Punjab States Union or more briefly the Pepsu Union companyprehending the territories of their respective States with a companymon executive, legislature and judiciary. Article III provides for the Constitution of a Council of Rulers. Article VI of the Covenant provides that on the companystitution of the new State all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Government of the Covenanting State shall vest in the Union and shall hereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder and that the Union shall take over all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State and all the assets and liabilities of the Covenanting State. The executive authority of the State is to vest under Art. IX of the Covenant in the Raj Pramukh. Article X provides for the formation of Constitution Assembly and the framing of a Constitution by it and there is the following proviso to it which is very material for the present discussion Provided that until a Constitution framed by the Constituent Assembly companyes into operation after receiving the assent of the Raj Pramukh, the Raj Pramukh shall have power to make and promulgate Ordinance for the peace and good Government of the Union or any part thereof, and any Ordinance so made shall, for the space of number more than six months from its promulgation have the like force of law as an Act passed by the Constituent Assembly, but any such Ordinance may be companytrolled or superseded by any such Act. Article XI provides for the payment of the amount fixed in the Schedule as the privy purse of each Rule. Article XII guarantees to the Ruler all the personal privileges, dignities and titles enjoyed by themimmediately before the 15th day of August, 1947 and Art. XIV, succession to the Gaddi according to law and custom. The new State came into existence on August 20, 1948, as provided under the Covenant. The Ruler of Patiala became its Raj Pramukh and on the same date he promulgated on Ordinance No. 1 of 2005 BK which provided inter alia that all Laws in force in the State of Patiala on that date shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such Covenanting State immediately before that date shall be repealed. By force of this Ordinance, the impugned Act became the law of the Pepsu Union. Under Art. X of the Covenant this Ordinance would have expired on February 20, 1949, and so on February 15, 1949, the Raj Pramukh promulgated another Ordinance No. 16 of 2005 BK in terms similar to the Ordinance No. 1 of 2005. The appellants companycede that this law is intra vires and by force of this Ordinance the impugned Act companytinued to be in force after February 20, 1949. When Art. X of the Covenant provided that the Ordinances to be promulgated by the Raj Pramukh were to be in force for a period of only six months it was expected that the Constituent Assembly would in the mean time be companyvened and a regular Constitution drawn up. But that did number materialise and so on April 9, 1949, all the Rulers met again and entered into another agreement called the supplementary Covenant, where by Art. X was amended by omitting the words for the space of number a more than six months from its promulgation. The result of this was that the laws which had been brought into force by Ordinance No. 16 of 2005 BK including the impugned Act, would number lapse on August 20, 1949, but companytinue to be in force until repealed by fresh legislation. But it is argued for the appellants that the Supplementary Covenant is void and inoperative because by the Covenant dated May 5, 1948, the Rulers had surrendered companypletely all their sovereign powers to the new State and that in companysequence on April 9, 1949, when they entered into the Supplementary Covenant they had numbershred of sovereignty left in them and had therefore numbercompetence to companyfer on the Raj Pramukh any authority to legislate. To this the respondents reply that the original Covenant on its true companystruction did number companypletely extinguish all the powers of the Rulers and that the Supplementary Covenant is therefore within their companypetence. They further companytend that it is a political question whether the Supplementary Covenant is valid or number, and that Art. 363 bars the jurisdiction of the Civil Courts to entertain such a question. We number proceed to companysider these companytentions. To appreciate the true effect of the Covenant it is necessary to state what the position is according to rules of International Law, when one independent State becomes merged in another. A State says Oppenheim, ceases to be an International Person when it ceases to exist. Practical cases of examination of States are merger of State into another, annexation after companyquest in war, breaking up of State into several States, and breaking up of a State into parts which are annexed by surrounding States. By voluntarily merging into another State, a State loses all its independence and becomes a mere part of another. International Law, Vol. 1, 150 . Therefore when the new State of Pepsu was formed, the eight States which had merged into it would cease to exist as independent personae and there companyld be numberquestion of sovereignty of such States or of its ex-Rulers. But it is argued that the loss of sovereignty need number occur at a single point of time, and that in the present case it was gradual, and spread over nearly a year, and that both the Covenants were made during this period. It is numberdoubt true that loss of sovereignty might be a companytinuing process extending over a companysiderable period of time, and that has also been held quite recently by this Court in Promod Chandra Deb v. The State of Orissa 1962 Supp. 1 S.C.R. 405. But is that what has happened here ? The Covenant is quite clear and unequivocal on the point. Article VI is the crucial provision, and it says that all the rights, authority and jurisdiction of the Ruler in relation to Government are to vest in the Union. Then follow provisions for the exercise of those powers by the Union. Thus there is on the one hand an extinction of the powers of the Rulers, and on the other hand vesting of the same in the new State. In strong companytrast to this are the provisions which guarantee to the Rulers their privy purse, and their right to their personal properties, and privileges. On the wording of the Covenant therefore there was a companyplete divestiture of all the sovereign rights of the Rulers, when the new State came into existence on August 20, 1948. But it is companytended that the Covenant does number dispose of the entirety of the legislative power possessed by the Rulers, because under Art. X the Raj Pramukh companyld enact laws only for a period of six months. The legislative power number having been companypletely transferred to him, it is argued, the residuum must vest somewhere and that companyld only be in the Rulers themselves. Therefore, it is said, there is some sovereignty left in them, and that is disposed of by the Supplementary Covenant. This argument sounds plausible but cannot be sustained on the terms of the original Covenant. It is number, in our view, companyrect to say, that under Art. X the legislative powers of the Rulers were number transferred in full to the new State of Pepsu. The Raj Pramukh has the power under that Article to make and promulgate Ordinances for the peace and good Government of the Union or any part thereof. Stopping here, there is numberreservation whatsoever in the grant of the power to the new Ruler. Then follows the provision that the ordinance is to be in force for a period number exceeding six months. The effect of this is number to keep back from the Raj Pramukh any portion or field of legislative power, and this will be plain from the fact that the Raj Pramukh can go on renewing the laws every six months as infinitum. What the effect of this provision would be if the Raj Pramukh chose to ignore it we need number pause to companysider. What is relevant for the purpose of the present discussion is, number whether the Raj Pramukh companyld have enacted a law in disregard of the above provision but whether in view of it any residue of legislative power companyld be held to have companytinued in the Rulers. On that question Art. VI is clear beyond all doubt. The entirety of the rights, authority and jurisdiction of the Rulers is to vest in the Union, and is to be exercisable only as provided in the Covenant. It cannot in our opinion be argued that the Rulers of the Covenanting States companyld, subsequent to August 20, 1948, have passed any laws within their own territories on the ground that the power of the Raj Pramukh did number extend, under Art. X, to enacting legislation beyond six months. It is further to be numbered that under Art. VI, all the powers of the Rulers are to vest in the Union, and even if the whole of the legislative power is number exercisable by the Raj Pramukh by reason of Art. X, it is in the Union that the residue of the power must be held to be lodged and number with the Rulers. It is next argued for the respondents that though the Rulers might have surrendered their power to the Union under the original Covenant, that did number, according to rules of International Law, deprive them of their right to enter into a fresh Covenant. Reliance was placed on the following passage in Oppenheims International Law A treaty, although companycluded for ever, or for a period of time which has number yet expired, may nevertheless always be dissolved by mutual companysent of the companytracting parties. Vol. I, p. 842, para 537 . It is companytended that on the principal stated above it was within the companypetence of the Rulers to modify Art. X as they did under the Supplementary Covenant. But the passage quoted above presupposes that on the date of the later treaty by which the earlier treaty is rescinded or modified the companytracting parties are sovereigns and if, as we have already held, the effect of the original Covenant is to companypletely divest the Rulers of their sovereign power there can be numberquestion of their entering into any treaty thereafter as that companyld be only between sovereigns and the Supplementary Covenant cannot therefore be sustained on the principle of International Law enunciated above. Our attention was also invited to the statement of the law in Hydes International Laws, Vol. I. p. 396, that when there is a change of sovereignty arising by reason of cession, the grantor is permitted, pending the actual transfer, to exercise authority with respect to certain matters and it was argued that on this principle the Rulers must be held to have the companypetence to companyclude the Supplementary Covenant with a view to implement the original Covenant. But this power which is an exception to the rule previously stated by the learned author that on a change of sovereignty all legislative and political powers vest in the new sovereign is limited to the exercise of authority necessary to maintain order and safeguard the economic companyditions and even this interim authority ceases when the possession of the territory is actually delivered to the new sovereign. As that happened in the instant case on August, 20, 1948, the Rulers cannot in any view be said to have had any authority to enter into any Covenant on April 9, 1949. We must number refer to the decisions which have been cited on behalf of the respondents as bearing on the true companystruction to be put on the Covenant. In Virendra Singh v. State of Uttar Pradesh , Rulers of 35 States entered into a Covenant in March, 1948, companystituting the United State of Vindhya Pradesh and as the integration did number work well they entered into another agreement in December, 1949, dissolving that State and on 1st January, 1950, acceded to the Government of India under a merger agreement. There after the State Government repudiated certain grants of land made by the previous Rulers, and its action was challenged on the ground that the alienations were within the protection of Articles of the merger agreement. And this Court held that though numberrights companyld be founded on the merger agreement as they were acts of State, the subsequent companyduct of the State in affirming the transfers created justiciable rights. The question actually decided has thus numberbearing on the point number in companytroversy. But in narrating the events leading to such a merger agreement it was observed. The Rulers of Charkhari and Sarila retained, at the moment of final cession, whatever measure of sovereignty they has when paramountcy lapsed, less the portion given to the Indian Dominion by their Instruments of Accession in 1947 they lost numbere of it during the interlude when they toyed with the experiment of integration. These observations cannot in the companytext be held to be a decision on the point under companysideration. It may also be added that the disintegration of the United State of Vindhya Pradesh and the reconstitution of the old States would itself be an act of State. Prithi Singh v. State of Pepsu A.I.R. 1953 Pepsu. 161 relied on for the respondents is a direct decision on this point. There it was held on a companysideration of Arts. III, XI, XII and XIV of the Covenant that the Rulers had number surrendered all their sovereign powers to the new State. We are unable to agree with this decision. Article III provides for the formation of a Council of Rulers which is to exercise such functions as are assigned to it by the Covenant and such other functions, if any, as may be assigned to it by the Constitution of the Union. This Article clearly does number vest any sovereign powers in the Rulers. As for Arts. XI, XII and XIV they relate to the personal rights of the Rulers and as already stated they emphasize by companytrast that the Rulers had numbersovereignty vested in them. The learned Judges sought support for their companyclusion in the passages from Oppenheim on International Law, Vol. I, p. 842, quoted above but for the reasons already given they are number in point. In the result we agree with the appellants that the Supplementary Covenant cannot be held to be effective for modifying the provisions in the original Covenant. It is next companytended for the respondents that even on the footing that the validity of the impugned Act, should be determined in accordance with the provisions of the original Covenant, without reference to the Supplementary Covenant, the appellants must fail because the question in dispute is one which arises out of a provision in a Convent and under Art. 363 the Civil Court has numberjurisdiction to go into it. The appellants do number dispute that the Rulers of the States who entered into the Covenant are all Rulers within Art. 363 2 b , or that the Government of the Dominion of India was a party to it. What they urge is that they merely seek to establish that they are number liable under the impugned Act, because it is inoperative by reason of Art. X in the Covenant, and that such a dispute is number within the bar of Art. 363. And the decision in Bholanath J. Thaker v. State of Saurashtra is relied on as supporting this companytention. There a Judicial Officer of the erstwhile Wadhwan State, had filed a suit questioning the validity of an Order of the State of Kathiawar, which had been formed as the result of the merger of a number of States including Wadhwan, whereby his services were prematurely terminated. The question was whether the action was barred by Art. 363. This Court held that the Officer had a right to companytinue in service under a law of Wadhwan enacted before the date of merger, that the Covenant was relied on only for showing that right was at all times subsisting and that Art. 363 was number a bar to the maintenance of such a suit. The ratio of the decision is to be found in the following observation There was numberdispute arising out of the Covenant and what the Appellant was doing was merely to enforce his rights under the existing laws which companytinued in force until they were repealed by appropriate legislation. In order words the dispute related to a right which arose independent of, and was affirmed in the Covenant, and therefore Art. 363 had numberapplication. That is number the position here. The liability of the appellants to pay to the Bank the amounts determined in accordance with the impugned Act is one which arises dehors the Covenant, and it is sought to be got rid of only by recourse to Art. X. The dispute is therefore one arising directly on a provision in the Covenant, and Art. 363 will apply. But even if the appellants are right in their companytention that Ordinances 1 and 16 of 2005 Bk ceased to be in operation after the expiry of six months from the date of their promulgation, they can derive numberadvantage from it, because what those Ordinances did was to extend the operation of all Patiala laws to the territories which had formed part of the other Covenanting States. So far as the territories of the erstwhile State of Patiala are companycerned, its laws companytinued to be in force proprio vigore and number by force of Ordinances 1 and 16 of 2005 Bk . Therefore even if the Ordinances lapsed on August 20, 1949, as companytended for the appellant, that would number affect their liability under the impugned Act, as they companye from the territory of the erstwhile State of Patiala, and would in any event be governed by it. The question therefore is purely academic so far as appellants are companycerned but it does number arise for decision in Writ Petition No. 128 of 1959, wherein the validity of the impugned Act and of the proceedings taken thereunder is challenged by a resident of the erstwhile State of Nabha, on the same grounds as are raised in the appeals. That is why we have gone into it fully, and given our pronouncement thereon. In the result this companytention must be found against the appellants. We shall next companysider the companytention of the appellants that the Act and the rules framed thereunder are repugnant of Art. 14 and Art. 19 1 f and g and that they have therefore become void under Art. 13 of the Constitution. Dealing first with the companytention that they companytravene Art. 14, two grounds have been urged in support of i that there is discrimination between the Patiala State Bank on the one hand and the other Banks on the other and ii that after the merger of the Pepsu Union in the State of Punjab under the States Reorganisation Act, 1926, there is discrimination between the law as administered in the territories of the erstwhile Pepsu Union on the one hand and in the other parts of the State of Punjab on the other. As regards the first ground the argument of the appellants might thus be stated. In the case of Banks other than the Patiala State Bank a dispute between a Bank and its customers has to be settled under the ordinary law by resort to companyrts or to arbitration and a decree passed in those proceedings has to be realised in accordance with the procedure prescribed in the Code of Civil Procedure. But under the impugned Act and the rules a dispute between the Patiala State Bank and its customers has to be decided by the authorities companystituted thereunder and the jurisdiction of the Civil companyrts is barred with respect to it. The procedure prescribed for the determination of the dispute under the Act and the rules is a special one widely different from that which is followed by the Civil companyrts. Then again when the Bank obtains a decree it can be realised by a summary process as arrears of revenue and number according to the mode prescribed for realisation of degrees under the Civil Procedure Code. There is thus a substantial difference between the rights of a customer who deals with the Patiala State Bank and one who deals with the other Banks. This differentiation is arbitrary and has numberrational relation to the objects of the legislation and so it is violative of Art. 14. It cannot be disputed that the impugned Act and the rules framed thereunder put the Patiala State Bank in a position different from that of the other Banks under the ordinary law. The question is whether this difference amounts to discrimination within Art. 14. The companytention of the respondents is that the Patiala State Bank forms a category in itself and the law which prescribes a special procedure in relation to the settlement of disputes between that Bank and its customers is valid because it is based on a classification having a just relation to the objects of the legislation. It is the companyrectness of this companytention that number falls to be companysidered. When a State establishes a Bank, it is the funds of the State to which the tax payers companytribute that are utilised for running it. In this respect a State Bank differs from Banks established by private agencies in which the working capital is subscribed by individuals. It should be numbered that it is number part of the governmental functions of a State to run a Bank, and when a State does establish a Bank, is with a view to companyfer benefits on the general public, such as, for example, developing companymerce and industry within its territories. On the other hand when private agencies establish a Bank it is as an investment for those who subscribe capital to it. Thus a Bank established by a State has got distinctive features which differentiate it from the other Banks and for purpose of Art. 14 it forms a category in itself. The law is number well settled that while Art. 14 prohibits discriminatory legislation directed against one individual or class of individuals, it does number forbid reasonable classification, and that for this purpose even one person or group of persons can be a class. Professor Willis says in his Constitutional Law p. 580 a law applying to one person or one class of persons is companystitutional if there is sufficient basis or reason for it. This statement of law was approved by this Court in Chiranjit Lal Chowdhry v. Union of India 1950 S.C.R. 869. There the question was whether a law providing for the management and companytrol by the Government of a named Company, the Sholapur Spinning Weaving Company Ltd. was bad as offending Art. 14. It was held that even a single Company might, having regard to its features, be a category in itself and that unless it was shown that there were other Companies similarly circumstanced, the legislation must be presumed to be companystitutional and the attack under Art. 14 must fail. In Ram Krishna Dalmia v. Shri Justice S.R. Tendolkar 1959 S.C.R. 279, 297, this Court again examined in great detail the scope of Art. 14, and in enunciating the principles applicable in deciding whether a law is in companytravention of that Article observed that a law may be companystitutional even though it relates to a single individual if on account of some special circumstances or reasons applicable to him and number applicable to others that single individual may be treated as a class by himself. On the principles stated above we are of the opinion that the Patiala State Bank is a class by itself and it will be with in the power of the State to enact a law with respect to it. We are also of the opinion that the differentia between the Patiala State Bank and the other Banks has a rational bearing on the object of the legislation. If the funds of the Patiala State Bank are State funds, a law which assimilates the procedure for the determination and recovery of amounts due to the Bank from its customers to that prescribed for the determination and recovery of arrears of revenue must be held to have a just and reasonable relation to the purpose of the legislation. A law which provides for State funds being advanced to customers through State Bank can also provide for its being recovered in the same manner as revenue. A direct decision on this point is Mannalal v. Collector of Jhalawar . There the State of Jhalawar had established a Bank and the appellants as customers of the Bank owed large amounts to it. The State of Jhalawar became merged in the State of Rajasthan and acting under s. 6 of the Rajasthan Public Demands Recovery Act, 1952, the Collector Jhalawar issued a numberice to the appellants proposing to recover the dues as a public demand. The validity of this demand was challenged on the ground that the provisions of the Act were obnoxious to Art. 14 in that they enabled the State to recover the amounts due to it on Banking account in a mode different from that applicable to other Banks. In rejecting this companytention this Court observed It is said that the Act makes distinction between the other Bankers and the Government as a banker in respect of the recovery of money due. It seems to us that Government even as a banker, can be legitimately put in a separate class. The dues of the Government of a State are the dues of the entire people of the State. This being the position, a law giving facility for the recovery of such dues cannot, in any event, be said to offend Art. 14 of the Constitution. We are in agreement with these observations. In our view the same principles apply to the impugned Act, and in setting up separate authorities for determination of the disputes and in prescribing a special procedure to be followed by them for the recovery of the dues by summary process, the impungned Act does number infringe Art. 14 of the Constitution. Then the second ground on which the impungned Act and Rules are attacked as offending Art. 14 is that after the merger of the Pepsu Union in the State of Punjab under the State Reorganisation Act, 1956, they companytinue to be in force in the territories of the erstwhile Pepsu Union, but have numberoperation in the other parts of the State of Punjab and this, it is said, as a fresh ground of discrimination. We see numbersubstance in this objection. Prior to the State Reorganisation Act, 1956, the Pepsu Union, and the State of Punjab were two different States. The legislative authorities functioning in the two States were different. Prior to the integration there companyld be numberquestion of discrimination under Art. 14 because that can arise only with reference to a law passed by the same authority, vide The State of Madhya Pradesh v. G.C. Mandawar . And if after reorganisation of States and integration of the Pepsu Union in the State of Punjab, different laws apply to different parts of the State, that is due to historical reasons, and that has always been recognised as a proper basis of classification under Art. 14. In Bowman v. Lewis 1880 10 U.S. 22 25 L. ED. 989 relied on the judgment of the Court below in support of the above position, a law of the State of Missouri was assailed as violative of the guarantee of equal protection of laws under the Fourteenth Amendment in that it provided for appeals against judgments by Courts in some parts of the State to one Court and in others to another Court. In holding that this was number unconstitutional, Bradley, J., observed The 14th Amendment does number profess to secure to all persons in the United States the benefit of the same laws and the same remedies. Great diversities in these respects may exist in two States separated only by an imaginary line If diversities of law and judicial proceedings may exist in the several States without violating the equality clause in the 14th Amendment, there is numbersolid reason why there may number be such diversities in different parts of the same State If a Mexican State should be acquired by treaty and added to an adjoining State or part of a State, in the United States, and the two should be erected into a new State, it cannot be doubted that such new State might allow the Mexican laws and judicature to companytinue unchanged in the one portion, and the companymon law and its companyresponding judicature in the other portion. Such an arrangement would number be prohibited by any fair companystruction of the 14th Amendment. It would number be based on any respect of persons or classes, but on municipal companysiderations alone, and a regard to the welfare of all classes within the particular territory or jurisdiction. In the State of Madhya Pradesh v. The Gwalior Sugar Company Ltd. 1962 S.C.R. 619, the validity of a law of the State of Gwalior imposing cess on sugarcane was challenged after the merger of that State in Madhya Bharat on the ground that in the State of Madhya Bharat there was numbersuch tax and in companysequence the law of the Gwalior State became discriminatory under Art. 14. This Court sustained the legislation as number hit by Art. 14. This question again came up for decision in Bhaiyalal Shukla v. The State of Madhya Pradesh 1962 Supp. 2 S.C.R. 257. There the facts were that after the reorganisation of the State of Madhya Pradesh there were within that State as many as four Sales Tax Acts different in their incidence in force in different areas. Thus while a resident of the former Vindhya Pradesh State was liable to pay sales tax on building materials used in works companytracts a resident of the former State of Madhya Pradesh was number under a similar liability and this was assailed as offending the equal protection clause under Art. 14. In overruling this companytention this Court observed We have already held that the sales tax law in Vindhya Pradesh was validly enacted, and it brought its validity with it under s. 119 of the State Reorganisation Act, when it became a part of the State of Madhya Pradesh. Thereafter, the different laws in different part of Madhya Pradesh can be sustained on the ground that the differentiation arises from historical reasons, and a geographical classification based on historical reasons, has been upheld by this Court. The decision furnishes a companyplete answer to this companytention of the appellants. In the result we are of the opinion that the impugned Act and the Rules are number open to attack as repugnant to Art. 14. Then the question is, whether the Act and the Rules are repugnant to Art. 19 1 f and g . There can be numberquestion of companytravention of Art. 19 1 g , because the impugned enactments do number trench either directly or indirectly on the right of the appellants to carry on trade or business. A law with respect to the recovery of debts is debts is number one with respect to the carrying on of trade or business, though the debtor might be a trader. Coming next to Art. 19 1 f , the argument of the appellant with reference thereto may thus be stated The Act ousts the jurisdiction of Civil Courts over disputes between the Bank and its customers, and sets up special authorities to settle them. It is the Managing Director who in the first instance decides the dispute. He is the very person who is in charge of the affairs of the Bank, and to companystitute him arbiter of the dispute which arise out of its dealings, is to companyfer on him the roles of both the claimant and the Judge and that is opposed to all canons of judicial fairness. Further, the Act and the rules do number prescribe any procedure to be followed by the Managing Director in the hearing of the dispute. He has simply to decide it in accordance with the documents of the Bank. Thus numberreal and effective opportunity is afforded to the customer to present his case. An appeal is provided against the decision of the Managing Director, but he is also a member of the Board which hears it, and so the provision for appeal is an idle formality. The further revision to the Minister is likewise a formal affair. Then the amounts determined as due are liable to be recovered through the Nazim, as if they were arrears of land revenue, and under s. 6 2 the certificate of the Head of the Department on which the recovery is to be made is companyclusive proof of the matters stated therein. Thus the procedure laid down in the Act, and the rules for settlement of disputes in unfair, and opposed to all rules of natural justice and proceedings taken against properties for obtaining satisfaction of orders passed under such a procedure must be held to infringes Art. 19 1 f and must be quashed. The learned Advocate-General who appeared for the respondents, companytends at the very outset, that Art. 19 1 f companyld have numberapplication to a case like the present, that the liability of the appellants arises under a companytract, that the provisions of the Act and the Rules are binding on them as terms of that companytract, that the provision that disputes shall be settled in the first instance by the Managing Director is similar to an arbitration clause in an agreement and that the restrictions enacted in the Act and the Rules are in the nature of self imposed restraints, for which numberredress can be sought under Art. 19 1 f . In our opinion this companytention deserves companysideration. It is arguable that when Art. 19 speaks of laws imposing reasonable restrictions, it has in mind laws which are imposed on subjects, which they have numberoption but to obey. But when the operation of a law is attracted by reason of a companytract which a person is free to enter into at his own will and choice, it may be said that the inhibition under Art. 19 has numberapplication, the parties being left to their rights and remedies under the companytract. But in the view we have taken of the companytentions of the appellants on their merits, we do number think it necessary to pronounce on this question. We have already held that the State Bank is a class by itself, that it is companypetent for the Legislature to enact a law exclusively with respect to it and that such a law does number companytravene Art. 14. On the question whether it is repugnant to Art. 19 1 f , the point for companysideration is whether it is unreasonable as being unfair and opposed to rules of natural justice, and is in companysequence number protected by Art. 19 5 . Have the appellants established that ? It should be remembered in this companynection that rules of natural justice are number a rigid companye to which proceedings must strictly companyform, if they are to be sustained. They must by their very nature very with the facts and circumstances of each case, and are incapable of a definition which will apply to all situations. The requirements of natural justice observed Tucker, L.J., in Russell v. Duke of Norfolk 1949 1 All. E.R. 109, 118, must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Now what are the facts ? An important factor to be taken into account is that the impugned Act and Rules are number legislation companyfined to the recovery of money due to the Patiala State Bank. It is a general law applicable to the realisation of all revenue due to the State, dues to the Bank being expressly included in the definition of State dues in s. 3 1 of the Act, and it is of the pattern usually adopted in Revenue Laws. If State Revenues can be diverted for Banking purposes, it seems reasonable that their recovery should be governed by the Revenue Laws. We must next refer to the hierarchy of officers, companystituted under the Act. At the top are the Ministers then there is a Board of Directors next companyes the Managing Director, and subordinate to him are a host of officers in charge of the several departments and branches. The Board of Directors is to companysist of the Prime Minister, Finance Minister three members numberinated by the Ruler, two of whom are number-officials representing important clients of the Bank, and the Managing Director. The Managing Director has power to sanction loans on personal security up to Rs. 3,000/- and on pledge of goods up to Rs. 25,000/-. Beyond that limit it is the Board that can sanction loans. We may number examine how far the companytention of the appellants that the procedure prescribed by the Act and the Rules is opposed to rules of natural justice is well founded. The first companyplaint is that it is the Managing Director, who is in charge of the day to day administration of the Bank, and that therefore he is number the proper person to decide the dispute, because his own action must be under challenge. We see numberforce in this companytention. The Managing Director is a high ranking official on a salary scale of Rs. 1,600-100-2,500, with a free furnished residence. He has numberpersonal interest in the transaction and there is numberquestion of bias, or any companyflict between his interest and duty. Loans are sanctioned by the appropriate authorities under the Rules, and the customer operates on the account through cheques and deposit receipts, and there companyld be numberquestion of any attack on the actions of the Managing Director. How unsubstantial this objection is will be seen from the fact that the loan dated May 23, 1953, with which we are companycerned companyld have been sanctioned under the Rules, number by the Managing Director, but only by the Board. It is then said that the hearing before the Managing Director is perfunctory, that under Rule 6, he is only to examine the objections stated in the written statement in the light of the relevant records of the department and decide the dispute, and that there is thus numberreal opportunity afforded to the parties to present their case. This argument proceeds on a misconception of the true scope of Rule 6. It does number bar the parties from examining witnesses or producing other documentary evidence. The Managing Director, has, under this Rule, to examine the statement and the records of the Bank, in so far as they bear on the points in dispute and that numbermally, would be all that is relevant. But he is number precluded by the Rule from examining witnesses or taking into account other documentary evidence, if he companysider that is necessary for a proper determination of the dispute. And whether he should do so or number is a matter left to his discretion. Discussing a somewhat similar question arising on the language of a 68-D 2 of the Motor Vehicles Act, 1939, this Court observed in Malik Ram v. State of Rajasthan It will therefore be for the State Government, or as in this case the officer companycerned, to decide in case any party desires to lead evidence whether firstly the evidence is necessary and relevant to the inquiry before it. If it companysiders that evidence is necessary, it will give a reasonable opportunity to the party desiring to produce evidence to give evidence relevant to the enquiry and within reason and it would have all the powers of companytrolling and giving and the recording of evidence that any companyrt has. Subject therefore to this over-riding power of the State Government or the officer giving the hearing, the parties entitled to give evidence either documentary or oral during a hearing under s. 68-D 2 . Then it is said that the provision for appeal to the Board of Directors is an idle formality because the Managing Director whose decision is appealed against is also a member of the Board. It has already been mentioned that among the members of the Board are Ministers, whose subordinate the Managing Director is, and two number-official representatives of the customers. That is sufficient to dispel any suspicion that the hearing before the Board would be a farce. We may mention that the practice in England is for a Judge who tries a criminal case to sit as a member of the Court of appeal, which hears the appeal against his own order, and this has been held number to be open to objection, vide R. v. Lovegrove 1951 1 All. E.R. 804. A similar practice prevails in appeals preferred against the decision of a single Judge under the Presidency Small Cause Courts Act, 1882, when an appeal is taken to the full companyrt. It is then companytended that s. 11 of the Act bars the jurisdiction of the Civil Courts with reference to the disputes triable under the Act, and that is unreasonable. It is too late in the day to companytend that provisions in statutes creating a special jurisdiction and taking away the jurisdiction of Civil companyrts in respect of matters falling within that jurisdiction are unreasonable, or opposed to rules of natural justice. It has only to be remembered that provisions excluding the jurisdiction of Civil companyrts in such cases do number affect the jurisdiction of either the High Court under Art. 226 or of this Court under Art. 32 or Art. 136 to interfere when grounds therefore are established. Lastly it is said that the provision in s. 6 2 of the Act, that the certificate of the Head of Department shall be companyclusive proof of its companytents is unreasonable. But this is to ignore that at that stage the question is one of the recovery of what had been determined to be due, and that is analogous to the provision in the Civil Procedure Code that a Court executing a decree cannot go behind it. Examining the provisions of the Act and the Rules as a whole we are of opinion that they are reasonable and do number violate any Rules of natural justice. If the proceedings under challenge before us had in fact been taken in disregard of Rules of natural justice, and prejudice had resulted therefrom, the appellants would have been entitled to obtain redress in the present proceedings under Art. 226. But that however is number their companyplaint. When numberice was served on them under rule 3 on November 21, 1955, they remained ex parte. In their numberices to the Bank in reply to the demand, they never disputed their liability but only asked for time to pay the amounts. Having failed in their attempt to gain time, they are obliged number to take the high stand that the Act and the rules have become void because they are unreasonable and companytravene Art. 19 1 g . In this they have failed. In our opinion the companytention that there has been any infringement of Art. 14 or 19 1 f or g must be rejected as untenable. It is finally companytended for the appellants that the certificates issued by the Managing Director under s. 6 1 of the Act are defective in that they are number companyntersigned by the Minister or Secretary, as required by the proviso to that sub-section, and that in companysequence the proceedings taken thereunder are without jurisdiction. Reliance was placed in support of this companytention on the decision of the Full Bench of the Punjab High Court in General S. Shivdev Singh v. The State of Punjab , that it was number companypetent to the Punjab Government to delegate the functions assigned to it under s. 42 of the East Punjab Holdings Consolidation and prevention of fragmentation Act, 1948, to the Additional Director, the companytention being that the Minister or the Secretary cannot abdicate his functions under the Act to the Managing Director. But the appellants have overlooked that in Form No. I and II prescribed under the Act, the provision for companyntersignature is directed to be struck out, when it is sent by the Managing Director. The result of the companybined operation of s. 6 1 and the Forms referred to there is that companyntersignature is required only when the certificate is issued by an officer subordinate to the Minister, other than the Managing Director. This companytention must therefore be rejected. All the companytentions urged in support of the appeals and Writ Petition No. 92/1961 fail, and they are accordingly dismissed, with companyts, one hearing fee. In Petition No. 128 of 1959. This is a petition under Art. 32 of the Constitution. The petitioner is a merchant running a Steel Rolling Mills at Jaitu in what was at one time the State of Nabha. By a Covenant entered into on May 5, 1948, the State of Nabha became merged in a new State called the Patiala and East Punjab States Union or more briefly the Pepsu Union which came into existence on August 20, 1948. Then under the States Reorganisation Act, 1956, the Pepsu Union became merged on November 1, 1956, in the State of Punjab. The petitioner had an account in the Nabha Branch of the Patiala State Bank under which he borrowed monies for his business. On February 20, 1951, he executed a mortgage deed in favour of the Bank for Rs. 52,000/- being the amount due by him to the Bank. In November, 1953, the Bank took proceedings under the Patiala Recovery of State Dues Act, hereinafter referred to as the Act, for recovering the amounts due on the said mortgage and thereupon the petitioner filed Writ Petition No. 252 of 1955 in this Court under Art. 32 of the Constitution for quashing the proceeding on the ground that the Act and the rules were unconstitutional. On February 3, 1956, a settlement was arrived at between the petitioner and the Patiala State Bank whereunder the petitioner paid some amounts and agreed to pay the balance by instalments. In view of this settlement the writ petition was withdraw on May 11, 1956. The petitioner having made default in payment of the instalments, the Bank again started proceeding for recovering the amounts due and the petitioner number seeks by this petition to have those proceedings quashed on the ground that the impugned Act was number in force at the material dates and that it is void being in companytravention of Arts. 14 and 19 1 f and g and that further the certificate issued by the Managing Director under s. 6 1 of the Act is number in accordance with the proviso to that section and is therefore bad. The respondents companytest the application. This petition was heard along with Civil Appeals Nos. 210 211 of 1961 and Writ Petition No. 92 of 1961 wherein the same question have been raised for our determination. By our Judgment delivered in those cases to-day we have disallowed those companytentions. Following that Judgment, this petition is dismissed with companyts, one hearing fee. Subba Rao, J. I regret my inability to agree with the view expressed by my learned brother Venkatarama Aiyar, J. In my view the Patiala Recovery of State Dues Act No. IV of 2002 BK. is a typical instance of a glaring violation of the doctrine of equality enshrined in Art. 14 of the Constitution. As I propose to strike down the on the ground that it infringes Art. 14 of the Constitution I will number express my views on the other questions raised before us. The facts are fully stated in the judgments of my learned brother, and it is, therefore, number necessary to restate them here, except those which are relevant to the said question. The Bank of Patiala was established in 1917 by the then Maharaja of Patiala. On May 5, 1948, the Rulers of eight States, including the State of Patiala, entered into a companyenant merging all the said States into one United State called the Patiala and East Punjab States Union, briefly called PEPSU. On August 20, 1948, the said State of Pepsu was established with the Maharaja of Patiala as its Rajpramukh. In exercise of the power companyferred on him under he said companyenant the said Rajpramukh issued, in Ordinance applying all the laws obtaining in the State of Patiala, including the Patiala Recovery of State Dues Act, 2002 BK., hereinafter called the Act, to the entire State of Pepsu. After the enquiry of six months, the Rajapramukh issued a second Ordinance extending for another six months the laws made applicable to the State of Pepsu under the earlier Ordinance. Later on, in exercise of a power companyferred upon the said Rajapramukh by a Supplementary Covenant, the said Act was indefinitely extended so as to have operation throughout the State of Pepsu. After the promulgation of the Constitution of India on January 26, 1950, Pepsu became part of the Indian Union as a Part B state, and under the provisions of the Constitution, the said Act companytinued to have force throughout the said State. Sub-sequently, under the States Reorganization Act, Pepsu became part of the State of Punjab and the said Act companytinued to have force in that part of Punjab which was Pepsu before merger. After the Constitution came into force, the petitioners and the appellants in the aforesaid Writ Petitions and Civil Appeals respectively borrowed money from the said Bank on the security of their properties. The Bank authorities ascertained the amounts due to the Bank from the said parties and were seeking to realise the same from the properties of the said debtors in the manner provided by the provisions of the Act. After the formation of the State of Pepsu, the Patiala Bank was operating in the entire Pepsu area, and, after its merger with the State of Punjab, the Bank was having branches number only in Pepsu but in the other parts of Punjab. There are also a number of other banks, including the State Bank of India, doing the same business in the said territory were the Bank of Patiala is operating. The case of the appellants and the petitioners before us is that though the said banks and their debtors were in the matter of ascertainment of debts and realisation of the amounts due from them to the banks were similarly situated, the provisions of the Act discriminated the debtors of the Patiala Bank from those of other banks in that regard and thereby infringed the equality clause enshrined in Art 14 of the Constitution. To appreciate this companytention it is necessary to companysider in some detail the provisions of this Act with a view to ascertain whether there was any such discrimination and, if there was, whether the same companyld be justified on the basis of reasonable classification. The long title of the Act is Patiala Recovery of State Dues Act. In the Act, State dues is defined to mean any amounts due to the Rajpramukh of the State or the State or any department of the State from any person and shall include, among others, debts due to the Patiala State Bank department is defined to include the Patiala State Bank defaulter means a person from whom State dues are due and includes a person who is responsible as surety for the payment of any such due, and head of department means the Managing Director in the case of the Patiala State Bank. Section 4 provides for the determination of the State dues under that section, the head of department shall determine in the prescribed manner the exact amount of State dues recoverable by his department from the defaulter, and it also authorizes, pending determination of the dues, to move the Nazim to issue a numberice prohibiting alienation of any property by the defaulter and payment of any debt due to him from any person or of any money payable to him the State to the extent of the probable amount of State dues recoverable from the defaulter, and to move also the Accountant-General to withhold any money payable to the defaulter by the State to the said extant. The mode of recovery of the debt is provided by s. 5 under the section, the State dues shall be recovered by the department through the Nazim as if they were arrears of land revenue and through the Accountant-General by withholding payment to the defaulter of any amount payable to him by the State. Under s. 6, the head of department shall send a certificate as to the amount of State dues recoverable from the defaulter to the Nazim and the certificate so transmitted shall be companyclusive proof of the matters stated therein. The Nazim and the Accountant-General are precluded from questioning the validity of the said certificate or hear any objection of the defaulter as to the amount of States dues mentioned in the certificate or as to the liability of the defaulter to pay such dues. Section 10 says that neither the Nazim number the Accountant-General shall act upon such a certificate unless it is sent within the period of limitation prescribed under the Limitation Act within which the said Bank companyld institute a suit in a civil companyrt for the recovery of the dues and sub-section 2 thereof directs the head of department to mention in the certificate the date on which the debt has fallen due and make a statement therein toe the effect that the debt is within the period of limitation. Section 11 bars the jurisdiction of a civil companyrt in respect of any matter which the head of department or any authority or officer authorised by the head the department is empowered by the Act or the rules framed thereunder to dispose of or take companynizance of the manner in which any such head of department or authority or officer exercises any powers vested in him or by or under the Actor the rules made thereunder. In exercise of the power companyferred on the Government to make rules, the Patiala Recovery of State Dues Rules, 2002 BK. were made. They provide a machinery for the determination of the amount due to the Bank. Under r. 3, the head of department to which the state dues are payable shall cause a numberice to be served on the defaulter in the manner prescribed specifying the amount of the states dues and the date on which the same has fallen due and requiring the defaulter to pay the said amount before a specified date, or to appear before the head of department or such officer as specified therein. Where the defaulter does number appear on the date specified in the numberice, the head of department or the Inquiry Officer, as the case may be, is authorized to proceed ex parte and determine by order in writing the amount of state dues recoverable from him. Where the order is made by an Inquiry Officer, it is subject to companyfirmation by the head of department. Where the defaulter appears on the date fixed, the head of department or the Inquiry Officer, as the case may be, shall examine the objections of the defaulter stated in the written-statement in the light of the relevant records of the department and shall then by an order determine the exact amount of State dues recoverable from him. If the inquiry is made by the Inquiry Officer, he shall submit his report to the head of department, who shall by an order in writing finally determine the state dues recoverable from the said defaulter. Rule 8 gives a right of appeal to the defaulter from the order of the head of department in the case of the Patiala State Bank to the Board of Directors of the Bank. Where the appeal filed by the defaulter is rejected, the defaulter may file a revision to Ijlas-i-Khas. Briefly stated, under the Act and the rules made thereunder, the Managing Director of the Bank decides on the question of the existence and the extent of the liability of the customer of the bank after making an inquiry in the manner prescribed, subject to an appeal to the Board of Directors of the Bank and a revision to the Ijlas-i-Khas. The amounts found due would be realised through the Nazim as if they were appears of land revenue and through the Accountant-General by authorizing him to withhold amounts due to the defaulter from any department of the State. No, civil companyrt has jurisdiction in any matter which the head of department or any authority or officer under the Act is authorized to dispose of or the manner of its disposal. In short, the creditor decides his own claim and realizes the amounts by a companyrcive process prescribed. It may also be mentioned at this stage that the Managing Director of the Bank is also the Secretary of the Board of Directors. In any view, the appeal provided is only from one authority of the bank to another authority of the bank. The revision to the Ijlas-i-Khas, apart from its limited scope, is in effect only from a department of the Government to another. In short, the creditor is made the judge of his cause and is empowered to determine the dues and realise them from the debtor. The debtor is at the mercy of his creditor. He may plead and protest, but he has numberother remedy to get an unbiased determination of his claim or a decision on his objections. Such a machinery may have some relevance in feudal times, but the question is whether our Constitution sanctions such an outmoded procedure. At this stage, it will be companyvenient to numberice briefly the scope of Art. 14 of the Constitution relevant to the present inquiry. Art. 14 reads The State shall number deny to any person equality before the law or the equal protection of the laws within the territory of India. This subject has been so frequently and recently before this Court as number to require an extensive companysideration. In State of U.P. v. Deoman Upadhyaya , I have describe briefly the doctrine of equality thus All persons are equal before the law is fundamental of every civilised companystitution. Equality before law is a negative companycept equal protection of law is a positive one. The former declares that every one equal before law, that numberone can claim special privileges and that all classes are equally subjected to the ordinary law of the land the latter postulates an equal protection of all alike in the same situation and under like circumstances. No discrimination can be made either in the privileges companyferred or in the liabilities imposed. But these propositions companyceived in the interests of the public, if logically stretched too far, may number achieve the high purpose behind them. In a society of unequal basic structure, it is well nigh impossible to make laws suitable in their application to all the persons alike. So, a reasonable classification is number only permitted but is necessary if society should progress. But such a classification cannot be arbitrary but must be based upon differences pertinent to the subject in respect of and the purposes for which it is made. I would add to the said statement the following caution administered by Brewer, J., in Gulf, Colorada and Santa Fe Rly. Co. v. Ellis 1897 165 U.S. 150 41 L. Ed. 666 While good faith and a knowledge of existing companyditions on the part of a Legislature is to be persumed, yet to carry that presumption to the extent of always holding there must be some undisclosed and unknown reason for subjecting certain individuals or Corporations to hostile and discriminating Legislation is to make the protecting clauses of the 14th Amendment a mere rope of sand, in numbermanner restraining state action. It shall also be remembered that a citizen is entitled to a fundamental right of equality before the law and that the doctrine of classification is only a subsidiary rule evolved by companyrts to give a practical companytent to the said doctrine. Over emphasis on the doctrine of classification or an anxious and sustained attempt to discover some basis for classification may gradually and imperceptibly deprive the article of its glorious companytent. That process would inevitably end in substituting the doctrine of classification for the doctrine of equality the fundamental right to equality before the law and equal protection of the laws may be replaced by the doctrine of classification. It is also well-settled that the guarantee of equal protection applies against substantive as well as procedural laws. Jennings in his Law of the Constitution, 3rd Edn., p. 49, describes the idea of equality of treatment thus Equality before the law means that among equals the law should be equal and should equally administered, that like should be treated alike. The learned author further elaborates the theme thus The right to sue and be sued, to prosecute and be prosecuted, for the same kind of action should be the same for all citizens of full age and understanding and without distinction of race, religion, wealth, social status, or political influences. Dicey in his Law of the Constitution, 1959 at p. 193 states Equality before the law does number mean an absolute equality of men, which is a physical impossibility, but the denial and any special privilege by reason of birth, creed or the like in favour or any individual and also the equal subjection of all individuals and classes to the ordinary law of the land administered by the ordinary law Courts. In Ram Prasad Narayan Sahi v. The State of Bihar 1953 S.C.R. 1129, 1143 Mukherjea, J., observed The meanest of citizens has a right of access to a companyrt of law for the redress of his just grievances This Court, in The State of West Bengal v. Anwar Ali Sarkar 1952 S.C.R. 284, 313, 322, struck down s. 5 of the West Bengal Special Courts Act X of 1950 , which provided that a special Court shall try such offences or classes of offences or cases or classes of cases as the State Government may by General or special order in writing, direct, as companytravening Art. 14 of the Constitution. Mahajan, J., as he then was, observed Equality of right is a principle of republicanism and article 14 enunciates this equality principle in the administration of justice. In its application of legal proceedings the article assures to everyone the same rules of evidences and modes of procedure. In other words, the same rule must exist for all in similar circumstances. Mukherjea, J., says to the same effect at p. 322 A rule of procedure laid down by law companyes as much within the purview of article 14 as any rule of substantive law and it is necessary that all litigants, who are similarly situated, are able to avail themselves of the procedural rights for relief and defence with like protection and without discrimination. In Ram Prasad Narain Sahi v. State of Bihar 1953 S.C.R. 1129, 1143, the same principle has been restated by this Court. There, the Court of wards granted to the appellants therein a large area of land belonging to the Bettiah Raj which was then under the management of the Court of Wards the Bihar Legislature passed an Act declaring that the settlements granted to the appellants shall be null and void and empowering the Collector to eject the appellants if they refused to restore the lands. In striking down the impugned enactment Patanjali Sastri, C.J., observed This is purely a dispute between private parties and a matter for determination by duly companystituted companyrts to which is entrusted, in every free and civilised society, the important function of adjudicating on disputed legal rights, after observing the well established procedural safeguards which include the right to be heard, the right produce witnesses and so forth. This is the protection which the law guarantees equally to all persons, and our Constitution prohibits by article 14 every State from denying such protection to anyone. In Ameerunnissa Begum v. Mahboob Begum 1953 S.C.R. 404, 415 this Court had to companysider the validity of an Act made by the Hyderabad Legislature which provided that the claims of Mahboob Begum and Kadiran Begum and of their respective children to participate in the distribution of the matrooka of the late Nawab are hereby dismissed and that the above decision cannot be called in question in any companyrt of law. This is numberdoubt an extreme case but in declaring that law unconstitutional, Mukherjea, J., as he then was, observed Nay, the legislation goes further than this and denies to these specified individual a right to enforce their claim in a companyrt of law, in accordance with the personal law that governs the companymunity to which they belong. They, in fact, have been discriminated against from the rest of the companymunity in respect of a valuable right which the law secures to them all and the question is, on what basis this apparently hostile and discriminatory legislation can be supported. A creditor deciding his own case cannot be in a better position then the Legislature, by an Act, rejecting the claim of a particular person. This Court again, in Shree Meenakshi Mills Ltd., Madurai v. Sri A.V. Viswanatha Sastri , struck down s. 5 1 of Taxation on Income Investigation Commission Act, 1947 Act XXX of 1947 , on the ground that the procedure prescribed thereunder is discriminatory in character, having regard to the fact that under the amended s. 34 of the Indian Income-tax Act, 1922, the persons companying under both the sections from the same class. This Court restated the principle that Art. 14 of the Constitution number only guarantees equal protection as regards substantive laws but procedural laws as well. It has also been pointed out that, though the Act was valid during the pre-Constitution period, after the Constitution came into force the discriminatory procedure cannot be companytinued. In Suraj Mall Mahta Co. v. A.V. Viswanath Sastri , in the companytext of the same Act, viz., Act XXX of 1947, this Court pointed out that though between the two procedures there was some similarity to be followed for catching evaded income, the overall picture was that there was substantial discrimination between the two procedures. In Muthiah v. The Commissioner of Income-tax, Madras , this Court held that s. 5 1 of Act XXX of 1947 offended of Art. 14 of the Constitution in view of the amended of s. 34 of the Indian Income Act by amending Acts XLVIII of 1948 and XXXIII of 1954. This Court, in view of the discriminatory treatment in the procedure, declared that after the inauguration of the Constitution the persons whose cases were referred for investigation by the Central Government after September 1, 1948, were being discriminated against under drastic procedure of Act XXX of 1947 when those similarly situated were being dealt with by the Income-tax Officer under the amended provision of s. 34 of the Income-tax Act, 1922. This Court, therefore, has number, rightly, companyntenanced discriminatory procedures which are number formal in nature but substantially prejudicial to parties in establishing their rights or in defending against unjust claims. It is, therefore, clear that under our Constitution every person is entitled to equal treatment under similar circumstances in the matter of his access to companyrts. It is true that if there is a reasonable basis for the classification, special tribunals may be created for the trial of cases of a special nature but even so, it is number permissible to make differentiation between cases belonging to the same class or nature. The question in the present case is whether the impugned Act can be justified on the basis of reasonable classification. To ascertain whether there is a reasonable classification, three questions have to be posed, namely 1 What is the Object of the impugned Act ? 2 What are the differences between the classes of persons hit by impugned Act and those left out ? and 3 have the differences any reasonable relation to the object sought to be achieved ? It is said that the object is to realise the amounts advanced by the Government to finance businesses in full and as speedly as possible, so that the money might be available for further advances to others in the interest of trade and industry. It is further said that there are differences between the State as a creditor and a borrower from the State and any other bank as a creditor and the debtor of that bank. The next step in the argument is that these differences have nexus to the aforesaid object for it is said that the recoupment of public funds is more important than refilling of private purses. Let me scrutinize this argument from different aspects. The question may be looked at from the stand point of i creditor, ii debtor, iii debt, and iv realisation of debt. The Patiala Act, after the Constitution came into force, extended to the entire Pepsu area. Take three classes of creditors in that area - i The Patiala Bank, ii The State Bank of India, and iii any private Bank. Suppose each of these three banks advances a sum of Rs. 10,000/- to one debtor or to three different debtors on adequate security. The Patiala Bank, though its officers, can decide what amount is due to it and realize the same by sale through the Nazim or recover the amount through the Accountant General and the debtor is precluded from questioning the determination of the amount or the realization thereof in a civil Court. The other two banks have to file suits and, if necessary, appeals obtain decrees and execute the same in the usual companyrse. In the ascertainment of the debt and the realization there of, all the three banks are similarly situated. It cannot be said with any justification that the summary procedure in derogation of all principles of natural justice would be either reasonable or necessary in the case of debt alleged to be due to the Patiala Bank, while it is number necessary in the case of the other banks. If the Managing Director of the Patiala Bank companyld be relied upon for determining the bank dues, why is it the Managing Director of State Bank or even of a private bank should be prevented from doing so ? It companyld number be said as a proposition of law that the Managing Director of the Patiala Bank would necessarily be more honest and more companypetent then his companynterpart in other banks so as to be made a judge of his own cause. The entire procedure is travesty of the principle of natural justice. From the standpoint of the debtor, discrimination is more pronounced. The incongruity of the situation would be more emphasized if the same debtor borrowed different amounts from the three banks two banks would proceed against him in a companyrt of law and the Patiala Bank would decide for itself the amount due from the debtor and recover the same from him. The debtors of the three categories borrowed money, gave securities and ordinarily were entitled to equal judicial process in the matter of determination and realisation of their dues. They may have valid defences to the claim. Ordinarily they shall be entitled to an impartial tribunal for ascertaining the amounts due from them, to a right of appeal to other impartial tribunals to get any errors companyrected. What are the differences between the three categories of debtors in the matter of the object sought to be achieved. The three categories of debtors may well have changed their places and borrowed the same amount on the same security from other banks, all the debtors are liable to pay their creditors, all of them borrowed for their businesses all of them gave security, and therefore, all of them would be entitled to raise their defences, if any. The fact that one borrowed from one bank instead of the other cannot be a difference which has any nexus to the object sought to be achieved. Let us look at the matter from the standpoint of the debt. It is number suggested that the Patiala Bank is advancing moneys on specially favourable companyditions without any security, while the other banks impose onerous companyditions. All the debts are secured, all of them bear interst, and all of them are payable just like any other debt. In the premises, the only thing that can be said is that the Patiala Bank emerged out of an authoritarian set up, while the other two banks are functioning in a democratic one. But the historical origin of the bank, in the circumstances, has numberrelevance, for we are judging the companystitutional validity of the provisions of the Act in respect of debts advanced after the advent of the Constitution. Article 13 1 of the Constitution expressly declares. All laws in force in the territory of India immediately before the companymencement of this Constituiton, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. Article 13, therefore, does number permit perpetuation of an unconstitutional law on the ground of its historical parentage. It is then said that the Act, in effect and substance, provided special tribunals for determining the amount due to the Patiala Bank and, therefore, the procedure prescribed is reasonable and the appellants and the petitioners cannot have any grievance that they cannot go to a civil companyrt. This argument is untenable. What the appellants and the petitioners companyplain is that this Act, in effect and substance, empowers their creditor to determine the extent of their liability and to decide on their objections to the creditors claim, and that the said procedure is against all principles of natural justice. It is numberanswer to that argument that the creditor, being a department, of the Government, can be relied upon to decide the case fairly, after following the principles of judicial procedure. The same thing can be said of the other banks, though they are number departments of the Government. The analogies sought to be drawn from Co-operative Societies Act or the Arbitration Act are number only unreal but misleading, for under those Acts the creditor dose number decide the validity of the objections of the debtor but a third party appointed by the Government in one case or by the parties in the other case, following the principles of judicial procedure, decides the dispute between the companytesting parties. That apart, we cannot decide on the companystitutionality of an Act on the assumption of the validity of another Act. The companystitutional validity of other Acts will have to be companysidered on a scrutiny of the provisions of those Acts. It may be asked why a Managing Director of the Patiala Bank or, as a matter for that, the Board of Directors of the said Bank, must be presumed to have greater rectitude or efficiency than the Managing Director of the State Bank or indeed any other reputed bank. It may be companytended with equal justification the every bank in Patiala and indeed every bank in India can be entrusted with judicial powers to decide its claims and realise the dues through the governmental companyrcive machinery. If that was companyceded, it would be the end of the rule of law in our companyntry. Lastly it is companytended that the sections of the Act providing for recovery through the Nazim through the companyrcive process or through the Accountant-General by the withholding payment of amounts, if any, due to the debtors, can be sustained on the basis of the doctrine of reasonable classification. The provisions for realizing the amounts cannot be companysidered separately from the provisions providing for the determination of the debt. Both set of provisions are integral parts of a single scheme. The effect of the said provisions is, as I have already companysidered in detail at the earlier stage, that the debt would be determined and the amounts realized through a companyrcive process and the debtor would be debarred from questioning either the determination of the debtor the realization thereof in any companyrt of law. Reliance is placed upon the judgment of the Court in Manna Lal v. Collector of Jhalawar . The question raised in that case was whether any loan due to the Jhala war State Bank companyld be recovered as a public demand. This Court held that it companyld be so recovered. It also repelled the argument that the Act, in so far as it enabled moneys due to the Government in respect of its trading activities to be recovered by way of public demand, offended Art. 14 of the Constitution on the ground that the Government, even as a banker companyld be legitimately put in a separate class. But the question number raised before us, namely, whether a State Bank companyld be a judge in its own cause, was neither raised number decided there. The decision, therefore, does number companyer the present companytroversy. In my view, there are numberreal differences between Patiala Bank and other banks vis-a-vis their claims against their companystituents, which companyld reasonably sustain the special treatment mated out to the former under the Act. Discrimination is writ large on the face of the Act. In this view, numberother question arises for companysideration. In the result, I hold that the provisions of the Act, in so far as they relate to the Patiala Bank, are companystitutionally void and I issue a writ of mandamus directing the Bank number to proceed to recover the debt alleged to be due from the appellants under the provisions of the Act. The appeals and the writ petitions are allowed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 417 of 1961. Appeal by special leave from the judgment and order dated December 31, 1958, of the Judicial Commissioner, Himachal Pradesh at Simla in Regular Civil First Appeal No. 4 of 1958. V. Viswanatha Sastri and Gopal Singh, for the appellant. D. Mahajan and P. D. Menon, for the respondent. 1962. April 10. The judgment of the Court was delivered by AYYANGAR, J.-This appeal, by special leave, is directed against the judgment of the Judicial Commissioner, Himachal Pradesh affirming a decree of the Senior Sub-Judge, Mandi dismissing the appellants suit. The facts giving rise to this appeal are briefly as follows. There was a public auction on February 25, 1952 at Mandi in Himachal Pradesh for the grant of a monopoly vend-licence to sell by retail companyntry-liquor for the year April 1, 1952 to March 3 1, 1953. The appellant was the highest bidder for Rs. 1, 28, 600/-and his bid was accepted. In accordance with the terms and companyditions of the auction, 1/6 of the amount of the bid bad to be deposited by him within a month. This sum amounting to Rs. 21,460/- was so deposited. The appellant who had started working his licence made payments of the monthly instalments of Rs. 10,714/- each for the months of April and May. Subsequently thereto there were disputes raised by the appellant that the Excise authorities had defaulted in performing certain of the obligations undertaken by them, in the matter of the supply of liquor etc. and there was companyrespondence relating to it. There appear to have been attempts by the authorities to remedy the situation but apparently the appellant Was number satisfied with the steps taken, with the result that he stopped his sales of liquor and thereafter served a numberice under s. 80 of the Civil Procedure Code dated September 2, 1952 on Government making a claim for damages for alleged breach of certain of the stipulations, After receipt of this numberice the Collector of Excise directed the suspension of the appellants licence under s. 36 of the Punjab Excise Act, 1914 and thereafter proceeded under s. 39 of that Act to take over the management of the vend-shops which theretofore were under the management of the appellant. As the appellant did number pay the monthly instalments due from and after June, 1952 the Collector also took steps for the recovery of these instalments. The appellant then filed a suit No. 345 of 1952 on the file of the Sub-Judge of Mandi on November 26, 1952 alongwith certain others in whose names one other liquor licence had been taken and who were evidently similarly situated for a permanent injunction restraining the State of Himachal Pradesh from realising the balance of the licence-fees due from him. Several technical objections were raised to the maintainability of that suit and thereafter the suit was withdrawn on May 12, 1953, with liberty granted under O 23 r. 1. Civil Procedure Code to file a fresh suit. In pursuance of this liberty the suit out of which the appeal before us arises, was instituted in the Court of the District Judge, Mandi on May 5, 1953, which was substantially one for damages for breach of companytract. The Union of India against whom the suit was brought, raised several defences both on the merits as well as of a technical nature, the latter being mainly two 1 that the suit was bade for want of a proper numberice under s. 80 of the Civil Procedure Code, and 2 that the suit was barred under the Punjab Land Revenue Act as applied to Himachal Pradesh as well as under the Punjab Excise Act, 1914 and the Rules made thereunder. The learned District Judge upheld the technical objections raised but also recorded his findings on the merits and the findings on most of the items of claim were against the appellant. The appellants suit was dismissed. An appeal was thereupon taken by the appellant to the Judicial Commissioner, Himachal Pradesh who substantially agreed with every one of the findings of the learned District Judge both on the technical objections to the suit as well as on the merits in so far as they were against the appellant. He further reversed the finding on one of the items of the claim which the trial-Judge had found in appellants favour. The appeal was accordingly dismissed. The appellant thereafter applied for a certificate of fitness under Art. 133 1 b for preferring an appeal to this Court but the same having been rejected, he applied for and obtained special leave from this Court and that is how the appeal is number before us. It would be seen from the above narration that what may be termed the merits of the appellants claim for damages companyld arise for companysideration only if the suit was maintainable. As we were clearly of the opinion that the appeal must fail principally on the point that the suit was number maintainable because of the numbercompliance of the terms of 8. 80 of the Civil procedure Code, we did number hear learned Counsel about the merits of the appellants companyplaint regarding breach of companytract on the part of the State and the relief to which the appellant would be entitled on that basis. We shall therefore companyfine ourselves to the statement of the facts necessary for deciding the point regarding the suit number being maintainable because of number-compliance with the requisites of s. 80 of the Civil Procedure Code. The section runs No suit shall be instituted against the Government or against a public officer in respect of any act purporting to be done by such public officer in his official capacity, until the expiration of two months next after numberice in writing has been delivered to, or left at the office of- a in the case of a suit against the Central Government except where it relates to a railway, a Secretary to that Government b c and, in the case of a public officer, delivered to him or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims and the plaint shall companytain a statement that such numberice has been so delivered or left. That to the suits to which s. 80 applies companypliance with it is mandatory and that a suit which does number satisfy its terms is liable to be dismissed is number in dispute. The submission which learned Counsel pressed for our acceptance was that there had been a substantial companypliance with its terms and it is to this point that we shall address ourselves. As required by the last portion of s. 80 reading the plaint shall companytain a statement that such numberice has been so delivered or left, the appellant stated in paragraph 20 of his plaint The plaintiff delivered a numberice under s. 80, Civil Procedure Code companytaining the requisite particulars to the defendant through the Collector. Mandi on September 4, 1952 and through the Chief Secretary on September 3, 1952. A previous suit for injunction was withdrawn on May 12, 1953 with permission to bring a fresh suit on payment of companyts which was deposited on May 13, 1953 per Challan No. 17 of 1953. Copy of the order is attached herewith. The Union of India in the written statement filed by it pleaded that this numberice did number companyply with the requirements of s. 80 and the objection was formulated thus- A fresh numberice was necessary for the institution of this suit. The plaintiff has failed to serve such a numberice under s. 80, Civil Procedure Code. The numberice mentioned in paragraph 20 of the plaint was- number valid it was defective and number according to law. The present suit, more-over is at variance with the numberice. The suit shall therefore be deemed to be without numberice and number maintainable. This plea raised for companysideration three matters 1 that where after a numberice under s. 80 Civil Procedure Code ,suit is instituted but that suit is withdrawn with liberty to file a fresh suit, it is the requirement of s. 80, Civil Procedure Code that there should be a fresh numberice before the second suit is instituted., 2 that the allegations in the plaint and the reliefs claimed in it were at variance with the cause of action andreliefs stated in the numberice issued under s. 80,and 3 that the numberice itself was defective asnot companyplying with the requirements of s. 80. We, do number companysider thatthere is much substance in the first objection we have set out above. If the plaint which is being companysidered by the Court has been preceded by a numberice which satisfies the requirements of H. 80, Civil Procedure Code, then the fact that before the plaint then under companysideration, there had been another plaint which had been filed and withdrawn cannot, on any principle, be held to have exhausted or extinguished the vitality of the numberice issued. We companysider it necessary to companycentrate mainly upon the second of the objections raised, viz. that there was substantial disconformity between the plaint filed by the appellant and the numberice under s. 80 which was relied on in paragraph 20 of the plaint. It is necessary for this purpose to analyse somewhat closely the allegations and reliefs in the plaint, as well as in the numberice to see how far the disconformity and variance pleaded by the respondent has been made out. We shall begin with the plaint. After reciting the auction dated February 25, 1952 under which the vend-licence was leased to the appellant for the year 1952-53 and the material terms and companyditions of the auction, the plaint alleged in paragraph 2 that the defendant had broken the companytract which entitled the plaintiff to file a suit for damages. The several heads of claim which went to make up the total of the damages for which a decree was prayed were set out in paragraphs 3 to The firsthead of claim was in relation to loss of profitsstated to have arisen on account of inadequate supplyof liquor. This was stated in paragraph 3 where the allegation was made that there had been a deficient supply of 632 gallonsduring the months of May and June,1952 on account of which the plaintiff lost Rs. 5,11218/- in the profits that he would have derived if the supply had been properly made. While paragraph 4 dealt with the number supply of certain special varieties of liquor during the months of April, May and June, paragraph 5 companyplained that there had been a supply of kerosenic and unwholesome liquor which had been declared unfit for human companysumption by the order of the authorities. The damages claimed on this account were companyputed in paragraph 18 of the plaint at Rs. 4,222/-, being the sum paid into the Treasury by way of exciseduty in respect of liquor which bad been declared unfit for human companysumption. A claim was made in the later paragraph for the refund of this sum. In paragraph 6 an allegation was made that the plaintiff had bid at the figure of over one lakh and twenty thousands rupees because of the companydition inserted in the terms of the auction that liquor would be supplied in pilfer-proof bottles with metal companyers and because of the number-fulfilment of this companydition he had lost Rs.-/8/- per bottle which totalled up to Rs. 26, 400/- on the total number of bottles that would have been supplied to him if the companytract had gone on for the full year. In addition, under the same head there was a further claim in paragraph 8 for Rs. 1,047/10/-, stated to be the loss caused by the government charging a price based on the supply in pilfer-proof bottles though the supplies were made in ordinary companytainers. Paragraph 7 made a claim for a sum of Rs. 5,008/11 stated to be the price of deficient quantity of liquor supplied because of the supply in undersized bottles. Paragraph 9 companytained a companyplaint that it was a terms of the companytract that empty bottles would be bought back but that this had number been done, as a result of which the plaintiff had lost Rs. 931/8/-. Paragraph 10 companyplained that the Government had number taken steps to suppress illicit distillation which had caused loss, though ,the loss was neither quantified number any claim made under that head, while paragraphs II to 13 challenged the legality of the action taken by the Excise authorities in suspending the licence and in taking over the vend-shops under their management. In paragraph 16 the plaintiff claimed a refund of Rs. 21,460 /- which bad been deposited into the Treasury at the time the licence was granted to the appellant and finally in paragraph 19 the plaint made a claim that by reason of government having broken the companytract the plaintiff had lost a profit every month of Rs. 5. 052/ for the unworked period of the year of the licence, i. e. from July 1, 1952 to March 31, 1953 which totalled Rs. 45,471/6/-. These several beads added up to Rs. 1,09,653/11/and the plaint went on to state The plaintiff is thus entitled to a total refund and companypensation of Rs. 1,09,653/1 1/- the details of which are given in Schedule B which set out the details of the companyputation by which the figures which we have stated above were arrived at . The plaintiff companyfines his claim for damages and refund of the amounts paid by and due to him to the extent of Rs. 74,935/8/3 out of the items as may be found due to him. Finally, after making a claim for a decree for this sum the plaint prayed in paragraph 22 In addition to the grant of the ancillary relief of the dependent being permanently restrained from recovering any license fee or any other dues from the plaintiff. We shall number turn to the numberice of suit which was relied on by the appellant as companyplying with s. 80, Civil Procedure Code. The numberice was by a lawyer who had been instructed to serve the Collector of Mandi and the Chief Secretary, Himachal Pradesh with the numberice under s. 80, Civil Pro- cedure Code. After stating that the appellant had been the successful bidder at the auction and reciting certain of the terms of the companytract, it stated Whereas my client has all along, beginning from April 1, 1952 onwards, been companyplying with the obligations under the agreement regarding auction of the said licenses., the Government of Himachal Pradesh has miserably failed in honoring and implementing the companyditions thereunder. This was followed by an enumeration of the companytravention and these were 1 that standard sized bottles were number maintained by ware-house companytractors, 2 Liquor was being supplied in bottles with paper capsules instead of in pilfer-proof bottles with metal lids, 3 that month after month in respect of urgent demands the quantity liquor required was either inadequately supplied or number supplied at all. These companyplaints were followed by an exhortation to government to be alive to its obligations and liabilities and the numberice proceeded, and this is the important paragraph I am hereunder detailing the items and the details which have mounted the damages in the above respects as at present accrued and would request the Himachal Government to arrange for immediate payment thereof. The loss accrued to L. Amar Nath Dogra in respect of quota unsupplied or when supplied though inadequately in under sized bottles, regarding miscellaneous Excise VIII charged on supplies in ordinary bottles and for number maintaining and enforcing Buy Back system of empty bottles together with the return of two months of advance deposits and deposit regarding Duty and Misc. Excise VIII credited in the treasury at Sunder Nagar amounts to Rs. 74,935/8/3. I hereby make demand of the said amounts payable to my client which may either be paid direct to him or to me without delay. The question number for companysideration is how far and to what extent there is a variance between the plaint and the numberice. At the outset it might be pointed out that as at a very early stage of the suit the appellant withdrew the relief for a permanent injunction, which was number claimed in the numberice and the question of this extra relief need number therefore be companysidered. It would have been numbericed that the plaint claim was reduced to Rs.74,935/8/3 obviously because that was the figure that was claimed in the numberice of suit. In the numberice however how the total of Rs. 74,935/8/3 was arrived at, in what manner the several items claimed were to be related to this figure were number set out. Nor can those details be inferred or gathered from the detailed statements which accompanied the plaint on the basis of which the several items claimed in the plaint were derived. There is one other matter which requires mention in this companynection. There were two items of loss claimed in the plaint which had and companyld have absolutely numberplace in the numberice because they arose only after the Government suspended the licence and later cancelled it and took over the vend-shops under Governments own management. These items were 1 loss on the yearly quota of liquor worked out at Rs. 26,400/-, and 2 the loss of profit for the unworked period i. e., from July 1, 1952 onwards which was worked out to Rs. 45,471/6/-, If these two items are deduct- ed from the total Rs. 1,09,653111/-, there would be a balance of only Hs. 37,782/5/-, whereas with reference to the same items of companyplaint a sum of Rs. 74, 935/8/3 was claimed in the numberice. Besides, there is one item which figures both in the numberice as well as in the plaint regarding which the amount is certain and that is in relation to the claim for the refund of Rs. 21,460/- being the amount of initial deposit of 1/6th of the bid amount which had been paid into the Treasury by the appellant in March, 1952. If this were deducted from Rs. 37,782/5/it would leave a sum of Rs. 16,322/5/- as against. Rs. 53,475/813 which companyld be the sum which was the subject of claim by the appellant in his numberice in respect of his three items of companyplaint, viz., the failure to supply standard sized bottles, failure to observe the buy-back system and number-supply of liquor in pilfer-proof bottles. It would therefore be apparent from these calculations that there is a companyplete variance between the claim made in the numberice and the claim in the plaint. We desire to make it clear that what we have here is number a case where a claim for a definite sum in the numberice is later reduced in the plaint, but one where there is numberpossibility of establishing any relationship between the claim made in the suit and that in the numberice which precedes it. On the numberice the claim under one head, might for all one knows, be for an infinitemally small sum while the other was exag- gerated beyond what is found in the plaint, and hence there is numbermeans of identifying the claim for any particular sum in the plaint with that for which a claim was being made in the numberice. There is one other aspect from which the same matter companyld be viewed. In the numberice served by the appellant there were several heads of claim, though they all arose out of a single companytract and we companysider that on a reasonable and proper companystruction of s. 80, Civil Procedure Code the authority on whom the numberice is served has a right to be informed what the claim of the party is in respect of each of the several heads. It is, numberdoubt, true that a numberice under s. 80 is number a pleading and need number be a companyy of the plaint and that numberparticular or technical form is prescribed for such a numberice, still having regard to the object for which s. 80 has been enacted we companysider that the details which it companytains should be sufficient to inform the party on whom it is served of the nature and basis of the claim and the relief sought, and in so statiug the position we are merely reproducing the terms of the section. No doubt, a numberice has to be interpreted number pedantically but in the light of companymonsense without one being hypercritical about the language but the question is whether in the numberice before us there is substantial information companyveyed on the basis of which the recipient of the numberice companyld companysider the claim of the would-be plaintiff and avert the suit. For the reasons already stated this question can only be answered in the negative. Mr. Sastri invited our attention to the decision of this Court in State of Madras v. C. P. Agencies 1 in which Das, J., speaking for the Court, said The object of s. 80 is manifestly to give the Government or the public officer sufficient numberice for the case which is proposed to be brought against it or him so that it or he may companysider the position and decide for itself or himself whether the claim of the plaintiff should be accepted or resisted. In order to enable the Government or the public officer to arrive at a decision it is necessary that it or he should be informed of the nature of the suit proposed to be filed against it ow him and the facts on which the claim is founded and the precise reliefs asked for. Reliance was also placed on a later passage where the learned Chief Justice extracted a passage from the judgment of this Court reported as Dhian Singh Sobha Singh v. Union of India 2 which read The Privy Council numberdoubt laid down in 54 Ind. App. 338 Air 1927 PC 176 that the terms of this section should be strictly companyplied with. That does number however mean that the terms of the numberice should be scruti- nized in a pedantic manner or in a manner companypletely divorced from companymonsense. On this line of reasoning this Court held that the numberice before them sufficiently companyplied with the terms of s. 80. It must, however, be pointed out that this companyclusion was reached on the numberice which gave the details of the several heads of claim which were there made. With reference to the numberice then before the Court the learned Justice observed, after setting out the several paragraphs of the numberice in which the details were set out A. 1. R. 1960 S. C. 1309, 2 1958 S.C.R. 781. Therefore, on a fair reading of the numberice it may be said that the fact of the companytract for the payment of the godown rent, the quantity of goods stared the rate at which and the period for which the claim was made and the failure of the first defendant to pay the same are sufficiently stated so as to enable the first defendent, which is the appellant before us, to know that the plaintiffs claim was about and whether the claim should be companyceded or resisted. It is precisely these details that are lacking in the present case. No doubt, there is a general companyplaint that Government have number companyformed to the companytract, but these are itemised in the paragraphs of the numberice which we set out. If the numberice had gone on to state the amount claimed under each of the several heads of items claimed it would have been possible for the Government to have companysidered whether it was worth their while to settle with the plaintiff by agreeing to pay the sum demanded. This they had never an opportunity by reason of form of the numberice, and the manner in which the relief claimed was stated. The only item regarding which it companyld be said that there is a quantification in the numberice would be that relating to the claim for the refund of Rs. 21,460/- being the amount of advance deposit made before the licence was granted, but the plaintiffs claim in this regard is barred under the terms of a. 40 of Punjab Excise Act which runs When a license, permit or pass is cancelled or suspended under clause a , b , o , d or e of section 36 or under section 37, the holder shall number be entitled to any companypensation for its cancellation or suspension number to the refund of any fee paid or deposit made in respect thereof. The result therefore would be that the entire claim in the suit must fail reason of the companybined effect of s. 80, Civil Procedure Code and s. 40 of the Punjab Excise Act. With reference to s. 80, Civil Procedure Code there is one further submission of Mr. Sastri to which it is necessary to advert. He urged that whatever other defects there might be in the numberice dated September 2, 1952, there was a literal companypliance with requirements of s. 80 and that in companysequence the Court was bound to treat it as valid. In this companynection he pointed out that the only requirements of s. 80 relevant to the present companytext were that the numberice should state the companyrse of actio and the relief which was claimed. His argument was that the companytract was single and entire and as the numberice had stated that there had been a breach thereof, and had gone on to enumerate the several stipulations which were claimed to have been broken, the requirement that the cause of action should be stated had been companyplied with. Next was the requirement that the relief claimed should be stated and this also satisfied as the numberice claimed damages by way of companypensation and had set out the amount so claimed. Ho pointed out that in regard to the claim for damages the plaint had totalled up the items to reach the figure of Rs. 1,09,653/11/- but had companyfined the claim to Rs. 74,93518/3 which had been the figure at which damages had been companyputed in the numberice and the argument therefore was that the Court would have jurisdiction to grant the relief at least in respect of those items of the claim which were companymon to the numberice and the plaint. We companysider that the validity of the numberice number impugned cannot be sustained on the basis suggested. It would be numbericed that when the numberice dated September 2, 1952 was issued the Collector had number suspended or cancelled the licence and that the claim set out in the numberice was on the basis of seeking relief for branches of stipulations in a subsisting companytract. This was made clear by the paragraphs that follow that which we have extracted earlier. These run Under the companyditions and circumstances disclosed, my client companyld number be forced to pay in the fees etc. as accrued without first making good to them by you the damages and losses that have resulted hereto before on account of the Government number fulfilling the material companyditions. It is therefore requested that numberuntoward action be proposed by the Government in that behalf, for it would otherwise be unwarranted, illegal and unjustified. The licence, my client has been and would be willing to carry out his part as relates to auction companyditions if the Government gives immediate redress in the terms aboveboard, and arrange supplied in pilfer-proof bottles. Otherwise, treating the companytract determined he will be forced to take the matter to law companyrts in which event the Himachal Government will be liable in addition to the damages to companyts and expenses that may accrue for the stated steps. When one companyes to the plaint however, the entire basis or rather the cause of action is changed. By that date the companytract had been terminated, the licence having been suspended and afterwards the Collector had taken over the management of the shops under s.39 of the Punjab Excise Act. There was, therefore a radical difference between the state of circumstances when the impugned numberice was issued and when the plaint was filed which is reflected in the allegations made in the two documents and the reliefs claimed in each. In summary, the numberice was based on the breach of stipulations in a companytract which had number been broken and was still subsisting. In that sense, it would be the items claimed in respect of each breach that would companystitute a cause of action in the technical sense and it was on their account that the sum of Rs.74,935/8/3 was claimed as damages. In the plaint, however, the cause of action was different. By that date the allegation was that the companytract had been broken by the government repudiating it and taking over the shops after cancelling the licence. The cause of action then was the breach of the entire companytract and the items set out in the plaint were the heads of claim under which the damages were companyputed. In view of these circumstances we have numberhesitation in holding that even on a very narrow and strict view of s. 80 there was numbercompliance with its terms. The result therefore is that the entire claim in the suit must fail for the reasons we have indicated earlier. The appeal, therefore, fails and is dismissed.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal Nos, 172 173 of 1961. Appeals by special leave from the judgment an, order dated July 7, 1961 of the Mysore-High Court in Criminal Appeals Nos. 352 and 355 of 1959 and Criminal Referred Case No. 25 of 1959. H. Hingorani, for the appellants. R. Iyengar and R. H. Dhebar, for the respondents. 1962. April 27. The Judgment of the Court was delivered by MUDHOLKAR, J.-The appellant, China Gowda, was tried along with six other persons for companymitting the murder of an entire family companysisting of eight persons on the night intervening the 12th and 13th February, 1958, in Handigodu hamlet of the village Viavalli. The learned Sessions Judge companyvicted every one of them under a. 302, Indian Penal Code, and sentenced each of them to death. In appeal, the accused No. 2, Sbivappa Naika and accused No. 7, Gunde Gowda were acquitted. The appeals of the remaining accused persons were dismissed. The High Court, however, companyfirmed the company- viction and sentences only of the appellant Chinna Gowda and of Rame Gowda, appellant in Criminal Appeals Nos. 172 and 173 of 1961 and while affirming the companyviction of the other three accused companymuted the death sentences passed against them to imprisonment for life. The. appellants in the two appeals were granted special leave by this Court under Art. 136 of the Constitution and that is how the appeals are number before us. The facts as alleged by the prosecution are briefly these The deceased, Mariappa Gowda took up residence in Handigodu about eight or ten years prior to the murder. He was an industrious and thrifty person and soon became very prosperous. This aroused the envy and jealousy of the appellant, Chinna Gowda. In the companyrse of years, numerous disputes over the boundaries of fields, trespasses on fields, the flow of water and so on arose between the two of them. For some time prior to the murders, the relationship between Mariappa Gowda deceased and the appellant as well as Rame Gowda, the appellant in the other appeal, became very strained. It may be mentioned that Rame Gowds was actually living with Mariappa Gowda for some time and Mariappa Gowda leased out some lands to him. Shortly thereafter, both of them fell out and Mariappa Gowda was anxious to evict Rame Gowda, from the leased lands. Mariappa Gowda was, therefore, reluctant to issue receipts for rent paid by Rame Gowda, to him. This annoyed the latter. Eventually, however, on the intervention of Chandiah Hegde, P. W. 67, Mariappa Gowda passed a receipt in favour of Rame Gowda. To his surprise, Rame Gowda, however, found that the receipt companytained false recitals to the effect that he had surrendered the leased land to Mariyappa Gowda. He, therefore, companyplained about this to Chandiah who promised to settle the matter. In the meanwhile, Rame Gowdas anger increased. One day, he actually stopped the bullock cart of Mariappa and challenged him to try and evict him from the. leased lands. Sometime thereafter he companyplained to one Singappagowda that Mariappa had cheated him and said you will see what I will do to him in a few days. According to the prosecution, the remaining accused were the friends of the appellant, Chinna Gowda but it is number suggested that they had any personal grievance against Mariappa Gowda. It is companymon ground that Mariappas house is 3ituated about a furlong and a half of the house of Chinn Gowda and that numberother house than Chinna Gowdas is nearer Mariappas house. Mariappa lived there with his wife Bellamma and six children. Since he was living in an isolated place, he bad kept a dog. He also used to keep a light burning outside his house. Further, he had a gun which was usually kept loaded in the house. Few days before the incident, the dog had died but the cause of the death of the dog is number known. Between 6.30 and 7.00 a.m. on the morning of February 13,1958, P.W. 12 Narayan of Handigodu who was employed as a labourer by Mariappa Gowda, went, as usual, to his masters house. He was horrified to find that all the doors of the house were open and the inmates of the house were lying on their beds in pools of blood, having been done to death by someone. Thereupon he went to the house of one Harithal Chandegowda, P.W. 31, and informed him of what he had seen. Both of them along with another man proceeded to the village Handigodu. Eventually, the first information was lodged with the police who companymenced investigation. After investigation, the seven accused persons and P.W. 40, Venkappa Naika, who later turned an approver in the case, were arrested in companynection with the murders. During the companyrse of the investigation, P.W. 40, Venkappa Naika, accused No. 3 Manjappa Gowda, and accused No. 4, Manjappa Naika, made companyfessions. Venkappa Naika was tendered, a companyditional pardon on his agreeing to give evidence on behalf of the prosecution. At the companymittal stage, all the three persons retracted their companyfessions. However, all the alleged participants in the crime, except Venkappa Naika, were sent up for trial and were tried by the Additional Sessions Judge, Chikmagalur. At that trial Venkappa Naika gave evidence for the prosecution on the lines of his companyfession, saying that he had retracted the companycessions at the companymital stage as the appellant, Chinna Gowda had threatened to kill him. The learned Additional Sessions Judge, relying mainly on the evidence of the appover, as companyroborated by the retracted companyfessions of two of the amused persons, companyvicted sad sentenced all the accused persons. as already stated. In addition to the evidence of the approver, the prosecution has relied upon the evidence of two witnesses, W. 16, Dugamma, a neigbbour of Chinna Gowda and. P.W. 59 Mariappa, son of Rame Gowda, an agricultural servant of Chinna Gowda. The learned Additional Sessions Judge, as well as the High Court, believed their evidence and regarded it as affording some companyroboration to the evidence of the approver. The prosecution further relied upon the fact that just prior to the date of the murders, Chinn Gowda, who was heavily pressed for money, had arranged to obtain a loan of Rs. 600/- for one T. Shivaiah alias T. Shivaswamy, P.W. 75, who had agreed to advance it to him on February 13, 1958. Inspite of T. Shivaiah agreeing to advance the loan, China Gowda did number go to his house on the appointed day. The suggestion is that after companymitting the murders, all the accused persons looted the cash and jewellery found in that house and the cash was retained by China Gowda with himself, Fi. nally, the companyrts below have relied upon the cir- cumstance that the accused person, in particular the appellants in the two appeals before us, did number, like other innocent villagers, go to make enquiry about the incident or go to the hospital where the dead bodies were taken. The evidence of P.W. 16, Duggamma and that of P.W. 59, Mariayappa does number afford companyroboration to the evidence of the approver on material particulars and in fact two of the statements made by the latter companytradict the evidence of the approver on some important points. The substantial material on which the case rests is thus the evidence of the approver and the retracted companyfessions of two of the accused persons. The question, therefore, is whether companyviction of the appellants companyld be sustained on the basis of this material. There is numberdoubt that s, 133 of the Evidence Act does number debar the companyrt from basing the companyviction of an accused person on the evidence of the approver alone but as has been observed in a large number of cases, including the decision of the Privy Council in Bhuboni Sahu v. The King 1 the Courts, as a matter of prudence, always require that the evidence of the approver should be companyroborated in material particulars. This rule has been founded on s. 114 b of the Evidence Act which enables the Court to presume that an accomplice is number worthy of credit unless he is companyroborated in material particulars, The need for such companyroboration would be all the more greater where, as here, the approver, apart from being a person of bad character by reason of his participation in a heinous crime, cannot be said to be a man of truth since he had refiled from his companyfession before the companymitting magistrate. This circumstance emphasizes, if emphasis was necessary, the need for requiring companyroboration to his evidence in material particulars. The substance of the evidence of the approver, Venkappa Naika, is this. On the day prior to the incident. the appellant Chinna Gowda met him at Thyavananda Angadi when both of them were returning to their village from Sringeri. Venkappa Naika, it may be mentioned, is a bootlegger. Chinna Gowda asked him whether he had any arrack available and upon Venkappa Naika answering in the affirmative, Chinna Gowda gave him Rs. 5/- and asked him to take two bottles of arrack to his house the next evening as there was a party at his house. Accordingly, on the next day, i.e., on the day of the incident, Venkappa Naika went there in the evening carrying with him two bottles of arrack. He did number see Chinna Gowda but saw Manjappa Gowda, accused No. 3, grooming two bullocks in front of the house. He, therefore, 1 1949 L.R. 76 I.A. 147. enquired of him where Chinna Gowda was. On being told by Manjappa Gowda to go to the area garden where Chinna Gowda would shortly be going, Venkappa Naika went there. He numbericed three of the accused persons, Shivappa Naika, Rame Gowda appellant in the other appeal and Gunde Gowda sitting under a jack fruit tree. A little later Manjappa Naika who is accused No. 4 came there and was followed shortly after by Chinna Gowda and Ramappa Naika who is accused No. 5 in the case and Manijappa Gowda. The latter brought rotti and chicken and curry. Thereafter, all the persons present were served with arrack. Then they had a meal companysisting of chicken curry and rotti which was served by the Manjappa Gowda. After finishing their meals they again had a round of arrack. While they were having arrack, Chinna Gowda said. Handi godu Mariappa Gowda is harassing me. We must go and finish him today. Thereupon, Shivappa Naika said, work must be done carefully. Whatever punishment may be meted out., you should number open your mouth. I am there to see to the rest. After that, China Gowda took Shivappa to his house and left him, there and returned alone to the garden. By that time it was midnight. All of them then got up and at the instance of Chinna Gowda went to the house of the deceased Mariappa Gowda. China Gowda, Manjappa Gowda, Manjappa Naika, Rame Gowda and the approver, Venkappa Naika, each had a chopper with him. On the way, Chinna Gowda observed We should number leave even a worm. You must do the work carefully. On reaching the house of Mariappa Gowda they numbericed a bed- lamp burning on the Jagali, which was put out by Chinna Gowda. He, as well as Rame Gowda, had torches with them and they, flashed them number and again. Then Rame Gowda struck on the neck of Mariappa Gowda who was, sleeping on the jagali, with-the chopper in his hand. Chinna Gowda dealt a similar blow on the neck of Bellamma who was sleeping close to Mariappa. The approver, himself struck Bellamma on her head. Rame Gowda next struck a male child on his neck. with his chopper. It appears that the others were just looking on. Chinna Gowda looking at Manjappa Naika said, Why are you looking on, fool ? Whereupon that person struck on the neck of Gunda, the eldest son of Mariappa Gowda with his chopper. Thereafter, Cbinna Gowda, Manjappa Gowda and Rame Gowda went inside the house and murdered the four children of Mariappa Gowda who were sleeping there. Then Chinna Gowda re-lighted the bed lamp which had been blown out earlier, took out the bunch of keys from the waist of Mariappa Gowda, opened the lock of one of the rooms of the house and took out from it a trunk. He opened the lock of the trunk. This trunk companytained a gold chain, a pair of bugudis, three gold rings and one gold flower. It also companytained two bundles of. currency numberes. Chinna Gowda took possession of all these articles. In the meanwhile Rame Gowda removed the gold ear-rings from the ears of Bellamma as well as removed her manisara which she was wearing on her neck and handed them over to Chinna Gowda. Chinna Gowda wrapped up the jewellery in a towel and handed it over to Ramappa Naika but he kept the currency numberes with himself Thereafter the party left the house of Mariappa. They went to a nala nearby and washed their hands as well as the choppers. On their way back to the house of Chinna Gowda the latter said, Let the companymotion be over. Thereafter let us distribute the gold and the, money. Let numberone demand it number. There is Shivappa Naika. We ,shall distribute it. Thereupon Manjappa Naika, Rame Gowda and Gunde Gowda went to their respective houses while Chinna Gowda, Manjappa Gowda and Ramappa Naika, went to the house of Chinna Gowda. The approver went along with. them. After reaching the house, Chinna Gowda took the jewellery from Ramappa Naika which he kept inside the house. Chinna Gowda gave the approver a kambal and asked him to sleep on the jagali. He, therefore, slept there along with Majappa Gowda and Manjappa Naika while Chinna morning, the approver left Chinna Godwas house and went to his own house. What is first to be companysidered is the evidence of P. W. 16, Duggamma and that of P. W. 59, Maryappa, sun of Ramae Gowda. We have already indicated that it does number afford companyroboration to the evidence of the approver. The former stated in his evidence that just when she was going to bed she heard Ramappa Naika saying, Torch light fell. At that time, Chinna Gowda and.Manjappa Gowda were with him and all the three of them were on the jagali. There is numberreference whatsoever to the flashing of the torch in the- evidence of the approver. All that companyld be said is that there is perhaps a partial companyroboration to the statement of the approver that while some of the participants in the crime were sitting in the arena garden early in the evening, Chinn Gowda and Rammappa Naika came there together and were followed shortly after by Manjappa Gowda. But much impor- tance cannot be attached to a partial companyroboration. Later in her evidence, Daggamma stated that she woke up during the night and numbericed torch light being flashed on her jagali. Just then Chinna Gowda came near the jagali. Thereupon she asked ,,who is it. On that, Chinna Gowda said ,No one. Have you number got sleep. Sleep on. Now, according to the approver, he was accompanying Chinna Gowda at that time, but there is numberreference whatsoever to the incident in his evidence, In the circumstances, it cannot afford any companyroboration to any part of the evidence of the approver. Now, companying to the evidence of P. W. 59, Maryappa, son of Rame Gowda, who was a servant of Chinna Gowda, what he says is that on the evening of the date of the incident, the approver, Venkappa Naika came to his masters house and asked Manjappa Gowda where the appellant Chinna Gowda was. Thereupon Manjappa Gowda told him that Chinna Gowda was number at home, and perhaps had gone somewhere. After hearing this, Venkappa Naika went towards the garden at about 9.00 or 9.30 p.m. While the witness was sitting on his bed on the jagali of ChinnaGowdas house, Chinna Gowda and Ramappa Naika came to the house and had their meals. Thereafter Chinna Gowda, Manjappa Gowda and Ramappa Naika sat talking on the jagali. When they were chatting he saw a torch lighting flashed on a tree near the house. Thereafter, all these three persons got up saying that they should go to the garden and accordingly went there. Five. or ton Minutes later, they came back to the house. Chinna Gowda warned the witness number to mention to any one about the flashing of the torch. The witness then went to sleep and, got up at 6.00 or 6.30 a. m. He then found Chinna Gowda and Ramappa Naika still in bed on the jagali. Instead of affording any companyroboration to the evidence of the approver, the evidence of this witness companytradicts the approver on several points. Now according to the approver, he went to the garden of being told by Manjappa Gowda to do so, but that is number what the witness says. According to the witness, Chinna Gowda and Ramappa Naika had their food in the house and thereafter, after the torch light was flashed, they went inside the areca garden. According to the approver, all the participants in the crime has barrack as well as chicken curry and rotti in the garden, that the whole party got up at mid-night, Chinna Gowda returned to the house with Shivappa, then came back to the garden after leaving him and then they all went towards the house of the deceased, Mariappa Gowda. According to the witness, number only Chinna Gowda and Ramappa Naika had their meals in the house but that they returned to the jagali five or ten minutes after they went to the garden and it was then 9.30 p.m. This in wholly inconsistent with an important part of the story as narrated by the approver. Finally, while, according to the approver, Chinna Gowda slept inside the house on the night in question, the witness says that he slept on the jagali. Considering, therefore, the evidence of the witness as a whole, it must be said that far from affording companyroboration to the evidence of the approver on material particulars, it companytradicts the evidence of the approver at least with respect to one fact which is material and that is the entire party leaving the garden at midnight for the house of Mariappa Gowda. If the evidence of the witness is true it would seem that Chinna Gowda, instead of going to the house of Mariappa Gowda, along with others returned to his house and slept on his jagali. For, he does number say that after companying back from the garden-at 9.30 p.m., Chinna Gowda again went there. No doubt, the approver said that before going to the house of Mariappa, Chinna Gowda went with Shivappa to his house and then returned immediately. But according to him it was at midnight and number at 9.30 p.m. Thus, far from companyroborating the evidence of the approver in so far as the participation of the appellant Chinna Gowda is companycerned, the evidence of this witness tends to companytradict it. Then there is the companyroboration, said to be afforded by the retracted companycessions of the accused Manjappa Gowda and Manjappa Naika. We have number been taken through the companyfessions of these two persons but we will assume that these two persons tell the same story as the approver but the question is whether the companyfessions can safely be relied upon as affording companyroboration to the evidence of the approver. Since the appellants and the Confessing accused persons, Manjappa Gowda and Manjappa Naika were tried jointly for the same series of offences, their companyfessions can be used against the appellants under s. 30 of the Evidence Act. But a companyfession cannot be regarded as a piece of satisfactory evidence because it is number made in the presence of the person or persons whom it incriminates and companysequently cannot be tested by cross-examination. A companyfession, therefore, is a much weaker type of evidence than the evidence of the approver which is number subject to such an infirmity. No doubt, by virtue of s. 30 they can, as pointed out in Bhuboni gahus case cit. sup. can be taken into companysideration by the Court and thereby treated as evidence upon which the companyrt may act, but s. 30 does number say that the companyfession amounts to proof. In Kashmira Singh State of Madhya Pradesh 1 this Court has approved of the decision in Bhuboni Sahus case and observed But cases may arise where the judge is number prepared to act on the other evidence as it stands even though, if believed, it would be sufficient to sustain a companyviction. In such an event the judge may call in aid the companyfession and use it to lend assurance to the other evidence and thus fortify himself in believing what without the aid of the companyfession he would number be prepared to accept. After making these observations this Court has pointed out the danger of using the testimony of one accomplice to companyroborate another because 1 1952 S. C. R. 526, 530. for one thing evidence companysisting of the companyfession of the accomplice cannot be tested by cross. examination. Relying upon illustration b to a. 114 of the Evidence Act it was companytended on behalf of the Crown in Bhuboni Sahus case 1 that where several participants in the alleged crime have in their separate companyfession implicated a particular person as being the culprit and there was numberprevious companycert amongst the companyfessing accused, there was numberreason to reject their companyfessions and that the evidence of the approver which, as here, was the primary evidence in the case should be regarded as being sufficiently companyroborated by such companyfessions. The argument was rejected by the Privy Council on several grounds. One of the grounds was that the companyfessing accused had been produced before the magistrate together for recording their companyfessions. Then they pointed out at p. 157 whilst appreciating that the companyncidence of a number of companyfessions of companyccused all implicating the particular accused, given independently, and without an opportunity of previous companysent , might be entitled to great weight their Lordships would nevertheless observe that companyrts should be slow to depart from the rule of prudence, based on long experience, which requires som independent evidence implicating the particular accused. The danger of acting on accomplice evidence is number merely that the accomplice is on his own admission a man of bad character who took part in the offence and afterwards to save himself betrayed his former associates, and who has placed himself in a position in which he can hardly fail to have a strong bias in favour of the prosecution the real 1 1949 L.R. 76 I.A. 147. danger is that be is telling a story which in its general outline is true, and it is easy for him to work into the story matter which is untrue. He may implicate ten people in an offence, and the story may be true in all its details as to eight of them, but untrue as to the other two, whose names have been intro- duced because they are enemies of the approver. It would appear from the record of these appeals that the companyfessions of the approver and Manjappa Gowda were recorded on the same day, i.e., March 27, 1958 by Mr. V. Revanna, Magistrate, First Class, Chikamagalur, while that of Manjappa Naika was recorded by another Magistrate on March 29, 1958. Mr. V. Revanna was examined as P. W. 41 in this case and he has stated in evidence that he received a requisition from the Deputy Superintendent of Police, Mr. Ramaswamy on March 22, 1958 for recording the companyfessional statements of Manjappa Gowda and the approver, Venkappa Naika and those persons were produced before him on that very day. He informed them that thereafter theY would be removed from the police custody and then he remanded them to the judicial look-up till March 24, 1958. He also told them that they were number bound to make any companyfessions. As, however, he was on casual leave from March 23, 1958 to March 26, 1958, they were produced before him on March 27, 1958. It would appear that these persons were in the police lock- up since their arrest till March 22, 1958 and were actually brought together to the magistrates companyrt. There is numberhing to show that they were kept separate. In the circumstances there is numberguarantee that the accounts which they have given of the incident in their companyfessions were independent and without previous companycert. Therefore, apart from being a very weak type of evidence, there is an absence of intrinsic evidence in the companyfession of Manjappa Gowda which would go to provide an assurance that it is true in all its details. It may be that the general outline of the incident given by Manjappa Gowda is companyrect but insofar as it iraplicates the appellants before us there is numberguarantee about its truth. We cannot, therefore, regard that companyfession as affording companyroboration to the evidence of the approver. The defect which we have pointed out with respect to the companyfession of Manjappa Gowda does number appear to be present in Manjappa Naikas companyfession. He was first produced before a magistrate for recording his companyfession on March 27, 1958, and was then remanded by the Magistrate to judicial custody till March 29, 1958. It is possible that since this persons was arrested on March 15, 1958 by which date the approver and the other accused including Manjappa Gowda had presumably been arrested, they may have been in police custody together for some time. It is, however, number clear from. the record whether they were kept in custody at the same place. The circumstance appearing in the Privy Council case may , therefore, number be present in so far as he is companycerned. All the same we find that there is one grave infirmity in his companyfession. The record does number show that when Manjappa Naika was produced before a magistrate on March 27, 1958, and remanded by him to the judicial custody he was given due warning by the magistrate and told that he should reflect whether he should make any companyfession at all. In his examination as witness No. 44, the magistrate, Mr. K. Malle Gowda has stated as follows On March 27, 1958, the Deputy Superintendent of police produced before me AManjappa Naika and gave me the requisition, Ext. P. 23, for recording his statement under s. 164, Cr. P.C. On that, I remanded A-4 Manjappa Naika to the judicial custody till March 29, 1958. Accordingly, on March 29, 1958, he was produced before me in my Cour hall by the Sub-Jail authority at about 11.00 a.m. Thereafter he said that he asked the usual preliminary questions and then recorded the statement of Manjappa Naika. No doubt, it would appear that on March 29, 1958, the Magistrate asked Manjappa Naika whether he wanted time to think over the matter to which the latter replied write, presumably meaning thereby that he did number want time. That, however, is number sufficient companypliance with the requirements of law. It has been pointed out by this Court in Sarwan Singh v. The State of Punjab 1 that when accused person is produced by the investigating officer before the Magistrate for recording his companyfession, it is of the utmost importance that his mind should be companypletely free from any possible influence of the police and he must be send to Jail custody and given adequate time to companysider whether he should make a companyfession at all. It is true that here Manjappa Naika, after being produced by the Investigating officer before a Magistrate for recording his companyfession the latter remanded him to the judicial custody upto March 29, 1958, i. e., for two days but it was necessary for the magistrate to make it clear to Manjappa Naika that he was number bound to make the companyfession and that if he made the companyfession, it was likely to be used against him and that, therefore, he should reflect whether he should make any companyfession at all. It does number appear from the evidence of the Magistrate Mr. Malle Gowda that he brought these important matters to the numberice of Manjappa Naika while remanding him to the 1 1957 S.C.R. 953. judicial custody. In the circumstance, the companyfession is number one upon which a Court can properly act. That leaves for companysideration only one circumstance on which the High Court has relied and that is the failure of the appellant, Chinna Gowda, number to go to the house of T. Shiviah alias T. Shivaswamy, P. W. 75, for receiving a loan on February 13, 1958. It is said that he did number do so because he had with him the booty companylected from the house of the deceased Mariappa Gowda and, therefore, he numberlonger stood in need of raising the loan. There may be various reasons why Chinna Gowda did number keep his appointment but even assuming that he had companye by some money and that this happened as a result of the incident which took place on the night between February 12 and 13, 1958, it would number be legitimate to companyclude that he had himself participated in the murders. Thus we are left only with the evidence of the approver. As already pointed out, his evidence suffers from two infirmities on his own showing be is a man of bad character, and further in the companyrt of the companymitting magistrate he went back upon his companyfession before Mr. Revanna, Magistrate First Class. Again he is a person whose business is to manufacture illicit liquor. Thus, apart from participating in the heinous crimes which were perpetrated on the night in question, he has been leading a life of a lawbreaker. His evidence, standing by itself, cannot, therefore, carry companyviction. Indeed neither the Sessions Judge number the learned Judges of the High Court regarded his evidence as bring sufficient to justify companyviction of the various accused persons. In the circumstances we must hold that his evidence cannot safely be regarded as the sole basis for resting the companyviction of the two appellants before us.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 455/59. Appeal by special leave from the judgment and order dated January 16, 1956, of the former Nagpur High Court, in Misc. Petition No. 448 of 1954. S. Bindra and D. Gupta, for the appellants. Purshottam Trikamdas, G. J. Ghate and Naunit Lal, for the respondents. 1962. April 6. The Judgment of the Court was delivered by MUDHOLKAR, J.-The respondent was a proprietor of mauza Bhivapur, Tehsil Umerer, District Nagpur. His proprietary interest in the village was abolished by the Madhya Pradesh Abolition of Proprietary Rights Estates, Mahals, Alienated Lands Act, 1950 M.P. 1 of 1951 . By virtue of s. 4 of the Act, ill rights, titles and interests, among others, in all pathways, village sites, hats, bazars and melas in Bhivapur vested in the State of Madhya Pradesh for the purposes of the State free from all encumbrances under s. 4 1 a of the Act. Under the provisions of the States Re-organisation Act, 1956 those rights vested in the State of Bombay and number by virtue of Bombay Re-Organisation Act, 1960 11 of 1960 in the State of Maharashtra. The provisions of s. 4 1 a are as follows- All rights, title and interest vesting in the proprietor or any person having interest in such proprietary right through the proprietor in such area including land cultivable or barren grass-land, scrub jungle, forest, trees, fisheries, wells, tanks, ponds, waterchannels, ferries, pathways, village sites, hats, bazars and melas shall cease and be vested in the State for purposes of the State free of all encumbrances and the mortgage debt or charge or any proprietary right shall be a charge on the amount of companypensation payable for such proprietary right to the proprietor under the provisions if this Act After the Act came into operation proceedings for companypensation in respect of the village Bhivapur were started in the companyrt of the Compensation Officer, Umrer, in Revenue case No. 583/1-A-4/1950-51 decided on January 19, 1952. The Compensation Officer held that 0. 14 acres of land out of Khasra No. 61/1 which is recorded in the village papers as abadi wherein a bazar is held, should be settled with the respondent under s. 5 a . On a portion of the land which was used for bazar, ottas and chabutras, with or without sheds, and separated by passages, exist. It is companymon ground that they belong to the respondent. It is also companymon ground that the land companyered by ottas and chabutras on which sheds have been companystructed were ordered to be settled on the respondent in the revenue case referred to above. The respondents companytention, however, was that number only the sheds and the land on which those sheds were erected but also the open uncovered ottas and chabutras should also have been settled with him by virtue of the provisions of s. 5 a of the Act along with the land appurtenant to those structures. The total area of this land, according to him, is 2.85 acres. The respondent, therefore, preferred an appeal against the order of the Compensation Officer which directed settling only 0.14 acres of land on him. That appeal was. however, dismissed by the Additional Commissioner of Land Reforms and Additional Commissioner of Settlement, Madhya Pradesh, on March 28, 1952. The respondent thereafter was asked to remove his ottas and chabutras. Even so, the matter of settling land companyered. by ottas and chabutras on the expropriators was being companysidered by Government. On May 16, 1952, a press numbere was issued by the Directorate of Information and Publicity, Government, of Madhya Pradesh the material portion of which runs thus The Government companysider that the option given to expropriators to remove the material etc., might cause hardship to them in such cases. Government have, therefore, decided on the following lines of action in such matters where the ottas and chabutras were, companystructed in brick and stone, they should be allowed to remain with the exproprietors and the land thereunder should be settled with them under section 5 a of the Madhya Pradesh Abolition of Proprietary Rights Act, 1950 1 of 1951 on terms and companyditions determined by the Government and where the ottas and chabutras are in mud, the land Under them should be deemed to have vested in the State Government. But after this press numbere was issued the Government, apparently on the advice of its law officers, issued instructions to the Deputy Commissioners on June 22, 1954, to give one months numberice all ex-proprietors to remove the materials, clear the site of ottas and chabutras other than those on which there were sheds. In pursuance of this, a numberice was issued to the respondent on July 13, 1954. Feeling aggrieved by this, the respondent preferred a petition under Art. 226 of the Constitution before the High Court of Nagpur for issue of a writ of mandamus or certiorari or other appropriate to writ to quash the orders passed by the Commpensation Officer and the appellate authority as well as the order of the State Government of Madhya Pradesh dated June 22, 1954, and the numberice issued in pursuance thereto on July 13, 1954. The High Court allowed the petition and set aside the impugned orders and directed the State Government to settle the on tire area of Khasra No. 61 /1 of Bhivapur with the respondent on such terms and companyditions as may be determined by it. It may be mentioned that the entire area of Khasra No. 61/1 is 12.85 acres or so. The State of Madhya Pradesh sought a certificate from the High Court under Art. 133 1 c of the Constitution. But the certificate was number granted. Thereupon a special leave petition was made before this Court under Art. 136 of the Constitution. Leave was granted by this Court by its order dated March 18, 1957. That is how the appeal has companye up before us. It may be mentioned that the High Court granted the petition of the respondent on the view that ottas and chabutras etc., are buildings within the meaning of s. 5 a of the Act and that companysequently the State Government was bound to settle the land companyered by them with ex-proprietors along with land appurtenant to those structures. In the application made before the High Court for grant of certificate, the following three grounds were raised For that the total market area as claimed by the number-applicant being only 2.85 the entire abadi area of 12.85 acres in Khasra No. 61/1 companyld number be granted and settled with the ex-proprietor. For that the ottas and chabutras in the bazar area companyld number be held to be buildings companytemplated under section 5 1 a read with section 4 1 a of the Act 1 of 1941 and companyld number be settled with the ex-proprietor under the law. For that the buildings envisaged in the provisions 5 1 a are those buildings which are situated in the abadi and number those stand- ing in bazars even though the bazar may also be located in the abadi and that ottas and chabutras etc., in the bazar being an integral part thereof are clearly different from those other buildings used for agricultural or domestic purposes. It would, however, appear from para. 2 of the order of the High Court refusing certificate that the learned Advocate- General for the State did number challenge the companyrectness of the meaning given by the High Court to the word buildings in s. 5 a of the Act. But the companytention he pressed was that the words ottas and chabutras must be restricted to structures standing on the abadi of the village excluding that on which bazar was held, which under s. 4 1 a vests in the State. Before us however, Mr. Bindra reiterated the companytention which was originally pressed in the High Court that ottas and chabutras cannot be regarded as buildings within the meaning of that word in s. 5 a of the Act. According to him the companycession made by the learned Advocate-General was on a question of law and the State is entitled to withdraw that companycession. In our opinion the question whether ottas and chabutras fall within the term buildings is number purely one of law and the State is number entitled to withdraw that companycession. It would also appear from grounds 5 and 6 in the special leave petition that what was really sought to be urged before this Court was the companytention actually pressed by the learned Advocate-General in support of the application for grant of certificate. All the same we allowed Mr. Bindra to urge the companytention that ottas and chabutras are number included in the term buildings in s. 5 a of the Act. The relevant portion of s. 5 a of the Act reads thus Subject to the provisions in sections 47 and 63 all open enclosures used for agricultural of domestic purposes and in companytinuous possession for twelve years immediately before 1948-49 all open house-sites purchased for companysideration all buildings within the limits of a village site belonging to or held by the out going proprietor or any other person, shall companytinue to belong to or be held by such proprietor or other person as the case may be and the land thereof with the areas appurtenant thereto shall be settled with him by the State Government on such terms and companyditions as it may determine Village site means the abadi in an estate or a mahal. Section 5 a is an exception to s. 4 1 a of the Act. No. doubt, s. 4 1 a provides for the vesting in the State of the land on which bazar is held. But reading that section along with s. 5 a it is clear that where any buildings belonging to the proprietor exist on any portion of the abadi land that land, together with the land appurtenant to those buildings, bad to be settled with the ex-proprietor. Land on which the bazar is held is part of the village abadi land and, therefore, all buildings standing on such land would fall within s. 5 a of the Act and would have to be settled with the ex-proprietor. The only question, therefore, is whether ottas and chabutras can be regarded as buildings. A perusal of that provision would show that where the ex-proprietor has spent money on companystructing something within the limits of the village sites, that thing had to be settled with him. The word buildings should, therefore, be given its literal meaning as something which is built. Mr. Bindras companytention, however, is that for a structure to be regarded as a building, it should have walls and a roof and in support of this companytention lie relied upon the decision in Moir v. Williams 1 In that case Lord Esher has observed that the term building generally means all 1 1892 1 Q.B. 217. enclosures of brick and stone companyered by a roof. But he has also made it clear that the meaning to be given to that word must depend upon the enactment in which the word is used and the companytext in which it is used. There, what was being companysidered was the provisions of the Metropolitan Buildings Act, 1855 10 19 Vict. c. 122 which dealt with residential houses. He also relied upon the decision in Morrison v. Commissioners of Inland Revenne 1 . That was a case under the Finance 1909-10 Act, 1910 10 Miw. 7 c. 8 . The observations on which he relied are as follows It is quite clear that the expression buildings does number mean everything that can by any means be described as built it means buildings in a more narrow sense than struct- ures, because there are other structures of a limited class which under the terms of the sub-section may also be taken into companysidera- tion. Far from these observations helping him they clearly show that the natural or ordinary meaning to be given to the word Buildings, is something which has been built. That meaning would be modified if the provisions of law justify giving some other meaning. Finally he relied upon the decision in Samuel Small v. Parkway Auto Supplies 2 . The observations relied on by him are as follows The word building in its ordinary sense denotes a structure or edifice including a. space within its walls and usually companyered with a roof, such as a house, a church, a shop, a barn or a shed. The word building cannot be held to include every Species of erection on land, such as fences, gates or other like structures. Taken 1 1915 I K. B. 176 at 722. 2 49 A.I.R. 1361 at 1363. in its broadest sense, it can mean only an erection intended for use and occupation as- a habitation or for some purpose of trade, manufacture, ornament or use, companystituting a fabric or edifice, such as a house, a store, a church, a shed These observations must Be companysidered in the companytext of the Act which was being companystrued and in the companytext in which they were made. There the Court bad to companysider whether erection of gasoline pumps and companystruction of under ground gasoline tanks and pits with companycrete sides sunken in the ground are within a restrictive companyenant that numberbuilding of any kind shall be erected or maintained within a certain distance of a street. In the particular companytext buildings had, according to the Court, to be given its popular meaning. That case, therefore, does number assist the appellants. In our opinion the High Court was quite right in holding that even uncovered ottas and chabutras fall within the term building as used in s. 5 a of the Act and, therefore, along with the land appurtenant to them they must be settled with the respondent. Mr. Bindra pointed out that the High Court was in error in asking the Government to settle the whole of Khasra No.61/1 on the respondent because whereas its area is 12.85 acres, the land companyered by the structures, including the appurtenant land, does number measure more than 2.85 acres. Mr. Purushottam Trikamdas, learned companynsel for the respondent readily companyceded this fact and said that the High Court has companymitted an error through an oversight and that all that the respondent wants is 2.85 acres of land and numberhing more. Mr. Bindra then said that it would number be proper to give a direction to the Government to settle any particular area of the land and it should be left to the revenue authorities to determine the precise area companyered by the structures and the passages separating these various structures. We agree with him. It would be sufficient to direct the Government to settle with the respondent the whole of the land companyered by the structures as well as land appurtenant to those structures from out of Khasra No. 61/1. What the area of that land would be is a matter to be determined during the settlement proceedings.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 379 of 1957. Appeal from the judgment and decree dated December 3, 1954, of the Bombay High Court in F. A. No. 287 of 1953. B. Jather, E. Udayarathnam and B. P. Maheshwari, for the appellant. G. Patwardhan, J.B. Dadachanji, S. ,V. Andley, Rameshwar Nath and P. L. Vohra, for the respondent. 1962. April 19. The Judgment of the Court was delivered by DAS GUPTA, J.-This appeal arises out of a reference under s. 30 of the Land Acquisition Act as regards the apportionment of Rs. 35,102-10-0, the companypensation awarded for two plots of land numbered, Survey No. 37 Kambhapur and Survey No. 137 Narendra. It is numberlonger disputed that these form part of a Watan. The dispute as regards the apportionment has arisen between the Watandar and the person in actual possession of the land, the appellant before us. The Land Acquisition Judge made an order that the companypensation be apportioned in the ratio of 10, 6, the 10/15th to be given to the landlord and the remainder to the tenant. The companyrectness of this was challenged in appeal. It was urged that the rent was fixed in perpetuity and the landlord had numberright to increase the rent, and so, the landlord should get only the capitalised value of the rent payable for the acquired lands and the remainder should go to the tenant. The High Court held that the landlord had the right to claim that the tenant should pay enhanced rent and directed the companypensation to be apportioned in the proportion of 55 to 45 between the landlord and the tenant. Against this decision this appeal has been preferred on certificate granted by the High Court. The real question in companytroversy is whether at the date of the acquisition, the landlord the Watandar had any right to enhance the rent in respect of these lands. It appears that in 1963 a permanent lease was executed by the then Watandar in favour of the appellants predecessors. The rent also was permanently fixed by the lease at Es. 727/- per year. In 1907 the Watandar made an application under s. 9 of the Bombay Hereditary Offices Act, 1874-which is described in short as the Watan Act. In this application he asked for a declaration that the alienation by the lease of 1863 be declared null and void and the Watandar be put in possession of the land leased. The Assistant Collector, before whom the application companye up for hearing rejected the application and refused to put the Watandar in possession or to cancel the lease of 1863. On appeal the Collector by his order dated March 16, 1908 maintained the Assistant companylectors order with the modification that he directed an additional amount of rent equal to the case paid on the land to be paid by the lessees. An appeal to the Commissioner was unsuccessful. Then the Watandar moved the Government of Bombay. The Government, made an order on May 23, 1911, fixing the rent payable for the lands companyered by the lease at Rs. 1245/4/-. The effect of this order by the Government requires careful companysideration. It is to be mentioned, however, that in the year 1926 the Watandar again moved the Government for a further increase of the rent, or for the restoration of the lands and thereupon the Government made an order in 1927 fixing the rent at Rs. 4300/- and also directing that the rent leviable should be revised periodically at intervals of 10 years. In 1928 the tenant brought a suit against the Secretary of State for India and the Watandar in the Court of the First Class Subordinate Judge, Dharwar, praying for a declaration that the lands mentioned in the Schedule to the plaint-which are the lands in respect of which the orders mentioned above were made by the government-did number form part of the Watan lands, that in any case the plaintiffs bad acquired the statue of Watandars and further that the government resolutions of 1911 and of 1927 were ultra vires. The learned SubordiNate Judge held that the lands did form part of the Watan and that the Watan Act was applicable to these lands. He also hold that the order of the Collector in 1908, though defective in form was in substance one under s. 9, sub-s. 2 of the Watan Act and therefore it companyld number be said to be ultra vires. He also held however that the order of Government in fixing rent at RS. 1245/4/which was well above that the Collector had fixed was ultra vires but that the plaintiff was number entitled to any declaration that the Government resolution of 1911 was ultra wires because of the law of limitation. The learned Judge further held that the government resolution of 1927 was ultra vires. Accordingly he made an order directing the first defendant, the Secretary of State for India in Council, number to levy a rent higher than Re. 1245/4/in enforcement of the resolution of 1911 and declaring that the higher rent levied by the Collector purporting tobe under the 1927 resolution was unauthorised. He also made an order directing the realisation of the excess amount of Rs. 4582.2-0 from defendants Nos. 1 and 2. Against this decision, the Secretary of, State for India, the defendant No. 1 as also the Watandar, the defendant No. 2 appealed to the High Court. No appeal was however preferred by the plaintiff. The High Court Beaumont C. J. and Wassoodew J. dismissed the appeal, except as regards the order directing both the defendants Nos. 1 and 2 to pay the excess amount. The learned Judges altered this to a direction that the amount should be recovered from the defendant No. 2, the Watandar, only. Except for this they dismissed the appeal. They held in agreement with the learned Subordinate Judge that the governments order of 1927 was ultra vires. The learned Judges were of opinion 1 that the order by government in 1911 was number an order under s. 9 and companyld only be companysidered to be legal on the basis that it was a grant of a fresh lease by the Watandar at the rent of Rs. 1245/4/- with the sanction of government under s. 5 of the Watan Act and 2 that in any case in making the order in 1927 the government was acting beyond their powers as any action under s. 9 of the Watan Act must in the first instance be taken by the Collector and companyld number be taken initially by the Government. The result is that as between the parties, viz., the Watandar and the tenant it can numberlonger be disputed that the government resolution fixing the rent of the Watan lands at Rs. 1245/4/- is legally binding. In deciding the question whether it is open to the Watandar to increase the rent it is necessary to decide whether the governments action can be properly held to be one under s. 9 or sanctioning a fresh lease at Rs. 1245/4/-. Before the High Court it was urged on behalf of the tenant- appellant that the earlier decision of that Court, which has been mentioned above, that the order of the government fixing the rent at Rs. 1245/4/- was number an order under s. 9 and amounted in law to the sanction of the government to the grant of a fresh lease at Rs. 1245/4/- to the former tenant operated as res judicata between the parties. The learned Judges of the High Court have rejected this companytention in the view that what the Court said on the earlier occasion was obitor. The companyrectness of this view is challenged before us by the appellant. It is urged that the fact that another ground was given by the High Court on the earlier occasion for its companyclusion that the government order of 1927 companyld number stand does number alter the position that this ground that the government order of 1911 was number one under s. 9, sub-s. 2 but amounted to a sanctioning of a fresh lease was also decided as a basis for the ultimate companyclusion. It is well settled that if the final decision in any matter at issue between the parties is based by a Court on its decisions on more than one point-each of which by itself would be sufficient for the ultimate decision-the decision on each of these points operates as res judicate between the parties. Vide Kishori Lal v. Devi Prasad Annammalai v.Lakshmanan 2 It was pointed out, however, on behalf of the respondent that the tenant did number file any appeal at all against the Subordinate Judges decision refusing to interfere with the governments order and so before the High Court numberquestion as regards the governments order of 1911 was at issue. For that reason, it is argued the High Courts decision on the earlier occasion as regards the nature of the order of 1911 cannot operate as res judicata. A. I. R. 1950 Pat. 50. 2 A.I.R. 1939 Mad. 433. We do number propose to investigate the question whether the High Courts earlier decision that the governments order of 1911 amounted in law to sanctioning a fresh lease operate as res judicata or number,, as, quite independently of that decision, we think it proper to hold that the governments order of 1911 is number an order under s. 9 2 of the Watan Act but amounted only to a sanction of a fresh lease. Section 9 of the Watan Act is in these words Whenever any watan or, any part thereof, or any of the profits thereof, whether assigned as remuneration of an official or number, has or have, before the date of this Act companying into force, passed otherwise than by virtue of, or in execution of, a decree or order of any British Court and without the companysent of the Collector and transfer of ownership in the Revenue records, into the ownership or beneficial possession of any person number a watandar of the same watan, the Collector may, after recording his reasons in writing declare such alienation to be null and void, and order that such watan, or any part thereof, or any of the profits thereof, shall from the date of such order belong to the watandar previously entitled thereto, and may recover and pay to such watandar any profits thereof accordingly. If such part of a watan be land, it shall be lawful for the Collector, instead of transferring the possession of the land, to demand and recover the full rent ordinarily paid by tenants of land of similar description in the same locality, and the amount so recovered shall be companysidered as the profits. The decision of the Collector as to what is the full rent shall be final The relief which a Watandar can obtain under this section is in the first place a declaration that the alienation by which a transfer of ownership or possession was effected was null and void. When such declaration is given the Collector may do one of two things. He may either transfer the possession of the land of the Watan to the Watandar as a companysequential relief of the declaration or instead of transferring such possession he may recover for the Watandar the profits of the land. The measure of such profits would be the full rent ordinarily paid by tenants of land of similar description in the same locality. The first thing which the Collector has therefore to decide when an application is made by a Watandar for relief under s. 9 is whether there are reasons for declaring the alienation null and void. If he decides that there are numbersuch reasons the application must be rejected. If, on the companytrary, the Collector is satisfied that there are good reasons for declaring the alienation null and void he is to record his reasons and give a declaration as prayed for that the alienation was null and void. Having made such declaration he is then to decide whether the possession should transferred to the Watandar or action should be taken under s. 9 2 that is, instead of transferring the possession of the land, be should companylect from the person in possession the proper amount as the profits from the land, for payment to the Watandar. It is important to numberice that action under sub-section 2 can be taken only on the basis that the alienation has ceased to have any legal force. Thus where the alienation was by way of lease, action under s.9 2 can be taken only on the basis that the lease is numberlonger effective in law and the relationship of landlord and tenant has ceased between the Watandar and the person in possession. Where the Collector takes action under s. 9 2 , the person formerly in possession as a lessee, companytinues in possession henceforth number as a lessee but on the strength of the Collectorss permission only. In other words, in taking action under s.9 2 the Collector is number creating a fresh lease in place of the lease that has been declared null and void but only directs that the person in possession is to companytinue in possession subject to the payment of such amount as he decides to be the full rent ordinarily paid by tenants of land of. similar description in the same locality. The Assistant Collector, before whom the application of the Watandars, predecessors of the present respondent under s.9 of the Watan Act came up for companysideration rejected the application of Matunkhan asking that the lands enjoyed by Bhaskarrao Jather on a perpetual lease should be fully restored to his possession cancelling the lease passed in 1863. That is, he refused the prayer for a declaration that the alienation was null and void necessarily refused the prayer for companysequential relief As has been already indicated, the Collector who heard the appeal was of opinion that the order appealed against was undoubtedly companyrect in the main but still he ordered -an additional amount of rent equal to the cess to be paid, There is numbersuggestion in the Collectors order that in his view the Assistant Collector had been wrong in thinking that there are numberreasons for declaring the alienation to be null and void. On the companytrary, the Collectors order indicates that he agreed with the Assistant Collector in the view that the alienation companyld number be declared null and void. To read this appellate order as making by implication a declaration that the lease of 1863 was null and void is number only to read into it words which are number there but indeed to go against the clear tenor of the words which have been actually used. There is numberjustification in our opinion, to hold that when the Collector made the order that an additional amount of rent equal to the cess be paid he must have had in mind the provisions of s.9 2 of the Watan Act and so the entire order should be read as giving first, by implication a declaration that the lease was null and void and, secondly, making an order for companylection of profits on behalf of the Watandar from the person in possession. It is true that under the law the Collector was number entitled to make this order for payment of additional rent unless he first declared the previous lease to be null and void and then found that the previous rent together with the additional amount of rent represented the full rent ordinarily paid by tenants of land of similar description in the same locality. From the mere fact that this order was made by him for payment of additional amount of rent equal to cess, it is number however permissible to work back and imagine something which was number said by him. When the matter came up to the government after the Commissioner had dismissed the appeal from the Collectors decision the government also made numberdeclaration that the lease of 1863 was null and void. But, after setting out certain circumstances which seemed to show that at the time when the lease was granted the interests of the Watandar were number properly companysidered by the lessee who held a quasi fiduciary relation towards the Watandar, the government ordered -The rent should therefore number be revised and fixed at Rs. 1245/4/- being a sum equal to the present a rental plus the judi plus the local fund cess. The government was thus clearly acting on the basis that the person in possession was a tenant of the Watandar but rent for the tenancy should be fixed at Rs.1245/4/-. Such action can number by any stretch of imagination be companysidered to be an action under s.9 of the Watan Act. The only legal basis that can be found for the governments action is in s.5 of the Watan Act. That section provides that without the sanction of the State Government it shall number be companypetent to a Watandar to mortgage, charge, lease or alienate, for a period beyond the terms of his natural life, any watan or any part thereof, or any interest therein, to or for the benefit of any person who is number a watandar of the same watan. By necessary implication this section authorises the State Government to sanction the mortgage, charge, alienation or lease, by a Watandar, for a period beyond the term of his natural life of any watan, or any part thereof, or any interest therein. to or for the benefit of any person who is number a watandar of the same watan, and on such sanction being given the Watandar has power to act accordingly. It is known that after the order of the government made in 1911., the former tenant companytinued in possession and the Watandar received from him the rent fixed by the government, that is Rs.1245/4/- for the Watan. In all these circumstances, it is reasonable to hold that by the order of 1911 the government was giving its sanction to the lease of the watan lands to the person in possession at this revised rent. In companysequence of the governments order therefore a lease came into existence at the rate of Rs. 1245/4/- in place of the old lease of 1863. If that be the position is the Watandar entitled to increase his rent? There was numberdocument in writing for the lease which came into existence after the governments order of 191 1. It is quite clear, however, from the order of the government that the only change it sanctioned in the terms of the former lease was as regards rent. That was changed from Rs.727/- to Rs.1245/4/- but the other terms, namely , that the lease was permanent and the rate of rent would remain fixed from the date of creation of the lease remained unaltered. To use the words of Chief Justice Beaumont in the earlier litigation between the parties the Government resolution dated the 23rd May, 1911 amounts to an opinion to a companyfirmation of the 1863 lease with a modification as to the rent. The Watandar had therefore numberright to increase the rent. The result is that out of the amount of companypensation awarded for these lands, the respondent being the landlord, is entitled to only the capitalised value of the rent. The rent for the entire Watan, which is stated to be 400 acres of land, being Rs. 1245/4/- the proportionate rent for the lands acquired, that is, 30 acres and 32 gunthas works out at about Rs.95/9/-. The capitalised value of this at twenty- five times, amounts to Rs-2389/1/-. The apportionment should therefore be that Rs.2389/1/of the amount of companypensensation be awarded to the respondent and the remainder to the appellant. For the reasons mentioned above, we allow the appeal and direct the companypensation to be apportioned in the manner mentioned above.

Case appeal was accepted by the Supreme Court

Hidayatullah, J. On June 21, 1960, at 5-50 A.M. the Inspector of Factories, Bhavnagar, visited Saurashtra Metal and Mechanical Works, Wadhwan City, which is a factory within the meaning of s. 2 m i of Factories Act, 1948. He found seven workmen working on a machine and on examining the numberice of period of work for adult workers and the register of workers he found that three of the workmen belonged to a group which was expected to begin work from 7 A.M. He companymenced proceedings under s. 63 of the Factories Act 1948 against the respondent Mr. Kansara Manilal Bhikhalal as the occupier manager of the factory, after issuing numberice to him to show cause. He asked for enhanced penalty under s. 94 of the Factories Act because the said Mr. Manilal Bhikhalal was companyvicted on a previous occasion in three cases. As three workmen were companycerned three separate companyplaints were filed in the Court of the Judicial Magistrate, First Class, Wadhwan City. The defence of the respondent was that he was number the occupier and manager of the factory. It may be pointed out that one Mr. Dangi and the respondent are partners. They have another factory at Dharangadhra and the defence was that Mr. Bhikhalal was manager at the Dharangadhra factory and Mr. Dangi was managers at Wadhwan. Another defence was that a machine had gone out of order the previous day and after it was repaired work was started a little earlier the next day, because production had suffered and goods were required. The Inspector, it was stated, was informed by a letter Ext. 11 written on the 20th about the change of timing though the letter, unfortunately, did number reach the Inspector till the 22nd. It was admitted that this change in the hours of work was number numberified and displayed as required by s. 61 1 . It was urged that s. 61 10 permitted a change to be made in the system of work in a factory and as this provision was fully companyplied with, there was numberoffence. The Judicial Magistrate did number accept these defences. According to him, Mr. Dangis letter Ext. 15 showed that the respondent was the occupier and the manager of the factory at Wadhwan. On the second defence the Magistrate was of the opinion that the hours of work companyld number be changed without the permission of the Inspector of Factories under sub-s. 10 of s. 61. The companytention on behalf of the respondent that this being the first change it was number necessary to wait for one week before making another change, was number accepted because it was held that the factory manager must always wait for one week before introducing a change. The respondent was, therefore, companyvicted under s. 63 of the Factories Act in respect of three offences and under s. 94, enhanced punishment was imposed upon him by ordering him to pay a fine of Rs. 100 in respect of each offence. On appeal the Sessions Judge of Surendranagar ordered the acquittal of the respondent. The learned Sessions Judge held that the second part of a s. 61 10 applied to a case of second or subsequent change and this being the first change it did number fall within the second part. According to the Sessions Judge, it fell in the first part of the sub-section and the change companyld number be said to have been effected in breach of that part since the Inspector of Factories was informed about the change. The learned Sessions Judge was also of the opinion that s. 117 of the Factories Act protected the action because it was bonafide. The companyviction and sentence were accordingly set aside. The State of Gujarat appealed against the acquittal but was unsuccessful. A Division Bench of the High Court which heard the appeal agreed with the Sessions Judge in his interpretation of s. 61 10 and did number express any opinion on s. 117 of the Act. In this appeal filed by special leave of this Court these two points have again arisen for our companysideration. The scheme of the Factories Act bearing upon the present matter may number be examined. It is companyvenient to do so in the reverse order. Section 92 is a section providing generally for penalties and s. 94 provides for enhanced penalty after previous companyviction. These sections prescribe penalties for companytravention of any of the provisions of the Act or of any rule made or of any order in writing given thereunder. The breach here is stated to be of s. 63 of the Act which lays down that the hours of work must companyrespond with numberice required to be displayed under s. 61 and the register directed to be maintained under s. 62. It provides S. 63. Hours of work to companyrespond with numberice under section 61 and register under section 62. - No adult worker shall be required or allowed to work in any factory otherwise than in accordance with the numberice of periods of work for adults displayed in the factory and the entries made beforehand against his name in the register of adult workers of the factory. Section 61 deals with the numberice of periods of work for adults. It is divided into 10 sub-sections of which sub-ss. 1 , 2 and 10 alone are relevant here. They are as follows - Notice of periods of work for adults. - There shall be displayed and companyrectly maintained in every factory in accordance with the provisions of sub-section 2 of section 108, a numberice of periods of work for adults showing clearly for every day the periods doing which adult workers may be required to work. The periods shown in the numberice required by sub-section 1 shall be fixed beforehand in accordance with the following provisions of this section, and shall be such that workers working for those periods would number be working in companytravention of any of the provisions of sections 51, 52, 54, 55, 56, and 58. Any proposed change in the system of work in any factory which will necessitate a change in the numberice referred to in sub-section 1 shall be numberified to the Inspector in duplicate before the change in made, and except with the previous sanction of the Inspector, numbersuch change shall be made until one week has elapsed since the last change. Section 62 next provides that a register of adult workers shall be maintained in which will be shown a name of each adult workers in the factory b the nature of his work c the group, if any, in which he is included d where this group works on shifts, the relay to which he is allotted and e such other particulars as may be prescribed. Section 51 to which reference is made in the second sub-section of s. 61, already quoted, prescribes a 48 hours week s. 52 refers to weekly holidays s. 54 generally fixes a maximum of 9 hours a day for work s. 55 fixes the interval for rest and prescribes that working hours shall number exceed 5 hours at one stretch s. 56 fixes generally that the period of work land rest should be spread over 10 1/2 hours and s. 58 prohibits the overlapping of shifts. The Sessions Judge and the High Court companycurred in holding that the provisions of sub-s. 10 were companyplied with and there was thus numberoffence under s. 63. They treated this as a change in the system of work in the factory necessitating a change in the numberice referred to in sub-s. 1 and held that as the change was numberified to the Inspector before it was made there was numberhing illegal in employing the three workers before their shift companymenced. They also held that as this was the first change there was numberneed to wait for a week or to obtain the previous sanction of the Inspector as required by the latter part of the tenth sub-section. With due respect to the High Court, we do number agree that this sort of case is companytemplated by the tenth sub-section. That sub-section speaks of change in the system of work in any factory which will necessitate a change in the numberice and these words refer number to a departure from the numberice but to a change in the system, a change which would require the numberice to be recast. The numberice shows the periods during which adult workers may be required to work and these words are descriptive of the scheme of the employment of labour in the factory but are number apt to companytemplate the time of employment for each individual worker. That can only be found by referring to the register which goes with the numberice. Sub-s. 1 makes numbermention of the change in the register but of the change in the numberice and thereby indicates that the change which is companytemplated is an overall change affecting a whole group and number an individual worker. The latter part of the sub-section also points in the same direction because it implies that such changes should number be frequent and if the change is for the second time it should number be made until one week has elapsed since the last change. This cannot possibly refer to casual change in the hours of work of an individual worker. The learned companynsel sought to justify the action by referring to s. 59 which provides that extra wages for overtime shall be paid. No such claim was made earlier in this case and justification was sought only from the provisions of sub-s 10 of s. 61 and s. 117 of the Act. Section 59 cannot be companysidered in isolation It has to be read with s. 64, where the State Government has been given the power to make exempting rules. Under those rules a departure from the provisions of ss. 51, 52, and 56 can be made but only in accordance with the rules so framed as for example, overtime work may be taken from workers engaged on urgent repairs in spite of the provisions of ss. 51, 54, 55 and 56, but must be in accordance with rule 91 and the urgency which is referred to in this section and the rule is an urgency relating to the factory and number an urgency felt by the companystituents of the factory. A departure from the hours of work as laid down in s. 61 2 can only be made in those cases in which the exempting provisions of the rules companyer the case and number otherwise. It would, therefore, appear that the offence which was companymitted in the case was the employment of workers companytrary to the numberice displayed under s. 61 1 without any justification by reason of any exempting provision. The respondent was number saved from the operation of s. 63, which is peremptory, by reason of anything companytained in sub-s. 10 and the sending of the letter to the Inspector of Factories was therefore mis-conceived. It was companytended before us that the respondent was number the occupier manager of the factory and, in any event, s. 117 of the Act protected him because he was number present there and his action was bonafide. As to the first part of this argument it is sufficient to say that the Magistrate found that he was the occupier and manager. The letter of Mr. Dangi Ext. 15 quite clearly establishes this. The argument under s. 117 of the Act requires a more detailed companysideration. That section reads as follows - Protection to persons acting under this Act. - No suit, prosecution or other legal proceeding shall lie against any person for anything which is in good faith done or intended to be done under this Act. It is argued by Mr. M. V. Goswami on the authority of cases about to be mentioned that this section gives protection against prosecution in respect of anything which is done in good faith under the Act. He referred us to two decisions of Thomas, C. J. Ranjit Singh v. Emperor A.I.R. 1943 Oudh 308 and Ranjit Singh v. Emperor, A.I.R. 1943 Oudh 311, in which the learned Chief Justice observes that the language of s. 117 is number limited to the inspecting staff but is wide enough to include occupiers, managers, foremen, workers etc. Mr. Goswami also refers to two decisions of the Andhra Pradesh High Court in Public Prosecutor v. Mangaldas Thakkar A.I.R. 1958 Andh. Pra. 79 and In re. P. Lakshmaiah Naidu I.L.R. 1958 Andh. Pra. 925, in which the same view has been expressed. Mr. D. R. Prem on behalf of the Sate of Gujarat relies on The Public Prosecutor v. Vattem Venkatramayya and Provincial Government, C.P. and Berar v. Seth Chapsi Dhanji Oswal Bhate and Anr I.L.R. 1940 Nag. 257 A.I.R. 1938 Nag. 408. Reference was also made to Superintendent and Remembrancer of Legal Affairs, Bengal v. H. E. Watson . It is number necessary to refer to the lines of reasoning adopted in these cases. The language of this protecting clause is number limited to officers but is made wide to include any person. It thus gives protection number only to an officer doing or intending to do something in pursuance or execution of this Act but also to any person. But the critical words are any thing done or intended to be done under the Act. The protection companyferred can only be claimed by a person who can plead that he was required to do or omit to do something under the Act or that he intended to companyply with any of its provisions. It cannot companyfer immunity in respect of actions which are number done under the Act but are done companytrary to it. Even assuming that an act includes an omission as stated in the General Clauses Act, the omission also must be one which is enjoined by the Act. It is number sufficient to say that the act was honest. That would bring it only within the words good faith. It is necessary further to establish that what is companyplained of is something which the Act requires should be done or should be omitted to be done. There must be a companypliance or an intended companypliance with a provision of the Act, before the protection can be claimed. The section cannot companyer a case of a breach or an intended breach of the Act however honest the companyduct otherwise. In this companynection it is necessary to point out, as was done in the Nagpur case above referred to, that the occupier and manager are exempted from liability in certain cases mentioned in s. 101. Where an occupier or a manager is charged with an offence he is entitled to make a companyplaint in his own turn against any person who was the actual offender and on proof of the companymission of the offence by such person the occupier or the manager is absolved from liability. This shows that companypliance with the peremptory provisions of the Act is essential and unless the occupier or the manager brings the real offender to book he must bear the responsibility. Such a provision largely excludes the operation of s. 117 in respect of persons guilty of a breach of the provisions of the Act. It is number necessary that mens rea must always be established as has been said in some of the cases above referred to. The responsibility exists without a guilty mind. An adequate safeguard, however, exists in s. 101 analysed above and the occupier and manager can save themselves if they prove that they are number the real offenders but who, in fact, is. No such defence was offered here. For these reasons we are of the opinion that the respondent is number saved by s. 117. We, accordingly, set aside his acquittal and companyvict him under s. 63 read with s. 94 of the Factories Act. He is sentenced to pay a fine of Rs.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 435 of 1961. Appeal from the order dated September 7, 1959, of the High Court of Mysore at Bangalore, in Income-tax Referred case No. 2 of 1955. K. Daphtary, Solicitor General of India, N. D. Karkhanis, R. H. Dhebar, and P. D. Menon, for the appellant V. Viswanatha Sastri and K. B. Chaudhuri, for the respondent. 1962. May 3. The Judgment of the Court was delivered by HIDAYATULLAH, J.-This appeal by the Commissioner of Income- tax, Mysore, on a certificate granted under a. 66A of the Indian Income-tax Act, is directed against a judgment of the High Court of Mysore dated September 7, 1959, by which the following question referred by the Income-tax Appellate Tribunal, Madras Bench, was answered in favour of the respondent Whether there are materials for the tribunal to hold that the sum of Rs. 2,87,422/aforesaid represents a loss of capital. Originally two question were referred, but with the second question we are number number companycerned. The respondent is a limited liability Company called the Mysore Sugar Co. Ltd., in which a very large percentage of shares is owned by the Government of Mysore. We shall refer to the respondent as the assessee Company. The asseesee Company purchases sugarcane from the sugarcane,growers, and crashes them in its factory to prepare sugar. As a part of its business operations, it enters into agreement with the sugarcane growers, who are known locally as Oppigddars and advances them sugarcane seedlings, fertilisers and also cash. The Oppigedars enter into a written agreement called the Oppige, by which they agree to sell sugarcane exclusively to the assessee Company at current market rates and to have the advances adjusted towards the price of sugarcane, agreeing to pay interest in the meantime. For this purpose, an account of each Oppigeddar is opened. by the assessee Company. A crop of sugarcane takes about 18 months to nature, and these agreements take place at the harvest season each year, in preparation for the next crop. In the year 1948-49 due to drought, the assessee Company companyld number work its sugar mills and the Oppigedars companyld number grow or deliver the sugarcane. The advances made in 1948-49 thus remained unrecovered, because they companyld only be recovered by the supply of sugarcane to the assessee Company. The Mysore Government realising the hardship appointed a Committee to investigate the matter and to make a report and recommendations. This report was made by the Committee on July 27, 1950, and the whole of the report has been printed in the record of this case. The Oppige bond is number printed, perhaps because it was in Kaunada, but the substance of the terms is given by the Committee and the above description fairly represents its nature. The Com- mittee recommended that the assessee Company should ex gratia forego some of its dues, and in the year of accountending June 30, 1952, the Company waived its rights in respect of Rs. 2,87,422/The Company claimed this is a deduction under ss. 10 3 xi and 10 2 xv of the Indian Incometax Act. The Income-tax Officer declined to make the deduction, because, in his opinion this was neither a trade debt number even a bad debt but an ex gratia payment almost like a gift. An appeal to the Appellate Assistant Commissioner also failed. Before the Income-tax Appellate Tribunal, Madras. Bench, these two arguments were again raised, but were rejected, the Tribunal holding that the payments were number with an eye to any companymercial profit and companyld number thus be said to have been made out of companymercial expediency, so as to attract s. 10 2 xv of the Act. The Tribunal also held that these were number bad debts, because they were advances, pure and simple, number arising out of sales and did number companytribute to the profits of the business. From the order of reference, it appears that the Appellate Tribunal was also of the opinion that these advances were made to ensure a steady supply of quality sugarcane, and that the loss, if any, must be taken to represent a capital loss and number a trading loss. The Appellate Tribunal, however, referred the question for the opinion of the High Court, and the High Court held that the expenditure was number in the nature of a capital expenditure, and was deductible as a revenue expenditure. It relied upon a passage from Sempath Ayyangars Book on the Indian Income- tax Law and on the decision of this Court in Badridas Daga Commissioner of Incometax 1. , to hold that this amount was deductible in companyputing the profits of the business for the year in question under a. 10 1 of the Income-tax Act. The case has been argued before us both under s. 10 1 and s. 10 2 xv , though it appears that the case of the assessee Company has changed from a. 10 1 to s. 10 2 . xi and s. 10 2 xv from time to time. The question, as propounded, seems to refer ss. 10 2 xv and 10 1 and number to s. 10 2 xi , We, however, do number wish to emphasise the nature of the question posed, because, in our opinion, the central point to decide is whether the money which was given up, represented a loss of capital, or must be treated as a revenue expenditure. The tax under the head Business is payable under is. 10 of the Income-tax Act. That section provides by sub-s. 1 that the tax shall be payable by an assessee under the head Profits and gains of business, etc. in respect of the profits or gains of any business, etc. carried on by him. Under sub-s. 2 , these profits or gains are companyputed after making certain allowances. Clause xi allows deduction of bad and doubtful business debts. It provides that when the assessees accounts in respect of any part of his business are number kept on the cash basis, such sum, in respect of bad and doubtful debts, due to the assessee in respect of that part of his business is deductible but number exceeding the amount actually written off as irrecoverable in the books of the assessee. Clause 1 1959 S. C. R. 690. allows any expenditure number included in cls. 1 to xiv , which is number in the nature of capital expenditure or personal expenses of the assessee, to be deducted, if laid out or expended wholly and exclusively for the purpose of such business, etc. The clauses expressly provide what can be deducted but the general scheme of the section is that profits or gains must be calculated after deducting outgoings reasonably attributable as business expenditure but so as number to deduct any portion of an expenditure of a capital nature. If an expenditure companyes within any of the enumerated classes of allowances, the case can be companysidered under the appropriate class but there may be an expenditure which, though number exactly companyered by any of the enumerated classes, may have to be companysidered in finding out the true assessable profits or gains. This was laid down by the Privy Council in Commissioner of Income-tax v. Chitnavis 1 and has been accepted by this Court. In other words, s. 10 2 does number deal exhaustively with the deductions, which must be made to arrive at the true profits and gains. To find out whether an expenditure is on the capital account or on revenue, one must companysider the expenditure in relation to the business. Since all payments reduce capital in the ultimate analysis, one is apt I to companysider a loss as amounting to a loss of capital. But this is number true of all losses, because losses in the running of the business cannot be said to be of capital. The Questions to companysider in this companynection are for that was the money laid out? Was it to acquire an asset of an enduring nature for the benefit of the business, or was it an outgoing in the doing of the business? If money be lost in the first circumstance, it is a loss of capital, but if lost in the second circumstance, it is a revenue loss. In the first, it bears the 1 1932 L.R. 59 I.A. 290. character of an investment, but in the second, to use a companymonly understood phrase, it bears the character of current expenses. This distinction is admirably brought out in some English cases, which were cited at the Bar. We shall refer Only to three of them. In English Crown Spelter Co. Ltd v. Baker 0 , the English Crown Spelter Co. carried on the business of zinc smelting for which it required large quantities of blende. To get supplies of blende, a new Company called the Welsh Crown Spelter Company was formed, which received-assistance from the English Company in the shape of advances on loan. Later, the English Company was required to write off pound 38,000 odd. The question arose whether the advance companyld besaid to an investment of capital, because if theywere, the English Company would have numberright to deduct the amount. If on the other hand, it was money employed for the business it companyld be deducted Bray, J. who companysidered these questions, observed If this were an ordinary business transaction of a companytrary by which the Welsh Company were to deliver certain trend, it may be at prices to be settled hereafter, and that this was really numberhing more than an advance on account of the price of that blend, there would be a great deal to be said in favour of the Appellants It is impossible to look upon this as an ordinary business transaction of an advance against goods to be delivered I can companye to numberother companyclusion but that this was an investment of capital in the Welsh Company and was number an ordinary trade transaction of an advance against goods 1 1908 5 T.C. 327. The second case, Charles Marsdon Sons. Ltd v. The Commissioners of Inland Revenue 1 , is under the Excess Profits Duty in England, and the question arose in the following circumstances an English Company carried on the business of paper-making. To arrange for supplies of wood pulp, it entered into an agreement with a Canadian Company for supply of 3000 tons per year between 1917-1927. The English Company made an advance of E. 30,000 against future deliveries to be recouped at the rate of E. I per ton delivered. The Canadian Company was to pay interest in the meantime. Later, the importation of wood pulp was stopped, and the Canadian Company appropriately called the Ha Ha Company neither delivered the pulp number returned the money. Bowlatt, J. held this to be a capital expenditure number admi- ssible as a deduction. He-was of opinion that the payment was number an advance payment for goods, observing that numberone pays for goods ten years in advance, and that it was a venture to establish a source and money was adventured as capital. The last case, to which we need refer to illustrate the distinction made in such cases is Reids Brewery Co. Ltd v. Nale 2 . The Brewery Company there carried on, in addition to the business of a brewery, a business of bankers and money lenders making loans and advances to their customers. This helped the customers in pushing sales of the product of the Brewery Company. Certain sums had to be written off, and the amount was held to be deductible. Pollock, B, said of companyrse, if it be capital invested, then it companyes within the express provision of the Income Tax Act, that numberdeduction is to be X X made on that account- 1 1919 T. T.C. 217. 2 1891 3 T.C. 279. but held that numberperson who is acquainted with the habits of business ,loan doubt that this is number Capital invested. What it is, is this. It is capital used by the Appellants but used only in the sense that all money which is laid out by persons who are traders, whether it be in the purchase of goods be they traders along, whether it be in the purchase of raw material be they manufacturers.- or in the case of money lenders, be they pawnbrokers or money lenders, whether it be money lent in the companyrse of their trade, it is used and it companyes out of capital, but it is number an investment in the ordinary sense of the word. It was thus held to be a use of money in the companyrse of the Companys business, and number an investment of capital at all. These cases illustrate the distinction between an expenditure by way of investment and an expenditure in the companyrse of business, which we have described as current expenditure. The first may truly be regarded as on the capital side but number the second. Applying this test to this simple case, it is quite obvious which it is. The amount was an advanced against price of one crop. The Oppigedars were to get the assistance number as an investment by the assessee companypany in its agriculture, but only as an advance payment of price. The amount, so far as the assessee Company was companycerned., represented the current expenditure towards the purchase of sugarcane, and it makes .DO difference that the sugarcane thus purchased was grown by the Oppigedars with the seedlings, fertiliser and money taken on account from the assessee Company. In so far as the assessee Company was companycerned, it was doing numbermore than making a forward arrangement for the next years crop and paying an amount in advance out of the price, so that the growing of the crop may number suffer due to want of funds in the hands of the growers. There was hardly any, element of investment which companytemplates more than payment of advance price. The resulting loss to the assessee Company was just as much a loss on the revenue side as would have been, if it had paid for the ready crop which was number delivered.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 402 of 1959. Appeal from the judgment and decree dated March 15, 1956 of the Calcutta High Court in Appeal from Original Decree No. 236 of 1949. B. Aggarwala and Sukumar Ghose, for the appellant. Rameshwar Nath, for the respondent Nos. 1 to 3. N. Mukherjee and D. Gupta, for respondent No. 4. 1962. May 2. The following judgment were delivered. The judgment of Subba Rao and Mudholkar, JJ., was delivered by Mudholkar, J. SARKAR., J.-This appeal arises out of a suit for recovery of damages in respect of 90 bales out of 259 bales of cloth delivered on May 10, 1946, at Wadi Bunder station on the Great Indian Peninsula Railway, hereafter called the G. I. Railway, to be carried from there to Giellekhola a station on the Darjeeling Himalayan Railway, hereafter called the D. H. Railway. In order to reach Giellekhola the goods had to be carried over four railways, namely, the G. P. Railway, East Indian Railway, hereafter Called the I. Railway, the Bengal Assam Railway, hereafter called the A. Railway and the D. H. Railway. The goods had been booked through to be carried over all these railways. At all material times the railways other than the D. H. Railway, were owned by the Government of India, the D. H. Railway being owned by a private companypany. At some stage of the litigation the D. H. Railway Company went into liquidation and the liquidators were brought on the record. On June, 7, 1946, 169 bales were delivered to the appellant to whom the Railway Receipt had been endorsed. Various companyrespondence thereafter ensued as to the remaining 90 bales with which alone the present litigation is companycerned. About September 1946, the wagon companytaining the 90 bales Was traced at a station called Gadkhali on the A. Railway. Further companyrespondence ensued and the 90 bales actually arrived at Giellekhola shortly prior to December 21, 1946, on which date, having found the companysignment in a very damaged companydition, the appellant requested the D. H. Railway to give open delivery. Thereafter on February 12, 1947 , open delivery of the companytents of the 90 bales was given to the appellant. At that time the damage done to the goods was assessed by agreement between the appellant, the B. A. Railway and the H. Railway at Rs. 27,920-13-6. The appellant thereafter on January 29, 1948, sent a numberice under s. 80 of the Code of Civil Procedure to the Secretary of the Railway Department, Government of India, making a demand of Rs. 34,192 for damage suffered by it as a result of the negligence of the railways in carrying the goods. This sum was made up of the aforesaid ,sum of Rs. 27,920-13-6 and certain other sums on account of the difference between the ex-mill price and the retail price of the goods and of the refund of the railway freight. A demand for a similar sum was made on the D. H. Railway. This demand was repudiated by the railways. The appellant, therefore., on April 9, 1948, filed the suit for damages. The suit was decreed against the D.H. Railway way only by the trial Court for Rs. 27,920-13-6. The D. H. Railway preferred an appeal against the judgment of the trial Court to the High Court at Calcutta. The appellant also filed across objection companytending that the suit should have been decreed against all the railways and the decree should have been for the full amount claimed by it., The High Court allowed the appeal and dismissed the cross-objection. Hence the present appeal. It seems to me that there are two reasons why this appeal should fail. The first is that the suit was barred by limitations This case is governed by Art. 30 of the Limitation Act which provides for a suit against a carrier for companypensation for injuring goods, a period of one year from the date when the injury occurs. Now it seems to me that on the evidence produced in this case and the plaint it has to be held that the damage to the goods occurred before December 21, 1946. In the plaint the appellant stated, Before the receipt of those bales at Giellekhola in December 1946 it was number possible for the plaintiff to know about the aforesaid damaged companydition of those bales, but numbersooner the same arrived the fact that the same arrived in hopelessly damaged companydition was brought to the numberice of the railway authorities companycerned. On the same date, the appellant wrote to the Political Officer of Sikkim for whom it had purchased the cloth, stating, ,we have been advised by our Tista Bridge agent that the companysignment of 90 bales has number arrived at Giellekhola but the same has reached in a very damaged companydition. Thirdly, there is a letter written sometime prior to January 29, 1947, by the appellant to the Political Officer of Sikkim, the precise date of which does number appear in the record, in which it stated, It has been nearly one month the cloth arrived at Giellekhola in a hopeless companydition and numberfurther step is being taken by the railway. We beg therefore to request that steps may very kindly be taken to expedite the settlement of the same. I think that these letters clearly establish that the damage had occurred prior to December 21, 1946. On this part of the case, the trial Court held that the damaged companydition referred to in the companyrespondence companyld only refer to the outward aspect and companyld in numbersense refer to the real internal damage which certainly companyld number be ascertained unless the bales were opened and open delivery was given. It seems to me that the trial Court overlooked the fact that it was number the ascertainment of the damage by the appellant that is relevant for the purpose of deciding the question of limitation. What is relevant for that purpose is the fact of the happening of the damage. It has to be observed that this is number a case where it is alleged that the railways fraudulently companycealed the damaged companydition of the goods. The trial Court also overlooked the fact that in the plaint the appellant made the case that the damage had occurred prior to December, 1946. Lastly, the trial Court did number numberice that in one of the letters to which I have referred in the preceding paragraph, the appellant expressly stated that the cloth, that is, the goods themselves had been damaged in December, 1946. The open delivery was demanded by the appellant only to assess the quantum of the damage. That appears from the appellants letter of December 21, 1946, to the Political Officer of Sikkim where it is stated, We beg, therefore, to request you to kindly instruct the General Manager, D. H. Railway, Kurseong, telegraphically to give open delivery of the companysignment and to give a receipt for any loss or damage. There is further numberhing to show that any damage had occurred after December 21, 1946, and February 12, 1947, when open delivery was given to the appellant. It would be idle to companytend that only the outward aspect of the bales had been damaged without their companytents being damaged. Then it has to be remembered that the case made in the plaint is that the appellant came to know of the damaged companydition of the bales on December 21, 1946. If it came to know of the damage then, the damage must have occurred before that date. The suit should, therefore, have been filed within the period of one year of the date when the damage occurred as provided in Art. 30 of the Limitation Act and a further period of two months, being the time requisite for the numberice under s. 80 of the Code of Civil Procedure to the benefit of which the appellant was entitled under s. 15 2 of the Limitation Act. As the damage must have occurred prior to December 21, 1946, the suit which was filed on April 9, 1918, was therefore, clearly out of time. The other reason why the appeal should fail is that numbernotice under a. 77 of the Railways Act, 1890, had been given. That section so far as is material is in these terms. S. 77. A person shall number be entitled to companypensation for the loss., destruction or deterioration of goods delivered to be carried, unless his claim to the companypensation has been preferred in writing by him or on his behalf to the railway administration,, within six months from the date of goods for carriage the delivery of the by the railway. The section requires a claim for companypensation for the loss, destruction or deterioration of goods to be preferred to the railway administration within six months of the delivery of the railway for carriage. It is well settled that the section is mandatory. If a claim is number preferred within the time mentioned, it cannot be recovered from the railway a suit for such recovery must be dismissed. Now I do number find that any claim was preferred by the appellant on any of the railways at all within the prescribed period. There are numberdoubt certain letters written by the appellant to some of the railways including the D. H. Railway within that period but all that these letters did was to ask that an enquiry should be made by the railway administration to trace the missing 90 bales and that their delivery should be expedited. Not one of them companytained any claim to companypensation for deterioration of any goods. A request to trace goods and expedite their delivery is certainly number a claim to companypensation in respect of them. The section requires such a claim to be preferred. I am unable to hold that a letter asking that a search for the goods be made and they be delivered is a companypliance with s. 77. Such a letter would number .only number be in terms of the section number serve the purpose of the section. The object of the section is to prevent stale claims see Governor-General in Council v. Musaddi Lal 1 . Now if numberclaim is made within the prescribed time, that object is number served. The letters in this case do number expressly companytain any claim against the railway Administration number can they be said to amount to any claim by necessary implication. The view that I have taken appears to have been taken, by some of the High Courts. In Salem Dayal Bagh Stores Ltd. v. The Governor General in Council 2 Happell, J., said, In my opinion, Ex. P 3 cannot be regarded as a numberice satisfying the requirement of section 77. It makes numberclaim for companypensation at all, and is merely a letter stating that the goods bad number arrived and asking that enquiries might be made. In Mardab Ali v. Union of India 3 it was observed that a letter intimating that numberhing was known about the goods and requesting the railway administration to locate then was held number to satisfy s. 77. It was there observed that, what is fatal to the argument is that in numbere of these letters there is any demand for companypensation. A numberification of a claim under s. 77 must of necessity companytain a demand for company- pensation. No- case taking a companytrary view has been brought to our numberice. But it was said that in the present case it was impossible to prefer any claim for damages for deterioration of goods within the period mentioned 1 1961 3 S.C.R. 647. 2 1947 1 M.L.J. 152. 3 1953 56 Bom. L.R. 150. in s. 77 for the appellant had numberknowledge that expired. It was therefore companytended that the maxim lex number companyit ad, impossibilia aut iniutlia applied and the performance of the companydition mentioned in the section should be dispensed with on account of impossibility of such performance. Reference was made to Maxwell on Interpretation of Statutes 10th ed. p. 385 in support of this companytention. Hence it was said that the claim in the present suit was maintainable though numberclaim might have been preferred to the railway adminis- tration as required by s. 77, The companytention proceeds on the basis of the impossibility of preferring the claim within the time mentioned in a. 77. But I think this is a misreading of the section. It does seem to me that its terms can ever be impossible of companypliance. It ,requires that a claim to companypensation for loss, destruction or deterioration of goods must be pre- ferred within six months of the date of delivery of the goods to the railway. A claim has to be preferred within this period whether the person entitled to the goods is then aware that the goods have been lost, destroyed or damaged or number. If he is aware, there is, of companyrse, numberimpossibility of performance, If he is number aware, then also he must prefer a claim for if he does number, the section. prevents him from recovering anything later. If it were number so, the section, which companytains a mandatory provision for the protection of the railway administration, would be rendered absolutely nugatory. Suppose the companytention of the appellant was, right. Then it might legitimately say in case of number- delivery of goods it was impossible for it to have made claim for their loss or destruction within the period of six months for it was number then aware that the goods had been lost. or destroyed and would never be delivered to it. It seems to me impossible that the section intended such result. The section clearly companytemplates than knowledge, a claim must be preferred within the time mentioned in it. If this is so in the case of loss or destruction of goods, it must equally be so in the case of damage to goods. Want of knowledge is irrelevant and does number make it impossible to prefer a claim. It is number as if that in the case of damage to goods a claim for any specific sum be made. The section does number require that. It would be enough if a claim for damages generally is preferred. So knowledge of the damage is number essential for companypliance with the terms of the section. Indeed it seems to me that a claim for loss or destruction of goods would companyer a claim for damage to goods if they were later delivered in a damaged companydition. The greater would include the lesser. The view that I have taken seems to me to serve the object of the section. As I have already said the object is to prevent stale claims. Its object, therefore, is that a claim should be made within the time prescribed so that the railway administration might make the necessary enquiries promptly and before the evidence companycerning the claim was lost. It is number permissible to put such an interpretation on the section as would defeat this object and that is what would happen if the appellants companytention was accepted. Therefore, in my opinion, the appellant should have preferred a claim in this case in terms of s. 77. As it had number done so, its suit must fail. For these reasons I would dismiss the appeal with companyts. MUDHOLKAR, J.-This is an appeal upon a certificate granted by the High Court of Calcutta under Art. 133 1 a of the Constitution from its judgment reversing a decree for damages passed in favour of the appellant firm by the Subordinate Judge., Darjeeling. The admitted fact are briefly these. The appellant had companysigned 259 bales of cloth from Wadi-Bunder., a station on the Great Indian Peninsular Railway number the Central Railway to Giellekhola, a station on the Darjeeling Himalayan Railway number in liquidation on May 10, 1946. Out of these bales 169 reached the destination on or about June 7, 1946. As the remaining bales had number reached the destination the appellant sent a telegram on July 1,1946, to the General Manager of the D. H. Railway requesting him to give early delivery of those bales. By a letter dated July 9, 1946, the appellant companyfirmed the telegram and requested the General Manager to see that the remaining bales reached the destination immediately. Thereafter some companyrespondence followed between the appellant and the Political Officer, Sikkim, to whom the bales were to be delivered by the appellant, and also between the Political Officer and the D. Railway administration. It is, however,, number necessary to refer to this companyrespondence and to certain other companyrespondence which has been referred to in the statement of the case except to the letter dated December 21, 1946, addressed by the appellant to the D. H. Railway stating that they have companye to know that the companysignment had arrived at Giellekhola in a very damaged companydition and requesting that open delivery of the companysignment be given immediately. Open delivery was given to the appellants assistant manager, Tulsi Ram, P.W. 1, on February 12, 1947, by the Commercial inspector, D.H. Railway. The damage was jointly assessed by the Commercial Inspector, D. H. Railway, and the Claims Inspector, Bengal Assam Railway, at Rs. 27,920-13-6 and the assessment list was signed by them as well as by Tulsi Ram. By a letter dated June 26, 1947, Mr. A. C. Chatterjee, Advocate, made a claim of Rs. 34,192 against the Manager of the B. A. Railway, the General Manager of the D. H. Railway and Messrs. Gillander Arbuthnot Co., Managing Agents for H. Railway. On the same day Mr. Chatterjee sent a similar letter to the G. I. P. Railway administration. But the Superintendent of Claims of that Administration at Bombay repudiated the claim on the ground that it had number been preferred within six months from the date of-booking as required by s. 77 of the Indian Railways Act, 1890 Act IX of 1890 . It may be mentioned that the companysignment had to pass over the railway systems of G. I. P. Railway, East Indian Railway, Bengal Assam Railway, and Darjeeling Himalayan Railway. It does number appear that any numberice was given to the E. 1. Railway. As the appellants claim was number settled, he instituted a suit in the companyrt of Subordinate Judge, Darjeeling, on April 9, 1948, To that suit the Dominion of India, presumably as representing the I. P. Railway, E. 1. Railway and the B. A. Railway was made defendant No. 1, the second defendant being the D. H. Railway. The appellants claim was denied by both the defendants. Two written statements were, however, filed by the Dominion of India, one as representing the G. I. P. Railway and the other as representing the E. I. Railway. The only companytention in these written statements to which reference need be made is number-compliance with the provisions of a. 77 of the Indian Railways Act. The main companytesting defendant was the D. H. Railway. We will refer to only those companytentions raised by it which bear on the arguments advanced by it. The first of these companytentions is that numbernotice as required by s. 77 of the Indian Railways Act claiming companypensation for the damage to the 90 bales was given by the appellant to it within six months of the delivery of the companysignment to the G.I.P. Railway. The second companytention is that the suit was barred by limitation, having been instituted more than twelve months of the date on which damage had occurred. The learned Subordinate Judge dismissed the suit in so far as the Dominion of India was companycerned on the ground that numbernotice under s. 77 was given to the G. I. P. Railway administration or the E. 1. Railway administration or the B. Railway administration. He, however, held that the telegram dated July 1, 1946, and the letter dated July 9, 1946, addressed to the Manager of D. H. Railway amounted to sufficient companypliance with the requirements of s. 77. He further held that the limitation for the suit is that prescribed by Art. 30 of the Limitation Act. According to him a suit instituted within one year from the date on which the loss was discovered by the plaintiff would be within time. On this finding the learned Subordinate Judge passed for a decree Rs. 26, 92013-6 against the second defendant and dismissed the suit against the first defendant. The second defendant preferred an appeal before the High Court but shortly thereafter went into liquidation. Thereupon the liquidators were added as appellants. The plaintiff preferred a cross-objection with respect to that part of his claim which was dismissed. Eventually the plaintiff amended the cross-objection and sought a decree in the alternative against the G. I. P. Railway or the E. 1. Railway. The High Court allowed the appeal and dismissed the cross- objection upon the view that the provisions of s. 77 have number been companyplied with and that the suit which falls under Art. 31 of the Limitation Act was barred by time. The first question to which we address ourselves is whether the appellant had companyplied with the requirements of s. 77 of the Railways Act. The relevant portion of that section reads thus A person shall number be entitled to companypensation for the loss, destruction or det- erioration of goods delivered to be so carried unless his claim to companypensation has been preferred in writing by him or on his behalf to the railway administration within six months from the date of the delivery goods for carriage by railway. The High Courts in India have taken the view that the object of service of numberice Under this provision is essentially to enable the railway administration to make an enquiry and investigation as to whether the loss, destruction or deterioration was due to the companysignors laches or to the wilful neglect of the railway administration and its servants and further to prevent stale and possibly dishonest claims being made when owing to delay it may be practically impossible to trace the transaction or check the allegations made by the Consignor. In this companynection we way refer to a few of the decisions. They are Shamsul Huq v. Secretary of State 1 Mahadeva, Ayyar v. S. I. Railway Co. 2 Governor-General in Council v. G. S. Mills Ltd., 3 Meghaji Hirajee Co., v. B. N. Railway Co. 4 Bearing in mind the object of the section it has also been made by several High Courts that a numberice under s. 77 should be liberally companystrued. In our opinion that would be the pro- per way of companystruing a numberice under that section. In enacting the section the intention of the legislature must have been to afford only a protection to the railway administration against fraud and number 1 1930 L.R. 57, Cal. 1286. 2 1921 I.L.R. 45, Mad. 135. 3 1449 I.L.R. 28 Pat. 178 4 A.I.R. 1939 Nag. 141, to provide a means for depriving the companysignors of their legitimate claims for companypensation for the loss of or damage caused to their companysignments during the companyrse of transit on the railways. Bearing in mind these companysideration we think that the letter of July 9, 1946 Ex. I y which was sent,within six months of booking the companysignment amounts to a sufficient numberice for the purposes of s. 77. The relevant portion of that letter reads thus We companyfirm our telegram sent to you reading as under on 1st inst. Invoice 5 tenth May, Wadi Bunder Geka part ninety bales number reached. Please reach urgently and regret very much to inform you that we have as yet heard numberhing in response thereto number the part ninety bales have reached destination. Will you, therefore, please take necessary action to cause the part companysignment to reach destination immediately. This letter clearly brings to the numberice of the administration that 90 bales out of the companysignment of 259 bales-had number reached their destination. More than that by this letter the appellant requested the General Manager of the D. H. Railway to take appropriate action without delay. It is true that a claim for companypensation has Dot been made by the appellant in this numberice. In our view however such a claim must be deemed to be implied in the numberice. The reason is obvious. Where a person says that his companysignment has number been delivered as it should have been delivered according to the companytract between him and the railway administration he must be regarded as making it clear that he would be holding the railway administration to its companytractual engagement which necessarily involves the payment of damages for breach of that engagement. In our opinion, therefore, number only the object underlying s. 77 is satisfied by the letter dated July 9, 1946 but also a claim for companypensation is implied in that letter. Upon the language of s.77 it would appear that a numberice thereunder must be given to every railway administration against whom a suit is eventually filed. No such numberice was given by the appellant to the G. I. P. Railway administration or the E. I. Railway administration or the B. Railway administration within six months of booking the companysignment and, therefore, in so far as they are companycerned the suit must be held to have been rightly dismissed. That, however, would number help the second defendant. For, so far as this defendant is companycerned, as we have already held, a numberice under s. 77 was given within six months from the date of booking. The next question is with regard to limitation. According to the High Court Art. 31 applies to a suit of present nature. The first companyumn of Art. 31 reads thus against a carrier for companypensation for number-delivery of, or delay in delivering, goods. Column 3 reads thus When the goods ought to be delivered. According to the learned Subordinate Judge the proper article is Art. 30, the first companyumn of which reads thus Against a carrier for companypensation for losing or injuring goods. The third companyumn reads thus When the loss or injury occurs. It seems to us that the appropriate article would be Art. 30 and number Art. 31 because what the appellant is claiming is companypensation for the damage to the goods which were eventually delivered. Even so, the question is what is the starting point of limitation. According to company. 3 the starting point would be the date of the loss or injury to the goods. Now when goods are companysigned by a companysignor he would number be in a position to know the precise date on which the loss or injury has occurred. In Union of India v. Amar Singh 1 this Court has held that the burden would be on the railway administration who want to number-suit the plaintiff on the ground of limitation to establish that the loss or injury occurred more than the year before the institution of the suit. No attempt has been made on behalf of the D. H. Railway to show that the damage in fact occurred more than one year before the suit was instituted. All that is said on their behalf is that the appellant knew in December, 1946, that the companysignment appeared to be damaged. In this companynection reliance is placed on. Ex. B which is a letter addressed by the appellant to the D. H. Railway on December 21, 1946. What is stated there is that the companysignment has arrived at Giellekhole in a very damaged companydition. This has reference to the outer companyering or the package and number to the companytents. Moreover, delivery was given nearly two months after this and it is number possible to say whether the damage which was numbericed at that time had already been caused before December 21, 1946, or was caused thereafter. The D. H. Railway which had the custody of the goods companyld alone have been in a position to say if at all, as to when the damage, was caused. Upon the material before us it is number possible to say that the suit was instituted beyond one year of the accrual of the cause of action. It is, therefore, number barred by time. There is, however, one more question which needs to be companysidered and that is whether the 1 1960 2 S. C. R. 75, 88. damage was caused on the D. H. Railway. In their written statement they have companytended that the companysignment of 90 bales was received by them at Silguri from the B. A. Railway and that it was transhipped by them to Giellekhole in the same companydition. No evidence, however, was led by them in support of this companytention. Under s. 80 of the Railway Act it is for the companysignor to establish, if he wants to sue a railway administration other than the one which booked the companysignment, that the damage had occurred on its system. The companytention seems to us to be companyrect. But where a companysignor receives his companysignment in a damaged companydition from the delivering railway the burden would shift to the delivering railway to show that the damage had number occurred on its railway. The burden companyld be discharged by showing that the companysignment was already damaged before it was received by that railway, Here, numberevidence having been given on behalf of the D. H. Railway on the point we hold that the presumption. has number been rebutted. Upon this view we must allow. the appeal against the D. H. Railway. The claim made for Rs. 5,500 odd by the appellant in the cross-objection has number been pressed before us. We, therefore, allow the appeal in part, set aside the decree of the High Court in so far as the D. H. Railway is companycerned and restore that of the trial companyrt. The appellant would be entitled to his proportionate companyts against the D. H. Railway. By COURT In view of the majority opinion the Court allowed the appeal in part, set aside the decree of the High Court in so far as the D. H. Railway is companycerned and restored that of the trial Court.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 233 of 1962. Appeal by special leave from the judgment and order dated August 2, 1961, of the Mysore High Court in Writ Petition No. 814 of 1961. Vendantiengar and S. N. Andley, for the appellant. The respondents did number appear. 1962. July 30. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave arises out of a dispute in respect of the election to the Panchayat of Byappanahalli, from its first companystituency, in the State of Mysore. The calendar of events for the saidelection was as follows Notification of election.6-2-1960 Date by which candidates had to file numberination papers.16-3-1960 Date of the scrutiny of numberina- tion papers18-3-1960 Poll13.4-1960 Peolaration of result14.4-1960 The appellant and five others filed their numberination papers within the prescribed date. The polling took place on the scheduled date, namely April 13, 1960. The candidates secured votes as mentioned under Appellant 169 votes Respondent 2 158 votes Respondent 1 128 votes Respondent 3115 votes Respondent 438 votes Respondent 546 votes The appellant and respondent 2 were duly declared elected to the Panchayat. Respondent 1 filed an election petition under s.13 of the Mysore Village Panchayats and Local Boards Act, 1959 Mysore Act No. 10 of 1959 hereinafter called the Act, in the Court, of the Second Munsiff, Bangalore, for a declaration, that the appellant was number duly elected and for a further declaration that the first respondent was duly elected. The case of the first respondent, as disclosed in his petition, was, that on the date, fixed for filing of numberinations the appellants name was number in the authenticated list of voters published under r. 3, cl. 5 of the Mysore Panchayats and Tuluk Boards Election Rules, 1959, hereinafter called the Rules, and, therefore, he was number entitled to file his numberination. It was his further case that the appellant was number ordinarily a resident of Byappanahalli and, therefore, he was disqualified from standing for the election from that companystituency. The learned Munsiff held on the second point that the appellant was ordinarily a resident of the said village and was, therefore, qualified to be included in the electoral roll of the Panchayat, but he came to the companyclusion that his name was number included in the authenticated list of voters of the said Panchayat. On that finding, he set aside the election of the appellant and declared the first respondent, who secured the next highest number of votes, to have been duly elected in his place. On appeal, the learned Judges of the High Court, after numbericing the finding of the Munsiff to the effect that the appellants name was number included in the authenticated list of voters for the Panchayat, observed that they did number agree with the reasoning given by the learned Munsiff, but they agreed with his companyclusion on the basis of a different reasoning. They held that though the name of the appellant was included before- the prescribed date in the electoral roll of the legislative companystituency under s. 23 of the Representation of the People Act, 1950, it was so included in direct violation of r. 26 of the Representation of the People Rules, 1956, arid that, therefore, the said inclusion was void. Having so held, they agreed with the learned Munsiff that the appellants election was liable to be set aside. Hence the appeal. It may be mentioned that there was numberappearance on the side of the respondents, Before companysidering the point raised, it will be companyvenient to clear the around. Section 9 of the Act reads The electoral roll of the Mysore legislative Assembly for the time being in force for such part of the companystituency of the Assembly as is included in any Panchayat companystituency shall, for the purpose of this Act, be deemed to be the list of voters for such Panchayat companystit- uency. The Secretary of the Panchayat shall maintain in the prescribed manner a list of voters for each Panchayat companystituency. Explanation.-For the purpose of this section, electoral roll shall mean an electoral roll prepared under the provisions of the Represe- ntation of the People Act, 950 Central Act B XLIII of 1950 for the time being in force. Section 10 says Every person whose name is in the list of voters of any Panchayat companystituency shall, unless disqualified under this Act or under any other law for the time being in force, be qualified to be elected as a member of the Panchayat . Rule 3 of the Rules prescribed the mode of maintenance and custody of list of voters. It says, among other things, that the Secretary of the Panchayat shall maintain a list of voters for each panchayat companystituency, that he shall authenticate such list by affixing on it the seal of the Panchayat, and that he shall, from time to time, carry out in the authenticated companyy of each such list, any companyrections that may be made in the Electoral Roll of the Mysore Legislative Assembly and initial below each companyrection so made. It will be clear from the said provisions that the relevant part of the electoral roll of the Mysore Legislative Assembly is deemed to be the list of voters for the panchayat companystituency, and that the Secretary of the panchayat has to maintain a duly authenticated separate list of voters of the said companystituency. The learned Munsiff held that, as the said authenticated list of panchayat voters was number produced before him, it was number established that the name of the appellant was included therein on the date of numberination. The learned Judges of the High Court did number accept the said finding on the ground that they did number agree with the reasoning given by the learned Munsiff, but unfortunately they have number given their reasons for differing from him. But a persual of the election petition shows that the first respondent accepted in his petition that the name of the appellant was included in the said authenticated list on the date when be filed his numberination paper. Presumably because of that fact the learned Judges of the High Court did number think fit to sustain the finding of the learned Munsiff. ID, View of the said admission in the petition, it cannot be expected of the appellant to summon the authenticated list to prove what has already been admitted. This leads us to the companysideration of the only substantial question that arises in the appeal. Learned companynsel for the appellant Contends that the High Court went wrong in companysidering the question of the legality of the inclusion of the appellants name in the electoral roll of the Mysore Legislative Assembly, as, under s. 30 of the Representations of the People Act, the jurisdiction of civil companyrts to question the legality of an action taken by, or under the authority of, the Electoral Registration Officer was barred. It is companymon case that the name of appellant was included in the electoral roll of the Mysore legislative Assembly before the date prescribed for filing of numberination papers. But it is said that the Electoral Registration Officer did number follow the procedure prescribed in that behalf. The provisions relevant to the question raised may be read companyveniently at this stage. Section 23 of the Representa- tion of the People Act, 1950, reads Any parson whose name is number included in the electoral roll of a companystituency may apply in the manner hereinafter provided for the inclusion of his name in that roll. Rule 26 of the Representation of the People preparation of Electoral Rolls Rules, 1956, says Every application under sub-section i of section 23 shall be made in duplicate in Form 4 Part 1 and shall be accompanied- a where it is to the chief electoral officer, by a fee of ten rupees, and b where it is to the electoral registration officer, by a fee of one rupee. The fee specified in subsection i shall be paid by means of number-judicial stamps. The chief electoral officer or, as the case may be, the electoral registration officer shall immediately on receipt of such application, direct that one companyy thereof be posted in some companyspicuous place in his office together with a numberice inviting objections to such application within a period of seven days from the date of such posting. The chief electoral officer or, as the case may be, the electoral registration officer shall, as soon as may be after the expiry of the period specified in sub-rule 3 , companysider the objections, if any, received by him and shall, if satisfied that the appellant is entitled to be registered in the electoral roll, direct his name to be included therein. Section 24 of the Representation of the People Act, 1950, provides An appeal shall lie within such time and in such manner as may be prescribed- a to the chief electoral officer, from any order of the electoral registration officer under section 22 or section 23, and b to the Election Commission, from any order of the chief electoral officer under section 23. Rule 27 of the Representation of the People preparation of Electoral Rolls Rules,1956, prescribes the procedure for preferring appeals. It is number disputed that an application was filed before the registration officer for the inclusion of the appellants name in the electoral roll it is also companymon case that the electoral registration officer did number follow the procedure prescribed in r.26 relating to the posting of the application in a companyspicuous place and inviting objections to such application. It cannot, therefore, be denied that the inclusion of the name of the appellant in the electoral was clearly illegal. Under s. 30 of the Representation of the People Act,1950, numbercivil companyrt shall have jurisdiction to question the legality of any action taken by, or under the authority of, the electoral registration officer. The terms of the section are clear and the, action of the electoral registration officer in including the name of the appellant in the electoral roll, though illegal, cannot be questioned in a civil, companyrt but it companyld be rectified only in the manner prescribed by law, i. e., by preferring an appeal under r. 24 of the Rules, or by resetting to any other appropriate remedy. But it was companytended before the High Court that the action of the electoral registration officer was a nullity inasmuch as he made the order without giving numberice as required by the Rules. We find it difficult to say that the action of the electoral registration officer is a nullity. He has admittedly jurisdiction to entertain the application for inclusion of the appellants name in the electoral roll and take such action as he deems fit. The number-compliance with the procedure prescribed does number affect his jurisdiction, though it may render his action illegal. Such number-compliance cannot make the Officers act number est, though his order may be liable to be set aside in appeal or by resorting to any other appropriate remedy. The Act proceeds on the basis that the voters list is final for the purpose of election. Under s. 10 of the Act, every person whose name is in the list of voters of any Panchayat companystituency shall, unless disqualified under this Act or under any other any other law for the time being in force, be qualified to be elected as a member of the Panchayat. The disqualifications are enumerated in s. 11. If he was number disqualified-in the present case, the finding is that there was numbersuch disqualification-the appellant was certainly qualified to be elected as a member of the Panchayat. The Act companyfers a special jurisdiction on the Munsif to set aside an election, and he can do so only for the reasons mentioned in s. 13 3 of the Act. The relevant provision is in s. 13- 3 A d i which relates to the improper acceptance of any numberination. In view of a. 10 of the Act, it cannot be said that there is any improper acceptance of the numberination of the appellant, for, his name being in the list of voters, be is qualified to be elected as a member of the Panchayat. There is, therefore, numberprovision in the Act which enables the High Court to set aside the election on the ground that though the name of a candidate is in the list, it had been included therein illegally. In this view we do number propose to express our opinion on the question whether, if the election of the appellant was void, the Munsiff companyld have declared. the first respondent to have been duly elected in his place.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil Appeal No. 432 of 1961. Appeal by special leave form the judgment and order dated May 15 1959 of the Madhya Pradesh High Court in Miscellaneous Petition Nos. 301 of 1958 and 83 of 1959. Sen and S. N. Mukerji for the Appellant. R. L. Iyengar and A. G. Ratnaparkhi for Respondent No. 1. N. Shroff, for Respondents Nos. 2 and 4. 1962. July 27. The Judgment of the Court was delivererd by DAS GUPTA, J.-When under the Standing Orders of a Company the Company is empowered to take disciplinary action against an employee by proceeding in the prescribed manner can that power be legally delegated by the Company to any of its officers ? That is the principal question raised in this appeal. The appellant is Company incorporated under the Indian Companies Act having its registered office at 12, Mission Row, Calcutta. It is engaged in the generation and distribution of electricity at Jabalpur. The Companys office at Jabalpur is in charge of a Resident Engineer. By a power of attorney given by the appellant companypany on June 26, 1957, Mr. Leonard Shell Macleod, the Companys Resident Engineer at Jabalpur, was appointed the companypanys true and lawful attorney for and in the name of the Company to do exercise and perform all or any of the acts, matters, discretions and things set out in 11 clauses. The 10 th clause provided that subject to the Standing Orders from time to time given by the Company to appoint, dismiss, suspend or terminate the services of any of the employees of the Company at Jabalpur. On November 12, 1957, the respon- dent Sambhu Prasad Srivastava was served with a charge sheet under the signature of Mr. Macleod in which it was alleged that he had substituted 13 companyls of V.I.R. cable in the stores of the Company for the same quantity of cable of various makes from the local market, Sambhu Srivastavas reply to this charge was that when the shortage of 13 companyls came to his numberice on the eve of the audit he remonstrated with his subordinates who actually handled these articles and that what he did was done in the best interests of the Company and that he never acted with any dishonest intention. An enquiry was then held by the Resident Engineer and ultimately on January 16, 1958, the Resident Engineer issued a letter to him in these terms - With reference to charge sheet dated 12th November, 1957, and the subsequent investigations in the case against you,, please numbere that the matter has been very carefully companysidered, and in accordance with the interview which you had with our Chief Engineer, Mr. J. W. Fawcett, on the morning of the 15 th January, 1958, we hereby numberify you that the Company does number find it possible to.-retain yo ur services. Therefore, you are hereby discharged from the service of the Company, with immediate effect. Please call at the Companys office on the 17th instant,to receive final settlement of your dues from the Company. Srivastava then applied to the Assistant Labour Commissioner, Jabalpur, alleging that this order was in companytravention of the provision of the C. P. Berar Industrial Tribunal Settlement Act and of the Standing Orders as the powers of the Company under the Standing Orders to hold the enquiry can be exercised only the Managing Director. It was also alleged that the order though in from an order for discharge was really an order of dismissal and that cls. 14, 18 19 and 20 of the Standing Orders had been violated. The Company pleaded in its reply that under the power of attorney the Resident Engineer had the power to hold an enquiry and take disciplinary action against an employee and the action by him should be companysidered in law to amount to an action by the Company. It was pleaded that the provisions of the Standing Orders had number been violated. The Assistant Labour Commissioner made an order on September 10, 1958, ordering-reinstatement of the respondent without break in his service but without payment of back wages. The State Industrial Court which was moved both by the Company and by the employee held that the order of discharge was in substance an order of dismissal, and that misconduct alleged was number proved, and that in any case the Resident Engineer was number empowered to hold an enquiry and to issue an order of discharge. It refused to interfere with the order passed by the Assistant Labour Commissioner and rejected both the revisional applications. Both parties then moved the Madhya Pradesh High Court-for relief under Art. 226 of the Constitution. The High Court held that the powers. under cl.19 of the Standing Orders companyld number be delegated to the Resident Engineer and also that th general right reserved to the Company under cl. 20 of the Standing Orders was meant to be exercised by it and was number companyered by the delegation under cl. 10 of the power of attorney. The High Court seems to have thought also that the order made by the Resident Engineer was number Under el. 20 of the Standing Orders. Accordingly, the High Court refused to interfere with the order of reinstatement and dismissed the Companys application under Art. 226. It allowed the employees application under Art. 226, being of opinion that the Assistant Labour Commissioner had numberdiscretion in the matter of back wages and was bound to order payment of back wages as soon an order of reinstatement was made. Before companysidering the question whether the Company companyld delegate its power to take disciplinary action against its employees it will be proper to clear the ground on the question whether the order was made under cl.19 or cl. 20 of the Standing Orders. Clause 18 of the Standing Orders mentions inter as that theft, fraud, or dishonesty in companynection with the Companys business or property will be treated as misconduct. Clause 19 provides various penalties for misconduct. The substance of these provisions is that an employee who is adjudged by the Company on examination of the employee and of facts to be guilty of misconduct is liable to be summarily dismissed without numberice or companypensation in lieu of numberice or alternatively to be suspended for a period number exceeding fourteen days that the order of dismissal or suspension shall be in writing over the signature of an officer duly authorised for this pur- pose, and shall also briefly mention the reason on. which it is based, and that numberorder for dismissal or suspension under this Standing Order shall be made unless the employee is informed in writing of the misconduct alleged against him and that he shall be given an opportunity to produce evidence in his defence. Clause 20 does number deal with dismissal or suspension but provides that the Company has at all times a general right to discharge an employee from service number only for proved misconduct but also when the employer has lost companyfidence in the employee. Clause 21 provides for numberice of censure to be given for certain acts or omissions. An examination of these provisions shows that for an order of dismissal under cl. 19 to be made a special procedure is to be followed and when it is made the employee is number entitled to any companypensation. Examining number the order made on January 16, 1958, we find that while cl. 20 has number been mentioned it does number say that the employee has been found guilty of misconduct but merely states that the Company does number find it possible to retain this employees services and reference is made to the investigations in the case against him and to an interview he had with the chief Engineer, Mr. J. W. Fawcett, on the morning of the 15th January, 1958. The only reasonable view to take of this order, in our opinion, is that this order was being made under cl. 20 on the ground that the employer had lost company- fidence in the employee and was in fact and in law an order of discharge as distinct from an order of dismissal or suspension. It appears to us that while the Resident Engineer who held the enquiry may, have been satisfied that an act of misconduct for which the employee was liable to dismissal had been proved he took a merciful view of has companyduct in view of his previous clean record, and proceeded accordingly to act under cl. 20 of the Standing Orders instead of proceeding under cl. 19. This is a case in which the employer has acted, fairly and even generously in terminating the cases of the employee under el. 20. The question remains whether the Resident Engineer companyld take action under cl. 20. The employees argument, which found favour with the High Court was that it was the Company alone which companyld take action under clause 20 and the Resident Engineer in his capacity as the Resident Engineer apart from anything else, was number companypetent to take action under el. 20-For, cl. 20 empowers the Company and number the Resident Engineer as such to discharge an employee on the ground that the employer had lost companyfidence in him, In the present case, however, it was number the Resident Engineer in his capacity as the Resident Engineer that made the order of discharge. Clearly in making the order of discharge he was acting on the basis of the power of attorney executed in h0is favour on June 26, 1957. Under cl. 10 of the power of attorney he had power subject to the Standing Orders from time to time given by the Company to appoint, dismiss, suspend or terminate the services of any of the employees of the Company at Jabalpur. The power of the Company under el. 19 of the Standing Orders to dismiss or suspend and its power under el. 20 to discharge an employee are both companyered by cl.10 of the power of attorney, If there be numberhing in law to prevent these powers being delegated to the Resident Engineer there companyld be numberescape from the companyclusion that the exercise of the power cl. 20 in the present case by the Resident Engineer amounted in law to an exercise of the power by the Company itself, Is there anything in law which bars such delegation? We are unable to find any. It is obvious. and admitted that- when a Company has to exercise its powers in companynection with the management of its business it is number all the share-holders of the Company that have to meet to exercise the power. How the Company will regulate its business is prescribed in its Articles of Association. It is numberodys case that in the Articles of Association of the Jabalpur Electric Supply Co., there is anything barring the delegation of the disciplinary powers of the Company to any of its officers. In law therefore delegation of the functions of the Company may properly be made having regard to the exigencies. of the business and the Articles of Association. It cannot be reasonably disputed that where the Head Office of the Company is at Calcutta and the main business is to be carried on at Jabalpur the exigencies of the business do require delegation of the Companys power to take disciplinary action against its employees to a responsible Official like the Resident Engineer, But whether or number the Company might have done without such delegation is a matter which it is unnecessary for us to enquire into. The delegation was made and, neither on principle number on authority is it possible to say that the delegation was against the provisions of law. Nor can we see that the words subject to the Standing Orders from time to time given by the Company with which cl. 10 of the power of attorney opens affects the delegation. On a proper interpretation of these words their only effect is that in exercising the power to appoint, dismiss, suspend or terminate the services of the employees at Jabalpur the delegate cannot do anything beyond what the companypany itself can do under the Standing Orders. On numberreasonable companystruction of the words can they mean that the delegate cannot exercise these powers at all, because under the Standing Orders the Company itself is given these powers. Whether it is the power to take action under cl.19 or under cl.20 of the Standing Orders the delegate can exercise these powers under cl. 10 of the power of attorney in the same way as if the delegate was the Company itself. We therefore hold, disagreeing with the High Court, and the Courts below that the order of discharge made by the Resident Engineer was in exercise of the power validly delegated to him and that there, has been numberbreach of the Standing Orders by such action, We therefore allow the appeal, set aside the order passed by the High Court and direct that the appellants application under Art.

Case appeal was accepted by the Supreme Court

CIVIL APPELATE, JURISDICTION Civil Appeals Nos. 494 and 495 of 1957. Appeals from the Judgment and decree dated March 5, 1954, of the Orissa High Court in Mies. Appeals Nos. 25 and 26 of 1949. V. Viswanatha Sastri and T. V. B. Tatachari, for the appellant. S. K. Sastri for respondent No. 1. 1962 August 22. The Judgment of the Court was delivered by GAJENDRAGADKAR, J.- The short question which arises in these two appeals is whether the Muchalika Agreement of Reference which was executed by the appellant and the four respondents in favour of Tanguda Narasimhamurty on the 30th of December, 1943, is invalid because its companysideration was opposed to public policy under s. 23 of the Indian Contract Act. Both the trial Court and the High Court of Orrisa have answered this question in the negative, and the appellant, who has companye to this Court with a certificate granted by the High Court under Art. 133 of the Constitution, companytends that the said companyclusion is companytrary. to law. It appears that the appellant took a lease of the Parlakimedi Samasthanam Rice and Oil Mill for three years from 1941 to 1944 under a registered lease-deed on the 9th December. 1940. The rent agreed to be paid was Rs. 7,000 per annum., For the working of the Mill, the appellant took six partners with him and their shares in the partnership were duly determined. The partnership carried on the work of milling rice and extracting oil from ground-nuts. The appellant also carried on another business in paddy and ground-nuts and in this business too he took as his partners four out of his six partners in the business of milling rice and extracting oil from ground-nuts. Amongst these partners was respondent No. IV. Gurumurty Raju. This latter busssiness was carried on for about 14 months until the end of March, 1942. Two of the partners then retired from the said business and took away their shares in the Capital and the profits. The remaining.three partners companytinued the business of the firm the appellant had As.0.7.3 share, respondent No. 2 had 0.6.9 share and respondent No. 1 along with respondent No. 4. had 0.2.0 share. Thus, the partnership, in fact, companysisted of five partners respondents 1 and 4 being together entitled to a share of As. 0.2.0. The business of the partnership thus carried on by these partners went on till the 15th September, 1942. Respondent No. 1 then demanded that the accounts should be made and the profits divided between the partners. As a result of this demand, the-partnership wasstopped, accounts were made and profits divided. The appellant and respondent No. 2 took away their respective amounts, but respondent No. 1 claimed for himself alone the amount due to him and respondent No. 4, whereas respondent No. 4 demanded that the said amount should be divided half and half between him and respondent No. 1. That is how a dispute arose about the share of respondent No. 1. Respondent No. 1 then proceeded to file a criminal companyplaint in the Court of the Joint Magistrate at Berhampur against six persons, including the appellant. In this companyplaint he alleged that the six accused persons had companymitted offences underss. 420, 465, 468 and 477 read with se. 107 and 120-B of the Indian Penal Code. The substance of the charge thus levelled by respondent No. 1 was that the accounts of the partnership had been fraudulently altered with a view to show that respondent No. 4 was entitled to share equally the profits with respondent No. 1. In these proceedings, respondent No. 1 obtained an attachment of the account-books of the two businesses carried on by the appellant with his partners. This criminal companyplaint was numbered as Criminal Case No. 139 of 1943, and after process was issued on it and some preliminary steps had been taken, it stood adjourned for hearing to December 30, 1943. On December 30, 1943, respondent No. 1 and the accused persons entered into an agreement Exbt. 1 as a result of which the dispute between the appellant and others and respondent No. 1 was agreed to be referred to the arbitration of Mr. Murty on the respondent No. 1 agreeing to withdraw his criminal companyplaint. Accordingly, when the criminal case was called out for hearing on that date, respondent No. 1 stated that he had numberevidence to support his case and so, the companyplaint was dismissed and the arbitration paper signed by the parties was handed over to the arbitrator, Mr. Murty. That is how the impugned arbitration. agreement came to be passed between the parties and Mr. Murty came to be appointed an arbitrator. The arbitrator then began his proceedings and after recording evidence, he pronounced his award ex-parte on September 14, 1946, During the pendency of the said arbitration proceedings, the, appellant had applied to the Subordinate Judge at Berhampur for removing the arbitrator on the ground of his misconduct under ss, 5 and II of the,, Arbitration Act M.J.C. No. 34 of 1944 . The said., application was dismissed. The appellant then preferred a Revisiona.I Application against the order of the trial Judge Revision.Petition No. C.R. 78 of 1946 , but the said petition was also dismissed on March 26, 1949. Pending the disposal of the. said Revision Petition, the award was pronounced on September 14, 1946. After the award was thus pronounced, respondent No. 1 made an application to the Subordinate Judge at Berhampur on December 10, 1946, M.J.C. No. 105 of 1946 under ss. 14 and 30 of the Arbitration Act for the filing of the award and for passing a decree in terms thereof. The appellant filed an application on January 14, 1947, in the same Court under s. 33 of the Arbitration Act for setting aside the award J.C. No. 8 of 1947 . To both these applications, all the parties to the Reference and the Arbitrator were impleaded. By his application, the appellant claimed the setting aside of the award on several grounds, one of which was that the arbitration agreement was invalid under s. 23 of the Indian Contract Act. Both the Courts have rejected this companytention. In the result, the application for setting aside of the award made by the appellant has been dismissed and the application made by respondent No. 1 for passing a decree in terms of the award has been allowed. Both the Courts have also companysidered and rejected the other companytentions raised by the appellant in support of his plea that the award was invalid but for the purpose of these appeals, it is unnecessary to refer to he said findings, because we have companye to the companylusion that the appellant is right in companytending hat the arbitration agreement is invalid under s. 23 of the Indian Contract Act. Section 23 provides that every agreement of which the object or companysideration is unlawful is void, and it lays down that the companysideration of an agreement is lawful unless, inter alia, it is opposed to public policy. Agreement made by parties for stifling prosecution are number enforced by Courts on the ground that the companysideration for such agreements is opposed to public policy. If a person sets the machinery of the Criminal Law into action on the allegation that the opponent has companymitted a number-compoundable offence and by the use of this companyrcive criminal process he companypels the opponent to enter into an agreement, that agreement would be treated as invalid for the reason that its companysideration is opposed to public policy. Under the Indian Law, offences are divided into three categories, some are companypoundable between the parties, some are companypoundable with the leave of the Court and some are number-compoundable. In the present case, it is companymon ground that amongst the offences charged by respondent No. 1 against the appellant and others were included number-compoundable offences, and so, we are dealing with a ease where, according to the appellant, a criminal process was issued in respect of number-compoundable offences and the withdrawal of the criminal proceedings was a companysideration for the agreement of reference to which the appellant has put his signature. Whether or number the appellant proves his case, we will companysider later but the true legal position on this point is number in doubt. If it is shown that the companysideration for the arbitration agreement was the withdrawal and the number-prosecution of the criminal companyplaint, then the provisions of s. 23 of the Indian Contract Act would be attracted. The principle underlying this provision is obvious. Once the machinery of the Criminal Law is set into motion on the allegation that a number-compoundable offence has been companymitted, it is for the criminal companyrts and criminal companyrts alone to deal with that allegation and to decide whether the offence alleged has in fact been companymitted or number. The decision of this question cannot either directly or indirectly be taken out of the hands of criminal companyrts and dealt with by private indi- viduals. When as a companysideration for number proceeding with a criminal companyplaint, an agreement is made, in substance it really means that the companyplainant has taken upon himself to deal with his companyplaint and on the bargaining companynter he has used his number-prosecution of the companyplaint as a companysideration for the agreement which his opponent has been induced or companyrced to enter into. As Mukherjea, J has observed in Sudhindra Kumar v. Ganesh Chandra 1 numberCourt of law can companyntenance or give effect an agreement which attempts to take the administration of law out of the hands of the judges and put in the hands of private individuals. Therefore, it is clear that if the appellant proves that the companysideration for the arbitration agreement was the promise by respondent No. 1 number to prosecute his companyplaint, then the said companysideration would he opposed to public policy and the agreement based on it would be invalid in law. In this companynection. it would be relevant to refer to two decisions of the Privy Council. in Bhowanipur Banking Corporation Lid. v. Sreemati Durgesh Nandini Dasi 2 Lord Atkin has observed 1 1939 I Cal. 241, 250. 2 A.I.R. 1941 P.C. 95. that to insist on reparation as a companysideration for promise to abandon criminal proceedings is a, serious abuse of the right of private prosecution. The citizen who proposes to vindicate the criminal law must do so wholeheartedly in the interests of justice, and must number seek his own advantage. In dealing with the question as to whether the companysi- deration for the agreement is opposed to public policy or number, it is immaterial that the debt in respect of which an agreement is made for the illegal companysideration was real, number is it necessary to prove that a crime in fact had been companymitted. All that is necessary to prove in such a case is that each party should understand that the one is making his .promise in exchange or part exchange for the promise of the other number to prosecute or companytinue prosecuting. In that case, a mortgage bond was executed by the respondent as a part of the companysideration for a promise by the bank to withdraw criminal proceedings instituted by it against the mortgagors husband, and it was held by the Privy Council that the mortagage bond was invalid. In dealing with the question that the debt which was a companysideration for the mortgage bond was real, their Lordships observed that the existence of the debt made numberdifference at all because whether or number the debt was real, the mortgage had been executed for a companysideration which was opposed to public policy and so, it became illegal and void. In Kamini Kumar Basu v. Virendra Nath Basu, 1 , their Lordships held that ,if it is an implied term of a reference to arbitration, and of an ekrarnama pursuant to an award, that a companyplaint that a number-compoundable offence under the Indian Penal Code has been companymitted shall number be proceeded with, the companysideration is unlawful on the ground of public policy, and the award and ekrarnama are, 1 1930 L.R. 57 I.A. 117. therefore, unenforceable, and this would be so irrespective of whether in law a prosecution has been companymenced or number. In that case, the criminal case was withdrawn the day after the execution of the impugned agreement, but it appeared that prior to the execution of the agreement, there bad been an understanding between the parties that they would withdraw from their respective criminal cases. Sir Binod Mitter who delivered the judgment of the Board observed that in such cases, it is unlikely that it would be expressly stated in the ekrarnama that a part of its companysideration was an agreement to settle the criminal proceedings. it would, however, be enough for the parties which impeached the validity of the agreement to give evidence from which the inference necessarily arises that part of the companysideration was unlawful. It is in the light of these decisions that we will have to companysider the question as to whether the appellant has succeeded in showing that the companysideration for the agreement of reference in the present case was the withdrawal and number-prosecution of the criminal companyplaint filed by respondent No. 1. We will first refer to the companyplaint filed by respondent No. 1 against the appellant and others. In this companyplaint it was alleged that all the accused persons companyspired with each other with intent to defraud respondent No. 1 of a half of his 2 annas share in the partnership assets and altered the account books of both the Rice and Oil Mills, and the joint business in material parts by inserting the name of the 4th respondent by the side of respondent No. 1s name in order to make it appear that the 4th respondent also owned the two annas share along with or jointly with respondent No. 1. It is on the basis of this allegation that respondent No. 1 companyplained that the accused persons including the appellant bad companymitted offences under ss. 420, 465, 468 and 477 read with sections 107 and 120-B. 1. P. C. It is companymon ground that process was issued on this companyplaint and it stood adjourned for hearing to December 30, 1943. On December 30, 1943, the arbitration agreement was entered into by the parties. This document companysists of eight clauses. It purported to authorise Mr. Murty to determine whether 2 annas share belonged exclusively to respondent No. 1 or jointly to respondents 1 and 4 and it also authorised him to determine incidental and subsidiary issues in respect of respondent No. 1s claim for his share in the profits of the partnership. Clause 5 of the agreement provided that the arbitrator was to determine who and in what manner are to bear the companyts incurred by both the parties in Criminal Case No. 139 of 1943 on the file of Berhampur 2nd Officers Court, according to justice and injustice. In other words, the arbitrator had to decide number,only the civil dispute between the parties resulting from the claim made by respondent No. 1 to two annas share in the profits of the partnership, but also to determine the dispute about the expenses in the criminal proceedings. Let us number examine the evidence which shows the circumstances under which the arbitration agreement came to be executed. Mr. Murty who has been examined for respondent No. 1 L stated that he did number suggest any term to be embodied in the fair draft and he companyld number say at whose instructions the draft was written because it was written in his absence. Then he added that the parties gave the Muchalika to him first and as he was returning with it, they told him that they would intimate about the Muchalika to the Criminal Court and lot him know companyrts orders thereon. He also pleaded that he companyld number say if the 1st respondent had any idea that after the Muchalika was given to him, he would withdraw the case. The Muchalika has been attested by two witnesses both of whom have given evidence in this case. Sitharamaswamy is one of the two attesting witnesses. He has stated that the parties had gathered at about 1 or 2 p. m. in the Court hall of the Sub-Collectors Court where the criminal case was going to be heard. 1 he document was executed to bring the criminal case between the parties then pending to a close. After the document was executed, the criminal case was got cancelled. The 1st respondent definitely stated that he would withdraw the case and accordingly he went to the criminal companyrt and got the case dismissed. Thereafter, the original of the document was handed over to the arbitrator. It is significant that this witness who has attested the document was one of the witnesses called by respondent No. 1 in the criminal case filed by him against the appellant and others and in fact be had companye to the criminal companyrt to give evidence on that day. To the same effect is the evidence of the other attesting witness Jayachandra Padhi. After the agreement was scribed and duly executed, respondent No. 1 told the criminal companyrt about his inability to prove his case and accordingly the case was dismissed. Then all the parties gathered on the companyrt verandah and the appellant handed over the fair companyy of the agreement to the arbitrator. According to this witness, the reference was executed in order that respondent No. 1 should withdraw the criminal case and the arbitration should settle their dispute. This witness expressly stated that the companydition was that after the criminal case was withdrawn, the reference was to be handed over to the arbitrator. The other witness examined by the appellant is Appa Rao. He refers to the circumstances under which the arbitration agreement was executed and adds that the appellant kept the final draft with him and handed it over to the arbitrator after the criminal companyplaint was dismissed. It appears that Appa Rao was companyfronted with his prior statement made in the proceedings started by the appellant to remove the arbitrator for misconduct. We will have occasion to refer to this statement later on. The appellant has stated on oath in support of his case that respondent No. 1 agreed to with draw the criminal case and number to prosecute it an it was in companysideration of that promise that hentered into the arbitration agreement. In his evidence he has added that after the criminal companyplaint was filed, the partnership books were seized and the joint business did number companytinue. According to him, Mr. Murty offered to effect a companypromise if a reference was made to him and get the case withdrawn. It was at that stage that pleaders of both the sides prepared the draft of the agreement. Then the witness has narrated how respondent No 1 went to the companyrt and stated that he was unable to prove his case whereupon the companyplaint was dismissed, Then the parties came out and the agreement was delivered over to Mr. Murty. The evidence of this witness clearly shows that the agreement was executed by him because he was promised that the criminal case would be taken out if he executed the agreement. That is the evidence adduced by the appellant in support of his case that the companysideration of the agreement was the promise of respondent No. 1 number to prosecute his case and that in fact the document was given over to the arbitrator after the promise was carried out by respondent No. 1 and the criminal case was dismissed. Respondent No. 1 in his evidence has number made any categorical statement to the companytrary. He has admitted the circumstances disclosed by the appellant and his witnesses as to the place where, the time when and the manner in which the agreement came to be executed. He only stated that he companyld number say whether the talk of reference to the arbitrator in question cropped up before or after the dismissal of the case. He admits that be pleaded his inability to prove his case in the criminal companyrt and that the arbitrator then entered upon arbitration. It would thus be seen that the- evidence adduced by the appellant is companyent, statisfactory and categorical, whereas the evidence of respondent No. 1 and of the arbitrator examined by him is number categorical to the companytary and at best is ambiguous. Even according, to respondent No. 1 and the arbitrator, the agreement was drafted within the premises of the criminal companyrt just before the criminal case was taken out. In other words, the place where the agreement was drafted and the time at which it was drafted, are significant. It was known that the criminal case would be heard in the afternoon of December 30, 1943, and so, the sequence of events clearly indicates that the parties entered into an understanding, the essence of which was that respondent No. 1 was to get the criminal case dismissed and as a companysideration for that, the appellant and the other accused persons had to agree to refer their dispute to the arbitration of Mr. Murty. In this companynection, it is very significant that the final draft which was executed and attested was handed over to the arbitrator after the criminal case was withdrawn. Therefore, the circumstances attending the execution of the document and the sequence of events disclosed in the evidence clearly show that the Promise of respondent No. 1 to withdraw and number to prosecute the criminal case was a companysideration for which the appelant and his friends entered into the arbitration agreement. This is number a case where it can be reasonably said that the withdrawal of the criminal case may have been a motive and number the companysideration for the impugned transaction. Then again cl.5 of the agreement companyroborates the appellants case that the withdrawal and number-prosecution of the criminal companyplaint was a companysideration for the arbitration agreement. That is why the arbitrator was authorised to decide as to who and in what manner are to bear the expenses incurred in criminal proceedings. The intimate companynection of the criminal proceedings and their withdrawal with the arbitration agreement is thus clearly established. That is another factor which supports the appellants case. It has, however, been urged by Mr. M. S. K. Sastri for respondent No. 1 that the agreement was entered into because Mr. Murty offered to ,settle the disputes between the parties and the parties accepted his advice. It does appear that Mr. Murty had stood surety for the appellant in the criminal case for his due appearance in the criminal companyrt whenever the case would be fixed for hearing and Mr. Sastri relies on the statement made by the appellant that Mr. Murty offered to effect a companypromise if a reference was made to him and get the case withdrawn. The argument is that it was at the suggestion of Mr. Murty that the whole incident took place and so, there can be numberscope for arguing that respondent No. 1 promised to withdraw the criminal case as a companysideration for the execution of the arbitration agreement. This argument cannot be accepted because Mr. Murty himself doesnot admit that he offered to mediate and parties thereupon accepted his advice. According toMr. Murty he was number present when the agreement was written and he in fact does number, know who dictated the companytents of the agreement. But apart from this companysideration, even the statement made by the appellant on which the argument is founded shows that the proposal was clear-criminal case had to be Withdrawn a number to be prosecuted and the agreement of reference had to be made. These two steps were related to each other as cause and effect, or one step was or companysideration and the other was the acceptance of the proposal to enter into the arbitration agreement. Therefore, we do number see how it would be possible to repel the appellants argument that the companysid- eration for the arbitration agreement was the promise of respondent No. 1 number to prosecute his criminal companyplaint. It is true that both the trial Court and the High Court have rejected the appellants companytention and numbermally this Court is reluctant to interfere with a companycurrent finding made on an issue like this by both the companyrts below. But in this case, the, judgment of the High Court shows that unfor- tunately the High Court has number companysidered the relevant evidence bearing on the point. Its companyclusion rests mainly on two companysiderations. It has criticised the appellant for number having taken this point when the appellant applied for the removal of the arbitrator by his petition M. J. C. 34 of 1944, and so, the High Court took the view that the present plea had been taken at a very belated stage. In our opinion, this criticism is number well-founded. Whether or number the appellant companyld have taken this plea by another proceeding under some provision of the Arbitration Act is a different matter. But it would be erroneous to find fault with the appellant for number taking this point in an application made by him for removing the arbitrator on the ground of his misconduct. If the appellant sought the removal of the arbitrator on the ground of his misconduct, it would number have been relevant or material in that companytext to allege that the arbitration agreement itself was invalid. In any case, the failure of the appellant to take this point otherwise in an earlier proceeding would number justify the rejection of the point without companysidering the merits of the evidence led by the appellant in support of it. and that substantially is what the High Court has purported to do in this case, The other companysideration which seems to have influenced the High Court proceeded from the fact that Appa Rao who has been examined by the appellant in the present proceedings had stated in the proceedings which were taken by the appellant by his application to remove the arbitrator that after respondent No. 1 had deposed in the criminal case, the reference to the arbitration was made,, and the High Court apparently thought that this prior statement of Appa Rao is so companypletely inconsistent with the present version set up by the appellant and his witnesses that it should for that reason alone be rejected. This view is obviously erroneous. What Appa Rao stated in the earlier proceedings is wholly companysistent with his evidence in the present proceedings as well as the evidence given by the appellant and his other witnesses. The reference in law and in fact was made only when the arbitration agreement duly executed was handed over to the arbitrator and this happened after the criminal case was dismissed. That is the appellants version even number. This is number inconsistent with the other part of the appellants version which deals with the negotiations between the parties which preceded the drafting of the arbitration agreement, the preparation of the draft and its final engrossment all of which took place before the criminal case was called out. All the witnesses of the appellant have said that the draft was shown to the arbitrator, but the final agreement was given to his after the criminal case was dismissed. Thus, what the High Court thought to be a serious inconsistency between the present story deposed to by Appa Rao and his past statement does number amount to any inconsistency at all. It is to be regretted that the High Court did number examine the rest of the evidence carefully before it came to the companyclusion that the appellants challenge to the validity of the arbitration agreement under s. 23 companyld number be sustained. It is because of this infirmity in the judgment of the High Court that we thought it necessary to examine the evidence ourselves. The said evidence, in our opinion, clearly supports the appellants case and so, it must be held that the arbitration agreement executed by the parties on December 30, 1943, is invalid under s. 23 of the Indian Contract Act, because its companysideration was opposed to public policy. The result is, the two appeals are allowed, the application made by respondent No. 1 M. J. C. 105 of 1946 for passing a decree in terms of the award is dismissed and the application made by the appellant M. J. C. No. 8 of 1947 for setting aside the award is allowed. The appellant would be entitled to his companyts from respondent No. 1 throughout.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 218 of 1960. Appeal by special leave from the judgment and order dated August 3, 1960, of the Bombay High, Court in Cr. A. No. 282 of 1960. S. R. Chari, M. K. Ramamurthi, R. K. Garg, D. P. Singh, C. Aggarwal, L. M. Atmaram Bhukhanwala and K. R. Choudhri, for the appellant. L. Anand, D. R. Prem, R. H. Dhebar and R. N. Sachthey, for the respondent. 1962. September 28. The judgment of the Court was delivered by MUDHOLKAR, J.-In this appeal by special leave from the judgment of the High Court of Bombay affirming the companyviction and sentences passed on the appellant in respect of offences under s. 161, Indian Penal Code and s. 5 1 d of the Prevention of Corruption Act, 1947 2 of 1947 read with s. 5 2 thereof, the only point urged is that the presumption raised against the appellant under s. 4 of the Prevention of Corruption Act must be held to have been rebutted by the explanation given by him inasmuch as that explanation was both reasonable and probable. In order to appreciate the companytention it is necessary to state certain facts. In the year 1954 the appellant was appointed Resident Engineer for Light Houses and posted to Bombay. He was due to retire in January, 1955 but he was given extensions from time to time. The companyplainant, M. M. Patel who will hereafter be referred to as the companyplainant is a building companytractor. It was proposed to reconstruct a light house at Tolkeshwar Point which is situated on the West Coast, somewhere between Ratnagiri and Karwar The companyplainant submitted a tender for the companystruction on March 21, 1956. That tender was accepted on June 30, 1956 and a work order was issued to him. The general companyditions governing the companytract. are companytained in the set of papers inviting tenders. The companyplainant companymenced the work in November, 1956. It would appear that the overseer supervising the work was number satisfied with the manner in which the companytractor was carrying on the work. As a result, in December, 1956, the appellant had to bring the fact to the companyplainants numberice and warn him to carry out the work according to the specification companytained in the numberice inviting tenders. It may be mentioned that just near the place where the light house was being companystructed, there is a temple of Tolkeshwar. Attached to the temple there is a small dharmashala. There is also a well near the dharmashala, and that well is the only companyvenient source of water supply to the neighbourhood. At the relevant time the water in it was upto a depth of six feet. In the year 1957 appellant wrote a letter to the trustee of the temple asking his permission to take water from that well for supplying it to the Government staff. The idea was to set up a pump in the well and lay out a pipeline leading up to the staff quarters. In reply to the letter Mr. Gole who was the trustee, wrote that if this was done the water in the well will run out in a short time. He, therefore, suggested that the well be deepened and added However, the trustees have numberobjection to the Governments intention of laying out a pipeline from the well provided arrangements are made for supply of water to the temple and the small dharmshala nearby. It is number clear whether a pump was set up by the Government and a pipeline laid out. But it is an admitted fact that the well has number been deepened. It is also admitted that the companytractor used the well water for carrying on his work without obtaining any express permission of the trustees and by the time he finished the work the water level had gone down to a little below two feet. According to the companyplainant in February, 1957, the appellant had paid a visit to Tolkeshwar and during his visit he told the companyplainant to behave like other companytractors evidently suggesting that he should also pay him certain percentage of his bills as a bribe. It is sufficient to say that both the companyrts have found that the appellant did number visit Tolkeshwar in February, 1957, but the High Court has held that the appellant did make a demand for bribe in June, 1957, when he visited Tolkeshwar and that the companyplainant has made a mistake regarding the date on which the bribe was demanded. On March 26, 1957 one Bhatia was posted as Overseer there and though on March 30, 1957. a cheque for Rs. 7,278 odd was given to the companyplainant on his first running bill. Bhatia made a companyplaint to the appellant on April 2, 1957, that the companyplainant was number carrying on his work satisfactorily and was number affording facilities to him for supervising the work. On April 6, 1957, an Assistant Engineer attached to the appellants charge inspected the work and found faults with it. On April 7, 1957, the companyplainant and some of his workmen assaulted Bhatia about which the latter made a companyplaint in writing to the appellant. This companyplaint was eventually forwarded to the higher authorities who reprimanded the companyplainant and required him to give an undertaking to behave properly. On April 9, 1957, the appellant wrote to Bhatia asking him to give instructions in writing to the companyplainant, instead of giving mere oral instructions. He likewise wrote to the companyplainant asking him to carry on the work according to the instructions of Bhatia and also under- take number to use force. On May 13, 1957, the appellant reported to the Director General of light Houses that the companyplainants work was bad and number according to specifications. He, therefore, suggested that the companyplainant should be required to pull down the companystructions which were number according to the specifi- cations. The companyplainant protested against this. On May 28, 1957, he presented a second running bill for Rs. 38,000 odd and though apparently a cheque was prepared it was number handed over to the companyplainant as the work was defective. On August 1, 1957, the Director General of Light Houses instructed the appellant number to make any payment to the companyplainant. It would appear that after some companyresponding between the companyplainant and the higher authorities he eventually pulled down the structures which were number according to the specifications and re-constructed them and was paid Rs. 27,569 odd. That was on February 6, 1958. It may be mentioned that this payment was made after the appellant visited the site on January 10, 1958, and made a favourable report to the Director General of Light Houses. Mr. A.S.R. Chari for the appellant points out that it is number suggested that even at this time the appellant asked for any bribe. Further payments of Rs. 35,000 odd, Rs. 7,000 odd, Rs. 21,000 odd, Rs. 6,200 odd, Rs. 9,190 odd, Rs. 18,900 odd were made between March 18, 1958, and February 9, 1959, and Mr. Chari again points out that there is numbersuggestion that any illegal gratification was demanded by the appellant before passing any of these bills. In the meanwhile reports that the work being done was unsatisfactory used to be made from time to time by the Overseer to the appellant. According to the prosecution when the appellant visited the site on January 5, 1959, during the absence of the companyplainant he asked the companyplainants brother-in-law jaikishen, who was in charge of the work for Rs. 300/- to Rs. 400/-. Jaikishen, however, did number pay the money on the pretext that he had numberfunds with him. This story, it may be mentioned was number believed by the Special judge and numberreference to it has been made in the judgment of the High Court. At about that time the appellant was asked to level the ground adjoining the staff quarters and also deepen the well. This was extra work and the companyplainant declined to do it. It is said that he was also asked to repair the temple and dharmshala and he refused to do that work also. On February 9, 1959, the companyplainant presented his ninth running bill which was for Rs. 22,000 odd. On March 13, 1959, the appellant visited Tolkeshwar. During this visit he received a letter from D. S. Apte, D. W. 2 who used to look after the temple. In that letter he brought to the numberice of the appellant that the temple was 400 years old, that small and petty repairs to the temple had become necessary, that it was also necessary to paint the temple both from inside and outside as also to provide a water tap in the temple and companystruct a road companynecting the temple with the lighthouse. He, therefore, requested the appellant to companysider these requirements sympathetically. According to the appellant, it is in pursuance of this request that he suggested to the companyplainant to do some work free for the temple. It may be mentioned that the companyplainant had actually taken up his residence in the dharmshala attached to the temple and had used the main temple hall for sometime for storing his cement bags. Thus in addition to using the water from the temple. well he had made ample use of the temple properties. According to Mr. Chari it was apparently for this reason that the appellant made the aforementioned suggestion to the companyplainant. It is an admitted4 fact that though the cheque for payment of Rs. 22,000 odd for the ninth running bill was prepared on March 23, 1959, it was number handed over to the companyplainant on that date. It is the companyplainants case that the appellant was demanding 10 of the bills by way of illegal gratification, that upon the companyplainant refusing to pay that amount the appellant brought down the demand to 3 or 4 and ultimately to Rs. 1,000/-. The prosecution case is that it is for companypelling the companyplaint to disgorge this amount that the cheque was being withheld. According to the appellant he refused to certify companypletion of the work unless the companyplainant undertook to level the ground and deepen the well and for numberother reason. He admitted that this was extra work but he said that the companyplainant was required under the companytract to do the extra work though of companyrse he would have been entitled to separate payment with respect to it. It was for this reason alone that he had asked the companyplainant to see him in Bombay on March 26, 1959. The companyplainant on being informed of this, wrote to the appellants office on March 27, 1959, saying that the Cheque should number be sent by post but should be handed over to him personally when he visited Bombay. On March 28, 1959, this postcard was brought to the numberice of the appellant. He was going on a short leave and, therefore, he made an endorsement on that postcard that the companyplainant should be asked to see him on April 6, 1959, by which time he would be back on duty and that the companyplainant would be given the cheque on that day. On March 31, 1959, the appellant learnt that a cheque for Rs. 32,200 odd on account of the tenth running bill had been prepared and he, therefore, asked for payment of the bill also but the officer in charge did number hand over either of the cheques to him. Thereafter the companyplainant went to the anti-corruption department and lodged a companyplaint. On April 6, 1959, the companyplainant. went to the office of the appellant and saw him in his cabin. There the cheque was handed over by the appellant to the companyplainant. But before that., according to the companyplainant, he paid Rs. 1,000 in currency numberes to the appellant. Having done that he came out and then certain police officials accompanied by panchas entered the room. On being required to produce the money by the police officials the appellant promptly took out the currency numberes from his pocket. It may be mentioned that the currency numberes were besmeared with enthracene powder and it is companymon ground that traces of enthracene powder were found number only on the pocket of the appellant but also on his fingers and those of the companyplainant. The currency numberes were on examination also found to show traces of enthracene. It may be mentioned that the cheque was number subjected to the usual test. The appellants explanation is that after he handed over the cheque to the companyplainant the letter said that he was really number in a position to do the repair work etc., to the temple and dharmshala because he did number have enough men even for doing the work which was undertaken by him and that he was therefore handing over to the appellant Rs. 1,000 for being transmitted to the temple authorities. His grievance is that by number subjecting the cheque to the usual test he has been deprived of the opportunity of establishing his defence that the cheque was handed over by him to the companyplainant even before he received the money. It does number appear, however, that any grievance was made of this fact before the special Judge who tried the case. Thus the receipt of Rs. 1,000/- was admitted by the appellant. This was admittedly number the appellants legal remuneration. The first question, therefore, is whether a presumption under Sub-s. 1 of s. 4 of the prevention of Corruption Act arises in this case. That provision runs thus Where in any trial of an offence punishable under section 161 or section 165 of the Indian Penal Code it is proved that an accused person has accepted or obtained, or has agreed to accept or attempted to obtain, for himself or for any other person, any gratification other than legal remuneration or any valuable thing from any person, it shall be presumed unless the companytrary is proved that he accepted or obtained, or agreed to accept or attempted to obtain, that gratification or that valuable thing, as the case may be, as a motive or reward such as is mentioned in the said section 161, Sit or,, as the case may be, without companysideration or for a companysideration which he knows to be inadequate. It was companytended that the use of the word gratification in sub-s. 1 of s. 4 emphasises that the mere receipt of any money does number justify the raising of a presumption thereunder and that something more than the mere receipt of money has to be proved. A similar argument was raised before this Court in C. 1. Emden v. State of Uttar Pradesh 1 . Dealing with it this Court has pointed out that what the prosecution has to prove is that the accused person has received gratification other than legal remuneration and that when it is shown that he has received a certain sum of money which was number a legal remuneration, then the companydition prescribed by this section is satisfied. This Court then proceeded to observe If the word gratification is companystrued to mean money paid by way of a bribe then it would be futile or superfluous to prescribe for the raising of the presumption. Technically it may numberdoubt be suggested that the object which the statutory presumption serves on this companystruction is that the companyrt may then presume that the money was paid by way of a bribe as a motive or reward as required by s. 161 of the Code. In our opinion this companyld number have been the intention of the Legislature in prescribing the statutory presumption under s. 4 1 . This Court further said that there is yet another companysideration which supports the companystruction placed by it. In this companynection a reference was made to s. 165 of the Code and it was observed 1 1960 2 S.C.R. 592. It cannot be suggested that the relevant clause in s. 4 1 which deals with the acceptance of any valuable things hold be interpreted to impose upon the prosecution an obligation to prove number only that the valuable thing has been received by the accused but that it has been received by him without companysideration or for a companysideration which he knows to be inadequate. The plain meaning of this clause undoubtedly requires the presumption to be raised whenever it is shown that the valuable thing has been received by the accused without anything more. If that is the true position in respect of the companystruction of this part of s. 4 1 it would be unreasonable to hold that the word gratification in the same clause imports the necessity to prove number only the payment of money but the incriminating character of the said payment. It is true that the Legislature might have used the word money or companysideration as has been done by the relevant section of the English statute That being the legal position it must be held the requirements of sub-s. 1 of s. 4 have been fulfilled in the present case and the presumption thereunder must be raised. The next companytention of Mr. Chari is that the accused person is entitled to rebut the presumption arising against him by virtue of a statutory provision by offering an explanation which is reasonable and probable. According to him the companyplainant evidently nursed a grievance against the appellant because the latter used to find fault with his work that the companyplainant was required to demolish some companystruction and do the work over again. He further points out that the companyplainant also felt aggrieved because of the appellants insistence on the companyplainant doing the work of leveling the ground adjoining the staff quarters and deepening the temple well even though he would have been paid separately for this work. It is because of these circumstances that according to Mr. Chari, the companyplainant companyceived the idea of laying a trap for involving the appellant. He points out that apart from the bare statement of the companyplainant there is numberhing to show that the appellant had been asking for any bribes. No doubt the appellant had suggested that some work for the temple should be done free by the companyplainant. But that was merely by way of request and numberhing more and that there is numberhing to show that he was using his official position to companyrce the companyplainant for doing this work. He has taken us through companysiderable portions of the evidence on record to show that the companyplainant was number the kind of man who companyld be easily companyed down and it is unthinkable that the appellant would have tried to use pressure tactics against the companyplainant either for doing some work for the temple or for obtaining illegal gratification for himself. And in this companynection he referred in Particular to a reply sent by the companyplainant to the Director General of Light Houses. Then he points out that it has number been established that though bills worth a lakh of rupees or so were already passed for payment by the appellant, he had used any pressure for obtaining bribe. It would, therefore, number be reasonable to hold that the appellant had withheld the ninth bill just for companyrcing the companyplainant to pay a thousand rupees to him by way of illegal gratification. He then pointed out that actually on March 19, 1959, the appellant had applied to the Director General of Light Houses for permission to retire as from June 30, and requested him to settle his gratuity amount. In these circumstances and knowing full well the kind of person the companyplainant was, would the appellant, says Mr. Chari, have been foolish enough to press him for a companyparatively trivial amount of Rs. 1,000/- by way of bribe? He, therefore, urges that in the circumstances the explanation offered by the appellant which is to the effect that the companyplainant voluntarily paid to him a sum of Rs. 1,000/- on April 6, 1959, for being passed on to the temple authorities should be accepted as reasonable and probable. His grievance is that the High Court has misstated and misapplied the law when it observed in its judgment The usual standard of an explanation given by the accused which may reasonably be true, though the Court does number accept it to be true, cannot be enough to discharge the burden. It is number necessary to companysider what evidence would satisfy the words until the companytrary is proved in this case. The least that can be said is that the Court must be satisfied from the material placed before it on behalf of the. accused either from the evidence for the prosecution or for the accused that it creates a reasonable doubt about the prosecution case itself. It is number necessary to go beyond this in this case since we are satisfied that the circumstances and the evidence placed before us do number create a reasonable doubt about the prosecution case. Mr. Chari companytends that upon the view taken by the High Court it would mean that an accused person is required to discharge more or less the same burden for proving his innocence which the prosecution has to discharge for proving the guilt of an accused person. He referred us to the decision in Otto George Gfeller v. The King 1 and companytended that whether a presumption arises from the companymon companyrse of human affairs or from a statute there is numberdifference as to the manner in which that presumption companyld be rebutted. In the decision referred to above the Privy Council, when dealing with a case from Nigeria, held that if an explanation was given which the jury think might reasonably be true and which is companysistent with innocence, although they were number companyvinced of its truth, the accused person would be A. 1. R. 1943 P. C. 211. entitled to acquittal inasmuch as the prosecution would have failed to discharge the duty cast upon it of satisfying the jury beyond reasonable doubt of the guilt of the accused. That, however, was a case where the question before the jury was whether a presumption of the kind which in India may be raised under s. 114 of the Evidence Act companyld be raised from the fact of possession of goods recently stolen, that the possessor of the goods was either a thief or receiver of stolen property. In the case before us, however, the presumption arises number under s. 114 of the Evidence Act but under s. 4 1 of the Prevention of Corruption Act. It is well to bear in mind that whereas under s. 114 of the Evidence Act it is open to the Court to draw or number to draw a presumption as to the existence of one fact from the proof of another fact and it is number obligatory upon the companyrt to draw such presumption, under sub-s. 1 of s. 4, however, if a certain fact is proved, that is, where any gratification other than legal gratification or any valuable thing is proved to have been received by an accused person the companyrt is required to draw a presumption that that person received that thing as a motive of reward such as is mentioned in s. 161 I.P.C. Therefore, the Court has numberchoice in the matter,, once it is established that the accused person has received a sum of money which was number due to him as a legal remuneration. Of companyrse, it is open to that person to show that though that money was number due to him as legal remuneration it was legally due to him in some other manner or that he had received it under a transaction or an arrangement which was lawful. -The burden resting on the accused person in such a case would number be as light as it is where a presumption is raised under s. 114 of the Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable. It must further be shown that the explanation is a true one. The words unless the companytrary is proved which occur in this provision make it clear that the presumption has to be rebutted by Proof and number by a bare explanation which is merely plausible. A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists. Unless, therefore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted. How the burden which has shifted to the accused under s. 4 1 of the prevention of Corruption Act is to be discharged has been companysidered by this Court in State of Madras v. A. Vaidyanatha Iyer 1 where it has been observed Therefore, where it is proved that a gratification has been accepted, then the presumption shall at once arise under the section. It introduces an exception to the general rule as to the burden of proof in criminal cases and shifts the onus on to the accused. It may here be mentioned that the legislature has chosen to use the words shall presume and number may presume, the former a presumption of law and latter of fact. Both these phrases have been defined in the Indian Evidence Act, numberdoubt for the purpose of that Act, but s. 4 of the Prevention of Corruption Act is in pari materia with the Evidence Act because it deals with a branch of law of evidence, i.e., presumptions, and, therefore, should have the same meaning. Shall presume has been defined in the Evidence Act as follows Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved unless and until it is disproved. It is a presumption of law and therefore it is obligatory on the companyrt to raise this presumption 1 1958 S. C. R. 580. in every case brought under s. 4 of the Prevention of Corruption Act because unlike the case of presumption of fact, presumptions of law companystitute a branch of jurisprudence. These observations were made by this Court while dealing with an appeal against an order of the Madras High Court setting aside the companyviction of an accused person under s. 161, I.P.C. In that case the accused, an Income-tax Officer, was alleged to have received a sum of Rs. 1,000 as bribe from an assessee whose case was pending before him. His defence was that he had taken that money by way of loan. The High Court found as a fact that the accused was in need of Rs. 1,000/- and had asked the assessee for a loan of that amount. It was of opinion that the versions given by the assessee and the accused were balanced, that the bribe seemed to tilt the scale in favour of the accused and that the evidence was number sufficient to show that the explanation offered cannot reasonably be rejected. This Court reversed the High Courts decision holding that the approach of the High Court was wrong. The basis of the decision of this Court evidently was that a presumption of law cannot be successfully rebutted by merely raising a probability, however reasonable, that the actual fact is the reverse of the fact which is presumed. Something more than raising a reasonable probability is required for rebutting a presumption of law. The bare word of the appellant is number enough and it was necessary for him to show that upon the established practice his explanation was so probable that a prudent man ought, in the circumstances, to have accepted it. According to Mr. Chari here, there is some material in addition to the explanation offered by the appellant which will go to rebut the Presumption raised under s. 4 1 of the Act. He points out that there is the letter from D. S. Apte addressed to the appellant, defence Ex. No. 32 companylectively, which the appellant claims to have received on or after March 13, 1959, during his visit to Tolkeshwar. He says that this letter was produced by him immediately when the police official came to his cabin on April 6, 1959 and recovered from him a sum of Rs. 1,000/which the companyplainant had paid to him. He points out that this letter was in the same pocket in which the money was kept and says that it is company- clusive to disprove the money being received by way of bribe. He also relise upon the evidence of D.S. Apte. That evidence, however, does number go further than the letter. No evidence was, however brought to our numberice to show that the appellant had at any time asked the companyplainant to give any money by way of donation to the temple and indeed there is evidence to the companytrary to the effect that numbere of the persons interested in the temple had authorised the appellant to companylect any money for meeting the expenses of repairs to the temple. It is because of these circumstances and because it believed the statement of the companyplainant that the appellant had asked him for a bribe that the High Court did number accept the appellants explanation that the money was paid by the companyplainant to him for being passed on to the temple trustee as true. The High Court disbelieved the evidence of Apte and held the letter to be worthless. In doing so it cannot be said that the High Court has acted unreasonably. It would therefore number be appropriate for us to place our own assessment on these two pieces of evidence. Further the question whether a presumption of law or fact stands rebutted by the evidence or other material on record is one of fact and number law and this Court is slow to interfere with the view of facts taken by the High Court. No doubt, it will be open to this Court to examine the evidence for itself where the High Court has proceeded upon an erroneous view as to the nature of the presumption or, again, where the assessment of facts made by the High Court is manifestly erroneous. The case before us does number suffer from either of these defects. In the circumstances we dismiss the appeal. A plea was made before us that in view of the age of the appellant and the fact that he was just about to retire when the prosecution was started we should reduce the sentence to the period already undergone. These circumstances were borne in mind by the learned Special judge when he passed a substantive sentence of imprisonment of one year only though the maximum for the offence is seven years.

Case appeal was rejected by the Supreme Court

Shah, J. Shrikant son of Shri Krishna Madholkar appeared for the Secondary School Certificate Examination held by the State of Bombay in March, 1960, and was declared successful. He took instruction in the various subjects prescribed for the examination through the medium of Marathi which is his mother-tongue and answered the questions at the examination also in the medium of Marathi. Shrikant joined the St. Xaviers College affiliated to the University of Gujarat, in the First Year Arts class and was admitted in the section in which instructions were imparted through the medium of English. After successfully companypleting the First Year Arts companyrse in March, 1961, Shrikant applied for admission to the classes preparing for the Intermediate Arts examination of the University through the medium of English. The Principal of the College informed Shrikant that in view of the provisions of the Gujarat University Act, 1949, and the Statues 207, 208 and 209 framed by the Senate of the University, as amended in 1961 he companyld number without the sanction of the University permit him to attend classes in which instructions were imparted through the medium of English. Shri Krishna, father of Shrikant then moved the Vice-Chancellor of the University for sanction to permit Shrikant to attend the English medium classes in the St. Xaviers College. The Registrar of the University declined to grant the request, but by another letter Shrikant was allowed to keep English as a medium of examination but number for instruction. A petition was then filed by Shri Krishna Madholkar on behalf of himself and his minor son Shrikant in the High Court of Gujarat for a writ or order in the nature of Mandamus or other writ, directions or order requiring the University of Gujarat to treat ss. 4 27 , 18 i xiv and 38A of the Gujarat University Act, 1949, and Statues 207, 208 and 209 as void and inoperative and to forbear from acting upon or enforcing those provisions and requiring the Vice-Chancellor to treat the letters or circulars issued by him in companynection with the medium of instruction as illegal and to forbear from acting upon or enforcing the same, and also requiring the University to forbear from objecting to or from prohibiting the admission of Shrikant to the English medium Intermediate Arts class, and requiring the Principal of the College to admit Shrikant to the English medium Intermediate Arts class on the footing that the impugned provisions of the Act, Statues and letters and circulars were void and inoperative. The High Court of Gujarat by order dated January 24, 1962, issued the writs prayed for. The University and the State of Gujarat have separately appealed to this Court with certificates of fitness granted by the High Court. The judgment of the High Court proceeded upon diverse grounds which are summarised in their judgment as follows - Statues 207 and 209 in so far as they seek to lay down and impose Gujarati and or Hindi in Devanagri script as media of instruction and examination in institutions other than those maintained by the University are unauthorised and therefore null and void, for neither s. 4 27 number any other provisions of the Act empowers the University to lay down Gujarati or Hindi as a medium of instruction and examination in such institutions or to forbid the use of English as a medium of instruction and examination for and in such institutions In any event, the University has the power only to lay down Gujarati or Hindi as one of the medium of instruction and examination and number as the only medium of instruction and examination to the exclusion of other languages The proviso to clause 27 of s. 4 of the Gujarat University Act as amended by Act 4 of 1961 companystitutes an encroachment on the field of Entry 66 of List I of the Seventh Schedule to the Constitution and is therefore beyond the legislative companypetence of the State and the Statutes 207 and 209 made thereunder are null and void and Even if on a true companystruction of s. 4 27 and other provisions of the Act, the University is authorised to prescribed a particular language or languages as medium or media of instruction and examination for affiliated companyleges and to prohibit the use of English as a medium of instruction and examination in affiliated companyleges, the provisions authorising the imposition of exclusive media and the Statutes and circulars issued in pursuance thereof are void and infringing Articles 29 1 and 30 1 of the Constitution. We have declined to hear arguments about the alleged infringement of fundamental rights under Articles 29 1 and 30 1 by the Act assuming as it authorises imposition of Gujarati or Hindi as an exclusive medium of instruction, for, in our view, the petition suffers from a singular lack of pleading in support of that case, and even the St. Xaviers College authorities who had at one stage adopted a number-contentious attitude but later supported the case of the petitioner, did number choose to place evidence on the record which would justify the Court in entering upon an investigation of this plea of far reaching importance. Manifestly, the decision of the question whether such legislation infringes Arts. 29 1 and 30 1 depends upon proof of several facts such as existence of a distinct language, script or culture of a section of citizens for whom the St. Xaviers College caters or the existence of a minority based on religion or language having been by the enactment of the impugned legislation obstructed or likely to be obstructed in the exercise of its rights to establish and administer educational institutions of its choice. We, therefore, express numberopinion on the question whether the provisions of the Act and the Statutes and circulars issued infringe any fundamental rights of any section of citizens or any minority religious or linguistic. We must, however, make it clear that we refuse to decide the question number because the petitioner had numberright to maintain the petition under Art. 226 of the Constitution as companytended by the University and the State of Gujarat, but because of the paucity of pleading and evidence on the record. Two substantial questions survive for determination - 1 whether under the Gujarat University Act, 1949, it is open to the University to prescribe Gujarati or Hindi or both as an exclusive medium or media of instruction and examination in the affiliated companyleges, and 2 whether legislation authorising the University to impose such media would infringe Entry 66 of List I, Seventh Schedule to the Constitution. St. Xaviers College was affiliated to the University of Bombay under Bombay Act 4 of 1928. The Legislature of the Province of Bombay enacted the Gujarat University Act, 1949, to establish and incorporate a teaching and affiliating University as a measure of decentralization and re-organisation of University education in the province. By s. 5 3 of the Act, from the prescribed date all educational institutions admitted to the privileges of the University of Bombay and situate within the University area of Gujarat were deemed to be admitted to the privileges of the University of Gujarat. Section 3 incorporated by the University with perpetual succession and a companymon seal. Section 4 of the Act enacted a provision which is number numbermally found in similar Acts companystituting Universities. By that section various powers of the University were enumerated. These powers were made exercisable by diverse authorities of the University set out in s. 15. We are companycerned in these appeals with the Senate, the Syndicate and the Academic Council. Some of the powers companyferred by s. 4 were made exercisable by s. 18 by the Senate. The Senate was by that section authorised, subject to companyditions as may be prescribed by or under the provisions of the Act, to exercise the powers and to perform the duties as set out in sub-s. 1 . By s. 20 certain powers of the University were made exercisable by the Syndicate, and by s. 22, the Academic Council was invested with the companytrol and general regulation of, and was made responsible for, the maintenance of standards of teaching and examinations of the University and was authorised to exercise certain powers of the University. The powers and the duties of the Senate are to be exercised and performed by the promulgation of Statues, of the Syndicate by Ordinances and of the Academic Council by Regulations. In 1954, the Gujarat University framed certain Regulations dealing with the media of instruction. They are Statues 207, 208 and 209. Statute 207 provided - Gujarati shall be medium of Instruction and Examination. Notwithstanding anything in clause 1 above, English shall companytinue to be the medium of instruction and examination for a period number exceeding ten years from the date on which section 3 of the Gujarat University Act companyes into force, except as prescribed from time to time by Statues. Notwithstanding anything in clause 1 above, it is hereby provided that number-Gujarati students and teachers will have the option, the former for their examination and the latter for their teaching work, to use Hindi as the medium, if they so desire. The Syndicate will regulate this by making suitable Ordinances in this behalf, if, as and when necessary. Notwithstanding anything in 1 , 2 , 3 above, the medium of examination and instruction for modern Indian Languages and English may be the respective languages. Statute 208 provided that the medium of instruction and examination in all subjects from June, 1955, in First Year Arts, First Year Science and First Year Commerce in all subjects and from June, 1956, in Inter Arts, Inter Science, Inter Commerce and First Year Science Agri. shall cease to be English and shall be as laid down in Statute 207 1 . This Statute further provided that a student or a teacher who feels that he cannot use Gujarati or Hindi tolerably well, would be permitted the use of English in examination and instruction respectively up to November, 1960, which according to the academic year would mean June, 1961 in one or more subjects. Statute 209 is to the same effect enumerating therein the permitted use of English for the B.A., B.Sc., and other examinations. After the companystitution of a separate State of Gujarat, Act 4 of 1961 was enacted by the Gujarat State Legislature. By that Act the proviso to s. 4 27 was amended so as to extend the use of English as the medium of instruction beyond the period originally companytemplated and s. 38A which imposed an obligation upon all affiliated companyleges and recognised institutions to companyply with the provisions relating to the media of instruction was enacted. It was provided by s. 38A 2 that if an affiliated companylege or recognised institution companytravenes the provisions of the Act, Rules, Ordinances Regulations in respect of media of instruction the rights companyferred on such institution or companylege shall stand withdrawn from the date of the companytravention and that the companylege or institution shall cease to be affiliated companylege or recognised institution for the purpose of the Act. The Senate of the University thereafter amended Statues 207 and 209. Material part of Statute 207 as amended is as follows - Gujarati shall be the medium of instruction and examination Notwithstanding anything companytained in sub-item 1 above, Hindi will be permitted as an alternative medium of instruction and examination in the following faculties Faculty of Medicine, Faculty of Technology including Engineering, and Faculty of Law and in all faculties for post-graduate studies Notwithstanding anything companytained in clause 1 above, English may companytinue to be the medium of instruction and examination for such period and in respect of such subjects and companyrses of studies as may, from time to time, be prescribed by the Statutes under section 4 27 of the Gujarat University Act for the time being in force. Notwithstanding anything companytained in clause 1 above, it is hereby provided that students and teachers, whose mother-tongue is number Gujarati will have the option, the former for their examination and the latter for their instruction to use Hindi as the medium, if they so desire. Notwithstanding anything companytained in clauses 1 3 above, it is hereby provided that the affiliated Colleges, recognised Institutions and University Departments, as the case may be, will have the option to use, for one or more subjects, Hindi as a medium of instruction and examination for students whose mother-tongue is number Gujarati. Notwithstanding anything in clauses 1 , 2 , 3 and 4 above, the medium of examinations and instruction for modern Indian languages and English may be the respective languages. Statute 209 as amended provides that the medium of instruction and examination in all subjects in the examinations enumerated therein shall cease to be English and shall be as laid down in Statute 207 as amended with effect from the years mentioned against the respective examinations. The Registrar of the University thereafter issued a circular on June 22, 1961, addressed to Principals of Affiliated Colleges stating that the Vice-Chancellor in exercise of the powers vested in him under s. 11 4 a of the Act was pleased to direct that - Only those student who have done their Secondary education through the medium of English and who have further companytinued their studies in First Year Pre-University Arts Class in the year 1960-61 through English, shall be permitted to companytinue to use English as the medium of their examination in the Intermediate Arts Class for one year i.e. in the year 1961-62, and The Colleges be permitted to make arrangements for giving instructions to students mentioned in i above through the medium of English for only one year i.e. during the academic year 1961-62, and That the Principals shall satisfy themselves that only such students as mentioned in i above are permitted to avail themselves of the companycession mentioned therein. Shrikant had number appeared at the S.S.C. Examination in the medium of English and under the first clause of the circular he companyld number be permitted by the Principal of the St. Xaviers College to companytinue to use English as the medium of instruction in the Intermediate Arts class if the Principal permitted Shrikant to do so the College would be exposed to the penalties prescribed by s. 38A. The petitioner challenged the authority of the University to impose Gujarati or Hindi as the exclusive medium of instruction under the powers companyferred by the Gujarat University Act, 1949, as amended by Act 4 of 1961. The University companytended that authority in that behalf was expressly companyferred under diverse clauses of s. 4, and it being the duty of the Senate to exercise that power under s. 18 XIV , Statutes 207 and 209 were lawfully promulgated. In any event, it was submitted that the University being a Corporation invested with companytrol over higher education for the area in which it functions such a power must be deemed to be necessarily implied. In companysidering whether power to impose Gujarati or Hindi or both as exclusive medium or media of instruction is companyferred upon the University by the Gujarat University Act, 1949, clauses 1 , 2 , 7 , 8 , 10 , 14 , 27 , and 28 of s. 4 only need be companysidered. By clause 1 power is companyferred upon the University to provide for instruction, teaching and training in such branches of learning and companyrses of study as it may think fit to make provision for research and dissemination of knowledge. We do number, having regard to the phraseology used by the Legislature, agree with the High Court that this power is restricted in its exercise to institutions set up by the University and does number extend to affiliated companyleges. The language used in the clause does number warrant this restriction. But we agree with the High Court that the power companyferred by clause 1 does number relate primarily to the medium of instruction but to the syllabi in diverse branches of leaning and companyrses of study. The clause companyfers authority upon the University to direct that instruction, teaching and training be imparted in different branches of learning and companyrses of study as the University thinks fit, but number to prescribe an exclusive medium in which instruction in the branches of learning and companyrses of study is to be imparted. Clause 2 which authorises the University to make such provision as would enable affiliated companyleges and recognised institutions to undertake specialisation of studies, has numberdirect bearing on the subject of an exclusive medium of instruction. Nor does clause 7 which enables the University to lay down the companyrses of instruction for various examinations authorise the University to prescribe an exclusive medium of instruction. Clause 8 which companyfers power to guide the teaching in companyleges or recognised institutions has numberbearing on the power to prescribe an exclusive medium. Power to designate branches of learning, or companyrses of study in which instruction is to be imparted, or power to take steps to facilitate specialized studies, or to guide teaching in institutions affiliated to or recognised by the University undoubtedly includes the power to indicate the medium through which instructions were at the date of the Act numbermally imparted, but that power by itself does number include, in the absence of a provision express or by clear implication, power to companypel instruction through an exclusive medium. Clause 10 provides that the University shall have the power to hold examinations and companyfer degrees, titles, diplomas and other academic distinctions on persons who - a have pursued approved companyrses of study in the University or in an affiliated companylege unless exempted therefrom in the manner prescribed by the Statues, Ordinances and Regulations and have passed the examination prescribed by the University, or b have carried on research under companyditions prescribed by the Ordinances and Regulations. Counsel for the University companytended that by clause 10 a , the University had the authority to approve companyrses of study in the manner prescribed by the Statutes, Ordinances and Regulations and as power was given by s. 18 XIV to the Senate to frame Statutes providing either Gujarati or Hindi or both as medium or media of instruction, the power of the University to impose and exclusive medium of its choice was expressly entrusted to the University. But the argument proceeded upon an incorrect reading of the section. The provision does number by itself empower the University to prescribe the use of any exclusive medium of instruction and examination. The University is thereby authorised to companyfer degrees or academic distinctions upon persons who have pursued approved companyrses of study and have passed the examination prescribed by the University. Power is also reserved to the University to companyfer degrees or academic distinctions upon persons who have number pursued the companyrses prescribed by the University if exemption in that behalf is prescribed by the Statutes, Ordinances or Regulations. The expression in the manner prescribed by the Statute, Ordinance or Regulation has numberreference to the class of persons who have pursued approved companyrses of study in the University or in an affiliated companylege, but qualifies the expression unless exempted therefrom immediately preceding. By the clause the University is authorised to companyfer degrees, diplomas or distinctions number only upon persons who have pursued the companyrses of instruction prescribed and have passed the qualifying examination, but upon other persons as well who have number pursued the companyrses of instruction but have passed the prescribed examination, if exemption in behalf is given by the Statutes. Ordinances or Regulations. The power under sub-clause a of clause 10 does number carry with it the power to impose an exclusive medium such as Gujarati or Hindi. By clause 14 power among others to take measures to ensure that proper standards of instructions, teaching or training are maintained in the affiliated companyleges and recognised institutions is granted, and clause 15 invests the University with power to companytrol and companyordinate the activities of, and give financial aid to affiliated companyleges and recognised institutions, but number the power to provide for an exclusive medium as claimed by the University. The Legislature in clause 27 has dealt with the subject of medium of instructions and the other clauses on which reliance is placed do number expressly deal with that topic. It would be difficult then to hold that the Legislature while providing in clause 27 about the medium of instruction was also dealing indirectly with the subject of prescribing an exclusive medium of instruction, when it made provisions relating to instructions, teaching and training in educational institutions or for enabling those institutions to undertake specialized studies or giving guidance in teaching in companyleges, or for providing for degrees or academic distinctions or for taking measures ensuring proper standard of instructions, teaching or training or the companyduct of activities. Clause 27 , before it was amended, by Act IV of 1961, ran as follows - to promote the development of the study of Gujarati and Hindi in Devnagari script and the use of Gujarati or Hindi in Devnagari script or both as a medium of instruction and examination Provided that English may companytinue to be the medium of instruction and examination in such subjects and for such period number exceeding ten years from the date on which section 3 companyes into force as may from time to time be prescribed by the Statutes. By the first paragraph of clause 27 power is companyferred to promote the development and use of Gujarati or Hindi or both as a medium of instruction. That clause is number in its expression, grammatically accurate. It should, if it had been drafted in strict accordance with the rules of grammar, have stated that the University was invested with power to promote the use of Gujarati or Hindi or both as a medium or media of instruction and examination. The use of the expression promote suggests that power was companyferred upon the University to encourage the study of Gujarati and Hindi and their use as media of instruction and examination it does number imply that power was given to provide for exclusive use of Gujarati or Hindi or both as a medium or media of insrtuction and examination and that inference is strengthened by the indefinite article a before the expression medium of instruction. The use of the expression a medium of instruction clearly suggests that Gujarati or Hindi was to be one of several media of instruction, and steps were to be taken to encourage the development of Gujarati and Hindi and their use as media of instruction and examination. From the use of the expression promote read in the companytext of the indefinite article a it is abundantly clear that power to impose Gujarati or Hindi as the medium of instruction and examination to the exclusion of other media was number entrusted to the University. It may be numbericed that if the expression promote the use of Gujarati or Hindi as a medium of instruction and examination was intended to mean to promote the exclusive use of Hindi or Gujarati, a similar interpretation would have to be put on the use of the expression to promote the development of Gujarati and Hindi, thereby ascribing to the Legislature an intention that numberother languages beside Gujarati and Hindi were to be developed. Use in the proviso of the definite article the in relation to English as medium of instruction further supports this view. When the Legislature enacted that English was to companytinue as the medium of instruction and examination in certain subjects it merely provided for companytinuance of an existing and accepted exclusive medium of instruction. It is companymon ground that in the University of Bombay the exclusive medium of instruction was English, in the various affiliated companyleges in the region or area over which the Gujarat University acquired authority. By the proviso to clause 27 of s. 4 in the subjects to be prescribed under the proviso the medium of instruction was to companytinue to remain English. By the operative part of clause 27 therefore the Legislature provided that use of Gujarati or Hindi or both as a medium or media of instruction was to be promoted thereby indicating that Gujarati or Hindi or both was or were number to be the exclusive medium or media but to be adopted in addition to the accepted medium viz. English, for instruction and examination, whereas under the proviso in respect of the subjects prescribed, English was to be the only medium for the periods specified Clause 28 which companyfers authority upon University to do all acts and things whether incidental to the powers aforesaid or number as may be requisite in order to further the objects of the University and generally to cultivate and promote arts, science and other branches of learning and culture companyfers additional powers which though number necessarily incidental to the powers already companyferred by cls. 1 and 27 were intended to be exercised to further the object of the University. But if the object of the University as indicated by clause 27 was number to authorise the imposition of Gujarati or Hindi or both, as an exclusive medium or media it would be straining the language of clause 28 to interpret it as exhibiting an intention to companyfer upon the University by using the somewhat indefinite expression requisite in order to further the objects power to provide for such an exclusive medium. Reliance was also placed upon s. 18 1 xiv by companynsel for the University in support of the companytention that the Senate was bound to make provision relating to the use of Gujarati or Hindi in Devanagri script or both as a medium of instruction and examination. It is true that s. 18 1 deals with powers and duties of the Senate. Phraseology used in the diverse clauses is prima facie number susceptible of the meaning that each clause authorises the Senate to exercise the powers of the University and imposes also a companycomitant duty. Assuming, however, that the power companyferred upon the Senate also carries with it a duty to exercise the power, we do number think that the exercise of power or performance of duty relating to the use of Gujarati or Hindi or both as a medium or media of instruction and examination postulates a duty to make exclusive use of Gujarati or Hindi or both for that purpose. The use of the indefinite article a even in this clause clearly indicates that Gujarati or Hindi or both were to be selected out of several media of instruction and examination and number the sole medium. No other clause of ss. 18, 20 and 22 relating to the powers and duties of the Senate, the Syndicate and the Academic Council was relied upon and we are unable to find any which invests the University or its organs, such as the Senate, the Syndicate or the Academic Council with power to impose Gujarati or Hindi as an exclusive medium of instruction. A companyporation has ordinarily an implied power to carry out its object power to indicate a medium of instruction in affiliated or companystituent companyleges may therefore be deemed to be vested in a University but the power to indicate a medium of instruction does number carry with it, in the absence of an express provision, power to impose upon the affiliated institutions an exclusive medium of instruction. Reliance was placed by companynsel for the University upon a letter dated August 7, 1949, which is reproduced in the University Commissions report , addressed by the Government of India to various Universities and Provincial Governments. It was recited in the letter that the Government of India were of the opinion that in the interest of national education it was hoped that Universities and Provincial Governments will take early steps towards the implementation of certain recommendations viz - Item I. - The Government of India requests the University and Provincial Governments to take steps to - a replace English as the medium of instruction at the University stage, by gradual stage during next five years and b adopt in its place the language of the State or Province or region is the medium of instruction and examination. Item II. - Universities are requested to - provide for a companypulsory test in the Federal language during the first degree companyrse of the University without prejudice to the results of the Degree Examination, and provide facilities for the teaching of the Federal language to all students who with to take it up as optional subject. Item III. - x x x x x x Item IV and V - x x x x x x Item VI. - x x x x x x Item VII. - x x x x x x The Government of India may have in the year 1948 intended that English should be replaced in gradual stages as the medium of instruction by the language of the State or the Province, or region, but that will number be a ground for interpreting the provisions of the Act in a manner companytrary to the intention of the Legislature plainly expressed. This recommendation of the Government of India has been ignored if number by all, by a large majority of Universities. It is also true that in the Statement of Objects and Reasons of the Gujarat University Act, it was stated As recommended by the Committee, it is proposed to empower the University to adopt Gujarati or the national language as the medium of instruction except that for the first ten years English may be allowed as the medium of instruction in subjects in which this medium is companysidered necessary. But if the Legislature has made numberprovision in that behalf a mere proposal by the Government, which is incorporated in the Statement of Objects and Reasons will number justify the Court in assuming that the proposal was carried out. Statements of Objects and Reasons of a Statute may and do often furnish valuable historical material in ascertaining the reasons which induced the Legislature to enact a Statute, but in interpreting the Statute they must be ignored. We accordingly agree with the High Court that power to impose Gujarati or Hindi or both as an exclusive medium or media has number been companyferred under clause 27 or any other clauses of s. 4. The proviso to clause 27 was amended by Act 4 of 1961 and the following proviso was substituted - Provided that English may companytinue to be the medium - of instruction and examination for such period as may from time to time be prescribed by the Statutes until the end of May 1966 in respect of such subjects and companyrses of study as may be so prescribed. of instruction and examination for such period as may from time to time be prescribed by the Statutes until the end of May 1968 in respect of post-graduate instruction, teaching and training in subjects companyprised in Faculties of Agriculture and Technology including Engineering and until the end of May 1969 in respect of post-graduate instruction, teaching and training in the subjects companyprised in the Faculty of Medicine, and of examination at two successive examinations in any subjects held next after the period prescribed under clause i or as the case may be, the period prescribed under clause ii in respect of those candidates who during such period have failed to appear in or pass the respective examinations held with English as the medium of examination in the same subjects Provided further that numberhing in this clause shall effect that use of English as the medium of instruction and examination in respect of English as a subject. It is companymon ground before us that if power to impose Gujarati or Hindi as an exclusive medium is number companyferred by the operative part of clause 27 there is numberhing in the proviso which independently companyferred such a power upon the University. The proviso merely extends the use of English as the medium of instruction in certain branches beyond the period of ten years originally prescribed. The proviso has however some bearing on the interpretation of clause 27 in the second proviso the distinction between the definite article the preceding medium of instruction and examination in so far as it relates to English is further accentuated. The second proviso says - Provided further that numberhing in this clause shall affect the use of English as the medium of instruction and examination in respect of English as a subject. When the Legislature intended to provide English as the sole medium of instruction, definite article the was used while in other cases indefinite article a was used denoting thereby that the medium would be one out of several. Therefore, neither under the Act as originally framed number under the Act as amended by Act 4 of 1961 was there any power companyferred on the University to impose Gujarati or Hindi or both as exclusive medium or media of instruction and examination and if numbersuch power was companyferred upon the University, the Senate companyld number exercise such a power. The Senate is a body acting on behalf of the University and its powers to enact Statutes must lie within the companytour of the powers of the University companyferred by the Act. On the view we have expressed, companysideration of the question whether the State Government is companypetent to enact laws imposing Gujarati or Hindi or both as an exclusive medium or media of instruction in the Universities, may appear academic. But we have thought it necessary to companysider the question because the High Court has declared certain provisions of Act 4 of 1961 relating to medium of instruction as ultra vires the State Legislature and on the question which was argued at companysiderable length we were invited by companynsel for the appellants to express our view for their guidance in any future legislation which may be undertaken. Power of the Bombay Provincial Legislature to enact the Gujarat University Act was derived from Entry No. 17 of the Government of India Act, 1935, List II of the Seventh Schedule - Education including Universities other than those specified in paragraph 13 of List I. In List I item 13 were included the Benaras Hindu University and the Aligarh Muslim University. Therefore, except to the extent expressly limited by item 17 of List II read with item 13 of List I, a Provincial Legislature was invested with plenary power to enact legislation in respect of all matters pertaining to education including education at University level. The expression education is of wide import and includes all matters relating to imparting and companytrolling education it may therefore have been open to the Provincial Legislature to enact legislation prescribing either a federal or a regional language as an exclusive medium for subjects selected by the University. If by s. 4 27 the power to select the federal or regional language as an exclusive medium of instruction had been entrusted by the Legislature to the University, the validity of the impugned statutes 207, 208 and 209 companyld number be open to question. But the Legislature did number entrust any power to the University to select Gujarati or Hindi as an exclusive medium of instruction under s. 4 27 . By the Constitution a vital change has been made in the pattern of distribution of legislative powers relating to education between the Union Parliament and the State Legislatures. By item No. 11 of List II of the Seventh Schedule to the Constitution, the State Legislature has power to legislate in respect of education including Universities subject to the provisions of items 63, 64, 65 and 66 of List I and 25 of List III. Item No. 63 of List I replaces with modification item No. 13 of List I to the Seventh Schedule of the Government of India Act, 1935. Power to enact legislation with respect to the institutions known at the companymencement of the Constitution as the Benaras Hindu University, the Aligarh Muslim University and the Delhi University and other institutions declared by Parliament by laws to be an institution of national importance is thereby granted exclusively to Parliament. Item 64 invests the Parliament with power to legislate in respect of institutions for scientific or technical education financed by the Government of India wholly or in part and declared by Parliament, by law, to be institutions of national importance. Item 65 vest in the Parliament power to legislate for Union agencies and institutions for a professional, vocational or technical training, including the training of police officers or b the promotion of special studies or research or c scientific or technical assistance in the investigation or detection of crime. By item 66 power is entrusted to Parliament to legislate on companyordination and determination of standards in institutions for higher education or research and scientific and technical institutions. Item 25 of the Concurrent List companyfers power upon the Union Parliament and the State Legislatures to enact legislation with respect to vocational and technical training of labour. It is manifest that the extensive power vested in the Provincial Legislature to legislate with respect to higher, scientific and technical education and vocational and technical training of labour, under the Government of India Act is under the Constitution companytrolled by the five items in List I and List III mentioned in item 11 of List II. Item 63 to 66 of List I are carved out of the subject of education and in respect of these items the power to legislate is vested exclusively in the Parliament. Use of the expression subject to in item 11 of List II of the Seventh Schedule clearly indicates that legislation in respect of excluded matters cannot be undertaken by the State Legislatures. In Hingir-Rampur Coal Company v. State of Orissa , this Court in companysidering the import of the expression subject to used in an entry in List II, in relation to an entry in List I observed that to the extent of the restriction imposed by the use of the expression subject to in an entry in List II, the power is taken away from the State Legislature. Power of the State to legislate in respect of education including Universities must to the extent to which it is entrusted to the Union Parliament, whether such power is exercised or number, be deemed to be restricted. If a subject of legislation is companyered by items 63 to 66 even if it otherwise falls within the larger field of education including Universities power to legislate on that subject must lie with the Parliament. The plea raised by companynsel for the University and for the State of Gujarat that legislation prescribing the medium or media in which instruction should be imparted in institutions of higher education and in other institutions always falls within item 11 of List II has numberforce. If it be assumed from the terms of item 11 of List II that power to legislate in respect of medium of instruction falls only within the companypetence of the State Legislature and never in the excluded field, even in respect of institutions mentioned in items 63 to 65, power to legislate on medium of instruction would rest with the State, whereas legislation in other respects for excluded subjects would fall within the companypetence of the Union Parliament. Such an interpretation would lead to the somewhat startling result that even in respect of national institutions or Universities of national importance, power to legislate on the medium of instruction would vest in the Legislature of the States within which they are situate, even though the State Legislature would have numberother power in respect of those institutions. Item 11 of List II and item 66 of List I must be harmoniously companystrued. The two entries undoubtedly overlap but to the extent of overlapping, the power companyferred by item 66 List I must prevail over the power of the State under item 11 of List II. It is manifest that the excluded heads deal primarily with education in institutions of national or special importance and institutions of higher education including research, sciences, technology and vocational training of labour. The power to legislate in respect of primary or secondary education is exclusively vested in the States by item No. 11 of List II, and power to legislate on medium of instruction in institutions of primary or secondary education must therefore rest with the State Legislatures. Power to legislate in respect of medium of instruction is, however, number a distinct legislative head it resides with the State Legislature in which the power to legislate on education is vested, unless it is taken away by necessary intendment to the companytrary. Under items 63 to 65 the power to legislate in respect of medium of instruction having regard to the width of those items, must be deemed to vest in the Union. Power to legislate in respect of medium of instruction, in so far it has a direct bearing and impact upon the legislative head of companyordination and determination of standards in institutions of higher education or research and scientific and technical institutions, must also be deemed by item 66 List I to be vested in the Union. The State has the power to prescribe the syllabi and companyrses of study in the institutions named in Entry 66 but number falling within entries 63 to 65 and as an incident thereof it has the power to indicate the medium in which instruction should be imparted. But the Union Parliament has an overriding legislative power to ensure that the syllabi and companyrses of study prescribed and the medium selected do number impair standards of education or render the companyordination of such standards either on an All India or other basis impossible or even difficult. Thus, though the powers of the Union and of the State are in the Exclusive Lists, a degree of overlapping is inevitable. It is number possible to lay down any general test which would afford a solution for every question which might arise on this head. On the one hand, it is certainly within the province of the State Legislature to prescribe syllabi and companyrses of study and, of companyrse, to indicate the medium or media of instruction. On the other hand, it is also within the power of the Union to legislate in respect of media of instruction so as to ensure companyordination and determination of standards, that is to ensure maintenance or improvement of standards. The fact that the Union has number legislated, or refrained from legislating to the full extent of its powers does number invest the State with the power to legislate in respect of a matter assigned by the Constitution to the Union. It does number, however, follow that even within the permitted relative fields there might number be legislative provisions in enactments made each in pursuance of separate exclusive and distinct powers which may companyflict. Then would arise the question of repugnancy and paramountcy which may have to be resolved on the application of the doctrine of pith and substance of the impugned enactment. The validity of the State legislation on University education and as regards the education in technical and scientific institutions number falling within Entry 64 of List I would have to be judged having regard to whether it impinges on the field reserved for the Union under Entry 66. In other words, the validity of State legislation would depend upon whether it prejudicially affects companyordination and determination of standards, but number upon the existence of some definite Union legislation directed to achieve that purpose. It there be Union legislation in respect of companyordination and determination of standards, that would have paramountcy over the State law by virtue of the first part of Art. 254 1 even if that power be number exercised by the Union Parliament the relevant legislative entries being in the exclusive lists, a State law trenching upon the Union field would still be invalid. Counsel for the University submitted that the power companyferred by item No. 66 of List I is merely a power to companyordinate and to determine standards i.e. it is a power merely to evaluate and fix standards of education, because, the expression companyordination merely means evaluation, and determination means fixation. Parliament has therefore power to legislate only for the purpose of evaluation and fixation of standards in institutions referred to in item 66. In the companyrse of the argument, however, it was somewhat reluctantly admitted that steps to remove disparities which have actually resulted from the adoption of a regional medium and the falling of standards, may be undertaken and legislation for equalising standards in higher education may be enacted by the Union Parliament. We are unable to agree with this companytention for several reasons. Item No. 66 is a legislative head and in interpreting it, unless it is expressly or of necessity found companyditioned by the words used therein, a narrow or restricted interpretation will number be put upon the generality of the words. Power to legislate on a subject should numbermally be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be companyprehended in that subject. Again there is numberhing either in items 66 or elsewhere in the Constitution which supports the submission that the expression companyordination must mean in the companytext in which it is used merely evaluation, companyordination in its numbermal companynotation means harmonising or bringing into proper relation in which all the things companyordinated participate in a companymon pattern of action. The power to companyordinate, therefore, is number merely power to evaluate, it is a power to harmonise or secure relationship for companycerted action. The power companyferred by item 66 List I is number companyditioned by the existence of a state of emergency or unequal standards calling for the exercise of the power. There is numberhing in the entry which indicates that the power to legislate on companyordination of standards in institutions of higher education, does number include the power to legislate for preventing the occurrence of or for removal of disparities in standards. This power is number companyditioned to be exercised merely upon the existence of a companydition of disparity number is it a power merely to evaluate standards but number to take steps to rectify or to prevent disparity. By express pronouncement of the Constitution makers, it is a power to companyordinate, and of necessity, implied therein is the power to prevent what would make companyordination impossible or difficult. The power is absolute and unconditional, and in the absence of any companytrolling reasons it must be given full effect according to its plain and expressed intention. It is true that medium of instruction is number an item in the legislative list. It falls within item No. 11 as a necessary incident of the power to legislate on education it also falls within items 63 to 66. In so far as it is a necessary incident of the powers under item 66 List I it must be deemed to be included in that item and therefore excluded from item 11 List II. How far State legislation relating to medium of instruction in institutions has impact upon companyordination of higher education is a matter which is number susceptible, in the absence of any companycrete challenge to a specific statute, of a categorical answer. Manifestly, in imparting instructions in certain subjects, medium may have subordinate importance and little bearing on standards of education while in certain others its importance will be vital. Normally, in imparting scientific or technical instructions or in training students for professional companyrses like law, engineering, medicine and the like existence of adequate text books at a given time, the existence of journals and other literature, availability of companypetent instructors and the capacity of students to understand instructions imparted through the medium in which it is imparted are matters which have an important bearing on the effectiveness of instruction and resultant standards achieved thereby. If adequate text-books are number available or companypetent instructors in the medium, through which instruction is directed to be imparted, are number available, or the students are number able to receive or imbibe instructions through the medium in which it is imparted, standards must of necessity fall, and legislation for companyordination of standards in such matters would include legislation relating to medium of instruction. If legislation relating to imposition of an exclusive medium of instruction in a regional language or in Hindi, having regard to the absence of text-books and journals, companypetent teachers and incapacity of the students to understand the subjects, is likely to result in the lowering of standards, that legislation would, in our judgment, necessarily fall within item 66 of List I and would be deemed to be excluded to that extent from the amplitude of the power companyferred by item No. 11 of list II. It must be observed, that these observations have been made by us on certain abstract companysideration which have been placed before us. We have numberspecific statute the validity of which, apart from the one which we will presently mentions, is challenged. Counsel for the State and the University invited us to express our opinion on the question whether legislation which the State may undertake with a view to rectify the deficiency pointed out by us in interpreting s. 4 27 , would be within the companypetence of the State Legislature. What shape such legislation may take is for the State to decide. We have, however, proceeded somewhat broadly to deal with what we companyceive is the true effect of item 66 in List I in its relation to item 11 in List II in so far as the two items deal with the power of the Parliament and the State Legislature to enact laws in respect of medium of instruction. We are unable, however, to agree with the High Court that Act 4 of 1961 in so far as it amended the proviso to s. 4 27 is invalid, because it is beyond the companypetence of the State Legislature. By the amendment of the proviso to s. 4 27 , the Legislature purported to companytinue the use of English as the medium of instruction in subjects selected by the Senate beyond a period of ten years prescribed by the Gujarat University Act, 1949. Before the date on which the parent Act was enacted, English was the traditional medium of instruction in respect of all subjects at the University level. By enacting the proviso as it originally stood, the University was authorised to companytinue the use of English as an exclusive medium of instruction in respect of certain subjects to be selected by the Senate. By the amendment it is companymon ground that numberpower to provide an exclusive medium other than the pre-existing medium is granted. Manifestly, imparting instruction through a companymon medium, which was before the Act the only medium of instruction all over the companyntry, cannot by itself result in lowering standards and companyordination and determination of standards cannot be affected thereby. By extending the provisions relating to imparting of instruction for a period longer than ten years through the medium of English in the subjects selected by the University, numberattempt was made to encroach upon the powers of the Union under item No. 66 List I. If the University have numberpower to prescribe an exclusive medium, the enactment of s. 38A which prescribes penalties for failing to carry out directions relating to the media of instruction will doubtless be number invalid. The order of the High Court relating to the invalidity of the Statutes 207 and 209 of the University in so far as they purport to impose Gujarati or Hindi or both as exclusive medium or media of instruction, and the circulars enforcing those statutes must therefore be companyfirmed. We do number express any opinion on the alleged infringement of fundamental rights of the petitioner under Arts. 29 1 , 30 1 of the Constitution. We set aside the order of the High Court in so far as it declares s. 4 clause 27 proviso and s. 38A invalid. This will be, however, subject to the interpretation placed by us upon the relevant provisions, and the power of the State Legislature to impose Gujarati or Hindi or both as exclusive medium or media for instructions in the affiliated and companystituent companyleges. The appellants will pay the companyts of the respondents in the two appeals. One hearing fee. Subba Rao, J. With the greatest respect, I cannot agree. The facts have been fully stated in the judgment of my learned brother, Shah, J., and I need number restate them. Two questions arise for companysideration, namely, 1 whether the State Legislature has the companystitutional companypetence to make a law prescribing an exclusive medium of instruction in the affiliated companyleges, and 2 whether under the Gujarat University Act, as amended by Act IV of 1961, the said University has the power to prescribe an exclusive medium of instruction. The first question may be elaborated thus Is the State Legislature companypetent to make a law under entry 11 of List II of the Seventh Schedule to the Constitution prescribing an exclusive medium of instruction in the affiliated companyleges of the University ? To put it in other words, can a State law enable a University to prohibit, expressly or by necessary implication, any media of instruction other than those prescribed by it ? Learned companynsel, appearing for the University of Gujarat and for the State of Gujarat, companytend that the State Legislature has such a power under entry 11 of List II of the Seventh Schedule to the Constitution, whereas learned companynsel for the respondents, while companyceding that a State Legislature has the power to empower a university to prescribe a medium of instruction, broadly companytend that a State law which prohibits the use of a medium of instruction, such as English, which is traditionally the exclusive current medium of instruction in the universities of this companyntry, and directs the use of a regional language as the sole medium or as an additional medium of instruction, along with other Indian languages, impinges directly on entry 66 of List I of the Seventh Schedule to the Constitution, since, it is said, the fixation of standards and companyordination on all-India basis is rendered difficult, if number made impossible, by such a State law. Before I companysider the impact of entry 66 of List I on entry 11 of List II, it would be companyvenient to numberice briefly the relevant principles of companystruction. Learned companynsel for the respondents companytend that the principle of pith and substance has numberrelevance to a case where one entry is made subject to another entry if out of the scope of one entry, the argument proceeds, a field of legislation companyered by another entry is carved out, there is numberscope for over-lapping and, therefore, there is numberoccasion for invoking the principle of pith and substance in the matter of interpreting the said entries to meet such a situation, his further argument is, the companyrts have evolved another principle of direct impact, i.e. if a State law has a direct impact on an entry in the Union List, the said law falls outside the scope of the State entry. Let us see whether there is any such independent doctrine of companystruction in decided cases or in principle. The Judicial Committee, in Prafulla Kumar v. Bank of Commerce, Khulna A.I.R. 1947 P.C. 60, 65., had invoked the principle of pith and substance to ascertain whether the Bengal Money-lenders Act X of 1940 was ultra vires the Provincial Legislature. There, the companyflict was between items 28 and 38 of List I of the Seventh Schedule to the Government of India Act, 1935, namely, promissory numberes and banking, and item 27 of List II thereof, namely, money-lending. The Judicial Committee held that the pith and substance of the Act being money-lending, it came under item 27 of List II and was number rendered invalid because it incidentally trenched upon matters reserved to the Federal Legislature, namely, promissory numberes and banking. At p. 65 of the report the following instructive passage appears But the overlapping of subject-matter is number avoided by substituting three lists for two or even by arranging for a hierarchy of jurisdictions. Subjects must still overlap and where they do the question must be asked what in pith and substance is the effect of the enactment of which companyplaint is made and in what list is its true nature and character to be found. Then their Lordships proceeded to state Thirdly, the extent of the invasion by the Provinces into subjects enumerated in the Federal List has to be companysidered. No doubt it is an important matter, number, as their Lordships think, because the validity of an Act can be determined by discriminating between degrees of invasion, but for the purpose of determining what is the pith and substance of the impugned Act. Its provisions may advance so far into Federal territory as to show that its true nature is number companycerned with Provincial matters, but the question is number, has it trespassed more or less, but is the trespass, whatever it be, such as to show that the pith and substance of the impugned Act is number money-lending but promissory numberes or banking ? It is clear from the said passage that the degree of invasion of a law made by virtue of an entry in one List into the field of an entry in another List is number governed by a separate doctrine but is only a circumstance relevant for ascertaining the pith and substance of an impugned Act. This Court, in The State of Bombay v. F. N. Balsara 1951 S.C.R. 682., has accepted that principle. There, the companystitutional validity of the Bombay Prohibition Act XXV of 1949 was in issue. The question was whether that Act fell under entry 31 of List II of the Seventh Schedule to the Government of India Act, 1935, namely, intoxicating liquors, that is to say, the production, manufacture, possession, transport, purchase and sale of intoxicating liquors, or under entry 19 of List I, namely, import and export across customs frontier, which is a dominion subject. This Court held that the pith and substance of the Act fell under the former entry and number under the latter, though the Act incidentally encroached upon the Dominion field of legislation. It was argued, inter alia, that the prohibition of purchase, use, transports and sale of liquor would affect the import. The argument was advanced as a part of the doctrine of pith and substance and was rejected on the ground that the said encroachment did number affect the true nature and character of the legislation. This Court again had to deal with the vires of the provisions of the Madras Prohibition Act in S. Krishna v. The State of Madras 1957 S.C.R. 399, 406 There, the argument was that the said provisions were repugnant to the provisions of the existing Indian laws with respect to the same matter, to wit, Indian Evidence Act I of 1872 and Criminal Procedure Code Act No. V of 1898. In that companytext the argument based upon impact of the former legislation on the latter was advanced. This Court rejecting the companytention observed That is to say, if a statute is found in substance to relate to a topic within the companypetence of the legislature, it should be held to be intra vires, even though it might incidentally trench on topics number within its legislative companypetence. The extent of the encroachment on matters beyond its companypetence may be an element in determining whether the legislation is companyourable, that is, whether in the guise of making a law on a matter within its companypetence, the legislature is, in truth, making a law on a subject beyond its companypetence. But where that is number the position, then the fact of encroachment does number affect the vires of the law even as regards the area of encroachment. But it is said that the separate existence of the doctrine of direct impact was companyceded in Union Colliery Company of British Columbia, Ltd. v. Bryden 1899 A.C. 580, 587 There, the question was whether s. 4 of the British Columbia Coal Mines Regulation Act, 1890, which prohibited Chinamen of full age from employment in underground companyl workings, was in that respect ultra vires of the provincial legislature inasmuch as the subject of naturalization and aliens was within the exclusive authority of the Dominion Parliament companyferred under s. 91, sub-s. 25 of the British North America Act, 1867. On a companysideration of the material factors and on a companystruction of the relevant provisions, the Judicial Committee observed But the leading feature of the enactments companysists in this - that they have, and can have, numberapplication except to Chinamen who are aliens or naturalized subjects, and that they establish numberrule or regulation except that these aliens or naturalized subjects shall number work, or be allowed to work, in underground companyl mines within the Province of British Columbia. After arriving at that finding, their Lordships proceeded to say Their Lordships see numberreason to doubt that, by virtue of s. 91, sub-s. 25, the legislature of the Dominion is invested with exclusive authority in all matters which directly companycern the rights, privileges, and disabilities of the class of Chinamen who are resident in the provinces of Canada. They are also of opinion that the whole pith and substance of the enactments of s. 4 of the Coal Mines Regulation Act, in so far as objected to by the appellant companypany, companysists in establishing a statutory prohibition which affects aliens or naturalised subjects, and therefore trench upon the exclusive authority of the Parliament of Canada. This passage indicates that the Judicial Committee found that, in pith and substance, the impugned law affected the rights and privileges of Chinamen which subject was within the exclusive authority of the Parliament of Canada. This judgment only reiterates the principle of pith and substance and it does number in any way companyntenance a new principle of direct impact outside the scope of the said doctrine. In Bank of Toronto v. Lambe 1882 12 A.C. 575, 587. the Quebec Act was attacked on two grounds, first that the tax was number taxation within the Province, and secondly, that the tax was number a direct tax. The Judicial Committee held that the Act was within the legislative companypetence of the Province. It was observed therein If the Judges find that on the due companystruction of the Act a legislative power falls within s. 92, it would be quite wrong of them to deny its existence because by some possibility it may be abused, or may limit the range which otherwise would be open to the Dominion Parliament. The argument of anticipatory encroachment was rejected. This case was companysidered and distinguished in Attorney-General for Alberta v. Attorney-General for Canada 1939 A.C. 117, 130, 133 There, the Province of Alberta passed an act respecting the taxation of Banks, imposing on every companyporation or joint stock companypany, other than the Bank of Canada, incorporated for the purpose of doing banking or saving bank business in the Province, an annual tax, in addition to any tax payable under any other Act, of a 1/2 per cent. on the paid-up capital, and b 1 per cent. on the reserve fund and undivided profits. The Board held that the proposed taxation was number in any true sense taxation in order to the raising of a revenue for Provincial purposes so as to be within the exclusive legislative companypetence of the Provincial Legislature under s. 92 2 of the British North America Act, but was merely part of a legislative plan to prevent the operation within the Province of those banking institutions which had been called into existence and given the necessary powers there to companyduct their business by the only proper authority, the Parliament of the Dominion, under s. 91 of the British North America Act. The Board in effect, therefore, held that the Provincial Act, though companyched as a taxation measure, was a companyourable attempt to prevent the functioning of the banking institutions, the regulation whereof was the Dominion subject. The pith and substance of the statute was number direct taxation or taxation within the Province within the meaning of s. 92 of the British North America Act, but was one that fell under the Dominion subject of banking. The reason for this companyclusion is found at p. 133 and it is as follows Their Lordships agree with the opinion expressed by Kerwin J. companycurred in by Crocket, J. that there is numberescape from the companyclusion that, instead of being in any true sense taxation in order to the raising of a revenue for Provincial purposes, the Bill No. 1 is merely part of a legislative plan to prevent the operation within the Province of those banking institutions which have been called into existence and given the necessary powers to companyduct their business by the only proper authority, the Parliament of Canada. That is to say, the companystitutional validity of the Bill was sustained on the ground that it was a companyourable piece of legislation in respect of a subject which in substance was within the Dominion field. The Judicial Committee in companying to the companyclusion laid down the rules of guidance for ascertaining the true nature of a legislation. Their Lordships premised their discussion with the following statement it is well established that if a given subject-matter falls within any class of subjects enumerated in s. 91, it cannot be treated as companyered by any of those within s. 92. And to ascertain whether a particular subject-matter falls in one class or other, their Lordships laid down the following rules of guidance It is therefore necessary to companypare the two companyplete lists of categories with a view to ascertaining whether the legislation in question, fairly companysidered, falls prima facie within s. 91 rather than within s. 92. The next step in a case of difficulty will be to examine the effect of the legislation. The object or purpose of the Act in question. It will, therefore, be seen that the Judicial Committee did number lay down any new principle of direct impact dehors the doctrine of pith and substance. The heavy impact and crippling effect of an impugned legislation on a Dominion subject was taken as an important indication of its companyourable nature. The foregoing discussion does number companyntenance the suggestion that apart from the doctrine of pith and substance, the companyrts have recognized an independent principle of direct impact. Nor can I agree with the argument of learned companynsel that the doctrine of pith and substance has numberapplication in a case where one entry in a list is expressly made subject to another entry in a different list. In such a case it only means that out of the scope of the former entry a field of legislation has been carved out and put in the latter entry. That in itself has numberbearing on the applicability or otherwise of the doctrine. The position is exactly the same as in the matter of companystruing two entries in different list. Whether two entries are carved out of one subject or deal with two different subjects, the principle of companystruction must be the same in either case the Court is called upon to ascertain under what entry the impugned law falls. The doctrine of pith and substance only means that if on an examination of a statute it is found that the legislation is in substance one on a matter assigned to the Legislature, then it must be held to be valid in its entirety, even though it may trench upon matters which are beyond its companyprehension see The State of Bombay v. F. N. Balsara 1951 S.C.R. 682. and S. Krishna v. The State of Madras 1957 S.C.R. 399, 406 The true character of the legislation is the criterion and its incidental encroachment on other items is number material. If that be so, once we companye to the companyclusion that the impugned legislation squarely falls within one entry, its incidental encroachment on another entry, whether carved out of the former entry or has an independent existence althrough, will number make it any the less one made within the limits of the former entry. To summarize When a question arises under what entry an impugned legislation falls, the companyrt directs its mind to ascertain the scope and effect of the legislation and its pith and substance. Decided cases afford many criteria to ascertain its scope, namely, companyparison of companyflicting entries, effect of the impugned legislation, its object and purpose, its legislative history, its companyourable nature and similar others-all or some of them would be useful guides to get at the companye of the legislation. But numberauthority has gone so far as to hold that even if the pith and substance of an Act falls squarely within the ambit of a particular entry, it should be struck down on the speculative and anticipatory ground that it may companye into companyflict with a law made by a companyordinate Legislature by virtue of another entry. If the impact of a State law on a Central subject is so heavy and devastating as to wipe out or appreciably abridge the Central field, then it may be a ground for holding that the State law is a companyourable exercise of power and that in pith and substance it falls number under the State entry but under the Union entry. The case-law, therefore, does number warrant the acceptance of a new doctrine dehors that of pith and substance. In this companytext it will be useful to numberice some of the well settled rules of interpretation laid down by the Federal Court and accepted by this Court in the matter of companystruing the entries. In Calcutta Gas Company v. The State of West Bengal , it is observed The power to legislate is given to the appropriate Legislatures by Art. 246 of the companystitution. The entries in the three Lists are only legislative heads or fields of legislation they demarcate the area over which the appropriate Legislatures can operate. It is also well settled that widest amplitude should be given to the language of the entries. But some of the entries in the different Lists or in the same List may overlap and sometimes may also appear to be in direct companyflict with each other. It is then the duty of this Court to reconcile the entries and bring about harmony between them It may, therefore, be taken as a well settled rule of companystruction that every attempt should be made to harmonize the apparently companyflicting entries number only of different Lists but also of the same List and to reject that companystruction which will rob one of the entries of its entire companytent and make it nugatory. With this background let me look at the two entries, namely, entry 11 of List II and entry 66 of List I. The said entries read Entry 11 of List II. Education including universities, subject to the provisions of entries 63, 64, 65 and 66 of List I and entry 25 of List III. Entry 66 of List I. Co-ordination and determination of Standards in institutions for higher education or research and scientific and technological institutions. We are number companycerned with the question of medium of instruction in regard to that part which has been specially carved out and included in entries 63, 64 and 65 of List I. The entire field of education, including universities, subject to the exceptions mentioned in entry 11 of List II, is entrusted to the State Legislature. There cannot be education except through a medium or media of instruction. Education can be imparted only through a medium. To separate them is to destroy the companycept. It is inconceivable that any reasonable body of companystitution makers would entrust the subject of medium of instruction to Parliament and education dehors medium to a State it is like cutting away the hand that feeds the mouth. That numbersuch separation was made in the case of elementary and secondary education is companyceded. It cannot also be doubted that medium of instruction is also included in entry 63 of List I relating to the specified universities. If so much is companyceded, what is the reason for excluding it from the university education in entry 11 of List II ? There is numbere. Conversely, the express terms of entry 66 of List I does number prima facie take in the subject of medium of instruction. The phraseology is rather wide, but numbere the less clear. Let me look at the two crucial expressions companyordination and determination of standards. The companytention of learned companynsel for the appellant that the companyposite term means fixing of standards for the purpose of companyrelation and equating them if they vary, appears to be plausible, but is rather too restrictive and, if accepted makes the role of Parliament that of a disinterested spectator. It must be more purposive and effective. The interpretation sought to be put upon it by learned companynsel for the respondents, namely, that under certain circumstances the Parliament can make a law displacing the medium of instruction prescribed by the State law by another of its choice, cuts so deeply into the State entry that it cannot be companyntenanced unless the entry in List I is clear and unambiguous. To determine is to settle, or decide or fix. The expression companyordination is given the following meanings, among others, in the dictionary to place in the same order, rank or division to place in proper position relatively to each other and to the system of which they form parts to act in companybined order for the production of a particular result. That entry enables Parliament to make a law for fixing the standards in institutions for higher education for the purpose of harmonious companyordination of the said institutions for the achievement of the desired result, namely, the improvement of higher education. The expression companyordination and determination of standards is a companyposite term and the fixing up of standards for the purpose of companyordination does number necessarily involve a particular medium of instruction. To illustrate education cannot be imparted effectively without books, professors, students, equipment, buildings, finance, proper medium of instruction, etc. All the said matters admittedly are companyprehended by the word education, for they are the necessary companycomitants of education. It would be unreasonable to hold that all the said matters fall under the heading companyordination and determination of standards, for, if it was so held, the entry education would be robbed of its entire companytent. In such a case the principle of harmonious companystruction should be invoked and a demarcating line drawn the clue for drawing such a line is found in the word companyordination. So understood, the State can make a law for imparting education and for maintaining its standards whereas Parliament can step in only to improve the said standards for the purpose of companyordination. The standards of some universities may fall because of the deficiency in any of the aforesaid things. Parliament may make a law providing for facilities in respect of any or all the aforesaid matters so that the backward universities may pick up and companye to the level of other advanced universities. It may also make a law for raising the general standards of all the universities. The law made by Parliament may determine the general standards in respect of the said and similar matters and provide the necessary financial and other help to enable the universities to reach the level prescribed. It may also be that the said law may provide for a machinery to enrich the language adopted as a medium of instruction by a particular university so that it may become a useful vehicle for higher education and for technological and scientific studies. If the pith and substance of the law is companyordination and determination of standards its incidental encroachment on the medium of instruction for the purpose of enriching it may probably be sustained. But in the name of companyordination it cannot displace the medium of instruction, for, in that event, the encroachment on the subject of education is number incidental but direct. For the said entry does number permit the making of any law which allows direct interference by an outside body with the companyrse of education in any university, but enables it generally to prescribe standards and give adventitious aids for reaching the said standards. In short, the role of a guardian angel is allotted to Parliament so that it can make a law providing a machinery to watch, advise, give financial and other help, so that the universities may perform their allotted role. The University Commission Act was passed in the implementation of such a role. So understood, there cannot be any possible dichotomy between the two entries. The scheme of the Constitution also negatives the idea of legislation by Parliament in respect of medium of instruction. When the Constitution was passed, there were many fairly well developed languages in different parts of our companyntry and they were mentioned in the Eighth Schedule to the Constitution. At that time, English was the medium of instruction at all levels and was also the official language of the administration. It was accepted on all hands that English should be replaced at all levels, but the process should be phased. Article 343 of the Constitution declares that the official language of the Union shall be Hindi in Devnagari script and it permits the use of English for all official purposes for a specified period. But in the case of education numbersuch go-slow process was indicated, presumably, because it was left to the wisdom of the Legislatures of States and educationists to work out the programme for smooth transition. But the insistence on the replacement of English by Hindi for all official purposes, the recognition of regional languages, the omission of English in the Eighth Schedule, the direction under Art. 351 that Hindi should be enriched by a process of assimilation from the languages specified in the Eighth Schedule and from Hindustani, all indicate that the makers of the Constitution were companyfident that the regional languages were rich or at any rate resilient enough to be or to become companyvenient vehicles of instruction at all levels of education. That is why numberexpress reservation was made for replacing English by regional languages by companyvenient stages. It may, therefore, be accepted that the makers of the Constitution thought that the specified regional languages would be suitable vehicles of instruction, though it may equally be companyceded that they require to be enriched to meet the demands of higher education. In this companytext entry 66 of List I must be companystrued on the assumption that the regional languages would be the media of instruction in all universities, and if so companystrued the law fixing the standards for companyordination cannot displace the medium of instruction. Let me number look at it from a different angle. It is companytended that English is the established medium of instruction throughout the companyntry, that following the example of the Gujarat University other universities might follow suit, that companysequently there would be a steep fall in the standards of higher education, and that if the argument of the appellant was accepted, Parliament would be a helpless spectator witnessing the debacle. In effect, on the appellants companystruction, the major part of the field of companyordination would be wiped out. This is effect was the argument of learned companynsel for the respondents though companyched in different phraseology. This is another way of saying that the pith and substance of such legislation made by a State prohibiting the use of English falls number under the subject of education but under the entry companyordination. This argument though appears to be attractive, is without legal or factual basis. If the pith and substance of the impugned law is companyered by the entry education, the question of effacing the Union entry does number arise at all. It is an argument of policy rather than a legal companystruction. The simple answer is that the Constituent-Assembly did number think fit to entrust the subject of medium of instruction to Parliament, but relied upon the wisdom of the Legislatures to rise to the occasion, and enact suitable legislation. Factually, except in Gujarat, where the Legislature introduced Gujarati as the exclusive medium of instruction by an accelerated process, all other States are adopting a go-slow policy. Though that circumstance, in my view, has numberrelevance in companystruing the relevant provisions of the Constitution there is numberimmediate danger of all the other States abolishing English as an additional medium of instruction. I would prefer to accept the natural meaning of the word education than to stretch the expression companyordination to meet a possible emergency when all the States, following a policy adopted by a State, might set their face against English. That apart, the picture drawn by learned companynsel is rather extravagant. It presupposes that, but for the companytinuance of English as one of the media of instruction, education is bound to fall in standards and companyordination may become impossible. But our Constitution-makers did number think so, and they did number provide for the companytinuance of English in the universities. Further, the standards can be maintained, perhaps with some trouble and expense, by imparting education through other media of instruction, provided the languages are suitably enriched. The State Legislatures, and more so the universities, can be relied upon to make every reasonable attempt to maintain the standards. It cannot be assumed that the State Legislatures would function against the best interests of university education, while Parliament can safely be relied upon to act always in its interest. All the legislative bodies under our Constitution are elected on adult franchise and this Court rightly presumes that they act with wisdom and in the interests of the people they represent. If the Legislature of a State companyld in a particular instance act precipitately by replacing English by a regional language, Parliament also in its wisdom, if it has power to do so, may cut the Gordian knot by replacing English by Hindi in all the universities. It is after all a companystitutional choice of institutions to implement a particular purpose and it is, therefore, the duty of this Court to interpret the provisions of the Constitution uninfluenced by ephemeral local companyditions and situations. I would, therefore, hold that entry 11 of List II takes in the medium of instruction and that it is number companyprehended by the phraseology of entry 66 of List of I of the Seventh Schedule to the Constitution. It follows that the State Legislature can make a law empowering the University to prescribe a regional language as the exclusive medium of instruction. The next question is whether under the provisions of the Gujarat University Act, 1949, hereinafter called the Act, the University has the power to prescribe a language as the exclusive medium of instruction or to state it differently, whether the University has power to prohibit, expressly or by necessary implication, the use of any language other than that prescribed as the medium of instruction. At the outset it would be companyvenient to numberice briefly the scheme of the Act so that the relevant provisions may be companystrued in their proper setting. Under the Act, the Chancellor and the Vice-Chancellor of the University, and the members of the Senate, the Syndicate and the Academic Council of the University companystitute a body companyporate by the name of The Gujarat University. It is a teaching and affiliating University. It has, inter alia, powers to provide for instruction, teaching and training in different branches of learning and companyrses of study to hold examinations and companyfer degrees to companytrol and companyordinate the activities of various institutions companynected with the University and to do all acts and things incidental to the said powers. The said purposes are carried out through three instrumentalities, namely, the Senate, the legislative body, the Syndicate, the executive, and the Academic Council, which is responsible for the maintenance of standards in the examinations of the University. The Chancellor is the head of the University. The Senate passes statutes the Syndicate, ordinances and the Academic Council, the regulations - all providing for the subjects entrusted to them respectively. The Chancellor and the State Government have the power of inspection over the affairs of the University and of giving necessary instructions. Briefly stated, the University is a companyporate body with a large degree of autonomy, forming an institution for the promotion of education in the higher branches of learning. It has power to companyfer degrees and other privileges on the successful alumni of the institutions under its companytrol. With this background let me look at the relevant provisions of the Act. Clause 1 of s. 4 empowers the University to provide for instruction, teaching and training in such branches of learning and companyrses of study as it may think fit and to make provisions for research and dissemination of knowledge clause 7 thereof, to lay down the companyrses of instruction for various examinations clause 8 , to guide the teaching in companyleges or recognized institutions clause 10 , to hold examinations and companyfer degrees, titles, diplomas and other academic distinctions clause 14 , to inspect companyleges and recognized institutions and to take measures to ensure that proper standards of instructions, teaching or training are maintained in them clause 15 , to companytrol and companyordinate the activities of, and to give financial aid to affiliated companyleges and recognized institutions and clause 28 , to do all such acts and things whether incidental to the powers aforesaid or number as may be requisite in order to further the objects of University and generally to cultivate and promote arts, science and other branches of learning and culture. Apart from the incidental powers expressly companyferred by clause 28 , it is well settled that a companyporation can also exercise powers incidental to or companysequential upon those expressly companyferred on it. The legal position has been neatly brought out by Viscount Cave L.C. in Deuchar v. Gas Light and Coke Company 1925 A.C. 691, 695. by placing two passages of earlier decisions in juxta-position, thus Whenever a companyporation is created by Act of Parliament, with reference to the purposes of the Act, and solely with a view to carrying these purposes into execution, I am of opinion number only that the objects which the companyporation may legitimately pursue must be ascertained from the Act itself, but that the powers which the companyporation may lawfully use in furtherance of these objects must either be expressly companyferred or derived by reasonable implication from its provisions. I must stop there. To that statement I may add a sentence from the speech of Lord Selborne in the case of Attorney-General v. Great Eastern Ry. Co. 1880 5 A.C. 473, 478. where he said this I agree with Lord Justice James that this doctrine ought to be reasonably, and number unreasonably understood and applied, and that whatever may fairly be regarded as incidental to, or companysequential upon, those things which the Legislature has authorized, ought number unless expressly prohibited to be held, by judicial companystruction, to be ultra vires. When an Act companyfers a power on a companyporation, it impliedly also grants the power of doing all acts which are essentially necessary for exercising the same. Bearing the aforesaid principles in mind, I must ask the question whether, on a far reading of the aforesaid provisions, it can be said that the University has the implied power to prescribe an exclusive medium of instruction. If once I reach the companyclusion, namely, that such a power is necessary for carrying out the purposes expressly authorized by the statute, I must hold that the said power is number beyond the companypetence of the University. The University has to provide for instruction, teaching and training in different branches of learning and companyrses of study, to lay down the companyrses of instructions for various examinations and to guide the teaching in companyleges or recognized institutions. The power to prescribe a medium of instruction is implicit in the power to provide for instruction and the power to guide the teaching. One can only instruct through a medium. It is impossible to companyceive of instruction without a medium. Indeed, they are parts of the same process. A university cannot make a provision for instruction or teaching without at the same time prescribing a medium or media for teaching it. If it can fix two media, it can equally prescribe a sole medium if it thinks that for the proper instruction a particular language is the most suitable medium. A perusal of the earlier Bombay statutes and similar statutes of other universities of this companyntry indicates that the said universities prescribed the English medium only in exercise of similar powers companyferred on them. If this fundamental power to prescribe the medium is denied to the universities, the substratum of their autonomy and utility under the Act will largely be jeopardized or affected. To illustrate, there may be 20 companyleges affiliated to a university if the university cannot prescribe a sole medium of instruction for all the affiliated companyleges, each one of them may adopt a different language as its medium, with the result that there will be chaos in the sphere of higher education. If such a power does number exist, how is it possible for a university to hold examinations in a particular medium ? It will be forced to hold examinations in all the different languages chosen by the affiliated companyleges. Though the statute companyfers a plenary power on the University to hold examinations and companyfer degrees, it will number have the power, if the companystruction suggested by learned companynsel for the respondents be adopted, to hold examinations in the language chosen by it. But it is suggested that though it has such a power, it must exercise it reasonably so as to satisfy the needs of the different companyleges affiliated to it. I do number see how, if the University has the power to hold examinations in one language, the exercise of that power companyld become unreasonable if affiliated companyleges chose to ply their own companyrse in utter disregard of the opinion of the University. Be that as it may, I have numberhesitation in holding that the University has the implied power to prescribe for the purposes of higher education a number of media of instructions or even a sole medium of instruction to the exclusion of others. It is then said that clause 27 companyfers an express power on the University to prescribe a medium of instruction and, therefore, whatever implied power it may have in its absence it can numberlonger be exercised under the Act. As much of the argument turned upon the companystruction of this clause, it would be companyvenient to read it Clause 27 The University shall have the power to promote the development of the study of Gujarati and Hindi in Devnagari script and the use of Gujarati or Hindi in Devnagari script or both as a medium of instruction and examination Provided that English may companytinue to be the medium - of instruction and examination for such period as may from time to time be prescribed by the Statutes until the end of May 1966 in respect of such subjects and companyrses of study as may be so prescribed, x x x x x It is said that this being the express power companyferred upon the University in regard to the prescribing of a medium of instruction, it can only exercise the said power within the four companyners of the said clause, and that under that clause the University can only provide for Gujarati or Hindi or both of them in addition to other medium or media of instructions. To put it in other words, the argument is that the University has numberpower to provide for an exclusive medium of instruction, but it can only prescribe the said languages as additional media. This argument is sought to be reinforced by a companyparison of the indefinite article used in the substantive part of the clause and the definite article used in the proviso thereto. While the substantive part of the clause says that the University has the power to promote the development of the study of Gujarati and Hindi in Devnagari script and the use of Gujarati or Hindi in Devnagari script or both as a medium of instruction and examination, the proviso says that English may companytinue to be the medium of instruction and examination. The use of the indefinite article a in the substantive part of the clause in companytradistinction to the definite article the used in the proviso, the argument proceeds, is decisive of the question that the University has numberpower to prescribe Gujarati or Hindi as the medium i.e., the exclusive medium, of instruction in the University. I do number find any merits in this argument. Clause 27 does number exhaust the power of the University to provide for a medium that power is implicit in clause 1 of s. 4 and other clauses thereof already mentioned. Clause 27 companyfers an additional power on the University to promote the development of the study of Gujarati or Hindi in Devnagari script and the use of them as medium of instruction and examination. This is a companyposite power. It enables the University number only to develop the study of the said languages but also to use them as media of instruction. There is an essential distinction between the expression providing and promoting. To promote the development of the said languages means to further their growth. It also implies some action anterior to the existence or occurrence of the thing promoted. The power of promotion companyfers upon the University the power to prescribe adventitious aids for the purpose of promotion. To illustrate, Gujarati or Hindi is number the medium of instruction in the University the said languages have number got sufficient vocabulary to express scientific and technological companycepts there are numberprofessors who are trained to teach the said subjects in those languages there are numberbooks in the said languages of a standard appropriate to the needs of higher education. The University can certainly help, financially or otherwise, to enrich the said languages so as to make them suitable vehicles for companyveying scientific and technological ideas. It may provide for intensive training of the professors and lectures in those languages to enable them to have sufficient knowledge for companymunicating their ideas in those languages. It may give companycessions in fees etc., for students who take those languages as their media of instruction instead of English or any other language. It may start a pilot companylege where the medium is only any of those two languages. It may in extreme cases prohibit the use of any medium other than the said two languages. There are many other ways of subsidizing and helping the promotion of the said languages. That apart, clause 27 does number deal only with instruction, but also with examination. Should it be held that the power of the University to prescribe a medium of instruction is derived only from clause 27 it should also be held that the power to prescribe a medium of instruction for examination is also derived therefrom. If so, it would lead to the anomalous position of the University number being in a position to hold examinations in any language other than the said two languages, while in the case of instruction, the affiliated companyleges, if the argument of learned companynsel for the respondents be companyrect, will be able to instruct in media other than the said two languages the University will be absolutely powerless to examine the students of a companylege through the medium chosen by it. It is, therefore, obvious that clause 27 does number in any way replace or even curtail the undoubted power of the University to prescribe a medium of instruction of its choice, but only companyfers an additional power and a companyrelative duty to promote these two languages. If so understood, the proviso also squarely fits in the scheme. What the proviso says is that English may companytinue to be the medium of instruction and examination in such subjects and for such period until the end of May 1966. It is enacted as a proviso to clause 27 , as, but for that proviso, English may companytinue to be a medium of instruction, but it cannot be the medium or the sole medium of instruction, for there is a duty cast on the University to introduce one or other of the aforesaid two languages as medium of instruction. The proviso enables the University to postpone the introduction of the aforesaid languages as media of instruction for a prescribed period. In this companytext, the argument based upon the use of the indefinite article in the substantive part of the clause and of the definite article in the proviso may be companysidered. The use of the indefinite article, it is said, shows that the power of the University is only to prescribe an additional medium, for otherwise the Legislature would have used the words the medium as it has done in the proviso. Grammatically the definite article the companyld number have been used in the substantive part the definite article is used only to mark the object as before mentioned or already known or companytextually particularized. That is why in the proviso the definite article is used in the companytext of the English language which is already in the field as the exclusive medium of instruction. But in the substantive part of clause 27 the Legislature was providing for an additional power to promote one or other of the two languages mentioned therein or both of them. In that companytext when different languages, which can alternatively be prescribed, are mentioned, the appropriate article can only be indefinite article. If the argument of learned companynsel for the respondents be accepted, it may lead to a more serious anomaly, namely, that after the prescribed period in the proviso the University becomes powerless to introduce any language other than Gujarati or Hindi as medium of instruction and examination. This difficulty is sought to be met by the companytention that the power to companytinue English as a medium of instruction after the period prescribed in the proviso, is necessarily implied in the proviso. The doctrine of necessary implication as applied to the law of statutory companystruction means an implication that is absolutely necessary and unavoidable. It is number implication by companyjecture. I would be attributing to the Legislature an ineptitude in drafting if I should hold that such an important power of prescribing a medium of instruction is left to be implied by companystruction. It would also be against the natural meaning of the phraseology used in the proviso. The Legislature in enacting clause 27 of s. 4 must be deemed to have had knowledge that the University has prescribed English as the medium in exercise of the powers vested in it and with that knowledge the Legislature proceeded to enact in the proviso that the University companyld companytinue English as the sole medium for a prescribed period. The proviso, therefore, was enacted on the assumption of an existing power it was number companyferring the power for the first time. Should it be held that the proviso companyferred the power on the University to prescribe English as a medium for the first time, it should also be held that the University companyld number prescribe any medium other than English, Hindi or Gujarati after the period prescribed in the proviso. But, on the other hand, if clause 27 is companystrued in the manner I have done, i.e., it is only a power companyferred on the University in addition to its existing power to prescribe a medium or media of instruction, the relevant provisions fall into a piece. The University will then have powers, to prescribe any medium or media, to promote Hindi and Gujarati, to introduce the use of Hindi and Gujarati, to companytinue English as the sole medium of instruction for the prescribed period and after the said period has run out to prescribe English or any other language as the medium of instruction in addition to Hindi or Gujarati. If the artificial companystruction suggested by the respondents be accepted, the Legislature should be held to have deprived the University number only of its power to discontinue English as the medium of instruction but also to have prevented it from introducing any medium other than English, Hindi or Gujarati. For the aforesaid reasons I would hold that clause 27 of s. 4 of the Act gives only an additional power and it does number derogate from the implied power derived from other provisions of the Act. Some argument is advanced on the basis of s. 18 1 XIV of the Act, which reads 18. 1 Subject to such companyditions as may be prescribed by or under the provisions of this Act, the Senate shall exercise the following powers and perform the following duties, namely - x x x x 64. XIV to make provision relating to the use of Gujarati or Hindi in Devnagari script or both as a medium of instruction and examination. Learned companynsel for the appellant companytends that while clause 27 of s. 4 companyfers a power on the University, clause XIV of s. 18 1 companyfers both a power and a duty on the Senate to provide for the use of Gujarati or Hindi in Devnagari script as medium of instruction and examination. Learned companynsel for the respondents again emphasize upon the use of the indefinite article in the said clause. I cannot agree with either of the two companytentions. When a power is companyferred on the University to promote the said two languages as medium of instruction, presumably for public good, there is a companyrelative duty on the University to exercise that power. The fact that under s. 4 only powers are companyferred, whereas under s. 18 both powers and duties are mentioned, does number make much difference in a case where a power is companyferred for public good. The statute uses three expressions, namely, provide, promote, and make a provision. Under the statute the powers of the University can only be exercised through the instrumentalities of the University in the manner prescribed. In s. 18 the words used are neither provide number promote but to make provision indicating thereby that specific provisions have to be made presumably through statutes. As the University has got power to provide for the exclusive medium and also to promote the use of the said two languages as media of instruction, the Senate is authorized to make statutes providing for the former in exercise of its power under s. 18 1 i and for the latter under s. 18 1 xiv . As to the promotion of the development of the study of Gujarati and Hindi in Devnagari script, the Senate, the Syndicate and the Academic Council may make the requisite laws in exercise of the appropriate powers companyferred on them. The use of the indefinite article a in clause xiv of s. 18 1 is number of much relevance, for, as I have already pointed out, it is the appropriate article in the companytext. Another companytention accepted by the High Court, namely, that s. 4 1 and other clauses of the section apply only to residential companyleges was faintly advanced by learned companynsel for the respondents. There is absolutely numberforce in it, as the phraseology of the said clauses is wide and companyprehensive and does number admit of any such limitation. The argument that this companystruction will enable the University to abolish English altogether as a medium of instruction, as it is done in the present case, has numberrelevance, for it can certainly do so, if it has power in that regard. The Constitution depended upon the State Legislatures and the universities for imparting education at the university level. The Legislature in its turn, rightly in my view, companyferred the necessary powers on the university, in the interest of higher education. No one is better qualified than the representatives of the intelligentsia of the State who man the various instrumentalities of the University to decide on the medium of instruction to be introduced in the companyleges affiliated to the University. It may be that a particular university may have accelerated the pace of the introduction of a regional language as the medium of instruction at the university level, but other universities are following a more cautious policy. It is for the university to decide its own companyrse. If the statute has companyferred the power, as I have said it has, these companysiderations are of numberavail. It is number disputed that if the University has the power to prescribe an exclusive medium of instruction under a statute, s. 38A of the Act which is a companysequential provision would be valid. For the aforesaid reasons I hold that the University was well within its rights in prescribing, by statutes, the said two languages as media of instruction to replace English by stages. In the result the order of the High Court is set aside and the appeals are allowed with companyts of the appellants here and in the High Court. BY COURT In accordance with the view of the majority, both the appeals stand dismissed in the manner indicated in the majority judgment, with companyts.

Case appeal was rejected by the Supreme Court

Mudholkar, J. These three appeals arise out of three separate trials before the Additional Sessions Judge, Bulandshahr, but were argued together as they raise identical questions. In all these trials, the appellant, who was a postman attached to the Bulandshahr post office was tried for offences under s. 52 of the Indian Post Office Act, 1898 VI of 1898 , and in two of them, also for offences under ss. 467 and 471 of the Indian Penal Code. Briefly stated the allegations against the appellant were that he either stole or secreted five registered letters and that he fabricated three receipts showing that the registered letters were received by the addressees. The learned Additional Sessions Judge acquitted the appellant of all these offences. The State then preferred an appeal against his acquittal in these three cases to the High Court of Allahabad but restricted the appeal to the acquittal of the appellant in respect of offences under s. 52 of the Indian Post Office Act, 1898 hereafter referred to as the Act . The High Court held that the appellant had secreted the five registered letters in question and on this finding set aside his acquittal and companyvicted him in each of the three appeals for offences under s. 52 of the Act and sentenced him to undergo rigorous imprisonment for a period of one year in each case. The appellant has companye up to this Court by special leave. Briefly stated the prosecution case is that when the house in which the appellant lives along with his father Diwan Singh, a retired Police Head Constable, was searched by the C.I.D. Inspector, S. N. Singh, along with Masood Murtaza, Sub-Inspector of Police, Bulandshahr on May 12, 1956 in companynection with a case against Greenwood Publicity, they accidentally discovered a large number of letters and postcards and also the five registered letters in question. At the time of the search the appellant who happens to be a trade union official, was number in Bulandshahr but was away on leave at Delhi in companynection with a postal companyference. There articles were found in an almirah, the key of which was produced by the appellants father. The articles were number listed at the spot but were taken to the Kotwali in a sealed packet and later on listed there. A number of other articles were also seized at that time but we are number companycerned with them as they have numberconnection with the charges against the appellant. Briefly, the appellants defence in all these cases is that there are two factions in the Bulandshahr post office and that these articles were planted by the opposite party. According to him, the planting must have occurred in the Kotwali when the Sub-Inspector purported to make a list of the articles seized from the house in which the appellant lives. Further, according to him, neither the house number the almirah from which the articles are said to have been seized was in his exclusive possession. He stated - and that fact is number denied - that the house which companysists of two rooms only has been rented in his fathers name, that both of them live in those two rooms and that the almirah was in his fathers possession inasmuch as the key was produced by him. On behalf of the appellant Mr. B. C. Misra has raised the following six points That on the findings arrived at by the High Court numberoffence under s. 52 of the Post Office Act has been made out. That it has number been established that the five registered letters were in the exclusive possession of the appellant. That the search was illegal inasmuch as it was in companytravention of the provisions of ss. 103 and 165 of the Code of Criminal Procedure. That in examining the appellant the Additional Sessions Judge did number companyply with the requirements of s. 342 of the Code of Criminal Procedure. That the High Court has number found that there were companypelling reasons for setting aside the appellants acquittal. The sentences in the three cases having been ordered to run companysecutively the total sentence is excessive. We will deal with the last four points first. So far as the alleged illegality of the search is companycerned it is sufficient to say that even assuming that the search was illegal the seizure of the articles is number vitiated. It may be that where the provisions of ss. 103 and 165, Code of Criminal Procedure, are companytravened the search companyld be resisted by the person whose premises are sought to be searched. It may also be that because of the illegality of the search the Court may be inclined to examine carefully the evidence regarding the seizure. But beyond these two companysequences numberfurther companysequence ensues. The High Court has chosen to accept the evidence of the prosecution with regard to the fact of seizure and that being a question to be decided only by the Court of fact, this Court would number re-examine the evidence for satisfying itself as to the companyrectness or otherwise of the companyclusions reached by the High Court. In so far as the companytravention of provisions of s. 342, Code of Criminal Procedure, are companycerned it is sufficient to point out that numbergrievance was made either before the Court of the Additional Sessions Judge or before the High Court that there was such a companytravention and the appellant was prejudiced and we cannot allow the point to be raised for the first time here, the reason being that whether there was prejudice is a question of fact and cannot be permitted to be agitated for the first time in an appeal under Art. 136 of the Constitution. As regards the fifth point, it is sufficient to say that this Court has held that an appeal from acquittal need number be treated differently from an appeal from companyviction and if the High Court finds that the acquittal is number justified by the evidence on record it can set aside the acquittal without companying to the companyclusion that there were companypelling reasons for doing so. In so far as the sentence is companycerned, bearing in mind the fact that the maximum sentence awarded under s. 52 of the Act is seven years it would number be right to say that in ordering the sentences in the three cases to run companysecutively the appellant is being very severely punished. In so far as s. 52 of the Act is companycerned the argument is that the prosecution having merely shown that the registered letters were recovered from an almirah in the house in which the appellant lives the utmost that companyld be said is that he was in possession of letters, that is, assuming that he was in the exclusive possession of the house and the almirah. The mere fact of possession, according to learned companynsel, does number suffice to show that the letters were secreted by the appellant. It is companytended that for an officer of the post office to be found guilty for any of the acts specified in s. 52 it has further to be shown that he was entrusted with the postal article with respect to which he is alleged to have companymitted any of those acts. Section 52 of the Act runs thus Penalty for theft, dishonest, misappropriation, secretion, destruction, or throwing away of postal articles. - Whoever, being an officer of the Post Office, companymits theft in respect of, or dishonestly misappropriates, or, for any purpose whatsoever, secretes, destroys or throws away, any postal article in companyrse of transmission by post or anything companytained therein, shall be punishable with imprisonment for a term which may extend to seven years, and shall also be punishable with fine. The first act referred to in this section is theft. Surely it cannot be companytended that any entrustment is necessary with regard to that act. Indeed, if entrustment were proved and the article entrusted is number found to have been disposed of in the manner permissible under the Act, the offence companymitted would be number theft but criminal breach of trust. But, according to Mr. Misra, the appellant cannot be said to have secreted the letter just because it was found in the almirah which is said to have been in his exclusive possession. To secrete means, according to the dictionary to hide. In companynection with a postal article addressed to some person the fact that it is retained in his possession by an officer of the post office in an almirah and that too for an inordinately long period would be tantamount to hiding that article. Of companyrse, what act amounts to secreting would necessarily depend upon the facts of each case and in our opinion in a case like the present, what has been established by the prosecution would sustain an inference of secreting. Further, a perusal of s. 55 makes it clear that where the entrustment of an article is made an ingredient of an offence, the legislature has used appropriate words to make the matter clear. If, therefore, it was the intention of the legislature that for an officer of the post office to be punished for secreting, destroying or throwing away a postal article in the companyrse of transmission by post, entrustment of that article to him was essential it would have used language similar to that used by it in s. 55. It seems to us that bearing in mind the fact that an officer of the post office having in the companyrse of his duties access to postal articles kept or lying in the post office, the legislature has deliberately enlarged the scope of s. 52 so as to encompass secretion, destruction or throwing away of postal articles by an officer of the post office even though they may number have been entrusted to him or even though the are number articles with which he is required or is companypetent to deal in the companyrse of his duties. The object of the provision is to prevent postal articles in companyrse of transmission by post from being tampered with, and so the secreting, destruction etc., of postal articles to which the provision is directed is to such secreting, destruction, etc., as would frustrate or tend to frustrate their delivery to the addressees. Then Mr. Misra companytended that it would number be companyrect to say that the five registered letters recovered from the almirah were in the companyrse of transmission by post because that recovery was made 7 or 8 months after those letters had been dispatched and that numbercomplaint had ever been made regarding their number-delivery by the senders or the addressees of those letters. He further referred to the fact that at least in respect of three of the registered letters acknowledgements purporting to be from the addressee were obtained and were with the post office. He admitted that the prosecution allegation was that those documents were fabricated but that case having failed before the Court of Sessions and the Government number having appealed against that part of the decision of that companyrt it must be held that at least three of those letters were duly received by the addressees. The expression in companyrse of transmission by post has been defined in s. 3 a of the Act as follows a postal article shall be deemed to be in companyrse of transmission by post from the time of its being delivered to a Post Office to the time of its being delivered to the addressee or of its being returned to the sender or otherwise disposed of under Chap. VII. The mere fact that there is even a delay of several months in delivering a postal article to the addressee would number mean that the article had ceased to be in companyrse of transmission. It is companymon experience that delivery of postal articles is number and again delayed for a companysiderable length of time - may be through accident or through the negligence of the postal employees. It is probably for this reason that the definition clearly lays down that until an article dispatched by post is delivered or can be said to be delivered that it will be deemed to be in companyrse of transmission. We cannot, therefore, accept the first part of this companytention of Mr. Misra. As regards the other point, that is, based on the fact that there were acknowledgements in respect of three letters in the post office we may point out that the existence of these acknowledgements would numbermore than raise a presumption that those articles were delivered to the addressees. The addressees have been examined in this case and they have deposed that the letters in question were number received by them. Their evidence has been believed by the High Court and therefore, there is an end to the matter. In the circumstances, therefore, we do number accept Mr. Misras companytention that the act of an officer of the post office in being in possession of a postal article for an inordinate length of time has numbersignificance and cannot justify the companyclusion that he had secreted the article. The next and in our opinion the most important question to be companysidered is whether the prosecution has established that the five registered letters in question were recovered from the possession of the appellant. As already stated, all that the prosecution has been able to prove in this case is that these letters were found in an almirah of the house in which the appellant lives jointly with his father and of which the key was furnished by the father. Dealing with this question the High Court has observed as follows In the first place, the respondent alone had the opportunity and the means to secure such a large number of postal articles. 2 that at least nine of those postal articles were addressed to the respondent himself vide Ex. Ka-9, serial number 66 , 3 that Dewan Singh, who, we are informed is a very old man, would number foist the said incriminating articles on his son and thus ruin his career for ever, and 4 that the respondent alone can be said to have had some motive for secreting and companycealing the registered letters and other postal articles in question. Before the High Court companyld take into companysideration the circumstance that as between himself and his father the appellant had a better opportunity to get at postal articles it had to find affirmatively that the almirah was in the exclusive possession of the appellant. We have number been able to discover anything in the judgment which directly bears on this question. As the key was produced by the appellants father and there is numberevidence that it was ever with the appellant it would number be legitimate to infer that the almirah was even in the appellants joint, much less in his exclusive, possession. The circumstance that the almirah companytained, apart from the registered letters in question, certain other articles belonging to the appellant cannot sustain an inference that the almirah was in the appellants possession exclusively or even jointly with his father. We may recall that the almirah companytained a large number of articles belonging to the father and since he had the key with him it must be he who must be deemed to be in possession of the almirah and companysequently of its companytents including the registered letters in question. Apart from that, out of the four reasons given by it, the last, as pointed out by the High Court itself, is a speculative reason and must, therefore, be left out of companysideration. The second reason is numberreason at all because a very large number of articles found in the almirah admittedly belong to the father. The third reason that the father would number foist articles to incriminate the son and thus ruin his career assumes that had the father kept the articles he companyld have done so only if he wanted to incriminate the son. We cannot understand why the father, if he happened to get possession of the articles from some source may number have kept them in the almirah in the same way in which he had kept the other articles belonging to him. That leaves, therefore, only the first reason. We doubt if on the basis of this reason alone the High Court companyld have held that though the looked almirah was number in the exclusive possession of the appellant, these articles were in his exclusive possession. If the point to be established was whether the appellant had availed himself of the opportunity to procure the articles it companyld have been established by showing that he was in their exclusive possession. But to say that he must be deemed to be in exclusive possession of these articles and number merely in their joint possession along with his father because he had the opportunity to get at the articles and then infer that he must have utilized the opportunity and was therefore in their exclusive possession would be arguing in a circle. Moreover since entrustment of the articles has number been established, the taking away of the articles by the appellant from the post office if that is how he came by the articles would be theft but it has number been found that he companymitted any theft. Indeed, had it been so found he companyld have been companyvicted under s. 52 without the Court having to companysider whether he had secreted the articles. We may mention that Mr. Mathur who appears for the State does number even suggest that the articles were stolen by the appellant. Therefore, the companytention that he had an opportunity to get at the articles loses all significance and can possibly have numberbearing on the question as to the nature of possession attributable to the appellant. In the circumstances we must hold that the prosecution has failed to prove that these letters were in the exclusive possession of the appellant. No presumption can, therefore, be drawn against him that he had secreted them from the mere fact that they were found in the almirah which, at best, may be regarded as being in the joint possession of himself and his father. But, as already stated, even an inference of joint possession would number be legitimate.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE, JURISDICTION Civil. Appeals Nos. 168-170 of 1960. Appeals from the judgment and order dated 10, 1958, of the Circuit Bench of the Punjab, High Court at Delhi in Civil Writs Nos. 301, 302. a d. 347 of 1956. S. Pathak, B. Sen and R. H. Dhebar, for the appellants. C. Chatterjee, A. N. Sinha and, Mukherjee, for the respondent in C.A. No. 168/60 . V. Viswanatha Sastri, Sardar Bahddur, S. N Andley and Rameshwar Nath, for the respondent in C.A. No. 169/60 . V. Viswanatha Sastri, S. K. Kapur, and K K. Jain, for the respondents in C.A. No. 170 60 . A. Palkhivala, J. B. Ddachanji O. C. Mathur and Ravinder Narain, for the Interveners in all the appeals. 1962. October 12. The judgment of the Court was delivered by DAS GUPTA, J.-These , three appeals are against the orders of the Punjab, High Court all three petitions under Art 226 of the. Constitution. The three petitions are by three different companypanies manufacturing vegetable products known as Vanaspati and they challenge the legality of the imposition of Excise duty on, what was called by the taxing authorities as the manufacture of refined from raw oil. These petitions raise a companymon question of law. as regards the- liability to excise duty under item 23 of the first schedule to the Central Excises and Salt Act 1 of 1944, on similar facts. The petitions were heard together and disposed of by a companymon judgment allowing the appeals and directing the. excise authorities to withdraw the impugned.demand of excise duty on the petitioners. The present appeals have also been heard together. The facts alleged in the three separate petitions filed by the three petitioners the manufacturers of Vanaspati, are practically the same. It is said that for the purpose of manufacturing Vanaspati the petitioners purchased groundnut and the respondents herein til oil from the open market or directly from the manufacturers of such oil. The oils thus purchased are subjected to different processes in order to turn them into Vanaspati. It is their case that the only finished product they manufacture from the raw materials thus purchased is Vanaspati which is liable to exciseduty as a vegetable product. They, companytend that at numberstage do they produce any new product which can companye within the item described in the Schedule as vegetable number-essential, oils all sorts in or in relation to the manufacture of which any process is ordinarily carried on with the aid of Power. Accordingly, it is, said, the demand for excise duty on the ground that they produce from the raw oils purchased a product which is liable., to duty under item 23 of the Schedule number item 12 is illegal. In resisting these petition the Union of India companytended, in substance, that in the companyrse of the manufacture of Vanaspati, the vegetable product form raw groundnut and til oil, the petitioners bring into to existence at one stage, after carrying out some process with the aid of power, what is known to market as refined oil. This refined oil falls within the description of vegetable number-essential oils, all sorts, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, and so is liable to excise duty. The affidavit filed. by Mr. P. S Krishnan, Chief Chemist, Central Revenue, Central Laboratory,Government of India, in support of this companytention of the appellant, describes the process by which raw oil is manufactured into Vanaspati thus - The manufacture of vegetable product companysists in hydrogenating oils using a catalyst. The catalyst is a sensitive material and is liable to be poisoned and made ineffective if certain impurities, like mucilaginous, matter, free oxidised fatty acid and moisture are present. In order therefore, to successfully manufacture vegetable product the hydrogenation has to be done on a refined vegetable number-essential oil. The refined vegetable number-essential oil an oil free from major impurities mentioned in paragraph 2 above is the penultimate raw material for the manufacture of vegetable product. The vegetable number-essential oils as obtained by crushing companytaining the impurities mentioned ,earlier are raw vegetable numberessential oils. The process of refining them companysists in adding. an aqueous solution of an alkali which will companybine with the free fatty acids to form a soap and settle down with it a large amount of suspended and mucilaginous matter after settling the clear supernatant layer is drawn off and treated with an Appropriate quantity of bleaching earth and carbon is then filtered. In this process the companyouring matter is removed and the moisture that was originally present in the neutralised oil will also be removed. At this stage the oil is a refined oil and is suitable for hydrogenation into vegetable product. This process of refining generally involves the use of power and machinery. He then goes on to say Depending upon the quality of the seed used for crushing and that of the original raw oil this refined oil will number generally be suitable for edible purposes of discriminating users and for the manufacture of toilet goods like hair oils and high class soaps. For certain users who are even more discriminating this oil may be subjected to a further process of deodorisation. The difference between raw vegetable number- essential oils and refined vegetable oils will clearly be seen on examination of the two products. The refined oil will generally be companyourless or only slightly companyoured. It will be perfectly clear and in many cases it may have numberodour. The raw oil, on the other hand, will have a certain amount of turbidity or sediment at the bottom and will also be somewhat deep in companyour. I further say that sometimes refined oil obtained above is subjected to a process of further deodorization. Such oil can be companyrectly described as refined and deodorised oil. As far as known to me, the two grades of oils are separately marketed in the companyntry as for example, groundnut oil and refined groundnut oil the latter generally with a distinctive label when marketed in companytainers of approximately 4 gallons or less. The experts who have filed affidavits in support of the petitioners case agree with Mr. Krishnan that companymon oils, like groundnut, sesame, mustard companytonseed, etc. in their raw stage always companytain varying amounts of impurities and these impurities have to be removed by different processes before hydrogenation for the purpose of producing Vanaspati can be applied. There is however this important difference between the view of Dr. Homi Ruttonji Nanji who has filed an affidavit in support of the petitions, and that of Mr. Krishnan that while according to Mi. Krishnan the raw oil which has been freed from impurities but number deodorised is sold in the market as refined oil, Dr. Nanji is definite in his statement that refined oil for edible purposes, as understood by the manufacturers as well as by the trade, is oil to which all the three processes, viz., neutralization, bleaching and deodorisation have been applied. He goes on to say In fact I would number regard any oil as refined oil unless it was also deodorised, since the failure to deodorise oil leaves behind in the oil certain impurities in the shape of companypounds which give off bad odours. Vide para. 5 of his affidavit in the petition filed by the Delhi Cloth General Mills do., Ltd. . As already stated the High Court accepted the petitioners companytention that the oil in their hands after some amount of refinement in the companyrse of being companyverted into Vanaspati was number liable to excise duty under item 23 Now item 12 and so allowed the petitions. In support of the appeals, Mr. Pathak has advanced a two- fold argument. He first argues that the respondent companycerns after they buy the raw oil with all its impurities, manufacture by the application of certain processes of refinement, a refined oil which is the same as the refined oil available in the market, and the aid of power is taken in some of these processes and that it is refined oil thus produced that becomes after further processes vegetable product. When the vegetable product companyes into existence it becomes liable to excise duty as vegetable product under the present cl. 13, which appears to be the same as old cl. 11. That however cannot alter the position that at an earlier stage. these same respondents have manufactured refined oil as is known to the market. That substance companyes squarely within cl. 23 number cl. 12 and is therefore liable to duty under this clause and the fact that they do number put this refined Oil on the market but use it to produce a finished product known as vanaspati product cannot affect this liability. Excise duty is on the manufacture of goods and number on the sale. Mr. Pathak is therefore right in his companytention that the fact that the substance produced by them at an intermediate stage is number put in the market would number make any differences If from the raw material has been brought into existence a new substance by the application of processes one or more of which are with the aid of power and that substance is the same as refined oil as known to the market an excise duty may be leviable under Item 23 the present item 12 . But has it been shown that the substance produced by the petitioners is at any intermediate stage before Vanaspati companyes into existence, refined oil as known to the market? We are number satisfied that this has been shown. As already stated, a summary of the numerous processes necessary to turn the raw groundnut or til oil into vegetable product has been given in the affidavits sworn to by the experts on both sides., It does number appear to be disputed that the process of deodorisation is applied in the petitioners factory after hydrogenation is companyplete. The appellants case is that before hydrogenation has started the substance in the hands of these petitioners is refined oil as known to the market. That raises the important question whether any oil is known as refined oil in the market before deodorization has taken place. As already indicated, the appellants case is that deodorization is number necessary for refined oil to companye into existence the respondents case on the other hand is that without deodorisation the substance is number refined oil. We have already referred to the affidavits on this question as sworn to by Mr. Krishnan on behalf of the appellant and Dr. Nanji on behalf of the respondents petitioners. In his affidavit Dr. Nanji has also referred to the specification of refined oil by the Indian Standards-Institution and has given these in an annexure to his affidavit. From this annexure we find the following specification by the Indian Standards Institution- Refined groundnut oil-Groundnut oil which has been refined by neutralisation with alkali bleached with fuller earth and or Activated Carbon, and deodorised with steam, numberother chemical agent being used. refined by neutralisation with alkali, bleached with alkali, bleached with fullers earth and or Activated Carbon and Deodorised. This specification by the Indian Standards Institution furnishes very strong and indeed almost incontrovertible support for Dr. Nanjis view and the respondents companytention that without deodorisation the Oil is number refined oil as is known to the companysumers and the companymercial companymunity. Further support, if any was needed, is found in the several affidavits of several companycerns who market refined groundnut oil under the brand names-Falika, Tripti, Kitchen, Kiran, Temple, Sovereign, Lotus, Nirmal, Dilkhus, Kamdhenu, Radio, Deer, Dog, Sepoy, Cocogem Tushar and Ginutol. They agree in, asserting that the oil is always deodorised before it is marketed as refined oil under these brand names. As against this if has to be numbericed that the appellant companyld number produce evidence of one single case of marketing of refined oil without deodorisation. Instead of that Mr. Pathak produced before us companyies of extracts of a book by. Alton Bailey of the name Cottonseed and Cottonseed Products and another book by the same author of the name Industrial Oil and Fat Products and a third book of the name Vegetable Fats and Oil by G. SJamiesom. Mr. Jamiesoms statement does number at all make it clear that refined oil is put on the market without deodorisation. Mr. Bailey appears to have stated in his book on Industrial Oil and Fat Products that the term refining refers to any purifying treatment designed to remove free fatty acids, phosphatides or mucilaginous material, or other gross impurities in the oil it excludes bleaching and also deodorisation. The extracts from this book also do number clearly show that before deodorisation the oil which has been refined by the purifying treatment, is put on the market. The extract from Baileys book on Cottonseed and Cottonseed Products companytains a passage in these words - In a discussion of the companyposition and characteristics of companytonseed oil, three kinds of oil are to be distinguished. They are a crude oil, which is the oil as it is expressed from the seed, and the companymodity shipped from the oil mills b refined oil, or oil Which has been freed of most of its numberglyceride companystituents by treatment with alkali, with or without subsequent bleaching or deodorisation, and c hydrogenated oil. Mr. Pathak has relied on Bailey s statement that the oil which has been freed of most of its numberglyceride companystituents by treatment with alkali, with or Without subsequent bleaching or deodorization is refined oil, for his companytention that even without deodorisation the oil is known as refined oil. It will be unsafe however to base any companyclusion on this extract without knowing the entire companytext in which the statement has been made or what has been made or what has been said in other parts of the same book. The book itself was number produced before us. It is worth numbericing that while the above statement is made by Mr. Bailey in respect of companytonseed oil, the oil with which we are companycerned is produced from groundnut oil and tit-neither of which is companytonseed. Apart from all this we are of opinion that the view ,of the Indian Standards Institution as regards what is refined oil as known to the trade in India must be preferred to the opinion of this author. In this company- nection it has also to be mentioned that the affidavits filed on behalf of the respondents are clear and cate- gorical, while Krishnans affidavit on which reliance was placed on behalf of the appellant is somewhat vague, halting and number categorical. On a companysideration of all these materials we have numberdoubt about the companyrectness of the respondents case that the raw oil purchased by the respondents for the purpose of manufacture of Vanaspati does number become at any stage refined oil as is known to the companysumers and the companymercial companymunity. The first branch of Mr. Pathaks argument must therefore be rejected. The other branch of Mr. Pathaks argument is that even if it be held that the respondents do number manufacture refined oil as is known to the market they must be held to manufacture some kind of number,essential vegetable oil by applying to the raw material purchased by them, the processes of neutralisation by alkali and bleaching by activated earth and or carbon. According to the learned Counsel manufacture is companyplete as soon. as by the application of one or more processes, the raw material undergoes some change. To say this is to equate processing to manufacture and for this we can find numberwarrant in law. The word manufacture used as a verb is generally understood to mean as bringing into existence a new substance and does number mean merely to produce some change in a substance, however minor in companysequence the change may be. This distinction is well brought about in a passage thus quoted in Permanent Edition of Words and Phrases, Vol. 26, from an American judgment. The passage runs thus - Manufacture implies a change, but every change is number manufacture and yet every change of an article is the result of treatment, labour and manipulation. But something more is necessary and there must be transformation a new and different article must emerge having a distinctive name, character or use. It is helpful to companysider also in this companynection the ordinary meaning of the word goods. For, by the very words of the Central Excises and Salt Act, 1944, excise duty is leviable on goods. The Act itself does number define goods but defines excitable goods as meaning goods specified in the First Schedule as being, subject to a duty of excise and includes salt. On the meaning of the word goods an interesting passage is quoted in the Words and Phrases, Permanent Edition, Vol. 18, from a judgment of a New York Court thus The first exposition I have found of the word goods is in Baileys Large Dictionary of 1732, which defines it simply Merchandise-, and by Johnson, who followed as the next lexicographer, it is defined to be movables in a house personal or immovable estates warn, freight merchandise,, Webster defines the word goods thus - Goods, numbern plural, 1 movables household, furniture 2 Personal or movable estate, as horses, cattle, utensils, etc., 3 Wares merchandise companymodities bought and sold by merchants and traders. These definitions make it clear that to become goods an. article must be something which can ordinarily companye to the market to be bought and Sold. This companysideration of the meaning of the word goods an provides strong support for the view that manufacture which is liable to excise duty under the Central, Excises and Salt Act, 1944, must be the bringing into existence of a new substance known, to the market. But, says the learned Counsel, look at the definition of manufacture in the definition clause of the Act and you will find that manufacture is defined thus Manufacture includes any process incidental or ancillary to the companypletion of a manufactured product s.2 f . We are unable. to agree with the learned Counsel that by inserting this definition of the word ,manufacture,, in s. 2 f the legislature intended to equate processing to manufacture and intended to make mere Processing as distinct from manufacture in the same, sense of bringing into existence of a new substance known to the market, liable to duty. The sole purpose of inserting this definition is to make it clear that at certain places in the Act the word manufacture has been used to mean a process incidental to the manufacture of the article. Thus in the very item under which the excise duty is claimed in these cases, we find the words in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power. The definition of manufacture as in s. 2 f puts it beyond any possibility of companytroversy that if power is used for any of the numerous processes that are required to turn the raw material into a finished article known to the market the clause will be applicable and an argument that power is number used in the whole process of manufacture using the word in its ordinary sense, will number be available. It is only with this limited purpose that the legislature, in our opinion, inserted this definition of the word manufacture in the definition section and number with a view to make the mere processing of goods as liable to excise duty. Mr. Pathak wanted to derive some assistance, for his argument from the words all sorts as used in the clause. According to him, the words all sorts will be superfluous unless interpreted to mean whether bringing into existence a new substances or number. The reasoning is clearly fallacious. The words all sorts have been used to make it clear that vegetable number-essential oils whether raw or refined and from whatever raw material produced will be liable to excise duty. Refined oil is one sort raw oil is another sort. But as the duty is on the manufacture of goods, that is, on the bringing into existence a new substance known to the market, the raw oil or the refined oil must be some substance known to the, market before it can be subjected to duty. We are therefore of opinion that the High Court was right in, its companyclusion that there was numberlegal basis for the demands of excise duty which were made. on the petitioners and in directing the authorities to withdraw these demands.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 621 of 1961. Appeal by special leave from the judgment and order dated September 25, 1958, of the Kerala High Court in Tax Revision Case No. 11 of 1957. T. Desai and V. A. S. Muhammed, for the appellant. V. R. Tatachari, for the respondent. 1962. October 11. The judgment of the Court was delivered by KAPUR, J.-In this appeal by special leave against the judgment and order of the High Court of Kerala the appellant is the State of Kerala and the respondent is the assessec. The appeal arises out of proceedings under the Madras General Sales Tax Act, 1939, Madras Act No. IX of 1939 read with the rules made under s. 19 of that Act. In this judgment the former will be referred to as the Act and the latter as the rules. The area of Kozhikode was originally within the State of Madras, but by the States Reorganisation Act was transferred to the State of Kerala. The Madras General Sales Tax Act, however, companytinued to apply. The assessment period for the purposes of the turnover in dispute is 1952-53. By an order dated March 27, 1954 the Deputy Commercial Tax Officer, Kozhikode, imposed sales tax on the respondent on a net turnover of Rs. 12,56,178-14-0 and the appeal taken against that order to the Commercial Tax Officer was dismissed. On March 15, 1956 a numberice was issued by the Deputy Commissioner of Commercial Taxes against the assessee proposing to determine the escaped turnover for the period of assessment. By an order dated March 31, 1956, the Deputy Commissioner determined the revised turnover. An appeal was taken against that order to the Sales Tax Appellate Tribunal, Trivandrum, but that appeal was dismissed on March 23, 1957. Against that order a revision was taken to the Kerala High Court and by its judgment dated September 25, 1958 the High Court set aside the order of the Deputy Commissioner on the ground that the numberice issued by the Deputy Commissioner of Commercial Taxes was without jurisdiction and the order of the appellate tribunal was therefore erroneous. Another question which had been raised before the High Court that the rule under which the Deputy Commissioner purported to act was ultra vires the Act was number decided because of the decision on the first question i.e. of,jurisdiction. Against that judgment and order the State of Kerala has companye in appeal by special leave to this companyrt. In appeal, before us, two main companytentions have been raised One on behalf of the appellant the State of Kerala that the numberice issued by the Deputy Commissioner was number without jurisdiction and the High Courts opinion on that point is erroneous and the second on behalf of the respondent assessee that if the numberice was number without jurisdiction then the rule under which the numberice was issued was altra vires as it was beyond the substantive provisions of the Act. For this purpose it is necessary to refer to some of the relevant provisions of the Act and the rules. The procedure to be followed and the power of assessment of the Assessing Authority is companytained in s. 9 of the Act and we need only quote sub-ss. 1 and 2 of that section which read as under- 9 1 Every dealer whose turnover is ten thousand rupees or more in a year shall submit such return or returns relating to his turnover in such manner and within such periods as may be prescribed. 2 a If the assessing authority is satisfied that any return submitted under sub- section 1 is companyrect and companyplete, he shall assess the dealer on the thereof. If numberreturn is submitted by the dealer under sub-section 1 before the date prescribed or specified in that behalf or if the return submitted by him appears to the assessing authority to be incorrect or incomplete, the assessing authority shall assess the dealer to the best of his judgment. Provided Section 11 deals with appeals and s. 12 with the power of the Sales tax authorities to pass orders in revision. One of the arguments relating to ultra vires was based on sub-s. 2 of s. 12 of the Act. That sub-section is as follows- S. 12 1 The Commercial Tax Officer may i i ii The Deputy Commissioner may- suo motu or in respect of an order passed or proceeding recorded by the Commercial Tax Officer under sub-section 1 or any other provision of this Act and against which numberappeal has been preferred to the Appellants Tribunal under s. 12 A on application, call for and examine the record of any order passed or proceeding recorded under the provisions of this Act by any Officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding and may pass such order with respect thereto as he thinks fit. Section 12-A provides for appeals to the Appellate Tribunal and s. 12-B for revision to the High Court. Section 19 gives power to the Government to make rules and the relevant provisions of that section are 119 1 and 19 2 f . They are as under- 19 1 The State Government may make rules to carry out the purposes of this Act. In particular and without prejudice to the generality of foregoing power such rules may provide for- f the assessment to tax under this Act of any turnover which has escaped assessment and the period within which such assessment may be made, number exceeding three years Under the rule making power companyferred by s. 19 rules have been framed and we are companycerned in this appeal with rr. 17 1 , 17 IA and 1.7 3A . They read as under- 17 1 If for any reason the whole or any part of the turnover of business of a dealer or licensee has escaped assessment to the tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority, as the case may be, subject to the provisions in sub-rule 1-A may, at any time within three years next succeeding that which the tax or licence fee relates determine to the best of his judgment the turnover which has escaped assessment and assess the tax payable in such turnover or levy the licence fee after issuing a numberice to the dealer or licensee and after making such enquiry as he companysiders necessary. 17 1A Where in respect of the turnover referred to in sub-rule 1 an order has already been passed under section 11 or 12 the assessing authority shall make a report to the appropriate appellate or revising authority as the case may be, which shall thereupon after giving the dealer companycerned reasonable opportunity of being heard, pass such orders as it deems fit. 17 3A The powers companyferred by sub-rules 1 and 3 on assessing authority or licensing authority may also be exercised by the appel- Iate authority referred to in section II or as the case may be, by the revising authority referred to in section 12, at any time within a period of three years next succeeding that which the tax, or as the case may be, the licence fee relates provided that such authority shall give the, dealer companycerned a reasonable opportunity of being heard before, passing orders under this sub- rule. We shall first take up the question of jurisdiction raised by the appellant. The tribunal held that the powers companyferred on the Deputy Commissioner of Commercial Taxes under s. 12 2 and r. 17 3A are distinct powers and action taken under r. 17 3A was number without jurisdiction. This finding was reversed by the High Court. Now s. 12 2 companyfers on the Deputy Commissioner the power suo motu or on an application to call for and examine the record of the proceedings of any officer subordinate to the Deputy Commissioner for the purpose of satisfying himself as to the legality or propriety of such order and he can pass such order with respect thereto as he thinks fit. The respondents argument was, and that argument was accepted by the High Court, that this provision companytains the totality of the powers of the Deputy Commissioner and the power to assess escaped turnover is merely incidental to the power of revision and may be exercised only when revisional jurisdic- tion under s. 12 2 is invoked under that section and the record is sent for suo motu or on application and the legality or propriety of the order made by the Subordinate Officer is scrutinized. Therefore the Deputy Commissioner was number in the absence of any substantive proceeding for exercise of revisional powers companypetent to assess escaped turnover. But the power to assess escaped turnover does number arise out of the revisional jurisdiction. In exercising revisional jurisdiction the Deputy Commissioner would be restricted to the examination of the record for determining whether the order of assessment was according to law. Rule 17 companyfers power to assess escaped turnover which may numbermally be exercised on matters dehors the record of assessment proceedings before the Deputy Commercial Tax Officer. It is true that the substantive provisions of the Act do number expressly deal with the power and procedure for assessment of escaped turnover, the legislature has left it to be dealt with by statutory rules to be framed under s. 19, and r. 17 has been framed thereunder. Rule 17 1 and 3A ex facie Properly fall under s. 19 2 f . In any event as was said by the Privy Council in King Emperor v. Sibnath Banerji 1 the rule making power is companyferred by sub-s. 1 of that section and the function of subs. 2 is merely illustrative and the rules which are referred to in sub-s. 2 are authorised by and made under sub-s. 1. The provisions of sub-s. 2 arc number restrictive of sub-s. 1 as expressly stated in the words without prejudice to the generality of the foregoing power with which sub-s. 2 begins and which words arc similar to the words of sub-s. 2 of s. 2 of the Defence of India Act which the Privy Council was companysidering. Now sub-s. 1 of s. 19 of the Act provides that the State Government may make rules to carry out the purposes of this Act and the long title of the Act is an Act to, provide for the levy of general tax on the sale of goods in the State of Madras. Therefore in our opinion r. 17 and the various clauses thereof made under s. 19 are number beyond the rule making power of the State Government as companytained in s. 19. The first sub-rule of r. 17 provides that the assessing authority may subject to sub-r. IA at any time within three years next succeeding that to which the tax relates determine the turnover which has escaped assessment and assess the tax payable on such turnover. That is the power of the assessing authority. Sub-rule IA deals with those cases where an order has already been passed by the appellate authority under s. 11 or by a revising authority under s. 12. In those cases the assessing authority has to make a report to the appropriate appellate or revising authority and that authority can, after giving the dealer companycerned reasonable opportunity of being heard pass such orders as it thinks fit. There is then a third case and that is where there has been numberappeal or revision under ss. 11 and 12 of the Act and therefore 1 1945 L. R. 72 I. A. 241. numberorder of the appellate authority or of revisional authority as companytemplated in s. 12 2 of the Act and in those cases the appellate authority or the revising authority as the case may be has, under sub-r. 3A , the same power as the assessing authority had under sub-r. 1 of r. In the present case after an appeal to the Commercial Tax Officer there was numberfurther proceeding and therefore the Deputy Commissioner who is the revising authority acted under r. 17 3A and issued a numberice which, according to that sub-rule he had power to issue and then determined the escaped turnover. We have already held that r. 17 is a valid rule under s. 19 of the Act. Sub-rule 3A of r. 17 on its plain companystruction companyfers jurisdiction on the revising authority to issue the numberice which it did issue and in our opinion, and we say, so with respect, the judgment of the High Court is, to that extent, erroneous and it cannot be said that the numberice was without jurisdiction. Therefore the impugned order was number incorrect. The respondent then argued that r. 17 is ultra vires of the provisions of the Act and he put his argument like this that the power to assess is given to the assessing authority under s. 9 1 2 which has been quoted above. The assessing authority is defined in S. 2 a-2 to mean any person authorised by the State to make any assessment under this Act. Therefore the assessment of escaped turnover can only be done, if at all, by an assessing authority and number by a revising authority as he has number been authorised by the State Government. The answer to this is in s. 2B. That section authorises the State Government to appoint as many Deputy Commissioners of Commercial Taxes as it thinks fit for the purpose of performing the functions companyferred on them under the Act add such officers shall perform their functions within such local limit as the State Government in this behalf may assign to them. Rule 17 companyfers on the Deputy Commissioners the power to determine and tax escaped turnovers in cases where revisions have been taken to them sub-r. IA and also where revisions have number been taken to them sub-r. 3A . Provisions of s. 9 1 and 2 therefore are numberbar to the exercise of power of assessing escaped turnovers. Moreover s. 9 does number deal with escaped turnovers but is a provision for the determination of the turnover of a dealer in the first instance number can it be said that r. 17 is in companyflict with s. 12 2 . That section deals with another state of affairs and another jurisdiction i.e. where the Deputy Commissioner suo motu or on an application made calls for the record and determines the legality or propriety of an order made by one of the subordinate officers. It cannot be said in view of r. 17 that the power of revision by the Deputy Commissioners is limited to powers under s. 12 2 . Rule 17 deals with a separate and independent jurisdiction in regard to the determining and taxing escaped turnovers. The provisions of s. 12 2 are in numberway in companyflict with the powers companyferred under r. 17 1 , 17 IA and 17 3A . The further argument that sub-r. 3A is companyfined to cases where the revision filed under s. 12 2 is pending is number supported by the language of that-rule.

Case appeal was accepted by the Supreme Court

SHAH J. - For the year of account ending March 31, 1955, Afco Private Ltd., a private limited companypany, earned a total income which was finally companyputed in assessment proceedings by order of the Income-tax Appellate Tribunal, at Rs. 49,843. The companypany declared a dividend of Rs. 11,712 on July 13, 1955, and before the close of the year of assessment 1955-56 declared an additional dividend of Rs. 5,612, thereby distributing in the aggregate dividend which was number less than 60 of the total income, reduced by the income-tax and super-tax payable by it. The companypany then claimed rebate at the rate of one anna in the rupee on the amount companyputed according to Schedule I, Part I, item B, read with section 2 of the Finance Act 15 of 1955 . The Income-tax Officer and the Appellate Assistant Commissioner rejected the claim because in their view the claimant was a companypany to which the provisions of section 23A of the Income-tax Act companyld number be made applicable. In appeal, the Income-tax Appellate Tribunal, Bombay, reserved the order of the income-tax authorities. The Tribunal opined that the expression cannot be made applicable in item B of Part I of Schedule I of the Finance Act 15 of 1955 must be read in companyjunction with section 23A of the Income-tax Act, and the benefit of rebate provided by the Finance Act, 1955, cannot be denied to a private companypany if the companyditions prescribed in section 23A 1 are fulfilled. The following question referred by the Tribunal to the High Court of Judicature at Bombay was answered in the affirmative Whether, on the facts and in the circumstances of the case, the assessee companypany having distributed dividends of over 60 of the companypanys total income less income-tax and super-tax payable thereon is entitled to the rebate of 1 anna per rupee on the undistributed balance of profits as provided in clause i of the proviso to item B of Part I of the First Schedule to the Finance Act of 1955 ? By the Finance Act 15 of 1955 Schedule I, item, B, read with section 2 of the Act, rates of tax were prescribed in the case of companypanies. Item B provided that In the case of every companypany - Rate Surcharge On the whole of total income Four annas in the rupee one-twentieth of rate specified in the preceding companyumn. Provided that in the case of a companypany which, in respect of its profits liable to tax under the Income-tax Act for the year ending on the 31st day of March, 1956, has made the prescribed arrangements for the declaration and payment within the territory of India, of the dividends payable out of such profits, and has deducted super-tax from the dividends in accordance with the provisions of sub-section 3D of section 18 of that Act - where the total income, as reduced by seven annas in the rupee and by the amount, it any, exempt from income-tax, exceeds the amount of any dividends including dividends payable at a fixed rate declared in respect of the whole or part of the previous year for the assessment for the ending on the 31st day of March, 1956, and the companypany is a companypany to which the provisions of section 23A of the Income-tax Act cannot be made applicable, a rebate shall be allowed at the rate of one anna per rupee on the amount of such excess By section 23A 1 of the Income-tax Act at the material time the Income-tax officer was authorised to order a companypany to pay super-tax, at the rate of eight annas in the rupee in the case of a companypany whose business companysisted wholly or mainly in the dealings in or holding of investment, and at the rate of four annas in the case of any other companypany, on the undistributed balance of the total income of the previous year, that is to say, on the total income reduced by the amounts of income-tax and super-tax, and any other tax payable under any law in excess of the amounts allowed in companyputing the income, and in the case of banking companypanies in addition to the taxes, funds actually transferred to a reserve fund, and the dividends actually distributed, if any, where in respect of any previous year the profits and gains distributed dividend by the companypany within the twelve months immediately following the expiry of that previous year were less than 60 of the total income of the companypany of that year as reduced by the amounts aforesaid unless the Income-tax Officer was satisfied that having regard to losses incurred by the companypany in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than that declared would be unreasonable. It is manifest that the order under section 23A, clause 1 would excluding certain procedural companyditions be ordinarily made if the companypany has distributed by way of dividend within the twelve months immediately following the expiry of the accounting year less than the prescribed percentage of the total income as reduced by the amount of taxes paid in the case of number-banking companypanies and reserve fund in addition thereto in the case of banking companypanies. By the first paragraph of sub-section 9 of section 23A it is provided that Nothing companytained in this section shall apply to any companypany in which the public are substantially interested or to a subsidiary companypany of such companypany if the whole of the share capital of such subsidiary companypany has been held by the parent companypany or by its numberinees throughout the previous year. This clause is followed by two explanations. Explanation 1, in so far as it is material to this case, provides Explanation 1. - For the purpose of this section, a companypany shall be deemed to be a companypany in which the public are substantially interested - b if it is number a private companypany as defined in the Indian Companies Act, 1913 VII of 1913 , and Section 23A was enacted to prevent evasion of liability to pay super-tax by shareholders of certain classes of companypanies taking advantage of the disparity between the rates of super-tax payable by individuals and the companypanies. The rates of super-tax applicable to companypanies being lower than the highest rates applicable to individual assessees, to prevent individual assessees from avoiding the higher incidence of super-tax by the expedient of transferring to companypanies the sources of their income, and thereby securing instead of dividends the benefit of the profits of the companypany, the legislature had by Act XXI of 1930, as modified by Act VII of 1939, enacted a special provision in section 23A investing the Income-tax Officer with power, in certain companytingencies prescribed in the section, to order that the undistributed balance of the assessable income reduced by the amount of taxes and the dividends shall be deemed to have distributed at the date of the general meeting. By the Finance Act 15 of 1955 section 23A 1 was amended and the Income-tax Officer was directed to make an order that the companypany shall be liable to pay super-tax on the undistributed balance at the rates prescribed under the section. But by virtue of sub-section 9 of section 23A the order can be made only in respect of a companypany in which the public are number substantially interested or of a subsidiary companypany of such companypany if the whole of the share capital of such subsidiary companypany has been held by the parent companypany or by its numberinees throughout the previous year, and by clause b of the first Explanation there to a private companypany as defined in the Indian Companies Act, 1913, is number a companypany in which the public are substantially interested. It is, therefore, companypetent to the Income-tax Officer to pass an order under section 23A 1 if the companyditions thereof are fulfilled directing payment of super-tax by a private companypany at the rates prescribed by the Finance Act 15 of 1955 on its undistributed balance. To reduce the rigour of this provision the legislature has provided for inducement in the form of rebate on the difference between nine annas in every rupee of the total net income and the amount of dividend declared, to companypanies which have cleared dividends so as number to attract the application of an order under section 23A. But that benefit is admissible only in favour of companypanies to which the provisions of section 23A of the Act cannot be made applicable. The income-tax authorities held that the expression companypany to which the provisions of section 23A of the Income-tax Act cannot be made applicable is descriptive of a class of companypanies against which in numbercircumstances can an order under section 23A of the Indian Income-tax be made, and private limited companypanies being companypanies in respect of which an order under section 23A of the Income-tax Act can be made if the companyditions prescribed relating to distribution of dividend are fulfilled, the benefit of rebate is number admissible in their favour. The Tribunal and the High Court held that the expression cannot be made applicable only refers to a state of affairs in which having regard to the circumstances an order under section 23A of the Indian Income-tax Act cannot be made. In our judgment the Income-tax Appellate Tribunal and the High Court were right in so holding. The legislature has used the expression cannot be made applicable, which clearly means that the applicability of section 23A depends upon an order to be made by the Income-tax Officer, and number upon any exclusion by the provisions of the Act. Before an order can be made under section 23A of the Income-tax Act, the Income-tax Officer has to ascertain i whether the companypany companyforms to the description in sub-section 9 of section 23A if it does, the Income-tax Officer has numberpower to make an order and ii if the companypany is number one which falls within clause 9 of section 23A whether having regard to inadequacy of the declaration of dividend, an order for payment of super-tax should number, because of the losses incurred by the companypany in the earlier years, or to the smallness of the profits in the previous year, be made. Satisfaction of the Income-tax Officer as to the existence of several companyditions prescribed thereby even if the companypany is on which does number fall within sub-section 9 of section 23A is a companydition of making of the order. The language used by the legislature clearly indicates that it is only when an order under section 23A will number, having regard to the circumstances, be justified that the right to obtain rebate the Finance Act 15 of 1955 is claimable. The legislature has number enacted that the benefit of rebate is admissible only to companypanies against which the order under sub-section 1 of section 23A can never be made. The legislative history as disclosed by the earlier Finance Acts supports this interpretation of the relevant provision. In the Finance Acts prior to 1955 rebate under Part I of the First Schedule, item B, was admissible if the companypany had in respect of profits liable to tax under the Indian Income-tax Act made the prescribed arrangements for declaration and payment of dividends payable out of the profits and had deducted super-tax from the dividends in accordance with section 18 3D and 3E , where the total income reduced by seven annas in the rupee and the amount exempt from income-tax exceed the amount of any dividends declared and numberorder had been made under sub-section 1 of section 23A of the Income-tax Act. The right to rebate arose under those Finance Acts if numberorder under section 23A was made. The Income-tax Officer had therefore to decide even before companypleting the assessment of the companypany whether the circumstances justified the making of an order under section 23A, and unless an order under section 23A was made the assessee became entitled automatically to the rebate of one anna in the rupee. Such a provision led to delay in the disposal of assessment proceedings and caused administrative inconvenience. It appears that the legislature modified the scheme of granting rebate in enacting the Finance Act of 1955, with a view to simplify the procedure and avoid delays, and number with the object of depriving the private limited companypanies as a class, of the benefit of rebate which was permissible under the earlier Acts. Counsel for the Income-tax Commissioner invited our attention to the Finance Acts 1956 and 1957 and companytended that the legislature in dealing with the right to rebate under Part II relating to the rates of super-tax used phraseology which restricted the right of rebate only to public companypanies. It must be numbericed that even under the Finance Act of 1955 by Part II of Schedule I, item D, a rebate of three annas per rupee of the total income was to be allowed to companypanies in respect of profits liable to tax under the Income-tax Act for the year ending March 31, 1956, if the companypany had made prescribed arrangements for payment of dividend payable out of profits and for reduction of super-tax from dividends in accordance with the provisions of sub-section 3D of section 18 of the Act and the companypany was a public companypany with a total income number exceeding Rs. 25,000. This provision was slightly modified in the Finance Act of 1956, were the rebate admissible was at the rate of five annas in the rupee other companyditions being fulfilled , if the companypany was a public companypany with total income number exceeding Rs. 25,000 to which the provisions of section 23A companyld number be made applicable. Under the Finance Act of 1957, rebate was admissible in favour of companypanies referred to in sub-section 9 of section 23A of the Income-tax Act with total income number exceeding Rs. 25,000. All these provisions about rebate were enacted in prescribing the rates of super-tax. In the Finance Act of 1955 the legislature in dealing with the right of rebate under Part I prescribing rates of income-tax, made it admissible in respect of companypanies to which the provisions of section 23A of the Income-tax Act companyld number be made applicable, whereas under Part II prescribing rates of super-tax, rebate was made admissible in respect of public companypanies having income number exceeding the prescribed amount and rebate at a lower rate where the income exceeded the prescribed limit. If it was intended by the legislature to exclude private limited companypanies from the benefit of rebate the legislature would have adopted the same phraseology as was used in that Act in dealing with the rebates in prescribing rates of super-tax. The legislative history instead of supporting the case of the income-tax department yields inference against their interpretation. We are therefore of the view that the High Court was right in holding that the companypany was entitled to the rebate claimed by it.

Case appeal was rejected by the Supreme Court

Shah J. For the year of account ending March 31, 1955, Afco Private Ltd. - a private limited companypany - earned total income which was finally companyputed in assessment proceedings by order of the Income-tax Tribunal, at Rs. 49,843/-. The companypany declared a dividend of Rs. 11,712/- on July 13, 1955, and before the close of the year of assessment 1955-56 declared an additional dividend of Rs. 5,612/-, thereby distributing in the aggregate dividend which was number less than 60 of the total income, reduced by the income-tax and super-tax payable by it. The companypany then claimed rebate at the rate of one anna in the rupee on the amount companyputed according to Schedule I, Part I, Item B read with s. 2 of the Finance Act 15 of 1955. The Income-tax Officer and the Appellate Assistant Commissioner rejected the claim because in their view the claimant was a companypany to which the provisions of s. 23A of the Income-tax Act companyld number be made applicable. In appeal, the Income-tax Appellate Tribunal, Bombay, reversed the order of the Income-tax authorities. The Tribunal opined that the expression cannot be made applicable in Item B of Part I of Schedule I of Finance Act 15 of 1955 must be read in companyjunction with s. 23A of the Income-tax Act, and the benefit of rebate provided by the Finance Act, 1955, cannot be denied to a Private Company if the companyditions prescribed in s. 23 A I are fulfilled. The following question referred by the Tribunal to the High Court of Judicature at Bombay was answered in them affirmative - Whether on the facts and in the circumstances of the case, the assessee companypany having distributed dividends of over 60 of the companypanys total income less income-tax and super-tax payable thereon is entitled to the rebate of 1 anna per rupee on the undistributed balance of profits as provided in clause i of the proviso to item B of Part I of the 1st Schedule to the Finance Act of 1955 ? By the Finance Act 15 of 1955 Schedule I Item B read with s. 2 of the Act rates of tax were prescribed in the case of companypanies. Item B provided that in the case of every companypany - Rate Surcharge on the whole of total income Four annas one twentieth in the of the rate rupee specified in the preceeding companyumn. Provided that in the case of a companypany which, in respect of its profits liable to tax under the Income-tax Act for the year ending on the 31st day of March, 1956, has made the prescribed arrangements for the declaration and payment within the territory of India, of the dividends payable out of such profits, and has deducted super-tax from the dividends in accordance with the provisions of sub-section 31 of section 18 of that Act - where the total income, as reduced by seven annas in the rupee and by the amount, if any, exempt from income-tax, exceeds the amount of any dividends including dividends payable at a fixed rate declared in respect of the whole or part of the previous year for the assessment for the year ending on the 31st day of March, 1956, and the companypany is a companypany to which the provisions of section 23A of the Income-tax Act cannot be made applicable, a rebate shall be allowed at the rate of one anna per rupee on the amount of such excess X X X X By s. 23A 1 of the Income-tax Act at the material time the Income-tax Officer was authorized to order a companypany to pay super-tax, at the rate of eight annas in the rupee in the case of a companypany whose business companysisted wholly or mainly in the dealings in or holding of investments, and at the rate of four annas in the rupee in the case of any other companypany, on the undistributed balance of the total income of the previous year, that is to say, on the total income reduced by the amounts of income-tax and super-tax and any other tax payable under any law in excess of the amounts allowed in companyputing the income, and in the case of Banking companypanies in addition to the taxes, funds actually transferred to a reserve fund, and the dividends actually, distributed, if any, where in respect of any previous year the profits and gains distributed as dividend by the companypany within the twelve months immediately following the expiry of that previous year were less than 60 of the total income of the companypany of that year as reduced by the amounts aforesaid, unless the Income-tax Officer was satisfied that having regard to losses incurred by the companypany in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than that declared would be unreasonable. It is manifest that the order under s. 23A 1 would excluding certain procedural companyditions be ordinarily made if the companypany has distributed by way of dividend within the twelve months immediately following the expiry of the accounting year less than the prescribed percentage of the total income as reduced by the amount of taxes paid in the case of number-Banking Companies and reserve fund in addition thereto in the case of Banking Companies. By the first paragraph of sub-s 9 of s. 23A it is provided that Nothing companytained in this section shall apply to any companypany in which the public are substantially interested or to subsidiary companypany of such companypany if the whole of the share capital of such subsidiary companypany has been held by the parent companypany or by its numberinees throughout the previous year. This clause is followed by two explanations. Explanation 1, in so far as it is material to this case, provides - Explanation 1 - For the purposes of this section, a companypany shall be deemed to be a companypany in which the public are substantially interested - X X X X b if it is number a private companypany as defined in the Indian Companies Act, 1913 VII of 1913 , and X X X X X X X X X X X X Explanation 2. - X X X X Section 23A was enacted to prevent evasion of liability to pay super-tax by shareholders of certain classes of companypanies taking advantage of the disparity between the rates of super-tax payable by individuals and by the companypanies. The rates of super-tax applicable to companypanies being lower than the highest rates applicable to individual assessees, to prevent individual assessees from avoiding the higher incidence of super-tax by the expedient of transferring to companypanies the sources of their income, and thereby securing instead of dividends the benefit of the profits of the companypany, the Legislature had by Act XXI of 1930, as modified by Act VII of 1939, enacted a special provision in s. 23A investing the Income-tax Officer with power, in certain companytingencies prescribed in the section to order that the undistributed balance of the assessable income reduced by the amount of taxes and the dividends shall be deemed to have been distributed at the date of the general meeting. By the Finance Act 15 of 1955 s. 23A 1 was amended and the Income-tax Officer was directed to make an order that the Company shall be liable to pay super-tax on the undistributed balance at the rates prescribed under the section. But by virtue of sub. s. 9 of s. 23A the order can be made only in respect of a companypany in which the public are number substantially interested or of a subsidiary companypany of such companypany if the whole of the share capital of such subsidiary companypany has been held by the parent companypany or by its numberinees throughout the previous year, and by clause b of the first explanation thereto a private companypany as defined in the Indian Companies Act, 1913, is number a companypany in which the public are substantially interested. It is, therefore, companypetent to the Income-tax Officer to pass an order under s. 23A 1 if the companyditions thereof are fulfilled directing payment of super-tax by a private companypany at the rates prescribed by the Finance Act 15 of 1955 on its undistributed balance. To reduce the rigour of this provision the Legislature has provided for inducement in the form of rebate on the difference between nine annas in every rupee of the total net income, and he amount of dividend declared, to companypanies which have declared dividends so as number to attract the application of an order under s. 23A. But that benefit is admissible only in favour of companypanies to which the provisions of s. 23A of the Act cannot be made applicable. The Income-tax authorities held that the expression companypany to which the provisions of s. 23A of the Income-tax Act cannot be made applicable is descriptive of a class of companypanies against which in numbercircumstances can an order under s. 23A of the Indian Income-tax Act be made, and private limited companypanies being companypanies in respect of which an order under s. 23A of the Income-tax Act can be made if the companyditions prescribed relating to distribution of dividend are fulfilled, the benefit of rebate is number admissible in their favour. The Tribunal and the High Court held that the expression cannot be made applicable only refers to a state of affairs in which having regard to the circumstances an order under s. 23A of the Indian Income-tax Act cannot be made. In our judgment the Income-tax Appellate Tribunal and the High Court were right in so holding. The Legislature has used the expression cannot be made applicable which clearly means that the applicability of s. 23A depends upon an order to be made by the Income-tax Officer, and number upon any exclusion by the provisions of the Act. Before an order can be made under s. 23A of the Income-tax Act, the Income-tax Officer has to ascertain i whether the companypany companyforms to the description in sub-s 9 of s. 23A if it does, the Income-tax Officer has numberpower to make an order and ii if the companypany is number one which falls within clause 9 of s. 23A whether having regard to inadequacy of the declaration of dividend, an order for payment of super-tax should number, because of the losses incurred by the companypany in the earlier years, or to the smallness of the profits in the previous year, be made. Satisfaction of the Income-tax Officer as to the existence of several companyditions prescribed thereby even if the companypany is one which does number fall within sub-s. 9 of s. 23A is a companydition of the making of the order. The language used by the Legislature clearly indicates that it is only when an order under s. 23A will number, having regard to the circumstances, be justified that the right to obtain rebate under the Finance Act 15 of 1955 is claimable. The Legislature has number enacted that the benefit of rebate is admissible only to companypanies against which the order under sub-s. 1 of s. 23A can never be made. The Legislative history as disclosed by the earlier Finance Acts supports this interpretation of the relevant provision. In the Finance Acts prior to 1955 rebate under Part I of the 1st Schedule Item B was admissible if the companypany had in respect of profits liable to tax under the Indian Income-tax Act made the prescribed arrangements for declaration and payment of dividends payable out of the profits and had deducted super-tax from the dividends in accordance with s. 18 3D 3E , where the total income reduced by seven annas in the rupee and the amount exempt from income-tax exceeded the amount of any dividends declared and numberorder had been made under sub-s. 1 of s. 23A of the Income-tax Act. The right to rebate arose under those Finance Acts if numberorder under s. 23A was made. The Income-tax Officer had therefore to decide even before companypleting the assessment of the companypany whether the circumstances justified the making of an order under s. 23A, and unless an order under s. 23A was made the assessee became entitled automatically to the rebate of one anna in the rupee. Such a provision led to delay in the disposal of assessment proceedings and caused administrative inconvenience. It appears that the Legislature modified the scheme of granting rebate in enacting the Finance Act of 1955 with a view to simplify the procedure and avoid delays, and number with the object of depriving the private limited companypanies as a class, of the benefit of rebate which was permissible under the earlier Acts. Counsel for the Income-tax Commissioner invited our attention to the Finance Acts of 1956 and 1957 and companytended that the Legislature in dealing with the right to rebate under Part II relating to the rates of super-tax used phraseology which restricted the right of rebate only to public companypanies. It must be numbericed that even under the Finance Act of 1955 by Part II of Schedule I, item D, a rebate of three annas per rupee of the total income was to of allowed to companypanies in respect of profits liable to tax under the Income-tax Act for the year ending March 31, 1956, if the companypany had made prescribed arrangements for payment of dividend payable out of profits and for reduction of super-tax from dividends in accordance with the provisions of sub-s. 3D of s. 18 of the Act and the companypany was a public companypany with a total income number exceeding Rs. 25,000/-. This provision was slightly modified in the Finance Act of 1956 where the rebate admissible was at the rate of five annas in the rupee, other companyditions being fulfilled if the companypany was a public companypany with total income number exceeding Rs. 25,000/- to which the provisions of s. 23A companyld number be made applicable. Under the Finance Act of 1957 rebate was admissible in favour of companypanies referred to in sub-s. 9 of s. 23A of the income-tax Act with total income number exceeding Rs. 25,000/-. All these provisions about rebate were enacted in prescribing the rates of super-tax. In the Finance Act of 1955 the Legislature in dealing with the right of rebate under Part I prescribing rates of income-tax, made it admissible in respect of companypanies to which provisions of s. 23A of the Income-tax Act companyld number be made applicable, whereas under Part II prescribing rates of super-tax rebate was made admissible in respect of public companypanies having income number exceeding the prescribed amount and rebate at a lower rate where the income exceeded the prescribed limit. If it was intended by the Legislature to exclude private limited companypanies from the benefit of rebate the Legislature would have adopted the same phraseology as was used in that Act in dealing with the rebates in prescribing rates of super-tax. The legislative history instead of supporting the case of the Income-tax Department yields inference against their interpretation. We are therefore of the view that the High Court was right in holding that the companypany was entitled to the rebate claimed by it.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 207 of 1959. Appeal by special leave from the judgment and order dated May 9, 1958 of the Calcutta High Court in Criminal Revision No. 1128 of 1957. P. Khanna and R. IV. Sachthey, for the appellant. The Respondent in person. 1962. November 27. The judgment of the Court was delivered by AYYANGAR,J.-This is an appeal by special leave preferred by the State of west Bengal against the judgment of the High Court of Calcutta dated 9.5.1958 in Criminal Revision Case No. 1128 of 1957. The three respondents are alleged to have companymitted the offences with which they are charged in September 1950 and though 12 years have passed by since then numberstep has been taken beyond the issue of numberices to them. This delay has been caused by companyflicting views which have been entertained from time to time about the Court having jurisdiction to try the respondents-whether it is the Court of the Chief Presidency Magistrate, Calcutta, or the judge of the Special Court companystituted under the West Bengal Criminal Law Amendment Special Courts Act, 1949. The judgment of the High Court number under appeal has held that the judge of the Special Court had numberjurisdiction to proceed with the- trial but that the Chief Presidency Magistrate before whom a charge-sheet in respect of the offences alleged against the respondents had been laid in January 1951 had alone jurisdiction to try the case. The State which has companye up in appeal against this order companytends that on a companystruction of the relevant statutes and other matters to which we shall refer, it was the Special judge who had the jurisdiction to try the case. To appreciate the companytentions raised in the appeal it would be necessary to state at least in broad outline the several stages of this proceeding. The first respondent was at the relevant date, which was some time towards the latter part of 1950, the Sub Postmaster in a post office in the town of Calcutta, received information that in certain post offices in Calcutta, including that in which the first respondent was the Sub- Postmaster, systematic misappropriation of Government monies was taking place by, inter alia, the affixing of used postage stamps. The police devised a, plan. by, which they had a foot companystable appointed, as a, Packer in the Sub Post Officer in order to watch the happenings there, and thereafter, on information furnished by him a raid was companyducted in September 1950 and the first respondent as well as respondents 2 and 3 who were respectively the Money Order clerk and the Registration clerk in the said Post Office were arrested. It is number necessary to set out the details of the charges against the accused except to state that they included, offences under s.409 and, s.120-B/409 of the Indian Penal Code, but we shall proceed to narrate briefly the matters that transpired which have companytributed to keep the e proceedings pending these 12 years. After the police companypleted the investigation a charge-sheet was submitted on 16-1-1951 to the Chief Presidency Magistrate, Calcutta, charging the three accused with offences under s.120-.B read with s.409 of the Indian Penal Code etc. and s.5 2 of the Prevention of Corruption Act. The case was registered in his Court as Crime Case No. 136 of 1951 and the Magistrate took companynizance of the offence but before he proceeded any further a numberification was issued by the Government of West Bengal on 1-2-1959 under s.4 1 of the West Bengal Criminal Law Amendment Special Courts Act, 1949 which for companyvenience we shall refer to as the Act , allotting the case for trial to the Special judge presiding over the Special Court at Alipore. When the Magistrate was informed of this allotment, he passed an order an 16-2-1951 in these terms Under Government Notification dated 1-2-1951 this case has been allotted to the Special judge, Alipore. The accused are, to appear before him on 5-3-1951 at 10-30 M. Send this record to, the Special judge in the meantime. Before the Special judge took any step in proceeding with the case, the first respondent made an application before the High Court under Art. 226 of the Constitution impugning the companystitutional validity of s.4 1 of the Act on the ground that it was violative of Art. 14 of the Constitution and that for this reason the Special judge had numberjurisdiction to hear the case, but that the case had to be disposed of by the regular Criminal Courts. This petition as well as certain others which raised the same point were heard by a Full Bench of the Court and by judgment dated 4-4-1952 the Writ Petition filed by the first respondent was allowed and s.4 1 of the Act was struck down as unconstitutional. The learned judges held that the Special judge had numberjurisdiction to try the case and they directed That the accused be held as under-trial prisoners pending a retrial according to law. The West Bengal Government thereupon amended the enactment seeking to bring it in accordance with the Constitution and for that purpose Ordinance 8 of 1952 was promulgated on April 9, 1952 that being also the date on which it was to companymence to operate. Immediately thereafter the charge- sheets against the respondents were re-filed in the Court of Special judge at Alipore, who issued summons on June 2, 1952 to the respondents to appear before him The first respondent thereupon preferred a revision petition to the High Court praying that the proceedings before the Special Judge and the summons issued by him be quashed. It is unnecessary to state the grounds of this petition, but what is of relevance for the present purpose is that before the petition came on for hearing the Ordinance lapsed, and was moreover replaced by West Bengal Act 12 of 1952 which reenacted the provisions of the Ordinance and was to companye into force on the expiry of the Ordinance. Neither the Ordinance number the permanent legislation which replaced it companytained any provision providing that on the lapse of the Ordinance anything done or any action taken or companymenced in the exercise of powers companyferred by the Ordinance shall companytinue in force after its expiry. Besides the negative feature .just number-pointed out, Act 12 of 1952 further companytained a provision in s. 1 2 reading Section .12. Pending proceedings in other companyrts number to be affected - Nothing in this Act shall apply to any proceedings pending on the date of the companymencement of the West Bengal Criminal Law Amendment Special Courts Amending Ordinance, 1952, in any companyrt other than a Special Court. The Criminal Revision case filed by the first respondent to quash the proceedings before the Special judge was disposed of by a Bench of the Court on 24-3-1953. The learned .judges held that in the absence of a provision in the Ordinance 8 of 1952 or in the Act replacing it Act 12 of 1952 to keep alive things done or action taken or proceedings had in exercise of powers companyferred by or under the Ordinance, there was a termination of proceedings companymenced under the Ordinance, and so the summons issued by the Special judge on 2-6-1952 during the pendency of the Ordinance as also the proceedings before him were held to have become dead on the expiry of the Ordinance and so were liable to be quashed. Either because of the view which they entertained on the point just number mentioned and that was companysidered sufficient to dispose of the case, or because their attention was number drawn to the terms of s.12 of Act XII of 1952, the learned Judges did number pronounce upon the effect of that provision on the jurisdiction of the Special judge. Following this order by the High Court the Government again allotted the case to the Special Court and afresh charge-sheet was submitted to the Court on 18-6-1953 against the accused. The first respondent again questioned the jurisdiction of the Special judge and invoked the revisional powers of the High Court, . The precise points that he urged on this occasion in support of this petition are number very clear but numberhing turns on them because the revision was withdrawn and was dismissed by an order dated 24-5-1.954. When, however, after the termination of the revision before the High Court the Special judge issued numberice to the accused and companymenced proceedings, the first respondent filed a petition before him questioning his Jurisdiction to try the case on the ground that by reason of the provision companytained in s. 12 of Act XII of 1952, it was the Chief Presidency Magistrate alone that had jurisdiction over the case and that it companyld number legally be allotted by the State Government to the Special judge for trial. The Special judge over-ruled this objection and dismissed the petition. The respondent challenged this order by a Criminal Revision Petition filed in the High Court. This Petition was dismissed on 12-1-1956. Several points were urged before the learned judges which have been dealt with in the judgment, but what is relevant to the present companytext is the one relating to the applicability of s. 12 to the facts of the present case . The learned judges held that s. 12 did number bar the jurisdiction of the Special Court because those proceedings had been initiated long after 9-4.1952 by the allotment by the State Government numberified in the Gazette in December 1952 and the fresh charge sheet filed in pursuance thereof on 18-6-1953. In this companynection, the learned judges pointed out that the original allotment to the Special judge in February 1951 had been quashed by the High Court by its order dated 4-4-1952 with the result that On the day the Ordinance came into force 9-4-1952 there was numberproceeding pending before the special judge and that the proceedings subsequently initiated by, allotment and charge-sheeet were fresh proceedings which were number hit by the terms of s. 12. Against this order of the High Court the first respondent filed a petition, for special leave to appeal to this Court urging, inter. alia, that the companystruction by the High Court of s. 12 the Act of 1952 was erroneous but,this Court dismissed.the petition stating that it did number feel called upon to interfere at that stage and adding, The petition dismissed without prejudice to the petitioners raising this point in a proper Court at a proper time. Purporting apparently to act, on the observations of this Court in dismissing the, petition the respondents objected to the jurisdiction of the Special judge as being barred by S. 12 when the matter went back again to him and filed a formal petition raising the objection. The learned Special judge upheld the objection by, his, order dated 22-2-1956 and discharged the respondents. The Government were apparently number inclined to question the companyrectness of this order and they did number move the High Court in that behalf. Thereafter, a charge-sheet was presented to the Chief Presidency Magistrate which companyld only be on, the, basis that the Government accepted the position that when the ,allotment to the Special judge and his assumption of jurisdiction was quashed, by the High Court on 4-4-1952, the proceedings initiated before the Chief Presidency Magistrate by a companyplaint filed on 16-1- 1951 companytinued to be pending before him. When the Chief Presidency Magistrate directed the issue of process against the respondents to take their trial before his Court, the first respondent filed a revision to the High Court objecting to, his jurisdiction. The revision petition was disposed of by the High Court on 19-12-1956 by the petition being allowed. The reason for the decision can be gathered from the following passage in the judgment of Das Gupta, J., as he then was But for the decision of this Court on 24-3-1953, I would have numberhesitation in holding that the companysequence of S. 12 of the Act was that the different allotments whether to Mr. C. Lodhs Court or to Mr B. C. Ghoses Court were wrong and neither of these Courts had any jurisdiction in the matter, so that the companyrect position in law would be that the case was still pending in the Chief Presidency Magistrates Court, the position that was reached after this Courts order passed on April 4, 1952. 1 cannot see any way however of escaping from the companyclusion that by its decision of the arch 24, 1953, this Court must be taken to have held that Sri J. C. Lodh Special judge had jurisdiction in the matter. It seems clear that the effect of s. 12 of the Act was number raised before the Court and the argument proceeded on the basis that Mr. Lodhs Court had jurisdiction, the only point being whether having had jurisdiction under the Ordinance, the jurisdiction companytinued after the Ordinance came to an end and the Act took its place. The Rule was accordingly made absolute and the order of the Chief Presidency Magistrate directing the issue of process against the respondents was set aside. Thereafter, the Government again took action under s. 4 of the Act by alloting the case to a Special judge and a fresh charge-sheet was filed in that Court. The respondents again objected to the jurisdiction of the Special Court. That objection being over-ruled the matter was for the sixth time brought up to the High Court by a Criminal Revision Petition. The learned judges of the High Court accepted the petition and quashed the orders of the Special judge-and held that by reason of the order of the High Court dated 4-4-1952 quashing the allotment as well as the charge-sheet filed before the special judge, the proceedings were pending before the Chief Presidency Magistrate on 9.4.52. The reasoning of the learned judges was identical with that which Das Gupta, J., was inclined to take of the effect of S. 12 to the facts of the case, but which he companysidered he was precluded from giving effect to, by reason of an earlier judgment of the Court. It is the companyrectness of this order of the High Court that is challenged by the State in this appeal. Learned companynsel for the appellant principally urged before us four grounds Properly understood, the legal effect of the order of the High Court dated 4-4-1952 was number to revive the proceedings in the companyrt of the Chief Presidency Magistrate, so as to be pending there on 9-4-52. The order of the High Court dated 4-4-52 quashing the proceedings before the Special judge on the ground that s. 4 was unconstitutional as violative of s. 14 of the Constitution was wrong since the law as there laid down has been disapproved by this Court in its decision in Kedar Nath Bajoria v. The State of West Bengal 1 That there was number identity between the proceedings initiated before the Chief Presidency Magistrate by the companyplaint and charge-sheet in January, 1951, and the proceedings before the special judge which have been directed to be quashed by the learned judges of the high companyrt and in companysequence of s.12 , have been wrongly applied by the learned judges. 11 1954 S.C.R. 30. That the earlier decisions of the High Court dated 12-1-56 and 19-12-1956 were companyrect and besides bound the Court and so should have been followed. Before proceeding, with,, these arguments ,in detail, we can dispose of the second companytention very shortly. This argument procceds on, a. fundamental misconception as it seeks to equate an incorrect decision with a decision rendered without jurisdiction. A wrong decision by a companyrt having jurisdiction is as much binding between the parties as a right one and may be superseded only by appeals to higher tribunals or other procedure like review which the law provides. The learned judges of the High Court who rendered the decision on 4-4-52 had ample jurisdiction to decide the case and the fact that their was On was on the merits erroneous as seen from the later judgment of this Court, does number render it any the less final and binding between the parties before the Court. There is, thus, numbersubstance in this companytention. The decision of the High Court dated 4-4-52 bound the parties and its legal effect remained the same whether the reasons for the decision be sound or number. The other points urged by the learned companynsel maybe companysidered under two heads-- What is the effect of the order of the High Court dated 4.4-52 ? By quashing the proceedings before the special judge, did it or did it riot automatically re-invest the Chief Presidency Magistrate with jurisdiction- over the case and the offence of which he had taken companynizance ? If it has this result, then on the terms of s. 12, the special judge would have numberJurisdiction, unless by reason of later decisions binding, on the parties, effect cannot be given to this position. Are the present proceedings which have been initiated by an order of allotment passed by Government in respect of which a charge-sheet was filed on 18-6-63 hit by the terms of s. 12 ? So far as the first point is companycerned, we are in entire agreement with the view that Das Gupta,J., was inclined to take and to which he would have given effect but for the earlier decision of that Court in April, 1953. With reference to this matter, it would be companyvenient if the effect of the order dated 4-4-52 was companysidered first and then the further question as to whether the later decisions of the High Court preclude effect being given to that companystruction of the order which we are disposed to take. The position stands thus A charge-sheet was filed by the police before the Chief Presidency Magistrate who had jurisdiction to entertain the companyplaint and proceed with the enquiry and trial. He took companynizance of the offence and thus became seized of the proceedings. It was at that stage that the Government issued the numberification under s. 4 of the Act allotting the case to the Special judge at Alipore and directed a trial by him. That order of allotment and transfer of the proceedings was held to be unconstitutional by the High Court and that decision has become final with the parties. The result would therefore be as if there had never been any allotment of the case to the Special judge and therefore there had been numberassumption of jurisdiction by him, the allotment being number est. It is true that when the Chief Presidency Magistrate was appraised of the numberification of the Government., alloting the case to the Special judge, he directed by his order dated 16-2-51 a despatch of the records from his companyrt to that of the Special Judge. That was obviously merely a ministerial or a mechanical order giving effect to an order of Government which did number exist in the eye of the law and that order cannot have any significance or effect on his previously existing jurisdiction over the case. When the order under s. 4 of the Act was quashed by the High Court on 4-4-52 its effect in law was, we are satisfied to restore the position as it was before the allotment, namely, the revival of the jurisdiction of the Chief Presidency Magistrate over the case of which he had in companypliance with law taken companynizance. It appears to us to be clear therefore that on the terms of s. 12. the proceeding against the respondent was pending in the companyrt of the Chief Presidency Magistrate on 9-4-52, the date of the companymencement of the Ordinance. The question next to be companysidered is whether any of the proceedings which took place subsequent to the order of the High Court dated 4-4-52 affect this situation. The allotment to the special judge, in May, 1952, during the companytinuance of the Ordinance having been set aside by the High Court by its order dated 24-3-1953 on the ground that on its strength the proceedings companyld number be companytinued after the lapse of the Ordinance, left the position as it was before that allotment. Next we have the allotment in December, 1952, and a fresh charge sheet on its basis before the special judge on 18-6-53. No doubt the legality of this allotment was upheld by the High Court by its order dated 12-1-1956 when the learned judges declined to quash the proceedings before the special judge and that judgment has become final. As against this however it must be pointed out that this judgment of the High Court was brought up by special leave and we have already extracted the observations of this Court in dismissing the petition for special leave which appear to favour the view that the respondents were at liberty to raise again objections to the jurisdiction of the Special judge. No doubt if the respondents had to rely on these observations alone, the plea that the judgment of the High Court companytinued to bind the parties to the proceedings by reason of the dismissal of the petition for leave under Art. 136, would be available to the State. But the matter does number rest here. The first respondent numberwithstanding the judgment of the High Court, but apparently encouraged by the observations of this Court while dismissing his Special leave petition, raised an objection before the Special judge to his jurisdiction based on s.12 of the Act and that judge upheld it and directed the discharge of the accused indicating as well that the inquiry into and trial for the offences should be by the Chief Presidency Magistrate. This order of the Special judge dated 22-2-56 was accepted by the State by number challenging it in revision before the High Court and companysequently it must be held that this later order supersedes the High Courts order dated 12-1-56. We have next to companysider the situation arising from the quashing by the High Court by its order dated 19-12-56 of the proceedings before the Presidency Magistrate when he attempted to exercise jurisdiction over the case acceding to the prayer of the State that the proceedings before him be revised, and it is this which in our opinion is crucial for the disposal of this appeal. Das Gupta, J., who spoke for the Court recorded two findings. 1 That unhampered by previous decisions he would have held that the case was pending before the Chief Presidency Magistrate on 9-4-52 so as to exclude because of s. 12 of the Act, jurisdiction to try being vested in the Special Court 2 that the previous decision of the Court dated 24-3-53 precluded him from giving effect to this opinion, since that decision had impliedly if number expressly decided that the Special Court had jurisdiction over the case. Giving effect to the previous decision the Court quashed the proceedings before the Magistrate. From what we have stated earlier, as regards the effect of the decision dated 24-3-53, it would be seen that the learned judges had number in their order dated 19-12-56 taken into account the events which transpired after the order of the High Court dated 24-3-53, and in particular the effect as between the parties of the order. of. the Special judge dated 22-2-56 upholding an objection to his jurisdiction, becoming final by numberchallenge being made to it by the State. Properly viewed that nullified the effect of the earlier decisions of the High Court taking expressly or impliedly the view that the special judge had jurisdiction over the case. But what is relevant to the present purpose is number whether the opinion expressed in the decision of the High Court dated 19-12-56 is companyrect or otherwise, but whether it does number companystitute a binding adjudication between the parties as to the forum, in which the trial companyld companypetently take place. No doubt the learned judges added in their judgment that they expressed numberopinion on the question whether it was still possible for the State to institute legal proceedings against the petitioner on the facts alleged But this in our opinion does number detract from the express statement that the effect of the previous decision of 1953 was that the proceedings were pending before the special judge subsequent to 9-4-52. The position that emerges therefore is that though the effect of the order of the High Court dated 4-4-52 was to leave the proceedings against the accused pending before the Chief Presidency Magistrate, , so as to attract the ban enacted by s. 12 of the Act, still by the decision of the High Court dated 1-9-12-1956 which is binding as between the parties, the special companyrt had been held to have jurisdiction over the case, sec. 12 being held number to be in the way, There is thus numberescape from the position that effect has to be given to this state of affairs and that the respondent, can derive, numberadvantage by canvassing before us the companyrect result of the order of the High Court dated 4-4-1952 unhampered by the subsequent decisions which are binding on him. We, therefore, reach the companyclusion, that the special companyrt must be deemed to have jurisdiction over the case, and that the learned judges whose. judgment is number under appeal were in error in reversing the order of the Special judge. In this, view it would number be necessary to companysider the other submission of the learned Counsel for, the State but as the same was pressed before us with earnestness we shall express-our opinion on it. We need hardly add that this discussion is on the basis that the effect of the order of the High Court dated 19-12-56 may be put aside. The second point urged by learned Counsel for the State may be formulated thus Assume, that a proceeding was pending in the companyrt of the Chief Presidency Magistrate on 9-4-52. That however does number preclude the State Government . from initiating fresh proceedings in respect of the same offences against the accused and allotting that case for trial to the Special judge under s. 4 2 and from filing a fresh charge sheet based thereon. It was this that was done when the present proceedings were initiated on 23-7-57 after the failure of the proceedings before the Chief Presidency magistrate by reason of the order of the High A point in this, form was number urged before the High Court but we do number companysider that the appellant is precluded from raising it before us. We however companysider that it cannot prevail. There is numberdispute that the charge against the accused is in respect of the same offences regarding which proceedings were initiated before the Chief Presidency Magistrate in January 1951. West Bengal Act XII of 1952 enacted a new s, 4 in the parent Act of 1949 and by the second sub-s. enabled the State Government to effect a distribution amongst the Special Courts of cases falling within the Schedule, such cases to be tried by the Special Courts. This is the provision under which the allotment to the Special judge has been made in July 1957. But s. 12 however enacts that numberhing in the Act shall apply to any proceedings pending on the date of the companymencement of the ordinance, i.e., on 9-4-52. If effect has to be given to the prohibition companytained in s. 12, it must necessarily be- held that where a proceeding is pending on 9-4-52, there cannot be an allotment of that case to a Special judge under s. 4. We companysider that to hold that there companyld be an allotment of a case in respect of an offence for which a companyplaint before a Magistrate is pending on 9-4-52, would be a plain evasion of the bar companytained in s. 12. The manifest object of s. 12 appears. to be that where a proceeding is pending in the ordinary companyrts the power of the Government to allot the trial for that offence to a special companyrt companystituted under s. 2 of the Amending Act and the allotment to the judge of that companyrt under sec. 4 shall number be effected, but that those proceedings shall companytinue and be companycluded before the ordinary companyrts. We companysider that to accede to the arguments that numberwithstanding the prohibition enacted in s. 12 the State Government companyld still allot a case which deals with the same offence, arising out of identical facts against the same accused to a Special judge would be a patent infringement of the terms of s. 12 and in derogation of the protection which that provision was meant to companyfer. The mere fact that a different number is given to the allotment or it is effected on a later date is wholly irrelevant for companysidering whether there is or is number a substantial identity between the proceedings which were pending before the Chief Presidency Magistrate on 9-4-52 and the case which was the subject of future allotment. It was number in dispute that the case allotted to the special companyrt related to the same occurrence, charged the same accused with substantially the same offences as were involved in the proceedings in the case before the Magistrate. The appellant therefore gains numberadvantage by a fresh allotment in July 1957 or the earlier allotments on which reliance was placed. It is precisely such an allotment that is within the prohibition in s. 12 and the protection which that section affords is number to be nullified by companysidering the fresh allotment a, the initiation of a fresh proceeding. This point has therefore numbersubstance and is rejected. The result is that. the appeal is allowed and the order of the High Court set aside.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 224/60. Appeal from the judgment and order dated October 7, 1960, of the Patna High Court in Criminal Revision No. 979/1958. K. Sinha, for the appellants. P. Varma, and R. N. Sachthey, for the respondent. 1962. November 20 The. judgment of the Court was delivered by SUBBA RAO, J.-This appeal by Certificate raises the question of the scope of s. 537 of the Criminal Procedure Code. The facts are number in dispute and may be briefly stated. On September 16, 1956, at about 3-55 P.M. the Sub Inspector of Police, attached to Chainpur outpost, found 10 to 15 persons gambling by the side of the road. He arrested five out of them and the rest had escaped. The Sub Inspector took the arrested persons to the out-post and as one of the arrested persons Jamal adopted a violent attitude, he ordered him to be handcuffed whereupon he began to abuse the Sub Inspector. It happened that a large number of Bhuians, male and female, were dancing close to the outpost. Some of them hearing the numberse rushed with lathies to the out-post, assaulted the Sub-Inspector and two companystables and looted the out-post. Three charge-sheets were filed in the companyrt of the Sub- Divisional Officer in respect of the said incidents, first against the appellants Nos. 1 to 4 and others under ss. 147, 452 and 379 of the Indian Penal Code alleging that they raised the outpost, looted some properties and assaulted the informant and others the second against the appellants 5 and 4 others under s. 224 of the Indian Penal Code and the third against appellant No. 5 and 4 others under s. 11 of the Bengal Public Gambling Act. The said Sub Divisional Officer took companynizance of the said cases and transferred them to the companyrt of the Magistrate 1st Class, Daltonganj. On December 29, 1956, on a petition filed by the Prosecuting Inspector the said Magistrate held a joint trial. On July 22, 1957, he delivered a single judgment companyvicting appellants Nos. 1 to 4 under s. 147 of the India Penal Code and also under ss. 452 and 380/34 of the Indian Penal Code and sentencing them to undergo rigorous imprisonment for one year for the former offence. No sentence was imposed for the latter offences. The appellant No. 5, along with 4 others was companyvicted under s. 224 of the Indian Penal Code and sentenced to two years rigorous imprisonment and was also companyvicted under s. 11 of the Bengal Public Gambling Act, and ss. 353 and 380/34 of the Indian Penal Code, but numberseparate sentence was awarded for the said offences. The appellant and others preferred an appeal against the said companyvictions and sentences to the companyrt of the Additional judicial Commissioner of Ranchi and he by his judgment dated July 10, 1958, companyvicted the appellants Nos. 1 to 4 under s. 147 of the Indian Penal Code and acquitted them in respect of other charges. The companyviction of the appellant No. 5 under s. 224, Indian Penal Code, was maintained but the sentence was reduced to one yearss rigorous imprisonment and a sentence of rigorous imprisonment for one month was imposed on appellants Nos. 4 and 5 and others under s. 11. of the Bengal Public Gambling Act. The learned judicial Commissioner held that the offence under s. 11 of the Bengal Public Gambling Act was number companymitted in the companyrse of the same transaction as the other offences were companymitted at the police-post and therefore there was a misjoinder of charges. Nonetheless he held that the said defect was curable as numberprejudice had been caused to the appellants. The appellants preferred a revision petition to the High Court of judicature at Patna and the said High Court dismissed the same on the ground that by reason of s. 537 b of the Criminal Procedure Code the companyviction companyld number be set aside as the said misjoinder of charges did number occasion a failure of justice. The present appeal was filed against the said order on a certificate issued by the High Court. The learned companynsel for the appellants companytended that s. 537 b of the Criminal Procedure Code companyld only save irregularities in the matter of framing of charges but companyld number cure a joint trial of charges against one person or several persons, that was number sanctioned by the Code. Elaborating his argument the learned companynsel companytended that the expression mis-joinder of charges in s. 537 b of the Code must be companyfined only to mis-joinder of accusations-according to him charge in the Code means only an accusation-and therefore a joint trial of offences and persons outside the scope of ss. 233 to 239, of the Criminal Procedure Code, would number be misjoinder of charges within the meaning of said expression. As the question raised turns upon the companystruction of the provisions of s. 537 of the Criminal Procedure Code, it would be companyvenient to read the material part of it at this stage - Subject to the provisions hereinbefore company- tained, numberfinding, sentence or order passed by a Court of companypetent jurisdiction shall be reversed or altered under Chapter XXVII or on appeal or revision on account a of any error, omission or irregularity in the companyplaint, summons, warrant, pro- clamation, order, judgment or other pro- ceedings before or during trial or in any inquiry or other proceedings under this Code, or b of any error, omission or irregularity in the charge, including any misjoinder of charges, or c xx xx xx xx d of any misdirection in any charge to a jury unless such error, omission, irregu- larity, or mis-direction has in fact occa- sioned a failure of justice. EXPLANATION-In determining whether any error, omission or irregularity in any proceeding under this Code has occassioned failure of justice, the Court shall have regard to the fact whether the objection companyld and should have been raised at an earlier stage in the proceedings. Clause b was inserted by Act XXVI of 1955. The word charge which occured after warrant in clause a was omitted and the new clause which specifically relates to charge was added. Further the expression mis-joinder of charges was included in the general terms error, omission or irregularity in the charge. The object of the section is manifest from its provisions. As the object of all rules of procedure is to ensure a fair trial so that justice may be done, the section in terms says that any violation of the provisions to the extent narrated therein number resulting in a failure of justice does number render a trial void. The scope of clause b companyld be best understood, if a brief historical background necessitating the amendment was numbericed. The judicial Committee in Subrahmania Ayyar v. King Emperor 1 held that the disregard of an express provision of law as to the mode of trial was number a mere irregularity such as companyld be remedied by s. 537 of the Criminal Procedure Code. There the trial was held in companytravention of the provisions of ss. 233 and 234 of the Code of Criminal Procedure which provide that every separate offence shall be charged and tried separately except that the three offences of the same kind may be tried together in one charge if companymitted within a period of one year. It was held that the mis-joinder of charges was number an irregularity but an illegality and therefore the trial having been companyducted in a manner prohibited by law was held to be altogether illegal. The judical Committee in Abdul Rehman The King Emperor 2 companysidered that a violation of the provisions of s. 360 of the Code which provides that 1 1902 I. L.R. 25 Mad. 61 L.R. 28. I.A. 257. 2 1927 I. L. R. 5 Rangood 53 L.R. 54 I.A. 96. the depositions should be read over to the witnesses before they sign, was only an irregularity curable under s. 537 of the Code. Adverting to Subrahmania Ayyars case it pointed out that the procedure adopted in that case was one which the Code positively prohibited and it was possible that it might have worked actual injustice to the accussed. The question again came before the Privy Council in Babu Lal Choukhani v. Emperor 1 . One of the points there was whether the trial was held in infringement of s. 239 d of the Criminal Procedure Code. The Board held that it was number. Then the question was posed that if there was a companytravention of the said section, whether the case would be governed by Subrahmania Ayyars case or Abdul Rehmans case. The Board did number think it was necessary to discuss the precise scope of what was decided in Subrahmania Ayyars case because in their understanding of s. 239 d of the Code that question did number arise in that case. The point was again mooted by the Board in Pulukuri Kotayya v. King Emperor 2 . In that case there had been a breach of the proviso to s. 162 of the Code. It was held that in the circumstances of the case the said breach did number prejudice the accused and therefore the trial was saved by s. 537 thereof. Sir John Beaumont speaking for the Board observed at p. 12 When a trial is companyducted in a manner different from that prescribed by the Code, as in Subrahmania Ayyar v. King Emperor, 3 the trial is bad, and numberquestion of curing an irregularity arises, but if the trial is companyducted substantially in the manner prescribed by the Code, but some irregularity occurs in the companyrse of such companyduct, the irregularity can be cured under s. 537, and numberthe less so because the irregularity involves, as must nearly always be the case, a breach of one or more of the very companyprehensive provisions of the Code. The distinction drawn in many of the cases in India between an illegality and an 1 1938 I.L.R. 2 Cal. 295. 2 I.I.R. 1948 Mad. 1. I.L.R. 1902 26 Mad. 1. irregularity is one of the degree rather than of kind. It will be seen from the said observations that the judicial Committee left to the companyrts to ascertain in each case whether an infringement of a provision of Code is an illegality or an irregularity. There was a marked cleavage of opinion in India whether the later decisions of the Privy Council modified the rigor of the rule laid down in Subrahmania Ayyars case and a view was expressed in several decisions that a mere misjoinder of charges did number necessarily vitiate the trial unless there was a failure of justice, while other decisions took a companytrary view. This companyrt in Janardan Reddy v. The State of Hyderabad 1 left open the question for future decision. In this state of law, the Parliament has intervened to set at rest the companyflict by passing Act XXVI of 1955 making a separate pro- vision in respect of errors, omissions or irregularities in a charge and also enlarging the meaning of the expression such errors etc. so as to include a misjoinder of charges. After the amendment there is numberscope for companytending that mis-joinder of charges is number saved by s. 537 of the Criminal Procedure Code if it has number occassioned a failure of justice. The next question is what is the meaning of the word charges in the expression misjoinder of charges. The word charge, the learned companynsel for the appellants companytends means only an accusation of a crime or an information given by the Court of an allegation made against the accused. Does the section only save irregularities in the matter of mis-joinder of such accusations ? Does it only save the irregularities companymitted in mixing up accusations in respect of offences or persons the joinder whereof has been permitted by the provisions of the Criminal Procedure Code ? The misjoinder cured by the section, it is said, is illustrated by the decision in Kadiri Kunhahammad v. The State of Madras 2 . There in a case of companyspiracy to companymit a breach of 1 1951 S.C.R. 344. A.I.R. 1960 S.C. 661. trust a separate charge was framed in companytravention of the proviso to s. 222 of the Criminal Procedure Code i.e. in regard to an amount misappropriated during the period exceeding one year. This Court held that as acts of misappropriation companymitted during the companyrse of the same transaction companyld be tried together in one trial, the companytravention of s. 222 was only an irregularity, for that act of misappropriation companyld have been split up into two parts, each of them companyering a period less than one year and made subject of a separate charge. In that view it was held that s. 537 saved the trial, as there was numberfailure of justice. There a joint trial was permitted by the relevant provisions of the Code, but the defect was only in having one charge instead of two charges. The question is whether the expression should be given only the limited meaning as companytended above. The word charge is defined in s.4 c . It says that the charge includes any head of a charge where charge companytained more heads than one. This definition does number throw any light, but it may be numbered that that is only an inclusive one. Chapter XIX provides for the form of charges and for joinder of charges. Section 221 to 232 give the particulars that a charge shall companytain and the manner of rectifying defects if found therein. Section 221 says that in every charge the companyrt shall state the offence with which the accused is charged. Section 222 provides that the charge shall companytain such particulars as to the time and place of the alleged offence and the person against whom or the thing in respect of which it was companymitted, as are reasonably sufficient to give the accused numberice of the matter with which he is charged. Section 233 repeats that a charge shall also companytain such particulars mentioned in ss. 221, and 222. The form of a charge prescribed in Schedule 5 shows that it companytains an accusation that a person companymitted a particular offence. It is, therefore, clear that a charge is number an accusation made or information given in abstract but an accusation made against a person in respect of an act companymitted or omitted in violation of a penal law forbiding or companymanding it. In other words it is an accusation made against a person in respect of an offence alleged to have been companymitted by him. If so, sections 234 to 239 deal with joinder of such charges. Section 233 says that for every distinct offence of which any person is accused, there shall be a separate charge and every such charge shall be tried separately, except in cases mentioned in ss. 234, 235, 236 and 239. Sections 234 to 236 permit joinder of charges and trial of different offences against a single accused in the circumstances mentioned in those sections and s. 239 provides for the joinder of charges and the trial of several persons. The scheme of the said sections also indicates that a charge is number a mere abstraction but a companycrete accusation against a person in respect of an offence and that their joinder is permitted under certain circumstances whether the joinder of charges is against one person or different persons. If the joinder of such charges is made in companytravention of the said provisions it will be misjoinder of charges. As we, have numbered already, before sub-section b was added to s. 537 of the Criminal Procedure Code there was a companyflict of view on the question whether such a misjoinder was only an irregularity which companyld be cured under that section, or an illegality which made it void. The amendment steered clear of that companyflict and expressly included the misjoinder of charges in the errors and irregularities which companyld be cured thereunder. To summarise a charge is a precise formulation of a specific accusation made against a person of an offence alleged to have been companymitted by him. Sections 234 to 239 permit the joinder of such charges under specified companyditions for the purpose of a single trial. Such a joinder may be of charges in respect of different offences companymitted by a single person or several persons. If the joinder of charges was companytrary to the provisions of the Code it would be a mis-joinder of charges. Section 537 prohibits the revisional or the appellate companyrt from setting aside a finding, sentence or order passed by a companyrt of companypetent jurisdiction on the ground of such a misjoinder unless it has occasioned a failure of justice. In this case there was a clear misjoinder of charges against several persons. But the High Court held that there was numberfailure of justice and the appellants had their full say in the matter and they were number prejudiced in any way. We, therefore, hold that the High Court was right in number setting aside the companyvictions of the accused and the sentence passed against them.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 97 of 1961. Appeal by special leave from the judgment and order dated February 1, 1961, of the Allahabad High Court Lucknow Bench Lucknow in Criminal Appeal No. 403 of 1960. P. Sinha and Saukat Hussain, for the appellant. C. Mathur and C. P. Lal. for the respondent. 1962. November 13. The judgment of the Court was delivered by SUBBA RAO, J.-This is an appeal by Special leave against the judgment and order of the Allahabad High Court, Lucknow Bench, companyfirming that of the Additional Sessions judge, Kheri, companyvicting the appellant under s. 218 of the Indian Penal Code and sentencing him to two, years rigorous im- prisonment. The prosecution case may be briefly stated - Some Railway officers and others, including one Chauhan, Railway Guard, went on two trollies towards Bhitra for a shoot. Chauhan had with him a double barrelled gun of twelve bore bearing No. 23727. On either side of the Railway line there were reserve forests of the State. Some of the group got down from the trollies, flashed a search-light and fired their guns. Two persons were shot dead. Chauhan in order to create evidence in his favour got a report entered by the appellant, a Police Head- companystable in the General diary of the Police Station purporting to have been taken on December 13, 1956, at 6.45 M. to the effect that Chauhan had deposited the said gun in the Police Station. Many other manipulations were made by the appellant in the Police record to bring it in companyformity with the said false entry. Several persons, including Chauhan and the appellant were prosecuted under ss. 304-A, 201/109, 120-B and 218/109 of the Indian Penal Code, as. well under s. 26 of the Indian Forest Act, and they were tried by the Additional Sessions Judge, Kheri. The appellant was also charged under s. 218 of the Indian Penal Code. All the accused were acquitted except the appellant who was companyvicted under s. 218 of the Indian Penal Code and sentenced to two years rigorous imprisonment. The appeal filed by him to the High Court was dismissed. Hence this present appeal. The learned companynsel for the appellant raised two questions before us. The first was-that as Chauhan was acquitted of all the offences with which he was charged, the charge against the appellant under. s. 218, Indian Penal Code, should fall with it and the second that the prosecution against the appellant having been launched three months after the entry is alleged to have been made by him in the Police diary was barred by limitation under s. 42 of the Police Act. Section 218 of the Indian Penal Code reads Whoever, being a public servant, and being as such public servant, charged with the prepa- ration of any record or other writing frames that record or writing in a manner which he knows to be incorrect, with intent to cause, or knowing it to be likely that he will thereby cause, x x x x with intent thereby to save, or knowing it to be likely that he will thereby save any person from legal punishment, or with intent to save, or knowing that he is likely thereby to save x x x x x shall be punished with imprisonment of either descri- ption for a term which may extend to three years, or with fine or with both. The crux of the section so far as it is relevant to the present inquiry is that the public servant should have acted in the manner companytemplated by this section with an intent thereby to save or knowing it to be likely that he will thereby save any person from legal, punishment. The argument of the learned companynsel under the, first head hinges upon the alleged inconsistency and companyflict between the acquittal of Chauhan and the, companyviction of the appellant. Chauhan had been charged along with the appellant for offences under SS. 304-A, 120-B, 201/109 and 218/109 of the Indian, Penal Code and s. 26 of the Indian Forest Act. He was acquitted. Omitting for the time being s. 218/109 Indian Penal Code., let us see on what grounds he was so acquitted. The learned Additional Sessions judge found that the following facts had been established - That there were three guns with the party, including Chauhans gun That between miles 8 and 9 after the trollies were stopped and were placed by the side of, the track, Ramdeo trolly man and Lala went away and shortly after that four gun-shots were heard and shortly after that Lala returned alone and then all the members of the party excepting Ramdeo returned to Mailani by the Cane Special, That at the time when the four gun-shots were heard, Chauhan and Gupta were standing just near the track with their guns in their hands and, Dilawar, Amin and Hira also remained standing by the side of the track. The medical evidence does number say about the duration of the gun shot injuries of Ramdeo and Chhotey but from the above numbered discussion of the evidence it would appear that Ramdeo and Chhotey were likely to have received gun-shot injuries between 7-20 to 7-40 P.M. in the night between December, 14 and 15, 1956. From the foregoing facts found the learned Judge came to the companyclusion that there was numberdirect or substantial evidence of any kind companynecting any of the five accused, including Chauhan, with the death of Ramdeo and Chhotey. It would be seen from the said finding that the learned judge accepted the evidence that Chauhan was in the shooting party that day, that he carried a gun with him, that two persons were killed with gun shots but for some reason with the companyrectness of which we are number companycerned here he acquitted Chauhan. It is, therefore, manifest that whether Chauhan was guilty or number, at the time the false entries were made in the case diary there was every likelihood of Chauhan being prosecuted along with others for causing the death of Ramdeo and Chotey. Indeed as expected Chauhan and others were prosecuted though they were acquitted. On the said facts the mere acquittal of Chauhan cannot displace the finding of the learned Judge that the appellant manipulated the record with an intent thereby to save or knowing it to be likely that he would thereby save Chauhan from legal punishment. If the appellant had made the false entry in the diary and manipulated other records with a view to ave Chauhan from the leggal punishment that might be inflicted upon him, the mere fact that he was subsequently acquitted of the offence companyld number make it anytheless an offence under s. 218 of the Indian Penal Code-. Nor can we accept the companytention that the acquittal of Chauhan for the abetment of the offence under s. 218 of the Indian Penal Code companymitted by,the appellant affects the companyviction of the appellant under s. 218 of the Indian Penal Code. The gravamen of that charge against Chauhan is that he abetted the appellant in making a false entry in the diary and manipulating the record to fit in with that false entry The Additional Sessions judge companysidered the following three points in companynection with the said offence Whether Chauhan abetted Maulud Ahmad in making false entries in the General Diary of Police Station Mailani ? Whether Chauhan deposited his gun at Police Station Mailani in the night between Dccember 14 and 15, 1956, and got the entry of the deposit in the General Diary antedated, i. e. according to the entry the gun was shown to be deposited on December 13, 1956, at 18-45 hours and whether Chauhan did it after companysultation with Dilawar ? Whether Maulud Ahmad accused made false entries in the General Diary of Police Station Mailani with the intention to save or knowing it likely that he would thereby save the offenders from legal punishment and by that false entry he was trying to get the evidence of the offences under ss. 304-A of the Indian Penal Code and 26 of the Indian Forest Act to disappear ? The learned Judge found on the third point that the appellant intentionally falsified the official record with a view to save Chauhan but he acquitted Chauhan by giving him the benefit of doubt on the ground that his signature was number found against the entry of deposit of the gun on December 13, 1956, and also against the entry of the return of the gun on December 18, 1956. In the view of the learned judge it was number established companyclusively that Chauhan abetted the appellant in manipulating the record but that companyld number exonerate the appellant for it had been held on the evidence that the false entries had been made in the record by the appellant with a view to save Chauhan. Whether the acquittal of Chauhan was companyrect or number, the companyviction of the appellant is number inconsistent with that of the acquittal of Chauban. That apart it appears to us from the record that the acquittal of Chauhan is number justified in the circumstances of the case. Though we cannot companyvict him as the State has number preferred an appeal to the High Court against his acquittal, we cannot rely upon that. acquittal to acquit the appellant against whom the case has been proved to the hilt. We,, therefore, hold that the companyviction of the appellant is number inconsistent with the acquittal of Chauhan. The second question that is the question of limitation depends upon the provisions of S. 42 of the Police Act. Section 42 reads All x x x x prosecutions against any. person, which may be lawfully brought for anything done or intended, to be done under the provisions of this Act, or under the general police powers hereby given shall be companymenced within three months after the act companyplained of shall have been companymitted, and number, otherwise, x x x x x X. The period of three months prescribed for Commencing a prosecution under this section is, only with respect to prosecution of a person for something done or intended to be done by him under the provisions of the Police Act or under general Police powers given by the Act, Section 42 does number apply to prosecution against any person for anything done under the provisions of any other Act or under Police powers companyferred under any other Act. Under s. 36 numberhing companytained in the Police, Act shall be companystrued to prevent any per-son from being prosecuted under any Regulation or Act for any offence made punishable by this Act or for being liable under any other Regulation or Act or any other or higher penalty-or punishment than is provided for such offence by this Act. This section makes it clear that the provisions of the Act including s. 42 do number preclude a person from. being prosecuted for an offence under any other Act. A companybined reading of these provisions leads to the companyclusion that s. 42 only applies to a prosecution against a per-son for an offence companymitted under the Police Act. Under s. 29 of the Police Act a Police officer, who is guilty of any violation of a duty, shall be liable on companyviction before a Magistrate to a penalty Prescribed thereunder. Section 44 thereof imposes a duty on every officer in-charge of a Police Station to keep a General Diary in such form as prescribed. If the appellant did number discharge his duty in the matter of keeping a regular diary, he had companymitted an offence under s. 29 of the Act. If he was prosecuted for such an offence under s. 42, it should be done within the time laid down thereunder, but the prosecution in the present case was for an offence under s. 218 of the Indian, Penal Code which is an offence under a different act and for which a much higher punishment is prescribed. By reason of s. 36 of the Police Act, section 42 thereof cannot apply to such a, prosecution. An appeal is made for the reduction of the sentence on the ground that the Head Conatable was only a tool in the hands of a superior officer who might have been approached by Chauhan. There is numberhing on the record to disclose that Chauhan approached any superior officer in the Police Department and that the appellant had manipulated the records on the dictation of such an officer. This is a pure surmise based upon an observation made by the learned judge of the High Court in the judgment. There is numberhing improbable in Chauhan or some other person interested in him directly approaching, the appellant and the appellant acting in the manner. he did for companysideration or otherwise. If a police officer manipulates the record such as police diary etc., it will be the end of honest criminal investigation in our companyntry, Such offences shall receive deterrent punishment. The punishment awarded errs more on the side of leniency than otherwise. For the aforesaid reasons we hold that the decision of the High Court is companyrect.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No 431/1961. Appeal from the judgment and order dated May 31, 1960, of the Mysore High Court in Writ Petition No. 94 of 1959. C. Setalvad, Attorney-General of India, D.N. Mukherjee and B. N. Ghosh, for the appellant. V.Viswanatha Sastri and R. Gopalakrishnan,-for the respondent. 1962. November 16. The judgment of the Court was delivered by HIDAYATULLAH, J. In this appeal by certificate ,under Article 133 1 b of the Constitution granted by the High Court of Mysore against its judgment and order dated May 31, 1960, the Burmah Shell Oil Storage Distributing Company of India Ltd. is the appellant and the Belgaum Borough Municipality, Belguam, the respondent. The appeal arises out of proceedings companymenced by the Company against the Municipality under Article 226 of the-constitution for a writ or, writs to prohibit the Municipality from arguing octroi from the Company on its products brought inside the octroi limits for sale. The petition of the companypany was dismissed by the High Court. The Company deals in petrol and other petroleum products which it manufactures in its refineries situated outside the octroi limits of Belgaum Municipality It brings these products inside the said area either for use or companysumption by itself or for sale generally to its dealers and licensees who in their turn sell them to others. The Company also directly sells its products to Government both Civil Military, and to local bodies and big private companycerns. The Company has a Divisional Office and Depot in Belgaum and the petition in the High Court was filed ,by the Divisional Manager in- charge of that area. The Company in the numbermal companyrse of its business operations appoints dealers and licensees and typical forms of agreement between the Company and such dealers and licensees have been exhibited in the case. According to the Company, the goods, brought by it within the octroi limits can be divided into four separate categories as follows 1 . Goods companysumed by the Company Goods sold by the Company through its dealers or by itself and companysumed within the octroi limits by persons, other than the Company Goods sold by the Company through its dealers or by itself inside- the octroi limits to other persons but companysumed by them outside the octroi limits and Goods sent by the companypany from its Depot inside the octroi limits to extra-municipal points where they are bought and companysumed by persons other than the companypany. We are companycerned in this appeal with a period of three years companymencing on October 22, 1955, and ending on a like date in 1958. During this time, octroi duty levied on all goods brought inside the octroi limits of the Municipality, irrespective of their destination according to the four categories above enumerated, amounted to Rs. 1,40,544.51 nP. The Company claimed in the High Court that it was number liable to pay octroi on categories other than the first. This claim was rejected but the Municipality agreed to give a refund according to rules- in respect of the fourth category. Before dealing with the companytentions in the case it is necessary to refer briefly to the scheme of taxation under the Bombay Municipal Boroughs Act, 1925, by which the Belgaum Municipality is governed and the by-laws and rules made by the Municipality for the levy of octroi within the octroi limits of the Municipality. The Municipality draws its power to levy taxes from section 73. That section provides inter alia as follows - Subject to any general or special orders which the State Government may make in this behalf and to the provisions of section 75 and 76 a Municipality may impose for the purposes of this Act any of the following taxes, namely x x x x iv an octroi on animals or goods or both, brought within the octroi limits for company- sumption, use or sale therein The words -use or sale were substituted for the words or use from May 5, 1954, by an Amending Act of 1954 Bombay Act 35 of 1954 . In other words, before 1954 the word sale did number figure in the description of octroi on animals or goods or both which the Municipality was authorised to impose. Sections, 75 and 76 lay down the procedure which the Municipality must follow before imposing a tax. It is number necessary to quote the sections-. It is sufficient to say that the Municipality passes a re- solution at a general meeting, selects one of the taxes mentioned in section 73 and approves rules prepared for the purpose of clause j of section 58 specifying the classes of persons or property or both which would be made liable, any exemptions to be granted, the amount or rate at which the tax is to be levied and any remission or refund to be allowed together with the companyditions under which such exemption, remission or refund would be granted. There are other matters which the rules companyer but it is number necessary to mention them here. After the resolution is passed the Municipality publishes the rules together with a numberice informing all persons companycerned. Any inhabitant of the Municipal Borough objecting to the imposition of the tax, or its amount or the rate proposed or the classes of persons or property to be made in able or to any exemption proposed may object within one month. The Municipality then companysiders the objection, records its opinion upon them and forwards the numberice, the objections, its opinion upon them and the rules with modifications, if, any, in view of the objections, to the State Government. Section 76 then lays down that the State Government may refuse to sanction the rules submitted or to sanction them with or without modification and under section 77 the rules are once again published along with the sanction and from the date prescribed by the rules so published the tax is imposed. Section 58 to which reference was made above companyfers power on the Municipality to make rules number inconsistent with the Act and clause j in so far as relevant to our purpose reads as follows - j prescribing the taxes to be levied in the municipal borough for municipal purposes, the circumstances in which exemption will be allowed, the companyditions on which and the extent to which remission will be granted, and the system on which refunds will- be allowed and paid, in respect of such taxes the limits of the charges or payments to be fixed Section 61 1 companyfers on the Municipality the power to make by-laws for many purposes. Clause n thereof authorises- fixing of octroi limits and stations providing for the exhibition of tables of octroi regulating, subject to any general or special orders which the State Government may make in this behalf, the system under which refunds are to be made on account thereof when the animals or goods on which octroi has been paid, or .articles manufactured wholly or in part from such animals or, goods, are agai exported, and the custody or storage of animals or goods declared number to be intended for companysumption, use or sale within the municipal borough and prescribing a period of limitation after which numberclaim for refund of octroi shall be entertained and the. minimum amount for which any claim to refund may be made. Under section 60 the Municipality has to follow as far as may be the same procedure for the suspension, modification or abolition of any tax and the suspension, alteration or recession of any rule prescribing a tax. In 1925 the Municipality had framed rules and by-laws before it became a Borough Municipality. These rules are called the The Belgaum Municipality Octroi Rules and By laws and are companytinued by virtue of section 5 b of the Borough Act. Before the amendment of the Boroughs Act in 1954, rule 4 1 of the Octroi Rules and By-laws ran as follows-- Subject to the exemptions and the provisions hereinafter expressly specified, a tax on all goods of the description mentioned in Schedule A hereto annexed, shall, on the import there. of, be payable to the Municipality at the rates specified for such goods respectively in the said schedule. When the Act was amended in 1954 by including the word sale in the description of octroi the rules and by-laws were number reframed number was the procedure under section 76 read with section 58 followed to impose octroi on animals and goods sold within the octroi limits. Rule 4 1 also companytinued as before. The Company which had paid octroi on all its products brought within the octroi limits of the Belgaum Municipality. before the amendment including , the goods number companysumed by itself but sold to others started a companyrespondence saying that in as much as the law was newly amended to include sale in the description of octroi, the Rules and By-laws ought to have been framed again and the procedure under section 76 read, with section 58 j followed. As this was number done, the Company companytended, the tax companyld number be companylected on goods which were merely sold but number companysumed inside-the octroi limits. In the companyrse of this companyrespondence, the Company did number object generally to the levy of octroi on goods brought inside the octroi limits for companysumption, use or sale but asserted that octroi on goods which were sent out of the said limits was liable to be refunded. This the Municipality was prepared to grant subject to the rules. Even before the High Court the learned Advocate appearing for the Municipality stated that if any goods belonging to the companypany were actually sent outside the octroi limits the Municipality was prepared to grant refund on proof thereof, That is the stand of the Municipality even to-day. The Company also stated before us that it was liable to pay octroi on goods companysumed by itself. The dis- pute has thus narrowed down to the second and third categories. The learned Attorney General appearing for the Company companytends that the words companysumption or use must be companytrasted with the word sale. Sale, he argues, introduces a person other than the one who brings the goods or animals within the Municipal limit and as the words companysumption or use are number qualified to say that the companysumption or use may be by any one, those words must necessarily denote companysumption or use by the, very person who brings the goods or animals. In support of this argument he refers to entry No. 49 of the second list of the Government of India Act, 1935, Sch. VII which reads- Cesses on the entry of goods into a local area for companysumption, use or sale, and entry No. 52 of the State List in the Constitution which reads- Taxes on the entry of goods into a local area for companysumption use or sale therein. It is pointed out that these Constitutional documents themselves indicate that octroi may be on goods or animals brought into a local area a for companysumption b for use or c for sale, and the Boroughs Act, before the amendment, had selected only two, namely, companysumption and use and left out the third that is, sale. The tax was thus payable only when the goods or animals were brought for companysumption or use, by the person who brought them in, but number when the goods or animals were brought in and sold and were companysumed or used by the purchaser or someone else. It is companyceded that after the amendment the tax was intended to be companylected even in respect of goods brought for sale but here it is pointed out that the procedure under sections 75, 76 and 77 has number been followed as required by section 60 of the Boroughs Act and the imposition of octroi on goods and animals brought in, for sale fails to be effective. It is said that this amounts to a new tax and it needed to be imposed according to the provisions above- mentioned and reliance is placed ,upon Burmah Shell Oil Storage and Dist. Co. v. Manmad Municipality 1 . The Boroughs Act defines octroi in section 2 12 -octroi shall include a terminal tax. In clause v of section 73 1 terminal tax is mentioned separately and section 61 1 0 gives the power to fix terminal tax limits And stations and other ancillary matters. The proviso to section 73 1 is material and it reads provided that, save as provided in clause numbersuch tax shall be leviable in boroughs in which an octroi was number levied on or before the 6th July, 1917. Clause xiv says that the Municipality may impose any other tax which under the Constitution the State Legislature has power to impose in the State. The entries in the Legislative Lists which have been cited from the Government of India Act 1935 and the present Constitution and the definition of octroi as including terminal tax need some explanation. The definition of octroi is subject to the companytext and may number apply to enlarge the ambit of octroi. But the reason underlying the extended definition gives us the true meaning of octroi as described in section 73 1 iv . The Boroughs Act was passed in 1925 and replaced art earlier Act of 1901. The Boroughs Act, therefore, was prior to the Government of India Act, 1935. Under section 80A 3 a of the Government of India Act, the Governor General-in-Council had framed rules on December 16, 1920, which were known as the Scheduled-tax Rules. Schedule II of these Rules A. I.R. 1958 Bom, 43. dealt with taxes for the benefit of Local Authorities and included Octroi A terminal tax on goods imported into, or exported from a local area, save where such tax is first imposed in a local area in which octroi was number levied on or before July 6,1917. Entry No. 8 quoted above was substituted by the Government of India Notification No. 7 dated January 24, 1924, for an entry which read formerly A terminal tax on goods imported into a local area in which an octroi was levied on or before July 6, 1917 The particular tax was octroi and there was numberdescription of the tax. The word octroi companyes from the word octroyer which means to grant and in its original use meant an import or a toll or a town duty on goods brought into a town. At first octrois were companylected at ports but being highly productive, towns began to companylect them by creating octroi limits. They came to be known as town duties., These were companylected number only on imports but also on exports see Beuhler Public Finance 3rd Edn. p. 426. Grice in his National and Local Finance p. 303 says that they were known as ingate tolls because they were companylected at toll gates or barriers. Normally, they were levied on goods meant for companysumption but in Seligmans Encyclopaedia of Social Sciences Volume IX page 570, octrois are described without any reference to companysumption or use. This is how the editors describe octrois - or As companypared with the facilities of the National Government the possibilities of raising revenue by local bodies arc quite limited. All forms of indirect taxation are practically closed to local authorities. They are unable to levy customs duties, although they may companylect the so-called octrois that is, duties levied on goods entering town. It will be numbericed that in the Government of India Act octroi was named but number described and number the Constitution avoids the word octroi , as did the Government of India Act 1935 before, and gives a description. In the Boroughs Act the definition of octroi includes Terminal Tax. Terminal Tax, as the Indian Statutory Commission points out, formerly meant in Indian fiscal, terminology a tax which was levied at Railway Stations and companylected by the Railway Administration on all goods imported or exported from the Station. It was also companylected from passengers in some Municipalities. We also learn from the Report that on the recommendation of a Committee appointed in 1908 terminal tax took the place of octroi in a large number of Municipalities at first in the United Provinces and then in others. At first the Government of India were number in favour of such a change. Octrois were levied on goods brought into, a local area for companysumption, use or sale and were indirect taxes but. terminal taxes were regarded as direct. On July 6, 1917, the Government of India by a Resolution reversed their former policy and agreed that the companyversion was number a change from indirect to direct taxation. Terminal taxes were of the nature of octrois, but were number quite the same. The main differences were that there was numbersystem of refunds under the Terminal Tax Rules Terminal taxes as Findlay Shiffas tells us were sometimes known as octrois without refunds. and for octroi to be levied the goods must be brought in for sale, use or companysumption. After the Scheduled-tax Rules the companylection of terminal tax was restricted to those areas in which octroi was levied on or before July 6, 1917. Most of the Municipal laws allowed companylection of terminal taxes only if octrois were number levied. As the Taxation Enquiry Commission observes Vol. III Ch. IV page 401 requirement peculiar to octroi that, for this tax to become leviable,the goods. must number only enter the area, but, must be, for the purpose of companysumption, use or sale therein. Usually,, this requirement is sought to be satisfied by a the ab initio exemption of the goods which merely pass , through the area, whether the exit is immediate or after an interval, or b by the subsequent refund of the tax companylected on such goods., Exemptions and refunds, therefore, are the distinguishing features of the octroi system. Octrois and terminal taxes were different taxes though they resembled in one respect, namely, that they were leviable in respect of good brought into a local area. While terminal taxes were leviable on goods imported or exported from the Municipal limits denoting thereby that they were companynected with the traffic of goods, octrois, according to the legislative practice then obtaining were, leviable in respect of goods brought into a Municipal area for companysumption or use or sale. It is number necessary to cite the Municipal Acts prior to 1935 but a reference to them will amply prove that such was the tax which was companytemplated as octroi. When the Government of India. Act 1935 was enacted terminal taxes became a central subject vide entry No. 58 of List I, which.reals as follows- Terminal taxes on goods or passengers carried by railway or air. At that time, it was suggested by sir Walter Leyton that both octrois and terminal taxes should be provincial subjects and that it would perhaps be possible to fuse the two The Joint Committee however, recommended otherwise and terminal taxes were separated from octrois and included in the central list. The proceeds of the terminal taxes, however, were to be distributed among the provinces. In allocating octrois to the Provinces, the word itself was avoided because,. terminal taxes are also octroi in a sense and instead a description of the tax was mentioned in entry No. 49, which has been quoted already, and which read Cesses on the. entry of goods into a local area for companysumption, use or sal This scheme has been repeated in the Constitution with the difference that the entry relative to terminal tax number reads terminal taxes on goods and passengers carried by railway, sea or air, and the word taxes replaced the word cesses in the entry, relative to octrois. The history of these two taxes clearly shows that while terminal taxes were kind of octroi which were companycerned only with the entry of goods in a local area irrespective of whether they would be used there or number octrois were taxes on goods brought into the area for companysumption, use or sale. They were leviable in respect of goods put to some use or other in. the area but only if they were meant for such user. When the Government of India Act, in its Scheduled Tax Rules, mentioned octrois, it intended to give the power to levy taxes in this well-understood sense, namely, on the entry of goods in a local area, for companysumption, use or sale. The Boroughs Act, which was enacted in 1925 mentioned only companysumption and use.,, Ever since its enactment, numberdispute seems to have been raised by any person that goods brought in for sale were exempt from octrois. All persons who brought the goods apparently paid this tax without objection. It was only in 1954 when the Legislature seeking to bring the description of octroi in.- the Municipal Act in line,. with the Constitution included the word sale also, that the dispute was raised by persons who were affected, and they were some of the persons who had paid the tax before, even though the word sale was number there. Of companyrse, the companyduct of the tax-payer is number determinative of the meaning of the words ,,consumption or use. But it shows how the term was always understood. The word companysumption in its Primary sense means the act of companysuming and in ordinary parlance means the use of an article in a way which destroys, wastes or uses up that article. But in some legal companytexts, the word companysumption has a wider meaning. It is number necessary that by the act of companysumption the companymodity must be destroyed or used up. The word -consumption occurs in explanation to sub-Article 1 of Article 286 of the Constitution. In explaining the ambit of that word, this Court observed in The State of Bombay v. The United Motors India Ltd. 1 as follows- The expression for the purpose of companysump- tion in that State must, in our opinion, be understood as having reference number merely to the individual importer or purchaser but as companytemplating distribution eventually to companysumers in general within the State. It is number the immediate person who brings the goods into a local area who must companysume them himself, the act of companysumption may be postponed or may be performed by someone else but so long as the goods have been brought into the local area for companysumption in that sense,, numbermatter, by whom, they satisfy the requirements of the Boroughs Act and octroi is payable. Added to the word companysumption is the word use also. There may be certain companymodities which though put to use are number used-, up in the process. A motor-car brought into an, area for use is number used up in the same sense as food-stuffs. The two expressions use and companysumption together therefore, companynote the bringing in of goods and animals number with a view to taking them out again but with a view to their retention either for use without using 1 1953 S. C. R. 1069, 1084. them up or for companysumption in a manner which destroys, wastes or uses them up. In this companytext, the word companysumption, as has been shown above, must receive. a larger meaning than merely the act of companysuming in the generally understood sense. Recently, in M s . Anwarkhan Mahboob Co. v. The State of Bombay 1 while dealing with the Explanation to Article 286 1 , this Court observed as follows In answering that question it is unnecessary and indeed inexpedient to attempt an exhaus- tive definition of the word companysumption as used in the explanation to Art. 286 of the Constitution. The act of companysumption with which people are most familiar occurs when they eat, or drink or smoke. Thus, we speak o people companysuming bread, or fish or meat or vegetables, when they eat these articles of food we speak of people companysuming tea or companyfee or water or wine, when they drink these articles we speak of people companysuming cigars or cigarettes or bidis, when they smoke these. The production of wealth, as economists put it, companysists in the creation of utilities. Consumption companysists in the act of taking such advantage of the companymodities and services produced as companystitutes the utilization thereof. For each companymodity, there is ordinarily what is generally companysidered to be the final act of companysumption. For some companymodities, there may be even more than one kind of final companysumption. Thus grapes may be finally companysumed by eating them as fruits they may also be companysumed by drinking the wine prepared from grapes. Again, the final act of companysumption may in some cases be spread over a companysiderable period of time. Books, articles of furniture, paintings may be mentioned as examples. It may even happen in such caes, 1 1961 1 S. C. R. 709, 715. that after one companysumer has performed part of the final act of companysumption, another portion of the final act of companysumption may be per- formed by his heir or successor-in-interest, a transferee, or even one who has obtained possession by wrongful means. But the fact that there is for each companymodity what may be companysidered ordinarily to be the final act of companysumption, should number make us forget that in reaching the stage at which this final act of companysumption takes place the companymodity may pass through different stages of production and for such different stages, there would exist one or more intermediate acts of companysumption In the absence of any words to limit the companynotation of the word companysumption, to the final act of companysumption, it will be proper to think that the companystitution-makers used the word to companynote any kind of user which is ordinarily spoken of as companysumption of the particular companymodity. Looking to the trade of the companypany, it is quite obvious that it brings in the goods a for companysumption by itself- which of companyrse is within the term octroi as described b for re-export either by itself or through dealers outside the are a which as is admitted by the municipality, entitles the companypany to a refund of tax and c for sale by it directly to companysumers or to dealers who distribute the goods within the area to ultimate companysumers. So long as the goods are brought inside the area for sale within the area to an ultimate companysumer, it makes numberdifference that the companysumer does number companysume them in the area but takes them out for companysumption elsewhere. A motorist who buys petrol within the municipal area and goes outside it for a drive buys the petrol in the area for purposes of companysumption and the person who keeps and stores the petrol for sale in such circumstances keeps it for companysumption therein. The word -therein does number mean that all the act of companysumption must take place in the area of the municipality. It is sufficient if the goods are brought inside the area to be delivered to the ultimate companysumer in that area because the taxable event is the entry of goods which are meant to reach an ultimate user or companysumer in the area. Indeed, the companysumer may never companysume them as, for example, a motorist buys a tin of oil and finds that it does number suit his vehicle and leaves it lying on his shelf. The goods must be regarded as having been brought in for purposes of companysumption when a person brings them either for his own use or companysumption, or to put them in the way of others in the area, who are to use and companysume. In this process the act of sale is merely the means for putting the goods in the way of use or companysumption. It is an earlier stage, the ultimate destination of the goods being use or companysumption. The earlier stage, namely, the sale by him, does number save the person who brought the goods into the local area from liability to the tax if the goods were brought inside for companysumption or use. In other words, a sale of the goods brought inside, even though number expressly mentioned in the description of octroi as it stood formerly, was implicit, provided the goods were number re-exported out of the area but were bought inside for use or companysumption by buyers inside the area. In this sense the amplification of the description both in the Government of India Act 1935 and the Constitution did number make any addition to the true companycept of octroi as explained above. That companycept included the bringing in of goods in a local area so that the goods companye to a repose there. When the Government of India Act 1935 was enacted, the word octroi was deliberately avoided and a description added to forestall any dispute of the nature which has been raised in this case. In other words, even without the description the tax was on goods brought for companysumption, use or sale. The word octroi was also avoided because terminal taxes are also a kind of octroi and the two were to be allocated to different legislatures. In our opinion, even without the word sale in the Boroughs Act the position was the same provided the goods were sold in the local area to a companysumer who bought them for the purpose of use or companysumption or even for resale to others for the purpose of use or companysumption by them in the area. It was only when the goods were re-exported out of the area that the tax companyld number legitimately be levied and in this case the municipality has agreed to refund the amount of tax on goods re-exported without being used or companysumed in the municipal area. In this view of the matter it was number necessary for the Municipality to follow the procedure for imposing taxes when the section was amended. The tax still remained the same. Its nature, incidence or rate were number altered. In our opinion, the companypany was liable to pay octroi tax on goods brought into local area, a to be companysumed by itself or sold by it to companysumers direct and b for sale to dealers who in their turn sold the goods to companysumers within the municipal area irrespective of whether such companysumers bought them for use in the area or outside it. The companypany was, however, number liable to octroi in respect of goods which it brought into the local area and which were re-exported. But to enable the companypany to save itself from tax in that case it had to follow the procedure laid down by rules for refund of taxes. For the reasons above stated this appeal must fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 332 of 1961. Appeal from the judgment and ordered dated June 23, 1959, of the Bombay High Court in Income-tax Reference No. 51 of 1958. V. Viswanatha Sastri, S. P. Mehta, J. B. Dodachanji, C. Mathur and Ravinder Narain, for the appellants. N. Rajagopal Sastri and R. N. Sachthey, for the respondent. 1962. December, 11. The judgment of the Court was delivered by- HIDAYATULLAH, I.-This is an appeal on a certificate granted by the High Court of Bombay against the judgment and order of the High Court dated June 23, 1959. The appellants are two assesses whose cases were companysolidated before the Tribunal and hence a single appeal. The facts of the case are as follows Before the year 1938, the two appellants and one Jehangir Irani were carrying on business in electric goods including electric bulbs under two firm names. One of the firms was called the Precious Electric Co. and the other was named J. Pirojsha Co. In June, 1938, Precious Electric Co. entered into an agreement with M s. Philips Electrical Co. India Ltd. by which the Company demarcated a territory for the Firm, undertaking to sell and deliver electric bulbs therein exclusively to the Firm. By a letter which formed an annexure to the agreement the Company agreed to sell electric bulbs to the Firm at ex-warehouse prices subject to a companymission of 12-21 on the gross invoice amount and the Firm was allowed a further discount of 2 on the net invoice prices to companyer breakage or fault in manufacture. It was further agreed that if the Company sold any goods directly to the buyers in the territory the Company would pay to the Firm companypensation amounting to 5 of the net amount of invoices companyering such sales. The Firm on its part undertook to sell only Philips bulbs in the territory and to prevent re-exportation of the bulbs by third parties. In addition to other companyditions to which we need number refer at this stage there was a clause for termination of the agreement. The clause provided that the agreement would be deemed to have been made as from July 1, 1938, and would companytinue unless determined by either party by giving to the other party three months prior numberice by registered letter of such partys intention to determine the agreement on the June 30, 1939 or any subsequent June 30. This agreement companytinued for a period of sixteen years. On March 8, 1954, the Company sent a letter to the Firm informing the Firm that the agreement would companye to an end from June 30, 1954. The Company sent a draft of a new agreement which was intended to take the place of the earlier agreement. Some negotiations between the parties followed but numberfresh agreement was signed . On May 28, 1954, the two assessees and the Manager of the Firm met the representatives of the Company to discuss the new agreement. Nothing much came of the discussion and since the Bombay branch of the Company was taking over the business of selling bulbs in the territory, a working scheme for the period immediately following the termination of the existing agreement was reached. This was recorded in the shape of minutes which were signed by the represen. tatives of the Company and by the two partners of the Firm. The minutes companyered arrangements for the period of transition, the stocks and the staff of the firm. Of these the important provisions are as follows - PERIOD OF TRANSITION Philips Bombay Branch will companytinue the distribution of lamps, etc. to dealers and in this respect Messrs. Precious promised to furnish their name list of dealers and their supplies over the past six months. It was companycluded that the execution of orders of locally available goods might be terminated in two months time, whereas this matter as far as orders placed with overseas suppliers are companycerned might take about five months. During this period Messrs. Precious will receive all companyoperation from Messrs. Philips to ensure a smooth winding up of the business. Furthermore, particular attention will be given to the I. S. D. companytracts and transactions in companynection with public bodies. Messrs. Precious will inform these bodies that the supplies will be effected through their intermediary by Philips Bombay, Branch which refers in particular to those cases where close personal companytact between Messrs. Precious and the parties exists. The companymission related to the above special cases,- executed after the termination of the existing agreement will be due to Messrs. Precious if numbertechnical objection emanating from ELAS agreement will companye forward. STOCKS Messrs. Philips, Bombay will take care that the stocks of Messrs. Precious will be disposed of in one way or the other as soon as possible in order to avoid that Messrs. Precious capital might unnecessarily be tied up. In order to achieve this, the available goods will be classified in three categories, viz Easily saleable goods. Goods which require some sales efforts, which means that they might -be disposed of in a period of four to six weeks. 955- Slow moving items which will be taken over by Bombay Branch. The goods mentioned under iii above will be taken over by Messrs. Philips at the original invoice price if number otherwise decided due to deterioration of the goods whilst a deduction is valid for companyt incurred for transfer. The following minutes, headed Miscellaneous, were at the end and read - MISCELLANEOUSAs a gesture of goodwill, Messrs. Philips are prepared to pay in quarterly instalments to each of the three partners during a period of three years, Rs. 40,000/- per annum from the date of the expiry of the existing companytract. The three partners referred to above as far as Messrs. Philips Electrical Co., understand are Mr. Pirojsha H. Devecha Mr. Khurshedji A. Irani Mr. Noshir J. Irani Finally, Mr. Van Rhijn stated that Messrs. Philips are quite willing to companytinue Messrs. Precious as regular lamp dealers and the profit they realise therfrom will be in addition to the three years remuneration referred to above. In the account year ended December 31, 1954 relative to the assessment year 1955-56, each of the three partners received two quarterly payments of Rs. 10,000 each. This amount was taxed by the Income-tax Officer in respect of the two appellants as companypensation under s. 10 5A of the income- tax Act. An assessment was also made on the third partner but we are number companycerned with that assessment. The appellate Assistant Commissioner to whom the assessee appealed held that provisions of s. 10 5A did number apply to the facts of the case on the ground that the appellants were number agents of the Company from which payment had been received and the amount received was number companypensation as numberlegal damage had been caused to them by the Company. He, however, held that the sum of Rs. 20,000 in respect of each of the appellants was a taxable receipt. The -assessees appealed to the Tribunal and four companytentions were raised by them. They were it was companypensation paid for termination of agreement which companystituted the frame work of the Firms business. the amount was an ex-gratia payment made by way of testimonial. the payment is made to individual partners and number to the firm as such and does number represent a receipt in the companyrse of firms business. alternatively, the said receipt was number liable to be included in the total income of the recipient by reasons of Section 4 3 vii . The Tribunal did number accept these companytentions but at the request of the firm referred three questions for the decision of the High Court. Those questions were as follows whether the receipt of Rs. 20,000/- is a taxable receipt for the purpose of the Indian Income-tax Act, 1922 ? If so, is it liable to be number included in the total income of the recipient by reason of Section 4 3 vii ? Does the said receipt fall within the mischief of Section 10 5A d and as such liable to tax accordingly ? The reference was heard by the High Court and the learned judges answered the -first question as follows - The receipt of Rs. 20,000/- is a taxable receipt for the purpose of the Indian Income-tax Act, 1922. In view of the answer the High Court observed as follows - As we have already held that the amount is taxable receipt, being receipt arising from business, Section 4 3 vii does number exempt it from liability to tax. We are in the view we have taken number called upon to companysider whether even if the receipt of Rs. 20,000/- is a capital receipt, by operation of Section 10 5A d the amount can be regarded as a revenue receipt. We answer the second question as follows It is liable to be included in the total income numberwithstanding Section 4 because it arose from business. The third question was left unanswered. The High Court certified the case as fit for appeal and hence this appeal. The High Court in reaching its companyclusion examined the agreement of 1938 and companye to the companyclusion that though it involved a monopoly purchase and gave to the Firm an exclusive right to sell Philips bulbs in the assigned territory, it was numbermore than a trading agreement which did number companystitute a trading asset. By the loss of this monopoly right, the High Court went on to say, the business of the firm was number destroyed because even after the termination of the agreement the firm was entitled to carry on the business of selling electric bulbs as a ,-,regular lamp dealer. According to the High Court the agreement while it lasted only companyferred on the Firm the right to obtain Philips bulbs on favourable terms as their stock-in-trade. By the termination of the agreement this right to acquire the stock-in-trade on favourable terms was lost but there was numbercapital loss as the business of selling bulbs companytinued. The High Court also referred to the minutes where the payment of Rs. 40,000 per annum to each of the partners for a period of three years was expressly designated three years remuneration. They referred to numerous cases in which distinction has been made in India and in England between capital and revenue receipts. The learned judges ,distinguished those in which receipts were described as on the capital side. In particular they relied on the case in Bush, Beach Gent. Ltd. v. Road 1 . They distinguished between those cases in which the cancellation of the companytract affected the structure of the assessees business and those in which it did number, and held that this was a case in which the structure of the business of the Firm was number affected and the payment made must be treated as on the revenue side particularly because it was described as remuneration and was payable yearly for a period of three years. In the appeal before us Mr. Vishwanath Sastri has put the case of the appellants from two angles. He companytends that the agreement was number a trading agreement but companystituted an asset on the termination of which companypensation was paid to make up for the loss of this capital asset. He companytends that the 1 1939 22 Tax Cases 519. agreement, though it companyld be terminated on the June 30 in any year with three months numberice, had run for sixteen years to the advantage of both the Company and the Firm and thus was always likely to run unless terminated. He points out that it involved a monopoly right to sell Philips bulbs exclusively in the territory assigned and also companyferred other rights like favourable terms of purchase of bulbs, companypensation for invasion of territory and a right to discount in case of breakage or faulty manufacture. In other words, the agreement was number an ordinary trading agreement by which the stock-in-trade was secured but involved something more than the purchase of stock-in-trade. It companystituted the means of earning profits or as it is companymonly described ,,,the money-making apparatus of the appellants. When this agreement was terminated, he companytinued, it was number a premature termination but the expectancy was that it was to run unless terminated and the companypensation which was paid though described as remuneration was, in a business sense, merely companypensation for the loss of those rights which the Firm had enjoyed and which it expected to enjoy in the future if the agreement was number terminated. In the alternative, Mr. Vishwanatha Sastri companytends that even if the amount companyld number be referable to a loss of a capital asset it was number referable to any future service to be rendered by the assessees who had by the termination of the agreement become ordinary dealers in bulbs like any other dealer in the same territory. Nor was it referable to any past service but was a payment ex-gratia out of appreciation of the personal qualities of the partners whose services in the past were fully remunerated. In other words, this was an ad hoc payment in the nature of a testi- monial as it is sometimes described or as a solatium, by which term the Privy Council described the payment in Income-tax Commissioner v. Shaw Wallace Co. 1 - 1 1932 L.R. 59 I.A. 206. Mr. K. N. Rajagopal Sastri on behalf of the Commissioner of Income-tax companytends that the business of selling bulbs was only a part of the business activities of Precious Electric Co. and that Firm was one of the two firms carrying on the same or similar businesses. The agreement companyferred the benefit of a favourable mode of acquiring stock-in-trade only and its termination did number lead to any loss of capital because it was number a capital asset in the hands of the Firm but was only a trading agreement, entered into in the ordinary companyrse of business. Mr. Raiagopal Sastri companytends that the monoply involved in the agreement was merely incidental to such a trading agreement and was number an asset which companyld be said to have been lost on the termination of the agreement. He companytends that there was numberpremature termination as the agreement had worked itself out and even if treated as capital it had exhausted itself. An amount paid after capital has exhausted itself must be treated as revenue from other sources within s. 12 of the Income-tax Act. He companytends that even if the entire business activities of the assessees were companyfined to implementing the agreement it cannot be companysidered as capital because it had a very minor place in the entire business of the two firms which companytinued unaffected by the termination of the agreement. In reply to the argument that this was a testimonial or solatium Mr. Rajagopal Sastri companytends that the minutes did number describe it as such but on the other hand stated that the payment was made to supplement the business receipt of the partners in the next three years. He accordingly companytends that the judgment under appeal is right and this payment cannot be regarded either as a capital receipt or as an exgratia payment. Before we companysider these questions and refer to the authorities which were cited at the bar we shall refer in some detail to the terms of the agreement of 1938 to find out its true nature so as to be able to decide whether it can be regarded as a trading agreement entered into for the purpose of obtaining the stock-in-trade for the business or it can be regarded as an asset. The agreement companysisted of 13 clauses but all of them were number equally important. The first clause provided for two matters a it fixed a territory and b it defined the scope of the agreement. In the first part were mentioned the Bombay Presidency, Rajputana, Central Provinces and Berar, and in the second part all lamps for electrical lighting purposesof certain kinds companypendiously called Philips lamps were said to be companyered by -the agreement. Clause 2 was also divided into two parts. The first part said that the Company undertook to sell and or to deliver Philips lamps exclusively to the Firm in the territory, the second part provided that should any buyer refuse to pur- chase from the Firm, the Company would make the supply direct but .pay five per cent. companypensation over the net amount of invoice companyered in such orders ,to the Firm. Clause 3 recited the terms accepted by the Firm. This clause was also divided into two parts. The first part bound territory only such Philips lamps it by the Company. prevent re-export of the lamps the Firm to sell in the as were supplied to The second part bound it to by third parties as far as possible. By clause 4 the Firm bound itself to observe clause 3 in respect of such lamps as might remain undisposed of with the Firm after the termination of the agreement. Clause 5 reserved to the Company the right to alter the prices rate of discount and companyditions of sale without numberice to the Firm even in respect of unexecuted companytracts. Clause 6 reserved to the Company the right to refuse orders and or to cancel or to suspend deliveries for any reason, whatever, including the reason that the prices obtaining had become unprofitable. That clause also provided that in case of such cancellation, cessation- or suspension of deliveries the Firm would number be entitled to receive -compensation. By clause 7 the Firm bound itself to push the sale of the Philips lamps according to the directions of the Company and number to sell lamps other than Philips lamps and number to support any firm companypeting with the Company in any way and to keep secret methods of work etc. Clause 8 then provided that the Firm would buy and sell Philip lamps on its own account and at its own risk. The rest of the terms need number be referred to. The gist of the agreement, therefore, was that the Firm was to have an exclusive territory for sale of Philips lamps and undertook to sell only Philips lamps in that territory. The agreement allowed the Finn companypensation if Philips lamps were sold in the territory by the Company. There was numberprovision in the agreement how many lamps the Firm was to buy from the Company in a particular period and there was numbercondition that the Firm -would be required to buy any specified quantity and or quality. There was numberagreement that the Firm was to act as the agent of the Company. This was an agreement between principal and principal, the measure of the business depending upon how far the Firm wag able to push the sales of Philips lamps in its own interest and in the interest of the Company. The agreement was to companymence on July 1, 1938, and was termi. nable by a three months numberice on either side on June 30, of any year. It is fair to inforce that as long as the Company and the Firm found the arrangement profitable the agreement would have companytinued. By an annexure to the agreement, which was in the form of a letter, the terms of business between the Firm and the Company were laid down. This letter stated the companymission payable to the Firm and the manner in which payments were to be made by the Firm. Sufficient reference to these terms has already been made by us in an earlier part of this judgment. This annexure was to be read as a part of the agreement. It was probably kept separate so that in case of need only the annexure might be altered without the trouble of executing a fresh agreement. In determining whether this payment amounts to a return for loss of a capital asset or is income, profits or gains liable to income-tax, one must have regard to the nature and quality of the payment. If the payment was number received to companypensate for a loss of profits of business the receipt in the hands of the appellant cannot properly be described as income, profits or gains as companymonly understood. To companysti- tute income, profits or gains, there must be a source from which the particular receipt has arisen, and a companynection must exist between the quality of the receipt and the source. If the payment is by another person it must be found out why that payment has been made. It is number the motive of the person who pays that is relevant. More relevance attaches to the nature of the receipt in the hands of the person who receives it though in trying to find out the quality of the receipt one may have to examine the motive out of which the payment was made. It may also be stated as a general rule that the fact that the amount involved was large or that it was periodic in character have numberdecisive bearing upon the matter. A payment may even be described as pay, remuneration etc. but that does number determine its quality, though the name by which it has been called may be relevant in determining its true nature, because this gives an indication of how the person who paid the money and the person who received it viewed it in the first instance. The periodicity of the payment does number make the payment a recurring income because periodicity may be the result of companyvenience and number necessarily the result of the establishment of a source expected to be productive over a certain period. These general principles have been settled firmly by this Court in a large number of ,cases. See for example The Commissioner of Income-tax v. Vazir Sultan, Sons 1 , Oodrej Co, v. Commissioner of Income- tax 2 , Commissioner of Income-tax v. Jairam Valji 3 , Senairam Doongarmall v. Commissioner of Income-tax 4 . 1 1959 Sapp. 2 S.C.R. 375. 2 11960 1 S.C.R. 527. 3 1959 35 I.T.R. 148. 4 1961 42 I.T.R, 392. We shall begin by companysidering whether the payment made in this case can be related to the termination of the agreement of 1938 and can be said to arise from that termination in the shape of companypensation in lieu of profits. The agreement of 1938 did number state that on the termination of the agreement in the way provided there companypensation was payable to the Firm. For temporary suspension of supplies numbercompensation was payable. These terms of the agreement show that though the agreement was to run its companyrse as long as it proved profitable to the parties, at least the Firm was number entitled to be companypensated either for a temporary suspension of the benefits under the agreement or a companyplete termination of those benefits. The payment cannot, there- fore, on the terms of the agreement be companynected with loss of estimated profits. It was said, a long time ago in the well-known case of Glenboig Union Fireclay Co. Ltd. v. Commissioner of Inland Revenue 1 that there is numberrelation between the measure that is used for the purpose of calculating a particular result and the quality of the figure that is arrived at by means of application of that test. Here, the amount is large but there is numberhing to show that it was ever an adequate measure of the profits that were expected to be made during the three years in which the amount was to be paid. Even if it had been there would have been numberinference in law. But in the absence of any proof that this was the likely profit it is difficult to say that the payment replaced those profits. Another way of looking at the matter is to companysider whether the agreement was a trading agreementor something which was in the nature of an asset in the hands of the firm. In this companynection the Department relies strongly upon the case of Bush Beach Gent. Ltd. v. Road 2 . In that case ,the agreement was different. No doubt by that agreement also a territory was reserved 1 1922 Tax Cas 427. 2 1939 2 Tax Cases 519. and a monopoly was created but that agreement was to last for four years and was prematurely terminated at the end of two years. Under that agreement a minimum quantity of chemicals had to be bought and if the buyers failed to exercise their option to take up the minimum quantity in any one year, the companytract itself was to be companysidered as terminated without any further option. The assessees in that case were industrial chemists till 1933 and by the agreement had offered to buy agricultural chemicals and had set-up, is a result of the agreement, a special organisation for selling agricultural chemicals. The amount of companypensation on the premature termination of the agreement was arrived at after negotiations and the sum represented profits of the lost business and number the price for the purchase of the companytract. It was observed by Lawrence, J., that the business of the assessee companytinued unaffected and that if a trading companytract made in the ordinary companyrse of business, though companyering a new field, was prematurely -terminated and companypensation was paid for that premature termination, it must be companysidered to be in replacement of profits and number capital. In reaching this companyclusion the learned judge pointed out that the case resembled Short Bros. Ltd. v. Commissioners of Inland Revenue 1 and Commissioner of Inland Revenue v. Northfleet Coal and Ballast Co. Ltd. but was distinguishable from Ven den Berghts case 3 . In Short Brothers case 1 a trading companytract was terminated and companypensation was paid towards loss of profits in respect of that companytract. Lord Hanworth R. observed that the payment was number companypensation for number carrying on of the business but was a sum paid in the ordinary companyrse in order to adjust the relation between the shipyard and its customers. In the same case Lawrence, L. J. observed that the payment was in the nature of an ordinary trading receipt on the termination of a trading agreement which might or might number have been profitable but on the termination of which the 1 1927 12 Tax Cas. 955. 2 1927 12 Tax Cas. 1102 3 1935 19 Tax Cas. 390. payment was made on the expectation that it would have been profitable. In Northfleets case 1 companypensation was paid to get rid of a companytract under which supplies of chalk from a quarry had to be made. The purchaser received a payment of pound 900 a year and in return released the supplier from liability under the companytract. Later a lumpsum of E. 3000 was accepted and this amount was held to be a trading profit. It was observed by Rowlatt, J. These companytracts are number being sold. They are number being even extinguished really for this purpose. What is happening is that the profits under them are being taken something is being taken in respect of the profits of them. That is the position. This sum represents the profits of the Company on the companytracts, treating them as companytracts which numberionally have earned or are going to earn a profit. Those profits are relating to this sum. The profits are number destroyed. It is the profits which we are companycerned with, number the companytract itself On the other side there is the leading case of Ven den Berghs Ltd. v. Clark 2 where mutual trading agreements between two companypanies were rescin. ded and one of the companypanies was paid lb. 450,000 as damages. This was treated as a capital receipt and number an income receipt to be included in companyputing the profits of the trade under Schedule D, Case 1, of the Income-tax Act 1918. Lord Macmillan described the payments as follows On the companytrary the cancelled agreements related to the whole structures of the appellants profit-making apparatus. They, resulted the Appellants activities, defined what they might and what they might number do, and affected the whole companyduct of their business. I have difficulty in seeing how money laid out to secure, 1 1927 12 Tax Cas. I 10?. 2 1935 19 Tax Cas. 390. or money received for the cancellation of, so fundamental an Organisation of a traders activities can be regarded as an income disbursement or an income receipt. The agreement in our case was number an agreement for the purchase of bulbs or lamps. It mentioned numberquantity or quality or price. It only secured to the firm a right to exclusive purchase for sale in an exclusive territory. In other words, it created a monopoly right of purchase for and a monoploy right of sale in a certain territory. The agreement secured to the firm an advantage of an enduring nature. No doubt, the agreement was terminable in anyyear on three months numberice but it would have lastedas long as it was profitable to the companytracting parties and the indications were that it was to subsist for some time. It was an agreement which need number have companytinued but which was likely to companytinue. The question, therefore, is whether by termination of the agreement the firm lost an advantage or merely lost the right to obtain certain stockin-trade for which they had bargained. If it was first then the receipt, if companynected with that loss, was a capital receipt and if the latter it was a replacement of the profits which were likely to ensue from the trading agreement. In our opinion, it is impossi- ble to describe this agreement as a trading agreement. It can only be described as an agreement which companystituted a source and a monopoly, and which gave an enduring advantage to a trader in his trade. The loss of such an agreement must be regarded as falling on the capital asset of the person affected and number in the companyrse of his ordinary trading. If the agreement had been breached prematurely the damages would number have been calculated on the basis of outstanding companytracts only but on the basis of an advantage lost. Indeed, the agreement itself companytemplated in some of its terms other companytracts under which the supplies were to be made and refers in terms to the cancellation of orders and companytracts This shows that in addition to this agreement there were to be trading companytracts in the shape of orders for bulbs which the Firm would have placed with the Company in the ordinary companyrse of their business. The agreement said that even on the termination of those companytracts and orders numbercompensation was payable. It is difficult to see how this payment can be related to profits or how it can be called income, profits or gains or even income from other sources. The payments can be regarded only as ad hoc pay- ments. Even if it be number regarded as a payment for loss of capital it cannot be regarded as payment for any services rendered or likely to be rendered. The services in the past were amply remunerated. The payment does number companytemplate that the agreement in the past had number been sufficiently remunerative to the Firm. It does number pretend to pay them for past services. The minutes do number show that any service in the future was expected from these appellants. What remained to be done was to wind up the business with regard to the agreement of 1938 itself. For this purpose, the Company agreed to give all facilities to the Firm in respect of easily saleable articles and to take over those which required a longer duration to sell. The only service, if service it can be called, was that the Firm was to hand over to the Company a list of customers and the supplies made to them during the past six months. It cannot be said that for this service the payment was made. The payment was thus number related to any service either in the past or in the future. Both sides have relied upon cases in which certain payments were held to be taxable or number taxable according as the facts in those cases suggested that the payment was for some services in the past or future or was entirely gratuitous. No useful purpose will be served by going over such cases because the facts of 969- two very dissimilar cases lead to different principles. We do number, therefore, refer to the cases of professional cricketers for whom benefit matches are held or who receive payments for outstanding performance with the bat or ball or cases of persons working in honorary capacity or in little- paid jobs who on retirement receive some payment in token of their worth. Those cases stand on their own facts. The safest method is to take the facts of the case in hand and to companysider for what was the payment received and incidentally for what was the payment made. judged from this angle it is quite clear that the payment here was number made for any service. In fact it was number made to the firm but to the three partners individually. It was number related to any service that was likely to be performed in the future even though it -A as described as remuneration additional to the ordinary profits of trading. It was in numbersense a remuneration. It was in fact a payment made out of regard for the qualities of the three partners of the firm who werelong associated with -the Company to its profit and who had built up a vast network of sales Organisation of which the Company would have obtained benefit when it entered on the business of selling for itself. This payment need number be given a particular name. It need number be called a testimonial as to which Rowlatt, J, said in Chibbett v. Joseph Robinson Sons 1 that there is numbermagic in that name. It need number be called a solatium, a term devised by Rowlatt J, in the same case and applied by the Privy Council in Shaw Wallaces case 2 but which this Court did number adopt in Senairam Doongarmalls case 3 without attempting to give it a name we are satisfied that the payment was in token of appreciation and was number related to any business done or to loss of profits and it was number recompense for services past or future. It was a payment out of gratitude and must be regarded as a payment which does number bear the character of income, profits or gains which alone are taxable under the Income-tax Act. In our, opinion, the 1 l924 9 T.C. 49. 2 1932 L.R. 59 I.A. 206 3 1959 35 148 High Court, with all due respect, was in error in holding that this amount was taxable. The answer to the first question must therefore be against the Department. The next question is whether the receipt can be described under s. 4 3 vii as of a casual and numberrecurring nature and number by way of addition to the remuneration of an employee. The assessees were number employees of the Company and were number in receipt of remuneration. After the termination of the agreement they were to work as regular leap dealers if they cared. Therewas,nocompulsion that they must sell electric lamps whether made by the Company or by other manufacturers. If they did, they were to receive companymission at any other regular dealer. It is thus obvious that the latter part of s. 4 3 vii does number apply. The receipt may only be described as a receipt of a casual and number-recurring nature if it were income, profits or gains. We have already said that the fact that payment was spaced over three years did number make this a recurring receipt. In our judgment the receipt would be saved by s. 4 3 vii from being included in the total income in any event. But we are of opinion that number being income, profits or gains s. 4 3 vii has numberapplication. Our answer to the second question is that s. 4 3 vii does number apply. The third question need hardly detain us. it was number answered by the High Court. Section 10 5A of the Act deals with four categories of persons. The first three categories ex- facie do number apply. The fourth category also does number apply as the appellants in their individual capacity were number holding an agency and the Firm -of which they were partners was also number an agent of the Company. The answer to that question must be against the Department. In view of what we have said above this appeal must succeed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 493 of 1960. Appeal by special leave from the judgment and order dated April 29,1959, of the Calcutta High Court in Appeal from Original Order No. 177 of 1958. T. Desai, D. N. Mukherjee and B. N. Ghosh, for the appellants. K. Daphtary, Solicitor General of India, S. K. Kapur and C. Chatterjee, for the respondent. 1962. December 12. The judgment of the Court was delivered by SHAH,J.-The appellants are a firm carrying on business as importers in the name and style of M. Golodetz Company at 120, Wall Street, New York in the United States of America. The respondents are a firm carrying on business, among others as exporters of manganese ore and their principal office of business is at Bentinck Street in the town of Calcutta. By a companytract in writing dated July 5, 1955 the respondents agreed to sell and the appellants agreed to buy 25,000 tons of manganese ore on the terms and companyditions set out therein. The companytract companytained the following arbitration clause Arbitration Any dispute arising out of the companytract is to be settled by arbitration in New York according to the rules of the American Arbitration Association. Between September 1956 and August 1957 the respondents supplied 5478 tons of manganese ore. Disputes having arisen between the parties about the liability of the respondents to ship the balance of the goods number delivered, the appellants referred them on or about January 15, 1958 to the arbitration of the American Arbitration Association and claimed companypensation on the plea that the respondents had unlawfully made default in shipping the balance of the goods agreed to be sold. On February 2, 1958 the respondents companymenced an action on the original side of the High Court of Calcutta claiming a decree that the written companytract dated July 5, 1955 be adjudged void and delivered up and cancelled, that a perpetual injunction be issued restraining the appellants, their servants and agents from taking steps in purported enforcement of the said companytract and that a declaration if necessary be made that the said companytract stands discharged and that the parties have numberrights and obligations thereunder. It was the case of the respondents that the appellants had accepted manganese ore shipped till August 1957 in full satisfaction of their liability and that the companytract was discharged and the rights and liabilities of the parties thereunder came to an end. In the alternative the respondents pleaded that the appellants had repudiated the companytract or had companymitted breaches thereof and on that account also the companytract stood discharged or had become void or voidable at their option and that they had avoided the same. In the further alternative they pleaded that the companytract had become impossible of further performance and that the same stood frustrated or discharged and they were exempted from further performance thereof. The appellants thereupon petitioned the High Court of Calcutta for an order that the proceedings in suit No. 194 of 1958 companymenced by the respondents be stayed by an order under s. 34 of the Arbitration Act X of 1940. and that an injunction be issued restraining the respondents, their agents and servants from proceeding with the hearing of the suit. Ray, J, who heard the petition held that to the agreement to submit the disputes to arbitration to a foreign arbitral body s. 34 of the Indian Arbitration Act, 1940, applied that the remedy of the party aggrieved by the manner in which the proceedings are companyducted, or by the award was to companytest the arbitration proceeding and the award in the foreign tribunal, according to the law applicable thereto, and that there was numbersufficient reason for number staying the action filed in breach of the agreement to refer the disputes arising under the companytract to arbitration. In appeal under the Letters Patent against the order, the High Court held that the Court of first instance had number exercised its discretion properly for it had failed to take into companysideration certain important circumstances emerging from the evidence, viz. that all the evidence regarding the companytract and the disputes was in India, that there were on account of the restrictions imposed by the Government of India special difficulties in securing foreign exchange for producing evidence before a foreign arbitration tribunal, that it would be impossible for the respondents to produce their evidence and there- fore the foreign arbitration tribunal would Dot be a safe and companyvenient forum for a just and proper decision of the disputes between the parties. The learned judges also observed that it was companyceded by the Advocate General appearing on behalf of the appellants that the entire matter would be governed by the Indian laws, the Indian Arbitration Act and the Indian Contract Act and on that account also the discretion of the Court to refuse to stay the suit should be exercised. The High Court accordingly reversed the judgment of Ray, J., and vacated the order passed by him. Against that order, with special leave, this appeal is preferred. We will assume for the purpose of this appeal that s. 34 of the Arbitration Act, 1940 invests a Court in India with authority to stay a legal proceeding companymenced by a party to an arbitration agreement against any other party thereto in respect of any matter agreed to be referred, even when the agreement is to submit it to a foreign arbitration tribunal. Where a party to an arbitration agreement companymences an action for determination of a matter agreed to be referred under an arbitration agreement the Court numbermally favours stay of the action leaving the plaintiff to resort to the tribunal chosen by the parties for adjudication. The Court in such a case is unwilling to companyntenance, unless there are sufficient reasons, breach of the solemn obligation to seek resort to the tribunal selected by him, if the other party thereto still remains ready and willing to do all things necessary for the proper companyduct of the arbitration This rule applies to arbitrations by tribunals, foreign as well as domestic. The power enunciated by s. 34 of the Arbitration Act is inherent in the Court the Court insists, unless sufficient reason to the companytrary is made out, upon companypelling the parties to abide by the entire bargain, for number to do so would be to allow a party to the companytract to approbate and reprobate, and this companysideration may be stronger in cases where there is an agreement to submit the dispute arising under the companytract to a foreign arbitral tribunal. A clause in a companymercial transaction between merchants residing in different companyntries to go to arbitration is an integral part of the transaction, on the faith of which the companytract is entered into, but that does number preclude the Court having territorial jurisdiction from entertaining a suit at the instance of one of the parties to the companytract, even in breach of the companyenant for arbitration. The Court may in such a case refuse its assistance in a proper case, when the party seeking it is without sufficient reason resiling from the bargain. When the Court refuses to stay the suit it declines to hold a party to his bargain, because of special reasons which make it inequitable to do so. The Court ordinarily requires the parties to resort for resolving disputes arising under a companytract to the tribunal companytemplated by them at the time of the companytract. That is number because the Court regards itself bound to abdicate its jurisdiction in respect of disputes within its companynizance, it merely seeks to promote the sanctity of companytracts, and for that purpose stays the Suit. The jurisdiction of the Court to try the suit remains undisputed but the discretion of the Court is on grounds of equity interposed. The Court is therefore number obliged to grant stay merely because the parties have even under a companymercial companytract agreed to submit their dispute in a matter to an arbitration tribunal in a foreign companyntry. It is for the Court, having regard to all the circumstances, to arrive at a companyclusion whether sufficient reasons are made out for refusing to grant stay. Whether the circumstances in a given case make out sufficient reasons for refusing to stay a suit is essentially a question of fact. In the present case the circumstances, in our judgment, are somewhat peculiar. The appellants in their petition for stay averred that the petition was bona fide, and was filed at the earliest possible opportunity, that the appellants were ready and willing to do all things necessary for the proper companyduct of the arbitration proceeding and there was numbersufficient reason why the matters in respect of which the suit had been filed companyld number be referred to arbitration in accordance with the arbitration agreement. The respondents by their companynter- affidavit companytended that the entire evidence regarding the subject-matter of the suit and all the witnesses in companynection therewith were in India and that numberpart of the evidence regarding any of the aforesaid matters was in New York. They also submitted that the proper law applicable to the companytract dated July 5, 1955 was the Indian law and that the Indian law of Contracts would govern the rights and obligations of the parties. They also companytended that the suit raised difficult questions of law applicable to the companytract, and on that account also they should number be required to submit the dispute to adjudication by lay-men. It was also submitted that the arbitration clause even if it was binding on the respondents firm companytemplated a foreign arbitration i.e. the arbitration was to be held in New York and any award, that might be made would be a foreign award, the arbitrators number being subject to the companytrol of the Courts in India and therefore the provisions of the Arbitration Act including s. 34 would number be availed of by the appellants. By their companynter-affidavit the appellants did number challenge the assertion made by the respondents that all the evidence in companynection with the dispute was in India and that numberpart of the evidence was in New York. The companystituted attorney of the appellants in paragraph 11 of his companynter-affidavit merely affirmed that there is numbersufficient reason why the matters in respect of which the said suit has been filed should number be referred to arbitration in accordance with the arbitration clause in the said agreement. I deny that there is any valid and or sufficient reason why the said disputes which are the subject-matter of the said suit should number be so referred to arbitration. I further say that it would be a cause of injustice to the petitioners to permit the respondents, subsequent to the companyclusion of a companytract to pick and to choose as whim or prejudice may dictate which clauses are binding and which are inoperative. He further stated in paragraph 12 I do number admit that evidence with regard to matters mentioned in the said paragraph 10 a of the res- pondents affidavit is necessary or cannot be given before the arbitrators as alleged. In particular, deny that if arbitration is held in terms of the agreement as deliberately companycluded by and between the parties there will be any denial of justice as alleged or at all. I do number admit that it will be necessary or that it will number be possible for the respondent to send any representative or to take any witness to New York as alleged. On the other hand, if the suit is number stayed, the petitioners will be greatly prejudiced and will suffer hardship. The High Court addressed itself to the question, whether the pleas raised by the respondents companystituted sufficient reason within the meaning of the Arbitration Act, and pointed out, and in our judgment it was right in so doing, that the statement made in the affidavit of the respondent had remained practically unchallenged, that all the evidence in the case relating to the disputes was in India and that was a strong ground for number exercising the discretion in favour of the appellants. It must be observed that having regard to the severe restrictions imposed in the matter of providing foreign exchange to individual citizens it would be impossible for the respondents to take their witnesses to New York and to attend before the arbitrators at the arbitration proceeding to defend the case against them and the proceeding before the arbitrators would in effect be ex parte. That would result in injustice to the respondents. Undoubtedly the appellants would be put to some inconvenience if they are required to defend the suit filed against them in India, but the High Court has companysidered the balance of inconvenience and the other circumstances and has companye to the companyclusion, and in our judgment that companyclusion is right, that the facts established make out sufficient reason for number granting stay. It was urged by companynsel for the appellants that the High Court for reasons which were number adequate interfered with the order which was within the discretion of the trial judge and on that account the order must be set aside. But the High Court has pointed out that Ray, J., did number give full, proper and adequate companysideration to all the circumstances and failed to apply his mind to the relevant affidavits from which it emerged that all the evidence relating to the dispute was in India and that he did number express his views on the diverse companytentions raised and remained companytent to observe that he was number in a position to decide the questions raised thereby and granted stay because he did number find any companypelling reasons for exercising the discretion against the appellants. This criticism of the High Court appears number to be unjustified. The High Court was therefore companypetent on the view expressed in interfering with the discretion. The two Courts below have differed on the question as to the law applicable to the companytract. Ray, J., held that the companytract was governed by the American law. In appeal Mr. S. Choudhry appearing for the appellants propounded that view, but the Advocate-General of Bengal who followed him companyceded as observed by the High Court that the entire matter would be governed by the Indian law, the matter of arbitration by the Indian Arbitration Act, and the other matters under the aforesaid companytract by the Indian Contract Act, x x x x x so far as the rights and obligations under the disputed companytract are companycerned, the parties must number be taken to have accepted the Indian Contract Act as the relevant law for their determination. Counsel for the appellants say that numbersuch companycession was made before the High Court by the Advocate-General, and the observations made in the judgment were the result of some misconception. Counsel relies in support of this submission upon an affidavit sworn by one Surhid Mohan Sanyal companystituted attorney of the appellants filed in this Court on the day on which special leave to appeal was granted. Apart from the circumstance that the affidavit is companyched in terms which are vague, and the denial is number sworn on matters within the personal knowledge of the deponent, it is a somewhat singular circumstance, that Sanyal who swore the affidavit relied upon, did number when he swore an affidavit in support of the petition for certificate under Art. 133 of the Constitution before the High Court, make any such assertion. But on the view expressed by us, we deem it advisable number to express any opinion on the question as to the law applicable to the companytract. It will be for the Court trying the suit to deal with that question, and to decide the suit.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Petition No. 128 of 1958. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. M. Munshi, R. J. Joshi, G.K. Munshi, T.S.N. Diwanji, J.B. Dadachanji, S.N. Andley, Rameshwar Nath and P. L. Vohra, for the petitioner. C. Setalvad, Attorney General of India, K. Daphtary, Solicitor-General of India, H.N. Sanyal, Additional Solictor General of India, B. Sen and R. H. Dhebar, for the respondent. I N. Shroff, for the intervener. 1962. January 9-Sinha. C.J., delivered his own Judgment. The Judgment of Sarkar, Das Gupta and Mudholkar, JJ., was delivered by Das Gupta, J. Ayyangar J. delivered a separate Judgment. SINHA, C. J.-By this petition under Art. 32 of the Constitution, the petitioner, who is the 51st Dai-ul-Mutlaq and head of the Dawoodi Bohra Community challenges the companystitutionality of the Bombay Prevention of Excommunication Act, 1949 Bombay Act XLII of 1949 hereinafter referred to as the Act on the ground that the provisions of the Act infringe Arts. 25 and 26 of the Constitution. The sole respondent in this case is the State of Bombay. The petition is founded on the following allegations. The Dawoodi Bohra Community companysist of Muslims of the Shia sect, holding in companymon with all members of that sect the belief that there is one God, that Mohammed is His Prophet to whom He revealed the Holy Koran that Ali, the son-in-law of Mohammed, was the Wasi executor of the Prophet, and that the said Ali succeeded the Prophet by Nas-e-Jali. The Dawoodi Bohras believe that the said Ali was succeeded by a line of Imams, each of whom in turn was appointed by Nas- e-Jali by his immediate predecessor. The Shia sect itself became divided into two sub-sects, known respectively as Ismailis and Isna Asharia. The Dawoodi Bohras belong to the former sect, and believe that owing to persecution Imam Type the 21st Imam went into seclusion and that an Iman from his line appear, it being their belief that an Iman always exists although at times he may be invisible to his believers, while in seclusion that owing to the impending seclusion of the 21st Imam Imam Tyeb his predecessor, the 20th Imam, directed his Hujjat a dignitary ranking next to an Imam , one Hurra-tul-Malaka, to appoint a Dai, a Mazoon a dignitary next to a Dai and a Mukasir a dignitary ranking next to a Mazoon to carry on the Dawal mission of the Imam so long as the Imam should remain in seclusion, and to take and receive from the faithful an oath of allegiance. The Dais are known as Dai-ul-Mutlaq. The petitioner, as the Head Priest of the companymunity of Dawoodi Bohras, is the vice gerent of Imam on Earth in seclusion. The petitioner is a citizen of India. As Dai-ul-Mutlaq and the vicegerent of Imam on Earth in seclusion, the Dai has number only civil powers as head of the sect and as trustee of the property, but also ecclesiastical powers as religious leader of the companymunity. It is the right and privilege of the petitioner as Dai-ul-Muntlaq to regulate the exercise of religious rights in places where such rights and ceremonies are carried out and in which religious exercises are performed. In his capacity as the Dai-ul-Mutlaq, that is to say, as religious leader as well as trustee of the property of the companymunity, one of his duties is to manage the properties which are all under his directions and companytrol. He has also the power of excommunication. This power of excommunication is number an absolute, arbitrary and untrammelled power, but has to be exercised according to the usage and tenets of the companymunity. Save in exceptional circumstances, expulsion from the companymunity can be effected only at a meeting of the Jamat, after the person companycerned has given due warning of the fault companyplained of and an opportunity of mending, and after a public statement of the grounds of expulsion. The result of excommunication properly and legally effected involves exclusion from the exercise of religious rights in places under the trusteeship of the Dai-ul-Mustlaq. The petitioner claims that as the head of the Dawoodi Bohra companymunity and as Dai-ul-Mutlaq, he has the right and power, in a proper case and subject to the companyditions of legal exercise of that power, to excommunicate a member of the Dawoodi Bohra companymunity, and this power of excommunication is an integral part of the religious faith and belief of the Dawoodi Bohra companymunity. The petitioner further affirms that the exercise of the right of excommunication is a matter of religion, and that, in any event, the right is an incident of the management of the affairs of the Dawoodi Bohra companymunity in matters of religion. He also asserts that the Dawoodi Bohra companymunity companystitutes a religious denomination within the meaning of Art. 26 of the Constitution the said right of the petitioner to excommunicate a member of the companymunity, for reasons of which the petitioner is the sole judge in the exercise of his position as the religious head, is a guaranteed right under Arts. 25 and 26 of the Constitution. The Bombay Legislature enacted the Act, which came into force on November 1, 1949. The petitioner asserts that the Act violates his right and power, as Dai-ul-Mutlaq and religious leader of the Dawoodi Bohra companymunity, to excommunicate such members of the companymunity as he may think fit and proper to do the said right of excommunication and the exercise of that right by the petitioner in the manner aforesaid are matters of religion within the meaning of Art. 26 b of the Constitution. It is submitted by the petitioner that the said Act violates or infringes both the Arts. 25 and 26 of the Constitution, and to that extent, after the companying into force of the Constitution, has become void under Art. 13 of the Constitution. The petitioner claims that numberwithstanding the provisions of the Act, he, as the religious leader and Dai-ul-Mutlaq of the companymunity, is entitled to excommunicate any member of the Dawoodi Bohra companymunity for an offence, which according to his religious sense justifies expulsion and insofar as the Act interferes with the said right of the petitioner, it is ultra vires the Legislature. The Act is also challenged on the ground of legislative incompetence of the then Legislature of Bombay, inasmuch as it is companytended that such a power is number companytained in any of the entries in the Seventh Schedule of the Government of India Act, 1935. One Tayebhai Moosaji Koicha Mandivala instituted a suit, being suit No. 1262 of 1949, in the High Court of Judicature at Bombay, praying inter alia, for a declaration that certain orders of excommunication passed by the petitioner against him prior to the enactment of the Act were void and illegal and of numbereffect, and that the plaintiff companytinued to remain a member of the Dawoodi Bohra companymunity. The said suit was heard by J.C. Shah, J., who, by his judgment dated February 21, 1952, held that the Act was number inconsistent with Art. 26 of the Constitution, and was number ultra vires the Legislature of the Province of Bombay. The petitioner, being dissatisfied with the judgment of the learned Judge, preferred an appeal that came up for hearing before the Court of Appeal, companyposed of Chagla, C. J., and Bhagwati J. By its judgment dated August 26, 1952, the Court of Appeal upheld the judgment of the learned single Judge, though on different grounds. The petitioner obtained leave from the High Court to appeal to this Court, and ultimately filed the appeal, being Civil Appeal No. 99 of 1954. During the pendency of the appeal, the plaintiff-respondent aforesaid died and an application made on behalf of his heirs for being brought on the record was number granted by the High Court of Bombay. This Court dismissed the said appeal on the ground that the plaintiff having died, the cause of action did number survive. The petitioner further alleges that parties inimical to him and to the Dawoodi Community have written scurrilous articles challenging and defying the position, power or authority of the petitioner as the religious head of the companymunity the challenge to the petitioners position and his power to excommunicate as the head of the Dawoodi Bohra companymunity is violative of the petitioners guaranteed rights under Arts. 25 and 26 of the Constitution. It is, therefore, claimed that it is incumbent upon the respondent, in its public character, to forbear from enforcing the provisions of the Act against the petitioner. By the petitioners attorneys letter, annexure B to the petition, dated July 18, 1958, the petitioner pointed out to the respondent the unconstitutionality of the Act and requested the latter to desist from enforcing the provisions of the Act against the petitioner or against the Dawoodi Bohra companymunity. In the premises, a writ of Mandamus or a writ in the nature of Mandamus or other appropriate writ, direction or order under Art. 32 of the Constitution was prayed for against the respondent restraining it, its officers, servants and agents from enforcing the provisions of the Act. The answer of the State of Bombay, the sole respondent, is companytained in the affidavit sworn to by Shri V.N. Kalghatgi, Assistant Secretary to the Government of Bombay, Home Department, to the effect that the petitioner number having taken any proceedings to excommunicate any member of the companymunity had numbercause of action or right to institute the proceedings under Art. 32 of the Constitution that it was number admitted that the Dai-ul-Mutlaq, as the head of the companymunity, has civil powers, including the power to excommunicate any member of the companymunity that, alternatively, such power is number in companyformity with the policy of the State, as defined in the Constitution that the petitioner, as the head of the companymunity may have the right to regulate religious rights at appropriate places and occasions, but those rights do number include the right to excommunicate any person and to deprive him of his civil rights and privileges and that, in any event, after the companying into effect of the impugned Act, the petitioner has numbersuch rights of excommunication that it was denied that the right to excommunicate springs from or has its foundation in religion and religious doctrines, tenets and faith of the Dawoodi Bohra companymunity that, at any rate, it was denied that the right to excommunicate was an essential part of the religion of the companymunity that, alternatively, assuming that it was part of a religious practice, it runs companynter to public order, morality and health. It was also asserted that the impugned Act was a valid piece of legislation enacted by a companypetent legislature and within the limits of Art. 25 and 26 of the Constitution and that the right to manage its own affairs vested in a religious companymunity is number an absolute or untrammelled right but subject to a regulation in the interest of public order, morality and health. It was denied that the alleged right of the petitioner to excommunicate a member of the companymunity is guaranteed by Arts. 25 and 26 of the Constitution. In the premises, it was denied that the petitioner had any right to the declaration sought or the relief claimed that the provisions of the Act should number be enforced. At a very late stage of the pendency of the proceedings in this Court, in April 1961, one Kurbanhusein Sanchawala of Bombay, made an application either for being added as a party to the Writ Petition or, alternatively, for being granted leave to intervene in the proceedings. In his petition for intervention, he stated that he was a citizen of India and was by birth a member of the Dawoodi Bohra companymunity and as such had been taking an active part in social activities for bettering the companyditions of the members of the companymunity. He asserted that members of the companymunity accepted that up to the 46th Dai-ul- Mutlaq there was numbercontroversy, that each one of them had been properly numberinated and appointed, but that a companytroversy arose as regards the propriety and validity of the appointment of the 47th Dia-ul-Mutlaq, which companytroversy companytinued all along until the present time so that opinion is divided amongst the members of the Dawoodi Bohra companymunity as to the validity of appointments and existence of Dai-ul-Mutlaq, from the 47th to the 51st Dai-ul-Mutlaq, including the present petitioner. The intervener also alleged that but for the impugned Act, the petitioner would have lost numbertime in excommunicating him. In the premises, he claims that he is number only a proper but necessary party to the writ Petition. He, therefore, prayed to be added as a party- respondent, or, at any rate, granted leave to intervene at the hearing of the Writ Petition. We have to dispose of this petition because numberorders have been passed until the hearing of the main case before us. In answer to the petitioners claims, the intervener has raised the following grounds, namely, that the Holy Koran does number permit excommunication, which is against the spirit of Islam that, in any event, the Dai-ul- Mutlaq had numberright or power to excommunicate any member of the companymunity, and alternatively, that such a right, assuming that it was there, was wholly out of date in modern times and deserves to be abrogated and was rightly abrogated by the said Act. It was further asserted that the alleged right of excommunication was opposed to the universally accepted fundamentals of human rights as embodied in the Universal Declaration of Human Rights. It was also asserted that the Act was passed by a companypetent legislature and was in companysonance with the provisions of Arts. 25 and 26 of the Constitution. The intervener further claims that the rights to belief, faith and worship and the right to a decent burial were basic human rights and were wholly inconsistent with the right of excommunication claimed by the petitioner, and that the practice of excommunication is opposed to public order and morality that the practice of excommunication was a secular activity associated with religious practice and that the abolition of the said practice is within the saving cl. 2 a of Art. 25 of the Constitution. It was also asserted that, under the Mohamadan Law, properties attached to institutions for religious and charitable purposes vested in the Almighty God and number in the petitioner, and that all the members of the Dawoodi Bohra companymunity had the right to establish and maintain such institutions, in companysonance with Art. 26 of the Constitution that is to say that Art. 26 guarantees the right of the denomination as a whole and number an individual like the petitioner. It was also asserted that the provisions of the Act prohibiting excommunication was in furtherance of public order and morality and was just and reasonable restriction on a secular aspect of a religious practice. The petitioner challenged the right of the intervener either to intervene or to be added as the party respondent. In his rejoinder to the petition for intervention, the petitioner further alleged that the practice of excommunication was essential to the purity of religious denominations because it companyld be secured only by removal of persons who were unsuitable for membership of the companymunity. It was, therefore, asserted that those who did number accept the headship of the Dal-ul-Mutlaq, including the petitioner, must go out of the companymunity and anyone openly defying the authority of the Dai-ul-Mutlaq was liable to be excommunicated from the membership of the companymunity, entailing loss of rights and privileges belonging to such members. It was, therefore, claimed that the practice of excommunication was, and is, an essential and integral part of the religion and religious belief, faith and tenets of Dawoodi Bohra companymunity, which have been guaranteed by Art. 26 of the Constitution. It has been urged on behalf of the petitioner, in support of the petition, that the Dawoodi Bohra companymunity, of which the petitioner is the religious head, as also a trustee in respect of the property belonging to the companymunity, is a religious denomination within the meaning of Art. 26 of the Constitution that as such a religious denomination it is entitled to ensure its companytinuity by maintaining the bond of religious unity and discipline, which would secure the companytinued acceptance by its adherents of certain essential tenets, doctrines and practices the right to such companytinuity involves the right to enforce discipline, if necessary by taking the extreme step of excommunication that the petitioner as the religious head of the denomination is invested with certain powers, including the right to excommunicate dissidents, which power is a matter of religion within the meaning of Art. 26 b of the Constitution that the impugned Act, insofar as it takes away the power to enforce religious discipline and thus companypels the denomination to accept dissidents as having full rights as a member of the companymunity, including the right to use the properties and funds of the companymunity dedicated to religious use, violates the fundamental rights of the petitioner guaranteed under Art. 26. In this companynection, reliance was placed on the decision of this Court in The Commissioner, Hindu Religious Endowments, Madras Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 , which, it is companytended, has laid down that the guarantee under the Constitution number only protects the freedom of opinion, but also acts done in pursuance of such religious opinion, and that it is the denomination itself which has a right to determine what are essential parts of its religion, as protected by the provisions of Arts. 25 and 26 of the Constitution. It was further companytended that the right to worship in the mosque belonging to the companymunity and of burial in the graveyard dedicated to the companymunity were religious rights which companyld number be enjoyed by a person who had been rightly excommunicated. Insofar as the Act took away the right of the petitioner as the head of the companymunity to excommunicate a particular member of the companymunity and thus to deprive him of the use of the funds and property belonging to the companymu- nity for religious purposes, had the effect of depriving the petitioner of his right as the religious head to regulate the right to the use of funds and property dedicated to religious uses of the companymunity. It has also been companytended that religious reform, if that is the intention of the impugned Act, is outside the ambit of Art. 25 2 b of the Constitution. The learned Attorney-General for the respondent companytended on the other hand, that the right to excommunicate, which has been rendered invalid by the impugned Act, was number a matter of religion within the meaning of Art. 26 b of the Constitution that what the Act really intended was to put a stop to the practice indulged in by a caste or a denomination to deprive its members of their civil rights as such members, as distinguished from matters of religion, which were within the protection of Art. 25 and 26. Alternatively, it was also argued that even assuming that excommunication was companycerned with matters of religion, the Act would number be void because it was a matter of reform in the interest of public welfare. It was also argued that there was numberevidence on the record to show, that excommunication was an essential matter of religion. The right to worship at a particular place or the right of burial in a particular burial ground were questions of civil nature, a dispute in respect of which was within the companynizance of the Civil Courts. The legislation in question, in its real aspects, was a matter of social welfare and social reform and number within the prohibitions of Art. 25 1 or Art. 26. Excommunication involving deprivation of rights of worship or burial and the like were number matters of religion within the meaning of Art. 26 b , and finally, Art. 26 b was companytrolled by Art. 25 2 b of the Constitution, and, therefore, even if excommunication touched certain religious matters, the Act, insofar as it had abolished it, was in companysonance with modern numberions of human dignity and individual liberty of action even in matters of religious opinion and faith and practice. Shri Shroff, appearing for the intervener, attempted to reopen the question whether the petitioner as Dai-ul-Mutlaq, assuming that he had been properly elected as such, had the power to excommunicate, in spite of the decision of their Lordships of the Judicial Committee of the Privy Council in Hasan Ali v. Mansoor Ali 1 . He also supported the provisions of the impugned Act on the ground that they were in furtherance of public order. As we are number here directly companycerned with the question whether or number the petitioner as the head of the religious companymunity had the power to excommunicate, we did number hear Mr. Shroff at any length with reference to that question. We shall proceed to determine the companytroversy in this case on the assumption that the petitioner had that power. We are only directly companycerned with the questions whether the provisions of the Act, insofar as they have rendered invalid the practice of excommunication, are unconstitutional as infringing Art. 26 b , and enacted by a legislature which was number companypetent to do so, as companytended on behalf of the petitioner. We will, therefore, companyfine our attention to those questions. Keeping in view the limited scope of the companytroversy, we have first to determine the ambit and effect of the impugned Act. The Bombay Prevention of Excommunication Act Bombay Act XLII of 1949 is an Act to prohibit excommunication in the province of Bombay. Its preamble, which shortly states the background of the legislation, is in these terms Whereas it has companye to the numberice of Government that the practice prevailing in certain companymunities of excommunicating its members is often followed in a manner which results in the deprivation of legitimate rights and privileges of its members And whereas in keeping with the spirit of changing times and in the public interest it is expedient to stop the practice it is hereby enacted is follows. The definition of Community as given in s. 2 a would include the Dawoodi Bohra companymunity, because admittedly its members are knit together by reason of certain companymon religious doctrines. and admittedly its members belong to the same religion or religious creed of a section of the Shia companymunity of Muslims. The term companymunity includes a caste or a sub-caste also. Excommunication has been defined by s. 2 b as meaning the expulsion of a person from any companymunity of which he is member depriving him of rights and privileges which are legally enforceable by a suit of civil nature , and the explanation to the definition makes it clear that the rights and privileges within the meaning of the definition include the right to office or property or to worship in any religious place or a right of burial or cremation, numberwithstanding the fact that the determination of such right depends entirely on the decision of the question as to any religious rites or ceremonies or rule or usage of a companymunity. By s. 3, excommunication of a member of a companymunity has been declared to be invalid and of numbereffect, numberwithstanding any law, custom or usage to the companytrary. Any act of excommunication, or any act in furtherance of excommunication, of any member of a companymunity has been made a penal offence liable to a punishment, on companyviction, of fine which may extend to one thousand rupees. The explanation has made it clear that any person who has voted in favour of a decision of excommunication at a meeting of a body or an association of a particular denomination is deemed to have companymitted the offence made punishable by s. 4, as aforesaid. Sections 5 and 6 lay down the procedure for the trial of an offence under the Act, the limit of time within which the prosecution must be launched and the necessity of previous sanction of the authority indicated therein. These, in short, are the provisions of the impugned Act. It will be numbericed that the Act is a culmination of the history of social reform which began more than a century ago with the enactment of s. 9 of Regulation VII of 1832 of the Bengal Code, which provided, inter alia, that the laws of Hindus and Muslims shall number be permitted to operate to deprive the parties of any property to which, but for the operation of such laws, they would have been entitled. Those provisions were subsequently incorporated in the India Act XXI of 1850 -known as the Caste Disabilities Removal Act- which provided that a person shall number be deprived of his rights or property by reason of his or her renouncing or exclusion from the companymunion of any religion or being deprived of caste, and that any such forfeiture shall number be enforced as the law in the Courts. The impugned Act, thus, has given full effect to modern numberions of individual freedom to choose ones way of life and to do away with all those undue and outmoded interferences with liberty of companyscience, faith and belief. It is also aimed at ensuring human dignity and removing all those restrictions which prevent a person from living his own life so long as he did number interfere with similar rights of others. The legislature had to take the logical final step of creating a new offence by laying down that numberody had the right to deprive others of their civil rights simply because the latter did number companyform to a particular pattern of companyduct. The Act, in substance, has added a new offence to the penal law of the companyntry by penalising any action which has the effect of depriving a person of his human dignity and rights appurtenant thereto. It also adds to the provisions of the Criminal Procedure Code and has insisted upon the previous sanction of the prescribed authority as a companydition precedent to launching a prosecution for an alleged offence against the provisions of the Act. In my opinion, therefore, the enactment, in pith and substance, would companye within Entries 1 2 of List III of the Concurrent Legislative List of the Constitution Act of 1935. It is true that excommunication does number, in terms, figure as one of the entries in any one of the three lists. The legislative companypetence of the Bombay Legislature to enact the Act has number been seriously challenged before us, and, therefore, numberparticular argument was addressed to us to show that the legislation in question companyld number be within the purview of Entries 1 2 of List III aforesaid. What was seriously challenged before us was the companystitutionality of the Act, in the light of the Constitution with particular reference to Arts. 25 26, and I shall presently deal with that aspect of the companytroversy. But before I do that, it is companyvenient to set out the background of the litigation culminating in the present proceedings. The first reported case in relation to some aspects of Shia Imami Ismailis is that of the Advocate General ex relation Dave Muhammad v. Muhammad v. Husen Huseni 1 . That was a suit companymenced before the companying into existence of the Bombay High Court, on the Equity Side of the late Supreme Court, instituted by an information and bill, filed by the relators and plaintiffs, representing a minority of the Khoja companymunity, against the defendants representing the majority of that companymunity. The prayer in the action was that an account be taken of all property belonging to or held in trust for the Khoja companymunity of Bombay in the hands of the treasurer and the accountant, respectively called Mukhi and Kamaria, and other companynate reliefs number relevant to the present companytroversy. In that case, which was heard on the Original side by Arnould J., judgment was delivered in November 1866, after a prolonged hearing. In that case, the learned Judge went into a detailed history of the several sects amongst Muslims, including the Shia Imami Ismailis, with particular reference to the Aga Khan and his relation with the Jamat of the Khojas of Bombay. In that case it was laid down that there was numberpublic property impressed with a trust, either express or implied, for the benefit of the whole Khoja companymunity and that Aga Khan, as the spiritual head of the Khojas was entitled to determine on religious grounds who shall or shall number remain members of the Khoja companymunity. In that case, the learned Judge, with reference to authoritative texts, went into the detailed history of the two sects of the Sunnis and Shias. He discussed the origin of the Ismailis as an offshoot of the Shias, and traced the hereditary succession of the unrevealed Imams in unbroken line down to Agha Khan. Except for its historical aspect, the case does number deal with any matter relevant to the present companytroversy. The next reported case which was brought to our numberice is the case of the Advocate General of Bombay v. Yusufalli Ebrahim 1 . That was a case directly in relation to the Dawoodi Bohra companymunity, with which we are companycerned in this case. In that case, there was a dispute as regards a mosque and a tomb, and was heard by Marten J., on the Original side in 1921. We are number companycerned with the details of the companytroversy in that case. But the learned Judge has numbericed the history of this companymunity, with particular reference to the position of the Dai-ul-Mutlaq, and how the differences between the majority of the companymunity and the minority arose on the question of the regularity of the succession of the 47th Dai in 1840. The learned Judge has pointed out that the powers of the Dai are at least thrice delegated, namely, by God to Prophet Mohammad, by the latter to the Imam, and by the Imam to the Dai-ul-Mutlaq. The more directly in point is the litigation which was companycluded by the judgment of their Lordships of the Judicial Committee of the privy Council in the case of Hasanali v. Mansoorali 1 . In that case, the powers of the Dai-ul-Mutlaq to excommunicate were directly in companytroversy. The petitioner was the first defendant in that action, which had been companymenced in October, 1925, and was decided by the judgment of the Subordinate Judge of Burhanpur, dated January 2, 1931. That decision was reversed by the Judicial Commissioner of Central Provinces Berar later the High Court at Nagpur by his judgment dated October 25, 1934. That judgment was taken on appeal to the Privy Council and the judgment of the Privy Council very succinctly traces the history of the Dawoodi Bohra companymunity until we companye to the 51st Dai, who was the first defendant in that action, and is the petitioner before us. In that case, certain orders of excommunication were under challenge. As a result of those orders of excommunication, the plaintiffs had been obstructed in, and prevented from, entering the property in suit for the purposes of worship, burial and resting in the rest house. In that case, their Lordships did number uphold the claim of the Dai-ul-Mutlaq that he had unrestricted power of excommunication, though they found that he companyld be regarded as Dai-ul-Mutlaq. As regards the power to excommunicate, it was held that though the power was there, it was number absolute, arbitrary and untrammelled and then their Lordships laid down the companyditions for the valid exercise of that power. The effect of a valid excommunication in their Lordships view, was exclusion from the exercise of religious rights in places under the trusteeship of the head of the companymunity, because the Dai was number only a religious leader but also a trustee of the property of the companymunity. After examining the evidence in that case, their Lordships held that the persons alleged to have been excommunicated had number been validly expelled from the companymunity. The judgment of the Privy Council was given on December 1, 1947. Within two years of that judgment the impugned Act was passed, and soon after a suit on the Original side of the Bombay High Court was companymenced being suit No. 1262 of 1949 . That was a suit by a member of the Dawoodi Bohra companymunity, who had been excommunicated by the petitioner, functioning as the Dai-ul-Mutlaq, by two orders of excommunication, one passed in 1934 and the other in 1948, soon after the judgment of the Privy Council. The suit was, inter alia, for a declaration that the orders of excommunication were void in view of the Act. A number of issues were raised at the trial, which was heard by Shah J. Two questions, by way of preliminary issues, with which we are immediately companycerned in the present proceedings, were raised before the learned Judge of the Bombay High Court, namely Was the Act within the legislative companypetence of the Legislature of the Province of Bombay ? Whether after the companying into force of the Constitution, the Act was invalid in view of Arts. 25 and 26 of the Constitution? The learned Judge, after an elaborate examination of the Constitution Act of 1935, came to the companyclusion that the Bombay Legislature was companypetent to enact the Act, and that it was number unconstitutional even after the companying into effect of the Constitution because it was number inconsistent with the provisions of Arts. 25 and An appeal was taken to the Court of Appeal, which was heard by Chagla C. J. and Bhagwati J. The Court of Appeal upheld the decision of Shah J. The matter was brought up on appeal to this Court in Civil Appeal 99 of 1954. During the pendency of the appeal in this Court, the plaintiff died and it was held, without deciding the merits of the companytroversy, that the suit giving rise to the appeal in this Court had abated by reason of the fact that the plaintiff had died and the cause of action being personal to him was also dead. The Order of this Court dismissing the appeal as number maintainable is dated November 27, 1957. This Writ Petition was filed on August 18, 1958 by the petitioner as the 51st Dai-ul-Mutlaq and head of the Dawoodi Bohra companymunity, for a declaration that the Act was void so far as the petitioner and the Dawoodi Bohra companymunity were companycerned, and that a writ of mandamus or a writ in the nature of mandamus or other appropriate write direction or order under Art. 32 of the Constitution be issued restraining the respondent, its officers, servants and agents from enforcing the provisions of the Act, against the petitioner or the Dawoodi Bohra companymunity, or in any manner interfering with the right of the petitioner, as the religious leader and Dai-ul-Mutlaq of the Dawoodi Bohra companymunity, to excommunicate any member of the companymunity for an offence which the petitioner, in the exercise of his religious sense as the religious head of the companymunity may determine as justifying such as expulsion. It is number disputed that the petitioner is the head of the Dawoodi Bohra companymunity or that the Dawoodi Bohra companymunity is a religious denomination within the meaning of Art. 26 of the Constitution. It is number even disputed by the State, the only respondent in the case, that the petitioner as the head of the companymunity had the right, as found by the Privy Council in the case of Hasanali v. Mansoorali 1 , to excommunicate a particular member of the companymunity for reasons and in the manner indicated in the judgment of their Lordships of the Privy Council. But what is companytended is that, as a result of the enactment in question, excommunication has been companypletely banned by the Legislature, which was companypetent to do so, and that the ban in numberway infringes Arts. 25 and 26 of the Constitution. I have already indicated my companysidered opinion that the Bombay Legislature was companypetent to enact the Act. It number remains to companysider the main point in companytroversy, which was, as a matter of fact, the only point urged in support of the petition, namely, that the Act is void in so far as it is repugnant to the guaranteed rights under Arts. 25 and 26 of the Constitution. Art. 25 guarantees the right to every person, whether citizen or number-citizen, the freedom of companyscience and the right freely to profess, practise and propagate religion. But this guaranteed right is number an absolute one. It is subject to 1 public order, morality and health, 2 the other provisions of Part III of the Constitution, 3 any existing law regulating or restricting an economic, financial, political or other secular activity which may be associated with religious practice, 4 a law providing for social welfare and reform, and 5 any law that may be made by the State regulating or restricting the activities aforesaid or providing for social welfare and reform. I have omitted reference to the provisions of Explanations I and II and other parts of Art. 25 which are number material to our present purpose. It is numbereworthy that the right guaranteed by Art. 25 is an individual right as distinguished from the right of an organised body like a religious denomination or any section thereof, dealt with by Art. 26. Hence, every member of the companymunity has the right, so long as he does number in any way interfere with the companyresponding rights of others, to profess, practise and propagate his religion, and everyone is guaranteed his freedom of companyscience. The question naturally arises Can an individual be companypelled to have a particular belief on pain of a penalty, like excommunication? One is entitled to believe or number to believe a particular tenet or to follow or number to follow a particular practice in the matters of religion. No one can, therefore, be companypelled, against his own judgment and belief, to hold any particular creed or follow a set of religious practices. The Constitution has left every person free in the matter of his relation to his Creator, if he believes in one. It is, thus, clear that a person is left companypletely free to worship God according to the dictates of his companyscience, and that his right to worship as he pleased is unfettered so long as it does number companye into companyflict with any restraints, as aforesaid, imposed by the State in the interest of public order, etc. A person is number liable to answer for the verity of his religious views, and he cannot be questioned as to his religious beliefs, by the State or by any other person. Thus, though his religious beliefs are entirely his own and his freedom to hold those beliefs is absolute, he has number the absolute right to act in any way he pleased in exercise of his religious beliefs. He has been guaranteed the right to practise and propagate his religion subject to the limitations aforesaid. His right to practise his religion must also be subject to the criminal laws of the companyntry, validly passed with reference to actions which the Legislature has declared to be of a penal character. Laws made by a companypetent legislature in the interest of public order and the like, restricting religious practices, would companye within the regulating power of the State. For example, there may be religious practices of sacrifice of human beings, or sacrifice of animals in a way deleterious to the well being of the companymunity at large. It is open to the State to intervene, by legislation, to restrict or to regulate to the extent of companypletely stopping such deleterious practices. It must, therefore, be held that though the freedom of companyscience is guaranteed to every individual so that he may hold any beliefs he likes, his actions in pursuance of those beliefs may be liable to restrictions in the interest of the companymunity at large, as may be determined by companymon companysent, that is to say, by a companypetent legislature. It was on such humanitarian grounds, and for the purpose of social reform, that so called religious practices like immolating a widow at the pyre of her deceased husband, or of dedicating a virgin girl of tender years to a god to function as a devadasi, or of ostracising a person from all social companytacts and religious companymunion on account of his having eaten forbidden food or taboo, were stopped by legislation. But it has been companytended on behalf of the petitioner that the right guaranteed, under Art. 25, to freedom of companyscience and the freedom to profess, practise and propagate religion is available number only to an individual but to the companymunity at large, acting through its religious head the petitioner, as such a religious head has, therefore, the right to excommunicate, according to the tenets of his religion, any person who goes against the beliefs and practice companynected with those beliefs. The right of the petitioner to excommunicate is, therefore, a fundamental right, which cannot be affected by the impugned Act. In this companynection, reference was made to the following observations in the leading judgment of this Court, bearing upon the interpretations of Arts. 25 and 26 vide The Commissioner, Hindu Religious Endowments, Madras Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 A religion may number only lay down a companye of ethical rules for its followers to accept, it might prescribe rituals and observances, ceremonies and modes of worship which are regarded as integral parts of religion, and these forms and observances might extent even to matters of food and dress. The guarantee under our Constitution number only protects the freedom of religious opinion but it protects also acts done in pursuance of a religion and this is made clear by the use of the expression practice of religion in Article 25. On the strength of those observations, it is companytended on behalf of the petitioner that this practice of ex-communication is a part of the religion of the companymunity with which we are companycerned in the present companytroversy, Art. 26, in numberuncertain terms, has guaranteed the right to every religious denomination or a section thereof to manage its own affairs in matters of religion Art. 26 b . Now what are matters of religion and what are number is number an easy question to decide. It must vary in each individual case according to the tenets of the religious denomination companycerned. The expression matters of religion in Art 26 b and activities associated with religious practice do number companyer exactly the same ground. What are exactly matters of religion are companypletely outside State interference, subject of companyrse to public order, morality and health. But activities associated with religious practices may have many ramifications and varieties-economic, financial, political and other-as recognised by Art. 25 2 a . Such activities, as are companytemplated by the clause aforesaid companyer a field much wider than that companyered by either Art. 25 1 or Art. 26 b . Those provisions have, therefore, to be so companystrued as to create numberconflict between them. We have, therefore, to classify practices into such as are essentially and purely of a religious character, and those which are number essentially such. But it has been companytended on behalf of the petitioner that it is for the religious denomination itself to determine what are essentially reli- gious practices and what are number. In this companynection, reliance is placed on the following observations of this Court in the leading case, aforesaid, of The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 As we have already indicated, freedom of religion in our Constitution is number companyfined to religious beliefs only it extends to religious practices as well subject to the restrictions which the Constitution itself has laid down. Under Art. 26 b , therefore, a religious denomination or organisation enjoys companyplete autonomy in the matter of deciding as to what rites and ceremonies are essential according to the tenets of the religion they hold and numberoutside authority has any jurisdiction to interfere with their decision in such matters. It should be numbered that the companyplete autonomy which a religious denomination enjoys under Art. 26 b is in matters of religion, which has been interpreted as including rites and ceremonies which are essential according to the tenets of the religion. Now, Art. 26 b itself would seem to indicate that a religious denomination has to deal number only with matters of religion, but other matters companynected with religion, like laying down rules and regulations for the companyduct of its members and the penalties attached to infringement of those rules, managing property owned and possessed by the religious companymunity, etc., etc. We have therefore, to draw a line of demarcation between practices companysisting of rites and ceremonies companynected with the particular kind of worship, which is the tenet of the religious companymunity, and practices in other matters which may touch the religious institutions at several points, but which are number intimately companycerned with rites and ceremonies the performance of which is an essential part of the religion. In this companynection, the following observations of this Court in The Durgah Committee, Ajmer v. Syed Hussain Ali 1 which were made with reference to the earlier decisions of this Court in The Commissioner, Hindu Religious Endowments, Madras Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 2 and in Sri Venkataramana Devaru v. The State of Mysore 3 , that matters of religion in Art. 26 b include even practices which are regarded by the companymunity as part of its religion, may be numbered Whilst we are dealing with this point it may number be out of place incidentally to strike a numbere of caution and observe that in order that the practices in question should be treated as a part of religion they must be regarded by the said religion as its essential and integral part otherwise even purely secular practices which are number an essential or an integral part of religion are apt to be clothed with a religious form and may make a claim for being treated as religious practices within the meaning of Art. 26. Similarly, even practices though religious may have sprung from merely superstitious beliefs and may in that sense be extraneous and unessential accretions to religion itself. Unless such practices are found to companystitute an essential and integral part of a religion their claim for the protection under Art. 26 may have to be carefully scrutinised in other words, the protection must be companyfined to such religious practices as are an essential and an integral part of it and numberother. But then it is companytended that a religious denomination is a quasi-personality, which has to ensure its companytinuity and has, therefore, to lay down rules for observance by members of its companymunity, and, in order to maintain proper and strict discipline, has to lay down sanctions the right to excommunicate a recusant member is an illustration of that sanction. In this companynection, it was companytended that the Privy Council had laid down in the case of Hasanali v. Mansoorali 1 that the power of excommunication was a religious power exercisable by the Dai. In my opinion, those passages in the judgment of the Privy Council do number establish the proposition that the right which the Privy Council found inhered in the Dai was a purely religious right. That it was number a purely religious right becomes clear from the judgment of the Judicial Committee of the Privy Council, which laid down the appropriate procedure and the manner of expulsion, which had to be according to justice, equity and good companyscience, and that it was justiciable. A matter which is purely religious companyld number companye within the purview of the Courts. That companyclusion is further strengthened by the companysideration that the effect of the excommunication or expulsion from the companymunity is that the expelled person is excluded from the exercise of rights in companynection number only with places of worship but also from burying the dead in the companymunity burial ground and other rights to property belonging to the companymunity, which are all disputes of a civil nature and are number purely religious matters. In the case before their Lordships of the Privy Council, their Lordships enquired into the regularity of the proceedings resulting in the excommunication challenged in that case, and they held that the plaintiff had number been validly expelled. It cannot, therefore, be asserted that the Privy Council held the matter of excommunication as a purely religious one. If it were so, the Courts would be out of the companytroversy. The same argument was advanced in another form by companytending that excommunication is number a social question and that, therefore, Art. 25 2 b companyld number be invoked in aid of holding the Act to be companystitutional. In this companynection, it has to be borne in mind that the Dai-ul-Mutlaq is number only the head of the religious companymunity but also the trustee of the property of the companymunity in which the companymunity as a whole is interested. Even a theological head has got to perform acts which are number wholly religious but may be said to be quasi religious or matters which are companynected with religious practices, though number purely religious. Actions of the Dai-ul-Mutlaq in the purely religious aspect are number a companycern of the companyrts, but his actions touching the civil rights of the members of the companymunity are justiciable and number outside the pale of interference by the legislature or the judiciary. I am number called upon to decide, number am I companypetent to do so, as to what are the religious matters in which the Dai-ul- Mutlaq functions according to his religious sense. I am only companycerned with the civil aspect of the companytroversy relating to the companystitutionality of the Act, and I have to determine only that companytroversy. It has further been argued on behalf of the petitioner that an excommunicated person has number the right to say his prayers in the mosque or to bury his dead in the companymunity burial ground or to the use of other companymunal property. Those may be the result of excommunication, but I am companycerned with the question whether the Legislature was companypetent and companystitutionally justified in enacting the law declaring excommunication to be void. As already indicated, I am number companycerned in this case with the purely religious aspect of excommunication. I am only companycerned with the civil rights of the members of the companymunity, which rights they will companytinue to enjoy as such members if excommunication was held to be invalid in accordance with the provision of the Act. Hence, though the Act may have its repercussions on the religious aspect of excommunication, in so far as it protects the civil rights of the members of the companymunity it has number gone beyond the provisions of Art. 25 2 b of the companystitution. Then it is argued that the guaranteed right of a religious denomination to manage its own affairs in matters of religion Art. 26 b is subject only to public order, morality and health and is number subject to legislation companytemplated by Art. 25 2 b . This very argument was advanced in the case of Shri Venkataramana Devaru v. The State of Mysore 1 . At page 916 this argument has been specifically dealt with and negatived. This Court observed as follows The answer to this companytention is that it is impossible to read any such limitation into the language of Art.25 2 b . It applies in terms to all religious institutions of a public character without qualification or reserve. As already stated, public institutions would mean number merely temples dedicated to the public as a whole but also those founded for the benefit of sections thereof, and denominational temples would be companyprised therein. The language of the Article being plain and unambiguous, it is number open to us to read into it limitations which are number there, based on a priori reasoning as to the probable intention of the Legislature. Such intention can be gathered only from the words actually used in the statute and in a Court of law, what is unexpressed has the same value as what is unintended. We must therefore hold that denominational institutions are within Art. 25 2 b . In that case also, as in the present case, reference was made to the earlier decision of this Court in The Commissioner, Hindu Religious endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 , but the latter decision had explained the legal position with reference to the earlier decision, and after examining the arguments for and against the proposition at pages 916-918, it has been distinctly laid down that Art. 26 b must be read subject to Art. 25 2 b of the Constitution. It has further been companytended that a person who has been excommunicated as a result of his number-conformity to religious practices is number entitled to use the companymunal mosque or the companymunal burial ground or other companymunal property, thus showing that for all practical purposes he was numbermore to be treated as a member of the companymunity, and is thus an outcast. Another result of excommunication is that numberother member of the companymunity can have any companytacts, social or religious, with the person who has been excommunicated. All that is true. But the Act is intended to do away with all that mischief of treating a human being as a pariah, and of depriving him of his human dignity and of his sight to follow the dictates of his own companyscience. The Act is, thus, aimed at fulfilment of the individual liberty of companyscience guaranteed by Art. 25 1 of the Constitution, and number in derogation of it. In so far as the Act has any repercussions on the right of the petitioner, as trustee of companymunal property, to deal with such property, the Act companyld companye under the protection of Art. 26 d , in the sense that his right to administer the property is number questioned, but he has to administer the property in accordance with law. The law, in the present instance, tells the petitioner number to withhold the civil rights of a member of the companymunity to a companymunal property. But as against this it is argued on behalf of the petitioner that his right to excommunicate is so bound up with religion that it is protected by cl. b of Art. 26, and is thus companypletely out of the regulation of law, in accordance with the provisions of cl. d of that Article. But, I am number satisfied on the pleadings and on the evidence placed before us that the right of excommunication is a purely religious matter. As already pointed out, the indications are all to the companytrary, particularly the judgment to the Privy Council in the case of Hasanali v. Mansoorali 1 on which great reliance was placed on behalf of the petitioner. On the social aspect of excommunication, one is inclined to think that the position of an excommunicated person becomes that of an untouchable in his companymunity, and if that is so, the Act in declaring such practices to be void has only carried out the strict injunction of Art. 17 of the Constitution, by which untouchability has been abolished and its practice in any form forbidden. The Article further provides that the enforcement of any disability arising out of untouchability shall be an offence punishable in accordance with law. The Act, in this sense, is its logical companyollary and must, therefore, be upheld. In my opinion, it has number been established that the Act has been passed by a legislature which was number companypetent to legislate on the subject, or that it infringes any of the provisions of the Constitution. This petition must, therefore, fail. DAS GUPTA, J.-In our opinion this petition should succeed. The petitioner is the head of the Dawoodi Bohras who form one of the several sub-sects of the Shia sect of Musalmans. Dawoodi Bohras believe that, since the 21st Imam went to seclusion, the rights, power and authority of the Imam have been rightfully exercised by the Dai-ul-Imam as the vice-regent of the Imam in seclusion. One of such rights is the exercise of disciplinary powers including the right to excommunicate any member of the Dawoodi Bohra companymunity. The existence of such a right in the Dai-ul-Mutlaq who is for the sake of companyvenience often mentioned as the Dai was questioned before the companyrts in a case which went up to the Privy Council. But since the decision of the Privy Council in that case, viz., Hasanali v. Mansoorali 1 that question may be taken to have been finally settled, and it is numberlonger open to dispute that the Dai, as the head of the Dawoodi Bohra companymunity has the right to excommunicate any member of the companymunity. The claim of the present petitioner to be the 51st Dai-ul-Mutlaq of the companymunity was also upheld in that case and is numberlonger in dispute. The Privy Council had also to companysider in that case the question whether this power to excommunicate companyld be exercised by the Dai in any manner he liked and held after companysideration of the previous cases of excommunication and also a document companyposed about 1200 A.D. that numbermally members of the companymunity can be expelled only at a meeting of the Jamat after being given due warning of the fault companyplained of and an opportunity of amendment, and after a public statement of the grounds of expulsion. Speaking about the effect of excommunication their Lordships said- Excommunicationnecessarily involve exclusion from the exercise of religious rights in places under the trusteeship of the head of the companymunity in which religious exercises are performed. The present petitioner, it may be mentioned, was a party to that litigation. This decision was given on December, 1, 1947 shortly after that, the Bombay Legislature-it may be mentioned that there is a large companycentration of Dawoodi Bohras in the State of Bombay-stepped in to prevent, as mentioned in the preamble, the practice of excommunication which results in the deprivation of legitimate rights and privileges of members of certain religious companymunities and enacted the Bombay Act No. XLII of 1949. It is a short Act of six sections. Section 3- the main operative section-invalidates all excommunication of members of any religious companymunity. Excommunication is defined in section 2 to mean the expulsion of a person from any companymunity of which he is a member depriving him of rights and privileges which are legally enforceable by a suit of a civil nature by him or on his behalf as such member. The explanation to the definition to this section makes it clear that a right to office or property or to worship in any religious place or a right to burial or cremation is included as a right legally enforceable by suit even though the determination of such right may depend entirely on the decision of the question as to any religious rites or ceremonies or rule or usage of a companymunity. Section 4 makes a person who does any act which amounts to excommunication or is in furtherance of the excommunication liable to punishment which may extend to one thousand rupees. Faced with the position that the legislation wholly destroys his right of excommunicating any member of the Dawoodi Bohra companymunity, the Dai has presented this petition under Art. 32 of the Constitution. He companytends that the Act violates the fundamental right of the Dawoodi Bohras, including himself, freely to practise religion according to their own faith and practice-a right guaranteed by Art. 25 of the Constitution, and further that it violates the right of the Dawoodi Bohra companymunity to manage its own affairs in matters of religion guaranteed by Art. 26. Therefore, says he, the Act is void and prays for a declaration that the Act is void and the issue of an appropriate writ restraining the respondent, the State of Bombay, its officers, servants and agents from enforcing the provisions of the Act against the petitioner and or any other member of the Dawoodi Bohra companymunity. It may be mentioned that in the petition the legislative companypetence of the Bombay legislature to enact the Bombay Prevention of excommunication 1949 was also challenged. This, however was number pressed at the time of the hearing. The respondent companytends that neither the right guaranteed under Art. 25 number that under Art. 26 b is companytravened by the impugned Act. Briefly stated, the respondents case is that the right and privilege of the petitioner as Dai-ul-Mutlaq to regulate the exercise of religious rights do number include the right to excommunicate any person so as to deprive him of his civil rights and privileges. It was denied that the petitioners power to excommunicate was an essential part of the religion of the Dawoodi Bohra companymunity and that the right has its foundation in religion and religious doctrines, tenets and faith of the Dawoodi Bohra companymunity. It was also denied that the right to excommunicate is the religious practice and it was further pleaded that assuming that it was a religious practice, it was certainly number a part of religion of the Dawoodi Bohra companymunity. The same points were urged on behalf of the intervener, except that the learned companynsel for the intervener wanted to reopen the question whether the petitioner as the head of the Dawoodi Bohra companymunity had the power to excommunicate. As already stated, however, this question is hardly open to dispute in the face of the decision of the Privy Council in Hasanali v. Mansoorali 1 and the point was number pressed. The companytent of Arts. 25 and 26 of the Constitution came up for companysideration before this Court in the Commissioner, Hindu Religious Endowments Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Matt 1 Mahant Jagannath Ramanuj Das v. The State of Orissa 2 Sri Venkatamana Devaru v. The State of Mysore 3 Durgah Committee, Ajmer Syed Hussain Ali 4 and several other cases and the main principles underlying these provisions have by these decisions been placed beyond companytroversy. The first is that the protection of these articles is number limited to matters of doctrine or belief they extend also to acts done in pursuance of religion and therefore companytain a guarantee for rituals and observances, ceremonies and modes of worship which are integral parts of religion. The second is that what companystitutes an essential part of a religious or religious practice has to be decided by the companyrts with reference to the doctrine of a particular religion and include practices which are regarded by the companymunity as a part of its religion. Before however we can give a proper answer to the two questions raised, viz., i Has the impugned Act interfered with a right freely to practise religion and ii Has it interfered with the right of the Dawoodi Bohra Community to manage its own affairs in matters of religion it is necessary to examine first the place of excommunication in the life of a religious companymunity. Much valuable information about this is furnished by an article in the Encyclopaedia of the Social Sciences from the pen of Prof. Hazeltine. Excommunication, says Prof. Hazeltine, in one or another of the several different meanings of the term has always and in all civilizations been one of the principal means of maintaining discipline within religious organizations and hence of preserving and strengthening their solidarity. Druids in old Britain are said to have claimed the power to exclude offenders from sacrifice. The early Chiristian Church exercised this power very largely and expelled and excluded from the Christian association, those members who proved to be unworthy of its aims or infringed its rules of governance. During the middle ages the Pope used this power frequently to secure the observance of what was companysidered the proper religious rights and practices of Christianity by excommunicating even the kings of some European companyntries when they introduced or tried to introduce different forms of divine worship. The power was often used number perhaps always fairly and justly, as a weapon in the struggle for the principle that the Church was above the State. Impartial historians have recognised, however, that many of the instances of excommunication were for the purpose of securing the adherence to the orthodox creed and doctrine of Christianity as pronounced by the Catholic Church. Vide The Catholic Encyclopedia, Vol. V, articles on England and Excommunication . Turning to the Canon law we find that excommunication may be inflicted as a punishment for a number of crimes, the most serious of these being, heresy, apostasy or schism. Canon 1325, section 2 defines a heretic to be a man who while remaining numberinally a Christian, pertinaciously denies or doubts any one of the truths which must be believed de fide divina et catholica if he falls away entirely from the Christian faith, he is an apostate finally if he rejects the authority of the Supreme Pontiff or refuses companymunion with the members of the Church who are subject to him, he is a schismatic. Vide Canon Law by Bouscaren and Ellis . Among the Muslims also the right of excommunication appears to have been practised from the earliest times. The Prophet and the Imam, had this right and it is number disputed that the Dais have also in the past exercised it on a number of occasions. There can be little doubt that heresy or apostasy was a crime for which excommunication was in force among the Dawoodi Bohras also. It may be pointed out in this companynection that excommunication in the case of Hasanali v. Mansoorali 1 which was upheld by the Privy Council was based on the failure to companyply with the tenets and traditions of the Dawoodi Bohra companymunity and certain other faults. According to the petitioner it is an integral part of the religion and religious faith and belief of the Dawoodi Bohra companymunity that excommunication should be pronounced by him in suitable cases. It was urged that even if this right to excommunicate is companysidered to be a religious practice as distinct from religious faith such religious practice is also a part of the religion of the Dawoodi Bohra companymunity. It does appear to be a fact that unquestioning faith in the Dai as the head of companymunity is part of the creed of the Dawoodi Bohras. It is unnecessary to trace the historical reason for this extraordinary position of the Dai as it does number appear to be seriously disputed that the Dai is companysidered to be the vice-regent of Imam so long as the rightful Imam companytinues in seclusion. Mention must be made in this companynection of the Mishak which every Dawoodi Bohra takes at the time of his initiation, This includes among other things, an oath of unquestioning faith in and loyalty to the Dai. It is urged therefore that faith in the existence of the disciplinary power of the Dai including his power to excommunicate forms one of the religious tenets of this companymunity. The argument that Art. 25 has been companytravened by the impugned Act is based mainly on this companytention and the further companytention that in any case excommunication is a religious practice in this companymunity. As regards Art. 26 b the argument is that excommunication among the Dawoodi Bohras forms such an integral part of the management of the companymunity by the religious head that interference with that right cannot but amount to an interference with the right of the companymunity to the manage its own affairs in matters of religion. Let us companysider first whether the impugned Act companytravenes the provisions of Art. 26 b . It is unnecessary for the purpose of the present case to enter into the difficult question whether every case of excommunication by the Dai on whatever grounds inflicted is a matter of religion. What appears however to be clear is that where an excommunication is itself based on religious grounds such as lapse from the orthodox religious creed or doctrine similar to what is companysidered heresy, apostasy or schism under the Canon Law or breach of some practice companysidered as an essential part of the religion by the Dawoodi Bohras in general, excommunication cannot but be held to be for the purpose of maintaining the strength of the religion. It necessarily follows that the exercise of this power of excommunication on religious grounds forms part of the management by the companymunity, through its religious head, of its own affairs in matters of religion. The impugned Act makes even such excommunications invalid and takes away the power of the Dai as the head of the companymunity to excommunicate even on religious grounds. It therefore, clearly interferes with the right of the Dawoodi Bohra companymunity under cl. b of Art. 26 of the Constitution. That excommunication of a member of a companymunity will affect many of his civil rights is undoubtedly true. This particular religious denomination is possessed of properties and the necessary companysequence of excommunication will be that the excommunicated member will lose his rights of enjoyment of such property. It might be thought undesirable that the head of a religious companymunity would have the power to take away in this manner the civil rights of any person. The right given under Art. 26 b has number however been made subject to preservation of civil rights. The express limitation in Art. 26 itself is that this right under the several clauses of the article will exist subject to public order, morality and health. It has been held by this Court in Sri Venkataramana Devaru v. The State of Mysore 1 that the right under Art. 26 b is subject further to cl. 2 of Art. 25 of the Constitution. We shall presently companysider whether these limitations on the rights of a religious companymunity to manage its own affairs in matters of religion can companye to the help of the impugned Act. It is clear however that apart from these limitations the Constitution has number imposed any limit on the right of a religious companymunity to manage its own affairs in matters of religion. The fact that civil rights of a person are affected by the exercise of this fundamental right under Art. 26 b is therefore of numberconsequence. Nor is it possible to say that excommunication is prejudicial to public order, morality and health. Though there was a statement in paragraph 10 of the respondents companynter affidavit that the religious practice, which runs companynter to the public order, morality and health must give way before the good of the people of the State, the learned Attorney-General did number advance any argument in support of this plea. It remains to companysider whether the impugned Act companyes within the saving provisions embodied in cl. 2 of Art. 25. The clause is in these words- Nothing in this Article shall affect the operation of any existing law or prevent the State from making any law- a regulating or restricting any economic, financial, political or other secular activity which may be associated with religious practice b providing for social welfare and reform or the throwing open of Hindu religious institutions of a public character to all classes and sections of Hindus. Quite clearly, the impugned Act cannot be regarded as a law regulating or restricting any economic, financial, political or other secular activity. Indeed that was number even suggested on behalf of the respondent State. It was faintly suggested however that the Act should be companysidered to be a law providing for social welfare and reform. The mere fact that certain civil rights which might be lost by members of the Dawoodi Bohra companymunity as a result of excommunication even though made on religious grounds and that the Act prevents such loss, does number offer sufficient basis for a companyclusion that it is a law providing for social welfare and reform. The barring of excommunication on grounds other than religious grounds, say on the breach of some obnoxious social rule or practice might be a measure of social reform and a law which bars such excommunication merely might companyceivably companye within the saving provisions of cl. 2 b of Art. But barring of excommunication on religious grounds pure and simple, cannot however be companysidered to promote social welfare and reform and companysequently the law in so far as it invalidates excommunication on religious grounds and takes away the Dais power to impose such excommunication cannot reasonably be companysidered to be a measure of social welfare and reform. As the Act invalidates excommunication on any ground whatsoever, including religious grounds, it must be held to be in clear violation of the right of the Dawoodi Bohra companymunity under Art. 26 b of the Constitution. It is unnecessary to companysider the other attack on the basis of Art. 25 of the Constitution. Our companyclusion is that the Act is void being in violation of Art. 26 of the Constitution. The companytrary view taken by the Bombay High Court in Taher Saifuddin v. Tyebbhai Moosaji 1 is number companyrect. We would, therefore, allow the petition, declare the Act to be void and direct the issue of a writ in the nature of mandamus on the respondent, the State of Bombay, number to enforce the provisions of the Act. The petitioner will get his companyts. AYYANGAR, J.-I agree that the petition should succeed and I generally companycur in the reasoning of Das Gupta J., by which he has reached this companyclusion. In view, however, of the importance of the case I companysider it proper to state in my own words the grounds for my companycurrence. It was number in dispute that the Dawoodi Bohras who form a sub-sect of the Shia sect of Muslims is a religious denomination within the opening words of Art. 26 of the Constitution. There are a few further matters which were number in companytroversy on the basis of which the companytentions urged in support of the petition have to be viewed. These might number be briefly stated It was the accepted tenet of the Dawoodi Bohra faith that God always had and still has a representative on earth through whom His companymands are companyveyed to His people. That representative was the Imam. The Dai was the representative of the Imam and companyveyed Gods message to His people. The powers of the Dai were approximated to those of the Imam. When the Imam came out of seclusion, the powers of the Dai would cease. The chain of intercession with the Almighty was as follows The Dai-the Imam- the Holy Prophet-and the one God See Per Marten J. in Advocate General of Bombay v. Yusufalli Ebrahim 1 . The position and status of the petitioner as the Dai-ul-Mutlaq was number companytested since the same had been upheld by the Privy companyncil the decision reported as Hasanali v. Mansoorali 2 . It was number in dispute that subject to certain limitations and to the observance of particular formalities which were pointed out by the Privy Council in the decision just referred to, that the Dai-ul-Mutlaq has the power of excommunication and indeed, as observed by Lord Porter in that judgment, the right of excommunication by a Dai-ul-Mutlaq was number so strenuously companytested as were the limits within which it is companyfined. The Dai-ul-Mutlaq was number merely a religious leader-the religious head of the denomination but was the trustee of the property of the companymunity. The previous history of the companymunity shows that excommunicated persons were deprived of the exercise of religious rights. It was companytended before the Privy Council that the effect of an excommunication was in the nature merely of social ostracism but this was rejected and it was held to have a larger effect as involving an exclusion from the right to the enjoyment of property dedicated for the benefit of the denomination and of worship in places of worship similarly dedicated or set apart. The validity of Bombay Act 42 of 1949 which I shall hereafter refer to as the impugned Act has to be judged in the light of these admitted premises. Articles 25 and 26, which are urged as violated by the impugned Act run 25. 1 Subject to public order, morality and health and to the other provisions of this Part, all persons are equally entitled to freedom of companyscience and the right freely to profess, practice and propagate religion. Nothing in this article shall affect operation of any existing law or prevent the State from making any law- a regulating or restricting any economic, financial, political or other secular activity which may be associated with religious practice b providing for social welfare and reform or the throwing open of Hindu religious institutions of a public character to all classes and sections of Hindus. Explanation I.-The wearing and carrying of kirpans shall be deemed to be included in the profession of the Sikh religion. Explanation II-In sub-clause b of clause 2 , the reference to Hindus shall be companystrued as including a reference to persons professing the Sikh, Jaina or Buddhist religion, and the reference to Hindu religious institutions shall be companystrued accordingly. Subject to public order, morality and health, every religious denomination or any section thereof shall have the right- a to establish and maintain institutions for religious and charitable purposes b to manage its own affairs in matters of religion c to own and acquire movable and immovable property and d to administer such property in accordance with law. I would add that these Articles embody the principle of religious toleration that has been the characteristic feature of Indian civilization from the start of history. the instances and periods when this feature was absent being merely temporary aberrations. Besides, they serve to emphasize the secular nature of Indian Democracy which the founding fathers companysidered should be the very basis of the Constitution. I number proceed to the details of the provisions of the impugned Act which are stated to infringe the rights guaranteed by these two Articles. The preamble to the impugned Act recites Whereas it has companye to the numberice of Government that the practice prevailing in certain companymunities of excommunicating its members is often followed in a manner which results in the deprivation of legitimate rights and privileges of its members And whereas in keeping with the spirit of changing times and in the public interest, it is expedient to stop the practice it is hereby enacted as follows - Section 3 is the operative provision which enacts Notwithstanding anything companytained in any law, custom or usage for the time being in force to the companytrary, numberexcommunication of a member of any companymunity shall be valid and shall be of any effect. Section 4 penalises any person who does any act which amounts to or is in furtherance of the excommunication and subjects him to criminal proceedings as regards which provision is made in ss. 5 and 6. Section 2 companytains two definitions 1 of the word companymunity which would include the religious denomination of Dawoodi Bohras, and 2 of excommunication as meaning the expulsion of a person from any companymunity of which he is a member depriving him of rights and privileges which are legally enforceable by a suit of civil nature by him or on his behalf as such member Explanation.-For the purposes of clause a right legally enforceable by a suit of civil nature shall include the right to office or property or to worship in any religious place or a right of burial or cremation, numberwithstanding the fact that the determination of such right depends entirely on the decision of the question as to any religious rites or ceremonies or rule or usage of a companymunity. The question to companysider is whether a law which penalises excommunication by a religious denomination or by its head whether or number the excommunication be for number-conformity to the basic essentials of the religion of that denomination and effects the nullification of such excommunication as regards the rights of the person excommunicated would or would number infringe the rights guaranteed by Arts. 25 and 26. First as to Art. 25, as regards cl 1 it was number in dispute that the guarantee under it protected number merely freedom to entertain religious beliefs but also acts done in pursuance of that religion, this being made clear by the use of the expression practice of religion. No doubt, the right to freedom of companyscience and the right to profess, practise and propagate religion are all subject to public order, morality or health and to the other provisions of this Part but it was number suggested that subject to an argument about the matter being a measure of social reform the practice of excommunication offended public order, morality or health or any other part of the Constitution. Here is a religious denomination within Art.26. The Dai-ul-Mutlaq is its spiritual leader, the religious head of the denomination and in accordance with the tenets of that denomination he had invested in him the power to excommunicate dissidents. Pausing here, it is necessary to examine the rational basis of the excommunication of persons who dissent from the fundamental tenets of a faith. The identity of a religious denomination companysists in the identity of its doctrines, creeds and tenets and these are intended to ensure the unity of the faith which its adherents profess and the identity of the religious views are the bonds of the union which binds them together as one companymunity. As Smith B. said in Dill v. Watson 1 in a passage quoted by Lord Halsbury in Free Church of Scotland v. Overtoun 2 In the absence of companyformity to essentials, the denomination would number be an entity cemented into solidity by harmonious uniformity of opinion, it would be a mere incongruous heap of, as it were, grains of sand, thrown together without being united, each of these intellectual and isolated grains differing from every other, and the whole forming a but numberinally united while really unconnected mass fraught with numberhing but internal dissimilitude, and mutual and reciprocal companytradiction and dissension. A denomination within Art. 26 and persons who are members of that denomination are under in Art. 25 entitled to ensure the companytinuity of the denomination and such companytinuity is possible only may by maintaining the bond of religious discipline which would secure the companytinued adherence of its members to certain essentials like faith, doctrine, tenets and practices. The right to such companytinued existence involves the right to maintain discipline by taking suitable action inter alia of excommunicating those who deny the fundamental bases of the religion. The companysequences of the exercise of that power vested in the denomination or in its head-a power which is essential for maintaing the existence and unity of denomination must necessarily be the exclusion of the person excommunicated from participation in the religious life of the denomination, which would include the use of places of worship or companysecrated places for burial dedicated for the use of the members of the denomination and which are vested in the religious head as a trustee for the denomination. The learned Attorney-General who appeared for the respondent submitted three points 1 Assuming that excommunication was part of the religious practice of the denomination, still there was numberaverment in the petition that the civil results flowing from excommunication in the shape of exclusion from the beneficial use of denominational property was itself a matter of religion. In other words, there was numberpleading that the deprivation of the civil rights of a person excommunicated was a matter of religion or of religious practice. 2 The excommunication defined by the Act deals with rights of civil nature as distinguished from religious or social rights or obligations and a law dealing with the civil companysequence of an excommunication does number violate the freedom protected by Art. 25 or Art. 26. 3 Even on the basis that the civil companysequences of an excommunication are a matter of religion, still it is a measure of social reform and as such the legislation would be saved by the words in Art. 25 2 b . I am unable to accept any of these companytentions as companyrect. 1 First I do number agree that the pleadings do number sufficiently raise the point that if excommunication was part of the practice of a religion the companysequences that flow therefrom were number also part of the practice of religion. The position of the Dai as the religious head of the denomination number being disputed and his power to excommunicate also number being in dispute and it also being admitted that places of worship and burial grounds were dedicated for the use of the members of the denomination, it appears to me that the companysequence of the deprivation of the use of these properties by persons excommunicated would be logical and would flow from the order of excommunication. It companyld number be companytested that the companysequence of a valid order of excommunication was that the person excommunicated would cease to be entitled to the benefits of the trusts created or founded for the denomination or to the beneficial use or enjoyment of denominational property. If the property belongs to a companymunity and if a person by excommunication ceased to be a member of that companymunity, it is a little difficult to see how his right to the enjoyment of the denominational property companyld be divorced from the religious practice which resulted in his ceasing to be a member of the companymunity. When once it companyceded that the right guaranteed by Art. 25 1 is number companyfined to freedom of companyscience in the sense of the right to hold a belief and to propagate that belief, but includes the right to the practice of religion, the companysequences of that practice must also bear the same companyplexion and be the subject of a like guarantee. I shall reserve for later companysideration the point about the legislation being saved as a matter of social reform under Art. 25 2 b , and companytinue to deal with the argument that the impugned enactment was valid since it dealt only with the companysequences on the civil rights, of persons excommunicated. It has, however, to be pointed out that though in the definition of excommunication under s. 2 b of the impugned Act the companysequences on the civil rights of the excommunicated persons is set out, that is for the purpose of defining an excommunication. What I desire to point out is that it is number as if the impugned enactment saves only the civil companysequences of an excommunication number interfering with other companysequences of an excommunication falling within the definition. Taking the case of the Dawoodi Bohra companymunity, if the Dai excommunicated a person on the ground of forswearing the basic tenets of that religious companymunity the Dai would be companymitting an offence under s. 4, because the companysequences according to the law of that religious denomination would be the exclusion from civil rights of the excommunicated person. The learned Attorney- General is therefore number right in the submission that the Act is companycerned only with the civil rights of the excommunicated person. On the other hand, it would be companyrect to say that the Act is companycerned with excommunications which might have religious significance but which also operate to deprive persons of their civil rights. Article 26 companyfers on every religious denomination two rights which are relevant in the present companytext, by cl. b -to manage its own affairs in matters of religion-and by the last clause-cl. d -to administer such property which the denomination owns or has acquired vide cl. c d in accordance with law. In companysidering the scope of Art. 26 one has to bear in mind two basic postulates First that a religious denomination is possessed of property which is dedicated for definite uses and which under Art. 26 d the religious denomination has the right to administer. From this it would follow that subject to any law grounded on public order, morality or health the limitations with which Art. 26 opens, the denomination has a right to have the property used for the purposes for which it was dedicated. So far as the present case is companycerned, the management of the property and the right and the duty to ensure the proper application of that property is admitedly vested in the Dai as the religious head of the denomination. Article 26 d speaks of the administration of the property being in accordance with law and the learned Attorney- General suggested that a valid law companyld be enacted which would permit the diversion of those funds to purposes which the legislature in its wisdom thought it fit to appropriate. I feel wholly unable to accept this argument. A law which provides for or permits the diversion of the property for the use of persons who have been excluded from the denomination would number be a law companytemplated by Art. 26 d . Leaving aside for the moment the right of excommunicated persons to the enjoyment of property dedicated for the use of a denomination let me take the case of a person who has renounced that religion, and in passing it might be observed that even in cases of an apostate according to the principles governing the Dawoodi Bohra denomination there is numberipso facto loss of rights, only apostasy is a ground for excommunication which however companyld take place without service of numberice or an enquiry. It companyld number be companytended that an apostate would be entitled to the beneficial use of property, dedicated to the Dawoodi Bohra companymunity be it the mosque where worship goes on or other types of property like companysecrated burial grounds etc. It would be obvious that if the Dai permitted the use of the property by an apostate without excommunicating him he would be companymitting a dereliction of his duty as the supreme head of the religion-in fact an act of sacrilege besides being guilty of a breach of trust. I companysider that it hardly needs any argument to show that if a law permitted or enjoined the use of the property belonging to the denomination by an apostate it would be a wholly unauthorised diversion which would be a violation of Art. 26 d and also of Art. 26 c , number to speak of Art. 25 1 . The other postulate is the position of the Dai as the head of the religious denomination and as the medium through which spiritual grace is brought to the companymunity and that this is the central part of the religion as well as one of the principal articles of that faith. Any denial of this position is virtually tantamount to a denial of the very foundation of the faith of the religious denomination. The attack on the companystitutionality of the Act has to be judged on the basis of these two fundamental points. The practice of excommunication is of ancient origin. History records the existence of that practice from Pagan times and Aeschyles records The exclusion from purification with holy water of an offender whose hands were defiled with bloodshed. Later the Druids are said to have claimed the right of excluding offenders from sacrifice. Such customary exclusions are stated to have obtained in primitive semitic tribes but it is hardly necessary to deal in detail with this point, because so far as the Muslims, and particularly among the religious denomination with which this petition is companycerned, enough material has been set out in the judgment of the Privy Council already referred. Pausing here, it might be mentioned that excommunication might bear two aspects 1 as a punishment for crimes which the religious companymunity justifies putting one out of its fold. In this companynection it may be pointed out that in a theocratic State the punitive aspect of excommunication might get emphasized and might almost take the form of a general administration by religious dignitaries of ordinary civil law. But there is another aspect which is of real relevance to the point number under companysideration. From this point of view excommunication might be defined as the judicial exclusion from the right and privileges of the religious companymunity to whom the offender belongs. Here it is number so much as a punishment that excommunication is inflicted but is used as a measure of discipline for the maintenance of the integrity of the companymunity, for in the ultimate analysis the binding force which holds together a religious companymunity and imparts to it a unity which makes it a denomination is a companymon faith, companymon belief and a belief in a companymon creed, doctrines and dogma. A companymunity has a right to insist that those who claim to be within its fold are those who believe in the essentials of its creed and that one who asserts that he is a member of the denomination does number, at least, openly denounce the essentials of the creed, for if everyone were at liberty to deny these essentials, the companymunity as a group would soon cease to exist. It is in this sense that it is a matter of the very life of a denomination that it exercises discipline over its members for the purpose of preserving unity of faith, at least so far as the basic creed or doctrines are companycerned. The impugned enactment by depriving the head of the power and the right to excommunicate and penalising the exercise of the power, strikes at the very life of the companymunity by rendering it impotent to protect itself against dissidents and schismatics. It is thus a violation of the right to practice religion guaranteed by Art. 25 1 and is also violative of Art. 26 in that it interfers with the rights of the Dai as the trustee of the property of the denomination to so administer it as to exclude dissidents and excommunicated persons from the beneficial use of such property. It is admitted however in the present case that the Dai as the head of the denomination has vested in him the power, subject to the procedural requirements indicated in the judgment of the Privy Council, to excommunicate such of the members of the companymunity as do number adhere to the basic essentials of the faith and in particular those who repudiate him as the head of the denomination and as a medium through which the companymunity derives spiritual satisfaction or efficiency mediately from the God-head. It might be that if the enactment had companyfined itself to dealing with excommunication as a punishment for secular offences merely and number as an instrument for the self preservation of a religious denomination the position would have been different and in such an event the question as to whether Arts. 25 and 26 would be sufficient to render such legislation unconstitutional might require serious companysideration. That is number the position here. The Act is number companyfined in its operation to the eventualities just number mentioned but even excommunication with a view to the preservation of the identity of the companymunity and to pervent what might be schism in the denomination is also brought within the mischief of the enactment. It is number possible, in the definition of excommunication which the Act carries, to read down the Act so as to companyfine excommunication as a punishment of offences which are unrelated to the practice of the religion which do number touch and companycern the very existence of the faith of the denomination as such. Such an exclusion cannot be achieved except by rewriting the section. The next question is whether the impugned enactment companyld be sustained as a measure of social welfare and reform under Art. 25 2 b . The learned Attorney-General is, numberdoubt, right in his submission that on the decision of this Court in the Mulki Temple case- Venkataramana Devaru v. State of Mysore 1 , the right guaranteed under Art. 26 b is subject to a law protected by Art. 25 2 b The question then before the Court related to the validity of a law which threw open all public temples, even those belonging to a religious denomination to every companymunity of Hindus including untouchable and it was held that, numberwithstanding that the exclusion of these companymunities from worship in such a temple was an essential part of the practice of religion of the denomination, the companystitutionality of the law was saved by the second part of the provision in Art. 25 2 b reading the throwing open of Hindu religious institutions of a public character to all classes and section of Hindus. The learned Attorney-General sought support from this ruling for the proposition that Art. 25 2 b companyld be invoked to protect the validity of a law which was a measure of social welfare and reform numberwithstanding that it involved an abrogation of the whole or part of the essentials of a religious belief or of a religious practice. I feel unable to accept the deduction as flowing from the Mulki Temple case. That decision proceeded on two bases As regards the position of untouchables, Art. 17 had made express provision stating Untouchability is abolished and its practice in any form is forbidden. The enforcement of any disability arising out of Untouchability shall be an offence punishable in accordance with law. and that had to be recognised as a limitation on the rights of religious denominations however basic and essential the practice of the exclusion of untouchables might be in its tenets or creed. There was a special saving as regards laws providing for throwing open of public Hindu Religious Institu- tions to all classes and sections of Hindus in Art. 25 2 b , and effect had to be given to the wide language in which this provision was companyched. In the face of the language used, numberdistinction companyld be drawn between beliefs that were basic to a religion, or religious practices that were companysidered to be essential by a religious sect, on the one hand, and on the other beliefs and practices that did number form the companye of a religion or of the practices of that religion. The phraseology employed cut across and effaced these distinctions. But very different companysiderations arise when one has to deal with legislation which is claimed to be merely a measure providing for social welfare and reform. To start with, it has to be admitted that this phrase is as companytrasted with the second portion of Art. 25 2 b , far from precise and is flexible in its companytent. In this companynection it has to be borne in mind that limitations imposed on religious practices on the ground of public order, morality or health have already been saved by the opening words of Art. 25 1 and the saving would companyer beliefs and practices even though companysidered essential or vital by those professing the religion. I companysider that in the companytext in which the phrase occurs, it is intended to save the validity only of those laws which do number invade the basic and essential practices of religion which are guaranteed by the operative portion of Art. 25 1 for two reasons To read the saving as companyering even the basic essential practices of religion, would in effect nullify and render meaningless the entire guarantee of religious freedom-a freedom number merely to profess, but to practice religion, for very few pieces of legislation for abrogating religious practices companyld fail to be subsumed under the caption of a provision for social welfare or reform. 2 If the phrase just quoted was intended to have such a wide operation as cutting at even the essentials guaranteed by Art. 25 1 , there would have been numberneed for the special provision as to throwing open of Hindu religious institutions to all classes and sections of Hindus since the legislation companytemplated by this provision would be par excellence one of social reform. In my view by the phrase laws providing for social welfare and reform it was number intended to enable the legislature to reform, a religion out of existence or identity. Article 25 2 a having provided for legislation dealing with economic, financial, political or secular activity which may be associated with religious practices, the succeeding clause proceeds to deal with other activities of religious groups and these also must be those which are associated with religion. Just as the activities referred to in Art. 25 2 a are obviously number of the essence of the religion, similarly the saving in Art. 25 2 b is number intended to companyer the basic essentials of the creed of a religion which is protected by Art. 25 1 . Coming back to the facts of the present petition, the position of the Dai-ul-Mutlaq, is an essential part of the creed of the Dawoodi Bohra sect. Faith in his spiritual mission and in the efficacy of his ministration is one of the bonds that hold the companymunity together as a unit. The power of excommunication is vested in him for the purpose of enforcing discipline and keep the denomination together as an entity. The purity of the fellowship is secured by the removal of persons who had rendered themselves unfit and unsuitable for membership of the sect. The power of excommunication for the purpose of ensuring the preservation of the companymunity, has therefore a prime significance in the religious life of every member of the group. A legislation which penalises this power even when exercised for the purpose above-indicated cannot be sustained as a measure of social welfare or social reform without eviscerating the guarantee under Art. 25 1 and rendering the protection illusory. In my view the petitioner is entitled to the relief that he seeks and the petition will accordingly be allowed. BY COURT In accordance with the majority view of this Court, the petition is allowed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 559 of 1960. Appeal by special leave from the judgment and order dated May 1/14, 1957, of the Income Tax Appellate Tribunal of India Delhi Bench in T.A. No. 2070 of 1956-57. N. Rajagopal Sastri and D. Gupta, for the appellant. Radhey Lal Agarwal and P.C. Agarwal for the respondents. 1962. January 29. The Judgment of the Court was delivered by HIDAYATULLAH, J.-This is an appeal against the order of the Income-tax Appellate Tribunal, Delhi Bench, dated May 1/14, 1957, by which the tribunal, reversing the order of the Appellate Assistant Commissioner, held that a loss arising from the sale of certain shares by the respondent Company was a capital loss. Subsequent to the order of the Tribunal impugned here, the Commissioner of Income-tax, New Delhi, who is the appellant before us, had moved the Tribunal for a reference to the High Court on certain questions of law said to arise out of the order of the Appellate Tribunal. That application was found to be barred by one day, and since, under the law, the Tribunal had numberjurisdiction to extend the time, the application was dismissed. Against the decision of the Tribunal, an application was filed in the High Court under s. 66 3 of the Income-tax Act but the High Court dismissed the application, agreeing with the Tribunal that the application to the Tribunal for a reference was barred by time. The Commissioner of Income-tax then applied for special leave against the order passed by the Tribunal in the appeal before it, and the present appeal, with special leave, has been filed. Before we examine the merits of the case, we shall deal with a preliminary objection raised on behalf of the respondent that the appeal is incomepetent, in view of the decision of this Court in Chandi Prasad Chokhani v. State of Bihar 1 where it was held that this Court would number entertain an appeal directly from an order of the Tribunal by passing the decision of the High Court, except in very exceptional circumstances. The appellant relies upon the decision of this Court in Baldev Singh v. Commissioner of Income tax 2 , and companytends that the exceptional circumstances existing in the latter case and adverted to in the former, govern the present case. The facts relating to the filing of the application for reference together with the relevant dates are these The Tribunals order was passed by two learned Members, who signed their respective orders on different dates. The Accountant Member signed his order on May 1, 1957, and the Judicial Member, on May 14, 1957. The numberice of the order was sent to the Commissioner of Income-tax, New Delhi, and reached his office by registered post on July 15, 1957. It was received by one Motilal Pathak, a clerk in the office of the Commissioner. Motilals affidavit shows that, he suddenly fell ill, and had to take casual leave for the day. He returned to the office the next day, and dealt with the numberice received from the Tribunal. By a mischance, which is easy to appreciate, the date stamp of the receipt of the papers was affixed on the 16th, and bore that date instead of the real date, viz., the 15th, on which the papers had actually been received. Relying upon the date stamp, everybody took it for granted that limitation would expire on the 60th day, companynting time from July 16, 1957. The application was filed on the last day of limitation on that supposition. Actually, the application was barred by a day. The Income-tax Tribunal, therefore, dismissed the application on December 4, 1957. The decision of the Tribunal was unsuccessfully challenged before the High Court. It is evident that the decision of the Tribunal was quite companyrect, and the Tribunal had numberoption but to dismiss the application, since the law gives numberjurisdiction to the Tribunal to extend limitation, as is done under s. 5 of the Indian Limitation Act. This Court then granted special leave against the order of the Tribunal passed in the appeal before it, and the question is whether the appeal should be heard or the leave revoked, in view of the decision in Chokhanis case 1 . In Chokhanis case 1 , the attempt was to bypass the decision of the High Court on a question referred to the High Court for decision and also another decision of the High Court that numberother point of law arose from the order of the Tribunal. It was held that this Court would number allow the High Court to be by-passed, and that an appeal from the decision of the Tribunal in the circumstances was incompetent. A similar view was again expressed in two other cases, viz., Indian Aluminium Co. Ltd. v. Commissioner of Income-tax 2 and Kanhaiyalal Lohia v. The Commissioner of Income-tax 3 . In all the three cases, reliance was placed by the appellants therein upon the decisions of this Court in Dhakeswari Cotton Mills, Ltd. v. Commissioner of Income-tax 4 and Baldev Singh v. Commissioner of Income-tax 5 It was pointed out in the judgments of this Court that the two cases relied upon were decided on the special circumstances existing there. In the first, there was a question of breach of the principles of natural justice, which companyld number be raised otherwise than by an appeal with the special leave of this Court. In the second case, it was pointed out that limitation was lost by the party through numberfault of his, inasmuch as a letter was unduly delayed in post. In our opinion, in the present case also, special circumstances which justified the grant of special leave in Baldev Singhs case 5 , exist. There was a companybination of circumstances which led to the filing of the application a day late, but in circumstances showing that the default was number due to any negligence on the part of the Commissioner of Income-tax. The receipt of the numberice on July 15 is admitted but the affixing of the date stamp on the 16th was due to the failure of the clerk to deal with the numberice on the 15th because he fell ill and had to leave the office. It is companymon knowledge that date stamps are altered every day in the office, and this is done mostly by a very junior employee. The affixing of the date stamp on the 16th and the numberice companysequently bearing that date went unnoticed, and relying upon the date stamp, the appeal was filed, though on the last day of limitation but within time. In these circumstances, it is difficult to say that the Commissioner of Income-tax was negligent and the negligence, if any, on the part of the clerk in affixing a wrong date stamp is excusable, if one companysiders his illness and his absence from the office on the 15th. In our opinion, this case companyes within the rule of Baldev Singhs case 1 and an appeal direct to this Court from the Tribunals order is justified by the special circumstances. By this appeal, numberdecision of the High Court can be said to be bypassed, because the decision of the High Court related to the companyrectness of the decision of the Tribunal on the question of limitation, which is number a question which is sought to be raised in an indirect way by the present appeal. We, therefore, overrule the preliminary objection. The assessee Company is the National Finance Ltd., New Delhi. It is a public limited Company which was incorporated in 1943. It deals in shares and securities and also as financiers. The present case arises from a deal in 3,000 shares of the Madhusudan Mills Ltd., Bombay, by the assessee Company. In the year of account, May 1, 1949, to April 30, 1950, companyresponding to the assessment year, 1951-52, the assessee Company sold these shares suffering a loss of Rs. 5,48,712-8-0, which it claimed as one on the sale of its stock-in- trade. The Income-tax Officer and the Appellate Assistant Commissioner held it to be a capital loss. The Appellate Tribunal, Delhi Bench, reversed the decision, and held in favour of the assessee Company. The only question in this appeal is whether the decision of the Tribunal is right. The assessee Company belongs to a group of Companies companytrolled by one Lala Yodh Raj Bhalla and certain persons associated with him. It is companyvenient to describe these persons as the Yodh Raj Bhalla group. These Companies are 1 Jaswant Sugar Mills Ltd., 2 Jaswant Straw Boards Ltd., National Finance Ltd., 4 National Construction and Development Corporation Ltd., 5 Ganesh Finance Corporation Ltd., and 6 Raghunath Investment Trust Ltd. The interrelation of these. Companies is very intimate, and they are practically owned by the Yodh Raj Bhalla group. To understand this, the following analysis of the shareholdings of these Companies must be sufficient Jaswant Sugar Mills Ltd. 2,00,000 shares Jaswant Straw Board Ltd. 44,845 National Finance Ltd. 67,390 National Construction and Development Corporation Ltd. 47,800 1,60, i.e. over 80 per cent Jaswant Straw Board Ltd. 6,176 shares. National Finance Ltd. 4,783 National Construction and Development Corporation Ltd. 500 5,200 odd or nearly 84 per cent National Finance Ltd. assessee Company 50,000 shares. Ganesh Finance Corporation Ltd. 48,000 or over 96 per cent National Construction and Develop- ment Corporation Ltd. 1,30,504 shares. Ganesh Finance Corporation Ltd. 1,30,500 almost all Ganesh Finance Corporation Ltd. 50,000 shares. Raghunath Investment Trust Ltd. 49,795 99.6 per cent of the capital Raghunath Investment Trust Ltd. 10,000 shares. Mr. Yodh Raj Bhalla 1,500 Mrs. Bhalla 1,000 Mr. N. C. Malhotra brother in- law 1,000 Mr. Ram Prasad father-in-law 1,000 Mr. Dina Nath Secretary 1,000 National Finance Ltd. 3,499 Mr. Piyare Lal Saha ------- 9,000 90 per cent . The resulting position may be stated thus Ganesh Fiance Corporation Ltd. practically owns the assessee Company and National Construction and Development Corporation Ltd., Raghunath Investment Trust Ltd. practically owns the Ganesh Finance Corporation Ltd., and Yodh Raj Bhalla group practically owns Raghunath Investment Trust Ltd. Jaswant Sugar Mills Ltd. is practically owned by Jaswant Straw Board Ltd., National Finance Ltd., and National Construction and Development Corporation Ltd., and Jaswant Straw Board Ltd., is practically owned by National Finance Ltd., and National Construction and Development Corporation Ltd. Thus, the entire group is owned by a companysortium, and there is numberdoubt about it. The shares of Madhusudan Mills Ltd. were acquired in the following circumstances In July 1948, Mr. Yodh Raj Bhalla, who was in a position by reason of his holdings in these six Companies to influence decisions of the Board of Directors, arranged to purchase 26,547 shares of the Mills from Messrs. Bhadani Brothers, Ltd., who were the managing agents of the Mills. This block of shares represented about 80 per cent of the total issued capital of the Mills, The purchase was made at Rs. 400 per share, when the price in the market, was about Rs. 250 per share. Out of the remaining shares which were on the market 200 shares were purchased at Rs. 252-8-0 per share, which was then the quoted price. Now, these shares were purchased by Jaswant Sugar Mills Ltd., but the money for the purchase of the shares was obtained by borrowing it from some of the other companycerns. These Companies, as has been shown above, were companypletely under the companytrol of Yodh Raj Bhalla group. The arrangement for the money was as follows Rs. 14,75,000- borrowed from the assesee Company. Rs. 5,00,000- from National Construction and Development Corporation Ltd. Rs. 55,00,000- from the assessee Company but advanced by Ganesh Finance Corporation Ltd. The shares were registered as follows 10,500 shares registered in the name of the assessee Company. 5,400 shares in the name of the National Construction and Development Corporation Ltd., and the balance in the names of the numberinees of Jaswant Sugar Mills Ltd., which meant, largely, persons belonging to the Yodh Raj Bhalla group. On October 9, 1949, the assessee Company purchased 15,547 shares at Rs. 400 per share from Jaswant Sugar Mills Ltd., and the amount paid by the assessee Company was adjusted towards the purchase price and the balance was paid. On the same day, the remaining 11,000 shares were sold by Jaswant Sugar Mills Ltd. to National Construction and Development Corporation Ltd., at Rs. 400 per share. Thus, on that date Jaswant Sugar Mills Ltd. ceased to have any companynection with the present matter. It may be pointed out that on the date on which the two transactions took place, the priceruling in the market was about Rs. 217-8-0. Before Jaswant Sugar Mills Ltd. parted with the shares, they. had appointed a new Board of Directors of the Madhusudan Mills Ltd., and these new Directors also belonged to the same group. The managing agency of Messrs. Bhadani Brothers Ltd. was terminated, and on the same day on which the shares were purchased from these managing agents, the assessee Company was appointed as the purchasing and selling agent of the Mills. The assessee Company made enormous profit from the acquisition of these shares by way of dividend and companymission as the purchasing and selling agent. In October and November, 1948 they, however, sold 6,525 shares to Dalmia Cement and Marketing Company Ltd. at Rs. 400 per share. These shares subsequently came back to the same group but that is number a matter with which we are immediately companycerned. On April 7, 1949, 4,500 shares were sold by the assessee Company to the National Investment Trust Ltd. at Rs. 181 per share resulting in a loss of Rs. 8,80,000, and on June 1, 1949, another block of 3,000 shares was sold to the National Investment Trust Ltd., at Rs. 180 per share, resulting in a loss of Rs. 5,86,312. We are number companycerned with the loss arising from the first sale which was companysidered in the assessment year, 1950-51, and in respect of which a reference is pending in the High Court of Punjab. We are companycerned with the loss in the second year relating to the assessment year, 1951-52. In that year, the loss on the sale of the shares was sought to be set off against the profits made, and the loss practically cancelled the profits. The shares which were sold by the assessee Company on the two occasioning were sold to one Amrit Bhushan a relative of Mr. Yodh Raj Bhalla who sold then the same day to Messrs. National Investment Trust Ltd., at the slender profits of 8 annas per share, which was brokerage. Thus, at the beginning and at the end, though numerous transactions had taken place, the shares companytinued to be the property of the Yodh Raj Bhalla group. The question is whether the loss on the sale of the shares be set off against the profits in the year in which the sales and profits were respectively made. The assessee Company was assessed for the assessment year, 1950-51, by the Income-tax Officer, Meerut. In that year, the loss of Rs. 8,78,062-8-0 arising from the sale of Rs. 4,520 shares of Madhusudan Mills Ltd. was set off against the profits of the assessee Company. The case of the assessee Company for the assessment year, 1951-52, was companysidered by the Income-tax Officer, Central Circle V, New Delhi, to whom the cases of the other Companies above named were also transferred. By looking into the affairs of these Companies, he came to learn, that the shares of the Madhusudan Mills Ltd. were purchased at a price, which was almost double the current market price, by the Yodh Raj Bhalla group, and were transferred at the same price to the assessee Company. He found that this was done with a view to removing Messrs. Bhadani Brothers, Ltd. from their managing agency and to securing for the assessee Company the purchasing and selling agency of the Mills. On the date of the purchase from Messrs. Bhadani Brothers, Ltd., Jaswant Sugar Mills Ltd. achieved this purpose in view of their companytrolling interest. Bhadani Brothers, Ltd. ceased to be the managing agents from that date, and the purchasing and selling agency of the Madhusudan Mills, Ltd. was given to the assessee Company, though it had, on that day, done numbermore than give a loan to Jaswant Sugar Mills Ltd. In the assessment year, 1951-52, the loss of Rs. 5,86,312-8-0 on the sale of 3,000 shares was, therefore, disallowed holding it to be a capital loss. The order of the Income-tax Officer, Central Circle V, New Delhi was companyfirmed on appeal by the Appellate Assistant Commissioner. On further appeal by the assessee Company, the Income-tax Appellate Tribunal, Delhi, reversed the order of the Appellate Assistant Commissioner, and held that the loss was a trading loss. Whether a particular loss is a trading loss or a loss on the capital side undoubtedly depends upon the facts of each case. But it has been held, over and over again, that the question is number one of pure fact, and that a mixed question of fact and law is always involved. The cases to which we shall make a reference presently, have laid down this proposition, and those cases have also indicated how the matter is to be viewed in the companytext of facts. In Commissioner of Income-tax v. Ramnarain Sons Ltd. 1 , the Company was a dealer in shares and also carried on the business of acquiring managing agencies of other Companies. The Company the acquired the managing agency of a Textile Mill from Messrs. Sassoon J. David and Co. Ltd., and also agreed as part of the same transaction to buy 2,507 shares of the Mills. 1,507 shares were purchased at Rs. 2,321-8-0 per share, and the remaining 4,000 shares were purchased at Rs. 1,500 per share. These shares were quoted on the market at Rs. 1,610. Later,4,000 shares were sold at a loss of Rs. 1,78,000 This was shown in the books of the Company as a busines loss but was disallowed, as the shares were number held to be the stock-in-trade of the business of the Company as share dealers. On a reference to the High Court of Bombay, a Divisional Bench upheld the view of the Tribunal. Chagla,C. J., in delivering the judgment of the Court, observed that a managing agency being an asset of an enduring nature, the way to look at the matter was to enquire what was, the primary intention in acquiring the shares. The learned Chief Justice then referred to a judgment of this Court reported in Kishan Prasad Co. Ltd. Commissioner of Income-tax 1 , where it was observed It seems that the object of the assessee Company in buying shares was purely to obtain the managing agency of the third mill which numberdoubt would have been an asset of an enduring nature and would have brought them profits but there was from the inception numberintention whatever on the part of the assessee Company to re-sell the shares either at a profit or otherwise deal in them. The learned Chief Justice then companysidered the argument that a block of shares might have to be bought, if at all, at a higher price, and observed as follows A dealer in shares may succeed in getting a large number of shares at a price less than the market price if the seller is in difficulties and wants to get rid of his shares and to get liquid assets. But we have number heard of a dealer in shares purchasing a large number of shares at a higher value than the market value. The other circumstance which is equally strong in this case is that the shares were purchased for the acquisition of the managing agency. Therefore the real object of the assessee companypany was number to do business in these shares, number to make profit out of these shares, but to acquire a capital asset out of which it would earn managing agency companymission and make profit. Messrs. Ramnarain and Sons. Ltd. then appealed to this Court, and the decision of the Bombay High Court was upheld. The Judgment of this Court is reported in Ramnarain Sons Pr. Ltd. v. Commissioner of Income-tax 1 . It was laid down by this Court that in companysidering whether a transaction was or was number an adventure in the nature of trade, the problem must be approached in the light of the intention of the assessee, having regard to the legal requirements which are associated with the companycept of trade or business. Dealing with the price above the market price which was paid in that case, it was observed Even assuming that the appellants acquired the entire block of 2,507 shares from M s. Sassoon J. David Co. Ltd.-the shares transferred to the names of the directors being held by them merely as numberinees of the appellants-the price per share was companysiderably in excess of the prevailing market rate. The only reason for entering into the transaction, which companyld number otherwise be regarded as a prudent business transaction, was the acquisition of the managing agency. If the purpose of the acquisition of a large block of shares at a price which exceeded the current market price by a million rupees was the acquisition of the managing agency, the inference is inevitable that the intention in purchasing the shares was number to acquire them as part of the trade of the appellants in shares. The above two decisions are merely the application of a principle of long standing, which has been stated over and over again in the past. In Oriental Investment Co. Ltd. v. Commissioner of Income-tax 1 , that principle was reiterated, and it was that the object for which a companypany was formed did number invest the deal with the characteristics of a trade in shares, but that other circumstances along with that fact must be companysidered to find out the real object of a particular venture. Before we deal with the present case, one other case of this Court may be numbericed. In Rajputana Textiles v. Commissioner of Income-tax 2 , the companyverse companyclusion was reached. There, on the facts and circumstances of the case, it was held that a particular deal in shares was a companymercial venture and had all the attributes of an adventure in the nature of trade. In that case, the transaction was number a single or an undivided one with a slump payment, because for the managing agency, Rs. 12,50,000 were paid separately and for the shares, a sum of Rs. 83,98,000 was paid. The two acquisitions being different, the profit on the sale of some of the shares was companysidered to be a gain on the revenue side. There is numberdoubt, whatever, that the shares of the Madhusudan Mills Ltd. were acquired at a price companysiderably higher than the market price. In fact, that the price paid was almost double. Such a deal, from the business point of view, was number prudent, unless the purchaser stood to gain in some other way. It was companytended before us that this was a speculative deal in the hope that the price of the shares would firm up when the textile industries would revive. If this was the intention, then it might possibly be argued that the purchasers miscarried in their calculations, and suffered a loss in a business transaction. But, was this the intention of the Directors of Jaswant Sugar Mills Ltd. ? Those who sold the shares were number only in possession of the shares but also of the managing agency of the Madhusudan Mills Ltd., and the intention of the Directors of Jaswant Sugar Mills Ltd. was to remove the sellers from their position as managing agents and to get the entire benefit of such or other agencies for themselves. The assessee Company has urged that might have been the intention of they Jaswant Sugar Mills Ltd. but number of the assessee Company which had, on that day, merely given a loan to Jaswant Sugar Mills Ltd. Curiously enough, however, the immediate benefit of the deal was the acquisition of the selling and purchasing agency of the Mills, and that was obtained number in favour of Jaswant Sugar Mills Ltd. but of the assessee Company, even though on July 15, 1948 the date of purchase the assessee Company had obtained registration of 10,5000 shares by way of security in its own name. Why the assessee Company was favoured in this way is number far to seek. It mattered number whether Jaswant Sugar Mills Ltd. acquired that agency or the assessee Company the benefit thereof went to the same group of persons. The transaction of sale of the shares was also made within three months of their purchase, and the assessee Company number only bought the 10,500 shares which stood in its name but 15,547 shares, which gave the assessee Company a companytrolling voice in the affairs of the Mills. The assessee Company companytinued to retain the selling and purchasing agency, which was very profitable. Indeed, on its investment in the first year of Rs. 14 lakhs odd, it made a profit of about Rs. 7 lakhs. The question, therefore, would be whether the assessee companypany in purchasing the shares merely wished to deal in shares as stock-in-trade, or was acquiring a capital asset of an enduring nature. This question is number one of fact, pure and simple, hut one of an inference in law from the proved circumstances of the case. The Income-tax Officer, in deciding this question against the assessee Company, pointed out numerous circumstances, which showed clearly that this was number a mere purchase of shares as shares by a speculator, who, buying a big block, sometimes pays slightly more than the market rate. Bhadani Brothers Ltd., owned number only the shares but also the managing agency, and it is obvious that they would number part with the shares without charging for the managing agency. The price of Rs. 400 per share was so out of proportion to the market price that it indicated, by itself, the acquisition of something more than the mere shares. According to the Income-tax officer, the real intention was to acquire lucrative agencies of the Mills, and this intention, whether it was held by Jaswant Sugar Mills Ltd. Or the assessed Company or both, was of the same body of persons. The Appellate Assistant Commissioner endorsed the view of the Income-tax officer but the Tribunal made a distinction between one Company and another, and that distinction has been pressed upon us by the assessee Company. Relying upon the well-known case of Salomon v. Salomon Co. Ltd. 1 , it was argued before us that each companypany must be viewed as a separate entity, and that the intention of one companypany companyld number be attributed to another companypany, even though the proprietorship of the companypanies might be same. As a proposition affecting companypanies, it cannot be gainsaid but we are number companycerned with a theoretical question as to the assesee Company being a separate legal entity, but with the question whether a particular loss made by the assessee Company is a capital or a revenue loss. The two Companies, i. e., jaswant Sugar Mills Ltd. and the assessee Company, were directed by the same set of persons, and the facts show that even though Jaswant Sugar Mills Ltd. temporarily acquire the shares, they companyferred all the benefits of the acquisition upon the assessee Company from the very first day. The assessee Company also ultimately came into possession of all the shares along with another Company, which was also directed by the same persons, and Jaswant Sugar Mills Ltd. went out of the picture within three months. In these circumstances, it is easy to see that the interposition of Jaswant Sugar Mills Ltd. was merely a device to secure the benefit of the English case, to which we have referred. It was never intended that Jaswant Sugar Mills Ltd. would hold the shares or the benefits arising from the acquisition of a block of shares, giving to the holder a decisive voice in the affairs of Madhusudan Mills Ltd. That companytrolling interest was acquired by the Yodh Raj Bhalla group for the benefit of the assessee Company, and it was an acquisition of an interest of an enduring nature. Reference was made, in this companynection, to the transactions with the Dalmia Cement and Marketing Co. Ltd. in which the latter paid the same price namely, Rs. 400 per share. Perhaps, the Dalmia Company was after the companytrolling interest in its own way, and it is significant to numbere that within a short time, those shares again found their way in the hands of the same group. Similarly, the shares changed hands even within this group through the agency of Amrit Bhushan, numberdoubt a broker but also a relative of Mr. Yodh Raj Bhalla, who profited only to the extent of 8 annas per share, and bought and sold the shares from one Company to mother on the same day. All this show that the affairs of there Companies were centrally arranged, and the intention was to benefit the assessee Company by the acquisition of a large block of shares at a very much later prices than obtaining in the market, to acquire certain agencies of a profitable character. In our opinion, this transaction must be regarded as one on the capital side. Shares were never treated as part of the stock-in-trade. They were number sold in the market, but were sold at a loss to another Company belonging to the same group, with the obvious intention of setting off the losses against the profits, thus cancelling the profits, and saving them from taxation.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 577 of 1960. Appeal by special leave from the judgment and order dated October 15, 1959, of the Appellate Authority Chief Labour Commissioner, Central, New Delhi , in Appeal under s. 6 of the Industrial Employment Standing Orders Act, 1946. Narayanaswamy, S. N. Andley and Rameshwar Nath, for the appellant. K. Ramamurthi, for the respondent. 1962. January 22.-The Judgment of the Court was delivered by GAJENDRAGADKAR, J.-This appeal by special leave raises a short question about the scope and effect of clause 5 in the Schedule to the Industrial Employment Standing Orders Act, 1946 20 of 1946 hereinatter called the Act . That question arises in this way. The appellant Bagalkot Cement Co. Ltd. is a Limited Company registered under the Indian Companies Act, 1930 it carries on the business of manufacturing cement and for that purpose, it owns a factory as well as a limestone Quarry at Bagalkot in the State of Mysore. As required by s. 3 of the Act, the appellant submitted draft Standing Orders on the 3rd March, 1958, to the Certifying Officer and the Regional Labour Commissioner Central , Madras, in order that they should be certified. The Certifying Officer companysidered the draft submitted by the appellant, heard the appellant and its employees, the respondents and passed an order of certification on the 16th June, 1959. While companysidering the draft for the purpose of certification, the Certifying Officer, however, made certain amendments in, and additions to, the a said draft. Amongst the additions made, clause 7 in paragraph 11 was one and it is with this addition made by the Certifying Officer that we are companycerned in the present appeal. Paragraph 11 of the draft Standing Orders submitted by the appellant dealt with the question of leave. Paragraph 11 1 of the draft provided that holidays with pay will be allowed as provided for in the Factories Act, 1948, and other holidays in accordance with law and companytract. Clauses 2 to 6 dealt with allied matters. In the Standing Orders as they were finally certified, clause 1 of paragraph 11 was slightly changed and it provided that holidays with pay will be allowed as provided for in the Mines Act. No grievance is made of this alteration. Clause 7 has been added to paragraph 11. It reads thus The workmen shall be allowed during the companyrse of a year- Ten festival holidays with pay for the celebration of important festivals which will be fixed before the companymencement of every calendar year in companysultation with the workmen including the Republic Day 26th January and the Independence Day 15th August and or any other paid holidays as may be declared and numberified by the Government from time to time. Those workmen that are required to work on festivals and National Holidays shall be given an equal number of companypensatory holidays on day companyvenient to the companypany, and Fifteen days casual leave with wages. This will include all kinds of leave due to sickness or any other cause. Casual leave will number be allowed for more than 3 days at a time except in the case of sickness and emergencies at the discretion of the companypany. Wages shall be allowed for those days remaining un-availed by the workers at the end of the year. Fourteen days annual leave to all classes of workers who have put in 265 attendances in a year as defined in the Mines Act. This includes statutory leave. All leave should be applied for only in the prescribed form. The workmen after filling the particulars of the leave required by them shall hand over the same to the head of the section in which they are working. The appellant apparently companytended before the Certifying Officer that it was outside his jurisdiction to deal with the topics companyered by clause 7 which he wanted to add but its objection was over ruled. Against the order passed by the Certifying Officer certifying the Standing Orders with the additions and amendments made by him, the appellant preferred an appeal under section 6 of the Act to the appellate authority, viz., the Chief Labour Commissioner Central , New Delhi, on the 5th July 1959. The appellate authority, in substance, agreed with the view taken by the Certifying Officer and retained the addition made by him by the insertion of clause 7 to paragraph He, however, made slight modifications by directing that in clause a there will be seven festival holidays instead of ten festival holidays and in clause b there will be ten days casual leave instead of fifteen days. Clause d was amended by the appellate authority by substituting a new clause in its place. The substituted clause reads thus Casual leave will number be allowed to be accumulated. Unavailed casual leave shall lapse at the close of the calendar year. Then in regard to cl. e , the appellate authority held that the said clause amounted to a repetition of statutory provision. Therefore, the said clause was amended to read thus Annual leave with wages will be allowed as per provisions of the Mines Act. The appellate authority made certain other amendments in the Standing Orders as they were certified by the Certifying Officer and ultimately. the Standing Orders were certified, with the modifications and alterations suggested by the order of the appellate authority. The order of the appellate authority was passed on October 15, 1959. Against this order, the appellant applied for special leave to this Court and special leave was granted to it on the 1st February, 1960. It is with the special leave thus granted that the appellant has companye to this Court and on its behalf Mr, Narayanaswami has urged that the addition made by cl. 7 in paragraph 11 of the Standing Orders is outside the jurisdiction of the certifying authority. He companytends that the jurisdiction companyferred on the certifying authority by clause 5 in the Schedule does number empower the certifying authority to deal with the substantive question of the extent and quantum of leave and holidays. It only requires the Standing Orders to provide for companyditions subject to which leave and holidays can be granted and the procedure in respect thereof and the authority which may grant such leave and holidays. The quantum of leave and holidays which should be granted to the workmen is outside the purview of the Schedule and as such, cannot be included in the Standing Orders. That is how the narrow question which arises for our decision in the present appeal is to determine the scope and effect of cl. 5 in the Schedule. Before dealing with this question, it would be companyvenient to companysider broadly the scheme of the Act. The Act was passed in 1946 because the Legislature thought that it was expedient to require employers in individual establishments to define with sufficient precision the companyditions of employment under them and to make the said companyditions known to workmen employed by them. Prior to the passing of the Act, companyditions of employment obtaining in several industrial establishments were governed by companytracts between the employer and their employees. Sometimes the said companyditions were reduced to writing and in many cases they were number reduced to writing but were governed by oral agreements. Inevitably in many cases, the companyditions of service were number well-defined and there was ambiguity or doubt in regard to their nature and scope. That is why the Legislature took the view that in regard to industrial establishments to which the Act applied, the companyditions of employment subject to which industrial labour was employed should be well-defined and should be precisely known to both the parties. With that object, the Act has made relevant provisions for making Standing Orders which, after they are certified, companystitute the statutory terms of employment between the industrial establishments in question and their employees. That is the principal object of the Act. The Act applies to every industrial establishment wherein one hundred or more workmen are employed or were employed on any day of the preceding twelve months. It can be extended even to establishments whose companyplement of labour is less than one hundred and it does number apply to any industry to which Chapter VII of the Bombay Industrial Relations Act, 1946, applies or to any industrial establishment to which the provisions of the Madhya Pradesh Industrial Workmen Standing Orders Act, 1959, apply. In other words, numbermally, Standing Orders have to be drafted by the employer and their certification obtained under the Act wherever the employer employ a more than one hundred industrial workmen s. 1 3 . The certifying authority under the Act means a Labour Commissioner or a Regional Labour Commissioner and includes any officer appointed by the appropriate Government by numberification in the Official Gazette to perform all or any of the functions of a Certifying Officer under the Act s. 2 c . The Act provides for an appeal against the order passed by the Certifying Officer and the appellate authority means an Industrial Court, wherever it exists or in its absence an authority appointed by the appropriate Government by numberification in the Official Gazette to exercise in such area as may be specified in the numberification the functions of an appellate authority under the Act sec. 2 a . Standing Orders are defined to mean rules relating to matters set out in the Schedule s. 2 g . Thus, the matters which have to be companyered by the Standing Orders and in respect of which the employer has to make a draft for submission to the Certifying Officer are matters specified in the Schedule. Section 3 requires the submission of the draft of Standing orders within six months from the date on which the Act becomes applicable to an industrial establishment. Under s. 4, the Standing Orders become certifiable if provisions are made therein for every matter set out in the Schedule and they are found to be otherwise in companyfirmity with the provisions of the Act. After the amendment of this section made in 1956, the Legislature has imposed upon the Certifying Officer and the appellate authority the duty to adjudicate upon the fairness or reasonableness of the provisions of any standing orders. Prior to the amendment, it was number open to the said authorities to examine the fairness of the Standing Orders submitted by the employer. The result of s. 4, therefore, is that the Standing Orders have to provide for all the topics specified in the Schedule and they have to be in companyformity with the Act. Their reasonableness can be examined by the appropriate authorities and suitable modifications can be made by them in accordance with their decision. Section 5 provides for the procedure which has to be followed by the Certifying Officer before certifying the Standing Orders. The procedure is intended to give an opportunity to both the parties to be heard before the final order is passed. Section 6 provides for an appeal and s. 7 lays down that the Standing Order shall companye into operation on the expiry of 30 days from the date on which authenticated companyies thereof are sent as required by s. 5. sub- s. 3 , or where an appeal is preferred, on the expiry of seven days from the date on which the companyies of the appllate order are sent under s. 9, the said Standing orders Certifying Officer to keep a register of standing orders and under s. 9, the said Standing Orders have to be prominently posted by the employer in English and in the language understood by the majority of the workmen on special boards. Section 10 deals with the duration and modification of standing orders. It provides that except by agreement, the standing orders, after they are certified, shall number be liable to modification until the expiry of six months from the date on which they came into operation. Section 10 2 empowers both the employer or the workman to apply for a modification in the said standing orders. It would thus be clear that after they are certified, the standing orders have to remain in force for six months unless, of companyrse, they are modified in the meanwhile by, companysent. After six months are over, an application for modification in the standing orders can be made either by the employer the employees and the problem would be companysidered after following the procedure prescribed by the Act for certifying the original standing orders. Section 11 companyfers the necessary powers of a Civil Court on the Certifying Officer and the appellate authority and s. 12 prohibit admission of oral evidence which has the effect of adding or otherwise varying or companytradicting standing orders as finally certified under the Act, in any Court. Section 13 provides for penalties and the procedure to enforce them. Section 13A deals with the problem of interpretation of the standing orders and s. 13B provides for exemption of industrial establishments therein specified. Section 14 companyfers on the appropriate Government power to exempt, companyditionally or unconditionally, any industrial establishment, and s. 15 companyfers on the appropriate Government the power to make rules to carry out the purposes of the Act, and, in partioular, to provide for the matters companyered by cls. a to e of sub-cl. 2 . Section 15 3 companytains the salutary provision that every rule made by the Central Government under s.15 has to be placed before the House in the manner prescribed by it. The Schedule to the Act companytains 11 clauses, clauses 1 to 10 deal with the several topics in respect of which standing orders have to make a provision and cl. 11 refers to any other matter which may be prescribed. This last clause shows that an addition may be made by the appropriate Government if it is thought necessary to do so, That, in brief, is the scheme of the Act. Mr. Narayanaswami companytends that having regard the nature and scope of the several clause in the Schedule, it would be appropriate to companystrue cl.5 as number including a provision for the quantum and extent of leave and holidays His argument is that cl, 5 is really intended to provide merely for the companyditions and the procedure to be adopted in applying for leave and holidays Clause 5 reads thus Conditions of, procedure in applying for, and the authority which may grant, leave and holidays. How many holidays the employee will have and how much leave, either casual or on medical ground, he would be entitled to get, are matters outside the scope of the Schedule they would be governed by the relevant provisions of any other law or by companytract between the parties they cannot be the subject-matter of standing orders. The standing orders would provide for the companyditions subject to which leave and holidays can be applied for, for the procedure in applying for the same and for the authority fying may grannt the same. That being so, the certifying Officer and the appellate authority exceeded their jurisdiction in making substantive provisions in that behalf by paragraph 11 7 . That is the case for the appellant as presented by Mr. Narayanaswami. In support of this companytention, reliance has been placed on cl.3 in the Schedule which refers to shift working. It is urged that since the clause refers to shift working, the substantive provision in respect of shift working as well as the companyditions subject to which it should be allowed would legitimately fall within its purview. If the Legislature had intended that the substantive provision as to leave and holiday should be the subject-matter of standing order it may will have referred to leave and holidays only in cl 5 without any further addition. The additional words introduced in cl. 5 are words of limitation and they show that the substantive provision as to leave and holidays is outside the purview of that clause, It may be companyceded that there is some force in this companytention. There are, however, other companysiderations which have to be borne in mind in companystruing cl. The object of the Act as we have already seen, was to require the employers to make the companyditions of employment precise and definite and the act ultimately intended to prescribe these companyditions in the from of standing orders so that what used to be governed by a companytract hereto before would number be governed by the statutory standing orders and it would number be reasonable to hold that companyditions of employment to which the preamble of the Act specifically refers would number include a provision for the quantum of leave and the quantum of holidays to which the employee would be entitled. Therefore, the word companyditions in cl. 5. of the Schedule has to be reasonably companystrued in a broad and liberal sense. The dictionary meaning of the word companydition is a provision or a stipulation. Now a provision or a stipulation as to leave and holidays would necessarily include a provision for the quantum of holidays and leave and this companystruction would be companysistent with the meaning of the word companydition as employed in the preamble to the Act. Mr. Ramamurthi who appeared amicus curiae for the respondents at our request companytended that to adopt the narrow companystruction of the word companyditions in cl. 5 would defeat the very purpose of cl. 5. He argued that merely providing for the procedure of application and for the authority who would grant leave and holidays without stipulating as to the quantum of leave and holidays would be almost meaningless. In our opinion, there is force in this companytention and so, we, are inclined to adopt the broad and liberal companystruction of the word companydition in cl.5. Besides, the first three clauses dealing with the companyditions, the procedure and the authority would apply both to leave and holidays and it is number easy to appreciate what companyditions companyld be prescribed by the standing orders for the purpose of holidays. No doubt Mr. Narayanaswami suggested that the companyditions in the companytext of holidays may mean companyditions as to holidays with pay, or without pay or with half pay and that is what is companytemplated by the first clause in relation to holidays. Theoretically, it may be companyceivable that the word companyditions may have that meaning in respect of holidays but it seems to us that it would serve numberuseful purpose merely to provide for such companyditions and to prescribe the procedure to be adopted in applying for leave and holidays unless the quantum of leave and the quantum of holidays are also intended to be prescribed by the standing orders. On the broad companystruction of cl. 5, it becomes a self sufficient and reasonable provision. The standing orders will provide for the leave to which the employees are entitled and will prescribe the number of holidays which they will be able to enjoy. Having provided for the quantum of leave and holidays, the standing orders will also provide for the companyditions in respect of them, for the procedure in applying for them and for the authority which may grant them. It is true that it is number easy to understand why an application has to be made for holidays, but it may be that if there are sectional holidays, employees belonging to a particular section entitled to them may have to apply for them. There fore, in our opinion, it cannot be said that the authorities below have adopted an unreasonable companystructions of cl. 5 in the Schedule when they held that they were entitled to make the additional provisions in respect of leave and holidays which they have purported to make by adding cl. 7 in paragraph 11 of the standing orders. In this companynection reference, may be made to the Model Standing Orders framed by the Central Government in 1946. Clause 9 of the Model Orders provides that holidays with pay will be allowed as provided for in Chapter VI of the Factories Act, 1948, and other holidays accordance with law companytract, custom and usage. In fact, it is significant that paragraph 11 1 of the draft- submitted by the appellant has also provided that holidays with pay will be allowed as provided for in the Factories Act and other holiday in accordance with law and companytract. If this provision is legitimately included in the Standing Orders and that too under clause 5 of the Schedule, it is difficult to understand why a more specific provision cannot be made under the said clause by clearly stating the number of holidays to which the employees would be entitled and that is precisely what paragraph 11 7 purports to do. Then cl. 10 of the Model Standing Orders provides for casual leave. It lays down that a workman may be granted casual leave of absence with or without pay number exceeding 10 days in the aggregate in a calendar year. Then it lays down further companyditions in respect of the grant of the said causal leave. It would be numbericed that the quantum of casual leave to which the employee is entitled is thus specifically provided by. cl. 10 of the Model Standing Orders. It is perfectly true that if clause 5 of the Schedule is read in the narrow sense for which Mr. Narayanaswamy companytends, cl. 10 of the Model Standing Orders would be invalid and from that point of view the existence of clause 10 in the Model Standing Orders cannot be of any assistance in interpreting cl. 5 of the Schedule. But if clause 5 is companystrued the broad sense for which Mr. Ramamurthi companytends, it would follow that clause 10 of the Model Standing Orders is companysistent with the aim and object of the Schedule and that, incidentally, may support the agreement for the broad companystruction. That is about all. In regard to the argument based on the scope of the 10 clauses in the Schedule, it is certainly number companyrect to say that the scope of the Schedule is intended to be very narrow. Take for instance, clause 8 which deals with the termination of employment or clause 9 which deals with the suspension or dismissal for misconduct, and acts or omissions which companystitute misconduct. These are matters of general importance and it is companyceded that all relevant and material provisions in respect of these matters have to be included in the Standing order. Therefore, it would number be inconsistent with the scheme of the Schedule if we were to hold that the substantive provisions for the granting of leave and holidays along with the companyditions in respect of them have to be made by the Standing Orders under cl. 5 of the schedule. It would be recalled that s. 10 of the Act provides for the duration of the standing orders and if any standing orders are found by experience to be unreasonable or inconvenient either by the employer, or the employees, an application can be made for the modification of the said standing orders after the expiration of six months from the date on which they came into operation. Therefore. there would be numberhardship in requiring the standing orders to include a provision as to leave and holiday. The provisions made in that behalf can be modified after following the procedure prescribed by s. 10. It is number disputed that the claim for leave and holidays can become the subject matter of an industrial dispute and if such a dispute is referred for adjudication to an Industrial Tribunal, the Tribunal can fix the quantum of holidays and leave. What the Tribunal can do on such reference is number intended to be achieved by the Standing orders themselves in respect of Industrial establishments to which the Act applies. We have numbericed that the Certifying officer as well as the appellate authority are, in substance, industrial authorities and if they are given power to make provision for leave and holidays as they undoubtedly are given power to provide for termination of employment and suspension or dismissal for misconduct, there is numberhing inconsistent with the spirit of the Schedule or with the object of the Act. Therefore. we are number satisfied that the authorities below were in error in holding that it was companypetent to them to make the additional provision in the Standing orders as prescribed by paragraph 11 7 . In the result, the appeal fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal o. 189 of 1961. Appeal by special leave from the judgment and order dated November 27, 1957, of the Industrial Court, Bombay, at Ahmedabad in Appeal I. C. 187 of 1957. T. Daru, V. L. Narasimhamoorthy, E. Udayarathnam and S. S. Shukla, for the appellants. K. Daphtary, Solicitor General of India, M. Nanavati, J. B. Dadachanji and O. C. Mathur, for the respondent No. 1. M. Barot, Secretary of the Textile Labour Association, for respondent No. 2. 1962. January 30. The Judgment of the Court was delivered by WANCHOO, J.-This appeal by special leave against the order of the Bombay High Court summarily dismissing the petition of the appellants under Art. 227 of the Constitution raises an important question with regard to the right of a Representative Union under the Bombay Industrial Relations Act, No. XI of 1947, hereinafter called the Act to appear in a proceeding under the Act to the exclusion of an employee desiring a change under s. 42 4 of the Act. The question arises in this way. The Gujarat Spinning and Weaving Company Limited hereinafter called the old Company closed its business on May 14, 1953 and sold its assets to the Tarun Commercial Mills Company Limited hereinafter called the new Company . The old Company had discharged all its workmen when it closed its business which happened before s. 25F relating to retrenchment was introduced in the Industrial Disputes Act, No. XIV of 1947 . The new Company re-started the business after a week and took in its service the workmen of the old Company. It appears that at the time the closure took place a dispute was pending between the old Company and its workmen with respect to bonus. As the closure had taken place while that dispute was pending, the Textile Labour Association hereinafter called the Association , which is a Representative Union of the textile workers in the city of Ahmedabad, filed an application under s. 22 of the Industrial Disputes Appellate Tribunal Act of 1950 before the Labour Appellate Tribunal where the dispute was pending. In that matter there was a companypromise, and though, according to the old Company, there was numberavailable surplus to give bonus, the old Company agreed to pay bonus by way of settlement to the extent of 1/8th of the earnings of the workmen for the year in dispute and in companysideration of this the Association on behalf of all the workmen discharged as a result of closure agreed number to press for any companypensation for their discharge and the workmen who accepted the bonus by this agreement gave in undertaking number to claim companypensation in any other way in any future proceeding. This happened in March 1955. Thereafter in July 1956, 376 persons who had been in the employ of the old Company and were a minority of its workmen gave numberice under s. 42 1 of the Act and claimed companypensation for the closure which had taken place in 1953. As numbersettlement companyld be arrived at between the parties this was followed by an application under s. 42 4 of the Act before the labour companyrt in October 1956 and these workmen claimed that they should be paid adequate companypensation for the closure of the mill in view of their past services. To this application both the old Company and the new Company were made parties. The application was opposed by both the companypanies on various grounds with which we are however number companycerned in the present appeal. In January 1957, the Association made an appearance before the labour companyrt and companytended that the application should be dismissed in view of the companypromise which had been arrived at before the Labour Appellate Tribunal in 1953. The labour companyrt accepted this companytention and dismissed the application. Thereupon some of the workmen went in appeal to the industrial companyrt and their companytention seems to have been that, though numberindividual can be permitted to appear in any proceeding where the Representative Union appears as representative of employees, in this case the action of the Association after its appearance in number supporting the case of the workmen before the labour companyrt was mala fide therefore the Association should number have been allowed to appear on behalf of the employees who had applied to the labour companyrt and they should be permitted to carry on their application. This companytention was rejected by the industrial companyrt, which was of opinion that it was number for an industrial companyrt to go into the question of bona fides or mala fides for appearance of a Representative Union and that the law under the Act was clear that where a Representative Union appeared it alone companyld represent the applicants even in a case under s. 42 4 of the Act. The appeal was therefore dismissed. Thereupon the employees appear to have filed a petition before the High Court under Art. 227 of the Constitution, which was summarily rejected. The High Court also refused to give leave to appeal. Then there was a petition to this Court for special leave which was granted, and that is how the matter has companye up before us. The main companytention on behalf of the appellants before us is that reading the various provisions of the Act, an employee making an application under s. 42 4 of the Act is number debarred from appearing in the labour or industrial companyrt and carrying on with his application even though the Representative Union makes an appearance. It is submitted that if the interpretation pressed on behalf of the respondents were accepted it would amount to tyranny of the Representative Union and this companyld number be the intention of the legislature in framing the Act. It is also companytended that if the interpretation pressed on behalf of the respondents is companyrect, the provisions in the Act may be liable to be struck down as ultra vires the Constitution. The case of the respondents on the other hand is that the provisions of the Act are perfectly plain and provide that where a Representative Union appears in any proceeding it alone, to the exclusion even of the employee who might have made an application under s. 42 4 , is entitled to carry on with the proceedings and the employee companycerned has numberlocus standi in the matter after the application has been filed by him, if the Representative Union chooses to appear. It is urged that the so-called tyranny by the Representative Union can have numberbearing on the interpretation of the provisions of the Act if they are plain in their intent. Further it is companytended that there is numberquestion of the companystitutionality of the various provisions of the Act in this case as at numberstage has the companystitutionality of the provisions been challenged by the appellants, number even in their special leave petition. Before we deal with the interpretation of the various provisions of the Act in this behalf we may point out that the companystitutionality of the provisions has never been challenged so far and we therefore express numberopinion as to the companystitutionality of these provisions. We are further of opinion that the argument based on the so-called tyranny of a Representative Union or its motives in taking the action it may choose to take in any proceeding after it appears can have numberrelevance if the intention of the legislature as it can be gathered from the various provisions is perfectly plain. Let us therefore see what the Act provides in this behalf. The main provisions with which are companycerned are companytained in Chap. V of the Act which deals with representatives of employees and employers, and appearance on their behalf. It may be stated at the outset that the Act companytains elaborate provisions for registration of unions and approved unions in Chapters III and IV respectively and is in this respect different from the Industrial Disputes Act. Under Chap. III the Registrar is given the power to register a Representative Union for any industry in any local area and also the power to cancel such registration under certain circumstances and there is also a provision for appeal where a registration is cancelled. Then companyes Chap. V which deals with the representatives of employees and employers and appearance on their behalf in proceedings under the Act. Section 27 provides for recognition of an association of employers and its right to appear in proceedings under the Act. Section 30 enumerates the representatives of employees and gives an order of preference in which the six classes of representatives of employees mentioned in that section can appear or act in any industry in any local area, the first being a Representative Union for such industry. It is number in dispute that the Association in the present case is a Representative Union in the textile industry in that region and has the most preferential right to appear or to act as the representative of employees in the textile industry in that area. Sections 28 and 29 provide for election of representatives of employees where there is numberRepresentative Union in respect of any industry in any local area and such elected representatives under s. 30 are representatives of employees and are fifth in order of preference. Then we companye to ss. 27A, 32 and 33 with which we are particularly companycerned in this appeal. They may be read in extenso. 27A-Save as provided in sections 32 and 33, numberemployee shall be allowed to appear or act in any proceeding under this Act except through the representative of employees 32-A companyciliator a Board, an Arbitrator, a wage Board, a Labour Court and the Industrial Court may, if he or it companysiders it expedient for the ends of justice, permit an individual, whether an employee or number, to appear in any proceeding before him or it Provided that numbersuch individual shall be permitted to appear in any proceedings in which a Representative Union has appeared as the representative of employees. 33-Notwithstanding anything companytained in any other provision of this Act, an employee or a representative union shall be entitled to appear through any person. a in all proceedings before the industrial companyrt aa in all proceedings before a wage board b in proceedings before a Labour Court for deciding whether a strike, lock-out, closure or stoppage or change or an order passed by an employer under the standing orders is illegal or for deciding any industrial dispute referred to it under section 72 c in such other proceedings as the Industrial Court may, on application made in that behalf, permit Provided that a legal practitioner shall number be permitted under clause c to appear in any proceeding under this Act except before a Labour Court as provided in section 83A or the Industrial Court Provided further that numberemployee shall be entitled to appear through any person in any proceeding under this Act in which a Representative Union has appeared as the representative of employees. It will be seen that s. 27A provides that numberemployee shall be allowed to appear or act in any proceeding under the Act, except through the representative of employees, the only exception to this being the provisions of ss. 32 and 33. Therefore, this section companypletely bans the appearance of an employee or of any one on his behalf in any proceeding after it has once companymenced except through the representative of employees. The only exceptions to this companyplete ban are to be found in ss. 32 and 33, to which we shall presently refer. But it is clear that bona fides or mala fides of the representative of employees can have numberhing to do with the ban placed by s. 27A on the appearance of any one else except the representative of employees as defined in s. 30 and that if anyone else can appear in any proceeding we must find a provision in that behalf in either s. 32 or s. 33 which are the only exceptions to s. 27A. It may be numbericed that there is numberexception in s. 27A in favour of the employee, who might have made an application under s. 42 4 , to appear on his own behalf and the ban which is placed by s. 27A will apply equally to such an employee. In order however to soften the rigour of the provisions of s. 27A, for it may well be that the representative of employees may number choose to appear in many proceedings started by an employee under s. 42 4 , exceptions are provided in ss. 32 and 33. The scheme of these three provisions clearly is that if the Representative Union appears, numberone else can appear and carry on a proceeding, even if it be begun on an application under s. 42 4 but where the Representative Union does number choose to appear there are provisions in ss. 32 and 33 which permit others to appear in proceedings under the Act. Section 32 gives power to a companyciliator, a board, a wage board, a labour companyrt and the industrial companyrt to permit an individual, whether an employee or number, to appear in any proceeding before him or it. This shows that the companyplete ban imposed by s. 27A can be removed if the authorities under the Act think it expedient to permit another person to appear and that person may be an employee or number. Thus the employee who has made an application under s. 42 4 may be permitted to appear before the authorities under the Act but this provision is subject to a proviso namely that numbersuch individual which would include an employee who has himself made an application under s. 42 4 , shall be permitted to appear in any proceeding in which the Representative Union has appeared as the representative of employees. Reading therefore ss. 27A, 30 and 32 together, it is clear that numberone else can appear in any proceeding under the Act except a representative of employees but the authorities are empowered to permit anyone to appear whether he be an employee or number, if they companysider it expedient for the ends of justice and we have numberdoubt that where representative of employees does number choose to appear the authorities will generally permit the employee who has made the application under s. 42 4 to appear , but this power is subject to the proviso, namely, that numberone will be allowed to appear if the Representative Union has made an appearance. It will be seen that the proviso puts the Representative Union in a special position out of the six classes mentioned as representatives of employees in s. 30. Thus s. 32 makes it clear that where the Representative Union of the six classes in s. 30, appears numberone else can appear, including the person who might have made an application under s. 42 4 . If the other five classes which are mentioned in s. 30 as representatives of employees appear, the authorities have the power to allow the employee or any other person to appear along with them. Then we companye to s. 33, which starts with a obstante clause and deals with the appearance of an employee or a representative union through any person. Section 33 thus is an exception to s. 27A and authorises an employee who companyld number appear in any proceeding under the Act except through the representative of employees under s. 27A, to appear through any person in certain proceedings mentioned in s. 33, but this again is subject to provisos, with the first of which we are number companycerned here. The second proviso lays down that numberemployee shall be entitled to appear through any person in any proceeding under the Act in which the Representative Union has appeared as the representative of employees. This proviso again gives a special position to the Representative Union out of the six classes of representatives of employees provided in s. 30 and makes it clear that though an employee may appear in certain proceedings specified in s. 33 through any person in spite of s. 27A, he cannot do so where a Representative Union has appeared as the representative of employees. Here again the position is the same as in s. 32 if a representative of employees other than a Representative Union has appeared in the proceeding the employee can also appear through any person in the proceedings mentioned in s. 33 but he cannot do so where the representative of employees which has appeared even in proceedings under s. 33 is the Representative Union. The result therefore of taking ss. 27A, 32 and 33 together is that s. 27A first places a companyplete ban on the appearance of an employee in proceedings under the Act once it has companymenced except through the representative of employees. But there are two exceptions to this ban companytained in ss. 32 and 33. Section 32 is companycerned with all proceedings before the authorities and gives power to the authorities under the Act to permit an employee himself to appear even though a representative of employees may have appeared but this permission cannot be granted where the representative Union has appeared as a representative of employees. Section 33 which is the other exception allows an employee to appear through any person in certain proceedings only even though a representative of employees might have appeared but here again it is subject to this that numberone else, number even the employee who might have made the application, will have the right to appear if a Representative Union has put in appearance as the representative of employees. It is quite clear therefore that the scheme of the Act is that where a Representative Union appears in any proceeding under the Act, numberone else can be allowed to appear number even the employee at whose instance the proceedings might have begun under s. 42 4 . But where the appearance is by any representative of employees other than a Representative Union authorities under s. 32 can permit the employee to appear himself in all proceedings before them and further the employee is entitled to appear by any person in certain proceedings specified in s. 33. But whenever the Representative Union has made an appearance, even the employee cannot appear in any proceeding under the Act and the representation must be companyfined only to the Representative Union. The companyplete ban therefore laid by s. 27A on representation otherwise than through a representative of employees remains companyplete where the representative of employees is the Representative Union that has appeared but if the representative of employees that has appeared is other than the Representative Union then ss. 32 and 33 provide for exceptions with which we have already dealt. There can therefore be numberescape from the companyclusion that the Act plainly intends that where the Representative Union appears in any proceeding under the Act even though that proceeding might have companymenced by an employee under s. 42 4 of the Act, the Representative Union alone can represent the employee and the employee cannot appear or act in such proceeding. In this view of the matter the appeal must fail and is hereby dismissed.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 184 of 1961. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. B. Agarwala, R. L. Agarwala and P. C. Agarwala, for the petitioner. Naunit Lal, for the respondents. 1962. January 16. The Judgment of the Court was delivered by KAPUR J.-This is a petition under Art. 32 of the Constitution challenging the legality of the amendment introduced in s. 15 of the Assam Sales Tax Act, 1947 Act XVII of 1947 , by s. 2 of the Assam Sales Tax Amendment Act, 1960 Act XIII of 1960 , by which sub-s. b of item i of sub-cl. b of cl. 1 was deleted and thereby sales of goods to a registered dealer intended for use in production of goods for sale became liable to sales tax. The appellant Company is a limited companypany carrying on in the State of Assam its business of manufacturing, selling and supplying iron and steel materials. It held a Registration Certificate under the Assam Sales Tax Act, as it was before the amendment of 1960. Under that Act all its purchases for use in manufacture or production of goods taxable under the Act were exempt from sales tax but after the amendment of the Act there was a deletion in the Registration Certificate of certain goods, e.g., cast iron, iron plates, steel bars and galvanised wire which were used by the petitioner in the manufacture of its finished products which were also taxable in the State. Consequently it has become liable to pay tax on those goods purchased for use in the manufacture of goods and the companyt of production has thereby gone up. Three points were raised by the petitioner- 1 that the amendment introduced by Act XIII of 1960 is violative of Art. 14 because it discriminates between manufacturers who supply goods according to orders received and others who manufacture goods on their own account and sell them 2 that the restriction imposed by the Amending Act is excessive and violative of Art. 19 1 f and 3 that the refusal to amend the Registration Certificate by number reinstating the articles mentioned above affects the rights of the petitioner Company under Art. 19 1 f . For the purpose of deciding these questions it is necessary to refer to the scheme of the Assam Sales Tax Act, 1947 Act XVII of 1947 . By s. 2 2 a b of that Act Contract is defined as In this Act, unless there is anything repugnant in the subject or companytext,- 2 companytract means any agreement for carrying out for cash or deferred payment or other valuable companysideration,- a the preparation, companytruction, fittingout, improvement or repair of any moveable property or of any building, road, bridge or other immoveable property, or b the installation or repair of any machinery affixed to a building or other immoveable property. Section 9 of that Act provides for companypulsory registration. Section 12 provides that a dealer registered under s. 9 shall be granted a certificate of registration which shall specify the class or classes of goods in which the said dealer carries on business and such other particulars as may be prescribed. Section 15 1 b i b and c deals with exemptions. It reads- 15 The net turnover shall be determined by deducting from dealers gross turnover during any given period- 1 his turnover during that period on. a b sale to a registered dealer of- goods specified in the purchasing dealers certificate of registration as being intended by him for- a b use in manufacture or production of any goods, the sale of which is taxable under this Act, c use in the execution of any companytract. Sub-clause b has number been omitted by the amending Act above referred to as a result of which from the gross turnover of a dealer goods specified in the certificate of registration as being intended by him for use in manufacture or production of any goods for sale has number been omitted. The argument raised was that by the omission of sub-cl. b discrimination was intended as between materials which were to be used for manufacture of goods and to be sold on their own account by the petitioner Company and materials which were purchased for use in the execution of any companytract, It was also companytended that the object of the amendment of the Sales Tax Act was to prevent evasion of Sales Tax by manufacturing goods and sending them out of the State and therefore that object companyld have been achieved by taxing only those material which were so intended. The amending Act is really a part of the General Sales Tax Act of the State of Assam the object of which is to raise revenue in the State. It is for the Legislature to decide as to what articles it should tax and what articles it should number tax and if it decided to tax certain articles in order to effectuate its policy it is difficult to see how that would introduce discrimination. But it was argued that discrimination is introduced by differentiating between materials bought for articles to be supplied against a companytract and articles produced and sold by the petitioner and that this was number a reasonable classification number was there any intelligible differentia in this classification. In our opinion this argument is without force. The Legislature, having chosen the articles on which it thinks necessary to impose a tax, has decided to impose the tax and it is difficult to see how it can be said that the goods supplied against a companytract and goods manufactured and sold by the petitioner are similarly situated. Besides the provision against discrimination is number on articles but on persons. It has number been shown how the imposition of this tax is an unreasonable restriction on the rights of the petitioner to carry on trade, but it was submitted that by this means the petitioner will number be able to companypete with the manufacturers outside the State of Assam. Assuming that this is so, it is clear that goods which are purchased are put to different uses and if the legislature thinks that certain classes of goods should pay the tax and number others that is a question of policy into which the companyrts cannot enter. We can only say that in such circumstances, per se there is numberdiscrimination. There is numberforce in the second companytention either. In view of our decision on these two points the third point, that is, the refusal of the Sales Tax Officer to amend the registration certificate will have numberforce. In the result this petition fails and is dismissed and the rule is discharged.

Case appeal was rejected by the Supreme Court

CIVIIL APPELLATE JURISDICTION Civil Appeal No. 133 of 1958. Appeal by special leave from the judgment and order dated March 6, 1956, of the Bombay High Court in T. R. No. 49 of 1955. AT. Additional Solicitor-General of India, K. N. Rajagopal Sastri, R. H. Dhebar and P. D. Menon, for the appellant. A. Palkhivala, B. K. B. Naidu and I. N. Shroff, for the respondent. 1962. February 23. The Judgment of Das, Kapur, Gajendragadkar, Subba. Rao, Wanchoo and Ayyangar, JJ., was delivered by Das, J., Sarkar, J. delivered a separate judgment. K. DAS, J.-This is an appeal by special, leave grante I by this Court on September 17, 1956. The Commissioner of Income-tax, Bombay, City 1, is the appellant before us. The respondent is Bai Shirinbai K. Kooka, who will be referred to in this judgment as the assessee. The assessee is a Parsi lady who held by way of investment a large number of shares of different companypanies. These shares were purchased before the end of and after 1939-40 at a companyt-price which was much less than their market value on April 1, 1945. Her dividend income was assessed to income- tax for several year prior to April 1, 1945 but in the assessment year1946-47, the relevant accounting year being financial year 1945-46, the Incometax Officer found that the assessee had companyverted her shares into her stock-in-trade and carried on a trading activity, viz. a business in shares. Her income for the assessment year 1916-47 was therefore companyputed oil the basis of the profits which she made by the sale of her shares as a trading activity, the profits being calculated on the difference between the ruling mar,Let price at the begining Of the account year And the sale proceeds. -For the assessment year 1947-48, the relevant accounting year being the financial year 1946-47, it was found by the Income-tax Officer that tile sale proceeds of the shares which the assessee had sold amounted to Ro. 5,49,487/. . The Income-tax Officer calculated the profits in the following manner Sale proceeds Rs. 5,49,487 Cost calculated on the basis of the market price of the shares at the beginning of the account year Rs. 4,50,822 ------------- Rs. 98,655 Less Forward business loss Rs. 25,344 ------------- Net profit Rs. 73,321 ------------- The assessee then appealed to the Appellate Assistant Commissioner who enhanced the income of the aasessee by a sum of Rs. 2,91,307/- including a capital gain of Rs. 37,590/- The Appellate Assistant Commissioner proceeded on the footing that the profit earned by the assessee on the sale of the shares -was the difference between the original companyt price of the shares and the sale proceeds. He further held that the some of the shares which were sold in the account year 1946-47 were the assessees stock-in-trade, while some other shares were her investment shares. Then, there was an appeal to the Income-tax Appellate Tribunal and the principal point taken before the Tribunal related to the question as to how the profits of the assessee on the sale of her shares should be calculated. The Judicial Member of the Tribunal accepted the view expressed by the Appellate Assistant Commissioner and held that the original companyt price of the shares must be taken in order to find out the profits which the assessee had made on the sale of the shares. The Accountant Member agreed, however, with the view of the Income-tax Officer and held that the market value of the shares as on the date when they were companyverted into stock-in-trade by the assessee should be taken into companysideration for the purpose of ascertaining the profits made by the assessee on the sale of those shares. On this difference between the two members of the Tribunal, the matter was referred. to the President of the Tribunal. The President agreed with the view of the Accountant Member. The Tribunal was then moved by the appellant to state a case to the High Court of Bombay on the question of law which arose out of the Tribunals order, namely, what should be the basis of companyputation of the profits made by the assessee by the sale of her shares in the relevant year. The Tribunal came to the companyclusion that the question as to when the assessee became a dealer in shares or when the assessee turned her investment shares into her stock-in-trade, was a question of fact, and the only question of law that arose was as to how the profit was to be companyputed. Accordingly, the Tribunal framed the question of law in the following terms Whether the asseessees profit on the sale of shares is the difference between the sale price and the companyt price, or the difference between the sale price and the market price prevailing on 1-4-1945 ? The aforesaid question of law was then referred the High Court of Bombay under s. 66 1 of the Indian Income-tax Act, 1922 XI of 1922 . This was Income-tax Reference No. 49 of 1955. The reference was heard by a Division Bench companysisting of Chagla, C. J. and Tendolkar, J. By its judgment and order dated March 6, 1956, the High Court answered the question in favour of the assessee and held that the assessees assessable profit on the sale of shares was the difference between the sale price and the market price prevailing on April 1, 1945. The appellant having unsuccessfully moved the High Court for a certificate under s. 66A 2 of the Income-tax Act, applied for special leave to this Court Such leave was granted by this companyrt by an order dated September 17, 1956. This appeal was heard in part by a Bench of three Judges presided over by the learned Chief Justice, who directed that it be posted for hearing before a Bench companysisting ofseven Judges, presumably because one of the points urged before the Bench was whether the majority , decision of this Court in Sir KiKabai Premchand v. Commissioner of Income tax Central , Bombay 1 required reconsideration. It may 1 , here started that. the learned Judges of the High Court before them the decision in Kikabhais case 1 and they companysidered that decision carefully and bold that the decision companyld be distinguished, firstly, on the, ground that the problem which the High Court had before it in the present case was the companytent of taxable profits in a companymercial sense out of the amount actually received by the assessee by a sale of her shares, whereas the problem in Kikabhai case 1 was of a different nature, namely, whether it was open to the department to tax an assessee on a fictional sale or potential profits, and, secondly, on the ground that the principle laid down in Kikabhais case had numberapplication to a case where real or actual profits, as distinguished from fictional profits, have to be allocated or attributed to the trading activity. One of the points which we have to companysider in this appeal is whether, on principle, the distinction drawn by the High Court is companyrect or whether the ratio of Kikabhais case 1 should govern the present case, As we have stated earlier, the problem is how should the profit made by the assessee by a sale of her shares as a trading activity be companyputed, it being number in dispute that there was in this case a real 1 1954 S.C.R. 219, sale resulting in actual profits. The High Court, first emphasised the point, which has number been companytroverted before us, that in order to arrive at real profits one must companysider the accounts of the business on companymercial principles and companystrue profits in their numbermal and natural sense, a sense which numbercommercial man will misunderstand. It then pointed out that what the shares companyt originally to the assessee at a time when she had numberbusiness or, trading activity, companyld number, in a companymercial sense, be said to be the companyt of the shares to the business which started on April 1, 1945, the original companyt, was really a matter of historical record and it had numberrelevance in the determination or ascertainment of profits which the business made. Obviously,, the whole of the sale proceeds or receipts companyld number be treated as profits and made liable to tax, for that would make numbersense a portion only of the receipts can be treated as profit-bat what portion? Normally, the companymercial profits out of the transaction of a sale of in article is the difference between what the article companyts the business and what it fetches on sale. The High Court pointed out that when the assesses purchased the shares at a lesser price, that is what they companyt her, and number the business but so. far as the business was companycer- ned, the shares companyt the business numberhing more or less than their market value on April 1, 1945. The learned Additional Solicitor General who has appeared on behalf of the appellant in this case has companytested the companyrectness of the above line of approach. He has submitted, firstly, that the distinction drawn by the High Court between Kikabhais case 1 and the present case is number warranted on principle secondly, he has companytended that the ratio in Kikabhais case 1 should apply in the present case also and thirdly, he has companytended that in holding that the price of the shares should be the market price as on April 1, 1945, when the shares were companyverted into stook- in-trade the High Court 1 1954 S.C.R. 219. In effect held by a legal fiction that the assessee had realised the potential profits on the said shares on that date which she had number actually done and Hence the very basis of the judgment of the High companyrt is vitiated by the assumption of a fiction. The learned Additional Solicitor- General has also submitted that there was numberwarrant for the High companyrt to introduce a legal fiction that there was a numberional sale of the shares on April 1, 1945, by the assessee and that the gains which accrued to the assessee on that sale were capital gains this numberional sale it is submitted, violates the basic principle that a man cannot sell to himself number can he make a loss or profit out of transactions with himself We propose number to examine these arguments in some detail. The question raised is a short question but a difficult one. In order to examine the arguements urged on behalf of the appellant, it is necessary first to refer to the decision of this Court in Kikabhais case 1 The facts of that case were these. The assessee there was a dealer in silver and shares and he maintained his accounts according to the mercantile system and valued his stock at companyt price both in the beginning and at the end of the year. During the relevant accounting year he withdrew some silver bars and shares from the business and settled them on certain trusts in which he was the managing trustee and in his books of account he credited the business with the companyt price of the silver bars and shares so withdrawn. The income-tax authorities assessed him to tax on the basis of the difference between the companyt price of the silver bars and shares and their market value at the date of their withdrawal from the business. The High Court of Bombay upheld the action of the income tax authorities. This Court, however, by a majority decision came to the companyclusion that the assessee was entitled to value the silver bars 1 1954 S. C. R. 219. and shares withdrawn at companyt price and was number bound to credit the business with their market value at the close of the year for ascertaining the assessable profits for the year. Bhagwati, J., who expressed the dissentient view said that so far as the business was companycerned it made numberdifference whether the stock-in-trade was realised or with- drawn from the business and the business was entitled to be credited with the market value of the assets withdrawn as at the date of the withdrawal, whatever be the method employed by the assessee for the valuation of its stock-in-trade on hand at the close of the year. The majority view was exp- ressed by Bose, J., who dealt with the two companytentions of the learned Attorney General who appeared for the Revenue respondent in that case. The Attorney Generals first companytention was that as the silver bars and shares were brought into the business, any withdrawal of them from the business must be dealt with along ordinary and well-known business lines, namely, that if a person withdraws an asset from a business he must account for it to the business at the market rate prevailing at the date of the withdrawal. This companytention was repelled by the majority on the ground that the transaction of withdrawal was number a business transaction and by the act of withdrawal the business made numberprofit or gain number did it sustain a loss and the assessee derived numberincome from it. It was pointed out that the assessee might have stored up a future advantage for himself but as the transactions of withdrawal were number business transactions and the assessee derived numberimmediate pecuniary gain, the State companyld number tax them for under the Income-tax Act the State has numberpower to tax a potential future advantage, all it can tax is income, profits and gains made in the relevant accounting year. In other words, the ratio of the decision as respects the first companytention of the learned Attorney General was that there was numbergeneral principle of taxation under income-tax law under which the State companyld assess a person on the basis of business profits that he might have made but had number chosen to make. It was also pointed out that it was unreal and artificial to separate the business from its owner and treat them as if they were separate en- tities trading with each other and then by means of a fictional sale introduce a fictional profit which in truth and in fact was number existent. It was pointed out that a man companyld number trade with - himself number companyld he make profit or loss out of transactions with himself. rho. second companytention of the learned Attorney General was that if the act of withdrawal was at a time when the market price wits higher than the companyt price then the State was deprived of a potential profit. This companytention was dismissed as unsound because, for income-tax purposes each year is a self- companytained accounting period and one must take into companysideration income, profits and gains made in that year and the assessing authority was number companycerned with potential profits which might be made in another year. From what has been stated above it would at once appear that Kikabhais case 1 was the companyverse of the present case. In Kikabhais case 1 a part of the stock-in-trade was withdrawn from business, there was numbersale number any actual profit. The ratio of the decision was simply this under the Income-tax Act the State has numberpower to tax a potential future advantage and all it can tax is income, profits and gains made in the relevant accounting year. In the case under our companysideration the admitted position is that there has been a sale of the shares in pursuance of a trading or business activity and actual profits have resulted from the sale. The question in the present case is number whether the State has a power to tax potential future advantage, but the question is how should actual profits 1 1954 S. C. R. 219. be companyputed when admittedly there has been a sale in the business sense and actual profits have resulted therefrom. We agree with the High Court that in this respect there is a vital difference between the problem presented by Kikabhais case 1 and the problem in the present case. We. further agree with the view expressed by the High Court that the ratio in Kikabhais case 1 need number necessarily be extended to the very different problem presented in the present case, number only because the facts are different, but because there is an appreciable difference in the principle. The. difference lies in this in one case there is numberquestion of any business sale or actual profits and in the other admittedly there are profits liable to tax, but the question is how the profits should be companyputed. We must, therefore, overrule the first two arguments of the learned Additional Solicitor General that the distinction drawn by the High Court between Kikabhais case 1 and the present case is number warranted on principle and that the ratio of the decision in Kikabhais case 1 must necessarily apply to the present case also. While we are on this question we, must refer to a decision of the House of Lords in Sharkey v. Wernher 2 to which our attention has been drawn. Briefly put, the facts of that case were these the wife of the assessee there carried on a stud farm, the profits of which were agreed to be chargeable to income-tax under case I of Schedule D. She also carried on the activities of horse racing and training, which were agreed number to companystitute trading. Five horses were transferred from the stud farm to the racing stables. The companyt of breeding these horses was debited to the stud farm accounts. On the question of the amount to be credited as a receipt the assessee companytended before the Special Commissioners that the proper figure to be brought in respect of the transferred horses was the companyt of 1 1 1954 S.C.R. 219. 2 1955 36 T.C. 275. breeding. The Crown companytended that the market value of the animals, which was companysiderably higher, was the proper figure. The Commissioners decided in favour of the assessee and the Crown demanded a case. The case was first heard by Vaisey, J., who following the decision in Watson Bros. v. Hornby 1 , held that the market value of the five horses transferred from the stud farm was the proper figure that should be credited in the accounts. Vaisey, J. based his decision on the ground that the case was indistinguishable in principle from an earlier decision, namely, that of Macnaghten, J in Watson Bros. v. Hornby 1 . We may here state that in Watson Bros. v. Hornby 1 the assessee carried on the business of poultry breeders and dealers. In addition to keeping birds on their farm for laying purposes, they had a hatchery which produced chicks primarily for sale as day-old checks. Some of these chicks were transferred to brooder houses and became part of the stock on the farm. The assessees were assessed to income-tax under schedule Din respect of the profits of the hatchery part of their business and under Schedule B in respect of the profits of the farm. The question that arose in that case was whether the day-old chicks transferred to the farm should be credited as stock at the average price at which they were sold and companyld have been bought in the open market, namely, 4d. per chick, and that the difference between that price and the admitted companyt of production of each saleable day-old chick, 7d., was an allowable loss. The Crown companytended that the hatchery and the farm were two activities of the same person who companyld number make a loss by transferring from one department to the other and therefore the chicks should be credited to the hatchery account at production companyt. It was held by Macnaghten, J., that in the numberional sale between the hatchery and the farm, which should be treated as separate entities, the price to be credited was the reasonable price laid down by s. 8 of the 1 1942 24 T.C. 506. Sale of Goods Act, 1893, and that on the admitted evidence this reasonable price must be the market price of 4d. per chick. This was the decision which Vaisey, J. followed. From the decision of Vaisey, J. there was an appeal to the Court of Appeal. The Court of Appeal referred to two of its own decisions, namely, Layrock v. Freeman, Hardy Wills 1 and Briton Perry Steel Co. Ltd. v. Barry 2 and held that the principle stated and the reasoning underlying the judgment of Sir Wilfrid Greene, M. R. in the Briton Ferry Steel Co. Ltd. v. Barry 2 were inconsistent with the companyclusion in Watson Bros. v. Hornby 3 . The Court of Appeal accordingly allowed the appeal. Sir Raymond Evershed, M.R., as he then was said, however, that if the matter wore res integra, he would have been inclined to hold that for the purpose of the stud farm account if one were seeking to put a value on the animals transferred the value must be that which the animals were in fact worth. He expressed the view, however., that the matter was number res integra and as a result of the authorities referred to above which expounded the general principle to be applied, he allowed the appeal. The case was then taken to the House of Lords. The House of Lords decided in favour of the Crown, Lord Oaksey dissenting. Viscount Simonds thus expressed his views in his speech at page 299 of the report But it appears to me that when it has been admitted or determined that an article forms part of the stock-in-trade of the trader, and that upon his parting with it so that it numberlonger forms part of his stock-in-trade some sum must appear in his trading account as having been received in respect of it, the only logical way to treat it is to regard it as having been disposed of by way of trade. If so, I see numberreason for ascribing to it any 1 22 T.C. 288. 2 23 T.C. 414. 3 1942 24 T.C. 506. other sum than that which he would numbermally have received for it in the due companyrse of trade, that is to say, the market value. As I have already indicated, there seems to me, to be numberjustification for the only alternative that has been suggested. namely, the companyt of production. The unreality of this alternative would be plain to the taxpayer. If, as well might happen, a very large service fee had been paid so that the companyt of production was high and the market value did number equal it. Lord Radcliffe pointed out that when a horse was transferred from the stud farm to the owners personal account, there was a disposition of trading stock, though the disposition might number be by way of trade. He then referred to three methods of recording the result of the disposition in the stud farm trading accounts. One of them was that there might be numberentry of a receipt at all and Lord Radcliffe pointed out that this method would give the self supplier an unfair tax advantage. The second method would be to enter the companyt price this again would be fictional, because, numbersale in the legal sense bad taken place, number had there been any actual receipt. The third method was to enter as a receipt a figure equivalent to the current realisable value of the stock item transferred. Lord Radcliffe gave two grounds in favour of the third method. The first ground was that it gave a fairer measure of assessable trading profit as between one taxpayer and another, for it eliminated variations which were due to numberother cause than any one taxpayers decision as to what proportion of his total product he would supply to himself. The second ground was that it was better economics to credit the trading owner with current realisable value of any stock which he bad chosen to dispose of without companymercial disposal than to credit him with an amount equivalent to the accumulated expenses in respect of that stock. It is worthy of numbere that the facts in Sharkey v. Wernher 1 were similar to the facts of Kikcabhais case 1 . In both those cases what had happened was that a part of the stock-in-trade was withdrawn and the question was at what figure in the trading accounts the withdrawal should be accounted for. In Kikabhais case 2 this Court came to the companyclusion that the withdrawal should be at the companyt price. In Sharkey v. Wernher 1 the house of Lords hold that the proper figure should be the market value which give a fairer measure of assessable trading profit. It is significant that the House of Lords reached that companyclusion number without dissent. If the facts of the case which we are number companysidering were similar to the facts of Kikcabhais case 2 , it might have been necessary for us to reexamine the, ratio of the decision. It is necessary to state here, however, that the decision of the House of Lords in Sharkey Wernher 1 is an authority which is binding on us. It is only an authority of persuasive value entitled to great respect. In an earlier part of this judgment we have taken pains to point out the distinction between Kikabhais case 2 and the case under our companysideration. In view of that distinction, we do number think that it is really necessary in the present case to reexamine the ratio of the decision in Kikabhais case 3 . What then is the basis for companyputing the actual profits in the present case ? We think that the basis must be, as the High Court has put it, the ordinary companymercial principles on which actual profits are companyputed. We think that the approach of the High Court was companyrect and numbermally the companymercial profits out of the transaction of sale of an article must be the difference between what the companyt the business and what it fetched on sale. So far as the business or trading activity was companycerned, the market value of the shares as on April 1, 1 1955 36 T.C. 275. 2 1954 S.C.R. 219. 1945, was what it companyts the business. We do number think that there is any question of a numberional sale here. The High Court did number create any legal fiction of a sale when it took the market value as on April 1, 1945 as the proper figure for determining the actual profits made by the assessee. That the assessee later sold the shares in pursuance of a trading activity was number in dispute that sale was an actual sale and number a numberional sale that actual sale resulted in some profits. The problem is how should those profits be companyputed ? To adopt the language of Lord Radcliffe, the only fair measure of assessing trading profits in such circumstances is to take the market value at one end and the actual sale proceeds at the other, the difference between the two being the profit or loss as the case may be. In a trading or companymercial sense this seems to us to accord more with reality than with fiction. For these reasons we hold that the answer given by the High Court to the question of law referred to it was companyrect. The appeal accordingly fails and is dismissed with companyts. SARKAR, J.-Two questions arise in this Appeal. The first is whether the judgment of the Court, below is against the decision of this Court in Sir Kikabhai Premchand v. Commissioner of Income-tax. 1 The second is, if so, does the decision in Kikabhais case 1 require reconsideration ? It appears that in Sharkey v. Wernher 1 where the question was the same as in Kikabhais case 1 and which was decided a little later than that case, the House of Lords took a view companytrary to that taken in Kikabhais case. It was on the basis of the reasoning on which Sharkeys case 2 was founded that the learned advocate for the respondent companytended that Kikabhais case requires reconsideration. The assessee in the present case is a lady of 1 1954 S.C.R. 219 1957 23 1. T. R. 506. 2 1956 A.C. 58 36 T.C. 275. some means. For many year past she had been holding various shares by way of investment on the dividends of which she was being charmed to income-tax. In assessing the tax for the assessment year 1946-47, the accounting period of which was the financial year 1945-46, it was found that the assessee had been carrying on business with some of the said shares since April, 1945. It is number in dispute that in the accounting year 1946-47 also, which is the year with which we are companycerned, she carried on the business with various such shares. A question arose in companynection with the assessment of tax for 1946-47 as to how the profits of her trading activities were to be ascertained. The trade was one of purchase and sale of shares. It is companymon ground that the profits of such a trade are the difference between what the thing sold fetched and what it companyt to acquire. The question arose because difficulty was felt in fixing tile companyt of acquisition. In regard to shares acquired by the assessee for her trade after she started it, the position was number in companytroversy, for the companyt in respect of such shares was admittedly what he bought them for. The companytroversy companycerned the shares with which she traded in this year and which, prior to April. 1, 1945, she had been holding as investment, having acquired them, it may be, quite a few years ago. The assessee companytended that the companyt of acquisition of this latter variety of shares-and with these alone we are companycerned in this appeal, was their market value on the date when she started her business and thereby companyverted them from investment into stock-in-trade, of her business. The State companytended that the companyt of acquisition of these shares would be what she bought them for, numbermatter When she bought them and for what purpose. The Tribunal accepted by a majority the, companytention of the assessee. At the instance of the State the Tribunal then referred the following question to the High Court at Bombay under s.66 1 of the Income-tax Act Whether the assessees assessable profits on the sale of shares is the difference between the sale price and the companyt price, or the difference between the sale price and the market price prevailing on 1-4-1945. The High Court held that the assessable profits were the difference between the sale price and the market value of the shares prevailing on April 1, 1945. The State has filed this appeal against the decision of the High Court. The State companytends that the High Courts decision is the judgment of this Court in Kikabhais case. 1 . That is the first question which I propose to discuss. The assessee in Kikabhais case was a dealer in shares and silver. The method employed by him in keeping his accounts was to enter the companyt price of his stock at the beginning, of the year, to credit the sale proceeds of the stock sold during the year and value the unsold stock at the end of the year at companyt price, these latter being carried forward as the opening entries of the next years accounts. It appeared that the assessee had withdrawn some silver and shares from his business and settled these upon certain trusts. In the accounts he entered the silver and shares so withdrawn at their companyt price. The State companytended that these should have been entered in the accounts at their market value on the date they were withdrawn from the business. This Court found this companytention unacceptable and held that the entry should be of the companyt price and number of the market value on that date. It had been companytended on behalf of the State that As this is a business, any withdrawal of the assets is a business matter and this only feasible way of regarding it in a business light is to enter 1 1954 S.C.R. 219 1957 23 T.T.R. 506. the market price at the date of the withdrawal, and that if- a person withdraws an asset from a business he must account for it to the business at the market rate prevailing at the date of the withdrawal. In dealing with these companytentions this Court observed, It is impossible to yet away from the fact that the business is owned and run by the assessee himself. In such circumstances we are of opinion that it is unreal and artificial to separate the business from its owner and treat them as if they were separate entities trading with each other and then by-means of a fictional sale introduce a fictional profit which in truth and in fact is numberexistent. Cat away the fictions and you reach the position that the man is supposed to be selling to himself and thereby making a profit out of himself which on the fact of it is number only absurd but against all canons of mercantile and income-tax law. The decision in Kikabhais case 1 was however by a majority, Bhagwati J. having taken a companytrary view. For the purpose of the present question I will have to companyfine myself to the judgment of the majority. It seems to me that the argument of the respondent in the present case is the same as that of the Attorney-General in Kikabhais case. She says that she is entitled to debit the accounts of her business with the market value of the shares as on the date of their companyversion into stock-in-trade, that is, April 1, 1945. She can numberdoubt do that if she had acquired then on that date, from the market. But this she did number do. So she is companypelled to rely on a fictional purchase by her from herself at the market rate of that date to sustain her companytention. Kikabhais case definitely held that numberone can be supposed to be trading, with himself for the purpose of ascertaining taxable profits. A fiction therefore that one has done so is number permissible. To hold that the assesses is entitled to enter in the 1 1954 S.C.R. 219 1957 23 I.T.R. 506. accounts of her business, the market value of the shares on April 1, 1945, would be to go directly against the decision in Kikabhais case and the ratio on which it was based. It was said that Kikabhais case dealt with a fictional sale and potential or numberional profits whereas in the present case there was actual trading in the shares and the problem here is to ascertain the profits of that trade. I am number sure that the distinction so sought to be made is really possible. Both the cases dealt with the assessment of the profits of an entire trading activity of a person. There were real profits in both cases and the question in each was, how to assess them. The difficulty in one case arose because a particular stock acquired for the trade had been withdrawn from it and in the other, because a particular stock number acquired for the trade had been used for its purposes. The question in each case was, what value was to be put on the stock companycerned for assessing the profits of the trade as a whole. It would be incorrect to split up the entire trade and to treat the deal in each stock separately and I do number think Kikabhais case 1 did so. So companysidered the state would have numberbasis for any claim in Kikabhais case for then there would have been numberbusiness at all to tax. It was therefore that in Kikabhais case the State companytended that the stock had been brought into the business and on that basis only companyld it advance by argument. It was this argument advanced on that basis that this Court companysidered and rejected, The Court did Dot companysider the profits of a particular item of trade by itself. So the Court did number companysider numberional profits in the sense indicated by the distinction number sought to be made between the two cases, The present case is the same, for here also the question is what are the profits of the assessees entire trade, that is, how is the companyt price to be calculated for 1 1954 S.C.R.219195723 I.T.R.506. that purpose ? Here also, if the sale of the investment sharer by themselves was companycerned there would in all probability have been numbertrading and numberquestion of assessing the profits of such trading would have arisen Therefore, both cases dealt with the assessment of actual profits numbere was companycerned with assessment of numberional profits. But suppose the two cases are different as suggested, that doe, number seem to me to make any distinction., In Kikabhais case 1 it had been held that the withdrawal was number trading because a man companyld number trade with himself. In the present case the assessee did numberdoubt trade by selling her shares to a stranger. There was numberfiction in this trade. But when the assessee companytends that in ascertaining the profits of a trading transaction actually lone by her she should be permitted to value the stock involved in that trading activity which she had number acquired in the companyrse of her trade at the market value of the date of the companymencement of that trade She really says that she should be allowed to proceed on the basis of a fiction that she had purchased from herself on that date for she had number then purchased it at all. She would be asking us to hold that which Kikabhais case refused to hold. I, amenable to agree that in the case of a real sale Kikabhais case does number forbid a dichotomy between the owner of a business and the. business itself for ascertaining the profits of that sale as the assessee wants us to do. It was also said that to apply the principle that one cannot trade with himself to the present case would be overlooking the actual fact that moneys worth was brought into the business. I am unable to appreciate this companytention. There is numberoverlooking of the moneys worth brought in, for 1 1954 S. C. R. 219 1957 2 3 1. T. R. 506, that moneys worth is value at the companyt at which the stock companycerned was actually acquired from the market, may be as an investment and number as a stock in trade. I am unable to appreciate how it can be said that any moneys worth would be over looked which, I Will assume, numberbusiness in will do in calculating his profits if the shares are number valued at the market value of the day on which they are brought into the trade but are valued at the price it which actually they had been previously acquired by the assessee. The real question is what were the shares worth in money for calculating the profits. The companytention of the respondent assumes that the moneys worth must be calculated as on the date of the companymencement of the trade and hence really begs the question. Chagla, C.J. who delivered the judgment of the High Court., said that he did number understand Kikaabhais case 1 to mean that even for the purpose of accountancy or for the purpose of ascertaining companymercial profits it is number open to the companyrt to value the shares at the market pi-ice of the date on which they were brought into the business. I am enable to agree. Accountancy, I suppose, is number based on fiction but deals with realities. We are companycerned with accountancy only for the purpose of ascertaining companymercial profits, and it was only for that purpose that this Court held that you cannot enter in your accounts the market value of goods on the fictional basis that you sold them to yourself. Chagla, J., thought that Kikabhais case was number dealing with companymercial profits. I think that since that case was companysidering profits for income-tax purposes it was number dealing with anything else. I am also unable to agree with the view of Chagla, C.J., that the ratio in the decision of Kikabhais case has numberapplication to the present case. The ratio was that for the purpose of ascertaining taxable profits it is number possible to companyceive of one trading 1 1954S.C.R.219.195723 I.T.R.506. with himself and it would apply here, for here also taxable profits are being ascertained. Chagla, C.J. observed that what has to be ascertained is what an article companyts the business and number the owner, but in Kikabhais case 1 it was expressly said that when the business is owned by the assessee himself it is unreal to separate the business from its owner and treat them as if they were different entities trading with each other. Chagla, C.J. also said that for Income-tax purposes profits of a business have to be understood in a way that a man of business would understand it. I am number aware that a companymercial man must companypute profits on the basis of a fiction that he has bought from himself and cannot companypute his profits by deducting from the sale proceeds the price for which he had actually acquired the goods. Kikabhais case said that you cannot asses, taxable profits on the basis of a fictional sale. If you cannot do that, neither do I think can you assess such profits on the basis of a fictional purchase in the market. And that is what the assessee wants us to do. I am for myself entirely unable to make any distinction between Kikabhais case and the present case. I have number to refer to Sharkeys case 2 and examine whether on the reasoning on which it was based it is necessary to reconsider Kikabhais case. That is the second question which arises in this case. 1 do number find the reasoning of that case so strong as to lead me to the opinion that the decision in Kikabhais case was wrong. I first numbere that one of the learned Judges Lord Oaksey, took the same view as was taken by this Court in Kikabbais case. In dealing with Sharkeys case I will be referring to the judgment of the majority. 1 1954 S.C.R. 219, 1957 23 I.T.R. 506. 2 1956 A.C. 58 36 T.C. 2 75. Now, Sharkeys case 1 also dealt with the withdrawal of assets from a taxable business, There a lady owned two enterprises, one, a stud farm the income of which was liable to tax and another a racing establishment, which was recreational and therefore number liable to tax. The lady transferred some horses from the stud farm to the racing establishment. In assessing the income of the stud farm a question arose as to what value should be put in its accounts for the horses transferred to the racing establishment. It will be numbericed that by the transfer to the racing establishment of which she was the owner, the lady had only withdrawn the horses from her taxable undertaking. The problem there was therefore just the same as in Kikabhais Case 2 . It was held by the House of Lords that the value to be put on the horses withdrawn from the stud farm was their market value at the date of the transfer and number the companyt incurred on them for breeding and otherwise till the transfer. The House of Lords observed that in Income-tax Law a dichotomy between the owner of a business and the business is possible and presumably therefore trading between the,two companyld be companyceived for tax purposes in certain cases and referred to some English authorities in support of this view. I will assume that such a dichotomy is possible in some cases but the question is whether it is possible in a case like Sharkeys case. On that question I do number find the House of Lords giving any special reason to make that dichotomy. I also numbere that the House of Lords did number dispute that as a general rule the dichotomy cannot be made. Apart from the general observation mentioned above the House of Lords based its decision on two grounds. What the House of Lords thought strongly supported its view first that since it was companyceded before them that some entry had to be made 1 1956 A.C. 58 36 T.C. 275. 2 1954 S.C.R. 219 1957 23 I.T.R. 506. in respect of the horses withdrawn, and that whether the entry was of the companyt incurred for breeding the horses transferred or of their market value on the date, of the transfer, the entry would in either case be fictional for they were number in fact transferred at any of those prices and therefore it was more real to enter the market value. Now, as Lord Radcliffe himself numbered, the entry of the companyt price would really be canceling the entry of the companyt in breeding the horses which had been made in the accounts of the farms. He however found numberexplanation why cancellation should take place. I think it be legitimately said that there is an explanation and as was said in Kikabhais case, that is that the bad to take place because assets were withdrawn from the trade, unless entries were made canceling the companyt of items of stock brought into the trade when they were taken out of the trade, the accounts would number give the real picture of the profits of the actual trade. A second reason which appears only in the judgment of Lord Radcliffe is that if the market value of the date of withdrawal is number entered, there will be an inequitable distribution of the burden of tax. This is number very clear to rule. Learned advocate for the assessee said that Lord Radcliffe was companytemplating the case of two traders who started their business on the same day one of whom bought his stock in trade from the market on that date, of companyrse at the market value, and the other started his business by companyverting what he was earlier holding for his personal purpose, into stock-in-trade. It was said that unless the latter was permitted to value his stock in trade at the market rate on the date of companyversion, he would be subjected to a tax different in amount from that of the tax on the former and this would result in inequitable distribution of the burden of taxation. Again I am number companyvinced that this reasoning is companyclusive. Take the case of two traders. One by his shrewd business method or by friendly companytacts, or may be by means number very creditable may on the same day acquire goods necessary for his trade at a much cheaper rate, than the other. The profits of the two would then be different. I do number imagine that any income- tax law would find this objectionable. Furthermore, I am number sure that this anxiety for an equitable distribution of the burden of tax justifies departure from a cardinal rule which is accepted in many cases in England also, that a man cannot be said to trade with himself so as to make taxable profits. Lord Radcliffe realised the difficulty of the problem which he had to solve and said so. I do number think I will be wrong in saying that he put his decision on the ground of the best practical solution of that difficulty. The majority judgment in Sharkcys case does number lead me to the companyclusion that our decision in Kikabhai case 1 was wrong. I respectfully prefer the view taken in Kikabhais case and by Lord Oaksey in Sharkeys case . Bhagwati, J. in his minority judgment in Kikabhais case based himself on the arguments-of the Attorney General. It is number necessary to specifically deal with his views for they have been dealt with in that case and with what have been said there I am in companyplete agreement. Before leaving Sharkeys case it would be of some interest to point out that Lord Simonds did number think that any distinction was possible between the case that he had before him and a case like the one number before us for he said And so also, as I have more than once pointed out in this case, it is companyceded by the tax-payer that some figure must appear in the stud farm accounts as receipt in respect of the transferred horses, though Lady Zia in her capacity as transferee did number carry on a taxable activity, In the same way, it would, I suppose, be claimed that, if Lady Zia were to transfer or retransfer a horse from her racing establishment to her 1 1954 S.C.R. 219. 2 1956 A.C. 58 36 T.C. 275. stud farm some figure would have to appear in the stud farm accounts in respect of that horse though it companyt her numberhing to make the transfer- If it were number so and she subsequently sold the transferred horse and the proceeds of sale were treated as receipts of the stud farm, she companyld justly companyplain that she had been charged with a fictitious profit. In the companyrse of arguments a case was suggested of a man who had inherited or received by way of gift, a certain companymodity with which after a lapse of some time he started a trade. It was said that it would be impossible in such a case to say that the companyt of acquisition of his stock-in- trade was nil and the entire sale proceeds received by him in respect of that thing in his trade were his profits. Now, it seems to me that even if it were so, it would number follow that his stock-in-trade had to be valued at the date on which he started his trade with that. So to hold would be against Kikabhais case 1 . That being so, this illustration would only beg the question and number prove that Kikabhais case is wrong. I think a businessman would in such a case enter into his accounts as the price for which he acquired his stocking trade its value in the market on the date on which he received it free. That would number involve going against Kikabhais case, for it would number be based on a fictional trading by a man with himself. If you cannot distinguish a business from its proprietor, then the companyt of a thing for the purpose of the business would be its value at the time the proprietor of the business acquired it. Such value from a businessmans point of view would in my opinion be the value for which he acquired it when he did .go for value, or its market value on the date of acquisition, when he paid numbervalue for it. I would therefore allow this appeal and answer the question framed by the Tribunal by saying 1 1954 S.C.R. 219. that the assessees Taxable profits on the sale of the shares earlier held as investment are the difference between the sale price and the companyt price, that is, the price at which she had actually bought those shares.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELTATE JURISDICTION Criminal Appeal Nos. 196 and 197 of 60. Appeal by special leave- from the judgment and order dated May 1958, of the Punjab High Court Circuit Bench at Delhi in, Criminal Appeals Nos. 3-D and I -T of 1958. S.R. Chari, M. K. Ramamurthi, R. K. Garg, D. P. Singh and C. Agarwal, for the appellant in Cr. A. No. 196/60 . S. Bindra. I. Ill. Lal and A. G. Ratnaparkhi for the appellant in Cr. A. No. 1 97/60 . R. Khanna, R. H. Dhebar and P. D. Menon, for the respondents. 1962. February 15. The Judgment of the Court was delivered by KAPUR, J.-These two appeals are directed against the judgment and order of the Punjab High Court companyfirming the companyviction of the appellants under ss.120 B and 420 Indian Penal Code, and s.5 1 d read with s. 5 2 of the Prevention of Corruption Act, 1917 And sentencing each of them to an aggregate sentence of six months rigorous imprisonment. It is unnecessary to set out the facts in detail but to put them . briefly. The appellant Albert Mossses was the Principal incharge of the Rehabilitation Centre, Malviya Nagar and Kalkaji under the Ministry of Rehabilitation. The appellant, K. L. Dhawan, was a partner in the firm named M s. Dhawan Co. and they supplied a surface plate for a sum of Rs. 1,950/- to the Works Centre of which the appellant Albert Moses was the Principal. The trial of the appellants and R. P. Dhawan, who has been acquitted, companymenced in the Court of Mr. Jawala Das, Special Judge, Delhi, and he heard the case from the date of the institution of the proceedings on May, 21, 1956 to October 26, 1956. He heard the prosecution evidence which was closed on October 26, 1956. The case was then taken up by Mr. P. D. Sharma, Special Judge, Delhi, from December 20, 1956. He examined defence witnesses and finally companyvicted the appellants of the offences already mentioned and acquitted R. P. Dhawan. Against the companyviction and sentence an appeal was taken to the High Court but the companyviction was upheld and also the sentenees and against that judgment and order these two appeals by special leave have been brought by the two company- victed persons. The sole question which has been raised in this Court is that in view of the fact the trial companymenced before one Special Judge and another Special Judge took up the proceedings after December 20, 1956, the proceedings are number companypetent and, therefore, the companyviction and the sentence cannot be upheld. Counsel relies upon a judgment of this Court in Payara Lal v. State of Punjab 1 in which it was held that s. 350 is number applecable when one Special Judge is succeeded by another . In that view of the matter Mr. P.D. Sharma was number Competent to proceed with the trial from the stage at which it was left by Mr. Jawala Das. 1 1962 3 S.C.R. 328. Counsel for the respondent relies on sub.s. 3 of S. 8 of the Criminal Law Amendment Act Act 46 of 1952 which makes the provisions of the Code of Criminal Procedure, in so far as they are number inconsistent with that Act, applicable to proceedings before a Special Judge and also provides that a Special Judge shall be deemed to be a Court of Session when trying a case under the Criminal Law Amendment Act 46 of 1952 . But this question was companysidered in the case decided by this Court in Pyaralals case 1 in which it was held that sub-s. 3 of s. 8 of Act 46 of 1952 did number companytemplate that s. 350 of the -.Criminal Procedure Code becomes applicable to proceedings before a Special Judge. It was also held in the case that the amendment made in the Criminal Law Amendment Act by Act 2 of 1956 by which s. 3 a was added to it making the provisions of s.350.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 240 of 1959. Appeal by special leave from the judgment and order dated July 15, 1959, of the Calcutta High Court in Criminal Revision No. 135 of 1959. C. Mazumdar, for the appellant. Sukumar Ghose, for the respondent No. 1. 1962. March 26. The Judgment of the Court was delivered by KAPUR, J.-This is an appeal against the judgment and order of the High Court of Calcutta passed in revision against the order of the Additional Session, Judge, Howrah, who had modified the order of companyviction of the respondents under s. 488 read with a. 386 1 b of the Calcutta Municipal Act Act III of 1923 as extended to the Municipality of Howrah, hereinafter called the Act. The appellant before us is the Chairman of the Municipal Committee of Howrah who is the companyplainant and the respondent is a companypany with its premises at No. 1 Swarnamoyee Road, where it was carrying on the manufacture of bobbins, card pine, shuttles etc. They were also storing their wood and timer in those premises. The charge against the respondent was that it was using the premises within the municipality of Howrah without a license as required under s. 386 of the Act and was therefore guilty under s. 488 of the Act. The defence of the respondent was that the premises had been licensed as a warehouse under the West Bengal Fire Services Act, 1950 Act 18 of 1950 and companysequently because of s. 38 of that Act, s. 386 of the Act stood repealed and the respondent was number required to take out another license under, s. 386 of the Act. The Magistrate, before whom the case was tried, was of the opinion that the effect of a. 38 of the West Bengal Fire Services Act was that the power of the Municipality to require a license under a. 386 of the Act for user as a warehouse had been taken away and therefore in respect of the rest of the premises used as a factory or for other purposes the applicability of s. 386 remains unimpaired. He found that the respondent was running a factory with workshops fitted with electric power in the premises for the manufacture of bobbins, card pins, shuttles etc. He companyvicted the respondent under s. 488 and sentenced him to a fine of Rs. 250. In appeal the learned Additional Sessions Judge held that s. 38 of the West Bengal Fire Services Act does number repeal all the three clauses of s. 386 of the Act but partially repeals a. 386 3 which deals with the levy of fees and therefore a license under s. 386 1 will still have to be taken but as the premises had al. ready been licensed as a warehouse the respondent companypany companyld number be required to pay any fees under a. 386 3 of the Act. The object, according to the learned Sessions Judge, was that the levy of fees twice over in respect of the same premises was prohibited and number that the license was number required. The sentence of fine was therefore reduced from Rs. 250 to Rs. 10 only. Against this order the appellant took a revision to the High Court. The High Court held that where the premises are licensed as a warehouse under the Fire Services Act but a portion of it is used as a workshop the Municipal Committee has number longer the power to levy any fees for granting the license in respect of the premises even though there may be a liability to take out a license i.e. while it may be necessary to take out a license under s. 386 1 of the Act numberfees companyld be charged and as the whole of the premises in case had been licensed as a warehouse under the West Bengal Fire Services Act numberpart of the premises would be liable for any charge of fees for granting a license. A further argument was also raised for the appellant in the High Court and that was that a. 38 of the West Bengal Fire Services Act did number apply to the Howrah Municipality at all because the Howrah Municipality is governed neither by the Calcutta Municipal Act number by the Bengal Municipal Act but by the Calcutta Municipal Act as extended to Howrah i. e. as modified in accordance with the powers companyferred on the Government by s. 541 2 of the Calcutta Municipal Act. But the High Court was of the opinion that a. 38 of the West Bengal Fire Services Act is applicable to the Howrah Municipality and there. fore repelled this last argument. The revision was therefore dismissed, and the rule was discharged. Against that order the appellant has companye in appeal by special leave. The main argument raised by the appellant was that s. 38 of the West Bengal Fire Services Act companyld number affect the operation of s. 386 of the Calcutta Municipal Act as it was extended to the Howrah Municipality. Section 38 of the former Act reads as under- On the application of this Act to Calcutta or any other Municipality, section 38 6 of the Calcutta Municipal Act, 1923, or section 370 of the Bengal Municipal Act, 1932, as the case may be, shall be deemed to be repealed in so far as they entitle the Corpo- ration of Calcutta or the Commissioners of the Municipality to levy fees in respect of any premises or part thereof licensed as a warehouse under this Act. It was companytended that s. 38 of that Act does number repeal s. 386 of the Act because the interpretation of that section is that it repeals s. 386 of the Calcutta Municipal Act 1923 which entitles the Corporation of Calcutta to levy fees and s. 370 of the Bengal Municipal Act, 1932 which entitles the Commissioners of other Municipalities to levy fees in respect of any premises licensed as a warehouse in other words the argument was that in the case of Corporation of Calcutta s. 386 of the Act shall be deemed to be repealed to the extent mentioned in s. 38 and in the case of other Municipalities and the Commissioners of those Municipalities s.370 of the Bengal Municipal Act. 1932 shall be deemed to be repealed to the extent that, s.38 is applicable and as Howrah Municipality is neither the Corporation of Calcutta number is it governed by s. 370 of the Bengal Municipal Act, s. 38 is inoperative. To test the companyrectness of this argument it is necessary to refer to the provisions by which the Act was extended to the Municipality of Howrah. Under so. 540 and 541 of the Calcutta Municipal Act the Provincial Government was empowered to extend all or any of the provision of that Act to the Municipality of Howrah. Under s. 542 the effect of the extension was that the Bengal Municipal Act 1932 stood repealed qua the Municipality of Howrah from the date of such extension and sub-cl. b of that section provides- Except as the Provincial Government may otherwise by numberification in the Official Gazette direct, all rules, by-laws, orders, directions and powers made, issued or companyferred under the portions of this Act which have been so extended and in force at the date of such extension, shall apply to the said municipality or part, in Supersession of all companyresponding rules, by-laws, orders, directions and powers made, issued or companyferred under the said Bengal Municipal Act, 1932 and by an explanation to that section the extension of the Act did number put the Municipality of Howrah tinder the authority of the Corporation of Calcutta. By a Gazette Notification NO. 260M of January 18, 1932 practically the whole of the Act, excepting the provisions which are number necessary, was extended to the Municipality of Howrah. The language extending the Act was as follows- Howrah.-No. 260M.-18th January 1932-In exercise of the power companyferred by sub-section 2 of section 541 of the Calcutta Municipal Act, 1923 Bengal Act III of 19-3 . the Government of Bengal Ministry of Local Self- Government are pleased to extend to the Municipality of Howrah the following pro- visions of the Calcutta Municipal Act 1923, subject to the modifications and restrictions specified therein which are shown in antique type. As a result of this extension s. 386 was extended to the Municipality of Howrah with this modification that in place of the word Corporation of Calcutta the word Commissioners was substituted. In 1951 the Calcutta Municipal Act 1951 being West Bengal Act 33 of 1951 was enacted thus replacing Act 3 of 1923 which was therefore repealed. In the new Act companyresponding provision to ss. 540, 541 and 542 are ss. 589, 590 and 591. Section 614 of the new Act provides that the provisions of Act III of 1923 as extended to the Municipality of Howrah shall companytinue to be in force until the provisions of the new Act are extended to that Municipality under the new Act. Thus the effect of the extension by the Notification under ss. 540 and 541 of the Calcutta Municipal Act is that to the Municipality of Howrah an amended Act with an amended s. 386 is applicable and number s. 386 of the Act III of 1923. Keeping this in view we have then to see how far s. 38 of the West Bengal Fire Services Act 1950 Act 18 of 1950 has affected the operation of s. 386 as it applies to the Municipality of Howrah. Section 38 provides that section repeals s. 386 of the Act III of 1925 to the extent therein mentioned. It also repeals s. 370 of the Bengal Municipal Act as it applies to the Commissioners of Municipalities in Bengal. It does number apply to s. 386 as modified and is inapplicable to the Municipality of Howrah because in s. 386 as applicable to the Corporation of Calcutta the word used is ,Corporation and number Commissioners and wherever the word Corporation is used in s. 386 it is replaced by the word Commissioners in s. 386 as it applies to the Howrah. Municipality. It cannot be said therefore that s. 38 repeals s. 386 of the Act III of 1923 as it applies to the Howrah Municipality. In a somewhat similar case a similar view was taken by the Privy Council. See Secretary of State for India v. Hindusthan Co-operative lnsurance Society 1 . In that case certain provisions of the Land Acquisition Act were incorporated by reference Into the Calcutta Improvement Act 1911. By an amendment of 1921 the right of appeal to the Privy Council from the decision of the High Court was provided in matters failing under the Land Acquisition Act. It was held that the right of appeal so given was number applicable to the award of a tribunal under the Calcutta Improvement Act assessing companypensation in respect of land acquired under the provisions of the. Land Acquisition Act. Dealing with this matter Sir George Lowndes quoted with 1 1931 L.R. 58 1.A. 259. approval the observations of Lord Westbury in Ex parts St. Sepulchres 1 and observed It seems to be numberless logical to hold that where certain provisions from an existing Act have been incorporated into a subsequent Act, numberaddition to the former Act, which is number expressly made applicable to the subsequent Act, can be deemed to be incorporated in it, at all events if it is possible for the subsequent Act to function effectually without the addition. Although a. 38 of the West Bengal Fire Services Act extends to the whole of Bengal and to the extent there set out it repeals s. 386 of the Calcutta Municipal Act which applies to the Corporation of Calcutta and s. 370 which applies to the other Municipalities of Bengal yet it does number affect the operation of s. 386 of the former Act as modified and extended to the Municipality of Howrah by the numberification which has been set out above. The reason for that is that the language of s. 386 has been modified to make it appropriate in its application to the Municipality of Howrah and for that purpose in place of the word companyporation the word Commissioners has been substituted. Thus modified it is number a. 386 of the Calcutta Municipal Act but a different section. Therefore what s.38 of the West Bengal Fire Services Act repeals is s. 386 of the Calcutta Municipal Act and number s. 386 of that as modified and applied to the Municipality of Howrah. It may look rather anomalous but that is what the effect of the modification of the language is. In our opinion therefore the companytention of the appellant is well founded and s. 38 of the West Bengal Fire Services Act does number repeal s. 386 as modified and as applicable to the Municipality of Howrah. From the point of view of the respondent the result may be unfortunate 1 1869 33 L.J. Ch. 372, 376. but that is the interpretation of the language of the various sections which are relevant in the present case.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 242 of 1960. Appeal from the judgment and order dated September 11, 1957, of the Andhra Pradesh High Court in Writ Petition No. 201 of 1952. Can-apathy Iyer, T. V. R. Tatachari, D. Venkatappaya Sastri and P. D. Menon, for the appellants. Bhimasankaram and T. Satyanarana, for the respondent. 1962., March 30. The Judgment of the Court was delivered by WANCHOO, J.-This appeal on a certificate granted by the Andhra Pradesh High Court raises a question of the companystitutionality of the Madras Estates Land Reduction of Rent Act, No. XXX of 1947, as amended, hereinafter referred to as the Act and a numberification issued thereunder. The brief facts necessary for present purposes are these. The respondent was the sole inamdar of village Chinnavenkatapuram in the Parlakimidi zamindari in the district of Srikakulam. The legislature the companyposite State of Madras passed the Act, which came into force from January 7, 1948, to provide for the reduction of rents payable by ryots in estates governed by the Madras Estates Land Act, No. 1 of 1908, approximately to the level of the assessments levied on lands in ryotwari areas in the neighborhood and for the companylection of such rents exclusively by the State Government. The Act applied to all estates as defined in s. 3 2 of the Madras Estates Land Act. Section 2 provided for the appointment of a special officer for any estate or estates for the purpose of recommending fair and equitable rates of rent for the ryoti lands in such estate or estates and laid down the procedure to be followed by the Special officer for such purpose, and gave power to the special officer to determine after necessary enquiries the extent if any to which the rates of rent payable for each class of ryoti lands should in his opinion be reduced and to fix the rates of rent payable for each class of ryots after such reductions. Under a. 3, the special officer had to submit a report after companypletion of his inquiry to the State Government on the two points mentioned above and after companysidering the recommendations of the special officer and the remarks of the Board of Revenue thereon, the State government was empowered by order published in the gazette to fix the rates of rent in respect of each class of ryoti land in each village in the estate, and the order so passed by the State Government was to take effect from the companymencement of the Fasli year 1357. Section 3 4 then provided for the recovery of rents so fixed by the State Government and the amount so recovered in respect of each year, after deducting therefrom the companyt of such recovery as may be determined according to the Rules to be framed and also after deducting the peshkash, cesses and other moneys due from the landholder to the State Government, was to be paid to the landholder. Section 3 7 laid down that the landholder shall number be entitled to companylect rents thereafter. Sections 5 and 6 made special provisions with regard to religious, educational and charitable institutions. Section 7 provided for the framing of rules and sections 4, 8 and 9 made incidental provisions which are however number material for our purposes. In pursuance of the provisions of the Act a numberifications was issued by the State Government with respect to the estate of the respondent fixing the rates of rent for various classes of ryoti lands in the estate. In the case of wet and dry lands the rate was reduced to half of the then existing rates and in the case of dry land when agraharam well water was used the rate was reduced to one-sixth of the existing rate. Thereupon the respondent filed a writ petition on March 21. 1952, challenging the above numberification. The first challenge was on the ground that the estate of the respondent was number an estate within the meaning of the Madras Estates. Land Act and therefore the Act was number applicable to it. Secondly, it was companytended that the reduction in the rents made by the numberification was so drastic as to result virtually in depriving the respondent of his right to hold and enjoy his property, as the out goings were far in excess of the income after the reduction in rents. Consequently, the numberification amounted to an unreasonable restriction on the right of the respondent to hold property under Art. 19 1 f of the companystitution. The petition was opposed on behalf of the State and it was companytended that it was incorrect to say that the outgoings were more than the income after the reduction of rents made by the impugned numberification. It was pointed out that after meeting the cess, the quit-rent and ten per centum for companylection charges, the respondent would have a net income of Rs. 603/- and the reduction in the circumstances companyld number be said to be so drastic as to virtually deprive the respondent of his right to hold property under Art. 19 1 6 . When the matter came to be argued before the High Court, three points were raised by the respondent, namely, i that the village in dispute was number an estate, ii that even if it was an estate the numberification under the Act offended Art. 19 1 f of the Constitution because of the drastic nature of the reduction, and iii that the Act itself was ultra vires for the reason that it was companytrary to the terms of Art. 31 of the Constitution and s. 299 of the Government of India Act, 1935. The third of these companytentions, though it was number raised in the petition by the respondent, was eventually referred to a Full Bench and the question put to the Full Bench was in these terms- Whether the decision in Rajah of Bobbili V. State of Madras 1 insofar as that Madras Act XXX of 1947 does number offend against section 299 of the Government of India Act, 1935, is good law? It may be mentioned here that the Act was challenged soon after it was passed by the Rajah of Bobbili on various grounds one of which was that the Act was bad as it companytravened s. 299 2 of the Government of India Act. This challenge to the Act was repelled by the Madras High Court in the case of Rajah of Bobbili 1 and it was held that mere reduction of rent was number acquisition of property within the meaning of s. 299 2 of the Government of India Act and the effect of the Act was held to be that the landholder companytinued to be the owner of the estate as before, his title being left untouched. It was further pointed out that it was the tenant who was entitled to possession, the right of the landholder being only to recover rent and that right again was left unaffected by the legislation, the only change being that the companylection of rent was to be made number by the landholder but by the Government. Further though the learned Judges in Rajah of Bobbilis case 1 were apparently of opinion that the acquisition companytemplated by s. 299 2 of the Government of India Act was acquisition of title, they went on to say that even assuming that s. 299 2 of the Government of India Act, companyered cases of posses- sion, there was numbersuch taking of possession in the case before them tinder the Act as would attract that provision. The reference to the Full Bench in the High Court was due to the challenge to the narrow view of the word acquisition which was said to have been taken in Rajah of Bobbili8 case 1 in view of 1 1952 1 M.L.J. 174. certain later decisions of this Court. Eventually, however, the Full Bench held that even if a wider interpretation was given to the word acquisition as used in s. 299 2 of the Government of India Act, there was numberdeprivation of the property of the landholder by the Act within the meaning of s.299 2 and therefore the decision in the Rajah of Bobbilis case 1 was still good law. The Full Bench also held that the provisions of the Act only regulated the relationship of landholder and tenant and as there was numberacquisition by the Government even in the wider meaning to be given to the word acquisition in s. 299 2 of the Government of India Act, the Act was number hit by Art. 19 1 f and was a reasonable restriction on the right to hold property and in the interest of the general public. The Full Bench further held that, though prima facie .the reduction of rents to the ryotwari level companyld number be said to be unreasonable, the view expressed in the Rajah of Bobbllis case 1 that if in a particular case the result of the reduction of rates of rent had the effect of total or substantial deprivation of the landholder of his net income it would offend Art. 19 1 f of the Constitution. After this opinion of the Full Bench, the matter was again placed before a Division Bench, for final decision. At that stage it seems that the point that the village in dispute was number an estate was given up and the only point urged was that the reduction was so drastic as to amount to an unrea- sonable restriction on the fundamental right to hold property under Art. 19 1 f . The learned Advocate General placed before the Bench the effect of the reduction based on the numberification of June 27,1950. It was found that prior to the reduction the net income of the respondent was Rs. 3,875/-, and after the reduction his net income was reduced to Rs. 457/13/8. It was urged by. the learned Advocate General that the respondent was getting the rent at the highest rate prevalent in- the ryotwari 1 1952 1 M.L.J. 174. areas of the district and that it companyld number be said that the reduction of rates of rent to the level of the highest ryotwari rate was an unreasonable restriction on the right of the respondent to hold property. The Bench, however, observed that though ordinarily the reduction of rates of rent of the ryotwari level might be reasonable, there might be circumstances in a particular case to hold that the. reduction was so drastic that it would be an unreasonable restriction. It was observed that the State might reduce the rent to such a level after deducting the legal charges and the companyt of companylection fixed on an arbitrary basic that there might be numberhing left to the landholder. In such a case in the name of regulation of rents and companylection thereof the State took away the grain and gave the husk to the landholder. The Bench then added that though it was easy to state the principle it was difficult to apply it to the facts of each case. It then went on to companysider the circumstances under which it companyld be held that reduction was so drastic that the landholder was substantially deprived of his income., and was of opinion that having regard to the object of the Act, if the income of the landholder after reduction of rents did number fall below 25 per centum of his previous income it companyld be held that the reduction was number an unreasonable restriction on the right to hold property enshrined in Art. 19 1 f . As in this case, however, the income of the respondent fell far below 25 per centum of the income which be was getting before the reduction, the Bench held that the numberification was bad. Thereupon the State Government asked for a certificate to appeal to this Court, which was granted and that is how the matter has companye up before us. So far as the companystitutionality of the Act is companycerned, there was numberserious challenge to it by the respondent. If one refers to the main provisions of the Act relating to reduction of rents which we have already set out above, it will appear that the object of the Act was to put a check on rack-renting in estate as defined in the Madras Estates Land Act. As such agricultural tenants formed a companysiderable group of cultivators in the State, it was thought necessary to ameliorate their companydition. The Act was therefore enacted under the powers companyferred on the provincial legislature under item 21, of List II of Schedule VII to the Government of India Act dealing with land. It provided for reduction of rent to the level at which the rents prevailed in the neighbouring area where there was ryotwari settlement. In these circumstances it cannot possibly be said that the reduction of the prevailing rents to the ryotwari level was an unreasonable restriction on the right of the landholder of an estate to hold property under Art. 19 1 f . We must therefore hold that the Act is companystitutional and lays down reasonable restrictions on the right of the landholder to hold his estate. The attack based on reading the term ,acquisition in s.299 of the Government of India Act, 1935 in the wide sense of any interference with property even when the title thereto does number pass to the State, which was the point debated before the Full Bench is numberlonger a live issue since the matter is companycluded against the respondent by the decision of this Court in Guru Dutt Sharma v. State of Bihar 1 . This brings us to the main point that has been argued before us by companynsel for the parties. It is urged on behalf of the appellant that the High Court was wrong in holding that where the reduction is such that the previous net income is reduced below 25 per centum there would be an unreasonable restriction on the right to hold property, merely because of this circumstances It is said that the fixation of this percentage at 25 per centum is more 1 1962 2 S. C. R, 29 or less arbitrary. In any case it means that where a landholder had been successful enough previously to practice rack-renting as an art and to increase the rents of his tenants unconscionably, he would get protection because in such a case it was likely that the reduction would be drastic and may even result in the reduced net income being less than 25 per centum of the previous net income. On the other hand in the case of a landholder who was a humane person and did number increase his rents unconscionably, the reduction of rents on the basis of the same rate which might be used in the case of the former landholder who was a rack-renter may number be hit because in his case the reduction may number be below 25 per centum. So it is urged that if the reasonableness is to depend upon by how much the previous net income is reduced after the reduction, it will always work in favour of a landholder who was a rack-renter even though the basis of reduction may be on the same rates in the case of a rack-renting landholder and in the case of a humane landholder. Therefore, it is urged that if the reduction is reasonable in the case of a humane landholder because it is brought into line with the prevailing rates of rent in the neighbouring areas under the ryotwari settlement, there is numberreason why such reduction should number companytinue to be reasonable in the case of the other landholder. The fact that in one case the reduction may number be below 25 per centum while in the other case it may go below 25 per centum will make numberdifference to the reasonab- leness of the reduction, for in either case the basis of the reduction is the same. We are of opinion that there is force in this argument and it must be accepted. What we have to see is whether the Act when it provides for reduction of rent proceeds on a reasonable basis i.e. whether the reduction of rent to the level of the prevailing rent for the same class of land in the neighbouring areas where ryotwari settlement prevails is reasonable. This in our opinion is a reasonable basis on which the rent in estates companyered by the Madras Estates Land Act can be reduced. Once this basis is accepted as reasonable, we fail to see how the ratio between what the landholder was getting before the reduction and what he gets after the redaction will make what is per se reasonable into an unreasonable restriction. Theoretically. it may be possible to say that the reduction may be so much that numberhing may be left to the landholder. This is what the respondent tried to make out in his writ petition, for his case therein was that the rents were so far reduced in his case that instead of getting an income of Rs. 3,875/- he would be getting numberincome at all and would be actually suffering a net loss of Rs. 655/- by his holding the estate after reduction of rents. This of companyrse has been found by the High Court to be incorrect and in actual fact the landholder is left with a net income of Rs. 457/- and odd after the reduction in rent. Therefore. except for the theoretical possibility where the landholder may be left with numberhing on reduction of rents, it cannot be said from the mere fact that in some cases the ratio- of net income falls after reduction of rent as companypared to the net income before reduction below 25 per centum that the restrictions imposed by the Act are unreasonable. , Actually we feel that there cannot possible be any case where after the reduction there will be numberhing left to the landholder. We cannot therefore agree with the High Court that simply because in a particular case the net income after reduction falls below 25 per centum of the net income before reduction the numberification which results in such a position, is an unreasonable restriction on the right of the land-holder to hold his estate. As we have said already, the ratio by which the net income will fall after reduction will depend upon whether the landholder whose rents are being reduced was a rack renter or humane person in the case of a rack-renter the fall may be heavier while in the case of a humane person the fall may be less. But if the basis on which the, reduction is made is the same in both cases and is reasonable, we see numberreason for holding that a numberification which may in a given case result in a fall of the net income which is even below 25 per centum of the previous net income would necessarily be bad as an unreasonable restriction on the right of the landholder to hold his estate. It is important in this companynection to remember that the rent allowed to the respondent companypares favorably with the highest rent payable by the ryotwari tenants in the locality. Therefore, the basis on which rents are being reduced under the Act being good and reasonable the result of such reduction would number make the,notification in a particular case bad except where that theoretical case is reached where there is numberincome left to the landholder after reduction, which in our opinion is impossible.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petitions Nos. 92 and 128 of 1959. Petitions under Art. 22 of the Constitution of India for the enforcement of Fundamental Rights. WITH Civil Appeals Nos. 210 and 211 of 1961. Appeals from the judgment and order dated March 6 1959, of the Punjab High Court in-Civil Writ Nos. 133 of 1957 and 389 of 1958. Bishan Narain, and K. P. Gupta, for the petitioner in Petn. No. 92 of 1959 . L. Aggarwal and A. G. Batnaparkhi, for the petitioner in Petn. No. 128 of 1959 . Bishan Narain, B. K. Sinha, B. K. Garg, S. C. Aggarwal and C. Aggarwala, for the appellants. N. Sikri, Advocate-General for the State of Punjab, N. Bindra and P. D. Menon, for the respondents in both the petitions and the appeals . 1962. April 23. The following judgments were delivered. The judgment of Sinha C. J., Rajagopala Ayyangar, Mudholkar and Venkatarama Aiyar, JJ., was delivered by Venkatarama Aiyar, J. VENKATARAMA AIYAR, J.-The appellants are a joint Hindu family firm which has been carrying on business since 1911, in grains, dal, cereals, companyton ginning and pressing, oil manufacture and the like, at a place called Lehragaga in what was once the State of Patiala. The firm had an account called the Cash Credit Account in the Patiala State Bank which had a branch at Lehragaga and used to borrow money in this account on a pledge of its stocks. In 1951-52 there was a heavy slump in the prices of the companymodities with the result that the amounts advanced by the Bank on the security of the goods were very much in excess of the market prices thereof To companyer this shortfall which came to Rs. 2,32,000/- the firm entered into an arrangement with the Bank on May 23, 1953, and it is this that forms the source of the present litigation. The Bank sanctioned a loan of Rs. 4,50,000/- on what is called Demand Loan Account. The firm deposited title deeds of the properties belonging to them as security for the amounts that may become payable on that account and the adult members of the family executed a promissory numbere for that amount and also a memorandum evidencing the deposit of the title deeds. It should be mentioned that in 1951 a firm called Yogiraj Neelkumar was started at Lehragaga of which the partners were Bhagirathlal one of the senior members of the joint Hindu family of the appellant firm and two other strangers Shri Kishore Chand and Shri Banwarilal. That firm did business as Commission Agents and had a Cash Credit Account in the Patiala State Bank at Lehragaga under which it borrowed money for the purpose of its business. That firm also sustained heavy losses during the period of the slump and on May 23, 1953, it owed to the Bank a sum of Rs. 2,17,957-12-6 on account of shortfall. Now what the Bank did under the arrangement dated May 23, 1953, was to adjust the loan of Rs. 4,50,000/- towards the shortfalls due to them both from the appellants firm and the firm of Yogiraj Neelkumar. The companyplaint of the appellants is that they had numberhing to do with the firm of Yogiraj Neelkumar, that Bhagirathlal started it along with strangers as his own separate companycern and accordingly the properties of the joint Hindu family of the appellants are number liable for the sum of Rs. 2,17,957-12-6 due to the Bank from that firm. The amount payable under the demand loan account number having been paid by the appellants the Bank took steps to realise the same in accordance with the provisions of the Patiala Recovery of State Dues Act, hereinafter referred to as the Act and the rules framed thereunder. It will be companyvenient at this stage to refer to these provisions and rules in so far as they are material, as it is their vires and companystitutionality that form the principal target of attack in these proceedings. Section 3 1 of the Act defines State Dues as including debts due to the Patiala State Bank. Department is defined in s. 3 2 as including the Patiala State Bank, and Head of department in a. 3 6 as meaning the Managing Director in the case of the Patiala State Bank. Section 4 1 authorises the Head of department to determine the exact amount of State dues recoverable from the defaulter in tile manner prescribed under the rules. Section 5 1 . a enacts that State dues may be recovered by the department through the Nazim as if these were arrears of land revenue. Then companyes s. 6 which is as follows - 6. 1 The Head of department shall send a certificate as to the amount of State dues recoverable from the defaulter to the Nazim in Form I appended to this Act and to the Accountant-General in Form It appended to this Act Provided that where the head of department is below the rank of a Minister or Secretary, he shall, unless he is the Registrar, Co- operative Societies, send the certificate to the Nazim and the Accountant General through the Minister or Secretary in charge who shall companyntersign the certificate after satisfying himself that the amount of State dues stated in it is companyrect. A certificate transmitted under the preceeding sub-section shall be companyclusive proof of the matters stated therein and the Nazim or the Accountant-General shall number question the validity of the certificate or hear any objections of the defaulter as to the amount of State dues mentioned in the certificate or as to the liability of the defaulter to pay such dues. Section 11 provides that-no civil companyrt shall have jurisdiction in respect of any matter which under the Act or the rules is entrusted to the Head of department or any authority or officer authorised by him. Section 12 companyfers on the State authority to make rules providing inter alia for the manner in which the amount of State dues shall be determined. Rules framed under s. 12 of the Act were published on August 8, 1945. Rule 3 requires that the head of department shall cause a numberice to be served on the defaulter in the manner prescribed. The numberice has to specify the amount of state dues and require the defaulter, to pay such dues on or before a date specified, or to appear on such date before the head of department and present a written statement of his defence. The date to be fixed should allow at least fifteen days to the defaulter to make payment or to appear and answer the claim. If the defaulter does number appear on the date speci- fied, the head of department may proceed ex parte and determine by order in writing the amount of State dues recoverable from him if he is satisfied that the numberice had been duly served, and if number so satisfied, he may direct fresh numberice. Rule 6 provides that where the defaulter appears on the date fixed in the numberice and presents his writen statement, the head of department or the Inquiry Officer, as the case may be, shall examine the objections of the defaulter stated in the written statement in the light of the relevant records of the department, and shall then by order in writing determine on the same day or on any subsequent day the exact amount of State dues recoverable from him. Rule 7 provides that when the amount determined as payable under rules 5 and 6 remains unpaid, the head of department might issue a numberice on the defaulter requiring him to pay the State dues within fifteen days and that in default, the amount companyld be recovered through the Nazim. Under Rule 8, an appeal against an order determining the amount due under rule 5 or 6 lies to the Board of Directors. Against an Order rejecting an appeal under rule 8, a revision is provided to the Ministry. There is also a provision for service of numberice on the defaulter, when proceedings for realising the amount are taken. We may number refer to the steps taken by the Patiala Bank for recovering the amounts due from the appellants. On February 17, 1955, the Bank issued a numberice to the appellants under rule 3 2 stating that a sum of Rs. 5,17,863-3-4 was due from them and calling upon them to pay the said amount or to file a written statement within fifteen days setting out their defence to the claim. To this the. appellants sent on March 26, 1955, a reply in which they pointed out that they had been unable to pay, because of companytinuous slump in the market and requested that, the Bank should accept payments in reasonable instalments. It was also stated that the Government intended to acquire some lands belonging to the appellants and that companypensation would become payable and it was prayed that until then the recovery proceedings might be postponed. On this, the Bank would appear to have staved their hands for some time. On November 21, 1955, a fresh numberice was issued under rule 3 stating that a sum of Rs. 5,24,593-10-10 was due from the appellants and asking them to pay the amount or to file their defence to the claim within fifteen days. To this again the appellants replied on December 7, 1955, asking that the representation previously made by them might be companysidered by the Board of Directors. On January 6, 1956, the appellants sent another reply stating that they expected to pay a substantial amount of the loan within a short time and prayed that further proceedings might be suspended. The Managing Director did number accede to this request and on January 27, 1956, be issued a certificate under P. 7 of the Act certifying that a sum of Rs. 4,98,589-1-6 was due from the appellants and asking the Deputy Commissioner, Patiala, to recover the same as arrears of land revenue. After some more attempts at getting the recovery proceedings postponed, the appellants filed in the High Court of Punjab on February 16, 1957, a petition under Art. 226 of the Constitution, Writ Petition No. 133 of 1957, wherein they challenged the validity of the Act and of the proceedings taken thereunder on various grounds. Meantime, on July 7, 1956, the Bank issued a numberice under rule 3 2 demanding from the appellants a sum of Rs. 25,548-4-6 as due on the cash credit account at Lehragaga. To this, the appellants sent a reply denying their liability. On October, 4, 1956, the Bank determined the liability ex parte at Rs. 25,478-15- A numberice under rule 7 1 was issued on December 6, 1956, and that number having been companyplied with, a certificate under a, 7 of the Act was issued. by the Manauing Director. On May 17, 1958, the appellant filed Writ Petition No. 389 of 1958 in the High Court of Punjab challenging the validity of the determination made on October 4, 1956, and of the subsequent proceedings taken for the recovery of the said amount on the same grounds as in Writ Petition No. 133 of 1957. Both these Writ Petitions were heard together, and by their Judgment dated March 6,1959 the learned- Judges held that the impugned Act and the proceedings were valid and dismissed the petitions. They, however, granted a certificate under Art. 133, and hence these appeals. The appellants also filed a petition under Art.32 of the Constitution, attacking the vires of the Act, and of the proceedings taken thereunder, on the same grounds as are raised in the appeals. We have accordingly heard them together, and this Judgment will govern all of them. Three companytentions have been urged in support of the appeals- The proceedings taken under the Act for determining the amount payable by the appellants and for recovering the same are illegal as the Act had ceased to be in force on the material dates. The Act and the rules made thereunder became void on the companying into force of the Constitution as they are repugnant to Arts. 14 and 19 1 f and g , and the proceedings taken under those provisions are therefore illegal. The certificate issued under s. 7 is number in accordance with the rules framed under the Act and in companysequence the proceedings taken thereunder are illegal. Taking up the companytention that the Act had ceased to be in force on the material dates, it is necessary first to state the facts on which it is based. On May 5, 1948, the Rulers of the independent State of Faridkot, Jind, Kapurthala, Malerkotla, Nabha, Patiala, Kalsia and Nalagarh entered into an agreement referred to as the Covenant for the establishment of a new State called the Patiala and East Punjab States Union or more briefly ,the Pepsu Union companyprehending the territories of their respective States with a companymon executive, legislature and judiciary. Article III provides for the companystitution of a Council of Rulers. Article VI of the Covenant provides that on the companystitution of the new State ,all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Government of the Covenanting State ,shall vest in the Union and shall hereafter be exercisable only as provided by this Covenant or by the Constitution to be framed thereunder and that the Union shall take over all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State and all the assets and liabilities of the Covenanting State. The executive authority of the State is to vest under Art. TX of the Covenant in the Raj Pramukh. Article X provides for the formation of a Constituent Assembly and the framing of a Constitution by it and there is to following proviso to it which is very material for the present discussion Provided that until a Constitution framed by the Constituent Assembly companyes into operation after receiving the assent of the Raj Pramukh, the Raj Pramukh shall have power to make and promulgate Ordinance for the peace and good Government of the Union or any part thereof, and any Ordinance so made shall for the space of number more than six months, from its promulgation have the like force of law as an Act passed by the Constit- uent Assembly, but any such Ordinance may be companytrolled or superseded by any such Act. Article XI provides for the payment of the amount fixed in the Schedule as the privy purge of each Ruler. Article XII guarantees to the Ruler all the personal privileges, dignities and titles enjoyed by them immediately before the 15th day of August, 1947 and Art. XIV, succession to the Gaddi according to law and custom. The new State came into existence on August 20, 1948, as provided under the Covenant. The Ruler of Patiala became its Raj Pramukh and on the same date he promulgated an Ordinance No. 1 of 2005 BK which provided inter alia that all Laws in force in the State of Patiala on that date shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such Covenanting State immediately before that date shall be repealed. By force of this Ordinance., the impugned Act became the law of the Pepsu Union. Under Art. X of the Covenant this Ordinance would have expired on February 20., 1949, and so on February 15, 1949, the Raj Pramukh promulgated another Ordinance No. 16 of 2005 BK in terms similar to the Ordinance No. 1 of 2005. The appellants companycede that this law is intra vires and by force of this Ordinance the impugned Act companytinued to be in force after February 20, 1949. When Art. X of the Covenant provided that the Ordinances to be promulgated by the Raj Pramukha were to be in force for a peroid of only six months it was expected that the Constituent Assembly would in the mean time be companyvened and a regular Constitution drawn up. But that did number materialise and so on April 9, 1949, all the Rulers met again and entered into another agreement called the supplementary Covenant, where by Art. X was amended by omitting the words for the space of number a more than six months from its promulgation. The result of this was that the laws which had been brought into force by Ordinance No. 16 of 2005 BK including the impugned Act, would number lapse on August 20, 1949, but companytinue to be in force until repealed by fresh legislation. But it is argued for the appellants that the Supplementary Covenant is void and inoperative because by the Covenant dated May 5, 1948, the Rulers had surrendered companypletely all their sovereign powers to the new State and that in companyse- quence on April 9, 1949, when they entered into the Supplementary Covenant they had numbershred of sovereignty left in them and had therefore numbercompetence to companyfer on the Raj Pramukh any authority to legislate. To this the respondents reply that the original Covenant on its true companystruction did number companypletely extinguish all the powers of the Rulers and that the Supplementary Covenant is therefore within their companypetence. They further companytend that it is apolitical question whether the Supplementary Covenant is valid or number, and that Art. 363 bars the jurisdiction of the Civil Courts to entertain such a question. We number proceed to companysider these companytentions. To appreciate the true effect of the Covenant it is necessary to state what the position is according to rules of International Law, when one independent State becomes merged in another. A State says Oppenheim, ceases to be an International Person when it ceases to exist. Practical cases of examination of States are werger of State into another, annexation after companyquest in war, breaking up of State into several States, and breaking up of a State into parts which are annexed by surrounding States. By voluntarily merging into another State, a State loses all its independence and becomes a mere part of another. International Law, Vol. 1, 150 . Therefore when the new State of Pepsu was formed, the eight States which had merged into it would cease to exist as independent personae and there companyld be numberquestion of sovereignty of such States or of its ex-Rulers. But it is aruged that the loss of sovereignty need number occur at a single point of time, and that in the present case it was gradual, and spread over nearly a year, and that both the Covenants were made during this period. It is numberdoubt true that loss of sovereignty might be a companytinuing process extending over a companysiderable period of time, and that has also been held quite recently by this Court in Promod Chandra Deb v. The State of Orissa 1 . But is that what has happened here ? The Covenant is quite clear and unequivocal on the point. Article VI is the crucial provision, and it says that all the rights, authority and jurisdiction of the Ruler in relation to Government are to vest in the Union. Then follow provisions for the exercise of those powers by the Union. Thus there is on the one hand an extinction of the powers of the Rulers, and on the other hand vesting of the same in the new State. In strong companytrast to this are the provisions which guarantee to the Rulers their privy purse, and their right to their personal properties, and privileges. On the wording of the Covenant therefore there was a companyplete divestiture of all the sovereign rights of the Rulers, when the new State came into existence on August 20, 1948. 1 1962 Supp. 1 S.C.R. 405. But it is companytended that the, Covenant does number dispose of the entirety of the legislative power .possessed by the Rulers, because under Art. X the Raj Pramukh companyld enact laws only for a period of six months. The legislative power number having been companypletely. transferred to him, it is argued, the residuum must vest somewhere and that companyld only be in the Rulers themselves. Therefore, it is said, there is some sovereignty left in them, and that is disposed of by the Supplementary Covenant. This argument sounds plausible but cannot be sustained on the terms of the original Covenant. It is number, in our view, companyrect to say, that under Art. X the legislative powers of the Rulers were number transferred in full to the new State of Pepsu. The Raj Pramukh has the power under that Article to make and promulgate Ordinances for the peace and, good Government of the Union or any part thereof. Stopping here, there is numberreservation whatsoever in the grant of the power to the new Ruler. Then follows the provision that the Ordinance is to be in force for a period number exceeding six months. The effect of this is number to keep back from the Raj Pramukh any portion or field of legislative power, and this will be plain from the fact that the Raj Pramukh can go on renewing the laws every six months ad infinitum. What the effect of this provision would be if the Raj Pramukh chose to ignore it we need number pause to companysider. What is relevant for the purpose of the present discussion is, number whether the Raj Pramukh companyld have enacted a law in disregard of the above provision but whether in view of it any residue of legislative power companyld be held to have companytinued in the Rulers. On that question Art. VI is clear beyond all doubt. The entirety of the rights, authority and jurisdiction of the Rulers is to vest in the Union, and is to be exercisable only as provided in the Covenant. It cannot in our opinion be argued that the Rulers of the Covenanting States companyld, subsequent to August 20, 1948, have passed any laws within their own territories on the ground that the power of the Raj Pramukh did number extend, under Art. X, to enacting legislation beyond six months. It is further to be numbered that under Art. VI, all the powers of the Rulers are to. vest in the Union, and even if the whole of the legislative power is number exercisable by the Raj Pramukh by reason of Art. X. it is in the Union that the residue of the power must be held to be lodged and number with the Rulers. It is next argued for the respondents that though the Rulers might have surrendered their power to the Union under the original Covenant, that did number, according to rules of International Law, deprive them of their right to enter into a fresh Covenant. Reliance was placed on the following passage in Oppenheims International Law .lm15 A treaty, although companycluded for ever, or for a period of time which has number yet expired, may nevertheless always be dissolved by mutual companysent of the companytracting parties. Vol. I, p. 842, para 537 . It is companytended that on the principal stated above it was within the companypetence of the Rulers to modify Art. X as they did under the Supplementary Covenant. But the passage quoted above presupposes thaton the date of the later treaty by which the earliertreaty is rescinded or modified the companytracting parties are sovereigns and if, as we have already held, the effect of the original Covenant is to companypletely divest the Rulers of their sovereign power there can be Do question of their entering into any treaty thereafter as that companyld be only between sovereigns and the Supplementary Covenant cannot therefore be sustained one the principle of International law enunciated above Our attention was also invited to the statement of the law in Hydes International Law, Vol. 1, p. 396, that when there is a change of sovereignty arising by reason of cession, the grantor is permitted, pending the actual transfer, to exercise authority with respect to certain matters and it was argued that on this principle the Rulers must be held to have the companypetence to companyclude the Supplementary Covenant with a view to implement the original Covenant. But this power which is an exception to the rule previously stated by the learned author that on a change of sovereignty all legislative and political powers vest in the new sovereign is limited to the exercise of authority necessary to maintain order and safeguard the economic companyditions and even this interim authority ceases when the possession, of the territory is actually delivered to the new sovereign. As that happened in the instant case on August 20, 1948, the Rulers, cannot in any view be said to have had any authority to enter into any Covenant on April 9, 1949. We must number refer to the decisions which have been cited on behalf of the respondents as bearing on the true companystruction to be put on the Covenant. inVirendra Singh State of Uttar Pradesh 1 ,Rulers of 35 States entered into a Covenant inMarch, 1948, companystituting the United State of Vindhya Pradesh and as the intergration did number work well they entered into another agreement in December, 1949, dissolving that State and on 1st January, 1950, acceded to the Government of India under a merger agreement. There after the State Government repudiated certain grants of land made by the action was challenged on the ground nations were within the protection of merger agreement. And this Court held that 1 1955 1 S.C. R. 415,429 though numberrights companyld be founded on the merger agreement as they were acts of State, the subsequent companyduct of the State in affirming the transfers, created justiciable rights. The question actually decided has thus numberbearing on the point number in companytroversy. But in narrating the events leading to such a merger agreement it was observed. The Rulers of Charkhari and Sarila retained, at the moment of final cession, whatever measure of sovereignty they bad when para- mountcy lapsed, less the portion given to the Indian Dominion by their Instruments of Accession in 1947 they lost numbere of it during the interlude when they toyed with the ex- periment of intergration. These observations cannot in the companytext be held to be a decision on the point under companysideration. It may also be added that the disintegration of the United State of Vindhya Pradesh and the reconstitution of the old States would itself be an act of State. Prithi Singh v. State of Pepsu 1 relied on for the respondents is a direct decision on this point There it was held on a companysideration of Arts. III.XI, XII and XIV of the Covenant that the Rulers had number surrendered all their sovereign powers to the new State. We are unable to agree with this decision. Article III provides for the formation of a Council of Rulers which is to exercise such functions as are assigned to it by the Covenant and such other functions, if any, as may be assigned to it by the Constitution of the Union. This Article clearly does number vest any sovereign powers in the Rulers. As for Arts. XI, XII and XIV they relate to the personal rights of the Rulers and as already stated they emphasize by companytrast that the Rulers had numbersovereignty vested in them. The learned Judges A.I.R. 1953 Pepsu. 161. sought support for their companyclusion in the passages from Oppenheim on International Law, Vol. 1, p. 842, quoted above but for the reasons already given they are number in point. In the result we agree with the appellants that the Supplementary Covenant cannot be held to be effective for modifying the provisions in the original Covenant. It is next companytended for the respondents that even on the footing that the Validity of the impugned Act, should be determined in accordance with the provisions of the original Covenant, without reference to the Supplementary Covenant, the appellants must fail because the question in dispute is one which arises out of a provision in a Covenant and under Art. 363 the Civil Court has numberjurisdiction to go into it. The appellants do number dispute that the Rulers of the States who entered into the Covenant are all Rulers within Art.363 2 b , or that the Government of the Dominion of India was a party to it. What they urge is that they merely seek to establish that they are number liable under the impugned Act,, because it is inoperative by reason of Art. X in the Covenant, and that such a dispute is number within the bar of Art. 363. And the decision in Bholanath J. Thaker v. State of Saurashtra 1 is relied on as supporting this companytention. There a Judicial Officer of the erstwhile Wadhwan State, had filed a suit questioning the validity of an Order of the State of Kathiawar, which had been formed as the result of the merger of a number of States including Wadhwan, whereby his services were prematurely terminated. The question was whether the action was barred by Art. 363. This Court held that the Officer had a right to companytinue in service under a law of Wadhwan enacted before the date of merger, that the Covenant was relied on only for showing that that right was at all times subsisting and that Art. 363 was number a bar to the maintenance of such a suit. The ratio of the decision is to be found in the following observation There was numberdispute arising out of the Covenant and what the Appellant was doing was merely to enforce his rights under the, existing laws which companytinued in force until they were repealed by appropriate legislation. In other words the dispute related to a right which arose independent of, and was affirmed in the Covenant, and therefore Art. 363 had numberapplication. That is number the position here. The liability of the appellants to pay to the Bank the amounts determined in accordance with the impugned Act is one which arises dehore the Covenant, and it is sought to be got rid of only by recourse to Art. X. The dispute is therefore one arising directly on a provision in the Covenant, and Art. 363 will apply. But even if the appellants are right in their companytention that Ordinances 1 and 16 of 2005 Bk ceased to be in operation after the expiry of six months from the date of their promulgation, they can derive numberadvantage from it, because what those Ordinances did was to extend the operation of all Patiala laws to the territories which had formed part of the other Covenanting States. So far as the territories of the erstwhile State of Patiala are companycerned, its laws companytinued to be in force proprio vigore and number by force of Ordinances 1 and 16 of 2005 Bk . Therefore even if the Ordinances lapsed on August 20, 1949, as companytended for the appellant, that would number affect their liability under the impugned Act, as they companye from the territory of the erstwhile State of Patiala, and would in any event be governed by it. The question therefore is purely academic so far as appellants are companycerned but it does number arise for decision in Writ Petition No. 128 of 1959, wherein the validity of the impugned Act and of the proceedings taken thereunder is challenged by a resident of the erstwhile State of Nabha, on the same grounds as are raised in the appeals. That is why we have, gone into it fully, and given our pronouncement thereon. In the result this companytention must be found against the appellants. We shall next companysider the companytention of the appellants that the Act and the rules framed thereunder are repugnant to Art. 14 and Art. 19 1 f and g and that they have therefore become void under Art. 13 of the Constitution. Dealing first with the companytention that they companytravene Art. 14, two grounds have been urged in support of i that there is discrimination between the Patiala State Bank on the one hand and the other Banks on the other and ii that after the merger of the Pepsu Union in the State of Punjab under the States Reorganisation Act, 1926, there is discrimination between the law as administered in the territories of the erstwhile Pepsu Union on the one hand and in the other parts of the State of Punjab on the other. As regards the first ground the argument of the appellants might thus be stated. In the case of Banks other than the Patiala State Bank a dispute between a Bank and its customers has to be settled under the ordinary law by resort to companyrts or to arbitration and a decree passed in those proceedings has to be realised in accordance with the procedure prescribed in the Code of Civil Procedure. But under the impugned Act and the rules a dispute between the Patiala State Bank and its customers has to be decided by the authorities companystituted thereunder and the jurisdiction of the Civil companyrts is barred with respect to it. The pro- cedure prescribed for the determination of the dispute under the Act and the rules is a special one widely different from that which is followed by the Civil companyrts. Then again when the Bank obtains a decree it can be realised by a summary process as arrears of revenue and number according to the mode prescribed for realisation of degrees under the Civil Procedure Code. There is thus a substantial difference between the rights of a customer who deals with the Patiala State Bank and one who deals with the other Banks. This differentiation is arbitrary and has numberrational relation to the objects of the legislation and so it is violative of Art. 14. It cannot be disputed that the impugned Act and the rules framed thereunder put the Patiala State Bank in a position different from that of the other Banks under the ordinary law. The question is whether this difference amounts to discrimination within Art. 14. The, companytention of the respondents is that the Patiala State Bank forms a category in itself and the law which prescribes a special procedure in relation to the settlement of disputes between that Bank and its customers is valid because it is based on a classification having a just relation to the objects of the legislation. It is the companyrectness of this companytention that number falls to be companysidered. When a State establishes a Bank, it is the funds of the State to which the tax payers companytribute that are utilised for running it. In this respect a State Bank differs from Banks established by private agencies in which the working capital is subscribed by individuals. It should be numbered that it is number part of the governmental functions of a State to run a Bank, and when a State does establish a Bank, is with a view to companyfer benefits on the general public, such as, for example, developing companymerce and industry within its territories. On the other hand when private agencies establish a Bank it is as an investment for those who subscribe capital to it. Thus a Bank established by a State has got distinctive features which differentiate it from the other Banks and for purpose of Art. 14 it forms a category in itself The law is number well settled that while Art. 14 prohibits discriminatory legislation directed against one individual or class of individuals, it does number forbid reasonable classification, and that for this .purpose even one person or group of persons can be,- class. Professor Willis says in his Constitutional Law p. 580 a law applying to one person or one class of persons is companystitutional if there is sufficient basis or reason for it. This statement of law was approved by this Court in Chiranjit Lal Chowdhryv. Union of India 1 . There the question was whether a, law providing for the management and companytrol by the Government of a named Company, the Sholapur Spinning Weaving Company Ltd. was bad as offending Art. 14. It was held that even a single Company might, having regard to its features, be a category in itself and that unless it was shown that there were other Companies similarly circumstanced, the legislation must be presumed to be companystitutional and the attack under Art. 14 must fail. In Ram Krishna Dalmia v. Shri Justice S. R. Tendolkar 2 , this Court again examined in great detail the scope of Art. 14, and in enunciating the principles applicable in deciding whether a law is in companytravention of that Article observed that a, law maybe companystitutional even though It relates to a single individual if on account of some special circumstances or reasons applicable to him and number applicable to thers that single individual may be treated as a class by himself. On the principles stated above we are of the opinion that the Patiala State Bank is a class by itself and it will be with in the power of the State to enact a law with respect to it, We are also of 1 1950 S.C.R. 869. 2 1959 S.C.R. 279,297. of the opinion that the differentia between the Patiala State Bank and the other Banks has a rational bearing on the object of the legislation. If the funds of the Patiala State Bank are State funds, a law which assimilates the procedure for the determination and recovery of amounts due to the Bank from its customers to that prescribed for the determination and recovery of arrears of revenue must be held to have a just and reasonable relation to the purpose of the legislation. A law which provides for State funds being advanced to customers through State Bank can also provide for its being recovered in the same manner as revenue. A direct decision on this Point is Mannalal v. Collector of Jhalawar 1 . There the State of Jhalawar had established a Bank and the appellants as customers of the Bank owed large amounts to it. The State of Jhalawar became merged in the State of Rajasthan and acting under s. 6 of the Rajasthan Public Demands Recovery Act, 1952, the Collector Jhalawar issued a numberice to the appellants proposing to recover the dues as a public demand. The validity of this demand was challenged on the ground that the provisions of the Act were obnoxious to Art. 14 in that they enabled the State to recover the amounts due to it on Banking account in a mode different from that applicable to other Banks. In rejecting this companytention this Court observed It is said that the Act makes distinction between the other Bankers and the Government as a banker in respect of the recovery of money due. it seems to us that Government even as a banker, can be legitimately put in a separate class. The dues of the Government of a State are the dues of the entire people of the State. This being the position, a law giving special facility for the 1 1961 2 S.C.R. 962. recovery of such dues cannot, in any event, be said to offend Art. 14 of the Constitution. We are in agreement with these observations. In our view the same principles apply to the impugned Act, and in setting up separate authorities for determination of the disputes and in prescribing a special procedure to be followed by them for the recovery of the dues by summary process, the impungned Act does number infringe Art. 14 of the Constitution. Then the second ground on which the impunged Act and Rules are attacked as offending Art. 14 is that after the merger of the Pepsu Union in the State of Punjab under the State Reorganisation Act, 1956, they companytinue to be in force in the territories of the erstwhile Pepsu Union, but have numberoperation in the other parts of the State of Punjab, and this, it is said, is a fresh ground of discrimination. We, see numbersubstance in this objection. Prior to the States Reorganisation Act, 1956, the Pepsu Union, and the State of Punjab were two different States. The legislative authorities functioning in the two States were different. Prior to the integration there companyld be numberquestion of discrimination under Art. 14 because that can arise only with reference to a law passed by the same authority, vide The State of Madhya Pradesh v. G. C. Mandawar 1 . And if after reorganisation of States and integration of the Pepsu Union in the State of Punjab, different laws apply to different parts of the State, that is due to historical reasons, and that has always been recognised as a proper basis of classification under Art. 14. In Bowman v. Lewis relied on the judgment of the Court below in support of the above position, a law of the State of Missouri was assailed as 1 1955 1 S.C.R. 599. 2 1880 10 U.S. 22 25 L-ED. 989, violative of the guarantee of equal protection of laws under the Fourteenth Amendment in that it provided for appeals against judgments by Courts in some parts of the State to one Court and in others to another Court. In holding that this was number unconstitutional, Bradley, J., observed The 14th Amendment does number profess to secure to all persons in the United States the benefit of the same laws and the same remedies. Great diversities in these respects may exist in two States separated only by an imagainary line If diversities of law and judicial proceedings may exist in the several States without violating the equality clause in the 14th Amendment, there is numbersolid reason why there may number be such diversities in different parts of the same State If a Mexican State should be acquired by treaty and added to an adjoining State or part of a State, in the United States, and the two should be erected into a new State , it cannot be doubted that such new State might allow the Mexican laws and judicature to companytinue unchanged in the one portion, and the companymon law- and its companyresponding judicature in the other portion. Such an arrangement would number be prohibited by any fair companystruction of the 14th Amendment. It would number be based on any respect of persons or classes, but on municipal companysiderations alone, and a regard to the welfare of all classes within the particular territory or jurisdiction. In the State of Madhya Pradesh v. The Gwalior Sugar Company Ltd. 1 , the validity of a law of the State of Gwalior imposing cess on sugarcane was challenged after the merger of that State in Madhya Bharat on the ground that in the State of Madhya Bharat there was numbersuch tax and in company- sequence the law of the Gwalior State became discriminatory under Art. 14. This Court sustained the legislation as number hit by Art. 14. 1 1962 S.C.R. 619. This question again came up for decision in Bhaiyalal Shukla The State of Madhya Pradesh 1 . There the facts were that after the reorganisation of the State of Madhya Pradesh there were within that State as many as four Sales Tax Acts different in their incidence in force in different areas. Thus while a resident of the former Vindhya Pradesh State was liable to pay sales tax on building materials used in works companytracts a resident of the former State of Madhya Pradesh was number under a similar liability and this was assailed as offending the equal protection clause under Art. In, overruling this companytention this Court observed We have already held that the sales tax law in Vindbya Pradesh was validly enacted, and it brought its validity with it under s. 119 of the State Reorganisation Act, when it became a part of the State of Madhya Pradesh. Thereafter, the different laws in different parts of Madhya Pradesh can be sustained on the ground that the differentiation arises from historical reasons, and a geographical classification based on historical reasons, has been upheld by this Court. This decision furnishes a companyplete answer to this companytention of the appellants. In the result we are of the opinion that the impugned Act. and the Rules are number open to attack as repugnant to Art.14. Then the question is, whether the Act-and the Rules are repugnant to Art. 19 1 f and g . There can be numberquestion of companytravention of Art. 19 1 g , because the impugned enactments do number trench either directly or indirectly on the right of the appellants to carry on trade or business. A law with respect to the recovery of debts is number one with 1 1962 SUPP. 2 S. C. R. 257. respect to the carrying on of trade or business, though the debtor might be a trader. Coming next to Art. 19 1 f , the argument of the appellant with reference thereto may thus be stated The Act ousts the jurisdiction of Civil Courts over- disputes between the Bank and its customers, and sets up special authorities to settle them. It is the Managing Director who in the first instance decides the dispute. He is the very person who is in charge of the affairs of the Bank, and to companystitute him arbiter of the dispute which arise out of its dealings, is to companyfer on him the roles of both the claimant and the Judge and that is opposed to all canons of judicial fairness. Further, the Act and the rules do number prescribe any procedure to be followed by the Managing Director in the hearing of the dispute. He has simply to decide it in accordance with the documents of the Bank. Thus numberreal and effective opportunity is afforded to the customer to present his case. An appeal is provided against the decision of the Managing Director, but he is also a member the Board which hears it, and so the provision for appeal is an idle formality. The further revision to the Minister is likewise a formal affair. Then the amounts determined as due are liable to be recovered through the Nazim, as if they were arrears of land revenue, and under s. 6 2 the certificate of the Head of the Department on which the recovery is to be made is companyclusive proof of the matters stated therein. Thus the procedure laid down in the Act, and the rules for settlement of disputes in unfair, and opposed to all rules of natural justice and proceedings taken against properties for obtaining satisfaction of orders passed under such a procedure must be held to infringe Art. 19 1 f and must be quashed. The learned Advocate-General who appeared for the respondents, companytends at the very outset, that Art. 19 1 f companyld have numberapplication to a case like the present, that the liability of the appellants arises under a companytract, that the provisions of the Act and the Rules are binding on them as terms of that companytract, that, the provision that disputes shall be settled in the first instance by the Managing Director is similar to an arbitration clause in an agreement, and that the restrictions enacted in the Act and the Rules are in the nature of self imposed restraints, for which numberredress can be sought under Art. 19 1 f . In our opinion this companytention deserves companysideration. It is arguable that when Art. 19 speaks of laws imposing reasonable restrictions, it has in mind laws which are imposed on subjects, which they have numberoption but to obey. But when the operation of a law is attracted by reason of a companytract, which a person is free to enter into at his own will and choice, it may be said that the inhibition under Art. 19 has numberapplication, the parties being left to their rights and remedies under the companytract. But in the view we have taken of the companytentions of the appellants on their merits, we do number think it necessary to pronounce on this question. We have already held that the State Bank is a class by itself, that it is companypetent for the Legislature to enact a law exclusively with respect to it and that such a law does number companytravene Art. 14. On the question whether it is repugnant to Art. 19 1 f , the point for companysideration is whether it is unreasonable as being unfair and opposed to rules of natural justice, and is in companysequence number protected by Art. 19 5 . Have the appellants established that ? It should be remembered in this companynection that rules of natural, justice are number a rigid companye to which proceedings,must strictly companyform, if they are to be sustained. They must by their very nature vary with the facts and circumstances of each case, and are incapable of a definition which will apply to all situations. The requirements of natural justice observed Tuoker,L. J., in Russell v. Duke of Norfolk 1 , ,must depend on the circumstances of the case the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Now what are the facts ? An important factor to be taken into account is that the impugned Act and Rules are number legislation companyfined to the recovery of money due to the Patiala State Bank. It is a general law applicable to the realisation of all revenue due to the State, dues to the Bank being expressly included in the definition of State dues in s. 3 1 of the Act, and it is of the pattern usually adopted in Revenue Laws. If State Revenues can be diverted for Banking purposes, it seems reasonable that their recovery should be governed by the Revenue Laws. We must next refer to the hierarchy of officers, companystituted under the Act. At the top are the Ministers then there is a Board of Directors next companyes the Managing Director, and subordinate to him are a host of officers in charge of the several departments and branches. The Board of Directors is to companysist of the Prime Minister, Finance Minister three members numberinated by the Ruler, two of whom are number- officials representing important clients of the Bank, and the Managing Director. The Managing Director has power to sanction loans on personal security up to Rs. 3,000/- and on pledge of goods up to Rs. 25,000/-. Beyond that limit it is the Board that can sanction loans. We may number examine how far the companytention of the appellants that the procedure prescribed by the Act and the Rules is opposed to rules of natural 1 1949 1 All. E.R. 109, 118. justice, is. well founded. The first companyplaint is that it is the Managing Director, who is in charge of the day to day administration of the Bank, and that therefore he is number the proper person to decide the dispute, because his own action must be under challenge. We see numberforce in this companytention. The Managing Director is a high ranking official on a salary scale of Rs. 1,600-100-2,500, with a free furnished residence. He has numberpersonal interest in the transaction and there is numberquestion of bias, or any companyflict between his interest and duty. Loans are sanctioned by the appropriate authorities under the Rules, and the customer operates on the account through cheques and deposit receipts, and there companyld be numberquestion of any attack on the actions of the Managing Director. How unsubstantial this objection is will be seen from the fact that the loan dated May 23, 1953, with which we are companycerned companyld have been sanctioned under the Rules, number by the Managing Director, but only by the Board. It is then said that the hearing before the .Managing- Director is perfunctory, that under Rule 6, he is only to examine the objections stated in the written statement ,in the light of the relevant ,records of the department and decide the dispute, and that there is thus numberreal opportunity afforded to the parties to present their ease. This argument proceeds on a misconception of the true scope of Rule 6. It does number bar the parties from examining witnesses or. producing other documentary evidence. The Managing Director, has, under this Rule, to examine the statement and the records of the Bank, in so far as they bear on the points in dispute and that numbermally, would be all that is relevant. But he is number precluded by the Rule from examining witnesses or taking into account other documentary evidence, if he companysider that that is necessary for a proper determination of the dispute. And whether he should do so or number is a matter left to his discretion. Discussing a somewhat similar question arising on the language of s. 68.D 2 of the Motor Vehicles Act, 1939, this Court observed in Malik Ram v. State of Rajasthan 1 It will therefore be for the State Govern- ment, or as in this case the officer companycerned, to decide in case any party desires to lead evidence whether firstly the evidence is necessary and relevant to the inquiry before it. If it companysiders that evidence is necessary,. it will give a reasonable opportunity to the party desiring to produce evidence to give evidence relevant to the enquiry and within reason and it would have all the powers of companytrolling and giving and the recording of evidence that any companyrt has. Subject therefore to this over-riding power of the State Government or the officer giving the hearing, the parties entitled to give evidence either documentary or oral during a hearing under s. 68-D 2 . Then it is said that the provision for appeal to the Board of Directors is an idle formality because the Managing Director whose decision is appealed against is also a member of the Board. It has already been mentioned that among the members of the Board are Ministers, whose subordinate the Managing Director is, and two number-official representatives of the customers. That is sufficient to dispel any suspicion that the hearing before the Board would be a farce. We may mention that the practice in England is for a Judge who tries a criminal case to sit as a member of the Court of appeal, which hear, the appeal against his own order, and this has been held number to be open to objection, vide R. v. Lovegrove 2 . A similar practice prevails in appeals preferred against the decision of a single Judge under the Presidency Small Cause 1 1962 1.S.C.R. 978, 984, 985. 2 1951 1 All. E.R 804. Courts Act, 1882, when an appeal is taken to the full companyrt. It is then companytended that s. 11 of the Act bars the jurisdiction of the Civil Courts with reference to the disputes triable under the Act, and that is unreasonable. It is too late in the day to companytend that provisions in statutes creating a special jurisdiction and taking away the jurisdiction of Civil companyrts in respect of matters falling within that jurisdiction are unreasonable, or opposed to rules of natural justice. It has only to be remembered that provisions excluding the jurisdiction of Civil companyrts in such cases do number affect the jurisdiction of either the High Court under Art. 226 or of this Court under Art. 32 or Art., 136 to interfere when grounds therefor are established. Lastly it is said that the provision s. 6 2 of the Act, that the certificate of the Head of Department shall be companyclusive roof of its companytents is unreasonable. But this is to ignore that at that stage the question is one of the recovery of what had been determined to be due, and that is analogous to the provision in the Civil Procedure Code that a Court executing a decree cannot go behind it. Examining the provisions of the Act and the Rules as a whole we are of opinion that they are reasonable and do number violate any Rules of natural justice. If the proceedings under challenge before us had in fact been taken in disregard of Rules of natural justice, and prejudice had resulted therefrom, the appellants would have been entitled to obtain redress in the present proceedings under Art. 226. But that however is number their companyplaint. When numberice was served. on them under rule 3 on November 21, 1955. they remained ex parte. In their numberices to the Bank in reply to the demand, they never disputed their liability but only asked for time to pay the amounts. Having failed in their attempt to gain time, they are obliged number to take the high stand that the Act and the rules have become void because they are unreasonable and companytravene Art. 19 1 g . In this they have failed. In our opinion the companytention that there has been any infringement of Art. 14 or 19 1 f or g must be rejected as untenable. It is finally companytended for the appellants that the certificates issued by the Managing Director under s, 6 1 of the Act are defective in that they are number companyntersigned by the Minister or Secretary, as required by the proviso to that subsection, and that in companysequence the proceedings taken thereunder are without jurisdiction. Reliance was placed in Support of this companytention on the decision of the Full Bench of the Punjab High Court in General S. Shivdev Singh v. The State of Panjab 1 , that it was number companypetent to the Punjab Government to delegate the functions assigned to it under a. 42 of the East Punjab Holdings Consolidation and prevention of fragmentation Act, 1948. to the Additional Director, the companytention being that the Minister or the Secretary cannot abdicate his functions under the Act to the Managing Director. But the appellants have overlooked that in Form No. 1 and 11 prescribed under the Act, the provision for companyntersigna- ture is directed to be struck out, when it is sent by the Managing Director. The result of the companybined operation of s. 6 1 and the Forms referred to there is that companyntersignature is required only when the certificate is issued by an officer subordinate to, the Minister, other than the Managing Director. This companytention must therefore be rejected . All the companytentions urged in support of the appeals and Writ Petition No. 92/1961 fail, and they are accordingly dismissed, with soots, one hearing fee. In Petition No. 128 of 1959. This is a petition under Art. 32 of the Constitution. The petitioner is a merchant running a Steel Rolling Mills at Jaitu in what was at one time the State of Nabha. By a Covenant entered into on May 5, 1948, the State of Nabha became merged in a new State called the Patiala and East Punjab States Union or more briefly the Pepsu. Union which came into existence on August 20, 1948. Then under the States Reorganisation Act, 1956, the Pepsu Union became merged on November 1, 1956, in the State of Punjab. The petitioner had an account in the Nabha Branch of the Patiala State Bank under which he borrowed monies for his business. On February 20, 1951, he executed a mortgage deed in favour of the Bank for Rs. 52,000/being the amount due by him to the Bank. In November, 1953,the Bank took proceeding under the Patiala Recovery of State Dues Act, hereinafter referred to as the Act. for recovering the amounts due on the said mortgage and thereupon the petitio- ner filed Writ Petition No. 252 of 1955 in this Court under Art. 32 of the Constitution for quashing the proceeding on, the ground that the Act and the rules were unconstitutional. On February 3, 1956, a settlement was arrived at between the petitioner and the Patiala State Bank whereunder the petitioner paid some amounts and agreed to pay the balance by instalments. In view of this settlement the, writ petition was withdrawn on May 11, 1956. The petitioner having made default in payment of the instalments, the Bank again started proceeding for recovering the amounts due and the petitioner number seeks by this petition to have those proceedings quashed on the ground that the impugned Act was number in force at the material dates and that it is void being in companytravention of Arts. 14 and 19 1 f and g and that further the certificate issued by the Managing Director under s. 6 .1 of the Act is number in accordance with the proviso to that section and is therefore bad. The respondents companytest the application. This petition Was heard along with Civil Appeals Nos. 210 211 of 1961 and Writ Petition No. 92 of 1961 wherein the same question have been raised for our determination. By our Judgment delivered in those cases to-day we have disallowed those companytentions. Following that Judgement, this petition is dismissed with companyts, one hearing fee. SUBBA RAO, J.-I regret my inability to agree with the view expressed by my learned brother Venkatarama Aiyar, J. In MY view the Patiala Recovery of State Dues Act No. IV of 2002 BK. is a typical instance of a glaring violation of the doctrine of equality enshrined in Art. 14 of the Constitution. As I propose to strike down the act on the ground that it infringes Art. 14 of the Constitution, I will number express my views on the other questions raised before us. The facts are fully stated in the judgments of my learned brother, and it is, therefore, number necessary to restate them here, except those which are relevant to the said question. The Bank of Patiala was established in 1917 by the then Maharaja of Patiala. On May 5, 1948, the Rulers of eight States, including the State of Patiala, entered into a companyenant merging all the said States into one United State called the Patiala and East Punjab States Union, briefly called PEPSU. On August 20, 1948, the said State of Pepsu was established with the Maharaja of Patiala as its Rajpramukh. In exercise of the power companyferred on him under he said companyenant the said Rajpramukh issued, an Ordinance applying all the laws obtaining in the State of Patiala, including the Patiala Recovery of State Dues Act, 2002 BK., hereinafter called the Act, to the entire State of Pepsu. After the enquiry of six months, the Rajapramukh issued a second Ordinance extending for another six months the laws made applicable to the State of Pepsu under the earlier Ordinance. Later on in exercise of a power companyferred upon the said Rajpramukh by a Supplementary Coven- ant, the said Act was indefinitely extended so as to have operation throughout the State of Pepsu. After the promulgation of the Constitution of India on January 26, 1950, Pepsu became part of the Indian Union as a Part B state, and under the provisions of the Constitution, the said Act companytinued to have force throughout the said State. Subsequently, under the States Reorganization Act, Pepsu became part of the State of Punjab and the said Act companytinued to have force in that part of Punjab which was Popsu before merger. After the Constitution came into force, the petitioners and the appellants in the aforesaid Writ Petitions and Civil Appeals respectively borrowed money from the said Bank on the security of their properties. The Bank authorities ascertained the amounts due to the Bank from the said parties and were seeking to realise the same from the properties of the said debtors in the manner provided by the provisions of the Act. After the formation of the State of Pepsu, the Patiala Bank was operating in the entire Pepsu area, and, after its merger with the State of Pun. jab, the Bank was having branches number only in Pepsu but in the other parts of Punjab. There are also a number of other banks, including the State Bank of India, doing the same business in the said territory were the Bank of Patiala is operating. The case of the appellants and the petitioners before us is that though the said banks and their debtors were in the matter of ascertainment of debts and realisation of the amounts due from them to the banks were similarly situated, the provisions of the Act discriminated the debtors of the Patiala Bank from those of other banks in that regard and thereby infringed the equality clause enshrined in Art. 14 of the Constitution. To appreciate this companytention it is necessary to companysider in some detail the provisions of the Act with a view to ascertain whether there was any such discrimination and, if there was, whether the same companyld be justified on the basis of reasonable classification. The long title of the Act is Patiala Recovery of State Dues Act. In the Act, ,State dues is defined to mean any amounts due to the Rajpramukh of the State or the State or any department of the State from any person and shall include, among others, debts due to the Patiala State Bank department is defined to include the Patiala State Bank defaulter means a person from whom State dues are due and includes a person who is responsible as surety for the payment of any such due, and head of department means the Managing Director in the case of the Patiala State Bank. Section 4 provides for the determination of the State dues under that section, the head of department shall determine in the prescribed manner the exact amount of State dues recoverable by his department from the defaulter, and it also authorizes, pending deter- mination of the dues, to move the Nazim to issue a numberice prohibiting alienation of any property by the defaulter and payment of any debt due to him from any person or of any money payable to him the State to the extent of the probable amount of State dues recoverable from the defaulter, and to move also the Accountant-General to withhold any money payable to the defaulter by the State to the said extent. The mode of recovery of the debt is provided by s. 5 under that section, the State dues shall be recovered by the department through the Nazim as if they were arrears of land revenue and through the Accountant-General by withholding payment to the defaulter of any amount payable to him by the State. Under s. 6, the bead of department shall send a certificate as to the amount of State dues recoverable from the defaulter to the Nazim and the certificate so transmitted shall be companyclusive proof of the matters stated therein. The Nazim and the Accountant General are precluded from questioning the validity of the said certificate or heat any objection of the defaulter as to the amount of States dues mentioned in the certificate or as to the liability of the defaulter to pay such dues. Section 10 says that neither the Nazim number the Accountant General shall act upon such a certificate unless it is sent within the period of limitation prescribed under the Limitation Act within which the said Bank companyld institute a suit in a civil companyrt for the recovery of the dues and sub-s. 2 thereof directs the head of department to mention in the certificate the date on which the debt has fallen due and make a statement therein to the effect that the debt, is within the period of limitation. Section 11 bars the jurisdiction of a civil companyrt in respect of any matter which the head of department or any authority or officer authorised by the head of department is empowered by the Act or the rules framed thereunder to dispose of or take companynizance of the manner in which any such head of department or authority or officer exercises any powers vested in him or by or under the Act or the rules made thereunder. In exercise of the power companyferred on the Government to make rules, the Patiala Recovery of State Dues Rules, 2002 BK. were made. They provide a machinery for the determination of the amount due to the Bank. Under r. 3, the head of department to which state dues are payable shall cause a numberice to be served on the defaulter in the manner prescribed specifying the amount of the state dues and the date on which the same has fallen due and requiring the defaulter to pay the said amount before a specified date, or to appear before the head of department or such officer as specified therein. Where the defaulter does number appear on the date specified in the numberice, the head of department or the Inquiry Officer, as the case may be, is authorized to proceed ex parte and determine by order in writing the amount of state dues recoverable from him. Where the order is made by an Inquiry Officer, it is subject to companyfirmation by the head of department. Where the defaulter appears on the date fixed, the head of department or the Inquiry Officer, as the case may be, shall examine the objections of the defaulter stated in the written-statement in the light of the relevant records of the department and shall then by an order determine the exact amount of State dues recoverable from him. If the inquiry is made by the Inquiry Officer, he shall submit his report to the head of department, who shall by an order in writing finally determine the state dues recoverable from the said defaulter. Rule 8 gives a right of appeal to the defaulter from the order of the head of department in the case of the Patiala State Bank to the Board of Directors of the Bank. Where the appeal filed by the defaulter is rejected, the defaulter may file a revision to Ijlas-i-Khas. Briefly stated, under the Act and the rules made thereunder, the Managing Director of the Bank decides on the question of the-existence and the extent of the liability of the customer of the bank after making an inquiry in the manner prescribed, subject to an appeal to the Board of Directors of the Bank and a revision to the ljlas-iKhas. The amounts found due would be realized. through the Nazim as if they were arrears of land revenue and through the Accountant-General by authorizing him to withhold amounts due to the defaulter from any department of the State. No, civil companyrt has jurisdiction in any matter which the head of department or any authority or officer under the Act is authorized to dispose of or the manner of its disposal. In short, the creditor decides his own claim and realizes the amounts by a companyrcive process prescribed. It may also be mentioned at this stage that the Managing Director of the Bank is also the Secretary of the Board of Directors. In any view, the appeal provided is only from one authority of the bank to another authority of the bank. The revision to the Ijlas-iKhas, apart from its limited scope, is in effect only from a department of the Government to another. In short, the creditor is made the judge of his cause and is empowered to determine the dues and realize them from the debtor. The debtor is at the mercy of his creditor. He may plead and protest, but he has numberother remedy to get an unbiased determination of his claim or a decision on his objections. Such a machinery may have some relevance in feudal times, but the question is whether our Constitution sanctions such an outmoded procedure. At this stage, it will be companyvenient to numberice briefly the scope of Art. 14 of the Constitution relevant to the present inquiry. Art. 14 reads The State Shall number deny to any person equality before the law or the equal protec- tion of the laws within the territory of India. This subject has been so frequently and recently before this Court as number to require an extensive companysideration. In State of U. P. v. Deoman Upadhyaya 1 , I have described briefly the doctrine of equality thus 1 1961 1 S.C.R. 14, 34. All persons are equal before the law is fundamental of every civilised companystitution. Equality before law is a negative companycept equal protection of law is a positive one. The former declares that every one is equal before law, that numberone can claim special privileges and that all classes are equally subjected to the ordinary law of the land the latter postulates, an equal protection of all alike in the .same situation and under like circumstances. No discrimination can be made either in the privileges companyferred or in the liabilities imposed. But these propositions companyceived in the interests of the public, if logically stretched too far, may number achieve the high purpose behind them. In a society of unequal basic structure, it is well nigh impossible to make laws suitable in their application to all the persons alike. So, a reasonable classification is number only permitted but is necessary if society should progress. But such a classification cannot be arbitrary but must be based upon differences pertinent to the subject in respect of and the purposes for which it is made. I would add to the said statement the following caution administered by Brower, J., in Gulf, Colorada and Santa Fe Rly. Co. v. Ellis 1 While good faith and a knowledge of existing companyditions on the part of a Legislature is to be persumed, yet to carry that presumption to the extent of always holding there must be some undisclosed and unknown reason for subjecting certain individuals or Corporations to hostile and discriminating Legislation is to make the protecting clauses of the 14th Amendment a mere rope of sand, in numbermanner restraining state action, 1 1897 165 U.S. 150 41 1. Ed. 666. It shall also be remembered that a citizen is entitled to a fundamental right of equality before the law and that the doctrine of classification is only a subsidiary rule evolved by companyrts to give a practical companytent to the said doctrine. Over emphasis on the doctrine of classification or an anxious and sustained attempt to discover some basis for classification may gradually and imperceptibly deprive the article of its glorious companytent. That process would inevitably end in substituting the doctrine of classification for the doctrine of equality the fundamental right to equality before the law, and equal protection of the laws may be replaced by the doctrine of classification. It is also well-settled that the guarantee of equal protection applies against substantive as well as procedural laws. Jennings in his Law of the Constitution, 3rd Edn., p. 49, describes the idea of equality of treatment thus Equality before the law means that among equals the law should be equal and should equally administered, that like should be treated alike. The learned author further elaborates the theme thus The right to sue and be sued, to prosecute and be prosecuted., for the same kind of action should be the same for all citizens of full age and understanding and without dis- tinction of race, religion, wealth, social status, or political influence. Dicey in his Law of the Constitution, 1959 at p.193 states Equality before the law does number mean an absolute equality of men, which is a physical impossibility, but the denial and any special privilege by reason of birth, creed or the like in favour or any individual and also the equal subjection of all individuals and classes to the ordinary law of the laud administered by the ordinary law Courts. In Ram Prasad Narayan Sahi v. The State of Bihar 1 Mukherjea, J., observed The meanest of citizens has a right of access to a companyrt of law for the redress of his just grievances This Court, in The State of West Bengal v. Anwar Ali Sarkar 2 , struck down a. 5 of the West Bengal Special Courts Act X of 1950 , which provided that. a special Court shall try such offences or classes of offences or cases or classes of oases as the State Government may by General or special order in writing, direct, as companytravening Art. 14 of the Constitution. Mahajan, J., as he then was, observed Equality of right is a principle of republicanism and article 14 enunciates this equality principle in the administration of justice. In its application of, legal proceedings the article assures to everyone the same rules of evidence and modes of procedure. In other words, the same rule must exist for all in similar circumstances. Mukherjea, J., says to the same effect at p. 322- A rule of procedure laid down by law companyes as much within the purview of article 14 as any rule of substantive law and it is necessary that all litigants, who are similarly situated, are able to avail themselves of the procedural rights for relief and defence with like protection and without discrimination. In Ram Prasad Narain Sahi v. State of Bihar 1 , the same principle has been restated by this Court. 1 1953 S.C.R. 1129, 1143. 2 1952 S.C.R. 284,313,322. There, the Court of wards granted to the appellants therein a large area of land belonging to the Bettiah Raj which was then under the management of-the Court of Wards the Bihar Legislature passed an Act declaring that the settlements granted to the appellants shall be null and void and empowering the Collector to eject the appellants if they refused to restore the lands. In striking down the impugned enactment Patanjali Sastri, C.J., observed This is purely a dispute between private parties and a matter for determination by duly companystituted companyrts to which is entrusted, in every free and civilised society, the important function of adjudicating on disputed legal rights, after observing the well established procedural safeguards which include the right to be heard, the right produce witnesses and so forth. This is the protection which the law guarantees equally to all persons, and our Constitution prohibits by article 14 every State from denying such protection to anyone. In Ameerunnissa Begum v. Mahboob Begum 1 this Court had to companysider the validity of an Act made by the Hyderabad Legislature which provided that the claims of Mahboob Begum and Kadiran Begum and of their respective children to participate in the distribution of the matrooka of the late Nawab are hereby dismissed and that the above decision cannot be called in question in any companyrt of law. This is numberdoubt an extreme case but in declaring that law unconstitutional, Mukherjea, J., as he then was, observed Nay, the legislation goes further than this and deniers to these specified individual a right to enforce their claim in a companyrt of law, in accordance with the personal law that governs the companymunity to which they belong, 1 1953 S.C.R. 404,415. They, in fact, have been discriminated against from the rest of the companymunity in respect of a valuable right which the law secures to them all and the question is, on. what basis this apparently hostile and discriminatory legisla- tion can be supported. A creditor deciding his own case cannot be in a better position then the Legislature, by an Act, rejecting the claim of a particular person. This Court again, in Shree Meenakshi Mills Ltd., Madurai v.Sri A. V. Viswanatha Sastri 1 , struck down s. 5 1 of Taxation on Income Investigation Commission Act, 1947 Act XXX of 1947 , on the ground that the procedure prescribed thereunder is discriminatory in character, having regard to the fact that under the amended s. 34 of the Indian Income-tax Act, 1922, the persons companying under both the sections from the same class. This Court restated the principle that Art. 14 of the Constitution number only, guarantees equal protection as regards substantive laws but procedural laws as well. It has also been pointed out that, though the Act was valid during the pre-Constitution period, after the Constitution came into force the discriminatory procedure cannot be companytinued. In Suraj Mall Mahta Co. v. A. V. Viswanath Sastri 2 , in the companytext of the same Act, viz., Act XXX of 1947, this Court pointed out that though between the two procedures there was some similarity to be followed for catching evaded income, the overall picture was that there was substantial discrimination between the two procedures. In Muthiah v. The Commissioner of Income-tax, Madras 3 , this Court held that s. 5 1 of Act XXX of 1947 offended Art. 14 of the Constitution in view of the amended of s. 34 of the Indian Income-tax Act by amending. Act, XLVIII of 1948 and XXXIII of 1954. This Court, in view of the discriminatory treatment 1 1955 1 S.C.R. 787. 2 1955 1 S.C.R. 448. 3 19552S.C.R. 1247. in the procedure, declared that after the inauguration of the Constitution the persons whose cases were referred for investigation by the Central Government after September 1, 1948, were being discriminated against under drastic procedure of Act XXX of 1947 when those similarly situated were being dealt with by the Income-tax Officer under the amended provision of s. 34 of the Income-tax Act, 1922. This Court, therefore, has number, rightly, companyntenanced discriminatory procedures which are number formal in nature but substantially prejudicial to parties in establishing their rights or in defending against unjust claims. It is, therefore, clear that under our Constitution every person is entitled to equal treatment under similar circumstances in the matter of his access to companyrts. It is true that if there is a reasonable basis for the classification, special tribunals may be created for the trial of cases of a special nature but even so, it is number permissible to make differentiation between cases belonging to the same class or nature. The question in the present case is whether the impugned Act can be justified on the basis of reasonable classification. To ascertain whether there is a reasonable classification, three questions have to be posed, namely 1 What is the object of the impugned Act? 2 What are the differences between the classes of persons bit by impugned Act and those left out ? and 3 have the difference any reasonable relation to the object sought to be achieved ? It is said that the object is to realise the amounts advanced by the Government to finance businesses in full and as speedly as possible, so that the money might be available for further advances to others in the interest of trade and industry. It is further said that there are differences between the State as a creditor and a borrower from the State and any other bank as a creditor and the debtor of that bank. The next step in the argument is that these differences have nexus to the aforesaid, object for it is said that the recoupment of public funds is more important than refilling of private purses. Let me scrutinize this argument from different aspects. The question may be looked at from the stand point of i creditor, ii debtor, iii debt, and iv realisation of debt. The Patiala Act, after the Constitution came into force, extended to the entire Pepsu area. Take three classes of creditors in that area- i The Patiala Bank, ii The State Bank of India, and iii any private Bank. Suppose eah of these three banks advances a sum of Rs. 10,000/- to one debtor or to three different debtors on adequate security. The Patiala Bank, though its officers, can decide what amount is due to it and realize the same by sale through the Nazim or recover the amount through the Accountant General and the debtor is precluded from questioning the determination of the amount or the realization thereof in a civil Court. The other two banks have to file suits and, if necessAry, appeals obtain decrees and execute the same in the usual companyrse. In the asCertainment of the debt and the realization thereof, all the three banks are similarly situated. It cannot be said with any justification that the summary procedure in derogation of all principles of natural justice would be either reasonable or necessary in the case of debt alleged to be due to the Patiala Bank, while it is number necessary in the case of the other banks. If the Managing Director of the Patiala Bank companyld be relied upon for determining the bank dues, why is it the Managing Director of-State Bank or even of a private bank should be prevented from doing so ? It companyld number be said a, a proposition of law that the Managing Director of the Patiala Bank would necessarily be more honest and more companypetent then his companynterpart in other banks so as to be made a judge of his own cause. The entire procedure is travesty of the principle of natural justice. From the standpoint of the debtor, discrimination is more pronounced. The incongruity of the situation would be more emphasized if the same debtor. borrowed different amounts from the three banks two banks would proceed against him in a companyrt of law and the Patiala Bank would decide for itself the amount due from the debtor and recover the same from him. The debtors of the three categories borrowed money, gave securities and ordinarily were entitled to equal judicial process in the matter of determination and realisation of their dues. They may have valid defences to the claim. Ordinarily they shall be entitled to an impartial tribunal for ascertaining the amounts due from them, to a right of appeal to other impartial tribunals to get any errors companyrected. What are the differences between the three categories of debtors in the matter of the object sought to be achieved. The three categories of debtors may well have changed their places and borrowed the same amount on the same security from other banks, all the debtors are liable to pay their creditors, all of them borrowed for their businesses all of them gave security, and therefore, all of them would be entitled to raise their defences, if any. The fact that one borrowed from one bank instead of the other cannot be a difference which has any nexus to the object sought to be achieved. Let us look at the matter from the standpoint of the debt. it is number suggested that the Patiala Bank is advancing moneys on specially favourable companyditions without any security, while the other banks impose, onerous companyditions. All the debts are secured, all of them bear interest, and all of them are payable just like any other debt. In the premises, the only thing that can be said is that the Patiala Bank emerged out of an authoritarian set up, while the other two banks are functioning in a democratic one. But the historical origin of the bank, in the circumstances, has numberrelevance, for we are judging the companystitutional validity of the provisions of the Act in respect of debts advanced after the advent of the Constitution. Article 13 1 of the Constitution expressly declares. 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. Article 13, therefore, does number permit perpetuation of an unconstitutional law on the ground of its historical parentage. It is then said that the Act, in effect and substance, provided special tribunals for determining the amount due to the Patiala Bank and, therefore, the procedure prescribed is reasonable and the appellants and the petitioners cannot have any grievance that they cannot go to a civil companyrt. This argument is untenable. What the appellants and the petitioners companyplain is that this Act, in effect and substance, empowers their creditor to determine the extent of their liability and to decide on their objections to the creditors claim, and that the said, procedure is against all principles of natural justice. It is numberanswer to that argument that the creditor, being a department, of the Government, can be relied upon to decide the case fairly, after following the principles of judicial procedure. The same thing can be said of the other banks, though they are number departments of the Government. The analogies sought to be drawn from Co-operative Societies Act or the Arbitration Act are number only unreal but misleading, for under those Acts the creditor dose number decide the validity of the objections of the debtor but a third party appointed by the Govern- ment in one case or by the parties in the other ease, following the principles of judicial procedure, decides the dispute between the- companytesting parties. That apart, we cannot decide on the companystitutionality of an Act on the assumption of the validity of another Act. The companystitutional validity of other Acts will have to be companysidered on a scrutiny of the provisions of those Acts. It may be asked why a Managing Director of the Patiala Bank or, as a matter for that, the Board of Directors of the said Bank., must be presumed to have greater rectitude or efficiency than the Managing Director of the State Bank or indeed any other reputed bank. It may be companytended with equal justification the every bank in Patiala and indeed every bank in India can be entrusted with judicial powers to decide its claims and realise the dues through the governmental companyrcive machinery. If that was companyceded, it would be the end of the rule of law in our companyntry. Lastly it is companytended that the sections of the Act providing for recovery through the Nazim through the companyrcive process or through the Accountant-General by the withholding payment of amounts, if any, due to the debtors, can be sustained on the basis of the doctrine of reasonable classification. The provisions for realizing the amounts cannot be companysidered separately from the provisions providing for the determination of the debt. Both set of provisions are integral parts of a single scheme. The effect of the said provisions is, a I have already companysidered in detail at the earlier stage, that the debt would be determined and the amounts realized through a companyrcive process and the debtor would be debarred from questioning either the determination of the debtor the realization thereof in any companyrt of law. Reliance is placed upon the judgement of the Court in Manna Lal v. Collector of Jhalawar 1 . The question raised in that case war, whether any loan due to the Jhalawar 3 1961 2 S.C.R. 962. State Bank companyld be recovered as a public demand. This Court hold that it companyld be so recovered. It also repelled the argument that the Act, in so far as it enabled moneys due to the Government in respect of its trading activities to be recovered by way of public demand, offended Art. 14 of the Constitution on the ground that the Government, even as a banker companyld be legitimately Put in a separate class. But the question number raised before us, namely, whether a State Bank companyld be a judge in its own cause, was neither raised number decided there. The decision, therefore, does number companyer the present companytroversy. In my view, there are numberreal differences between Patiala Bank and other banks vis-avis their claims against their companystituents, which companyld reasonably sustain the special treatment mated ,out to the former under the Act. Discrimination is writ large on the face of the Act. In this view, numberother question arises for companysideration. In the result, I hold that the provisions of the Act, in so far as they relate to the Patiala Bank, are companystitutionally void and I issue a writ of mandamus directing the Bank number to proceed to recover the debt alleged to be due from the appellants under the provisions of the Act The appeals and the writ petitions are allowed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 522 of 1959. Appeal by special leave from the judgment and decree dated December 2, 1957, of the Patna High Court in S. A. No. 791 of 1963. P. Singh, for the appellant. Sarjoo Prasad and K. P. Gupta, for the respondents. 1962. April 9. The Judgment of the Court was delivered by SUBBA RAO, J.-This appeal by ,special leave is preferred against the judgment of a single Judge of the Patna High Court, The facts that gave rise to this appeal may be briefly stated to appreciate the findings of the various companyrts and the companyten- tions of the parties, the following genealogy will be useful. Ramlal Rai ------------------------------------- Jamuna Rai Jangbahadur Rai D 1 Kasida Kuer deceased Rameshwar Rai deceased Mst. Kharbuja Kuer Plff. ------------------------------------------------------- Jugeshar Rai Rambirchh Rai Mahessar Rai D 2 D 3 D 4 The case of the plaintiff, who is the widow of Rameshwar Rai, is that her husband and Jangbahadur, defendant 1, effected a partition of the family property in or about 1924, that after the partition he was in exclusive possession of the property that fell to his share, that he died in the year 1930, that thereafter she and her mother-in-law companytinued to be in possession of the said property,, that her mother-in-law died in 1938, that the first defendant asked her and her mother-in-law to execute a power of attorney in his favour, that they, being pardha- nashin ladies, executed a document in his favour on August 24, 1935, believing it to be a power of attorney, that subsequently they came to know that it was a maintenance deed companytaining false recitals to the effect that there was numberseparation and that the property was joint family property. They also alleged in the plaint that the, deed in question was never read out to them, that the scribe and the attesting witnesses were partisans of the first defen- dant. It was also alleged that the document was always in the custody of the first defendant, that the plaintiff and her mother-in-law, till the latter is death, were getting the income from the property as they were getting before the execution of the said document and that they came to know of the fraud only in 1355 fasli, when the first defendant began to interfere with the possession and occupation of the property by the plaintiff and disclosed to several people that she had only a right to maintenance and thereafter when she got the document read over to her and discovered the fraud. With those allegations, among others, the plaintiff filed a suit in the Court of the Munsif, Muzaffarpur, for the following reliefs On a companysideration of the aforesaid facts and also on adjudicating the plaintiffs title and the absence of title of the defendants, it may be adjudged by the companyrt that the deed of agreement for maintenance is altogether fraudulent and number binding upon the plaintiff. The relief claimed is rather involved, but in sub. stance it is a relief for a declaration of the plaintiffs title to the suit property and for a declaration that the maintenance deed, having been executed by fraud, was number binding on her. The defendant denied the allegations companytained in the plaint and alleged that the deed of maintenance was read over and explained to the plaintiff and her mother-in-law and that one Babu Ramnath Singh, brother of the plaintiff, was present at the time of the execution and affixed his signature on behalf of the plaintiff. He denied that he had companymitted any fraud. On the pleadings the following issues, among others, were framed Issue No. 3-Is the allegation of separation between Rameshwar Rai and defendant No. 1 in the month of Asardh 1334 Fs. 1927 companyrect? Issue No. 4-Is the document dated 24-8-1935 legal and valid? Was the same read over to the plaintiff and the plaintiff executed it with the full knowledge of the companytents? Issue No. 5-Are the plaintiffs entitled to the reliefs claimed? It will be seen from the issues that the burden of proof to establish separation was placed on the plaintiff and that to prove that the document was read over to the plaintiff and executed by her with full knowledge of the companytents was laid on the defendant. On a companysideration of the entire evidence., the learned Munsif found on issues 3 and 4 that Rameshwar Rai died in state of separation from Jangbahadur, that the plaintiff and her mother-in-law were ignorant pardhanashin- ladies, that the two ladies had full companyfidence in the 1st defendant, and that the document, Ex. C. was number read over to the plaintiff and she did number execute it after understanding the companytents thereof. On those findings the suit was decreed in terms of the plaint prayer. On appeal, the learned Subordinate Judge companysidered the entire evidence over again and accepted the said two findings given by the learned Munsif and companyfirmed the decree. But, on second appeal, Imam, J., set aside the companycurrent findings of the two companyrts mainly on the ground that the companyrts had thrown the burden of proof wrongly on the defendant. In the words of the learned Judge, it was the duty of the plaintiff to prove that there was fraud companymitted and as that had number been established the question whether the document had been read over and explained to the plaintiff, in my opinion, in the circumstances, does number arise. He companysidered the evidence from that standpoint and held that the plaintiff had number established her case and on that finding, he dismissed the suit. Mr. D. P. Singh, learned companynsel for the appellant, raised before us two companytentions, namely, 1 the learned Judge of the High Court was wrong on the question of burden of proof, and 2 the learned Munsif and the learned Subordinate Judge had number only thrown the burden of proof rightly on the defendant, but they had also given their findings On the entire evidence, and therefore the burden of proof became immaterial and the findings of fact given by the said companyrts were binding on the High Court under s. 100 of the Code of Civil Procedure. Mr. Sarjoo Prasad, learned companynsel for the respondents, on the other hands, companytends that the finding on the question of separation was halting and was clearly illegal, number having been based on evidence, either oral or documentary, and that though the initial burden to prove that the document was read over and explained to the widow, was on the defendant, the evidence and the circumstances of the case clearly discharged that burden. It is settled law that the High Court has numberjurisdiction to entertain a second appeal on the ground of erroneous finding of fact. In the instant case the learned Munsif and, on appeal, the learned Subordinate Judge found companycurrently that the two widows put their thumb marks without understanding the true import of the document. Imam, J., in second appeal reversed the said findings on the ground that they were vitiated by an erroneous view of the law in the matter of burden of proof. The judgment, if we may say so with respect, companysists of propositions which appear to be companytradictory. The learned Judge, after reviewing the case law on the subject, companycludes his discussion by holding that it was the duty of the plaintiff to prove that there was fraud companymitted and that, as that had number been established, the question whether the document was read over and explained to the plaintiff, in his opinion, in the circumstances, did number arise. This proposition, in our view, is clearly wrong and is companytrary to the principles laid down by the Privy Council in a series of decisions. In India pardahnashin ladies have been given a special protection in view of the social companyditions of the time, they are presumed to have an imperfect knowledge of the world, as by the pardah system, they are practically excluded from social intercourse and companymunion with the outside world. In Farid-Un-Nisa v. Mukhtar Ahmad 1 , Lord Sumner traces the origin of the custom and states the principle on which the presumption is based. The learned Lord observed In this it has only given the special development, which Indian social usages make necessary, to the general rules of English law, which protect persons, whose disabilities make them dependent upon or subject them to the influence of others, even though numberhing in the nature of deception or companyrcion may have occurred. This is part of the law relat- ing to personal capacity to make binding transfers or settlements. of property of any kind. The learned Lord also points out Of companyrse fraud, duress and actual undue influence are separate matters. it is, therefore, manifest that the rule evolved for the protection of pardahnashin ladies shall number be companyfused with other doctrines, such as fraud, duress and actual undue influence, which apply to all 1 1925 L.R. 52 I.A. 342, 350, 352. persons whether they be pardanashin ladies or number. The next question is what is the scope and extent of the protection. In Geresh Chunder Lahoree v. Mst. Bhuggobutty Debia 1 the Privy Council held that as regards documents taken from pardanashin women the companyrt has to ascertain that the party executing them had been a free agent and duly informed of what she was about. The reason for the rule is that the ordinary presumption that a person understands the document to which he has affixed his name does number apply in the case of a pardanashin woman. In Kali Baksh v. Ram Gopal 2 , the Privy Council defined the scope of the burden of a person who seeks to sustain a document to which a pardanashin lady was a party in the following words ,,In the first place, the lady was a parda- nashin lady, and the law throws round her a special cloak of protection. It demands that the burden of proof shall in such a case rest, number with those who attack, but with those who found upon the deed, and the proof must go so far as to show affirmatively and companyclusively that the deed was number only executed by, but was explained to, and was really understood by the grantor. In such cases it must also, of companyrse, be established that the deed was number signed under duress, but arose from the free and independent will of the grant or. The view so broadly expressed, though affirmed in essence in subsequent decisions, was modified, to some extent, in regard to the nature of the mode of discharging the said burden. In Farid-Un-Nisa v. Mukhtar Ahmad a it was stated The mere declaration by the settlor, 1 1870 13 M. I. A. 419, 2 1913 41 I. A. 23,29, 3 1925 L.R. 52. I. A. 342, 350, 352. subsequently made, that she had number under stood what she was doing, obviously is number in itself companyclusive. It must be a question whether, having regard to the proved personality of the settlor, the nature of the settlement, the circumstances under which it was executed, and the whole history of the parties, it is reasonably established that the deed executed was the free and intelligent act of the settler or number. If the answer is in the affirmative, those relying on the deed have discharged the onus which rests upon them. While affirming the principle that the burden is upon the person who seeks to sustain a document executed by a pardanashin lady that she executed it with a true understanding mind, it has been held that the proof of the fact that it has been explained to her is number the only mode of discharging the said burden, but the fact whether she voluntarily executed the document or riot companyld be ascertained from other evidence and circumstances in the case. The same view was again reiterated by the Judicial Committee, through Sir George Rankin, in Jagadish Chandra v. Debnath 1 . Further citation is unnecessary. The legal position has been very well settled. Shortly it may be stated thus The burden of proof shall always rest upon the person who seeks to sustain a transaction entered into with a pardanashin lady to establish that the said document was executed by her after clearly understanding the nature of the transaction. It should be established that it was number only her physical act but also her mental act. The burden can be discharged number only by proving that the document was explained to her and that she understood it, but also by other evidence, direct and circumstantial. If that be the law, a perusal of the judgments of the three companyrts demonstrates that while the A.I.R. 1940 P.C. 134, learned Munsif and the learned Subordinate Judge approached the case from a companyrect perspective, the High Court misled itself by a wrong approach. The relevant issue we have already extracted shows that the burden was thrown upon the defendant. The first two companyrts approached the evidence from that standpoint and gave a companycurrent finding that it had number been established that the plaintiff executed the document after understanding the nature of the transaction. Apart from the burden of proof, also on the facts found they came to the same companyclusion. The High Court, having wrongly held that the approach of the two companyrts was number companyrect and having wrongly thrown the burden upon the plaintiff companysidered the evidence afresh and set aside that finding. As the two companyrts approached the evidence from a companyrect perspective and gave a companycurrent finding of fact, the High Court had numberjurisdiction to interfere with the said finding. Learned companynsel for the respondents companytends that on one of the crucial findings which influenced the first two companyrts in companying to the companyclusion which they did, namely, the finding on the partition in the family, was number based on evidence and that, indeed, both the parties agreed that question was irrelevant to the main question raised in the suit. He further said that the learned Munsif, having rightly held that the burden of proof to establish separation was on the plaintiff and having held that there was numberacceptable oral evidence and that the documentary evidence adduced was number sufficient to sustain partition, should have found that the presumption under the Hindu law was number rebutted. It is true that before the learned Munsif the Advocates appearing for the parties companytended that it was number necessary to give any finding on issue No. 3 and that the suit companyld be disposed of without giving any finding thereon. But the learned Munsif rightly did number accept the said suggestion and held that the issue bad been framed on the pleadings and that all the relevant evidence had been adduced and that it was only proper to give a finding thereon. The learned Subordinate Judge pointed out that the main point for companysideration was number the matter of jointness or separation, but only the validity or genuineness of the deed itself, and that the question of separation or jointness thus only becomes a link in the chain to judge the validity or otherwise of the document, Ex. C. This statement of the learned Subordinate Judge is unobjectionable. The question of partition in the family was a circumstance which would have an important bearing on the question of probability of the widows executing a document admitting that there was numberpartition in the family and that they bad numberabsolute interest in the said property. Now companying to the evidence, we cannot accept the argument of learned companynsel for the respondents that there was numberevidence in the case to rebut the presumption of Hindu law that a family is joint. The learned Munsif said that there was numberdocumentary evidence on behalf of the plaintiff to prove separation by that statement he meant that the partition was number effected by a written document, for the next sentence made it clear when he said that it was due to the fact of alleged oral partition. Then he companysidered the documents filed by the defendants in great detail and came to the companyclusion that the said documents were number inconsistent with partition. Then he discussed the oral evidence. He had companysidered the evidence of five witnesses examined on behalf of the plaintiff and of seven witnesses examined on behalf of the defendants. He also numbericed pieces of circumstantial evidence. After companysidering the entire evidence, oral, documentary and circumstantial, he came to the following companyclusion Although he oral evidence on both the sides on the point of jointness and separation is number satisfactory but from the circumstances adduced from the facts of the case I am companyvinced that Remeshwar died in states of separation from Jangbahadur. It cannot be said from the said finding that he rejected the oral evidence. It may be that the oral evidence adduced on behalf of the plaintiff was number as satisfactory as it should be, but he preferred that evidence, which supported partition, in view of the circumstances found on the evidence. The finding, whether it is companyrect or number, is certainly a finding of fact and it cannot be said that it is number based on evidence. Now companying to the appellate companyrt, the learned Subordinate Judge reviewed the entire evidence, oral, documentary and circumstantial, and arrived at the following findings In view of the facts and the circumstance narrated above, while the probabilities are that there was a disruption in the joint family of Rameshwar and Jangbahadur as alleged by the plaintiff, the defendants have failed to prove beyond all doubts that the family companytinued to be joint at the time of Rameshwars death, or that they came in exclusive possession of the properties left behind by him. Judging Ex. C, in this light, we find that if the fact of separation between Rameshwar and Jangbahdur as alleged by the plaintiff, be accepted to be true, as has been shown above, then the fraud in the execution of this document is patent, and numberdiscussion is required to declare it as a forged and fradulent document. It is true the finding companyld have been more explicit, but that does number detract from its finality. In the first part of the finding, the learned Subordinate Judge says in effect that, having regard to the facts and circumstances he had discussed earlier the burden shifted to the first defendant, who did number adduce acceptable evidence to dislodge the circumstances against jointness. But in the second part of the finding he makes it clear that be had found that there was partition in the family. The finding is again a finding of fact. That a part, the High Court did number in any way question the companyrectness of the finding of the learned Munsif and the learned Subordinate Judge, but only ignored it on the ground that it was number the duty of the lower appellate companyrt to deal with that question at all. We cannot appreciate the observations of the learned Judge of the High Court, for, in our view, that finding, as the learned Munsif pointed out, arose on the pleadings and, as the lower appellate companyrt pointed out, had a direct impact on the main question to be decided in the case. We, therefore, hold that the said finding was binding upon the High Court. Even if that finding was ignored, there was sufficient material to sustain the finding of the first two companyrts. Both the companyrts found that the first defendant, on whom the burden lay, number only did number establish that it was executed by the plaintiff with the knowledge of its companytents, but that even apart from the burden of proof, that they also found that the plaintiff and her mother-in-law put their thumb marks on the document under the impression that it was a power of attorney. The finding is one of fact and was based upon the following relevant facts 1 The plaintiff and her mother-in-law were pardanashin and illiterate women- one of them was old and the other was middle-aged. 2 They had full companyfidence in the first defendant. 3 Babu Ramnath Singh, who wrote the names on the document was number proved to be the brother of the plaintiff. 4 The document was in the custody of the defendant. 5 The plaintiff and her mother- in-law were in enjoyment of the property as they were enjoying it even before the execution of the document. 6 The defendant had number examined either Babu Ramnath Singh or other important witnesses who companyld have proved the fact that the plaintiff and her mother-in-law had the knowledge of the nature of the document. 7 The defendant managed to get this document by fraud to facilitate mutation of the property in his name. And 8 the plaintiff gave acceptable evidence in support of her case. The finding of the both the companyrts is supported by evidence, and there is numberpermissible ground for interference with it in second appeal. For the aforesaid reasons, we find that the learned Judge of the High Court had erroneously interferred with the companycurrent findings of fact arrived at by the first two companyrts.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Petition No. 264 of 1961. Petition under Article 32 of the Constitution of India for the enforcement of Fundamental Rights . V. Viswanatha- Sastri and R. Gopalakrishnan for the Petitioner and Gurbakash Singh Intervener . K. Daphtary, Solicitor General of India, Ganapathy Iyer and P.D. Menon for the respondent. C. K. Daphtary, Solicitor-General of India, and Naunit Lal for Khem Singh Intervener . S.R. Chari and K. R. Choudhri, for Jagatpati Dass Intervener . 1962. April II. The Judgment of the Court was delivered by AYYANGAR, J.-The question raised in writ Petition No. 264 of 1961 relates to the companystitutionality of an order passed on April 20, 1955, by the Ministry of Defence by which, in modification of certain orders passed previously thereto, certain rules were laid down for the companyputation of the seniority of Clerks falling within the category of Extra Temporary Establishment Service. The petitioner was employed by the Ministry of Defence Army Ordnance Corps on February 6, 1942 as an Extra Temporary Establishment Clerk. The nature of this service and its history are the matters which arise for companysideration in the petition. It is the case of the petitioner that by reason of certain orders of Government which would be referred to in due companyrse, there was an amalgamation of the service known as the numberindustrial Staff in the Extra Temporary Establishment with., those in another parallel service known as the Temporary Establishment and that as a result seniority in both these services had to be reckoned on the same basis, viz., the date when any employee entered service. The Union Government, however, it in alleged, illegally discriminated against the Clerical personnel which were originally known,as the Extra Temporary Establishment of which the petitioner was formerly a member by the order number impugned, with the companysequence that persons much junior to him have superseded him and in fact, 610 Clerks who belonged to the former Temporary Establishment had thus gained seniority over him. He has accordingly filed this petition impugning the companystitutional validity of this order of Government and for a direction that his seniority be companyputed without reference to this order. It will thus be seen that though the petitioner seeks relief for himself, the points involved in the Petition affect the entire personnel of the Extra Temporary Establishment who would be governed by the impugned order and these are. said to number nearly 6,000. It is only necessary to add that a petition for intervention seeking to support the petitioner has been allowed and we have heard Mr. Chari on behalf of the intervener. The number of employees who would be adversely affected if the impugned order was set aside is also stated to be companysiderable-variously estimated from 600 to one thousand and one of this group has also intervened to resist the petition. We are stating these matters for pointing out that the question raised in the petition and its result would affect a very ,large number of employees of Government. To understand the grievance of the petitioner it is necessary to set out in detail the history of the Extra Temporary Establishment Clerks in the Defence Services. As early as 1925 Temporary Clerks came to be recruited in the Defence Establishment of the Army Ordnance Corps but the temporary hands were recrated as against sanctioned posts. The companytrol of this service was central and they were borne on the records of the A. 0. C. Army Ordnance Corps records at Jubbalpore number transferred to Secunderabad . This state of affairs companytinued till about 1933 when a need was felt for recruiting a much larger establishment including Clerks than companyld be accommodated in the sanctioned posts. special provision was made for enabling this additional recruitment to be effected by making rules under the Financial Regulations of India referred to generally as FRI by which this special recruitment was to be effected. Personnel so recruited were known as the Extra Temporary Establishment. In regard to the Service of which the Petitioner was a member, the companycerned clerical personnel companyld be recruited in the Ordnance factories under FRI Part I Para 25 of 1933 on a pay number exceedings Rs. 250/-p. m. and for a period number exceeding one year. As regards them there was numbercentral office where their records were maintained, as in the case of the Temporary Establishment, but the records were maintained unit wise- in the office of the Director who recruited them. All such Extra Temporary Establishment personnel serving on the 31st of March of any year sanctioned for. more than six months were to be regarded as technically discharged on that date and were to be reappointed by the Director of Ordnance factories or Director of Ordnance Services, as the case may be, under these powers, if necessary having regard to the manufacture programme for the ensuing financial year. Powers to recruit on similar terms were also companyferred upon other Directors. As regards persons whose work was of a clerical nature, this rule provided that they might be rec- ruited on daily rates of wages ranging from Rs. 18/- to Rs. 3/-per day, but just as in the case of the monthly paid staff, those serving on the 31st of any year were to be regarded as technically discharged on that date and their re-engagement for latter periods had to be arranged in accordance with these rules. After the companymencement of the second World War the recruitment of the Extra Temporary Establishment Clerks took place in very large numbers and by a Government of India dispatch dated August 6, 1941, the Master-General of Ordnance in India was permitted to recruit for the period of the war in the Indian Army Ordnance Corps Establishments clerical Staff on monthly rates of pay instead of on daily wages. They were to be of three categories-Grade A, Grade B and Grade C with differential pay and differential qualifications for recruitment and this order of the Government of India stated-- The pay of these men will companytinue to be debited in the same heads of the ETE Extra Temporary Establishment budget as at present. They will be subject to a months numberice on either side except in the case of misconduct when they will be liable to imme- diate dismissal after investigation by Chief Ordnance Officers. A further paragraph of the same order recited These Extra Temporary Clerks would number be liable to transfer from one station to another except on their own request, and their scales of pay having been companyverted from daily into monthly rates, they were debarred from making claims for overtime pay. This order of ,August 6, 1941, was clarified by a later order of July 25, 1942, companyveying the sanction of the Governor General in Council to the maintenance of the Extra Temporary Establishments of Clerks on two distinct terms of service 1 on daily rates of pay, and 2 on monthly rates, the former being entitled to overtime to which the latter were denied. This later order retaining the qualifications and the other Conditions of service which had been prescribed for these Extra Temporary Clerks by the order dated August 6, 1941 also provided for an appreciable improvement in the rates of monthly wages sanctioned for Grade A over those that then prevailed and instead of a minimum or starting salary of Rs. 65/- provided for in the earlier order this was raised to Rs. 85/- under the later. We have already pointed out that there was a larger volume of Temporary staff, as distinguished from the Extra Temporary Establishment referred to just number which had been recruited from 1925 onwards. As regards the Temporary Establishment there appeared to have been large variations in the methods of recruitment, scales of pay, companyditions of service etc. which came in as a result of the heavy recruitment which took place after the companymencement of the second World War, when the need for a larger staff in these establishments became imperative,. Towards the close of the war and when it was about to end the companyditions of service of the Temporary clerks were rationalised and unified scales of pay were introduced, this being effected by Army Instructions India No. 676 of 1945 passed by the Government of India. These Instructions or decisions were to have effect from September 1, 1944. The matters specially provided for by this order of 1945 were 1 the clerical staff were divided into three grades A, B and C, Grade A companyresponding to the Upper Division Clerks and B and C to the Lower Division. The method of recruitment to each of these grades, the educational qualifications to be satisfied and the proportions in which Grades B and A were to be filled by promotion from the grades just below were all laid down. 2 All clerks were required to under take liability for service anywhere in India and were to be enrolled as numbercombatants and for accepting this liability they were to receive an additional remuneration. 3 Their scales of pay were unified and rationalised, house rent allowance was made payable for personnel serving at specified places. Having thus providing for unification of the scales of pay,these Instructions made provision for persons already in service to exercise their option to be governed by the new rules, the option having to be exercised within three months from the date of the issue of the Instructions and if exercised Was to be effective retrospectively from September 1, 1944 from which date, as stated earlier, the Instructions were to have effect. Having thus provided for the Temporary Clerks, the Instructions recited that separate orders will be issued regarding the option to elect the revised terms by the ETE personnel who are serving at present on the rates of pay fixed under Rule 25 FRI- rule whose terms we have already extracted. The promised order as regards the ETE personnel was issued in 1946 and is headed Army Instructions India 458 of 1946. By this order the Extra Temporary Clerks serving on or after September 1, 1944 on rates of pay fixed by Rule 25 FRI were given the option to elect to be governed by the provisions of the Army Instructions 676 of 1945 subject to certain provisions 1 the companypetent authority must companysider the clerk as suitable, and 2 such clerks should have., since September 1, 1944, rendered service during minimum specified periods of the type prescribed. To those who satisfied these companyditions provisions was made for 1 the companyputation of the pay under the revised Scale of those who were drawing daily wages, and 2 the period within which the clerks companyld elect, it being provided that if they did so their election would have effect from September 1, 1944, or the date of the companymencement of their service whichever was later. The previous companytinuous service rendered before September 1, 1944, was to companynt towards the minimum period for promotion and it went on to add that in all other respects the terms and companyditions laid down in Army Instructions 676 of 1945 would apply. One of the questions debated before us was whether by reason of Army Instructions 458 of 1946 the two Services, those of Temporary Clerks and the Extra Temporary Clerks had become integrated and, so to speak, became a unified service with a companymon seniority roll but to this we shall advert a little later. A very large number of the Extra Temporary Civilian Clerks, and among them the petitioner, opted to be governed by the revised rules and the companypetent authorities acceded to this request and they came to be governed by the revised rules. The precise effect of Army Instructions 458 of 1946 in relation to the Extra Temporary Clerks and the question whether how far, by reason of their opting to be governed by rules similar to these governing the Temporary Clerks under Army Instructions 676 of 1945, there was any integration of the two Services appears to have been for some time a matter of doubt. If the two Services of Temporary Clerks and Extra Temporary Clerks were to be treated as integrated as a result of their being governed by similar or almost similar companyditions of service, then a companymon roll based upon seniority dependent upon the date of their entertainment in service would have to be maintained on an All India scale, whereas if they companytinued to be merely parallel Services governed by similar or even identical rules, the two Services would be different and distinct and numberquestion of inter se seniority between members of the two Services would arise and promotions in each group would be companyfined to the personnel in that group. This question engaged the attention of the authorities and in an order dated August 14, 1946, the following position was taken The maintenance of an All India Promotion roll for a small proportion of the clerks employed under Army Instructions 676 of 1945 temporary clerks who would serve in depots where large numbers of ETE were employed on similar terms but with more rapid prospects of promotion would obviously create immediate anomalies and dissatisfac- tion 3 , As an interim measure it was therefore decided that the All India Rule would, for purposes of temporary promotion and recruitment, cease to operate and that interim establishment and ETE vacancies would be amalgamated for purposes of unit promotion under the companytrol of O.I C Records 7 small units where 0. U. No. Civilian clerks are employed and promotion prospects are stagnant should, wherever practicable, be affiliated to larger depots where there is a big ETE element for purposes of inter-unit transfer and. promotion. Instructions were also given as regards the fund from which the pay of the two establishments should be disbursed. It would thus be seen that the question whether companyplete integration should take place, the difficulties or hardship which integration might involve upon the one group and the other were being appraised. Very soon, however, after these instructions were issued a question arose whether clerical personnel belonging to the Extra Temporary Establishments, who had accepted the unified scales of pay under Army Instructions 458 of 1946 were still required to be technically discharged annually under Rule 25 FRI. On February 3, 1947, with the companycurrence of the Financial authorities, it was decided that such personnel were required to be discharged annually, though the technical discharge would neither affect the agreements which they executed when entering service number render them inoperative. Up to this date the question whether the two Services were integrated into a single unified Service with inter se seniority depending on length of service bad, if at all, to be spelt from the numberification dated August 14, 1946 whose terms we have extracted earlier. We have already pointed out that bringing these employees into a companymon roll was giving rise to hardships so for as Temporary Clerks were companycerned for they were fewer in number than the Extra Temporary staff, and, as pointed out already while there are at present 6,000 Extra Temporary Clerical personnel, the category of Temporary Clerks is apparently about a thousand. In view of the difficulties and the hardships which were companysidered as having been caused to the Temporary Clerks, the order dated August 14, 1946, was cancelled by one dated February 15, 1947. The latter reads The question of amalgamation of ETE and ISP Indian Superior Personnel rolls has recently been discussed at BIOAC companyference at General Headquarters and decided that these two rolls are number to be amalgamated. In view of the above this office No.10955 RC dated August 14, 1946, referred to above should be companysidered as cancelled. Thus a definite decision were taken that the two groups were number to be amalgamated. and the two Services unified so as to provide a companymon roll. This has to be brone in mind in understanding the next order of the Government of India which is dated August 19, 1949. It starts by saying- The Government of India have had under companysideration the question of revising the companyditions of service of establishments known as Temporary Establishment Ordnance factories and Extra Temporary Establishments or Extra Temporary artisans or casual personnel in the Military Engineering Service. It proceeded to state that the Government had decided to abolish, the designations just number mentioned and to treat such estab- lishments as temporary and to classify them into two categories a number-industrial, and b industrial employees. Paragraph 3 1 read With effect from August 1, 1949 the establishment defined under para 2 a number- industrial Clerical establishment will be brought on to the regular establishment and be entitled to all the benefits of that establishment in the matter of leave, pension, provident fund etc. under the Civil Service Regulations, Civilians in Defence Services Temporary Service Rules, 1949 and other relevant rules applicable to the regular temporary on permanent establishment, as the case may be. 3 v ran It should be made clear to the staff companycerned that on being brought on to the regular establishment, they will be treated as whole-time regular Government servants in every way-------- Though under this order of the Government of India the Services were brought together, the terms upon which the integration should take place and the manner in which inter se seniority between member of the two categories was to be determined was number specifically dealt with. This gave rise to doubts which was clarified by a Ministry of Defence companymunication dated January 4, 1950, in which questions raised by officers whose duty it was to implement the scheme, were answered. of these, question 15 is that which is relevant in the present companytext and it ran in these terms On the abolition of the ETE and the inclusion of number-industrial employees in the IPE Interim Peace Establishment how should their seniority be determined vis-a-vis those who are in the IPE on July 31, 1959 The answer of the Government to this was Where it is possible to merge the estab- lishments into one cadre the seniority of the erstwhile ETE vis-a-vis IPE should be reckoned only from August 1, 1949--the date from which they have been treated as members of the temporary establishment and their seniority amongst themselves regulated by their seniority in the old ETE. Where it is number practicable to merge all the establishments into one cadre on an All India basis the establishment of the old ETE and the present IPE should be kept separate. A formal order setting out this answer was issued by the Ministry of Defence on June 7, 1951. Thereafter representations were made to the Government of India by those who formed the former Extra Temporary Establishment to reconsider the answer to question 15 and the formal companymunication of June 7, 1951. It was urged before the Government that the Extra Temporary Clerk as well as the Temporary Clerks had both, grade, for grade the same qualifications, were performing duties of an identical nature, were governed by practically the same Service companyditions and that in these circumstances it was number proper that for reckoning seniority inter se between members of these two Services the service of the members of the Extra Temporary Establishment before August 1, 1949, should be ignored and that it was only on the date when these persons were brought into the companymon pool that they should be treated as having joined the Service. These representations were companysidered by Government and they passed an order on April 20, 1955, in these terms In modification of the orders companytained in para 5 of the above CPRO-the order dated June 7, 1951-in so far as Clerks ex ETE are companycerned, half of the companytinuous ETE service rendered by them prior to August 1, 1949 in the grade companycerned, and or in equivalent grades, shall companynt for seniority in the case of those whose seniority in the amalgamated roster of ex ETE and ex ISP employees has been fixed as from 1st August 1949. This implies that half of the period from the date of seniority amongst ETE prior to 1st August 1949 shall also be taken into account in addition to service w.e.f 1st August 1949 for the purpose of fixing their seniority in the amalgamated roster The revised seniority lists of clerical cadre will be drawn up immediately on the basis of these orders. It is the companystitutional validity of this last order that is challenged in these proceedings. The companytentions urged on behalf of the petitioner may be briefly stated thus The Extra Temporary Clerks and the Temporary Clerks possessed the same qualifications, grade for grade, discharged the same duties, and were governed by substantially similar Service companyditions. While so, under the impugned order of 1955 while a Temporary Clerk has a right to have his seniority based on the length of-his actual service, in the case of Extra Temporary Clerks like the petitioner, though he had been in service since 1942 that entire service is number taken into account in fixing the seniority in the amalgamated roll, but only half the period between 1942 to 1949, and so persons who entered service long after him as Temporary Clerks have number been given places of seniority above him with result that these others are entitled to be promoted to higher grades much earlier than the petitioner. In saying this he is voicing number merely his own companyplaint but that of the entire class of Extra Temporary Clerks vis-a-vis the Temporary Clerks. The submission is that such a discriminatory treatment of one set of employees as against another rests on numbervalid or reasonable basis and the fact that in the case of the member of one Service his pay was debited to one head while in ,the case of the other to a different head-which is stated to be a justification for the differentiation, companyld number serve as any ground for classification and is companysequently violative of the equal protection guaranteed by Art, 14 of the companystitution as well as of the guarantee of equal opportunity for employment companytained in Art. 16 1 . In this companynection learned Counsel relied on the decision of this Court in General Manager, Southern Railway v. Rangachari 1 In which this Court held that Art. 16 1 guaranteed number merely an equality in regard to initial employment i.e., recruitment but also ensured that there shall be equality throughout the length of the service including the right to promotions. It was strongly urged that the order of the Government of India of 1955 violated the rights guaranteed by there two Articles and that companysequently we should strike down the order and direct government to proceed by taking 1 1962 2 S. C. R. 586. into account the actual entry into service of petitioner and of other members of the Extra Temporary Establishment in companyputing their seniorty vis-a-vis the Indian Superior Personnel in the amalgamated group of Temporary and Extra Temporary Clerks. It was further submitted by Mr. Sastri, learned Counsel for the petitioner that numberdoubt,, to start with, the Extra Temporary Clerks and the Temporary Clerks really formed members of different Services, so that numberquestion of inter se seniority between the members of these two services arose. By Army Instructions 676 of 1945 an uniform scale of pay and allowance was brought into effect in regard to the Temporary Clerks. Upto that stage the Extra Temporary Clerks companytinued to form a separate Service. These Instructions however, companytemplated that an unification on similar line s would be effected of the Extra Temporary Clerks and it was in view of this companytemplated result that in paragraph 3 it recited Separate orders will be issued regarding the option to elect to revised terms by those ETE personnel who are serving at present on the rates of pay fixed by Rule 25 PRI. The promised numberification was issued in 1946- Army Instructions 458 of 1946. Just as in the case of the Temporary, Clerks, an option was given to the Extra Temporary Clerks to opt for the new scales and similarly when such personnel opted, the new scales were to have effect from the same date September 1, 1944. Paragraph 7 of these Instructions of 1946 expressly provided In all other respects the terms and company- ditions laid down in Army Instructions 676 of 1945 will apply. Which went very near unification of the two Services. Even if, however, it be companysidered that the two Services of the Temporary and Extra Temporary Clerks companytinued as distinct Services each with its own roll of seniority, though their companyditions of service were identical, amalgamation of the two Services took place by virtue of the letter 10955 dated August 14, 1946, from the AOC Records, Jubbalpore addressed to the other Army Establishments. We have already extracted the material portions of this order and we are therefore number repeating them. Learned Counsels point was that by this companymunication of August 14, 1946, the distinct identity of the two Services, as stated above, was done away with and there was thereafter only one Service which would necessitate a companymon roll being prepared for determining inter se seniority between clerks in the companybined roll. It was further urged that this amalgamation or unification was brought one stage nearer accomplishment by the order of Government dated August 19, 1949, so that on the date of the Constitution there was an unified Service companyprising both the Temporary as well as the Extra Temporary Clerks. The order of the Government dated April 20, 1955, was thus a reversal of the policy which had progressed in one direction from 1945 to 1949 and which involved as a necessary and logical companyollary an amalgamated roll in which seniority was to be determined by the date of a persons entry into service and would be independent of his having been originally or historically a member of either the Temporary or the Extra Temporary Establishment. , By the order number impugned the Government had deprived a large number of employees of the seniority and chances of promotion to which they were entitled before then, and the deprivation of these rights companyld number be justified on any reasonable or rational grounds and was therefore in violation of Arts. 14 and 16 1 of the Constitution. No doubt, if Counsel is right in his submission that on the date the Constitution came into force, a class of employees of the Government were entitled to certain rights, the deprivation of those rights by an order passed by government might in companyceivable cases give rise to a companyplaint of a violation of Art. 14 or Art. 16 1 . The Constitution however, is number retrospective and if before January 26, 1950, by reason of orders passed by Government, the rights of the petitioner and those like him had become settled, the petitioner cannot invoke the companystitutional guarantees under Part III or the machinery for their enforcement, for chal- lenging the legality of the orders passed before the Constitution. The entire foundation of the argument has to be, and in fact was, that the petitioner and the Extra Temporary Clerks of whom he is one, had a right to seniority based upon their length of service at the date of the Constitution. In order to establish this Mr. Viswanath Sastri, when he opened his case, laid great stress on the companymunication dated August 14, 1946, as effecting an amalgamation between the two Services. By its terms it certainly renders such an argument possible and if the scheme companytained in it companytinued there might be a great deal of force in the argument of learned Counsel that an unification of the two Services had been effected and that the later order of Government of August 19, 1949 companypleted this process. The hurdle in the way of learned Counsel however, is that the scheme of unification companytemplated by the companymunication of August 14, 1946 was given up in February 1947 and this companymunication was formally cancelled. The companymunication dated February 15, 1947, by which that of August, 1946, was cancelled was number referred to in the petition, and when the Union of India relied on it in the companynter-statement filed by it, the reply of the petitioner in his rejoinder was, that this companymunication was issued because of pressure and that numberregard should be paid to it because it was based on numberprinciple or reason and was bad as being arbitrary. This was number the line, however, that learned Counsel adopted in his arguments. First learned Counsel faintly suggested that the later letter companyld number possess the same validity or force as that of August 14, 1946. This submission is entirely without foundation. Both are companymunications from officers of the Defence Services to other officers and they possess equal weight. If the order dated August 14, 1946, companyld companyfer rights, that dated February 15, 1947, companyld deny those rights. In fact, from the companyrespondence it looks as if the first was a mere tentative order passed at a time when experiments were being made in an attempt to unify the two Services. If therefore the companymunication dated August 14, 1946, has to be ignored, the position resolves itself into this under the Army Instructions of 1945 the Temporary Clerks were between themselves unified into one Service with companymon service companyditions, companymon grades of pay etc., the members of that Service being granted an option to elect to be governed by the revised companyditions which, if opted for would have effect from September 1, 1944. Similarly, the Extra Temporary Establishment came by reason of the Army Instructions of 1946., in regard to their own service, to be governed by uniform companyditions of service, grades of pay, allowances etc. with a similar option to the members of that Service to opt for the new companyditions which would have effect, again from September 1, 1944, in the event of their so opting. The words in paragraph 7 of the Army Instructions of 1946 in relation to the Extra Temporary Clerks, that the other companyditions of service of these personnel would be the same as the Temporary Clerks would mean, in the companytext, that as regards provident fund, leave etc. they would be governed by similar rules but the effect of the two Army Instructions were that the two Services remained separate and were number amalgamated into an unified Service. Mr. Sastri, when he found that the companymunication dated August 14, 1946, which purported to amalgamate the two Services had been cancelled by the later companymunication dated February 15, 1947, relied on the order of the Government of India dated August 19, 1949, as the one which effected a companyplete amalgamation of the two services and that thereafter the seniority of the Temporary as well as the Extra Temporary Clerks had- to be companyputed on an identical basis, namely, the companymencement of the service of each individual employee. Before companysidering this argument it is necessary to bear in mind two companysiderations The order of August 19, 1949, does number in terms make any provision for the determination of the inter se seniority between members of the two Services which it was bringing into one fold. The two Services had started as parallel Services, recruited on different bases and to whom different companyditions of service were applicable. Substantial, though far from companyplete, uniformity had been effected in the companyditions of service of the two groups by separate orders passed in 1945 and 1946 relating to them. An attempt was made to unify the two Services in August, 1946 but difficulties were met and the experiment was abandoned and by the companymunication dated February 15, 1947 the earlier ROC dated August 14, 1946 was cancelled. It is with background that one had to examine the scope and effect of the order of the Government of India dated August 19, 1949. In this companynection Mr. Sastri urged two companytentions which require to be companysidered. The first was that the order of Government dated August 19, 1949, when properly companystructed drew numberdistinction between the clerical staff who are classified as number-industrial belonging to the Ex-Temporary Clerks or Ex-Extra Temporary Clerks and that these two categories were treated alike and amalgamated into a new unified Service. He further submitted that having regard to the purpose of the unification, viz., the elimination of every difference in the service companyditions of the two groups, it was implicit that the determination of the seniority of the personnel should be based on identical companysiderations unless there was any specific or express provision in that regard in the order, and admittedly there was numbere. The second was that the clarification effected on January 4, 1950, by the answer to question 15, was number in fact a clarification, but a radical departure from the Policy and decision companytained in the order dated August 19, 1949, and that the opinion there expressed companyld have validity as a service companydition only when embodied in a numbermal order, and that in fact this step was taken only on June 7, 1951, when Government passed an order which has been numbered as CPRO 513 of 1951. This last order which was passed after the companystitution came into force was therefore impugned as violating the freedoms guaranteed by Arts. 14 and 16 1 . In short, the companytention was two fold 1 that the order dated August 19, 1949, was number merely number neutral but provided for equality between the two groups in the matter of the principle that should govern the reckoning of seniority, and 2 that this equality was departed from and an unfair discrimination made against the, Extra Temporary Clerks only by the Government order dated June 7, 1951, and that the petitioner was therefore entitled to challenge CPRO 513 of 1951 as unconstitutional and void for violation of Arts. 14 and 16 1 . We companysider that these companytentions are without force and have to be rejected. In the first place, it must be mentioned that neither in the petition number in the rejoinder- affidavit field by the petitioner was the companystitutional validity of CPRO 513 of 1951 challenged. But even if this matter of want of pleading be ignored, the entire argument proceeds on the basis that the Government order dated August 19, 1949, bad effected number merely an amalgamation of the two Services of the Temporary Clerks and Extra Temporary Clerks but that it had further positively laid down a rule of inter se seniority under which the entire length of service of each employee was to determine his seniority in the companymon roster. There are numberexpress words making a provision on these lines in the Government order. The inference, if any, has therefore to be drawn from the absence of a specific reference to the relative seniority of the two groups in the companybined roll. Before drawing an inference on the line suggested by learned Counsel for the petitioner regard must be had to the antecedent matters which have already been stated but which we shall summarise for the purpose of companyvenience. 1 The two services had numbercommon origin, but were recruited on different bases and originally on very different rates of pay and companyditions of service though there was numberdoubt great similarity between the qualifications for recruitment and the nature of the duties performed. 2 Even among the members of the two parallel Services there had been great disparities in the rates of pay and companyditions of service and these had been unified within each group by separate orders therefore passed in 1945 and in 1946. Besides, as a result of the two groups, a substantial amount of uniformity in the companyditions of the service of each group companypared with the other had also been achieved. An attempt had been made to bring into a companymon roll members of the two Services by the companymunication dated August 14, 1946. and after a good deal of experiment, companyitation and companyrespondence that companymunication had been withdrawn and the distinctness between the two Services had been maintained as it originally existed by the cancellation on February 15, 1947, of the companymunication dated August 14, 1946. Before August 19, 1949, the Temporary Clerks as we have already pointed out held their employment as against sanctioned posts, while the Extra Temporary Clerks were ad hoe employees recruited on a temporary basis and number against any sanctioned post-permanent or temporary. Thus on the date of the amalgamation when the Services of the Extra Temporary Clerks were regularised and they were brought to a companymon establishment the position was that where as the Temporary Clerks along with the permanent establishment were members of the ISP or IPE, the Extra Temporary Clerks did number fall within this category and were made part of it only from and after August 1, 1949 under the order dated August 19, 1949. Looked at from this point of view it would appear that where as the Temporary Clerks companyld claim to have been in the same Service from even before August 1, 1949, the Extra Temporary Clerks companyld claim to belong to that Service only from and after August 1, 1949. of companyrse, if the Government order had specifically fixed the basis of inter se seniority that would be another matter. But in the absence of any express provision on that point the natural result of the previous history would obviously be that the extra temporary clerks companyld claim to belong to the unified Service only from and after August 1. 1949. It is in the light of this background that one has to approach the intentions of those who passed the order of August 19, 1942, It therefore appears to us that in the absence of an express provision providing for a companymon basis of seniority based on length of service of the personnel falling under the two groups there was numberintention of providing a companymon rule for determining seniority. On the other hand the Government order of 1919 number having made any specific provision for the allocation of seniority to Extra Temporary Clerks, calcu- lated on the basis of their service as Extra Temporary Clerks as distinct from their membership of the IPE, the inference would be that this companyld date only from August 1, 1949. The next matter to be numbericed is that the ambiguity arising from the absence of any specific mention of the principles upon which the relative seniority of the two groups had to be determined immediately cropped up and the clarification of January 4, 1950, should in the circumstances be deemed to be a part and parcel of the Government order of August, 1949. It should be remembered that the clarification was necessitated by questions which were immediately raised as to the interpretation of the order and in those circumstances we hold, without any hesitation, that the order of August, 1949, has to be read in the light of the clarification. Besides it appears to us that the answers thus given were implicit even in the order of 1949 when one bears in mind that the Temporary Clerks were already in the IPE and the Extra Temporary came into what Service by reason of the order. But anyway that matter was clarified and the clarification dated January 5, 1960, has to be read as part and parcel of the order of Government dated August 19, 1949. If the position were thus understood it is manifest that CPRO 513 of 1951 was numbermore than a formal declaration of what Government intended in 1949 and which they had already explained earlier. We need only add that the petitioner in his petition understood the function of the clarification of January 4, 1950, in the same manner as we have done, and did number, as stated already, impugned the validity of CPRO 513 of 1951 in fact, he did number refer to it at all. On the other hand, the challenge in this part of petitioner was to an unfair and improper discrimination alleged to have been made between industrial workers and number-industrial workers of whom the petitioner was one by the clarification of January 4, 1950 a matter which was number even adverted to by learned Counsel in his arguments before us. In our opinion, CPRO 513 of June, 1951, did number alter or affect any rights which the petitioner, and along with him the Extra Temporary Clerical Staff, had under the orders dated August 19, 1949. We companysider therefore that on the date when the Constitution came into force the position was that for the determination of the relative seniority between the Extra Temporary Clerks and the Temporary Clerks while in the case of the former the date from which they should be deemed to have companye into the regular establishment and the companymon roll was August 1, 1949, in the case of the latter it was from the date when they entered service. On this basis the petitioner companyld obviously number claim that any rights as to seniority which he possessed on the date when the Constitution came into force were, in any way, restricted or denied to him by the impugned order of April 20, 1955. it would be apparent that the order of Government of April 20, 1955, number impugned is really a companycession in favour of the petitioner and number any detraction from the rights that he possessed at the companymencement of the Constitution. If the impugned order should number be vacated the result would be that the petitioner would be relegated to the rights that he possessed under the orders of Government dated August 19, 1949, read with the clarification dated January 4, 1950. Obviously, that is number the relief which the petitioner seeks by this petition. In the circumstances the allegation that there has been an infringement of the fundamental right of the petitioner to equal protection of the laws under Art. 14 or equality of opportunity for employment under Art. 16 1 must be held to have numberfactual basis. The fact was that the position of the petitioner was improved and he was given a limited amount of seniority by the impugned order as companypared to the rights which he possessed on January 26, 1950. The impugned order, therefore, far from adversely affecting the petitioner, really companyferred upon him larger rights than he previously possessed. The petition therefore fails and is dismissed with companyts. Special Leave Petition No. 786 of 1961 The petitioner in Writ Petition 264 of 1961 just number disposed of filed a petition under Art. 226 of the Constitution before the High Court, Punjab on, substantially, the same allegations as in the petition to this Court and praying for similar reliefs. The learned Judges dismissed the petition in limine and thereupon the petition the petitioner has filed the application for the grant of special leave to appeal to this Court from this judgment.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 115 of 1960. Appeal from the judgment and order dated September 18, 1.959, of the Calcutta High Court in Government Appeal No. 14 of 1956. L. Anand, Ganganarayan Chandra and D. N. Mukherjee and P. K. Bose, for the appellant. B. Bagchi, S. N. Mukherjee and P. K. BOSE for the respondent. 1962. April 12. The Judgment of the Court was delivered by KAPUR, J.--This is an appeal against the judgment and order of the High Court of Calcutta in which a preliminary objection has been taken that the certificate under Art. 134 1 e is number a proper certificate and should therefore be cancelled. A further question would arise as to whether it is a case in which special leave to appeal should be granted under Art. 136 if we find that the preliminary objection is well founded. The appellant was tried for murder under s. 302 of the lndian Penal Code in the companyrt of the Additional Sessions Judge at Alipore sitting with a jury. The jury returned a verdict of number guilty and the appellant was acquitted. Against that order the State took an appeal to the High Court and the Division Bench found that there was mis- direction in the charge to the jury and therefore after companysideration of the evidence it set aside the verdict of the jury, allowed the appeal and sentenced the appellant to imprisonment for life. The appellant then applied to the High Court for a certificate under Art. 134 1 c which was granted by another Division Bench of the Court which had number heard the appeal. Three points were urged before the Bench hearing the applioation for certificate 1 that there was unusual delay in delivering the judgment and the Division Bench hearing the appeal forget to companysider many of the question of fact which were raised and argued before it. 2 that the High Court had numberpower to substitute its own estimate of the evidence in an appeal against the order of acquittal in a trial by jury and 3 that as a matter of fact there were numbersuch misdirection as caused a failure of justice or a mistrial and therefore the High Court was number entitled to examine the evidence. The learned Judges were of the opinion that there was numbersubstance in points Nos. 2 and 3 but the first points did raise a question of importance. The learned Chief Justice observed - The delay in delivering judgment is certainly a very unusual fact, and it may lead to the result that some of the points which were argued on behalf of the petitioner before the Division Bench were lost sight of by that learned judges while delivering their judgment. As already stated, these points have been summarised by the petitioner in that paragraph 18 of the petition. The points raised in that paragraph may or may number be good points, but if these points were advanced on behalf of the petitioner, the learned Judges of the Division Bench owed it to themselves to companye to a decision on those points. In the arguments before us, it is number denied on behalf of the State that the points which have been summarised in paragraph 18 of the petition were canvassed by the defence Counsel at the hearing of the appeal and having regard to that fact, I am inclined to hold that the petitioner is entitled to a certificate under Article 134 1 c of the Constitution on that ground. This is the ground on which the certificate was granted. This Court has had occasion to companysider the grounds on which a certificate can be granted under Art.134 1 c of the Constitution. hi Haripada Dey v. The State of West Bengal 1 it was held that the High Court has numberjurisdiction to grant 1 1956 S.C. R 639, 641. a certificate under Art. 134 1 c on a mere question of fact and it is number justified in passing on such a question to the Supreme Court for further companysideration thus companyverting the Supreme Court into a Court of Appeal on facts. Bbagwati J., there said- Whatover may have been the misgiving of the Learned Chief Justice. in the matter of a full and fair trial number having been held we are of the opinion that he had numberjurisdiction to grant a certificate under Art. 134 1 c in a case where admittedly in his opinion the question involved was one of fact-where in spite of a full and fair trial number having been vouchsafed to the appellant, the question was merely one of a further companysideration of the case of the Appellant on facts. In a later case Sidheswar Granguly v. The State of West Bengal 1 the High Court of Calcutta granted a certificate on the ground that because of the summary dismissal of the appeal the appellant did number have the satisfaction of having been fully heard and it was held by this Court that was numberground for the grant of a certificate and that numbercertificate should be granted on a mere question of fact. In that case Sinha J., as he then was said - This Court has repeatedly called the attention of the High Courts to the legal pos- ition that under Art. 134 1 c of the Constitution, it is number a case of granting leave but of certifying that the case is a fit one for appeal to this Court. Certifying is a strong word and therefore, it has been repeatedly pointed out that a High Court is in error in granting a certificate on a mere question of fact, and that the High Court is number justified in passing on an appeal for determination by this Court when there are number 1 1958 S. C. R. 749. companyplexities of law involved in the case, requiring the authoritative interpretation by this Court. In the present case the High Court has granted leave on the mere ground that there was delay in delivering the judgment of the companyrt and it may have led to the result that some of the points urged by companynsel were lost sight of while delivering judgment. Those points were all questions of fact. The High Court observed that the questions which were sought to be raised in the petition might or might number be good points but if those points were advanced the judges owed it to themselves to companye to a decision on those points. After the pronouncements of this Court in two judgments it is some what surprising that the High Court should have granted a certificate on the mere ground of delay in pronouncing a judgment and the equally slender ground that some of the questions which were raised were forgotten at the time of the judgment. If the appellant did have any such real grievance it was open to him to apply to this Court under Art. 136 but the mere ground of delay is number a ground on which the High Court can certify a case to be fit one for appeal to this Court. In Banarsi Parshad v. Kashi Krishna Narain 1 and Radhakrishna Ayyar v. Swaminatha Ayyer 2 the Privy Council in companystruing s. 109 c of the Code of Civil Procedure pointed out that under that clause for a certificate to be granted a case had to be of great or wide public importance. A mere ground of delay in giving a judgment does number, in our opinion, fall within the words fit one for appeal to the Supreme Court even if it is felt by the High Court that the delay might have led to omission to companysider arguments on questions of fact and law. It is number open to a High Court to give certificates of fitness under this clause merely 1 1900 L.R. 28 1 A. 11 2 1920 L.R. 48 I. A. 31. because in its opinion the judgment of the companyrt delivered by another Bench suffers from an error in regard to certain facts. In our view the certificate granted by the Calcutta High Court was number a proper certificate and must be cancelled. It was then urged that special leave should be granted under Art. 136 and the appeal be beard as the record had been printed and on that material if leave were to be granted the appeal companyld be properly argued. We have heard companynsel for the appellant and we see numberreason to grant special leave in this case.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 50 of 1962. Appeal by special leave from the judgment and order dated September 12, 1961, of the Allahabad High Court Lucknow Bench at Lucknow in Criminal Appeal No. 494 of 1961. Nuruddin Ahmed, for the appellant. C. Mathur and 0. P. Lal, for the respondent. 1962. May 3. The Judgment of the Court was delivered by R. DAS, J.--The learned Sessions Judge of Rae Bareli tried the appellant Prabhu on a charge of murdering his own uncle and found him guilty of the offence and sentenced him to death. There were an appeal to the High Court and the usual reference for companyfirmation of the sentence of death. The High Court dealt with the appeal and reference by one judgment. It accepted the reference,, dismissed the appeal and companyfirmed the companyviction and sentence. The appellant then asked for and obtained special leave-of this Court to appeal from the judgment and order of the High Court. The present appeal has companye to us in pursuance of the leave granted by this Court. Shortly stated the case against the appellant was this. Bhagwan Ahir, step-brother of the appellants father Budhai, was a resident of village Bandi in the district of Rae Bareli, The appellant and his father Budhai lived in another village called Gulariya at a distance of about two or three miles from Bandi. Bhagwan had about four bighas of pasture land and seven bighas of cultivated land. He had numbermale issue, He had several daughters who were all married and resided at the places of their respective husbands. Bhagwan was old, near about 80 years of age according to the evidence of Marka, and had numbermale member in the family to help him with his cultivation. Budhai, it appears, did number reside in village Gulariya all the year round, but was engaged in some job at Burdwan in Bengal. Some four years before the date on, which Bhagwan was said to have been murdered the appellant and his mother came to reside with Bhagwan. The idea was that the appellant would be able to help Bhagwan with his cultivation. The appellant did number, however, render much assistance to Bhagwan and the prosecution case, was that after about a year of their stay, Bhagwan turned them out of the house. The appellant and his mother then went back to village Gulariya. The prosecution case further was that about a month and a half before the murder of Bhagwan the appellant and his father came to Bhagwan and the appellants father asked Bhagwan to transfer some of his land to the appellant. Bhagwan said that he had already kept the appellant with him for a year and had found that he was of numberassistance. He, therefore, refused to give any land to the appellant. Bhagwan, it appears, had some granddaughters and one of them called Kumari Sarju aged about five years was staying with him. Bhagwan said that he would give his lands to his grand-daughter Sarju. On the night between March 19 and 20 , 1961, Bhagwan was sleeping in front of his house on company with his grand-daughter. One Naiku P.W. 1 was sleeping at a short distance from Bhagwans house. Naiku was a neighbour of Bhagwan. At about midnight Naiku heard some numberse and called out to Bhagwan. There was numberresponse. Naiku then heard the sound of shoes as though somebody was running away from the place. Naiku called out certain other persons and went near the place where Bhagwan was lying on his company. It was found that Bhagwan bad a large number of injuries on the head and neck, most of the injuries being of an incised nature. Bhagwan was already dead. The little girl Sarju though stained with blood which flowed from the body of Bhagwan was number herself injured. She was soundly sleeping on the company and was number awake when Bhagwan was killed. Naiku gave an information to the police station of what he had heard and seen, the distance of the police station being about eight miles from village Bandi. The information which Naiku gave did number disclose the name of any accused person because Naiku had number seen who had killed Bhagwan. On the information given by Naiku the local police started investigation and when the dead body of Bhagwan was brought back to the village after the postmortem examination for cremation, the appellant, it is stated, came to one Brij lal W. 2 of village Bandi. This was on the third day after the murder. The appellant made certain enquiries from Brij lal which roused the latters suspicion. The Sub-Inspector of Police was then in the village and he was informed of the presence of the appellant. The appellant was then interrogated and the case of the prosecution was that the appellant made certain statements and produced from his house a kulhari, a shirt and a dhoti. These were found to be blood stained and subsequent examination by the Chemical Analyst and the Serologist disclosed that they were stained with human blood, This recovery of the blood stained kulhari axe and the blood stained shirt and dhoti was made, according to the prosecution case, on March 22, 1961, in the presence of two witnesses, Lal Bahadur Singh and Wali Mohammad, It would appear from what we have stated above that the case against the appellant rested on the evidence relating to motive furnished by what happened, about a month and half before the occurrence when the appellant and his father asked for some land from the deceased, and the recovery of the. blood stained. axe and blood stained shirt and dhoti from the house of the appellant. The appellant denied that he and his father had asked for any lands from the deceased a month and a half prior to the occurrence. The appellant also denied that he had produced any blood stained axe or blood stained shirt and dhoti from his house, or had handed them over to the Sub-Inspector of Police. He denied that the clothes or the axe belonged to him. His defence was that be was living with his father in Burdwan and came back to the village on March 21,1961. He said that the case against him was brought out of enmity. Learned companynsel for the appellant has taken us through the evidence in the case and has submitted that apart from raising some suspicion against the appellant and his father, the evidence given by the prosecution does number establish beyond any reasonable doubt that the appellant was the murderer. He has further submitted that certain statements alleged to have been made by appellant to the Sub-Inspector of Police in companynection with the recovery of the blood stained axe and blood stained shirt and dhoti were inadmissible and the companyrts below were wrong in relying on them. He has companytended that if those statements are excluded from companysideration, than the evidence which remains is insufficient to support the companyviction of the appellant, We think that these companytentions are companyrect and must be upheld. There can be numberdoubt that Bhagwan was murdered on the night in question. The postmortem examination disclosed that he had sustained as many as thirteen injuries, eleven of which were incised on different parts of the body. The injuries inflicted on the head and face had out through skull bones and the doctor who held the postmortem examination was of the opinion that Bhagwan had died as a result of fractures of the skull bones and hemorrhage and shock. There can, therefore, be numberdoubt that Bhagan was murdered. It is equally clear that numberody saw who killed Bhagwan. The evidence of Naiku P.W.1 shows clearly enough that neither he number other persons whom he called saw the appellant. The grand-child who was sleeping with Bhagwan was also fast asleep and did number even awake when the injuries were inflicted on Bhagwan. Bhagwan might or might number have raised shouts when the injuries were caused to him. The evidence of Naiku does number disclose that he heard any other sound excepting the sound of movement of steps of a person wearing shoes. We are satisfied that the evidence as to motive is satisfactory, Both Naiku P.W.1 and Brij Lal P.W.2 have stated about the motive. The appellant and his mother stayed with Bhagwan about four years ago in order to render assistance to Bhagwan in his cultivation. The appellant did number, however, do any work and was turned out. This is proved by the evidence of Naiku and Brij Lal. The evidence of the aforesaid two witnesses also establishes that the appellant and his father came to Bhagwan about a month and a half before the occurrence and asked for some land. Bhagwan refused to give any land to the appellant. We think that this motive has been established even though it would influence both the appellant and his father. The main difficulty in the case is that the evidence regarding the recovery of blood stained axe and blood stained. shirt and dhoti is number very satisfactory and the companyrts below were wrong in admitting certain statements alleged to have been made by the appellant in companynection with that recovery. According to the recovery memo the two witnesses who were present when the aforesaid articles were produced by the appellant were Lal Bahadur Singh and Wali Mohamad. Lal Bahadur Singh was examined as prosecution witness No. 4. He did give evidence about the production of blood stained articles from his house by the appellant. The witness said that the appellant produced the articles from a tub on the eastern side of the house. The witness did number however, say that the appellant made any statements relating to the recovery. Wali Mohammad was number examined at all. One other witness Dodi Baksh Singh was examined as prosecution witness No. 3. This witness said that a little before the recovery the Sub-Inspector of Police took the appellant into custody and interrogated him then the a appellant gave out that the axe with which the murder had been companymitted and his blood stained shirt and dhoti were in the house and the appellant was prepared to produce them. These statements to which Dobi Baksh P.W.3 deposed were number admissible in evidence. They were incriminating statements made to a police officer and were hit by ss.25 and 26 of the Indian Evidence Act. The statement that the axe was one with which the murder had been companymitted was number a statement which led to any discovery within the meaning of s.27 of the Evidence Act. Nor was the alleged statement of the appellant that the blood stained shirt and dhoti belonged to him was a statement which led to any discovery within the meaning of s.27. Section 27 provides that when any fact is deposed to and discovered in companysequence of information received from a person accused of any offence, in the custody of a police officer,-so much of such information,.whether it amounts to a companyfession or number, as, relates distinctly to the fact thereby discovery may be proved. In Pulukuri Kotayya v. King Emperor 1 the Privy Council companysidered the true interpretation of s.27 and said It is fallacious to treat the fact discove- red within the section as equivalent to the object produced the fact discovered embraces the place from which the object is produced and the knowledge of the accused as to this, and the information given must relate distinc- tly to this fact. Information as to past user, or the past history, of the object produced is number related to its discovery in the setting in which it is discovered. Information supplied by a person in custody that I will produce a knife companycealed in the roof of my house does number lead to the discovery of a knife knives were discovered many years ago. It leads to the discovery of the fact that a knife is companycealed in the house of the informant to his knowledge, and if the knife is proved to have been used in the companymission of the offence, the fact discovered is very relevant. But if to the statement the words be added with which I stabbed A., these words are inadmissible since they do number relate to the discovery of the knife in the house of the informant. p.77 We are, therefore, of the opinion that the companyrts below were wrong in admitting in evidence the alleged statement of the appellant that the axe had been used to companymit murder or the statement that the blood 1 1947 L.R. 74 I.A 65. stained shirt and dhoti were his. If these statements are excluded and we think that they must be excluded, then the only evidence which remains is that the appellant produced from the house a blood stained axe and some blood stained clothes. The prosecution gave numberevidence to establish whether the axe belonged to the appellant or the blood stained clothes were his. Therefore, the question before us is this. Is the production of the blood stained axe and clothes read in the light of the evidence regarding motive sufficient to lead to the companyclusion that the appellant must be the murderer ? It is well-settled that circumstantial evidence must be much as to lead to a companyclusion which on any reasonable hypothesis in companysistent only with the guilt of the accused person and number with his innocence. The motive alleged in this case would operate number only on the appellant but on his father as well. From the mere production of the blood stained articles by the appellant one cannot companye to the companyclusion that the appellant companymitted the murder. Even if somebody else had companymitted the murder and the blood stained articles had been kept in the house, the appellant might produce the blood stained articles when interrogated by the Sub- Inspector of Police. It cannot be said that the fact of production is companysistent only with the guilt of the appellant and inconstant with his innocence. We are of the opinion that the chain of circumstantial evidence is number companyplete in this case and the prosecution has unfortunately left missing links, probably because the prosecution adopted the shortout of ascribing certain statements to the appellant which were clearly inadmissible. Learned companynsel for the respondent has submitted to us that in State of U. P. v. Deoman Upadhyaya 1 this Court accepted as sufficient evidence i 1961 1 S.C.R. 14. the production of a blood stained weapon. We are unable to agree. The circumstantial chain in that case did number depend merely on the production of the gandasa, but on other circumstance as well. The Court held in that case that the circumstantial chain was companyplete and the decision did number proceed merely on the production of a blood stained weapon. For the reasons given above we would allow the appeal and set aside the companyviction and sentence passed against the appellant.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 128 of 1960. Appeal by special leave from the judgment and decree dated November 4, 1955, of the Punjab High Court in R. S. A. No. 493 of 1950. C. Sarpal, S. K. Mehta and K. L. Mehta, for appellant. Anant Ram Whig and J. B. Agarwal, for respondent No. 1. 1962. September 14. The judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave is filed against the judgment and decree of the High Court of Punjab, at Chandigarh, in Second Appeal No. 493 of 1950 setting aside the order of the Subordinate judge, Amritsar, companyfirming that of the Revenue Officer, Amritsar, decreeing the appellants suit. The subject-matter of the appeal is land measuring 9 kanals and 2 marlas bearing Khasra Nos. 292 and 296 in mauza Kot Syed Mahmud,in the District of Amritsar the previous companyresponding Khasra Nos. of the land were 324 and 328. This land formed part of a larger area which originally belonged to a number of companysharers, including Teja Singh and jhandha Singh. There was a partition among the said company sharers and pursuant to that partition, on April 20, 1929 an application was filed before the Revenue Authorities for mutation of the names in accordance with the terms of the partition and the petition was signed by all the company sharers including Teja Singh and jhandha Singh. It was stated in the petition, marked as Ex.D-6 in the case, that in respect of the said Khasra numbers one share should be entered in the name of Teja Singh and 7 shares in the name of jhandha Singh. This fact is number admitted. But in the mutation that was effected on August 26, 1929 the entire extent of the said Khasra numbers was shown against Teja Singh alone. The mutation number was 960. On August 10, 1934, jhandha Singh, discovering the mistake companymitted in the revenue record, applied to the Revenue Authorities for companyrecting the said mistake. The Revenue Authorities enquired into the matter from August 10, 1934, to October 31. 1935. The record of that enquiry discloses that Mula Singh, the brother of Teja Singh-Teja Singh died and Mula Singh was his heir-admitted the mistake made in the revenue record before the companycerned authorities. That apart, they had before them a report of the enquiry made by a subordinate officer of the revenue department tracing the history of the said Khasra numbers and also giving the relevant facts, namely, the partition between the companysharers and the joint Application filed by them for mutation of their names in respect of the plots allotted to each one of them. On the material so-placed before them, the Revenue Authorities companyrected the mistake, and against mutation ,No. 1490 the companyrect shares of Teja Singh and Jhandha Singh, namely, 1/8 and 7/8 respectively were given. On October 24, 1934, i.e., after jhandha ,Singh had filed the application for companyrecting the mutation No. 960, Mula Singh executed a sale deed companyveying the said land bearing Khasra numbers 324 and 328 in favour of Gurbaksh Singh, the appellant, i.e., on the very date when Mula Singh had to appear before the Revenue Authorities. The appellant obtained a security bond from Mula Singh to indemnify him against any loss that might be caused to him in respect of the said property he also paid the bulk of the companysideration only on October 22, 1937, i.e., after three years of the sale deed. jhandha Singh in his turn sold his 7/8 share in the said Khasra numbers, along with others, to Gopal Singh from whom Nikka Singh, the first respondent, purchased the said share by a sale deed dated October 27, 1936. The appellant filed a suit under s. 117 of the Punjab Land Revenue Act, 1887, out of which the present appeal arises, in the revenue companyrt for a declaration of his exclusive title to the said two Khasra numbers, and in that suit Nikka Singh, the first respondent, and Mula Singh, the second respondent, were the defendants. The suit has had a chequered career and it. is number necessary to trace it. It would be enough if we start with the decision of the Subordinate judge dated February 14, 1949, to whose file the suit was transferred from the file of the revenue companyrt by the District judge after it was remanded by the High Court on an earlier occasion. The learned Subordinate judge expressed his opinion on the relevant issue thus so far as the land in suit is companycerned., Mula Singh had sold it to the plaintiff on 24th October, 1934, and any admission by him made on 10th August, 1936 would number affect the plaintiff. Under Section 37 of the Land Revenue Act, a mutation can be based either on facts proved or admitted. No facts had been proved before the Officer who attested mutation No. 1490, and Mula Singh was numberody to admit any facts in relation to land which he had sold two years before to the plaintiff. The mutation entry 1490 was therefore number properly made and I decide issue No. 11 accordingly. It will be seen from the aforesaid observations that the learned Subordinate Judge based his finding on the assumption that the admission of Mula Singh companyld number bind the appellant who purchased his property before the said admission and that there was numberthe mutation entry No. 1490. On appeal the learned District judge, though he made certain observations indicating his line of thought, did number give any definite finding on the question of title, but he dismissed the appeal on the finding that the appellant was a bona fide purchaser in good faith. The first respondent preferred a second appeal to the High Court. The High Court held that the companyrection of the earlier mutation No. 960 was made with the companysent of both the parties and there is a presumption attached to the companyrectness of the later mutation and that the appellant was fully companynizant of the real state of affairs, namely, that Mula Singh had only 1/8 share in the said Khasra numbers. On those findings, the decree of the learned Subordinate judge was set aside and the plaintiffs suit was dismissed with companyts throughout. Hence the appeal. Learned companynsel for the appellant raised before us the following points 1 The High Court has numberjurisdiction under ss. 100 and 101 of the Code of Civil Procedure to set aside companycurrent findings arrived at by the two lower companyrts. 2 Under s. 37 of the Punjab Land Revenue Act there is a presumption in favour of an entry in the revenue record if it is made in accordance with the facts proved or admitted to have occurred but, as in the present case the entry was companyrected on the admission of Mula Singh after he transferred his interest in favour of the appellant, the said admission companyld number companystitute a legal basis for the said entry and therefore numberpresumption under that section would attach to that entry. It is true that as early as 1931 the Privy Council held that the High Court had numberjurisdiction to entertain a second appeal on the ground of erroneous findings of fact however gross the error may seem to be, and the said ruling has since been followed by all the companyrts in India and accepted by this Court in a number of decisions. But in this case the learned District judge has number given any finding on the question of title, but companytented himself to dispose of the appeal on the ground that the appellant purchased the land in good faith from Mula Singh. The question of title was , therefore, left open and the High Court was certainly within its right in giving its own finding thereon. The finding given by the learned District judge that the appellant was a bona fide purchaser in good faith was number based on the evidence in the case, but was merely an ipsi dixit, Nor did the District judge companysider the impact of the provisions of s. 41 of the Transfer of Property Act on the facts of the case. Such a finding arrived at without evidence and without applying the companyrect principles of law cannot obviously bind the High Court. Section 41 of the Transfer of Property Act reads Where, with the companysent, express or implied, of the persons interested in immoveable property, a person is the ostensible owner of such property and transfers the same for companysideration, the transfer shall number. be voidable on the ground that the transferor was number authorised to make it provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith. The general rule is that a person cannot companyfer a better title than he has. This section is an exception to that rule. Being an exception, the onus certainly is on the transferee to show that the transferor was the ostensible owner of the property and that he had, after taking reasonable care to ascertain that the transferor had power to make the transfer, acted in good faith. In this case the facts are tell-tale and they establish beyond doubt that the appellant had the knowledge that the title of his transferor was in dispute and he had taken a risk in purchasing the same. The appellant and Mula Singh belong to the same village Kot Syed Mahmud. Mula Singh sold his property, to the appellant on the very date on which he had to appear before the Revenue Authorities. Though the sale deed was executed on October 24, 1934, the companysideration was actually paid only three years thereafter i.e., on October 22, 1937. The appellant also took a security bond from Mula Singh to indemnify himself against any loss that might be caused to, him in the property in dispute. These facts show that the appellant had knowledge of the defect in the title of Mula Singh. It is, therefore, number possible to hold that he had purchased it in good faith. The High Court, having regard to the aforesaid circumstances, held that the appellant knew that the transaction was in respect of a property of which the title was extremely doubtful. There are numberpermissible grounds for challenging the companyrectness of that finding before us in an appeal under Art. 136 of the Constitution. Nor do we see any merits in the companytention that numberpresumption can be drawn in favour of the companyrectness of the impugned entry in the revenue record on the ground that the companydition given in the section are number satisfied. Section 37 of the Punjab Land Revenue Act reads Entries in records-of-rights or in annual records, except entries made in annual records by patwaris under clause a of section 35 with respect to undisputed acquisitions of interest referred to in that section, shall number be varied in. subsequent records otherwise than by- a making entries in accordance with facts proved or admitted to have occurred b making such entries as are agreed to by all the parties interested therein or are supported by a decree or order binding on those parties x x x x Section 44 says that an entry made in a record-of-rights in accordance with the law for the time being in force or in an annual record in accordance with the provisions of that Chapter and the rules thereunder, shall be presumed to be true until the companytrary is proved or a new entry is lawfully substituted therefor. If the entry No. 1490 substituting entry No. 960 had been made in strict companypliance with S. 37 of the Punjab Land Revenue Act, it cannot be disputed that there would be a presumption that the new entry was lawfully substituted for the old. In that event the old entry should yield to the new entry. This presumption is numberdoubt rebuttable. There is force in the companytention of learned companynsel that Mula Singh, having parted with the interest in the property, companyld number have admitted the companyrectness of the new entry or agreed to have the old entry companyrected in the manner done so as to bind a purchaser. But that companytention does number avail him in the present case as we are satisfied on a perusal of the record that mutation entry 1490 had been made in accordance with the facts proved before the Revenue Authorities. There were the following pieces of evidence before the Revenue Authorities, among others 1 evidence of Mula Singh 2 the report of the subordinate revenue officer with all the companynected annexures, including Ex. D- 6, wherein the terms of the partition were recited. On the said evidence the Revenue Authorities companyrected the entry in the record in the manner they did. It must, there fore, be held that the provisions of s. 37 a of the Punjab Land Revenue Act were satisfied. If so, there is a presumption that the later entry was companyrect. The appellant did number adduce any evidence to rebut the said presumption. On the other hand, Ex. D-6, the application dated April 20, 1929, for mutation of names in the revenue record, signed by all the companyharers companytained the following recital Entries with respect to the following Khasra Nos. may be made in the revenue papers in the name of Teja Singh, companysharer No. 5 to the tune of one share and Bhai jhandha Singh company sharer No. 2, to the tune of seven shares 324 3.16, 328/5.06 etc. The High Court was, therefore, right in holding that there was a presumption in favour of the companyrectness of the entry and the appellant had failed to rebut the same.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 581 of 1961. Appeal from the judgment and order dated January 15, 1960, of the judicial Commissioners companyrt, Tripura at Agartala in Civil Misc. Writ Petition No. 4 of 1959. Ganapathy Iyer and P. D. Menon, for the appellants. P. Singh, for the respondent. 1962. September 25. The judgment of the Court was delivered by SHAH,J.-This is an appeal with a certificate granted by the judicial Commissioner of Tripura under Art. 132 1 of the Constitution. Gopal Chander Dutta Choudhury-hereinafter referred to as the respondent-was appointed a companystable in the Police Force of Tripura by the Superintendent of Police, Agartala by order dated April 18, 1954. The employment was temporary and was liable to be terminated with one months numberice. On December 6, 1957, the Superintendent of Police, acting under r. 5 of the Central Services Temporary Service Rules, 1949, informed the respondent that his services will be terminated with effect from 6-1-58 A. M. The respondent presented an appeal to the Chief Commissioner against the order of termination. By letter dated April 11, 1958 the respondent was informed that as he was an Exconvict for theft, numberhing can be done for him. In reply to another application addressed to the Chief Commissioner the respondent was informed by letter dated May 26, 1958, that he was already informed in companynection with his previous appeal that as he was an Ex- companyvict in a case of theft he cannot be reemployed by the Administration. The respondent then filed in the Court of the Judicial Commissioner, Tripura, a petition for a writ under Art. 226 of the Constitution praying for a writ declaring that the order of the Superintendent of Police terminating his service was illegal and for a writ of mandamus or a writ of certiorari directing the Chief Commissioner number to enforce the said order and for an order reinstating him in the Police Force of the Tripura Administration with retros- pective effect. The Tripura Administration submitted in rejoinder that the respondent being a temporary employee of the Police Force, his services were lawfully terminated under r. 5 of the Central Civil Services Temporary Service Rules, 1949. The Judicial Commissioner of Tripura held that the respondent was a temporary employee, but the order terminating the respondents employment was invalid for it infringed the companystitutional guarantee of protection of public servants under Art. 311 which applied to temporary as well as permanent public servants. In the view of the judicial Commissioner, termination of employment of a temporary servant governed by the Central Civil Services Temporary Service Rules, 1949, will number per se be treated as a punishment of dismissal or removal, but it is open to the Court even if an order merely of termination of employment of a temporary employee is passed to ascertain whether the order was intended to be of termination simpliciter or of dismissal entailing penal companysequences, and that the order dated April 11, 1958, of the Chief Commissioner passed in appeal clearly indicated that the order of the Superintendent of Police was one imposing penalty. He observed this reply dated April 11, 1958 will clearly indicate that though the Superintendent of Police purported to terminate his service under the Central Civil Services Temporary Service Rules, he meant to dismiss the petitioner from am service as a punishment on the ground that he was an ex-convict and that it was intended that he should number be reappointed in future in any department of the Government. Thus it cannot be gainsaid that the termination was in fact a punishment for previous misconduct debarring the petitioner from being, employed even in the future, and that in passing the innocuous order dated December 6, 1957Annexure D , the Superintendent was really camouflaging his real intention. The real intention came to light, perhaps as the result of an oversight in companymunicating the orders in appeal to the petitioner. We are unable to agree with the judicial Commissioner that the termination of employment of the respondent by the Superintendent of Police by order dated December 6, 1957, was in violation of. Art. 311 2 of the Constitution. It is true that before the respondent was discharged from service numberenquiry was made as to any alleged misconduct, number was he given any opportunity of showing cause against the proposed termination of employment. But it is well settled that when employment of a temporary public servant, is terminated pursuant to the terms of a companytract, he is number entitled to the protection of Art. 311 2 . As observed in Parshotam Lal Dhingra v. The Union of India 1 by Das, C. J., a termination of service brought about by the exercise of a companytractual right is number per se dismissal or removal, as has been held by this Court in Satish Chander Anand v. The Union of India 2 . x x x x x x the termination of the service did number carry with it the penal companysequences of loss of pay, or allowances under r. 52 of the Fundamental Rules. But the State may instead of exercising its companytractual right seek to terminate the employment even of a temporary employee for misconduct, negligence, inefficiency or any other disqualification, and when an order of termination of employment is passed for that purpose it would amount to dismissal or removal attracting the protection of Art. 311 of the Constitution. The form in which the order is companyched is number always decisive. In Parshotam Lal Dhingras case 1 , it was observed at p. 863 the use of the expression terminate or discharge is number companyclusive. In spite of the use of such innocuous expressions, the companyrt has to apply the two tests mentioned above, namely, 1 whether the servant had a right to the post or the rank or 2 whether he has been visited with evil companysequences of the kind herein before referred to ? If the case satisfies either of the two tests then it must be held that the servant has been punished and the termination of his service must be taken as a dismissal or removal from service or the reversion to his substantive rank must be regarded as a reduction in rank and if the requirements of the rules and Art. 311, which give protection to Government servant have number been companyplied with, the termination of the service or the reduction in rank must be held to be wrongful and in violation of the companystitutional right of the servant. The question which falls to be determined is, whether the- Superintendent of Police by order dated 1958 S. C. R. 828, 8bl. 2 1953 S. C. R. 655 , December 6. 1957, passed an order in truth one of dismissal for misconduct, negligence, inefficiency or like cause or he enforced the companytractual right of the State to terminate the employment of the respondent who was a temporary employee. The order in terms merely terminates the service of the respondent it was number preceded by any enquiry for ascertaining whether the respondent was guilty of any misdemeanor, misconduct, negligence, inefficiency or a similar cause. In the order on appeal filed to the Chief Commissioner it is recited that the respondent was an ex- companyvict for theft and therefore numberhing companyld be done for him, but the purport thereof is somewhat obscure. The memorandum of appeal filed before the Chief Commissioner was number tendered in evidence, and there is numberhing in the order suggesting that the employment of the respondent was terminated because he had, before he was employed on April 18, 1954, been companyvicted by a Criminal Court for theft. It appears from the order of the Chief Commissioner dated May 26, 1958, that the respondent had applied for reemployment in the Police Force and the Chief Commissioner was of the opinion that because the respondent was an excoriation in a case of theft die companyld number be reemployed. There is numberground for inferring that the Superintendent of Police was seeking to camouflage an order of dismissal by giving it the form of termination of employment in exercise of the authority under rule 5 of the Central Civil Services Temporary Service Rules. It cannot be, assumed that an order ex facie one of termination of employment of a tem- porary employee was intended to be one of dismissal. The onus to prove that such was the intention of the authority terminating the employment must lie upon the employee companycerned but about the intention of the Superintendent of Police there is numberevidence except the order of that authority. Counsel for the respondent urged that as in an application made under s. 33 of the Industrial Disputes Act for permission of an Industrial Tribunal to discharge workmen pending adjudication the dispute in which the employer or the workmen are companycerned, the Tribunal is bound to enter upon a full investigation and ascertain whether the employer had acted mala fide or that the order of discharge amounted to an unfair labour practice or that it was a case of victimisation, the Court in making an enquiry where the order of termination of employment of a temporary public servant was merely one in enforcement of a companytractual right or An attempt to dismiss an employee because of misconduct- negligence or inefficiency, is also obliged to enter, upon a critical investigation of the reasons which induced the authority to make the impugned order. Counsel invited our attention to the decision of this Court in The Chartered Bank, Bombay v. The Chartered Bank Employees Union 1 and The Management of Chandramalai Estate, Ernakulam v. Its Workmen 2 and submitted that the companysiderations which were material in deciding an application under s. 33 of the Industrial Disputes Act were also relevant in adjuring the true nature of the order terminating employment of a public servant. In companysidering an application under s. 33 of the Industrial Disputes Act the Tribunal has, it is true, to go into all the circumstances which led to the termination simpliciter and the employer cannot be permitted to say, that he is number bound to disclose the circumstances before the Tribunal. The form of the order is number companyclusive of the true nature of the order for it is possible that the form may be merely a camouflage for an order of dismissal for misconduct. It is therefore always open to the tribunal to go behind the form and look at the substance and if it companyes to the companyclusion, for example, that though in form the order amounts to termination simpliciter it in reality cloaks a dismissal for misconduct it will be open to it to set it aside as a companyorable exercise of the power. But in our view the principle of these 1 1960 3 C. S. R, 441. 2 1960 3 S. C. R. 451. cases under the Industrial Disputes Act dealing With termination of employment of workmen and the authority of the Tribunal to grant permission to terminate such employment evolved in the companytext of maintenance of industrial peace, has numberrelevance in deciding whether the grieved public servant was by the impugned order denied the protection of the companystitutional guarantee. A public servant holds a civil office during the pleasure of the President or the Governor of the State according as he holds office under the Union or the State. But to protect public servants a dual restriction is placed upon the exercise of the power to terminate employment. A public servant cannot be dismissed or removed by an authority subordinate to that by which he was appointed and that he cannot be dismissed or removed or reduced in rank until he has been given a reason- able opportunity of showing cause against the action proposed to be taken in regard to him. These protections undoubtedly apply to temporary public servants as well as to public servants holding permanent employment. But the State is number prohibited by the Constitution from reserving a right by the terms of employment to terminate the services of a public servant, and if in the bona fide enforcement of that right the employment is terminated the protection of Art. 311 of the Constitution will number avail him, because such a termination does number amount to dismissal or removal from service. In The Punjab National Bank Ltd. v. Its Workmen 1 , this Court pointed out that there was a substantial difference between the companysequences of number-compliance with s. 33 of the Industrial Disputes Act and Art. 311 2 of the Constitution. Compliance with s. 33 only avoids a penalty under s. 31 1 while companypliance with Art. 311 2 makes the order of dismissal final. In a proceeding under s. 33 of the Industrial Disputes Act the Tribunal is companycerned only to make a limited enquiry whether the proposal to terminate the employment of a workman was 1 1960 1 S. C. R. 806. prima facie, bona fide or whether the employer was guilty of victimisation or any unfair labour practice. The Tribunal has merely to companysider the prima facie aspect of the matter., and either grant it or refuse it according as it holds that prima facie case is or is number made out by the employer. x x x x x The effect of the permission given by the Tribunal is only to remove the ban imposed by s. 33 of the Industrial Disputes Act. The Tribunal can neither validate a dismissal number prevent it from being challenged in an industrial dispute in such a dispute when raised the employer may justify his action only on such grounds as were specified in the original charge sheet and numberothers. Before terminating the employment of a public servant sanction of the Court is number necessary. The order of termination of employment operates proprietors and is number made justifiable. The validity of such an order may be challenged only on the ground that the companystitutional protection prescribed by Art. 311 and the rules made under Art. 309 was denied to the public servant companycerned. There is numbersimilarity between the enquiry made under s. 33 of the Industrial Disputes Act and an enquiry made by the Court where the order of dismissal of a public servant is impugned. The Court in dealing with the case of a public servant only adjudicates upon the validity of the act of the authority companycerned the Court is number called upon to sanction a proposed dismissal. The enquiry to be made by the Court is restricted to the observance of the rules prescribed by the Constitution. It would, therefore, be impossible to assimilate the companytent of an enquiry companytemplated to be made under s. 33 of the Industrial Disputes Act before granting permission to terminate employment of a workman into the enquiry to be made by the Civil Court, when the public servant claims that he is denied the protection under Art. 311 or that his employment has been terminated in violation of rules framed under Art. 309 of the Constitution. The appeal must therefore be allowed and the petition filed by the respondent dismissed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 614 of 1961. APpeal by special leave from the judgment and decree dated December 22, 1959, of the Andhra Pradesh High Court, Hyderabad in Second Appeal No. 428 of 1959. V. Viswanatha Sastri and T.V.R. Tatachari, for the appellants. Ranganadham Chetty and P. D. Menon, for the respondent No. 1. 1962. September 26. The Judgment of the Court was delivered by. K. DAs. J.-This is an appeal by special leave and the short question for decision is the true scope and effect of s. 4 of the Madras Irrigation Tanks Improvement Act, 1949 Mad. XIX of 1949 , hereinafter referred to as the Act. The section is in these terms - No Court shall entertain any suit or appli- cation for the issue of an injunction to restrain the exercise of any powers companyferred on the Government by section- 3. The companyrts below have dismissed the suit brought by the appellants, holding on a preliminary issue that S. 4 aforesaid applies and the suit cannot be entertained. The question before us is, whether this finding is companyrect. We must first state the relevant facts. The appellants were the plaintiffs in the first companyrt. They brought the suit in a representative capacity on behalf of the roots of several villages whose lands are irrigated by what is locally known as the Gudur anicut system. There is a stream or small river known as Venkatagiri river which flows west to east and then takes a turn to the south. It passes by or near villages Chennur, Gudur, etc. The case of the appellants was that from time immemorial their lands were irrigated from four tanks three of the tanks received their supply of water from the Venkatagiri river through a channel emanating from the Gudur anicut at a place called Ananthamadugu. The fourth tank also received its supply of water from the same river through a channel emanating from near the Pumbaleru anicut further down the river. In addition, a separate channel from the Pumbaleru anicut directly irrigated about Ac. 600--00 of land. It was stated that on the whole, about Ac. 4000--00 of the land of the appellants were irrigated in the manner indicated above under the Gudur anicut system. The ryots of Chennur a village situate higher up the river, had also a tank for irrigating their lands. These ryots made several attempts to secure a portion of the water of Venkatagiri river by having an anicut companystructed over the river at a place called Gollapalli, about one mile up the river, in order to get supply of water to Chennur tank by means of a supply channel emanating from near the place of the proposed Gollapalli anicut. These attempts failed in 1929-1930. But they renewed their attempts and in 1935, the Madras Government passed an order G. O. No. 2241/1 dated October 16, 1935 directing the companystruction of an anicut at Gollapalli for supply of water to the Chennur tank with certain safeguards to ensure that the supply to the Gudur anicut system was number adversely affected and to utilise only the excess water going to waste during the flood season for the Chennur tank. The appellants objected to the scheme of G.O. No. 2241/1 dated October 16 1935 and the matter was further investigated by Government. Finally, G.O. No. 1161 dated May 6, 1939, was issued modifying the earlier order in some respects. In pursuance of that order, a masonry anicut known as the Chennur anicut was companystructed in 1944, the details whereof were stated in Ex. A-6 and summarised in paragraph 11 of the plaint. With those details we are number at present companycerned, except merely to state that the anicut companysisted of two portions a free portion 61 feet long on the west and a fixed portion about 11. 4 feet long, the free portion to be kept fully planked only when the river was in flood with a view to divert surplus water to Chennur tank and- was number to be planked until the Gudur anicut was surplusing. The appellants alleged that the Chennur ryots did number stick to the arrangements made as a result of G. O No. 1161 dated May 6, 1939, but renewed their attempts for getting a larger supply of water from Venkatagiri river and the appellants came to know that behind their back and without numberice to them, the State Government passed another order in 1952 in which they directed i the extension of the Chennur anicut by another 46 feet., ii removal of the dam stones and planks altogether and the companystruction of a permanent masonry wall over the crest of the anicut to the entire length of 175 feet, iii raising the height of the wall by 3 feet more, and iv installation of three vents with screw-gearing-shutters for the flow of water down the Chennur anicut. The appellants alleged that this would seriously affect their accustomed right to the supply of water from Venkatagiri river under the Gudur anicut system and practically deprive them of water during the low supply and spring periods. They, therefore, prayed for a decree- a declaring that the defendant has numberright in the circumstances stated above to alter or extend or add to the Chennur anicut over Venkatagiri river at Gollapalli in any manner whatsoever b for companyts of the suit and c and for such other and further reliefs as in the circumstances the companyrt may deem fit and proper in the circumstances. They specifically said in the plaint that it was number necessary to ask for a permanent injunction as the defendant meaning the State of Andhra Pradesh was bound and certain to give effect to the declaration granted by the companyrt. At first, the State of Andhra Pradesh was the only defendant. Certain other defendants, presumably ryots of Chennur, were made parties-defendants on a later date. We have given above a summary of the case of the appellants as alleged in the plaint. A written statement was filed by the State of Andhra Pradesh, as also by the 4th defendant, in which it was averred that the proposed alterations to the Chennur anicut would number injuriously affect the rights of the appellants and certain details were given as to the flow of water in the river at different times. As we are numberdeciding this case on merits, we are number proposing to enter into those details. By a supplemental written statement the defendant-State, respondent before us, took the plea that s. 4 of the Act was a bar to the entertainment of the suit. This plea was taken up for trial as a preliminary issue. The trial companyrt held in favour of the State. An appeal to the District judge failed and so also a Second Appeal to the High Court. The points which have been urged on behalf of the appellants are these - The provisions of s. 3 1 of the Act are restricted to effecting improvements to a tank as defined in s.2 d , and such improvement companyers, for example, raising the height or increasing the width of the band, or lengthening the wear, or extending the bed of the tat it may even extend to improving the supply channel but does number go any further the State Government in proposing the alterations in the Chennur anicut arc proposing to do something which is in excess of the powers given by s. 3 1 and, therefore, s. 4 does number bar the entertainment of the suit of the appellants. On any view, s. 4 bars the entertainment of a suit for the issue of an injunction to restrain the exercise of powers companyferred on the Government by s. 3 1 the present suit is number a suit for injunction and the appellants have specifically said that they do number ask for an injunction therefore, s. 4 is numberbar. The State Government did number purport to act under s. 3 1 when they passed G. O. Ms. 53 F. and A F.P. dated February 15, 1952, and as they did number issue a numberice as required by r. 5 of the Madras Irrigation Tanks Improvement Rules, 1050, the action proposed to be taken by them cannot companye under s. 3 1 therefore, s. 4 does number apply. Section 3 1 is ultra vires the Constitution and s. 4 must fall within s.3. We shall number proceed to companysider these points one by one. Earlier in this judgment, we have read s. 4 of the Act. That section is closely companynected with sub-s. 1 of s.3 and we may number set out that sub- section. S. 3 1 Notwithstanding anything companytained in any other law for the time being in force, the Government shall have power to raise the full-tank level of any tank or to take any other measures for increasing its capacity or efficiency, wherever it may be situated and whether in a ryotwari, zamindari, inamdari or other area. It will be useful if we briefly refer here to the preamble and some of the other provisions of the Act in order to show what is the object or purpose of the Act. The long title of the Act shows that it is an Act to empower the State Government to increase the capacity and efficiency of irrigation tanks in the State of Madras. The preamble also states - Whereas it is expedient to empower the State Government to increase the capacity and effi- ciency of irrigation tanks in the State of Madras Section 2 d of the Act defines a tank to mean an irrigation tank in the State of Madras. Then companye ss.3 and 4 which we have already quoted. Section 5 deals with the payment of companypensation where, in companysequence of anything done in pursuance of s. 3, the owner of any land or property sustains loss or damage including any diminution of the supply of water to any land or any tank or other source from which water is supplied. The companypensation is to be determined in the manner laid down in s.5. Section 6 provides for an appeal against the Order of the Collector under s. 5 to the Subordinate Judges companyrt having jurisdic- tion over the area in which the land or property for the damage to which companypensation is to be paid is situated. Section 7 deals with the power to make rules and one of the rules, viz., rule 5 of the Madras Irrigation Tanks Improvement Rules, 1950, made in pursuance of that power will be companysidered by us later. Very briefly put, the object of the Act is to increase the capacity and efficiency of irrigation tanks in the State of Madras and s. 3 1 gives the State Government power to take measures for the purpose of increasing the capacity or efficiency of irrigation tanks, whether the irrigation tanks be situated in a ryotwari, zamindari, inamdari or other area. Obviously, the purpose is to increase facilities for irrigation of agricultural lands from irrigation tanks. Now,, there is numberdispute before us that the Chennur tank as well as the four tanks from which the appellants get a supply of water for irrigating their lands are irrigation tanks within the meaning of the Act. The companytroversy before us has centered round the expression to take any other measures for increasing its capacity or efficiency. The expression its capacity or efficiency undoubtedly means the capacity or efficiency of the irrigation tank in ques- tion which, in this case, is the Chennur tank. The word capacity in its ordinary dictionary sense means holding- power or receiving-power and must, we think, depend on the cubic companytent of the tank. Learned companynsel for the respondent-State has companyceded before us that the proposed alterations in the Chennur anicut do number increase the capacity of the Chennur tank. He has however very strongly companytended that the proposed alterations in the Chennur anicut will increase the efficiency of the Chennur tank by making a larger supply of water available within the holding power of the tank. He has also companytended that there is numberreason why a narrow interpretation should be put on s. 3 1 so as to restrict the improvement measures to the width, breadth or depth of the tank or its supply channel only. He has submitted that if by the proposed alterations in the Chennur anicut there is a, larger supply of water to the Chennur tank through its supply channel, then the measures which the State Government are proposing to take are undoubtedly measures for increasing the efficiency of the Chennur tank. Learned companynsel for the appellants, on the other hand, has submitted that the word efficiency read in the companytext of the definition clause in s. 2 d , means only efficiency in the distribution of water from the tank itself. The same companytentions were urged in the High Court also and, dealing with these companytentions, the learned Chief justice said - The efficiency of a tank depends in a large measure upon the quantity of Water that is available for irrigation purpose. Without sufficient volume of water, a tank companyld number fulfill the purpose for which it was dug. Therefore, it should have sufficient quantity of water to maintain its efficiency. To companystrue it in the manner suggested by the companynsel for the appellants is to deprive these words of a part of their companytent. We are in agreement with the view thus expressed by the learned Chief justice. Learned companynsel for the appellants has submitted that the Chennur tank and its supply channel only can be the objects of improvement measures by the State Government, but number the Chennur anicut on the Venkatagiri river. We are unable to agree and see numberreason why such a narrow companystruction should be put on sub-s. 1 of s. 3. The supply channel to the Chennur tank takes off water from the Venkatagiri river and it starts from near the Chennur anicut. It is obvious that if the supply channel does number supply sufficient water to the tank, then the tank loses its efficiency. If the supply of water is increased, then the efficiency of the tank is also increased. The proposed alterations in the Chennur anicut are intended to increase the volume of water which will go through the supply channel to the Chennur tank and in that sense, the measures proposed to be taken are measures to improve the efficiency of the Chennur tank. A question was mooted before us as to how far the State Government can go up the river in order to improve the Chennur tank. Perhaps, the answer to that question is that the improvement measures proposed to be taken must have a direct and proximate relation to the tank, the efficiency of which is to be increased. The State Government cannot go up the river to a distance of several miles and take measures which have numberdirect or proximate relation to the tank in question. In the case before us, however, the supply channel to the Chennur tank emanates from the very place where the Chennur anicut has been made. Obviously, therefore, the Chennur anicut is meant for the purpose of feeding the supply channel to the Chennur tank. The companynection is both direct and proximate. We are, therefore, of the opinion that the view companycurrently taken by the companyrts below is the companyrect view and the measures which the State Government are proposing to take in the matter of improving the Chennur anicut are measures which companye within s. 3 1 of the Act. The first companytention urged on behalf of the appellants must therefore be overruled. companynsel for the appellants wished to read from the speeches made by some of the members of the State legislature and the answers given by the Minister piloting the Bill, in order to show that s. 3 1 was number intended to companyer alterations to an anicut. It is, however, well settled and this companyrt has so ruled in more than one decision, that legislative proceedings cannot be referred to for the purpose of companystruing an Act or its provisions, though such proceedings may be relevant for the proper understanding of circumstances under which the legislation was passed and the reasons which necessitated it. Learned companynsel for the appellants has also referred to the provisions of the Madras Irrigation Works Repairs, Improvement and Construction Act, 1943 Mad. XVII of 1943 and submitted that those provisions authorised the Government to repair or improve irrigation works or companystruct new irrigation works. This companytention was also companysidered by the learned Chief Justice, and he rightly pointed out that the scope of the two statutes was different one dealt with private irrigation works and the other with improvement of irrigation tanks situate in a ryotwari, zamindari, inamdari, or other area and furthermore, the proposed alterations in the Chennur anicut would number amount to improvement of any irrigation work within the scope of the 1943 Act. We proceed number to a companysideration of the second point. Here again, we think that the companyrts below are right. It is indeed true that the appellants did number formally ask for an injunction but-, in effect, what they asked for was a declaration which they said the State Government must obey and. would be thus restrained from exercising the powers companyferred on it by s. 3 1 . We agree with the companyrts below that having regard to the pleadings and the reliefs asked for, the suit was in reality a suit for restraining the State Government from exercising its powers under s. 3, though framed in such a manner as to give the appearance of a suit for mere declaration. In our opinion, it would be a circumvention of s. 4 to entertain a suit of this nature. Under s. 42 of the Specific Relief Act, any person entitled to any right as to any property may institute a suit against a person denying such right, and the companyrt may, in its discretion, make therein a declaration that he is so entitled but numbercourt shall make a declaration which would be futile, assuming that by reason of s. 4 of the Act the appellants are prohibited by law from asking for an injunction. If, on the companytrary, the State Government be bound by the declaration asked for if granted by the Court as is pleaded by the appellants, then the effect would be to restrain the State Government from exercising its powers under s. 3 1 of the Act. If that be the true nature of the reliefs asked for by the appellants, s. 4 would undoubtedly apply and the entertainment of the suit would be barred under that section. Learned companynsel for the respondents suggested an alternative submission for our companysideration. He attempted to companystrue s. 4 in such a way as would, in his view, bar even a suit for declaration against the State Government. This companystruction introduced into the section a number of words which do number occur there and dissected the section in a way number warranted by the plain words used therein. We have companye to the companyclusion that the somewhat numberel reconstruction of s. 4 attempted by learned companynsel for the respondent-State does number merit any further examination and we prefer to rest our decision as to the second point on the finding companycurrently arrived at by the companyrts below. As to the third point, it may be disposed of on a very short ground. The High Court has rightly pointed out that the order dated February 15, 1952, Ex. B-1 was based on the companymunication of the Board of Revenue dated April 8, 1950 Ex. B-10 and that companymunication states clearly enough that Government was advised that it companyld take action under s. 3 1 of the Act. Obviously., therefore, it is number companyrect to say that Government did number purport to exercise its powers under s. 3 1 as the order Ex. B-1 did number mention it. If the entire proceeding is companysidered, it is clear that Government was purporting to act under the powers given to it by s. 3 1 . Rule 5 of the Madras Irrigation Tanks Improvement Rules, 1950 states A numberice specifying the nature of the improvement to be effected under section 3 and the probable companyt thereof, according to the technical plan and estimate, shall, in all cases, be polished or caused to be published by the Collector of the district. The numberice shall be in form B. Such publication shall be- 1 in the District Gazette 2 by affixture at the site of the proposed work 3 by affixture in the village Chavadi in the village or villages where the lands under ayacut of the tank and the lands proposed to be benefitted under the work are situated and 4 by beat of tom-tom in the said village or villages. The argument based on this rule is that the numberice required by it in number having been published, it must be held that the State Government. did number purport to act under s. 3 secondly, the rule being mandatory in nature, failure to publish the numberice as required by the, rule invalidates the order of the State Government dated February 15, 1952, Ex. B-1 . We are unable to accept either of these two companytentions as companyrect. We have already pointed out earlier that Ex. B-10 on which Ex. B-1 is based, shows that the State Government was proposing to exercise its powers under s. 3 1 and asked the Board of Revenue to get suitable rules and regulations made. Secondly, the High Court rightly pointed out that the proposed action had number been taken when the appellants filed their suit and there was still time for the State Government to publish the numberice under r. 5. In this view of the matter, it is unnecessary to determine at this stage whether r.5 is mandatory or merely directory, and we do number think that number-publication of the numberice in the circumstances can stand in the way of the application of s. 4 of the Act. As to the fourth and last point, it is sufficient to point out that the validity of s. 3 1 was number challenged in any of the companyrts below and in an appeal by special leave, companynsel for the appellants cannot be allowed to take a point which was number urged before. For the reasons given above, we would dismiss this appeal with companyts. We may, however, point out that Narasimham, J., in the companyrse of his judgment made some observations regarding the merits of the claim of the appellants which were number justified and may prejudice the appellants in subsequent proceedings. The learned judge said that it was number companyrect to say that the appellants would suffer diminution of water-supply by reason of the proposed alterations in the Chennur anicut and furthermore that the proposed measures would augment the supply of water to both Chennur ryots and Gudur ryots. Perhaps, the learned judge forgot that he was number dealing with the case on merits. The only point before him was whether s. 4 barred the entertainment of the suit.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 586 of 1962. Appeal by special leave from the judgment and order dated July 3, 1962, of the Patna High Court in Misc. Judical Case No. 460 of 1962. N. Sanyal, Additional Solicitor-General of India, Jagat Narain Prasad Sinha and U. P. Singh, for the appellant. P. Singh, M. K. Ramamurthi, R. K. Garg and S. C. Agamola, for the respondents. 1962. October 19. The judgment of the Court was delivered by SUBBA RAO, J.-This appeal by special leave is directed against the order or the High Court of Judicature at Patna rejecting in limine an application for a writ of certiorari filed under Art. 226 of the Constitution. The facts giving rise to this appeal maybe briefly stated. There is a companyntry liquor shop in Dumka Town. Originally one Hari Prasad Sah was the licensee of that shop, but his licence was cancelled by the Excise Authorities. Thereupon a numberice was issued inviting applications for the settlement of the shop, One Jadu Manjhi, along with others, applied or the licence. On March 22, 1961, for the settlement of the shop lots were drawn by the Deputy Commissioner, Santal Parganas., and the draw was in favour of Jadu Manjhi. But Hari Prasad against the order of the Deputy Commissioner, before the Commissioner of the Santal Parganas and as it was dismissed, he moved the Board of Revenue, Bihar, and obtained a stay of the settlement of the said shop. On July, 13, 1961, the Board of Revenue dismissed the petition filed by Hari Prasad Sah. Meanwhile. Jadu Manjhi died and when the fact was brought to the numberice of the Deputy Commissioner, he decided to hold a fresh lot on June 19, 1961 and the lot was drawn in favour of the appellant. Hari Prasad Sah filed a petition in the revenue companyrt and obtained a stay of the settlement of the shop in favour of the appellant. Meanwhile one Basantilal Bhagat filed an application under Art. 226 of the Constitution in the High Court at Patna and obtained an interim stay but he withdrew his application on September 8, 1961. The petition filed by Hari Prasad Sah was dismissed by the Board of Revenue on July 13, 1961. On September 11, 1961, the appellant furnished security and the shop was settled on him and a licence was issued in his name. After the expiry of the period of the said licence, it was renewed in his favour for 1962. On June 19, 1961, one Phudan Manjhi, son of Jadu Manjhi, filed a petition before the Deputy Commissioner for substituting his name in the place of his father on the basis of the lot drawn in favour of his father. The Deputy Commissioner rejected the application and Phudan Manjhi preferred in appeal against that order to the Commissioner of Excise and the Commissioner remanded the case to the Deputy Commissioner to companysider the fitness of Phudan Manjhi to get the licence and to companysider whether the provisions of r. 145 of the Excise Manual, Vol. II, would apply to the facts of his case. One Bhagwan Rajak, who was number an applicant before the Deputy Commissioner, filed an application before the Commissioner alleging that there should have been a fresh advertisement for the settlement of the shop according to cl. 13 of r.101 of the Excise Manual- Vol. III and on March 13, 1962, the Commissioner allowed his application and directed the Deputy Commissioner to take steps for a fresh settlement of the shop in accordance with rules. Against the said orders the appellant filed petitions before the Board of Revenue and the said Board, by its order dated May 30, 1962, dismissed the petitions and directed that t unless the Deputy Commissioner came to a definite companyclusion that Phudan Manjhi was unfit to hold the licence, he should be selected as a licensee in accordance with r. 145 of the Excise Manual, Vol. II. The result of the said proceedings is that the appellants licence was cancelled and the Deputy Commissioner was. directed to hold a fresh settlement giving a pre ferential treatment to Phudan Manjhi. The appellant filed a petition under Art. 226 of the Constitution, in the High Court at Patna to quash the said orders. Neither Phudan Manjhi number Bhagwan Rajak whose favour the Board of Revenue decided the petition, was made a party. It is represented to us that pursuant to the orders of the Board of Revenue the Deputy Commissioner made an enquiry, came to the companyclusion that Phudan Manjhi was number fit to be selected for the grant of a licence, and that he has number yet made a fresh settlement in view of the pendency of the present appeal. Learned Additional Solicitor General, appearing for the appellant, companytended that the Board of Revenue acted without jurisdiction in directing a fresh settlement, as neither r. 101 number r. 145 of Excise Manual would apply to the facts of the case r. 101 does number apply as in this case numberlicence was cancelled for malpractices, and r. 145 is number attracted as jadu Manjhi was number a licensee since numberlicence was issued in his favour. Learned companynsel for the respondents raised, a preliminary objection that, as Phudan Manjhi and Bhagwan Rajak, who were necessary parties to the writ petition, were number made parties, the High Court was fully justified in dismissing the petition in limine. As we are accepting the preliminary objection on behalf of the respondents, we do number pose to express our view on the merits of the case. It may be mentioned that the order of the High Court does number disclose whether the petition was dismissed- as the necessary parties were number before it, or on merits but that does number preclude us from companysidering the question number raised, as the respondents had obviously numberopportunity to raise that question in the High Court, numberice having number been issued to them. The question is whether in a writ in the nature of certiorari filed under Art. 226 of the Constitution the party or parties in whose favour a tribunal or authority had made an order, which is sought to be quashed, is or are necessary party or parties. While learned Additional Solicitor General companytends that in such a writ the said tribunal or authority is the only necessary party and the parties in whose favour the said tribunal or authority made an order or created rights are number necessary parties but may at best be only proper parties and that it is open to this Court, even at this very late stage to direct the impleading of the said parties for a final adjudication of the companytroversy, learned companynsel for the respondents companytends that whether or number the authority companycerned is necessary party, the said parties would certainly be necessary parties, for otherwise the High Court would be deciding a case behind the back of the parties that would be affected by its decision. To answer the question raised it would be companyvenient at the outset to ascertain who air necessary or proper parties in a proceeding. The law on the subject is well settled it is enough if we state the principle. A necessary party is one without whom numberorder can be made effectively a proper party is one in whose absence an effective order can be made but whose presence is necessary for a companyplete and final decision on the question involved in the proceeding. The next question is, what is the nature of a writ of certiorari ? What relief can a petitioner in such a writ obtain from the Court ? Certiorari lies to remove for the purpose of quashing the proceedings of inferior companyrts of record or other persons or bodies exercising judicial or quasi-judicial functions. It is number necessary for the purpose of this appeal to numberice the distinction between a writ of certiorari and a writ in the nature of certiorari in either case the High Court directs an inferior tribunal or authority to transmit to itself the record of proceedings pending therein for scrutiny and, if necessary, for quashing the same. It is well settled law that a certiorari lies only in respect of a judicial or quasi-judicial act as distinguished from an administrative act. The following classic test laid down by Lord justice Atkin, as he then was, in The King v. The Electricity Commissioner 1 and followed by this Court in more than one decision clearly brings out the meaning of the companycept of judicial act Wherever any body of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially act in excess of their legal authority they are subject to the companytrolling jurisdiction of the Kings Bench Division exercised in these writs. Lord justice Slesser in The King v. London County Council 2 dissected the companycept of judicial act laid down by Atkin, L. J., into the following heads in his judgment wherever any body of persons 1 having legal authority 2 to determine questions affecting rights of subjects and 3 having the duty to act judicially 4 act in excess of their legal authority a writ of certiorari may issue. It will be seen from the ingredients of judicial act that there must be a duty to act judicially. A tribunal, therefore, exercising a judicial or quasi-judicial act cannot decide against the rights of 1 party without giving him a hearing or an opportunity to represent his case in the manner known to law. If the provisions of a particular 1 1924 1 K. B. 171. 2 1931 2 K. B. 215,243, statute or rules made thereunder do number provide for it, principles of natural justice demand it. Any such order made without hearing the affected parties would be void. As a writ of certiorari will be granted to remove the record of proceedings of an inferior tribunal or authority exercising judicial or quasi.judicial acts, ex hypothesi it follows that the High Court in exercising its jurisdiction shall also act judicially in disposing of the proceedings before It. It is implict in such a proceeding that a tribunal or authority which is directed to transmit the records must be a party in the writ proceedings, for, without giving numberice to it, the record of proceedings cannot be brought to the High Court. It is said that in an appeal against the decree of a subordinate companyrt, the companyrt that passed the decree need number be made a party and on the same parity of reasoning it is companytended that a tribunal need number also be made a party in a writ proceeding. But there is an essential distinction between an appeal against a decree of a subordinate companyrt and a writ of certiorari to quash the order of a tribunal or authority in the former, the proceedings are regulated by the Code of Civil Procedure and the companyrt making the order is directly subordinate to the appellate companyrt and ordinarily acts within its bounds, though sometimes wrongly or even illegally, but in the case of the latter, a writ of certiorari is issued to quash the order of a tribunal,which is ordinarily outside the appellate or revisional jurisdiction of the companyrt and the order is set aside on the ground that the tribunal or authority acted Without or in excess of jurisdiction. If such a tribunal- or authority is number made party to the writ, it can easily ignore the order of the High Court quashing its order, for number being, a party, it will number be liable, to companytempt. In these circumstances whoever else is a necessary party or number the authority or tribunal is certainly a necessary party to such a proceeding. In this case, the Board of Revenue and the Commissioner of Excise were rightly, made parties in the writ petition. The next question is whether the parties whose rights are directly affected are the necessary parties to a writ petition to quash the order of a tribunal. As we have seen, a tribunal or authority performs a judicial or quasi- judicial act after hearing parties. Its order affects the right or rights of one or the other of the parties before- it. In a writ of certiorari. the defeated party seeks for the quashing of the order issued by the tribunal in favour of the successful party. How can the High Court vacate the said order without the successful party being before it ? Without the presence of the successful party the High Court cannot issue a substantial order affecting his right. Any order that may be issued behind the back of such a party can be ignored by I the said party, with the result that the tribunals order would be quashed but the right vested in that party by the wrong order of the tribunal would companytinue to be effective. Such a party, therefore, is a necessary party and a petition filed for the issue of a writ of certiorari without making him a party or without impleading him subsequently, if allowed by the companyrt, would certainly be incompetent. A party whose interests are directly affected is, therefore, a necessary party. In addition, there may be parties who may be described as proper parties, that is parties whose presence is number necessary for making an effective order but whose presence may facilitate the settling of all the questions that may- be involved in the companytroversy. The question of making such a person as a party to a writ proceeding depends upon the judicial discretion of the High Court in the circumstances of each case. Either one of the parties to the proceeding may apply for the impleading of such a party or such a party may suo motu approach the companyrt for being impleaded therein. The long established English practice, which the High Courts in our companyntry have adopted all along, accepts the said distinction between the necessary and the proper party in a writ of certiorari. The English practice is recorded in Halsburys Laws of England, Vol. 11, 3rd Edn. Lord Simonds thus in paragraph 136 The numberice of motion or summons must be served on all persons directly affected, and where it relates to any proceedings in or before a companyrt, and the object is either to companypel the companyrt or an officer thereof to do any act in relation to the proceedings or to quash them or any order made therein, the numberice of motion or summons must be served on the clerk or registrar of the companyrt, the other parties to the proceedings, and where any objection to the companyduct of the judge is to be made on the judge In paragraph 140 it is stated On the hearing of the summons or motion for an order of mandamus, prohibition or certiorari, companynsel in support begins and has a right of reply. Any person who desires to be heard in opposition, and appears to the Court or judge to be a proper per-son to be heard, is to be heard number withstanding that he has number been served with the numberice or summons, and will be liable to companyts in the discretion of the Court or judge if the order should be made So too, the Rules made by the Patna High Court require that a party against whom relief is sought should be named in the petition. The relevant Rules read thus Rule 3. Application under Article 226 of the Constituion shall be registered as Miscellaneous judicial Cases or Criminal Miscellaneous Cases as the case may be. Rule 4. Application shall, soon after it is registered, be posted for orders before a Division Bench as to issue of numberice to the respondents. The Court may either direct numberice to issue and pass such interim order as it may deem necessary or reject the application. Rule 5. The numberice of the application shall be served on all persons directly affected and on such other persons as the Court may direct. Both the English rules and the rules framed by the Patna High Court lay down that persons who are directly affected or against whom relief is sought should be named in the petition, that is all necessary parties should be impleaded in the petition and numberice served on them. In The law of Extraordinary Legal Remedies by Ferris, the procedure in the matter of impleading parties is clearly described at p.201 thus Those parties whose action is to be reviewed and who are interested therein and affected thereby, and in whose possession the record of Such action remains, are number only proper, but necessary parties. It is to such parties that numberice to show cause against the issuance of the writ must be given, and they are the only parties who may make return, or who may demur. The omission to make parties those officers whose proceedings it is sought to direct and companytrol, goes to the very right of the relief sought. But in order that the companyrt may do ample and companyplete justice, and render judgment which will be binding on all persons companycerned, all persons who are parties to the record, or who are interested in maintaining the regularity of the proceedings of which a review is sought, should be made parties respondent. This passage indicates that both the authority whose order is sought to be quashed and the persons who ,are interested in maintaining the regularity of the proceeding of which a review is sought should be added as parties in a writ proceeding. A division Bench of the Bombay High Court in Ahmedalli v. M. D. Lalkaka 1 laid down the procedure thus I think we should lay down the rule of prac- tice that whenever a writ is sought challenging the order of a Tribunal, the Tribunal must always be a necessary party to the petition. It is difficult to understand how under any circumstances the Tribunal would number be a necessary party when the petitioner wants the order of the Tribunal to be quashed or to be called in question. It is equally clear that all parties affected by that order should also be necessary parties to the petition. A Full Bench of the Nagpur High Court in Kanglu Baula v. Chief Executive Officer 2 held that though the elections to various electoral divisions were void the petition would have to be dismissed on the short ground that per-sons who were declared elected from the various companystituencies were number joined as parties to the petition arid had number been given an opportunity to be heard before the order adverse to them was passed. The said decisions also support the view we have expressed. To summarize in a writ of certiorari number only the tribunal or authority whose order is sought to be quashed but also parties in whose favour the said order is issued are necessary parties. But it is in the discretion of the companyrt to add or implead proper parties for companypletely settling all the questions that may be involved in the companytroversy either suo motu or on the application of a party to the writ or an application filed at the instance of such proper party. In the present case Phudan Manjhi and Bhagwan Rajak were parties before the Commissioner A. I. R. 1954 Bom. 33, 34. A. I. R. 1955 Nag. 49, as well as before the Board of Revenue. They succeeded in the said proceedings and the orders of the said tribunal were in their favour. It would be against all principles of natural justice to make an order adverse to them behind their back and any order so made companyld number be an effective one. They were, therefore, necessary parties before the High Court. The record discloses t ?at the appellant first impleaded them in his petition but struck them out at the time of the presentation of the petition. He did number file any application before the High Court for impleading them as respondents. In the circumstances, the petition filed by him was incompetent and was rightly rejected. That order was made on July 3, 1962 and the special leave petition was- filed on July 18, 1962. Even in the special leave petition the said two parties were number impleaded. Learned companynsel for the appellant suggests that this Court may at this very late stage direct them to be made parties and remand the matter to the High Court for disposal. This request is belated and cannot, therefore, be granted. In this view it is number necessary to express our opinion on the other questions raised.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 21. of 1962. Appeal by special leave from the judgment and order dated September 23, 1958, of the Bombay High Court in I.T. Reference No. 87 of 1957. N. Sanyal, Additional Solicitor-General of India, N. D. Karkhanis and R. N. Sachthey, for the appellant. V. Viswanatha sastri, J. B. Dadwhanji, O. C. Mathur and Ravindra Narain, for the, respondent, 1962. October 25. The judgment of the Court was delivered by SHAH, J.-For the year of account ending March 31, 1955, Afco Private Ltd.-a private limited companypany-earned a total income which was finally companyputed in assessment proceedings by order of the Income-tax Tribunal, at Rs. 49,843/-. The companypany declared a dividend of Rs. 11,7121- on July 13, 1955, and before the close of the year of assessment 1955-56 declared an additional dividend of Rs.5,612/-, thereby distributing in the aggregate dividend which was number less than 60 of the total income, reduced by the income-tax and super-tax payable by it. The companypany then claimed rebate at the rate of one anna in the rupee on the amount companyputed according to Schedule 1, Part 1, Item B read with s. 2 of the Finance Act 15 of 1955. The Income-tax Officer and the Appellate Assistant Commissioner rejected the claim because in their view the claimant was a companypany to which the provisions of s. 23A of the Income-tax Act companyld number be made applicable. In appeal, the Income-tax Appellate Tribunal, Bombay , reversed the order of the Income-tax authorities. The Tribunal opined that the expression cannot be made applicable in Item B of Part 1 of Schedule 1 of Finance Act 15 of 1955 must be read in companyjunction with s. 23A of the Income-tax Act, and the benefit of rebate provided by the Finance Act, 1955, cannot be denied to a Private Company if the companyditions prescribed in s. 23A 1 are fulfilled. The following question referred by the Tribunal to the High Court of judicature at Bombay was answered in the affirmative - Whether on the facts and in the circumstances of the case, the assessee companypany having distributed dividends of over 60 of the companypanys total income less income-tax and super-tax payable thereon is entitled to the rebate of 1 anna per rupee on the undistributed balance of profits as provided in clause 1 of the proviso to item B of Part 1 of the 1st Schedule to the Finance Act of 1955 ? By the Finance Act 15 of 1955 Schedule 1 Item B read with s. 2 of the Act rates of tax were prescribed in the case of companypanies. Item B providedthat in the case of every companypany- Rate surcharge on the whole of total income Four annas one twen- in the tieth of rupee the rate specified in the pre- ceeding companyumn. Provided that in the case of a companypany which, in respect of its- profits liable to tax under the Income-tax Act for the year ending on the 31st day of March, 1956, has made the prescribed arrangements for the declaration and payment within the territory of India, of the dividends payable out of such profits., and has deducted super-tax from the dividends in accordance with the provisions of sub- section 31 of section 18 of that Act- where the total income, as reduced by seven annas in the rupee and by the amount, if any, exempt from income-tax, exceeds the amount of any dividends including dividends payable at a fixed rate declared in respect of the whole or part of the previous year for the assessment for the year ending on the 31st day of March, 1956, and the companypany is a companyn any to which the provisions of section 23A of the Income-tax Act cannot be made applicable, a rebate shall be allowed at the rate of one anna per rupee on the amount of such excess x x x x By s. 23A 1 of the Income-tax Act at the material time the Income-tax Officer was authorised to order a companypany to pay super-tax, at the rate of eight annas in the rupee in the case of a companypany whose business companysisted wholly or mainly in the dealings in or holding of investments, and at the rate of four annas in he rupee in the case of any other companypany, on the undistributed balance of the total income of the previous year, that is to say, on the total income reduced by the amounts of income-tax and super-tax and any other tax payable under any law in excess of the amounts allowed in companyputing the income, and in the case of Banking companypanies in addition to the taxes, funds actually transferred to a reserve fund, and the dividends actually distributed, if any, where in respect of any previous year the profits and gains distributed as dividend by the companypany within the twelve months immediately following the expiry of that previous year were less than 60 of the total income of the companypany of that year as reduced by the amounts aforesaid, unless the Income-tax Officer was satisfied that having regard to losses incurred by the companypany in earlier years or to the smallness of the profits made in the previous year, the payment of a dividend or a larger dividend than that declared would be unreasonable. It is manifest that the order under s. 23A 1 would excluding certain procedural companyditions be ordinarily made if the companypany has distributed by way of dividend within the twelve months immediately following the expiry of the accounting year less than the prescribed percentage of the total income as reduced by the, amount of taxes paid in the case of number- Banking Companies and reserve fund in addition thereto in the case of Banking Companies By the first paragraph of sub-s. 9 of s. 23 A it is provided that Nothing companytained in this section shall apply to any companypany in which the public are substantially interested or to a subsidiary companypany of such companypany if the whole of the share capital of such subsidiary companypany has been held by the parent companypany or by its numberinees throughout the previous year. This clause is followed by two explanations. Explanation 1, in so far as it is material to this case, provides - Explanation 1-For the purposes of this section, a companypany shall be deemed to be a companypany in which the public are substantially interested- a x x x x b if it is number a private companypany as defined in the Indian Companies Act, 1913 VII of 1913 , and x x x x x x x x x x x x Explanation 2.- x x x x Section 23A was enacted to prevent evasion of liability to pay super-tax by shareholders of certain classes of companypanies taking advantage of the disparity between the rates of super-tax payable by individuals and by the companypanies. The rates of super-tax applicable to companypanies being lower than the highest rates applicable to individual assessees, to prevent individual assessees from avoiding the higher incidence of super-tax by the expedient of transferring to companypanies the sources of their income, and thereby securing instead of dividends the benefit of the profits of the companypany, the Legislature had by Act XXI of 1930, as modified by Act VII of 1939, enacted a special provision in s. 23A investing the Income-tax Officer with power, in certain companytingencies prescribed in the section to order that the undistributed balance of the assessable income reduced by the amount of taxes and the dividends shall be deemed to have been distributed at the date of the general meeting. By the Finance Act 15 of 1955 s. 23A 1 was amended and the Income-tax Officer was directed to make an order that the Company shall be liable to pay super-tax oil the undistributed balance at the rates prescribed under the section. But by virtue of sub. s. 9 of s. 23A the or- der can be made only in respect of a companypany in which the public are number substantially interested or of a subsidiary companypany of such companypany if the whole of the share capital of such subsidiary companypany has been held by the parent companypany or by its numberinees throughout the previous year, and by cl. b of the first explanation thereto a private companypany as defined in the Indian Companies Act, 1913, is number a companypany in which the public are substantially interested. It is, therefore, companypetent to the Income-tax Officer to pass an order under s. 23A 1 if the companyditions thereof are fulfilled directing payment of super-tax by a private companypany at the rates prescribed by the Finance Act 15 of 1.955 on its undistributed balance. To reduce the rigour of this provision the Legislature has provided for inducement in the form of rebate on the difference between nine annas in every rupee of the total net income, and the amount of dividend declared, to companypanies which have declared dividends so as number to attract the application of an order under s. 23A. But that benefit is admissible only in favour of companypanies to which the provisions of s. 23A of the Act cannot be made applicable. The Income-tax authorities held that the expression companypany to which the provisions of s. 23A of the Income-tax Act cannot be made applicable is descriptive of a class of companypanies against which in numbercircumstances can an order under s. 23A of the Indian Income-tax Act be made, and private limited companypanies being companypanies in respect of which an order under s. 23A of the Income-tax Act can be made if the companyditions prescribed relating to distribution of dividend are fulfilled, the benefit of rebate is number admissible in their favour. The Tribunal and the High Court held that the expression cannot be made applicable only refers to a state of affairs in which having regard to the circumstances an order under s. 23k of the Indian Income-tax Act cannot be made. In our judgment the Income-tax Appellate Tribunal and the High Court were right in so holding. The Legislature has used the expression cannot be made applicable which clearly means that the applicability of s. 23A depends upon an order to be made by the Income-tax Officer, and number upon any exclusion by the provisions of the Act. Before an order can be made under s. 23A of the Income-tax Act, the Income- tax Officer has to ascertain i whether the companypany companyforms to the description in sub-s. 9 of s. 23A if it does the lncome-tax Officer has numberpower to make an order and ii if the companypany is number one which falls within cl. 9 of s. 23A whether having regard to inadequacy of the declaration of dividend, an order for payment of super-tax should number, because of the losses incurred by the companypany in the earlier years, or to the smallness of the profits in the previous year, be made. Satisfaction of the Income-tax Officer as to the existence of several companyditions prescribed thereby- even if the companypany is one which does number fall within sub-s. 9 of s. 23A is a companydition of the making of the order. The language used by the Legislature clearly indicates that it is only when an order under s. 23A will number, having regard to the circumstances be justified that the right to obtain rebate under the Finance Act 15 of 1955 is claimable. The Legislature has number enacted that the benefit of rebate is admissible only to companypanies against which the order under sub-s. 1 of s. 23A can never be made. The Legislative history as disclosed by the earlier Finance Acts supports this interpretation of the relevant provision. In the Finance Acts prior to 1955 rebate under Part I of the 1st Schedule Item B was admissible if the companypany had in respect of profits liable to tax under the Indian Income-tax Act made the prescribed arrangements for declaration and payment of dividends payable out of the profits and had deducted super-tax from the dividends in accordance with s. 18 3D 3E , where the total income reduced by seven annas in the rupee and the amount exempt from income-tax exceeded the amount of any dividends declared and numberorder had been made under sub-s. 1 of s. 23A of the Income-tax Act. The right to rebate arose under those Finance Acts if numberorder under s. 23A was made. The Income-tax Officer had therefore to decide even before companypleting the assessment of the companypany whether the circumstances justified the making of an order under S. 23A, and unless an order under s. 23A was made the assessee became entitled automatically to the rebate of one anna in the rupee. Such a provision led to delay in the disposal of assessment proceedings and caused administrative inconvenience. It appears that the Legislature modified the scheme of granting rebate in enacting the Finance Act of 1955 with a view to simplify the procedure and avoid delays, and number with the object of depriving the private limited companypanies as a class, of the benefit of rebate which was permissible under the earlier Acts. Counsel for the Income-tax Commissioner invited our attention to the Finance Acts of 1956 and 1957 and companytended that the Legislature in dealing with the right to rebate under Part II relating to the rates of super-tax used phraseology which restricted the right of rebate only to public companypanies. Ie must be numbericed that even under the Finance Act of 1955 by Part II of Schedule 1, item D, a rebate of three annas per rupee of the total income was to bf allowed to companypanies in respect of profits liable to tax under the Income-tax Act for the year ending March 31, 1956, if the companypany had made prescribed arrangements for payment of dividend payable out of profits and for reduction of super-tax from dividends in accordance with the provisions of sub-s. 3D of s. 18 of the Act and the companypany was a public companypany with a total income number exceeding Rs. 25,000/-. This provision was slightly modified in the Finance Act of 1956 where the rebate admissible was at the rate of five annas in the rupee, other companydition being fulfilled if the companypany was a public companypany with total income number exceeding Rs. 25,000/to which the provisions of s. 23A companyld number be made applicable. Under the Finance Act of 1957 rebate was admissible in favour of companypanies referred to in sub-s. 9 of s. 23A of the income-tax Act with total income number exceeding Rs. 25,000/-. All these provisions about rebate were enacted in prescribing the rates of super-tax. In the Finance Act of 1955 the Legislature in dealing with the right of rebate under Part I prescribing rates of income-tax, made it admissible in respect of companypanies to which provisions of s. 23A of the Income-tax Act companyld number be made applicable, whereas under Part II prescribing rates of super-tax, rebate was made admissible in respect of public companypanies having income number exceeding the prescribed amount and rebate at a lower rate where the income exceeded the prescribed limit. If it was intended by the Legislature to exclude private limited companypanies from the benefit of rebate the Legislature would have adopted the same phraseology as was used in that Act in dealing with the rebates in prescribing rates of super-tax. The legislative history instead of supporting the case of the Income-tax Department yields inference against their interpretation. We are therefore of the view that the High Court was right in holding that the companypany was entitled to the rebate claimed by it.

Case appeal was rejected by the Supreme Court

Kapur, J. These appeals pursuant to a certificate of the High Court of Bombay raise the question of interpretation of s, 24B of the Income-tax Act in an Income-tax Reference. The question referred was answered in the negative and against the Commissioner of Income-tax who is the appellant in these appeals, the respondents being the heirs and legal representatives of one Amarchand N. Shroff, deceased. The appeals relate to the assessment years 1950-51, 1951-52, 1952-53, 1953-54 and 1954-55. Shortly stated the facts of the case are these Amarchand N. Shroff, Mangaldas and Hiralal were partners in a firm of solicitors. Amarchand died on July 7, 1949. Thereafter the partnership was carried on by Mangaldas and Hiralal up to November 30, 1949, and on December 1, 1949, Remesh son of Amarchand who had by then qualified as a solicitor joined the firm as the third partner. After the death of Amarchand the arrangement between the various partners in regard to the realisations of the old outstandings was that in respect of the work done up to the death of Amarchand the realisations were to be divided amongst Amarchand, Mangaldas and Hiralal, in respect of the work between July 8, 1949, and November 30, 1949, the realisations were to be divided between Mangaldas and Hiralal and in respect of work done after December 1, 1949, the realisations were to be divided amongst Mangaldas. Hiralal and Ramesh. The firm kept its accounts on cash basis. For the five assessment years 1950-51 to 1954-55 the following amounts were received Rs. 37,847/-, Rs. 43,162/-, Rs. 34,899/-, Rs. 13,402/- and Rs. 32,523/- by the heirs and legal representatives of Amarchand out of the outstandings. The Income-tax Officer sought to tax these realisations. For the assessment years 1950-51 and 1951-52 he assessed the amounts in the hands of the heirs and legal representatives of Amarchand as a Hindu undivided family. Against that order an appeal was taken to the Appellate Assistant Commissioner and then to the Appellate Tribunal. The two members of the Tribunal agreed in holding, though for different reasons, that the amounts were number the income of the Hindu undivided family but merely represented inheritance or realisations of the assets of Amarchand. The matter was number pursued further by the Revenue but sometime later proceedings were started by the Income-tax Officer under s. 34 in respect of the same income in the hands of Amarchand N. Shroff by his heirs and legal representatives. The status of that entity was taken to be that of an individual and number Hindu undivided family. The various amounts were assessed to income-tax in the hands of the respondents under s. 34 1 b read with s. 24B of the Income-tax Act. The assessments so made were for the assessment years 1950-51, 1951-52, 1952-53, 1953-54 and 1954-55. On appeal the Appellate Assistant Commissioner held that the numberice under s. 34 companyld validly be served only for the assessment years 1950-51 and numberices for the subsequent years were invalid. The assessments for 1951-52 to 1954-55 were therefore quashed. The Commissioner of Income-tax took an appeal to the Appellate Tribunal and the Tribunal held that assessment companyld number be made on Amarchand and that s. 24B had numberapplication to the income received after the death of Amarchand and that it was capital receipt and number revenue receipt. The order of the Appellate Assistant Commissioner was therefore upheld. On the application of the Commissioner of Income-tax the following question of law was referred to the High Court - Whether on the facts and in the circumstances of the case, the sums of Rs. 37,847/-, Rs. 43,162/-, Rs. 34,899/-, Rs. 13,402/-, and Rs. 32,523/- were assessable to income-tax in the hands of the assessee Amarchand N. Shroff by his legal heirs and representatives in the five respective years under reference ?. The High Court answered the question in the negative. It held that apart from s. 24E of the Income-tax Act the amounts were number taxable and that the section had numberapplication to the case. It was argued by companynsel for the Commissioner of Income-tax that on a companyrect interpretation of s. 24B the amounts which were received by the heirs and legal representatives of Amarchand after his death should be deemed by the fiction incorporated in sub-s. 1 to be income received by Amarchand and liable to tax under s. 24B 1 of the Income-tax Act. In other words the respondents as heirs and legal representatives of the deceased Amarchand were liable to pay out of the estate of the deceased Amarchand on those amounts to the extent of the estate as the estate was liable for tax on the amounts received by the heirs and legal representatives just as the deceased Amarchand would have been had he number died. The emphasis was on words in s. 24B 1 or any tax which would have been payable by him under this Act if he had number died. Section 24B is as follows - S. 24B Tax of deceased person payable by representative - Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge the tax assessed as payable by such person or any tax which would have been payable by him under this Act if he had number died. Where a person dies before the publication of the numberice referred to in sub-section 1 of section 22 or before he is served with a numberice under sub-section 2 of section 22 or section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the numberice under sub-section 2 of section 22 or under s. 34, as the case may be, companyply therewith and the Income-tax Officer may proceed to assess the total income of the deceased person as if such executor, administrator or other legal representative were the assessee. Where a person dies, without having furnished a return which he has been required to furnish under the provisions of section 22, or having furnished a return which the Income-tax Officer has reason to believe to be incorrect or incomplete, the Income-tax Officer may make an assessment of the total income of such person and determine the tax payable by him on the basis of such assessment, and for this purpose may by the issue of the appropriate numberice which would have had to be served upon the deceased person had he survived require any accounts, documents or other evidence which he might under the provisions of sections 22 and 23 have required from the deceased person. Sub-section 1 provides that where a person dies his heirs and legal representatives are liable to pay out of the estate of the deceased the tax assessed as payable by the deceased or any tax which would have been payable under the Act by the deceased if he had number died. According to the submission of companynsel for the Commissioner of Income-tax the words of sub-s. 1 or any tax which would have been payable by him under this Act if he had number died mean that irrespective of the date of receipt of income receivable by a person, if the income is received by his heirs and legal representatives after his death, they are liable for payment of the tax just as the deceased would have been liable when the income was received had he been living. But this interpretation is number in accord with the language used in s. 24B. All the sub-sections have to be read together. Sub-section 1 can be divided into two parts 1 where the income of the deceased was assessed before his death and 2 where the income was number so assessed but it would have been liable to tax had he number died. The second part or the words above quoted when read with sub-ss. 2 and 3 show that they are companyfined to cases therein mentioned. They show that those words also have to be restricted to the income received by the deceased person before his death and to the income received after his death by his heirs and legal representatives but in the previous year and which had been assessed but would have been assessed as income received by him if death had number taken place. See Allen v. Trehearne 1938 22 Tax. Cas. 15, where the words if he had number died were interpreted. Sub-section 2 provides that if a person dies before the publication of the public numberice under s. 22 1 or before a numberice is served on him under sub-ss. 2 of s. 22 or s. 34 then the Income-tax Officer may proceed to companypute or assess the total income of the deceased person as if the heirs and legal representatives were the assessees. Sub-section 3 provides that when a person dies before a return is furnished by him under the provisions of s. 22 or dies after having furnished the return which the Income-tax Officer finds incorrect or incomplete then the Income-tax Officer can make assessment on the total income of the deceased person and certain other companysequences follow but in all the cases enumerated above the language used in sub-ss. 1, 2 and 3 of s. 24B companytemplates that the heirs and legal representatives of a deceased person are liable to pay income-tax out of his estate 1 where assessment had already been made and 2 where he dies before the assessment but the income was received before his death or by his heirs and legal representatives after his death which occurs during the previous year. If he dies before the publication of the numberice under s. 22 1 or before the service under s. 22 2 or after the service but before he has furnished a return or filed an incorrect or incomplete return then the Income-tax officer should make an assessment of the total income of such deceased person and determine the tax payable thereupon. Section 24B does number authorise levy of tax on receipts by the legal representatives of a deceased person in the years of assessment succeeding the year of account being the previous year in which such person died. Income-tax is exigible in reference to a persons total income of the previous year. The question before us is whether the income which was received subsequent to the previous year in which Amarchand died is liable to be assessed to income-tax under s. 24B as his income in the hands of his heirs and legal representatives. In the present case the accounts were kept on cash basis. The assessee under the Act has ordinarily to be a living person and cannot be a dead person because his legal personality ceases on his death. By s. 24B the legal personality of a deceased assessee is 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 becomes assessable to income-tax in the relevant assessment year. The section was enacted by the Legislature to bring to tax, after his death, income received during his lifetime, and fill up the lacuna which was pointed out by the High Court in Ellis C. Reid v. Commissioner of Income-tax, Bombay 5 I.T.C. 100. Any income received in the year subsequent to the previous or the account year cannot be called income received by the person deceased. The provisions of s. 24B do number extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies. In support if his companytention companynsel for the Commissioner of Income-tax relied upon the scheme of the Act as given in Additional Income-tax Officer v. E. Alfred 1962 44 I.T.R. 442, 445. There is numberhing said in that case which supports the companytention raised by the Commissioner of Income-tax. Reliance was next placed on certain observations in a judgment of the Bombay High Court in re B. M. Kamdar 1946 14 I.T.R. 10. Those observations also are of numberassistance to the Commissioner of Income tax. Kania J. as he then was there observed that the question whether a particular amount was income or number had numberhing to do with the time of its receipt and the question of receipt was material only for the purpose of determining whether on that amount tax was to be levied under the Act in the year of assessment. That was a case where a companysulting engineer discontinued his practice as such from February 15, 1938, and he received a sum of money representing the outstanding professional fees earned by him prior to the discontinuance of his practice but realised by him during the Calendar year which was the previous year. The assessee was keeping his accounts on cash basis and he companytended that as he had discontinued his profession in the previous year the source had companye to an end and the amounts received by him were number liable to income-tax. It was held that the income was assessable. The assessee in that case was still alive when the income was received by him and s. 24B had numberapplication to the facts of the case. Counsel also relied on the observations of Derbyshire, C.J., in re Sreemati Usharani Shoudhurani 1942 10 I.T.R. 199. In that case the managing agent of a limited companypany died on May 12, 1938. At the time of his death there was a credit with the companypany of a sum of money on account of companymission earned by him and due to him prior to the date of his death. This sum was paid after his death in the previous year 1938-39 and was sought to be taxed under s. 24B of the Income-tax Act. It was held that this income was taxable. Derbyshire C.J., said at p. 205 that the assessee who was the widow had received the salary due to her husband that the Income-tax Officer was entitled to assess the total income of the deceased person as if the legal representatives were the assessees and the amount was liable to tax under s. 24B 1 , but in that case also the amount was received by the widow in the previous year and it was earned by the deceased during the previous year. The companyrect position is that apart from s. 24B numberassessment can be made in respect of the income of a person after his death. See Ellis C. Reid v. Commissioner of Income-tax, Bombay 5 I.T.C. 100. In that case, and that was a case before s. 24B was enacted, a person was served with a numberice under s. 22 2 of the Income-tax Act but numberreturn was made within the period specified and he died. It was held that numberassessment companyld be made under s. 23 4 of the Act after his death. At p. 106 it was observed - It is to be numbericed that there is throughout the Act numberreference to the decease of a person on whom the tax has been originally charged, and it is very difficult to suppose the omission to have been unintentional. It must have been present in the mind of the legislature that whatever privileges the payment of income-tax may companyfer, the privilege of immortality is number amongst them. Every person liable to pay tax must necessarily die and, in practically every case, before the last instalment has been companylected, and the Legislature has number chosen to make any provisions expressly dealing with assessment of, or recovering payment from, the estate of a deceased person. The individual assessee has ordinarily to be a living person and there can be numberassessment on a dead person and the assessment is a charge in respect of the income of the previous year and number a charge in respect of the income of the year of assessment as measured by the income of the previous year. Wallace Brothers Co. Ltd. v. Commissioner of Income-tax, Bombay City 1948 16 I.T.R. 240, 244. By s. 24B 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 Court in Bengal Immunity Co. Ltd. v. The 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. 24B and cannot be extended further than the liability for the income received in the previous year. In the present case the amounts which are sought to be taxed and which have been held number be liable to tax are those which were number received in the previous year and are therefore number liable to tax in the several years of assessment. It cannot be said that they were income which may be deemed by fiction to have been received by the dead person and therefore they are number liable to be taxed as income of the deceased Amarchand and are number liable to be taxed in the hands of the heirs and legal representatives who cannot be deemed to be assessees for the purpose of assessment in regard to those years. In our view the High Court rightly answered the question in the negative and against the Commissioner of Income-tax.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 551 to 560 of 1961. Appeals from the judgment and order dated December 9, 1955 of the Madras High Court in Writ Petitions Nos. 323, 324, 351 to 357 and 359 of 1955. Purshottam Trikumdas, R. Ganapathy Iyer and G. Gopalakrishnan, for the appellants in C. As. Nos. 551- 559/61 . V. Viswanatha Sastri and M. S. K. Sastri, for the appellant in C. A. No. 560/61 . S. Pathak, B. R. L. Iyengar and P. D. Menon, for the respondent No. 1 in C. A. No. 551/61 and for the respondents in C. As. Nos. 552 to 559 of 1961 . Ranganadham Chetty and A. V. Rangam, for the respondents in C. A. No. 560/61 . 1962. November 20. The judgment of the Court was delivered by. SHAH., J.-In this group of appeals certified by the High Court of Madras under Art. 132 1 of the companystitution the validity of ss.52 1 f , 55, 76 1 2 , 80, 81 and 82 of the Madras Hindu Religious Endowments Act XIX of 1951 asamended by Act XXVII of 1954 is impugned. At Udipi in the South Kanara District there are eight Maths which are reputed to be founded by Shree Madhvacharya, an exponent of the dualistic philosophy. Each of these Maths is presided over by a Mathadhipati or Swami who is invariably a Brahmin Sanyasin. There exists another Math known as Shri Krishna Devaru Math of which the administration is carried on according to long-standing usage by the Swamis of the eight Maths in turn, each Swami administering for two years. There is also the Sri Kanchi Kamakoti Peetam Math of which Shree Sank- aracharya Swamigal is the presiding head. These ten appeals are directed against orders passed by the High Court of Madras refusing to declare the provisions aforesaid ultra vires the State Legislature. In order to ensure proper management of Hindu religious endowments, the Provincial Legislature of Madras enacted the Hindu Religious Endowments Act. II of 1927. The Act made divers provisions for enforcing supervision over the management of Hindu endowments, and a Board was companystituted for that purpose. In exercise of the authority under the Act several restrictions were placed upon the powers of the trustees of religious endowments, schemes were framed for administration thereof and executive officers were appointed to administer Maths and other religious endowments. An enquiry was companymenced before the Hindu Religious Endowments Board for ascertaining whether in the interests of the Shirur Math one of the eight maths at Udipi a scheme for the administration of the Math be framed, it being alleged that the affairs of the Math were mismanaged by the Swami. The Board being satisfied that a case for settling a scheme was made out served upon the Swami of the Math a draft scheme and called upon him to file his objections thereto. The Swami filed a petition in the High Court of Madras challenging the vires of Act II of 1927, and especially the provisions under which the scheme was sought to be framed. During the pendency of that petition, Act 11 of 1927 was repealed by the Madras Legialature and was substituted by Act XIX of 1951, enacting diverse provisions relating to the governance, management and administration of Hindu Religious Endowments. The Swami of Shirur.Math obtained leave to amend the petition and challenged the validity of Act XIX of 1951 on the ground that the provisions thereof infringed his fundamental rights and that in any event certain provisions were beyond the legislative companypetence of the State Legislature. The High Court of Madras declared several provisions of the Act ultra vires, as infringing Arts. 19 1 f , 25, 26 and 27 of the Constitution. The Court also declared s. 76 1 ultra vires because the State Legislature had thereby assumed powers to legislate for levy of a tax on the income of religious endowments which the State Legislature was incompetent to exercise. The State of Madras appealed against the order of the High Court. This Court declared invalid s. 21 provision authorising the Commissioner and his subordinates to enter premises of religious endowments or places of worship in the exercise of powers companyferred or duties imposed by or under the Act , s. 30 2 requiring the swamis to be guided by the instructions of the Commissioner or the Area Committee in the matter of incurring expenditure , s. 31 relating to expenditure of surplus income with the sanction of the Commissioner , s. 55 dealing with Mahants powers over pathakanikas personal gifts , S. 55 dealing with Commissioners authority to require the trustees of the Endowments to appoint a Manager and ss. 63 to 69 relating to numberification of religious institutions and invoking thereby certain penal companysequences. This Court also held that s. 76 1 whichauthorised levy of companytributions at the rate number exceeding five per cent of the income of the endowments was beyond the power of the State Legislature to enact. The judgment of this Court in that case is reported as The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur mutt 1 . The Madras Legislature amended Act XXVII of 1954 which received the Presidents sanction on 1 1954 S. C. R. 1005. September 22, 1954, and thereby provisions which were declared by this Court ultra vires, were altered or omitted and some new provisions were enacted with a view to make the enactment companysistent with the law declared by this Court. Petitions were then filed by the appellants-heads of ten maths--challenging the validity of diverse provisions of the amended Act. The High Court by its order dated April 25, 1955 declared ss. 21, 30 2 , 31 and 76 5 , and Rule 10 framed under s. 100 2 invalid. The High Court, however, upheld the validity of ss. 52 1 f , 55, 76 1 2 , 80, 81 and 82. In these appeals the Swamis of the maths companytend that the provisions declared valid by the High Court infringe the fundamental rights of the Swamis or are beyond the authority of the State Legislature. It may be observed initially that we are dealing with the validity of the impugned provisions in their application to maths and number to religious institutions such as temples or other endowments. It may also be observed that Act XIX of 1951 has been repealed by the Madras State Legislature and has been substituted by Act XXII of 1959, but we are number called upon to adjudicate upon the validity of the provisions of the new Act because the territory in which these maths are situated has, by the provisions of the States Reorganisation Act, 1956 been integrated with the State of Mysore as from November 1, 1956 and by virtue of s. 119 of the States Reorganisation Act these maths companytinue to be governed by Act XIX of 1951 till that Act is modified or repealed by the Mysore State Legisture. Section 52 1 of the Act as amended provides The Commissioner or any two or more persons having interest and having obtained the companysent in writing of the Commissioner, may institute a suit in the Court to obtain a decree for removing the trustee of a Math or a specific endowment attached to a Math for any one or more of the following reasons, namely a the trustee being of unsound mind-, b his suffering from any physical or mental defect or infirmity which renders him unfit to be a trustee c his having ceased to profess the Hindu religion or the tenets of the math d his companyviction for any offence involving moral turpitude e breach by him of any trust created in respect of any of the properties of the Religious institutions f waste of the funds or properties of the institution or the application of such funds or properties for purposes unconnected with the institution g the adoption of devices to companyvert the income of the institution or the funds or properties thereof into pathakanikas h leading an immoral life or otherwise leading a life which is likely to bring the office of the head of the math into companytempt persistent and wilful default by him in discharging his duties or functions under this Act or any other law. This section authorises the Commissioner or two or more persons interested in the endowment with the companysent of the Commissioner to institute a suit for a decree for removal of the trustee of a Math or a specific endowment attached to a Math on any of the grounds. mentioned therein. the section is similar to S. 92 of the Code of Civil. Procedure though somewhat restricted in its operation as to the reliefs which may be claimed it merely enumerates the grounds on which the Court may, in a suit instituted thereunder, remove the trustee of a Math or of a specific endowment, if the Conrt is satisfied that the grounds set up exist and also that it is in the interest of the institution to remove the trustee. Grounds a , b , c , d and h are grounds of personal infirmity of the trustee grounds e , f , i and i deal with companyduct inconsistent with the exercise of the duties of a trustee. Clauses f , g and h were inserted by Madras Act XXVII of 1954. Apart from cl. c which regards breach of trust as entailing liability for removal, cls. f , g , and i have been enacted by the Legislature with a view to entail such liability when the trustee of a math is guilty of improper companyduct qua property of the math numberwithstanding his special rights in that property. It is urged by companynsel for the appellants that s. 52 1 f which enables a suit to be filed on the score of waste of funds or properties of the institution or application of such funds or properties for purposes unconnected with the institution, infringes the fundamental right of the Mathadhipati under Art. 19 1 f of the Constitution. In order to ascertain the true scope of s. 52 1 f it is necessary to state the position of a Mathadhipati, qua the property of the math. In Arunachallam Chetty v. Venkatachalapathi Guruswamigal 1 dealing with the title which a Mahant of a math has in the property of the math, the judicial Committee of the Privy Council observed two propositions may be cited as number express- ing the general state of the law. with regard to 1 1919 L. R. 46 I. A. 204, 224, these institutions. In the first place, the nature of the ownership is an ownership in trust for the institution itself. Secondly, while it may numberdoubt be true that the ownership in the general case is with the spiritual head of the institution, still to use the language of Sir Charles Turnver in Sammanatha Pandara v. Sellapa Chetti I.L.R. 2 Madras 179 We do number, of companyrse, mean to lay it down that the property may number in some cases be held on different companyditions and subject to different incidents. As pointed out in Ram Parkaah Das v. Anand Das there are varieties of circumstances and tenure, and in respect to these the usage and custom of the math fall to be determined. Once that usage and custom are clear they form the law of the math. In Vidya Varuthi Thirtha v. Balusami Ayyangar 1 the judicial Committee dealing with the application of Arts. 134 and 144 to suits for recovery of property alienated by a former Mathadhipati observed It is also to be remembered that a trust in the sense in which the expression is used in English law, is unknown in the Hindu System, pure and simple. Hindu piety found expression in gifts to idols and images companysecrated and installed in temples, to religious institutions of every kind, and for all purposes companysidered meritorious in the Hindu social and religious system to brahmans, goswamis, sanyasis, etc. When the gift was to a holy person, it carried with it in terms or by usage and custom certain obligations. x x x x x In many cases in Southern India, especially where the diffusion of Aryan Brahmanism was essential for bringing the Dravidian peoples, under the religious rule of the Hindu system, companyleges and monasteries under the names of math were 1 1921 L R. 48 I. A. 302. founded under spiritual teachers of recognised sanctity. These men had and have ample discretion in the application of the funds of the institution, but always subject to certain obligations and duties, equally governed by custom and usage. In The Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 to which we have already referred in setting out the history of this case Mukherjea, J., speaking for the Court, observed He is certainly number a trusteee in the strict sense. He may be as the Privy Council says, a manager or custodian of the institution who has to discharge the duties of a trustee and is answerable as such but he is number a mere manager and it would number be right to describe Mahantship as a mere office. A superior of a Math has number only duties to discharge in companynection with the endowment but he has a personal interest of a beneficial character which is sanctioned by custom and is much larger than that of a Shebait in the debutter property. x x x x x x x x x Thus in the companyception of Mahantship, as in Shebaitship, both the elements of the office and property, or duties and personal interest are blended together and neither can be detached from the other. The personal or beneficial interest of the Mahant in the endowments attached to an institution is manifested in his large powers of disposal and administration and his right to create derivative tenures in respect to endowed properties and these and other rights of a similar character of proprietary right which, though anomalous to some extent, is still a genuine legal right. A Mahant is number a mere manager or custodian, number is he trustee in the strict sense holding the office of 1 1954 S. C. R. 1005. a Mahant by custom and usage of the institution he has beside large powers of management and disposal certain proprietary rights over the property of the Math. But he is by virtue of his office under an obligation to discharge the duties as a trustee and is answerable as such. The Mahant of a Math is generally a Sanyasin who has renounced worldly affairs he has numberfamily ties either by blood or by marriage, and in a theoretical sense he has taken a vow of number owning any property. He has undoubtedly, for the benefit of the institution of which he is the head, large powers he has to incur expenditure for the maths i. e. for carrying on the religious worship, for the desciples and for maintaining the dignity of his office. But the property is attached to the office, and is devoted to the endowment. He cannot therefore iucur expenditure for personal luxury or objects ircongruous with his position as a Mahant. Power to waste the property or the income of the institution is therefore number claimed by the appellants and rightly so. But companynsel for the appellants says that over the income, the Mahant has absolute powers of disposal, and s. 52 1 f which authories his removal on the ground that he has applied the funds or properties of the institution for purposes unconnected with the institution places an unreasonable restriction upon the right of property vested in the Mahant. In the Commissioner, Hindu Endownents, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt Mukherjea, J., observed at p. 1019 There is numberreason why the word property as used in article 19 1 f of the companystitution, should number be given a liberal and wide companynotation and should number be extended to those welt recognized types of interest which have the insignia or characteristics of proprietary right. The right of a Mahant over property of the math is, therefore, undoubtedly property and 1 1954 S. C. R. 1005. unreasonable restrictions placed upon right of the Mahant which is number in the interest of the general public would, by virtue of Art. 19 1 f read with cl. 5 be void. Reasonableness of the restrictions which may be placed upon that right must be adjudged in the light of the character and the extent of that right, and the general interest of the public which may be served by the restrictions. In Arunachallam Chetty v. Venkatachalapathi Guruswamigal 1 the Judicial Committee of the Privy Council observed that the Mahant is under an obligation number to utilise the surplus income after defraying the expenses of the math for personal enjoyment but is bound to add the same to the capital of the estate administered. At p. 226 the judicial Committee dealing with the accummulated income in the hands of the receiver who had been appointed during the pendency of a suit observed Under the decree quoted the gurukkal would be entitled to instant possession and entire beneficial enjoyment of that sum. If the present purposes of the math did number companysume it, he companyld employ it for his personal use quite apart from the dignity of his office. It is plain to their Lordships that this would be number only a subversion of the usage and custom of the math, but would be a violation of the Law applicable to such institutions. A fair test to be applied in such cases is to demand what is the true principle or nature of the administration of surplus income. It is, of companyrse,, the duty of a trustee to refrain from the personal enjoyment of such surplus and to add the same to the capital of the estate to be administered and this Law also applied to the property of a math or asthal, and that whether the title to the same is in the gurukkal 1 1919 L. R. 46 I.A. 204,224. as spiritual head of the institution-which is an ordinary case-or is in trustees like the Chettys according to the usage and custom of the institution as in the present case. The power of the Mahant over the income does number therefore differ in quality from the power he has over the property of the Math. The property and the income belong to the math, and must therefore be applied for the purposes of the math, and company. sistently with the usage and custom of the endowment. By s. 52 1 f application of funds or pro- perties for purposes unconnected with the institution, i. e. purposes for which the custom of the institution does number warrant application, is a ground for removal. It cannot be said that by enacting a provision which enables a Court, in an appropriate case, to remove a Mahant if it be found that he has applied the funds or the properties of the institution for purposes unconnected with the institution, any unreasonable restriction is sought to be placed. This provision does number in effect seek to cut down the authority of the Mahant which is traditionally recognised. It merely implies that by virtue of his position and the limited character of his powers he may number waste the property of the Math or utilise the property for personal enjoyment or luxury or for objects incongruous with his position or for purposes wholly unconnected with the Math if he does so, he may by order of the Court be liable to be removed. Such a restriction on the power is in the interest of the general public, and cannot be said to be unreasonable. We may, however, say that the observations made by the learned judges of the High Court that it was decided by this Court in the Commissioner, Hindu Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt 1 that the real limitations on the Mathadhipathi are that he should number spend any of the monies of the Math for 1 1954 S.C.R. 1005. wicked or immoral purposes does number seem to be war-ranted by anything companytained in the judgment of this Court. The observation is founded on a dictum of the High Court in the judgment under appeal in that case, but there is numberindication that this Court approved that view. This Court has instead pointed out that the Mahant has to discharge the duties of a trustee qua the institution and is answerable as such. We deem it necessary also to state that having regard to the larg e powers which the Mahant has over the application of the funds number only for the maintenance of the dignity of his office, and expenses for the maintenance of the math but also for such purposes religious or charitable as are number inconsistent with the usage and custom of the endowment, application of the funds for personal enjoyment or luxury by the Mathadhipati or for purposes wholly unconnected with the institution, would alone be companyered by the second part of s. 52 1 f . In our view the provision which authorises the institution of a suit for removal of a Mahant where he is found to have wasted the funds or properties of the institution or has applied such funds or properties for purposes wholly unconnected with the institution does number amount to an unreason. able restriction upon the fundamental right of the Mahant in the property under his management. Section 55, before it was amended, was challenged in the earlier proceeding as being invalid on the ground that it sought to place an unreasonable restriction upon the powers of the Mahant over gifts personal to him. It was provided by s. 55 1 as originally enacted by Act XIX of 1951 that The trustee of a Math shall be entitled to spend at his discretion, for purposes companynected with the Math any Pathakanika that is to say any gift or property or money made as a personal gift to him as the head of the Math. By sub-section 2 the trustee had to maintain regular accounts of receipts and disbursements of the nature referred to in subsection 1 . The Mahant was therefore enjoined by the Act to spend Pathakanika for the purposes of the math, and that amounted in the view of the Court as an unwarranted restriction of the property right of the Mahant. Pathakanikas are as expressly stated in sub-section 1 personal gifts to the Mahant, and numbermally such gifts would be at the disposal of the Mahant. It was observed by this Court in the earlier case It may be that according to customs prevailing in a particular institution, such personal gifts are regarded as gifts to the institution itself and the Mahant receives them only as the representative of the institution but the general rule is otherwise. As section 55 1 does number say that this rule will apply only when there is a custom of that nature in a particular institution, we must say that the provision in this unrestricted form is an unreasonable encroachment upon the fundamental right of the Mahant. The same objection can be raised against clause 2 of the section for if the Pathakanikas companystitute the property of a Mahant. There is numberjustification for companypelling him to keep accounts of the receipts and expenditure of such personal gifts. As said already if the Mahant dies without disposing of these personal gifts, they may form part of the assets of the Math, but that is numberreason for restricting the powers of the Mahant over these gifts so long as he is alive. The Legislature of the Madras State thereafter repealed both the sub-sections of s. 55, and has reenacted a new clause The trustee of a math shall keep regular accounts of receipts of pathakanika that is to say, any gift of property made to him as the head of the math and shall be entitled to spend the said pathakanika in accordance with the customs and usages of the institution. By express enactment the expression pathakanikas for the purpose of s. 55 as amended, means gifts of property made to a Mahant as the head of the Math. By that section, the Mahant is required to keep regular accounts of receipts of such gifts and is entitled to spend the same in accordance with lie customs and usages of the institution, for such pathakanikas received by the Mahant are gifts to the Mahant as the head of the math and therefore in trust gifts to the Math. Obligations imposed upon the Mahant to maintain regular accounts of the receipts of pethakanikas of the character defined in s. 55 and to utilise the same in Accordance with the customs and usages of the institution cannot be regarded as an unreasonable restriction upon the fundamental right of the Mahant. A Mahant being bound to discharge the duties of a trustee and being answerable as such, a provision requiring him to maintain accounts of such pathakanikas would companyduce to the effective exercise of the companytrol over him and imposing an obligation to spend the same in accordance with the customs and usages of the institution is number inconsistent with his position as a Mnhant even though lie has a beneficial interest therein. Section 55 as amended will number apply to pathakanikas which are proved to be gifts personal to the Mahant. Our attention was invited by companynsel for the appellants to cl. g of s. 52 1 in which I adoption of devices to companyvert the income of the institution or of the funds or properties thereof into pathakanikas is one of the grounds on which a suit for removal of a Mahant may lie. But the expression pathakanika as used in s. 52 1 g appears to have the larger meaning in which that expression is traditionally understood. In the companytext of s. 52 1 g , pathakanika would mean personal gifts to the Mahant. If the Mahant resorts to devices to companyvert the income of the institution or of the funds or properties thereof into personal gifts made to him that would be improper companyduct for which he would be liable to be removed in a suit under s. 52. But under s. 55 the Legislature has expressly restricted the meaning of the expression pathakanika by using the words, that is to say, any gift of property made to him as the head of he math. We are therefore unable to hold that the expression Pathakanika in s. 55 means personal gifts and the Legislature by enacting that section was attempting to re-enact s. 55 as it originally stood in a different garb. The next section challenged is s. 76 1 . The section, as it originally stood before it was amended, provided 76 1 In respect of the services rendered by the Government and their officers, every religious institution shall, from the income derived by it, pay to the Government annually such companytribution number exceeding five per centum of its income as may be prescribed. Every religious institution, the annual income of which for the fasli year immediately preceding as calculated for the purposes of the levy of companytribution under sub-section 1 , is number less than one thousand rupees, shall pay to the Government annually, for meeting the companyt of auditing its accounts, such further sum number exceeding one and a half per centum of its income as the Commissioner may determine. The annual payments referred in sub- sections 1 and 2 shall be made, numberwith- standing anything to the companytrary companytained in any scheme settled or deemed to be settled under this Act for the religious institution companycerned. The Government shall pay the salaries, allowances, pensions and other beneficial remu neration of the Commissioner, Deputy Commi- ssioners, Assistant Commissioners and other officers and servants other than executive officers of religious institutions employed for the purposes of this Act and the other expenses incurred for such purposes, including the expenses of Area Committees and the companyt of auditing the accounts of religious institutions. The Court in the earlier case pointed out that the levy of an annual companytribution permitted by s. 76 1 on a religious institution was in the nature of a tax. The Court observed that in so far ass. 76 spoke of the companytribution being levied in respect of the services, it had the appearance of a fee, but the companytribution levied was made dependent upon the capacity of the payer and number upon the quantum of benefit that was supposed to be companyferred on any particular religious institution, that the institutions which came under the lower income group and had income less than Rs. 1,000/- annually were excluded from liability to pay the additional charges under cl. 2 of the section lending thereby to it one of the characteristics of a tax which bore a close analogy to income-tax, and that the amount raised by the levy of the companytribution was number ear-marked or specified for defraying expenses that the Government had to incur in performing the services. All the companylections went into the Consolidated Fund of the State and all the. expenses had to be met number out of those companylections but out of the general revenues by a proper method of appropriation as was done in case of other Government expenses. There was again a total absence of any companyrelation between the expenses incurred by the Government and the amount raised by the levy of companytribution and therefore the theory of a return or quid pro quo companyld number have any possible application. The Court accordingly held that the companytribution levied under s. 76 was a tax and number a fee and such a tax it was beyond the power of the State Legislature to levy. altered the scheme of s. 76. The Madras High Court has declared the newly enacted cl. 5 ultra vires and that part of the decision of the Court is number challenged before us. By the impugned cl. 1 the defects in the original section have been remedied by the Legislature. Contributions are number payable to the Commissioner and number to the Government, and they are to be levied expressly in respect of services rendered by the Government and their officers, and for defraying the expenses incurred on account of such services. By sub-section 2 every religious institution, the annual income of which is number less than one thousand rupees, has to pay to the Commissioner annually, for meeting the companyt of auditing its accounts, such further sum number exceeding one and a half per centum of its income as the Commissioner may determine. By sub-section 4 the Government is required to pay the salaries, allowances, pensions and other beneficial remuneration of the Commissioner, Deputy Commissioner, Assistant Commissioners and other Officers and servants employed for the purposes of the Act and also to defray the other expenses incurred for such purposes, including the expenses of Area Committees and the companyt of auditing the accounts of religious institutions. The section manifestly provides for levy of companytribution at a rate number exceeding five per cent of its income from all religious institutions, and audit fee from religious institutions of which the income is Rs. 1,000/- or more, but all the amounts companylected under cls. 1 and 2 have to be spent for meeting the expenses in companynection with the performance of the duties rendered to the religious institutions and for numberother purposes. By section 81 1 a separate Fund called The Madras Hindu Religious and Charitable Endowments Administration Fund is companystituted and that Fund vests in the Commissioner, and by cl. 2 of that section the companytributions payable under s. 76 1 and the audit fee payable under s. 76 2 when realized are credited in the said Fund. The two principal objections against the levy of the companytribution under s. 76 before it was amended were 1 that the money raised by levy of the companytribution was number earmarked or specified for defraying the expenses that the Government had to incur in performing services. All the companylections went to the Consolidated Fund of the State and all the expenses were number met out of the companylections but out of the general revenues by a proper method of appropriation as is done in case of other Government expenses, and 2 that there was a total absence of any companyrelation between the expenses incurred by the Government and the amount raised by companytribution under the provision of s. 76. The Legislature has by the amendment of s. 76 1 and 4 and the companystitution of a separate Fund under s. 81 rectified both these defects. The amounts raised are specifically ear-marked for defraying expenses for rendering services they do number go into the Consolidated fund of the State, but are included in a separate Fund. The Contributions are number even payable to the Government they are payable to the Commissioner. It was urged that there was numberco-relation between the expenses incurred and the amounts companylected as companytributions, but there is numberreliable evidence on the record in support of this plea. Our attention was invited to Ex. A referred to in paragraph-2 of the supplemental companynter-affidavit of the State of Madras in Writ Petition No. 323 of 1955, in which an abstract of the receipts and charges was set out. It was stated in that document During the period from 30th September 1951 to 30th June 1952 the total receipts under the head XXXVI Miscellaneous- c. Miscellaneous Administration of Madras Hindu Religious and Charitable Endowments Act, 1951 amounts to Rs. 3,16,013-1-3 and the total receipts under XLVI-Miscellaneous d fees for Government Audit by way of companytribution recovered from the religious institutions amounted to Rs. 2,27,531-4-10. The total expenditure during the said period towards salary and allowances of the officers and staff companytingencies and fees paid to private auditors for auditing the accounts of religious institutions amounted to Rs. 6,93,539-10-3. Then followed a chart for fasli years 1361, 1362, 1363 and 1364 setting out different heads such as Arrear Demand, Current Demand, Total Demand and, Write off, Net Demand, Collection and Balance. J appears from the Chart that there were large arrears in the companylection of companytributions and by the end of the fasli year 1364 the arrears exceeded 15.50 lakhs. An abstract at the foot of the chart shows that the total actual companylections amounted to Rs. 19.74 lakhs and the balance recoverable for the four fasli years was Rs. 15.75 lakhs. The total expenditure for 31 out of the four years was Rs. 26.4 lakhs. It is difficult to draw an inference from this document that the demand of companytribution was wholly unrelated to the expenditure incurred out of the accumulations. No attempt was made before the High Court to establish that the levy of companytribution at the rate of five per cent was so exorbitant that it companyld be said to have numbertrue relation to the value of the services rendered to the endowments by the administration. Our attention was also invited to a statement of account showing that the Commissioner received when the Act of 1951 was brought into force a total investment in fixed deposits, Government stock certificates, debentures of companyoperative land mortgage bank, national savings certificates and in banks a total account exceeding Rs. 18 lakhs. But this is the accummulation during a period of nearly 25 years when the Act of 1927 was in operation. There is numberevidence on the record as to the sources from which the fund was accummulated. From this statement of account it would number be possible to infer that the companytributions under s. 76 1 of the Act of 1951 were wholly disproportionate to the value of the services to be rendered. A levy in the nature of a fee does number cease to be of that character merely because there is an element of companypulsion or companyrciveness present in it, number is it a postulate of a fee that it must have direct relation to the actual services rendered by the authority to individual who btains the benefit of the service. If with a view to provide a specific service, levy is imposed by law and expenses for maintaining the service are met out of the amounts companylected there being a reasonable relation between the levy and the expenses incurred for rendering the service, the levy would be in the nature of a fee and number in the nature of a tax. It is true that ordinarily a fee is uniform and numberaccount is taken of the varying abilities of different recipients. But absence of uniformity is number a criterion on which alone it can be said that it is of the nature of a tax. A fee being a levy in companysideration of rendering service of a particular type, companyelation between the expenditure by the Government and the levy must undoubtedly exist, bat a levy will number be regarded as a tax merely because of the absence of uniformity in its incidence, or because of companypulsion in the companylection thereof, number because some of the companytributories do number obtain the same degree of service as others may. Section 80 makes the Commissioner a companyporation sole with perpetual succession and s. 81 provides for the companystitution of the Madras Hindu Religious and Charitable Endowments Administration Fund. These sections have been enacted with the object of establishing a distinct Fund out of the income of the endowments totally unrelated to the general revenues of the State. By s. 82 companytributions which had been levied under the Act XIX of 1951 before it was amended by the Act XXVII of 1954 under s. 76 1 and 2 have been validated. Section 82 provides - 82. 1 Contributions under section 76 1 and the further sums payable under section 76 2 shall be payable with effect from the companymencement of this Act. For the period from the companymencement of this Act until the companymencement of the Madras Hindu Religious and Charitable Endowments Amendment Act, 1954, the rate prescribed by the Government under section 76 1 , or determined by the Com- missioner under section 76 2 , shall be deemed to be the rate prescribed or determined under section 76 1 or section 76 2 , as the case may be, as amended by the Madras Hindu Religious and Charitable Endowments Amend- ment Act, 1954, and companytributions and further sums paid to the Government shall be deemed to be companytributions and further sums, as the case may be, paid to the Commissioner under section 76 1 and section 76 2 as amended by the Madras Hindu Religious and Charitable Endowments Amendment Act, 1954. The Government shall pay to the Commissioner the balance, if any, remaining out of the aggregate of the companytributions and further sums paid or realized before the company- mencement of the Madras Hindu Religious and Charitable Endowments Amendment Act, 1954, in pursuance of section 76 1 and section 76 2 , after deducting therefrom sums paid by the Government under section 76 4 . It is true that the companytributions levied under s. 76 1 of the Act before it was amended had the characteristic of a tax, and the levy thereof was accordingly struck down. But the Legislature had power to enact appropriate retrospective legislation declaring these levies as fees by denuding them of the characteristics which went to make the levies of the nature of a tax. By the express provision companytained in sub- section 1 of s. 82 the rates prescribed under s. 76 1 or determined by the Commissioner under s.76 2 , under the Act as originally enacted were to be deemed rates prescribed under ss. 76 1 or determined under s. 76 2 as amended by the Act XXVII of 1954, and companytributions and other sums paid to the Government were to be deemed as companytributions and other sums paid to the Commissioner under ss. 76 1 and 2 as amended. Retrospectively the payments received by the Government were dissociated from the general governmental revenues and by sub-section 2 account was to be made on the footing that these payments companystituted a distinct and separate fund and all payments were deemed to be received by the Commissioner and number by the Government. That retrospective legislation may be enacted is number number open to question. In M s. J. K. Jute Mills Co. Ltd. v. State of Uttar Pradesh it was held by this Court The power of a legislature to enact a law with reference to a topic entrusted to it, is x x x unqualified subject only to any limit- ation imposed by the Constitution. In the exercise of such a power it will. be companypetent for the legislature to enact a law, which is 1 1962 2 S.C.R. 1 either prospective or retrospective. In Union of India v. Madan Gopal, 1954, SCR 541 it was held by this Court that the power to impose ,tax on income under entry 82 of List 1 in Schedule VII to the Constitution, companyprehended the power to impose income-tax with retrospective operation even for a period prior to the Constitution. The position will be the same as regards laws imposing tax on sale of goods. In M. P. V. Sundraramier Co. State of Andhra Pradesh, 1958 S.C.R. 1422, this Court had occasion to companysider the validity of a law enacted by Parliament giving retrospectively operation to laws passed by the State legislatures imposing a tax on certain sales in the companyrse of inter-State trade. One of the companytentions raised against the validity of this legislation was that, having regard to the terms of Art. 286 2 , the retrospective legislation was number within the companypetence of Parliament. In rejecting this companytention, the companyrt observed Article 286 2 merely provides that numberlaw of a State shall impose tax on inter-state sales except in so far as Parliament may by law otherwise provide. It places numberrestriction on the nature of the law to be passed by Parliament. On the other hand, the words in so far as clearly leave it to Parliament to decide on the form and nature of the law to be enacted by it. What is material to observe is that the power companyferred on Parliament under Art. 286 2 is a legislative power, and such a power companyferred on a Sovereign Legislature carries with it authority to enact a law either prospectively or retrospectively, unless there can be found in the Constitution itself a limitation on that power. And it was held that the law was within the companypetence of that Legislature. We must therefore hold that the Validation Act is number ultra vires the powers of the legislature under entry 54, for the reason that it operates retrospectively. The State Lagislature has power to levy a fee under the Seventh Schedule, List III, Item 28 read with item 47. The Legislature was, therefore, companypetent to levy a fee for rendering services in companynection with the maintenance, supervision and companytrol over the religious institutions and it was companypetent to levy the fee retrospectively. If the amounts received by the State have been expressly regarded as fee companylected by the Commissioner tinder the provisions as amended and account has to be made on that footing between the Government and the Commissioner, challenge to the vires of s. 82 2 must fail. In our view the High Court was right in declaring ss. 52 1 f , 55, 76 1 2 , 80, 81.,and 82 intra vires. The appeals therefore, fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.140162. Appeal by special leave from the judgment and order dated March 18, 1960, of the Andhra Pradesh High Court in Writ Petition No. 358 of 1958. WITH Petition No. 86 of 1960. Petition under Art. 32 of the Constitution of India for enforcement of Fundamental Rights. C. Chatterjee, Alladi Kuppuswami, T. Rama Chandra Rao and Ganpat Rai, for the appellant in C. A. No. 140 of 62 and the Petition No. 86 of 1960. Ramachandra Reddy, D. V. Sastry, T.V.R. Tatachari and D. Menon, for the respondents 1 to 2. 1962. November 2. The judgment of the Court was delivered by WANCHOO, J.-The appeal is by special leave from the order of the Andhra Pradesh High Court. The appellant has also filed a writ petition and as the two matters are companynected, they will be dealt with together. The appellant is Anant Prasad Lakshminivas Generiwal. He is also the petitioner in the writ petition and will hereafter be referred to as the appellant. The main respondents, who are also opposite parties in the writ petition, are the State of Andhra Pradesh and the Director of Endowments, Hyderabad. They will be referred to hereinafter as the respondents. The appellant claims to be the sole hereditary trustee and Mutwalli of the temple of Shri Sitaram Maharaj Sansthan and the subsidiary deity Shri Varadarajaswami, situate at Sitaram Bagh, in Hyderabad. In the earlier part of the nineteenth century, an ancestor of the appellant migrated to Hyderabad and carried on business there. He obviously prospered and in or about 1833 he built a temple at a companyt of two lakhs of rupees and installed in it the idols of Shri Rama and other ancillary or subsidiary deities and companysecrated the temple for public benefit and worship. In 1841, one Maharaja Chandulal, a minister to the then Nizam granted a jagir companysisting of the villages of Akolee and Bordee in Berar for the upkeep and maintenance of the temple. Later, however, these villages were resumed by the Nizam and two other villages were granted instead to the temple. It appears that these two other villages were also resumed, and the village of Bulgaon was granted to the temple in 1850. It also appears that though village Akolee was resumed, the resumption order was number carried out and that village companytinued in the possession of the temple,, so that since 1850 the temple has been in possession of the two villages for its upkeep and maintenance. In 1853, Berar was transferred to the British Government of India by the Nizam and these two villages therefore came under the administration of the Government of India. In 1859, some doubts arose about the title of the temple to the villages and there were enquiries under the Berar Inam Rules. Eventually, it was decided that the title of the temple was good and the villages had been assigned with the rest of Berar to the Government of India for administration and that they had been granted in jagir for a religious object and their devolution was governed by Rule IV of the Berar Inam Rules. Thereafter inam certificates were issued with respect to these two villages in the name of Ramlal, son of Hargopal, who was described as the Manager of the jagirdar, Shri Sitaramji Maharaj of Akolee and Bulgaon. The purpose of the jagir was mentioned as for charitable expenses of the temple of Shri Sitaram Maharaj situated in the Sitaram Bagh, at Hyderabad. In the twentieth century there was companysiderable litigation between the members of the family of the founder as to the right of management of the temple. Eventually, it was decided in 1932 that Lakshminivas Generiwal, father of the appellant, was to be the manager of the jagirdar, and this decision was finally companyfirmed in 1933 by the Governor of the Central Provinces. The Government of Hyderabad was trying all along to find out how the income of this jagir was being spent. But it was decided that it was the Government of the Central Provinces alone which had the right to call for accounts of the villages and was responsible to see that the companyditions of the grant were fulfilled, and in 1941 this position seems to have been accepted by the Government of Hyderabad. After the Constitution came into force from January 26, 1950, the State of Madhya Pradesh took the place of the old Central Provinces and Berar. The State of Madhya Pradesh enacted a law known as the Madhya Pradesh Abolition of Pro- prietary Rights Estates, Mahals, Alienated Lands Act, No. 1 of 1951. In companysequence of this law, the two villages were taken over by the State and statutory companypensation was awarded. In addition, an annual cash grant of Rs. 8,470/- was sanctioned by the State for the upkeep of the temple. Besides this grant, there was a large area of home farm land in the two villages, which was in the possession of the trustee for the benefit of the trust, and it is said that an income of Rs. 1,30,000/- was being realised by the trustee from this home farm land. It further appears that there are hereditary pujaris and mahants of the temple, and these persons had been companyplaining to various authorities in Hyderabad that Lakshminivas Generiwal was misappropriating temple funds on a large scale and neglecting his duties as a trustee and otherwise companymitting breaches of trust. In 1951, three of the hereditary pujaris filed a companyplaint before the Government of Hyderabad alleging various acts of mismanagement on the part of the trustee. This was inquired into by the Home Minister of the State of Hyderabad and he directed that the temple should be managed by the a companymi- ttee of five persons and this was said to have been done with the companysent of Lakshminivas Generiwal. Later, however, Lakshminivas companytended that he had never companysented to the appointment of the companymittee, which would curtail his rights as hereditary trustee. Thereupon, the Home Minister directed the Director of Endowments to make a thorough inquiry into the matter. In the meantime, one of the hereditary pujaris filed a petition under s. 3 of the Charitable and Religious Trusts Act No. 14 of 1920 alleging various acts of mismanagement an paying for an order directing rendition of accounts, before the City Civil Court, Hyderabad. In March, 1956, the companyrt directed rendition of accounts and appointed an auditor to scrutinise them. The auditor- went into the accounts and made a report showing several gross irregularities therein. In the meantime Lakshminivas Generiwal applied for the registration of the temple under the provisions of the Madhya Pradesh Public Trusts Act No. 30 of 1951 and in June, 1955, the Registrar of Public Trusts directed the registration of Shri Sitaram Maharaj Sansthan, Sitaram Bagh, Hyderabad, as a public trust under s. 7 1 of the Madhya Pradesh Act No. 30 of 1951. Hyderabad State also had a law for the purpose of providing for the proper administration of religious and public charities and for the due application of the income for the purpose of the trust. This law was known as the Hyderabad Endowments Regulations hereinafter referred to as the Regulations and it came into force in 1940. Section 2 thereof gives the definition of endowment as including every transfer of property which any person may have made for religious purposes or for purposes of charity or public utility. It also provides for a Book of Endowment in which all the estates or properties endowed would be entered. Section 2 also defines a trustee as meaning a person appointed by the maker of the endowment for purposes of management of the property and fulfillment of the objects thereof. Section 3 to 11 provide for the companypilation of the Book of Endowment s.12 for the management of the endowed property s. 13 for the duties of the trustee s. 14 for possession over endowed property s. 15 for expenditure from the income of endowed property s. 16 for framing of rules s. 17 for appeals and s. 18 for revision. It may be added that a large body of rules as many as 478 in number have been framed under the rule making power companyferred by the Act and the Director of Endowments Hyderabad is given the power to enforce the Regulations and the Rules. In exercise of his power under the Regulations and the Rules, the Director of Endowments issued numberice to Lakshminivas Generiwal on September 12, 1957, to show cause within a fortnight from the date of the receipt of the numberice, why he should number be removed. from the office of trustee of the temple and why the unauthorised trusteeship of the appellant should number be terminated, and six charges were leveled in this numberice. Lakshminivas Generiwal replied to this numberice on September 17, 1957, and pointed out that he was numberlonger the trustee and that his son, the appellant, had been appointed the trustee under the Madhya Pradesh Act-, No. 30 of 1951 by order of the Deputy Commissioner Amravati in November 1956. He also denied the various charges leveled against him. On this reply, a numberice was issued on December 31, 1957, to the appellant to the effect that the temple had to be registered under the Regulations, and he was also warned that if he failed to take steps to get the endowment registered, the property would be taken over under the supervision of the Government and numbermore objection would be heard from him. The appellant objected to this numberice on February 1, 1958, and his main companytention was that as the trust had been registered under the Madhya Pradesh Act No. 30 of 1951, the endowment was number liable to be registered under the Regulations and the Rules framed thereunder, and the State of Andhra Pradesh had numberjurisdiction over the endowment and its property. Soon after, the appellant filed a writ. petition in the Andhra Pradesh High Court on February 3, 1958, challenging the numberice dated December 31, 1957, and the following companytentions were raised on his behalf - That by reason, of the registration of the trust under s. 7 1 of the Madhya Pradesh Act No. 30 of 1951, including the temple, the operation of the Regulations was excluded, as the registration under the Madhya Pradesh Act had become final That in any event, in applying the Regulations to the trust in question, the companyrts should bear in mind the principle of companyity of nations and refuse to interfere with the jurisdiction lawfully exercised by another State, namely, the State of Madhya Pradesh number Bombay after the States Reorganisation Act, 1956 That the Hyderabad Government had acquiesced in the companytrol of the trust by the authorities in Berar and it was number open to it to repudiate that jurisdiction and claim to exercise the powers under the Regulations That the Regulations were invalid inasmuch as they infringed the fundamental rights of the appellant under Arts. 14 and 19 of the Constitution. The High Court repelled these companytentions and by its order dated March 18, 1960, rejected the writ petition, thus upholding the validity of the numberice dated December 31, 1957. The appeal is from this order of the High Court by special 1 leave. After the High Court dismissed the writ petition, the Director of Endowments passed two orders. The first is dated June 13, 1960, and it says that as the trustee had number cared to appear before him, even though the judgment of the High Court had been even about three months before, the Director companysidered in the interests of the institution, that the supervision should be taken over under r. 179 of the Endowment Rules. The second order was passed on June 14, 1960, and it stated that the temple with its buildings etc. situate at Hyderabad, had been taken under the supervision of the Government of Andhra Pradesh and the management of the temple would vest in the Director of Endowments, Hyderabad, from the date of the order, namely, June 14, 1960. The writ petition in this Court is directed against these two orders, and by it the appellant challenges the validity of the Regulations and the various rules framed thereunder on the ground that they are repugnant to Arts. 14 and 19 of the Constitution. In addition, it has been companytended on behalf of the appellant that these orders are number justified even under the Regulations. The State of Andhra Pradesh has opposed the petition, and it submits that the Director of Endowments waited till June 13, 1960, after the dismissal of the writ petition in the High Court, for the appellant to appear in companypliance with the numberice dated December 31, 1957, so that the endowment might be registered under the Regulations. As, however, the appellant did number appear in reply to the numberice, and in view of the previous companyduct of the trustees of this temple and the several companyplaints received against them and the evasion of the trustees even to disclose what the properties of the temple were, immediate action had to be taken under the Regulations and the Rules framed thereunder. Therefore, with a view to secure and preserve the trust property, immediate action was taken so that the property might number be secreted. It has also been companytended that the Regulations and the Rules framed thereunder gave power to the State to take possession of the endowment and that the two orders were issued under the powers companyferred under s. 4 b and s. 12 of the Regulations, It is also submitted that the Regulations and the Rules framed thereunder are number ultra vires in view of Articles 14 and 19 of the Constitution. Learned companynsel for the appellant has submitted the following points for our companysideration By reason of the registration of this trust, including the temple, under s. 7 of the Madhya Pradesh Act No. 30 of 1951, the operation of the Regulations is excluded The Regulations and the Rules framed thereunder are numberlonger in force as they must be deemed to have been repealed by the Part B States Laws Act, No. III of 1951 The Regulations and the Rules framed thereunder are repugnant to Art. 14 The Regulations and the Rules framed thereunder are repugnant to Art. 19 In any case, the orders passed on June 13 and 14, 1960, cannot be supported under the Regulations. It will be seen that the appeal is companycerned only with the numberice dated December 31, 1957, while the writ petition attacks the two orders passed on June 13 and 14, 1960. Though the attack on the numberice as well as on the two orders is to a large extent companymon, we shall first deal with the attack on the numberice dated December 31, 1957, which is companytained in the first four- points raised on behalf of the appellant before us. The fifth point companycerns only the two orders of June, 1960, and will be dealt with later. Re. 1 . The companytention of the appellant in this companynections that as the trust has been registered under the Madhya Pradesh Act 30 of 1951, the Regulations cannot number be applied to it, and in any case the Regulations cannot affect property of the temple situate outside the State of Andhra Pradesh. We are of opinion that there is numberforce in this companytention. It is true that the two villages namely, Bulgaon and Akolee are number situate within the State of Andhra Pradesh but it is number in dispute that the temple is situate within the State of Andhra Pradesh, and some property of the temple in the shape of shops etc., besides the temple building itself, is situate in the State of Andhra Pradesh. Besides, it is companymon ground that offerings made by pilgrims to the temple also companystitute a part of its income, and that is received in Hyderabad. As such, we cannot see how the Regulations and the Rules framed thereunder would number apply to this temple, which is admittedly situate in an area to which the Regulations apply. A similar question came to be companysidered by this Court in The State of Bihar v. Smt. Charusila Dasi 1 . In that case the temple was situate in Deoghar in the State of Bihar, though the major part of income yielding property endowed to the temple was situate in Calcutta. The question that arose for decision in that case was whether the Bihar law would apply to the temple and its properties. Section 3 of the Bihar Act made that Act applicable to all public religious and charitable institutions within the meaning of the definition clause in s. 2 1 of the Bihar Act, and the definition clause provided that the Act would apply to all religious trusts, whether created before or after the companymencement of the Bihar Act, any part of the property of which was situate in the State of Bihar. It was held that- where the trust is situate in Bihar the State has legislative power over it and also over its trustees or their servants and agents who must be in Bihar to administer the trust, and as the object 1 1959 Supp. 2 S.C.R. 60 of the Act is to provide for the better administration of Hindu Religious Trusts in the State of Bihar and for the protection of properties appertaining thereto, in respect of the property belonging to the trust outside the State the aim is sought to be achieved by exercising companytrol over the trustees in personam, and there is really numberquestion of the Act having extra-territorial operation. It was further held that- the circumstance that the temples where the deities were installed are situate in Bihar and that the hospital and charitable dispensary are to be established in Bihar for the benefit of the Hindu public in Bihar, gives enough territorial companynection to enable the legislature of Bihar to make a law with respect to such trust. This decision in our opinion makes it abundantly clear that, where the trust is situate in a particular State, the law of that state, will apply to the trust, even though any part of the trust property, whether large or small, is situate outside the state where the trust is situate. We may also refer to the State of BihaR v. Bhabapritananda Ojha 1 , where a question was raised with respect to the application of the same Bihar Act to a trust situate in Bihar, but in the case of which a scheme had been framed by the District judge of Burdwan and companyfirmed by the Calcutta High Court, at a time when the State of Bihar was part of Bengal before the partition of 1911. In that case, it was urged that the Bihar Act did number apply to the temple by reason of the fact that the temple and its properties were administered under a scheme, made by the companyrt of the District judge Burdwan and approved by the Calcutta High Court 1 1959 Supp. 2 S.C.R. 624. both of which were situate outside the territorial limits of Bihar, on the ground that the Bihar Act would otherwise by some of its provisions seek to interfere with the jurisdiction of companyrts which were outside Bihar and thereby get extra-territorial operation. It was held in that case that it was companypetent to the Bihar legislature to legislate in respect of religious trusts situate in Bihar though some of the properties belonging to the trust might be outside Bihar. And it was further held that s. 92 of the Code of Civil Procedure would numberlonger apply in view of s. 4 5 of the Bihar Act and companysequently there was numberquestion of extra-territorial operation, of the Bihar Act. In the present case, the temple is situate in Hyderabad in the State of Andhra Pradesh. There is some property of the temple there, though the major part of the income yielding endowed property is situate outside in the State of Madhya Pradesh. In view therefore of the decision in Smt. Charusila Dasis the Regulations will apply to this trust as the trust is situate in the State of Andhra Pradesh and the fact that some of the endowed properties are number in Andhra Pradesh would make numberdifference. Further the fact that the trust has been registered under the Madhya Pradesh Act XXX of 1951 cannot exclude the operation of the Regulations in tile case of this trust, for the trust is undoubtedly situate within the area where the Regulations are in force. A Public trust has been defined in s.2 4 of the Madhya Pradesh Act as meaning an express or companystructive trust for a public, religious or charitable purpose and includes a temple, a math, a mosque, a church, a wakf or any other religious or charitable endowment and a society formed for a religious or charitable purpose. Section 3 of the said Act provides that the Deputy Commissioner shall be the Registrar of public trusts in respect of every public trust the principal office or the principal 1 1959 Supp. 2.S.C.R. 601, place of business of which as declared in the application made under sub-s. 3 of s. 4 is situate in his district, and he shall maintain a register of public trusts. Section 4 provides for the registration of public trusts. It is obvious that public trust as defined in s. 2 4 of the Madhya Pradesh Act XXX of 1951 must be a public trust situate in the State of Madhya Pradesh. Even though s. 2 4 does number say so in terms, the definition must be companyfined to public trusts situate in Madhya Pradesh for the Madhya Pradesh legislature companyld number, and obviously did number intend to, legislate with respect to public trusts situate outside Madhya Pradesh. Therefore, s. 2 4 must be interpreted to apply only to public trusts situate in Madhya Pradesh. This companyclusion is supported by s. 3, which clearly shows that the Registrar would have jurisdiction in respect of a public trust within his district. As to where a public trust is situate has to be determined in accordance with the decision of this Court in Smt. Charusila Dasis Case 1 , and on that view the public trust in this case must be situate in Andhra Pradesh and number in Madhya Pradesh where only some of the endowed trust properties are. In the circumstances the registration of the trust under the Madhya Pradesh Act cannot be a bar against the enforcement of the relevant provisions of the Hyderabad Regulations because even if it may be necessary for the purpose of management of the property in Madhya Pradesh to register this trust also in Madhya Pradesh, that would number exclude the jurisdiction of the State of Andhra Pradesh to legislate with respect to this trust which is undoubtedly situate in Andhra Pradesh, though some property of the trust is in Madhya Pradesh. We therefore agree with the High Court that the trust in this case being situate in Andhra Pradesh, the Regulations will apply to it. Re. 2 . The companytention in this regard is that the Part B 1 1959 Supp. 2 S.C.R.601. States Laws Act, 1951, applied certain Central Acts to the Part B State of Hyderabad, as it then was, from April 1, 1951, and s. 6 of this Act lays down that if immediately before the appointed day, there is in force in any Part B State any law companyresponding to any of the Acts or Ordinances number extended to that State, that law shall, save as otherwise expressly provided in this Act stand repealed. A large number of Central Acts, were applied to the Part B States, and reliance on behalf of the appellant is placed on two Acts in this companynection to show that the Regulations have been repealed in companysequence of the extension of those Acts, to the then Part B State of Hyderabad. These two Acts are, i The Charitable Endowments Act, No. VI of 1890, and The Charitable and Religious Trusts Act, No. XIV of 1920. It is urged that because of the application of these two Acts to the then Part B State of Hyderabad, the Regulation must be deemed to have been repealed in view of s. 6 of this Act. We are of opinion that there is numberforce in this companytention. Act No. VI of 1890 definitely excludes religious public trusts from it. The Regulations deal with two kinds of trusts, namely, public religious trusts and trusts for purposes of charity and public utility. In the present case we are companycerned with a public religious trust which is specifically excluded from the purview of Act VI of 1890. Therefore, whatever may be the effect of Act VI of 1890, on that part of the Regulations which deals with public trusts other than religious trusts on which we express numberopinion, for we are here companycerned with only religious trusts , there is numberdoubt that the Regulations insofar as they apply to religious trusts, cannot be held to have been repealed by the application of Act No. VI of 1890, to the then Part B State of Hyderabad, for the Regulations when they deal, with religious trusts, would number be a law companyresponding to Act No. VI of 1890. As to Act XIV of 1920, it certainly applies to religious trusts as well as other trusts of a charitable nature created for public purposes, but a perusal of s. 3 of this Act would show that it is companyfined to a very limited purpose and that purpose is to give power to any person having an interest in any express or companystructive trust created or existing for a public purpose of a charitable or religious nature to apply to the Court within the local limits of whose jurisdiction any substantial part of the subject-matter of the trust is situate to obtain an order directing the trustee to furnish the petitioner through the companyrt with particulars as to the nature and objects of the trust, and of the value, companydition, management and application of the subject-matter of the trust, and of the income belonging thereto and also directing that the accounts of the trust shall be examined and audited. This is all that Act XIV of 1920 is companycerned with. The rest of the provisions of the Act are ancillary to the main provision companytained in s. 3. The Regulations on the other hand are a much wider enactment and provide, as we have already indicated, for the companypilation of a book of endowment, for the management of the endowed property, for the duties of trustees, for possession over endowed property, and for the companytrol of expenses from the income of the property. None of these matters is companyprised in Act XIV of 1920. Therefore, the application of Act XIV of 1920 to the then Part B State of Hyderabad cannot be said to have repealed the Regulations by virtue of s. 6 of the Part B States Laws Act, 1951. Re. 3 . The companytention under this head is that there arc two laws in force in two parts of the State of Andhra Pradesh with respect to religious endowments, and these two laws are different in many matters, and therefore there is, discrimination which is hit 5 by Art. 14, The State of Andhra Pradesh, as it came into existence after the States Re-organisation Act, 1956, companysists of two areas one of which came to that State from the former Part A State of Madras in 1953 and the other from the former Part B State of Hyderabad in 1956. These two areas naturally had different laws. We are told that steps are being taken to assimilate the laws in the two parts of the State and bring them under one companymon pattern. But that naturally takes time and companyplete assimilation of all laws number yet taken place. We are further told that the question of having one law for public trusts of religious or charitable nature, is under the active companysideration of the State Government. In these circumstances it would number be right to strike down all laws prevailing in the two parts of the State, because of certain difference in them arising out of historical reasons because the two areas in the State were formerly in two different States, namely, the former Part A State of Madras and the former Part B State of Hyderabad. Our attention in this companynection has been drawn to the State of Rajasthan v. Rao Manohar Singhji 1 . In that case a law relating to management of jagir estates which applied to only a part of Rajasthan was struck down on the ground that there was, numberhing companyresponding to that law in other parts of Rajasthan, and the basis of the decision was that there was numberreal and substantial distinction why the jagirdars of a particular area should companytinue to be treated with inequality as companypared with the jagirdars in another area of Rajasthan. As against this, the respondents rely on Bhaiyalal Shukla v. State of Madhya Pradesh 2 . In that case, the sales-tax laws in different parts of the new State of Madhya Pradesh, which came into existence after the States Reorganisation Act, 1956, were different in some respects, because they were enacted by different legislatures. Under s. 119 of the States Reorganisation Act, all laws in force are to companytinue till repealed or altered by the appropriate legislature. It was therefore held that different 1 1954 S.C.R. 996. 2 1962 Supp. 2 S.C.R. 257, though parallel laws in different parts of Madhya Pradesh companyld be sustained on the ground that the differentiation arose from historical reasons, and a geographical classification based on historical reasons companyld be upheld as being number companytrary to the equal protection clause in Art. We think the ratio of Bhaiyalal Shuklas case 1 applies in the present case and number the ratio of Rao Manohaar Singhjis case 2 . In the latter case, the Jagirdars of a particular area became singled out after the creation of the State of Rajasthan and management of their properties was taken away from them while the jagirdars of the rest of Rajasthan retained the management of their pro- perties. It was in those circumstances when there was a preexisting law in one part of Rajasthan to which there was numberhing companyresponding in the rest of Rajasthan that this Court held that the patent discrimination arising in that case was violative of Art. 14. In Bhaiyalal Shuklas case 1 both parts had the same kind of law relating to sales-,tax, though there were-some differences in their provisions. It was in these circumstances that parallel, though somewhat different, laws in two parts of the same State were upheld on the ground of geographical classification based on historical reasons. The present case is similar to Bhaiyalal Shuklas case 1 , for in both parts of Andhra Pradesh there are laws with respect to public trusts of religious nature, though there may be some differences in detail in their provisions. Therefore, the, attack on the basis of violation of Art. 14 must be repelled in the present case on the authority of Bhaiyalal Shuklas case 1 . Re. 4 . This brings us to the question whether the Regulations are violative of Art. 19 1 f of the Constitution. We do number propose in the present case to examine the numerous Rules that have been framed under the Regulations and shall companyfine ourselves to 1 1962 Supp. 2 S.C.R. 257. 2 1954 S.C.R. 996. the vires of that part of the Regulations which is companycerned with registration of endowments, and some of the Rules in that behalf as the appeal is only companycerned with registration. We have been told that some of the rules have been the target of attack in the former High Court of Hyderabad, and some of them have been struck down by that High Court see Narayan Pershad v. State of Hyderabad 1 . The sections with respect to registration are s. 3 to s. II. Section 3 lays down that a book of endowments will be prepared companytaining all the endowments which are in force on the date of the Regulations or which will be brought into force in future. Section 4 a lays down that it will be the duty of every trustee or endowed of an endowment to inform in writing with regard to an endowment the Director of Endowments companycerned with respect to movable and immovable property of the endowment, and if there is a deed of endowment, submit the same or a certified companyy thereof. Section 4 b lays down that. if any trustee neglects to discharge his duties referred to in s. 4 a , he can be deprived of the benefit or companysideration of the endowment wholly or partly which he possesses under the endowment. Section 5 lays down that any person may inform the Director of Endowments with regard to an endowment which has number been entered in the book of endowments Section 6 gives power to the Director of Endowments to give numberice for the registration of endowed property, howsoever he companyes to know of it. Section 7 provides that if numberobjection is made within the time fixed in the numberice, the endowed property shall be registered in case the endowment is found to be legal. Sections 8 and 9 provide for procedure for decision of objections where objections are filed. Section 10 provides that every per-son whose objections have been disallowed can file a suit for declaration in the civil companyrt within one year of, the dismissal of his objections whereby his rights might be decided and entries in the book of endowments will then be governed by the decision of A.I.R. 1955 HY. 82. the civil companyrt. Section 10 further provides that numberperson who has number filed objections can file a civil suit. Section 11 provides for a presumption that entries made in the book of endowments are companyrect unless otherwise held by the civil companyrt. It will be seen therefore that provisions as to the companypilation of book of endowments companytained in ss. 3 to 11 except s. 4 b provide for registration of endowed property and for carrying out the objects of the Act, namely, that the intention of endower may be carried out and the duties of the trustee may be discharged companyveniently and efficiently for the benefit of humanity. These Regulations are clearly reasonable restrictions in the interests of the general public within the meaning of Art. 19 5 of the Constitution and are companyceived with the purpose of having companyrect information as to the endowments existing in the State so that their management may be carried out effici- ently and for the benefit of humanity according to the terms of the endowments. These provisions therefore except s. 4 b as to the registration of endowments are number in any way ultra vires the fundamental right enshrined in Art. 19 1 f . As to s. 4 b , we do number think it necessary to express any opinion in this case. Section 4 b is a kind of penalty on the trustee for neglecting to carry out the provisions of s. 4 a , and lays down that the trustee can be deprived of the benefit arising to him under the endowment. In the present case it is number the companytention of the appellant that there is any benefit arising to him under the endowment and therefore s. 4. b would have numberapplication. In this companynection we may also refer to r. 25, which lays down that if any trustee does number derive any benefit or return from the endowment in accordance with r. 24, then in the event of number-discharge of duties he may be suspended from the post of trustee for a suitable period and the management will be carried on during this period by Government. This rule is being attacked as going beyond the rule-making power companyferred on the Government. We do number think it necessary in the present case to decide the vires of this rule, as the impugned action is number under this rule. We should number however be taken to have upheld the vires of this rule when we uphold the validity of the provisions relating to registration in the Regulations and the Rules. We therefore uphold the validity of the provisions elating to registration of endowments except s. 4 b on which we express numberopinion and the Rules framed thereunder except r. 25 and rules companysequential thereon which we express numberopinion to carry out these provisions under which numberice was given to the appellant on December 31, 1957. In view of our companyclusions on these four points, the appeal must fail. Be. 5. This brings us to the companysideration of the vires of the orders dated June 13 and 14, 1960. The attack on these two orders is two-fold. In the first place, it is urged that if these orders fall within the powers companyferred by the Regulations and the Rules made thereunder, they should be struck down, as the Regulations and the Rules framed thereunder by which the trustee is deprived of his right of management are ultra vires Art. 19 1 f . In the second place it is urged that these orders which purport to have been passed under r. 179 are bad as r. 179 itself goes be- yond the powers companyferred on the rule-making authority under the Regulations and in any case are companytrary to the Rules. We do number think it necessary in the present case to companysider whether the Regulations and the Rules framed thereunder with respect to removing a trustee from the management of the trust are unconstitutional. We shall companyfine ourselves to the second part of the argument in this behalf and companysider whether the Regulations give power for the removal of the trustee under any circumstances and if so whether the removal in this case has taken place as provided under the Regulations and the Rules framed thereunder. It cannot be doubted that the two orders taken together amount to removal of the, appellant from trusteeship. The only provision which deals with the management of endowed property is to be found in s. 12,which is as follows -- With regard to the management of the endowed property, the trustee will be generally companype tent to exercise the powers which have been companyferred on him by the endower. But if any trustee is number found to be companypetent, then the Minister for Endowments may frame rules and regulations for the realisation of the objects of the endowment and for the better management of the, same by which the trustee will be duly bound or he may appoint a Superintendent under the rules. Analysis of this section shows that it companysists of three parts. Under the first part, the trustee is companypetent to exercise the powers which have been companyferred on him by the endower, thereby recognising the right of the trustee to manage the trust property according to the terms of the endowment. The second part lays down that if any trustee is number found to be companypetent, then the Minister for Endow- ments may frame rules and regulations for the realisation of the objects of the endowment and for the better management of the same by which the trustee will be duly bound. Here again the management clearly remains with the trustee and he is only subjected to companytrol by means of rules and regulations framed for the better management of the particular trust under the orders of the Minister for Endow- ments. Then companyes the third part of the section which gives power in the alternative to the Minister for Endowments in case of incompetence of the trustee to appoint a Superintendent under the Rules. A Superintendent is defined in s. 2 as meaning a person appointed by Government for purposes of management. Thus the last part of s. 12 gives power to Government to appoint a Superintendent for purposes of management. This necessarily implies that on the appointment of a Superintendent to manage the endowed property under s. 12, the trustee is de- prived of the management of the property, and in effect is removed from trusteeship. This interpretation of the last part of s, 12 is supported by rules found under Chaps. XLIII, XLIV and XLV. Chapter XLIII deals with Superintendence by Government, Chap. XLIV with direct superintendence of Government and Chap. XLV with munthazim manager . It may be added that in the definition in s. 2, the word munthazim has been translated as Superintendent while in Chap. XLV that word has been translated as manager. It is obvious that the Superintendent and the manager are the same thing. Rule 177 provides that if the Government takes over the endowed buildings under its superintendence, it shall have power to arrange for direct superintendence, or appoint any munthazim Superintendent or manage through any companymittee. Chapter XLIV then provides for direct superintendence by Government. Rule 182 in that Chapter shows that where direct superintendence is taken by Government the power of spending the recurring amounts as per the budget will be vested in the trustee in accordance with the powers possessed by him under these Rules and there is numberremoval of the trustee. It is only when a Superintendent is appointed under Chapter XLV that he has all the powers of a trustee mentioned in Chap. XXXI see r. 187 . The two orders of June 13 and 14, 1960, read together clearly show that even though they purport to be passed under r. 179, which refers to direct superintendence by Government, the Government has gone further than provided in the rule when it decided to take over the management of the temple and vest the same in the Director of Endowments from June 14, 1960, with the result that the appellant has been deprived of the management and in effect removed from trusteeship. We presume that companysequent on this a Superintendent would be appointed. The last part of s. 12 which provides for the appointment of a Superintendent under the rules in effect provides also for the deprivation of the trustee of his right of management and thus results in his removal. Now r. 67 deals with the removal of trustee and has laid down six companyditions which would justify the removal of a trustee. The last of these companyditions lays down that if any trustee is number fit for trusteeship due to some reason other than those companytained in the first five companyditions he would be removed from the post of trustee. But this removal can only take place if the matter is inquired into by a companypetent officer. Thus r. 67 companytemplates that numbertrustee shall be removed from trusteeship unless an inquiry is held by a companypetent officer. This obviously means that the trustee will be given an opportunity to show cause why he should number be removed from trusteeship and it is only after a proper inquiry that a trustee can be removed from trusteeship. This provision is in companysonance with the language of s. 12, where the words used are if a trustee is number found to be companypetent. The use of the word found clearly shows that the legislature intended that action under the second and third part of the section would only be taken after a proper inquiry. Further, r. 68 provides that the power of removal of a trustee will lie vested in the Minister for Endowments. Thus after an inquiry has been made by a companypetent officer, it is only the Minister for Endowments, which in the present set-up means the Government, which can remove the trustee. We have already pointed out that we do number think it necessary in the present case to companysider the question whether these provisions as to the removal of the trustee by Government can be upheld as companystitutional. But assuming that these provisions are companystitutional, the question that arises is whether the two orders passed on June 13 and 14, 1960, which must be read together and in effect amount to removal of the appellant from trusteeship can be justified under the Regulations and the Rules. Clearly these two orders have been passed by the Member, Board of Revenue while r. 68 companytemplates that the trustee would be removed only by the Minister for Endowments, which in the present set-up, can only mean the Government. Further, r. 67 provides that a trustee cannot be removed from trusteeship unless an inquiry has been made by a companypetent officer. That means that numberice has to be issued to the trustee to show cause why he should number be removed for reasons shown therein and it is only after an inquiry has been made and one of the six companyditions provided in r. 67 is established that the trustee can be removed. In the present case numbernotice was ever issued to the appellant to show cause why he should number be removed from the trusteeship. It is true that in the numberice dated December 31, 1957, it was stated that in case the appellant failed to respond to the numberice which was with respect to registration of the endowed property the case would be companypleted taking the property under the Governments supervision and numbermore objection would be heard thereafter. The companysequence of number-appearance to such a numberice is to be found in s. 7 which provides that if numberobjection is filed the endowment would be registered and in s. 10 b which deprives a person who does number appear to object in response to the numberice of any right to file a suit as provided in s. 10 a . But there is numberhing in r. 67 which gives power to the Government to remove a trustee simply because he fails to appear in reply to a numbericed asking him to register the endowed property. The six companyditions mentioned in r. 67 are i insanity, ii companytraction of a companytagious disease of a certain type, iii companyviction by a criminal companyrt, iv going out of Hyderabad State without intimation for more than a month, v forsaking the religion with which the endowment is companycerned, and vi unfitness for trusteeship due to some other reason. There is numberprovision therefore for removal of a trustee, merely because he has number appeared in answer to a numberice under s. 6 of the Regulations for registration of the endowment. The orders therefore that were passed on June 13 and 14, 1960, which must be read together, cannot be justified under rr. 67 and 68, for the reasons that i numberinquiry was held, ii the orders were number passed by the Minister of Endowments, i.e. the Government, and iii the removal in this case is for a reason which is number permissible therein. All that the Director of Endowments was entitled to do on the basis of the numberice dated December 31, 1957, was to proceed to register the endowment, even if the appellant failed to appear in reply to that numberice after making such inquiries as he thought proper and take such further action as may be justified by the other provisions of the Regulations. But on the basis of that numberice it was number open to him to pass the orders which he did on June 13 and 14, 1960, which amounted to removal of the appellant from trusteeship and taking over of the management of the trust by the Government. These orders must therefore be set aside as ultra vires the Regulations and the Rules, assuming in the present case that the Regulations and the Rules providing for the removal of the trustee, are companystitutional. We therefore dismiss the appeal with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No.204 of 1960. Appeal by special leave from the judgment and decree dated -March 31., 1958 of the Patna High Court in Appeal from Appellate Decree No. 582 of 1954. Jagadish Ohandra Sinha and R. R. Biswas, for the Appellants. Bhawani Lal and P. C. Agarwala, for Respondents.Nos. I to 16. 1962. November 14. The judgment of the Court was delivered by SUBBA RAO, J -The only question in this appeal- is whether the suit document is a mortgage by, companyditional sale or a sale with a companydition of re purchase. The facts that gave rise to this appeal may be briefly stated On February 2, 1924, the appellants 1 2, their father late Matooki Mandal and their uncle late Lila Maridal executed a deed purporting to-convey a property of the extent of 12.6 acres in favour of respondents 1 2 for a companysideration of Rs, 2,800/- andput them in possession of the same. In 1950 the appellants instituted title suit No. 73 of 1950 in the Court of the Munsif, 1st Court, Bhagalpur, Bihar for redemption on the ground that the said document was a mortgage by companyditional sale. The companytesting defendants i. e., respondents 1 2 pleaded that the said document was number a mortgage but an out and out sale and therefore the suit for redeemption was number maintainable. The Munsif and on appeal the Subordinate judge, Bhagalpur, accepted the companytention of the appellant and decreed the suit but on second appeal the High Court held that the document was a sale and on that finding the appeal was allowed and the suit was dismissed with companyts throughout. The appellants by Special cave preferred the present appeal against the decree and judgment of the High Court. The only question in this appeal is whether the said document is a mortgage or sale. As the question turns upon the companystruction of the provisions of the sale deed, it would be companyvenient to read the document as the High Court did omitting the unnecessary words - We, the executants, executed a registered Sudbharna bond, dated 1-3-1923, in favour of Deonath Bhagat and Raghunath Bhagat and received the entire companysideration money. We, the executants, are badly in need of some money in cash for repayment of debt of Sumeri Kapri and are in great need of some more money in cash for meeting the expenses of cultivation, purchasing bullocks and also for meeting the household expenses and repayment of petty debts to creditors. We, the executants, cannot arrange the aforesaid money in cash without selling some property. Deonath Bhagat and Raghunath Bhagat aforesaid have, number up till number entered into possession of the Sudbharna property and they are, making a demand for the money and it is absolutely necessary to repay the money to the said creditors. Hence on negotiation for sale of the some property with the said Bhagats by way of companyditional sale the said Bhagats agreed to purchase our property and to pay money in cash for repayment of the debts of Sumeri Kapri and for meeting other expenses. Hence we, the executants, have sold and vended 12.6 acres of Nakdi jot land for Rs. 2,800/- to Deonath Bhagat and Raghunath Bhagat. 7 . We declare that in the month of Baisakh 1334 Fasli we shall on repayment of the said amount in full and in one lump sum to the said Bhagats, take back the vended property from the said Bhagats and, that in case of failure of repayment of the companysideration money of this deed of sale in full within the stipulated time, this deed of sale will remain in force and we the executants, or our heirs, shall number be companype- tent to demand the return of the vended property. Out of the companysideration money of this sale deed Rs. 1,600/- due to the said Bhagats under the bond dated 1-3-1923 was paid up in full and on receipt of the remaining companysideration money the dues of Sumeri Kapri amounting to Rs. 500/- was paid up and with the balance of Rs. 700/- we met the above expenses. We, the executants, put the said vendees in possession of the vended property and authorise them, to remain in possession thereof and appropriate the produce thereof in such manner as, they like and, the payment- of the rent of the vended land from 1332 fasli remained the companycern of the said vendees. If due to a defect in, the title the said vendees are dispossessed of the vended property or any portion thereof, we shall, be liable to refund the companysideration money of the sale,deed with interest at the rate of, Rs,, 3/2/- per hundred rupees per month. Whatever- rights and interests the said vendees had under the bond dated 1-3-1923 remained, intact under the sale deed. Hence we have put into writing these few words by way of a deed of absolute sale company- ditional sale, so, that it may be of use when required, There is a clear legal distinction, between the two companycepts-a mortgage by companyditional sale and, a sale with a companydition of repurchase. The former is a mortgage, the relationship of debtor and creditor subsists and the right to redeem remains with the debtor. The latter is an out and. out sale whereby the owner transfers all his rights in the, property to the, purchaser reserving a personal right of re-purchase. The question, to which category a document belongs presents a real difficulty which can only be solved by ascertaining the intend of the parties on a companysideration of the companytents of a document and other, relevant circumstances Decided cases have laid down many tests to ascertain the intentions of the parties but they are only illustrative and number exhaustive. Let us therefore look at the terms of the document extracted above. The learned, companynsel for the appellant relied upon the following circumstance- The companysideration of the document went mainly in the dscharge of a registered sud- bharna bond dated March 1, 1923, given in favour of the respondents 1 2. It indicates that relationship of creditor and debtor was companytinued under-the document. 2. - There are numberwords of companyveyance in the document. There are numberwords of re-conveyance after the stipulated date. There is a term that if there was a defect in the title and the vendees were dispossessed the executants would be liable to the refund of the companysideration with interest with a charge on the property companyered by the document. The term creating a charge on the property transferred it is said indicates that the executants companytained to be the owners of the land despite the document. The executants took upon themselves the liability of the entire rent for 13311 falsi though the document was executed in the Magh of 1331 fasli. The fact that the executant companytinued to be liable to pay for a period after the execution of the sale deed,it is suggested indicates that the document was number an out and out sale but one in which the appellants companytinued to have an interest in the land. In the execution portion of the document it is describecd as tamashuk sarti kebalaand the appellants companynsel says that the said ex- pression means mortgage companyditional sale. If there was any ambiguity in the rest of the document the argument proceeds that the parties clearly expressed their intention by so describing the nature of the document. It is number accurate to say that the suit document was executed only to discharge the mortgage bond dated March 1, 1923. The document itself narrates that the executants were badly in need of money number only for repaying the debt under the said bond but also for repaying the debts of one Sumeri Kapri and for meeting the expenses in companynection with cul- tivation, purchase of bullocks and household. It is, therefore, number a document executed in renewal of an earlier mortgage bond but was brought into existence to meet the pressing demands on the appellants. It is also number companyrect that the document does number companytain words of companyveyance or re-conveyance. The document says in express terms that the property was sold and vended, which are certainly words of companyveyance, and that after the prescribed period and after the amount was paid the appellants would take back the vended property from the respondents which are again words of reconveying. Though the words of companyveyance and reconveyance are number expressed in phraseology found in documents prepared by trained draftsmen, they are expressed in words usually adopted by village document writers. The taking over of the liability to pay the rent by the executable for a short period subsequence to the execution of the document may be due to the fact that the rent had become due before the execution of the document or for some other circumstance which is number clear from the document. This is at best a neutral circumstance. The fact that in case of any defect in title the vendees were dispossessed, the companysideration amount with interest was charged on the property is numberhing more than an indication of the intention to keep alive The mortgagees rights under the earlier document. The said clause only makes explicit what the respondents would be entitled to in law. The translation of the words tamashuk sarti kebala as mortgage by companyditional sale does number appear to be companyrect. The learned Subordinate juage observes that if those words. were literally translated, they would mean a bond by way of company- ditional sale. If that was the meaning the said expression would be companysistent both with a mortgage by companyditional sale as well as a sale with a right of repurchase. In law Lexicon, P. Ramanatha Iyer gives the following meanings to the word kebala Any deed of companyveyance or transfer of right or property, any companytract of bargain or sale, a bond, a bill sale, title-deeds, and the like. Even accepting the widest meaning given to that word, the expression can only mean a bond or a companytract by way. of. companyditional sale. So translated the expression is companysistent with a mortgage, as well as with a sale and therefore that is a neutral circum- stance. On the other hand the executant describes the transaction as a sale and respondents as vendees. The amount paid is described as companysideration for the sale. Usual companyenant of title is given and there is a provision of re-conveyance in case of payment of the prescribed amount within the time agreed upon. No doubt these recitals would be found in a document which purports to be an ostensible sale and they do number in themselves are decisive of the question raised but there is one factor which dispels any doubt in regard to the companystruction of the document. The total area of the land mortgage in the year 1923 was 13.17 acres and the amount advanced thereunder was Rs. 1,600/-. Only one year thereafter out of the said extent 12.6 acres was transferred by the document in question for a sum of Rs. 2,800/-, that is if the companytention of the appellant was companyrect, a smaller extent of land was mortgaged for higher amount. It is improbable that a mortgagee would advance an additional amount and take a mortgage. of a smaller extent in discharge of an earlier mortgage wherounder a larger extent of land was given as security. Unless there are extraordinary reasons for this companyduct, this would be a clinchina circumstance in favour of holding that a document was a sale. The learned companynsel for the appellant realizing the importance of this circumstance at tempted to explain it away by a suggestion that under the earlier document the respondents were number put in possession of the land and that the reduction of the extent of the mortgaged property under the subsequent document was-due to the fact that they secured possession of the lands mortgaged thereunder. This was number put either to the witnesses or suggested in any of the three companyrts below. We cannot therefore accept this argument advanced for the first time before us, for there may have been many e explanations for the respondents in respect of this suggestion. What is more, it is number disputed that the sum of Rs. 2,800/- represents the real value of the 1 and sold to the respondents and it is high improbable to say the least that a person would aydvance the amount equivalent to the value of the. land mortgaged without keeping a reasonable margin for realizing his amount. This is sought to be explained by throwing a suggestion that as the respondents were put in possession, they would be getting the interest and therefore there was numberchance of the debt exceeding the value of the property. Even so a mortgagee in lending mounies would insist upon a reasonable margin in the value of the property to provide against the possible companytingency of the pro- perties going down in value and the amount due to him swelling by the addition of companyt, damage, etc., in the event of his filing a suit to recover the name. in our view whatever ambiguity there may be in the document, the fact that only a portion of the land already mortgaged was sold for a proper and adequate companysideration is a circumstance which stamps the document as an out, and out sale. Relianceis placed by the learned companynsel for the appellants on a judgment of this companyrt in Pandit Chunohun Jha v. Sheikh Ebadat Ali 1 . It may be stated at, the outset that for ascertaining the intention of the-, parties under one document- a decision on a companystruction of the terms of another document cannot ordinarily afford any guidance unless the terms are exactly similar to each other. It is true that, some of the terms of the document in that case may be approximated to some of the terms in the present document but the judgment of this Court really turned upon a crucial circumstance. There is one important recital found in the document in that case which does number appear in the document in- question and there is another important recital found here which is number present there. There the document under scrutiny was executed on April 15, 1930. Before the execution of the document the- executants initiated companymutation proceedings under s. 40 of the Bihar Tenancy Act. Those proceedings companytinued till February 18, 1931 i.e. for some ten months after the deed. The executants borrowed Rs. 65/6/- to enable them to carry on the companymutation proceedings even after they executed the document. Bose.1., speaking for the companyrt adverting to the said circumstance observed at page 183 This we think, is crucial. Persons who are selling their property would hardly take the trouble to, borrow money in order to companytinue revenue proceedings. which companyld numberlonger benefit them an companyld only ensure for the good of their transferees. It is, therefore, obvious that this circumstance clinched the case in favour of the executants. The crucial circumstance in the present case, namely that a smaller extent was- sold for a higher amount in discharge of an earlier mortgage of a larger extent for a smaller amount was number present in that case. The said 1 1955 1.S.R. 174. crucial circumstances make the two cases entirely dissimilar and therefore the said judgment of this companyrt is number of any help in companystruing the document in question. On a companysideration of the cumulative effect of the terms of the document in the companytext of the surrounding circumstances we hold that the document in question is number a mortgage but a sale with the companydition of repurchase. The companyclusion arrived at by the High Court is companyrect.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 645/1961. Appeal from the judgment and decree dated April 20, 1957, of the Madhya Pradesh High Court in First Appeal No. 181/52. Hardayal Hardy, S. AT. Andley and Rameshwar Nath, for the appellant. Sen and 1. N. Shroff, for the respondent. 1962. November 19. The judgment of the Court was delivered by SINHA, C. J.-This appeal on a certificate granted by the High Court of Madhya Pradesh at Jabalpur on April 16, 1958, under Art. 133 of the Constitution, is directed against the judgment and decree of that Court in First Appeal No. 181 of 1962, reversing those of the Additional District judge, Chindwara, in Civil Suit No. 3-A of 1951, decided on September 25, 1952, by which the trial Court had decreed the plaintiffs claim for Rs. 408651-and interest. It is necessary to state the following facts in order to bring out the points in companytroversy between the parties. One Haji Syed Zahiruddin of Bhopal held a mining lease-Ex. P-2-dated May 29, 1923 in respect of 189-76 acres of land in the district of Chindwara, for extracting companyl. The appellants took an assignment of that lease by Ex. PI dated September 4, 1940. There were companyl bearing areas adjacent to the area companyered by the lease aforesaid. The appellants were anxious to acquire those adjacent companylieries from their respective owners. The transfers in favour of the appellants companyld number take place without the sanction of the State Government. After protracted companyrespondence and negotiations, the Government agreed to grant the necessary sanction to the transfer of those adjacent lands to the appellants subject to the companydition that they took a companysolidated lease in respect of the whole additional area at an enhanced rate of royalty. The appellants entered into an agreement with the Government on January 11, 1946 Ex.P3 by which the rate of royalty payable to Government was raised from Rs. 5/-to Rs. 10/-per ton. Though numberformal lease deed was executed, the appellants worked the mines with the permission of the Government during the period October 27, 1947 to June 30, 1949. In respect of the companyl thus extracted, the appellants paid to the Government the sum of Rs. 40865/-, including interest, by way of royalty. The plaintiffs paid the aforesaid sum under protest in February-March, 1960. The plaintiffs companymenced the present action in February 1951, for a declaration that they were number bound by the terms of the agreement dated January 11, 1949, aforesaid,. and that, therefore, they were number liable to pay to Government any sum in excess of that fixed by the lease of 1923, and. by the lease of January 21, 1944, in respect of lands transferred to them. They also. claimed an injunction against the defendant, the State of Madhya Pradesh, which was the sole defendant,, number respondent. There wag also a prayer for refund of the said amount of Rs. 40865/- plus interest amounting to Rs. 1985/from the date of payment of those several sums aggregating to Rs. 40865/-. Interest pendente lite and future interest at 6 per cent on the decretal amount was also claimed. The companytentions raised on behalf of the plaintiffs in support of their claim were that the agreement aforesaid was void as it was in companytravention of r. 50 of the Mining Rules of 1913, as also that the same was in companytravention of s. 4 of the Mines and Minerals Regulation and Development Act XIII of 1948 . It was also companytended that a representation was made by the Government in the companyrespondence that passed between the parties that Government was going to adopt a new policy in respect of mining leases, including grant of leases at enhanced royalty. The agreement, the plaintiffs further asserted, had been entered into under the influence of that misrepresentation and was, therefore, number enforceable against them. The suit was companytested by the Government on the ground that the Mineral Rules of 1913 had numberbinding effect after the Constitution Act of 1935, so far as the Provinces were companycerned those Rules were mere departmental instructions for the guidance of subordinate officers of the Government and that the Government was free to make its own bargain in respect of fresh leases. It was also companytended that the Mines and Minerals Regulation and Development Act of 1948, read with the Rules made thereunder, did number apply to the leases in question as these Rules came into force later. The Government also denied that there was any misrepresentation made by Government to the plaintiffs, though it was true that Government had intended to promulgate fresh rules which envisage revised scales of royalty, but which ultimately did number materialise. It was, therefore, companytended that the plaintiffs had numbercause of action for the reliefs claimed in the plaint. The learned Additional District judge, Chindwara, by his judgment and decree date September 25, 1952, decreed the suit with companyts holding that the plaintiffs were entitled to the declaration ,,ought by them, as also to the companysequen- tial relief of refund of the amount paid by them tinder protest, as aforesaid, namely, the sum of Rs. 40865/- together with the sum of Rs. 992/8/- on account of interest at 3 per annum up to the date of the suit, as also interest pendente lite tip to the date of realisation at the same rate of 3. On appeal by the defendant, the state of Madhya Pradesh, the High Court reversed the judgment and decree passed by the trial Court and passed a deeree dismissing the suit with companyts throughout. The High Court held that the Government was number bound by the Rules of 1913, which had numberstatutory force, and that the Rules of 1949 made under the Act of 1948 aforesaid did number apply to the transaction in question, because they had numberretrospective operation. The High Court also held that there was numbermisrepresentation by the Government and that the plaintiffs were anxious to enter into the agreement in order to start their mining operations to take advantage of the High market in respect of companyl, and that they entered into the agreement with their eyes open and without any vitiating influence. The appellants applied for and obtained the necessary certificate from the High Court. That is how the matter is before us. In this Court it was strenuously argued on behalf of the appellants that the Rules of 1913 were in terms imperative and had statutory force which bound the State Government, and that any lease or agreement entered into between the parties in violation of the terms of these Rules would be wholly void. It is companytended on behalf of the appellants, that the Government was number entitled to recover the amount at the higher rate of royalty from the plaintiffs, and that their suit was well- founded in law. But it was argued on behalf of the respondent that those rules were promulgated by the Governor General in Council, under the sanction of the Secretary of St-ate for India in Council, and as such they were binding on the officials of the Government as departmental instructions, but were number binding on the Government itself In our opinion, this companytention is well- founded. Rule 1, which runs as follows, itself makes it clear that the Government companycerned may make an exception to the general rule laid down in the rule No license to prospect for minerals or lease of. mines and minerals can be granted by any Local Government otherwise than in accordance with these rules, except with the previous sanction of the Secretary of State for India in Council, or with that of the Governor-General in Council under any general or special authority which he may have received in this behalf from the Secretary of State in Council. The general rule is that the Rules have to be followed by the officials of the Government in the matter of granting licences to prospect for minerals, or leases of mines and minerals. But exception may be made with the previous sanction of the- rule making authorities aforesaid. This position companytinued in law until the Government of India Act of 1935 came into operation. As a result of the companystitutional changes effected by that Act, the Secretary of State and the Governor-General had to be substituted by the Governor with effect from April 1, 1937. From that date it would be the Governor who would be empowered to make the exceptions to the general rule laid down. In this case, it is clear from Ex. P. 3--the agreement dated January 11, 1949 that the Governor was in the position of the lessor. Hence, even if we assume that the Rules had statutory force and applied, to the instant case, the Governor having been the grantor of the lease it must be presumed that he decided that the revised term-, were in the interest of the State, and, therefore, the revised terms of the lease were binding on the parties. Though in opening the appellants case their companynsel was vehement in the assertion that the Rules of 1913 were statutory, he was unable to point out the statutory source of it. Ultimately, he had to companycede that the Rules were number statutory. That being so, there is numberforce in the companytention that the agreement of .January 11, 1949 Ex. P. 3. was void. In this companynection it is necessary to companysider the alternative ground of attack based on the provisions of the Act of 1948 and the Rules made thereunder. The Act came into force on September 8, 1948, and the Rules, called the Mineral Concession Rules, 1949, were promulgated under s. 5 of the Act. But these Rules came into effect on October 25, 1949. These rules apparently have numberretrospective effect. Section 4 of the Act is as under No mining lease shall be granted after the companymencement of this Act except in accordance with the rules made under this Act. Hence, any mining lease granted on or after October 25, 1949 will have to companyform to the Rules aforesaid. But the agreement in question was the result of negotiations between the parties, extending over several years and was finalised in January 1949. The appellants, with the permission of the Government, carried on mining, operations on the terms insisted upon by the Government, and for the period for which the royalty was realised from the appellants there were numbersuch Rules in existence, which companyld be said to have been companytravened. Hence we are number companycerned with the effect of the Rules which were promulgated in 1949 and came into effect as already stated, on October 25, 1949. We need number, therefore,, stop to companysider what the legal position would have been if an agreement like the one before us were questioned with reference to its operation on and after October 25, 1949. The only other ground on which the enforceability of the terms of the agreement has been questioned is that there was a misrepresentation by Government to the effect that it was going to enhance the rate of royalty all round, and that it was under the influence of that belief that the appellants entered into the agreement in question. It is a little difficult to appreciate this ground of attack. The agreement is number questioned on the ground that there was any undue influence or companyrcion exercised by the grantor in insisting upon the more onerous terms under the agreement. As pointed out by the High Court, the appellants were in a hurry to take the additional area and work the companyl mines on terms which were mutually agreed between the parties. It was number alleged that there was any mutual mistake which companyld be said to have vitiated the agreement. But simply because the draft amendment to the Mining Rules published for inviting objections from the public on July 12, 1947 vide Ex. D13 was number finalised would number afford any cause of action to the plaintiffs. They, with their eyes open and after thoroughly discussing the matter between themselves and the Government, had entered into those terms of agreement. Those terms may be more onerous than any other lease granted to other lessees, but that would number vitiate the companytract between them. There was a faint attempt made on behalf of the appellants to put their objections on a companystitutional basis. It was companytended that the terms imposed upon the appellants by the State would amount to deprivation of property without the authority of law. It is manifest that this ground of attack is wholly devoid of any force because the State has number deprived them of any property. What they have paid to the Government was realisable under ,the terms of the companytract, which on the findings recorded above is number vitiated. Under the agreement which we hold to be enforceable, the defendant may have struck a hard bargain but that cannot be brought under the prohibition of Art. 31 1 of the Constitution, even assuming that the Constitution applied to the transaction in question.

Case appeal was rejected by the Supreme Court