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ORIGINAL JURISDICTION Writ petition No. 459 of 1972. Under article 32 of the Constitution of India for the enforcement of fundamental rights. Purshottam Chatterjee and Rathin Das, for the petitioner. S. Nariman, Additional Solicitor General and M. N. Shroff for respondents Nos. 1-5. N. Sinha, Dilip Sinha and G. S. Chatterjee, for respondent No. 9. Respondent No. 8 appeared in person. The Judgment of the Court wag delivered by CHANDRACHUD, J.-The petitioner, Shrimati Arati Ray Chou- dhury, is a permanent employee in the South Eastern Railway- a Government of India Undertaking-which runs two Higher Secondary Schools for girls one at Adra and other at Kharagpur. Broadly stated, the question which we have to decide in this petition under article 32 of the Constitution is whether the vacancy in the post of the Headmistress of the Kharagpur school can be treated as being reserved for a Scheduled Caste candidate, a question which depends for its decision both on the interpretation and the validity of the Carry forward rule. The petitioner assails that rule and companytends that the vacancy is open to all candidates while respondent No. 8, who belongs to Scheduled Caste, companytends for a companytrary position. In August 1966, a vacancy arose in the post of the Headmistress of the Adra school and was filled up on the footing that it was unreserved. The Headmistress of the Kharagpur school was due to retire with effect from January 1, 1969 and therefore on December 5, 1968 the Railway administration formed a panel of candidates for selection to that post and fixed December 18, 1968 as the date for holding interviews. The names of four Assistant Mistresses called for selection, were arranged in the panel seniority- wise, the petitioner occupying the top place and respondent No. 8 the third place. The meeting of the 18th was stayed by the Calcutta High Court in a Writ Petition Civil Rule No. 2117W of 1968 brought by respondent No. 8 for readjustment of her seniority. On December 28. 1969 the petitioner was asked to take over charge of the post and on January 4. 1969 she was promoted to officiate as a Headmistress, purely on local stop-gap basis, and on the express companydition that the promotion will number-confer upon her any right or title to the Post. Respondent No. 8 then filed another Writ Petition in the Calcutta High Court Civil Rule No. 499 W of 1969 asking that the numberice of December 5, 1968 be quashed as the vacancy in the post of the Headmistress of the Kharagpur school ought under the relevant rules, to be treated as being reserved for a Schedule Caste candidate. In the meanwhile, the stay order issued in Writ Petition 2117 of 1968 was vacated by the High Court and therefore on April 15, 1969 the Railway administration issued a fresh numberice fixing the interviews of the four candidates on April 29. This attempt also proved abortive as respondent No. 8 obtained in Writ Petition 499 of 1969 an injunction restraining the authorities from holding the interviews. On December 24, 1970 a learned single Judge of the Calcutta High Court allowed Writ Petition 499 of 1969, holding that the post in question must be treated as being reserved, for a Scheduled Caste candidate and that therefore respondent No. 8 was alone entitled to appear before the selection Board for her appointment as Headmistress of the said Girls school. Neither the petitioner number the two other candidates were impleaded to this petition. The Union of India was the first respondent and the Chief Personnel Officer of the S. Railway, the second respondent to the petition. These respondents carried an appeal No. 454 of 1971 from the judgment of the learned single Judge but it was dismissed by a Division Bench on September 14, 1971. Respondent No. 8 filed three companytempt petitions, one after another against the Railway administration for their failure to companyply with the directions issued by the Calcutta High Court in Writ Petition No. 499 of 1969, In the first of these petitions Civil Rule No. 4014 W of 1971 , a Division Bench of, the High Court, by its judgment of June 7, 1972, asked the Railway administration to companyply within a period of three months with the directions issued earlier by the High Court by asking the petitioner to appear before the Selection Board. The learned Judge however made it clear that the Selection Board would be at liberty to companysider the suitability of the petitioner. Whether such a clarification companyld be made in the companytempt petition filed by respondent No. 8 is open to doubt, but numberhing really turns on it. The companyrse which the other two companytempt petitions took is also number relevant for the purpose of the present petition. On November 6, 1971 the Chief Personnel Officer of the S. E. Railway issued a Memorandum stating that it was decided to hold a selection to draw up a panel of 2 approved candidates to fill the post of Headmistress, one post being reserved for the scheduled caste against the existing vacancy and another to companyer unforeseen requirement-unreserved. The petitioner filed a writ petition Civil Rule No. 1395W of 1972 in the Calcutta High Court to challenge the memorandum and in the fashion of companynected proceedings, she impleaded to her petition the Railway administration and the Union of India but numbere of her three companypetitors who would be directly affected by any order passed in her favour. On February 11, 1972, a learned single Judge granted an injunction in that writ petition restraining the Railway administration from making any appointment on the basis of the memorandum of November 6, 1971. Later in August 1972, the three other Assistant Mistresses, including respondent No. 8, were impleaded to the writ petition. Despite the order of injunction, the Railway administration issued a letter on August 19, 1972 asking respondent No. 8 to appear before a Selection Board on August 30. It is patent that in doing this the Railway administration acted companytrary to the terms of the injunction dated February 11, 1972. But, they were truly between Scylla and Charybdis. On the one hand, they had to companyply with the orders passed in Writ Petition No. 499 of 1969 under which they were directed to treat the vacancy as being reserved for the scheduled caste lid to interview respondent No. 8 only for the post. On the other hand, they were faced with the injunction of February 11, 1972 by which they were restrained from making any appointment to the post on the, basis that the vacancy was reserved for the scheduled caste, We suppose that they escaped through the horns of the dilemma by making a breach of the order which was later in point of time. But this is number all. Shrimati Lila Bhattacharyya, respondent No. 9 before is, who was one of the four companytenders for the Headmistresses post had also obtained an injunction in a writ petition filed by her in the Calcutta High Court Civil Rule No. 5680W of 1970 , restraining the Administration from making appointment to the post of the Headmistress of the Kharagpur school, without companysidering her claim to the post, Finally, the petitioner approached the High Court once again and on September 18, 1972 obtained an injunction once again in terms of the earlier injunction of February 11, 1972. The Railway administration had to fend their way through this network of injunctions. Writ Petition No. 1395 of 1972 filed by the petitioner came for hearing before a learned single Judge on October 3, 1972 when he felt numberrule should have been issued and in any case, numberinterim order should have been granted companytrary to the direction of the Appeal Court by me and I did so only because I was entirely kept in the dark regarding the earlier proceeding, namely Writ Petition 499 of 1969, filed by respondent No. 8 in which the Railway administration was asked to treat the vacancy as a reserved vacancy. The learned Judge therefore recalled the Rule and dismissed the petition. The petitioner did number appeal from this judgment but on October 1 1, 1972 she filed the present petition under article 32 of the Constitution impleading thereto, fortunately, all the necessary parties. Respondent 1 to petition is the Union of India, respondents 2 to 5 are officers of the Railway administration, respondent 6 is the Union Public Service Commission while respondents 7 to 9 are the 3 rival claimants to the post of the Headmistress. The petitioner prays for a mandamus asking respondents 1 to 5 number to give effect to the rules relating to reservation of posts for candidates belonging to schedule castes and scheduled tribes, particularly the Carry forward rule to withdraw the order dated November 6, 1971 iii to allow her, the petitioner to companytinue in her post as a Headmistress of the Kharagpur school and iv to allow her to companytinue in the revised scale of pay Rs. 700-1100. Rule Nisi was issued on this petition on October 23, 1972 and it was directed that status quo be maintained pending the hearing of the numberice of motion for stay. The interim order directing the maintenance of status quo was vacated on February 27, 1973 after hearing the respondents. The Chief Personnel Officer, thereafter, passed an order on March 21, 1973 that respondent No. 8 be posted immediately as the Headmistress of the Kharagpur school, subject to certain companyditions. The learned Additional Solicitor General appearing for the Union of India and respondent No. 8 appearing in person have raised a preliminary objection to the maintainability of this petition. They companytend that the petitioner ought to have pursued her remedies against the judgment dated October 3, 1972 dismissing her writ petition 1395W of 1972 and since she has acquiesced in that-judgment it is number open to her to bring this petition under article 32 of the Constitution, for the same reliefs. We are number disposed to accept this objection. and would prefer to deal with the petition on its merits. it is true that long back in 1955 this Court had held in M. Gopalan and Anr. v. The State of Madhya Pradesh 1 that, except for good reasons the practice of approaching the Supreme Court directly under article 32 in matters which have been taken to the High Court and found against, without obtaining leave to appeal therefrom, is number to be encouraged. Recently in Tilokchand Motichand Ors. v. H. B., Munshi Anr. 2 it was observed that this Court refrains from acting under article 32 if the petitioner had already moved the High Court under article 226. in the words of Hidayatullah C.J. this companystitutes a companyity between the Supreme Court and the High Court and, since the motivating factor is the existence of a parallel jurisdiction in another companyrt, if that companyrt has been moved this Court insists on bringing the decision of that companyrt before it for review. But the distinguishing feature of the instant case is that the High Court dismissed the writ petition number on merits, though by a speaking order. The learned Judge thought that it was number just and proper for him to entertain the petition under article 226 because if he were to grant any relief therein, it would clash with the judgment rendered by the Division Bench on September 14, 1971 in appeal No. 455 of 1971 companyfirming the judgment of the single Judge dated December 24, 1970, holding that the vacancy must be treated as a reserved vacancy for the schedule caste and that respondent No. 8 was alone entitled to be companysidered for the post from amongst the 4 candidates. The learned Judge therefore recalled the Rule and dismissed the petition without companysidering the merits of the companytentions raised, before him by the petitioner. As the petition filed in the High Court under article 226 was number dismissed on merits, the present petition cannot be barred by res judicata or by the application of any principle analogous to it. See Daryo and Ors. v. The State of U.P, and Ors. and its true application .is explained in the judgments of Sikri J., Bachawat J.,, Mitter J. and Hegde J. in Tilok Chands case at pp. 833, 839, 855 and 856 of the Report. Nor do we see any substance in the other preliminary objection that as in Mirajkars case 3 , the true grievance of the petitioner is that the judgment of the High Court has infringed her right to equal opportunity and such a grievance cannot be made. The petitioner was number a party to the proceedings in which the judgment was rendered by the High Court and her companytention number is that the various rules and numberifications including the Carry forward rule are violative of her rights and therefore the memorandum of November 6, 1971 should be struck down as unconstitutional. No relief is sought by her directly or indirectly, either as a matter of substance or of form, against the judgment rendered by the High Court in the writ petition filed by respondent No. 8. 1 1955 1 S. C. R. 168, 174. 2 1991 2 S. C. R. 824. 3 1966 3 S. C. R. 744. That takes us to the merits of the challenge made by the petitioner to the Rules providing for reservation of posts for scheduled castes and scheduled tribes. The companytention is that on a true interpretation of the Rules, the vacancy in the post of the Headmistress of the Kharagpur school ought to be treated as an unreserved vacancy and secondly that the Carry forward provision of the rules is violative of articles 14 and 16 of the Constitution In M. R. Balaji and Ors. v. State of Mysore 1 this Court struck down as uncontitutional an order by which 68 per cent of the Seats in educational institutions were reserved for scheduled castes, scheduled tribes and the other educationally and socially backward classes. The companyrt was reluctant to suggest a proper percentage of reservation but bearing in mind that the. interests of weaker sections of society which are a first charge on the states and the Centre have to be adjusted with the interests of the companymunity as a whole, it observed that .speaking generally and in a broad way, a special provision should be less than 50 how much less than 50 would depend upon the relevant prevailing circumstances in each case. Following this decision, the majority observed in Devadasans case that in order to effectuate the guarantee companytained in article 16 1 , each year of recruitment has to be companysidered separately by itself for, the reservation for backward companymunities should number be so excessive as to create a monopoly or to disturb unduly the legitimate claims of other companymunities. Then rule which fell for companysideration in that case was companytained in a Memorandum dated January 28, 1952 of the Ministry of Home Affairs, as modified by the Memorandum of May 7, 1955. The Memorandum provided If a sufficient number of candidates companysidered suitable by the recruiting authorities, are number available from the companymunities for whom reservations are made in a particular year, the unfilled vacancies should be treated as unreserved and filled by the best available candidates. The number of reserved vacancies thus treated as unreserved will be added as an additional quota to the number that would be reserved in the following year in the numbermal companyrse and to the extent to which approved candidates are number available in that year against this additional quota, a companyresponding addition should be made to the number of reserved vacancies in the second following year. However, the unutilised quota was number to be carried forward for more than two years. As a result of the Carry forward rule, 29 out of 45 vacancies were filled from amongst the members of scheduled castes and scheduled tribes, the percentage of reservation companying to 64.4. The rule was struck down as reservation of vacancies in excess of 50 per cent was deemed unconstitutional. The decision in Devadasans case was rended on August 29, 1963 and on December 4, 1963 the Ministry of Home Affairs issued a memorandum modifying the Carry forward rule so as to companyply with the decision. By Para 2 of the Memorandum as amended by the Memorandum of September 2, 1964 , the Carry forward rule was 1 1963 Supp. 1 S.C.R. 439. 2 1964 4 S.C.R 680. amended by providing that in any recruitment year, the number of numbermal reserved vacancies and the carried forward reserved vacancies together shall number exceed 45 per cent of the total number of vacancies Nevertheless, if there be only two vacancies one of them may be treated as a reserved vacancy. But if there be only one vacancy, it shall be treated as unreserved. The surplus above 45 shall be carried forward to the subsequent year of recruitment, subject however, to the companydition that the particular vacancies carried forward do number become time barred due to their becoming more than two years old. The Note appended to the Rule defines a Recruitment year as a calendar year and says that for purposes of the two year limit for the carry forward of reserved vacancies, recruitment year shall mean the year in which recruitment is actually made. By a letter dated October 6, 1964 of the Railway Board, this Note was modified in its application to the Railway Services to the extent that Recruitment year was to be the financial year and number the calendar year. Acting in pursuance of the Home Ministrys Memorandum dated December 4, 1963 as modified from time to time, the Railway Board by its letter of January 16, 1964 prepared a new Model Roster signifying the turns of reserved and unreserved vacancies. Under this Roster 12.5 per cent of the vacancies were reserved for scheduled castes and 5 per cent for the scheduled tribes. The Roster runs thus Point on the Roster Whether Unreserved or Reserved for 1 Scheduled Castes 2-3 Unreserved 4 Scheduled Tribe 5-8 Unreserved 9 Scheduled Castes 10-16 Unreserved 17 Scheduled Castes 18-20 Unreserved 22-24 Scheduled Tribes 22-24 Unreserved 25 Scheduled Castes 26-32 Unreserved 33 Scheduled Castes 34-40 Unreserved The Note appended to the Roster companytains an important explanation If there are only two vacancies to be filled on a particular occasion, number more than one may be treated as reserved and if there be only one vacancy, it should be treated as unreserved. If on this account a reserved point is treated as unreserved, the reservation may be carried forward in the subsequent two recruitment years. In order to remove a still surviving grievance of the scheduled castes and scheduled tribes that in spite of the model roster they were denied appointments whenever there was a single vacancy, such vacancies being invariably treated as unreserved irrespective of the point of the roster at which they occur, the Railway Board by their letter of August 23, 1971 desired that if there is one post to be filled, selection should invariably be held for two posts, i.e., one actual and the other to companyer unforeseen circumstances. It was in pursuance of these instructions that on November 6, 1971 the Chief Personnel Officer of the S.E. Railway issued the impugned order stating that it was decided to hold a selection to draw up a panel of 2 approved candidates to fill the post of Headmistress i One post Reserved for Scheduled Caste against an existing vacancy. ii One post to companyer unforeseen requirement-unreserved. We have set out the rules leading to the final order in some fulness with a view to showing how, from time to time, the rules were adapted to meet the requirements of the law declared by this Court. The vice of rules impugned in Devadasans case was that though the unutilised reserved quota companyld number be carried forward for more than 2 years, the carry forward mechanism envisaged by the rules companyld almost companypletely swamp recruitment to open, general seats. The companyrt illustrated the startling effect of the carry forward rule companytained in the Memorandum of January 28, 1952 as modified in 1955 by taking a hypothetical example If in each of the first 2 years of recruitment, the total number of seats to be filled in was 100, 18 vacancies would have to be treated as reserved in each year. If suitable candidates were number available to fill these reserved vacancies, the reservation would have to carried forward to the third year, though number beyond it. If the total number of seats for recruitment in the third year was 50. the backlog of 36 seats with the addition of 9 reserved seats for the current year would companyer 45 out of 50 vacancies, leaving only 5 vacancies for open recruitment. This vice was effectively rectified soon after the judgement in Devadasans case by the issuance of the Memorandum of Dec- ember 4, 1963 as amended on September 2, 1964. It was specifically directed by these curative prescriptions that in any recruitment year, the number of numbermal reserved vacancies and the carried forward reserved vacancies together shall number exceed 45 per cent of the total number of vacancies. The rules thus are numberlonger open to the objection that the reservation is so excessive as to create in Government employment a monopoly in favour of backward classes or to disturb unduly the legitimate claims of other companymunities. The model roster accompanying the letter of the Railway Board dated January 16, 1964 is designed to meet the requirements of the new situation arising out of the rules framed in deference to the judgment in Devadasans case. Both the letter and the Note appended to the roster state expressly that if there are only two vacancies to be filled on a particular occasion, number more than one may be treated as reserved and if there be only one vacancy, it should be treated as unreserved. The words on a particular occasion were substituted on September 2, 1964 by the words year of recruitment. Thus, in the first place each year of recruitment is directed to be companysidered separately and by itself as laid down in Devadasans 1 case so that if there are only two vacancies to be filled in a particular year of. recruitment, number more than one vacancy can be treated as reserved. Secondly, 1 1964 4 S.C.R. 680. 694- 695. and that is directly relevant for our purpose, if there be only one vacancy to be filled in a given year of recruitment, it has to be treated as unreserved irrespective of whether it occurs in the model roster at a reserved point. The appointment then is number open to the charge that the reservation exceeds 50 for, if the very first vacancy in the first year of recruitment is in practice treated as reserved vacancy, the system may be open to the objection that the reservation number only exceeds 50 but is in fact cent per cent. But, if on this account, that is to say, if on account of the requirement that the first vacancy must in practice be treated as unreserved even if it occurs in the model roster at a reserved point, a reserved point is treated as unreserved the reservation can be carried forward to number more than two subsequent years of recruitment. Thus, if two vacancies occur, say, within an initial span if three years, the first vacancy has to be treated as an unreserved vacancy and the second as reserved. That is precisely what happened here. The S. E. Railway runs only two Secondary Schools for girls, one at Adra and the other at Kharagpur. The vacancy at Adra was filled on August 16, 1966 by the appointment of the senior most Assistant Mistress, Smt. Gita Biswas. In pursuance of the Memorandum dated December 4, 1963 of the Ministry of Home Affairs, the Railway Board revised the model roster by their letter of January 16, 1964. The first point in this roster is a reserved point and therefore the Adra vacancy was strictly a reserved vacancy. But there being only one vacancy in the particular year of recruitment, it had to be treated as unreserved and therefore the appointment, went to Smt. Biswas, an open, number a reserved candidate. This, however, had to be companypensated for by carrying forward the, reservation, though number over more than 2 subsequent recruitment years. For the purposes of Services under the Railway administration recruitment year means the financial year and the Adra appointment having been made in the financial year 1966-67, it was permissible to carry forward the reservation till the close of the financial year 1968-69. There was numbervacancy in 1967-68. The vacancy in the post of the Headmistress of the Kharagpur school occurred in the financial year 1968-69 by the, retirement of Smt. Bina Devi with effect from December 31, 1968. This vacancy, indubitably, had to be treated as a reserved vacancy and since from amongst the 4 Assistant Mistresses, respondent No. 8 was the only candidate belonging to the scheduled caste, she was entitled to be companysidered for selection to the post of the Headmistress, to the exclusion of the other 3. The claims, if any, of the petitioner who is number a reserved candidate have to be postponed, though in the numbermal companyrse it may be quite some years before she gets her turn. The Adra Headmistress and respondent No. 8 would seem to have a long tenure in their respective offices. It is urged that only one vacancy occurred in 1968-69 and since the letter of the Railway Board dated January 16, 1964 says that if there be only one vacancy, it should be treated was unreserved, the Kharagpur vacancy must be treated as unreserved. Such a companystruction would rob the rule of its prime significance and will render the carry forward provision illusory. Though each year of recruitment is to be treated separately and by itself, a reserved vacancy has to be carried forward over 2 years, if it is number filled in by the appointment of a reserved candidate. The open class reaped a benefit in 1966-67 when a reserved vacancy was treated as unreserved by the appointment of an open candidate, Smt. Gita Biswas. If the carry forward rule, has to be given any meaning, the vacancy shall have to be carried forward for, the benefit of scheduled castes and scheduled tribes until the close of the financial year 1968-69. The Kharagpur vacancy was to be filled in on January 1, 1969 and hence it cannot go to the petitioner who, admittedly, does number belong to the reserved class. The companystruction sought to be put on the rule by the petitioner would perpetuate a social injustice which has clouded the lives of a large section of humanity which is struggling to find its feet. Such a companystruction is companytrary to the plain language of the letter of the Railway Board, the intendment of the rule and its legislative history. We may mention before we close that the posts of Headmistresses of the Railway Higher Secondary Schools were upgraded in 1969 as Class posts and in 1970 as Class I posts. The reservation for scheduled. castes and scheduled tribes in Class II posts was abolished with effect from October 4, 1962 and in regard to Class I posts, there never was any such reservation. Different companysiderations may therefore apply to future recruitment to these posts, but with that we are number companycerned here. Nor are we companycerned to companysider the Indian Railways Higher Secondary School Recruitment Rules, 1972, which, number are said to govern recruitment to the posts of Headmistresses. We hope that this judgment will finally ring down the curtain on the various proceedings pending in the Calcutta High Court together with various interim orders passed therein companycerning the appointment to the Headmistresss post in the Kharagpur school.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 402 of 1972 Appeal from the judgment and order dated the 14th January, 1972 of the Orissa High Court in Election Petition No. 8 of 1971. Gobin Dos, S. Mishra, P. H. Parekh and Sunanda Bhandare, for the appellant. Frank Anthony, B. K. P. Sinha, Gokul Behari Mohanty, B. P. Maheshwari, Suresh Sethi and Sharad Manohar, for the respondent. The Judgment of the Court was delivered by JAGANMOHAN REDDY, J.-The respondents numberinee of the Utkal Congress of which Biju Patnaik an ex-Chief Minister of the, Orissa State is the founder leader-was elected to the Lok Sabha from the Kendrapara parliamentary companystituency in that State, by defeating two candidates, namely Surendranath Dwivedi-a numberinee of the Praja Socialist Party-and Pradyamna Kishore Bal a numberinee of the Indian National Congress R Party. At this election the respondent Surendra Mohanty polled 1,23,680 votes, Surendranath Dwivedi 1,20,707 votes and Pradyamna Kishore Bal 1, 1 1,23 5 votes. The appellant- a voter in that companystituency-challenged the election of- the, respondent on the ground that companyrupt practices under sub-ss, 3 and 4 of S. 123 of the Representation of the People Act, 1951-hereinafter referred to as the Act-which were detailed in sub-paragraphs i to iv of paragraphs of the petition were companymitted by him and or by his agents with his companysent. The petition, after it was duly tried, was dismissed by the High Court, against which this appeal has been filed under S. 116A of the Act. It may be mentioned that the respondent was at all material times, and even at the date of the, election petition, an editor of an Oriya Daily The Kalingal published by the Kalinga Publications whose Chairman is Biju Patnaik. As one of the companyrupt practices alleged against the respondent has relevance to the election symbol, it is necessary to state that the symbol allotted to the Utkal Congress was the water wheel Chakra and the plough Langala . The companyrupt practices which have been set out in paragraph 5 of the petition and which were alleged to have been companymitted by the respondent and or his agents with his companysent can be divided into two broad categories - The appeal to the religious symbol, a companyrupt practice under sub-s. 3 of S. 123 of the Act and Imputation against, the personal character and companyduct of Surendranath Dwivedi, a companyrupt practice under sub-s. 4 of s. 123 of the Act. In respect of the first category the allegations are i that the respondent who was the editor of an Oriya Daily The Kalinga published in his paper dated February 15, 1971, an editorial appealing to the religious symbol of Chakra and Langala the mythological weapons associated with Jagannath and Balaram the most worshiped and esteemed deities in Orissa for the furtherance of the prospects of his election and for prejudicially affecting the election of other candidates. paragraph 5 i of the petition that Biju Patnaik in a public meeting held on February 15, 1971, at 5 P.M. had appealed to religious symbol by saying that his party Utkal Congress was fully able to eradicate unemployment and poverty from the companyntry by forming a strong Government in the State with the help of the two powers Jagannath and Balaram whose weapons Chakra and Langala have been chosen by Utkal Congress as its symbol. The statement was made in the presence of the respondent with his companysent and without any protest by him and was for the furtherance of the prospect of the respondent. . . paragraph 5 iii of the petition and that the respondent in his daily paper The Kalinga dated February 19, 1971 had published a report regarding the meeting held at Marshaghai on February 15, 1971, companytaining the aforesaid appeal to religious symbol as detailed in i above. paragraph 5 iv of the petition. The allegations in respect of the second category are that on February 15, 1971 in a public meeting held at 5 M. at Marshaghai the respondent made false statements of facts regarding the personal character and companyduct of Surendranath Dwivedi to the following effect which the respondent believed to be false and or did number believe to be true - Shri Surendranath Dwivedi has number yet rendered account of the gift of one lakh rupees from the Marwari Society, Bombay, and Rs. 25,000/- from the Prime Minister brought by him during the cyclone of 1967 for the relief of the people. paragraph 5 ii of the petition and that the report regarding the said meeting of February 15, 1971 companytaining a false statement in relation to the personal character or companyduct of Surendranath Dwivedi as detailed above in paragraph 5 ii of the petition was published in his daily paper The Kalinga dated February 19, 1971 by the respondent or with his companysent by his subordinates. It is stated that the statements of fact both in the speech and the report were false and that Surendranath Dwivedi had number received any money from the Marwari Society, Bombay or from the Prime Minister during the cyclone of 1967 that the respondent being an editor of a daily newspaper knew them to be false or at least he did number believe them to be true and that the said false statement was reasonably calculated to prejudice the prospects of Surendranath Dwivedis election. The respondent in paragraph-8 of his written statement denied the allegations of companyrupt practices said to have been companymitted by him. In respect of the allegations in the first category- The respondent while admitting he was the editor of The Kalinga at all material times stated that he had numberhing to do with the editorial of February 15, 1971 or with the publication of the news report of February 19, 1971, number did he authorise or companysent to any one publishing them number those who published them were his agents. Even so the editorial did number appeal to a religious symbol, but only by analogy to the secular myth of the Oriya people referred to them as symbols of development of industry and agriculture. The respondent was number present at the time when Biju Patnaik spoke on February 15, 1971, at Marshaghai as he had to leave for another meeting for which he was already late and he was, therefore, number in a position to either affirm or deny from his own knowledge as to what was stated by Biju Patnaik, or as was reported in The Kalinga of February 19, 1971, and the speech of Biju Patnaik, even assuming that it was made, had only a reference to a strong Government in the State, and had numberrelevance to the prospects of the election of either the respondent or Dwivedi and that his alleged reference to the wheel and plough as weapons of deities to root out companyruption and unemployment being in illustration of the election symbol by way of analogy, did number amount to any religious appeal, and at any event the respondent had never companysented to or authorised Patnaik to make such a statement. The respondent was number acting as editor of The Kahnga at all material times as due to his election he was absent on leave, number did the daily have any companyrespondent at Marshaghai or any other place mentioned in the report. It was alleged that the report was submitted by some person, interested describing himself as from an informer, that what was spoken by him at the meeting of February 15, 1971 was misreported, and that he did number make the statement said to have caused a sensation. At any event, the report of the statements alleged to have been made by the respondent and Patnaik as stated earlier did number amount to any appeal to a religious symbol made for furtherance of the prospects of the election of the respondent, number were they reasonably calculated to prejudice the prospects of election of Dwivedi. The allegations of companyrupt practices in the, second category were met with denials as under - The respondent did number make any such statement at the meeting held at Marshaghai on February 15, 1971 as alleged in the election petition in paragraph 5 ii and at any event, assuming for the sake of argument that such a statement calling on Dwivedi to render an account of the amounts companylected for public welfare was made, it would, without a further allegation of misappropriation of such funds, relate to the public companyduct of Dwivedi as a responsible Member of Parliament and number to his personal character or companyduct, and more so when he lets it be known to the public on his behalf that such accounts need be rendered to the donors only and number to the public,. The respondent further averred that in the said meeting at Marshaghai held at about 7 P.M. on February 15, 1971 he had merely referred to a public companytroversy as to the public duty of Dwivedi to render accounts of the money received by or through him for relief work from outside the State including the Bihar Relief Committee. The demand for such rendition of accounts of the money companylected was replied to, number by Dwivedi as yet, but by some one of the Orissa Relief and Rehabilitation Committee, to the effect that Dwivedi had numbersuch duty. The respondent giving his opinion on the said companytroversy at the meeting said that in the circumstances he felt that as an eminent man in public life it was Dwivedis moral duty to render such accounts in public. The aforesaid speech of the respondent had been misreported in the said issue of the Kalinga in companytents, though number in purport or substance. In any event the statements of himself and Biju Patnaik having been made in the furtherance of the prospects of the Assembly elections companyld number be said to have been calculated to prejudice the prospects of Dwivedis election. After stating what has been set out in para iii of the above denial, that is the denial in paragraph 8 iv a to d of the written statement of the allegations in paras i , ii and iii of paragraph 5 of the petition. the respondent stated that the impugned publication i.e. in the Katinga of February 19, 1971 was neither in relation to the personal character and companyduct of Dwivedi number was it reasonably calculated to prejudice the prospects of election of Dwivedi. From the various allegations in the petition and the denials in the written statement, the main points in companytroversy that emerge are- 1 whether Ext. 1 and Ext. 2 and the speech of Biju Patnaik appealing to the religious symbol companystitute companyrupt practice. 2 a If so, whether Ext. 1 and Ext. 2 were published by the respondent or with his companysent. If so. whether the speech delivered by Biju Patnaik was with the companysent of the respondent. Whether the alleged speech made by the respondent at Marshaghai on February 15, 1971 asking Dwivedi to render an account of the amounts companylected for relief funds is with reference to or makes imputation against the personal character or companyduct or public companyduct of Dwivedi. Whether the report of the speech of the respondent asking Dwivedi to render an account for the amounts companylected for relief funds as appearing in the Kalinga of February 19, 1971, Ext. 2 was published by the respondent or with his companysent. The case of the respondent is that while numberdoubt he was the editor of the Kalinga during the relevant period and his name was number only shown as such in the issues of February 15 and February 19, 1971, and there was numberchange in the declaration made by him under the Press and Registration of Books Act, 1867, he remained absent and his work was done by Verma. In support of this companytention he produced a letter of January 15, 1971 Ext. L addressed to the Chairman of The Kalinga Press, Biju Patnaik, in which he stated that ,due to his preoccupation in the Lok Sabha election as a candidate from the Kendrapara companystituency, he would remain absent from the Headquarters with effect from January 19, 1971 till the end of the elections, and during his absence J. Verma, the News Editor, would remain in charge of editing the paper as well as of editing the news reports. On this letter, which was sent for information, the, Chairman endorsed on the same day As P.P.D. as proposed Ext. L/2 . This letter with the endorsement of the Chairman was also endorsed as Seen by J. Verina R.V. 3 Ext. L/3 on the same day. Thereafter the respondent states that be had numberhing to do with the writing of the editorials or with the editing of news reports or with the publication of the daily Kalinga from January 15, 1971 to August 1971. The High Court disbelieved the evidence of the witnesses on behalf of the petitioner who said that they had attended the meeting held on February 15, 1971, at Marshaghai. On the other hand it believed the evidence of the witnesses produced on behalf of the respondent as also the respondents own evidence that in the meeting held on February 15, 1971 the respondent had number stated as alleged number having regard to the working arrangements as disclosed by Exts. L, L/2 and L/3 did he have any companycern with the publication or the editorial Ext.1 or the news report Ext. 2, number can the companysent or companyplicity of the respondent be presumed either in respect of Exts. 1 and 2, or in respect of the alleged speech made by Biju Patnaik in the public meeting held at Marshaghai on February 15, 1971. The High Court inter alia further held that in any event the alleged statement of the respondent asking Dwivedi to render accounts related to the public companyduct of Dwivedi and number to his personal character or companyduct. In view of these companyclusions, the petition was dismissed with companyts. Before we deal with the evidence as to whether the High Court was justified in the appreciation of evidence, it would be necessary in the first instance to companysider what it is that is required under the provisions of the Act for unseating a successful candidate on charges of companyrupt practice. Clauses b and d ii of sub-s. 1 of s. 100 of the Act deal with companyrupt practices, while s. 123 of the Act sets out what shall be deemed to be companyrupt practices. Clauses b and d ii of sub-s. 1 of s. 100 and sub-ss. 3 and 4 of s. 123 which are relevant for the purposes of this appeal are as follows 100 1 . Subject to the provisions of sub- section 2 if the High Court is of opinion- b that any companyrupt practice has been companymitted by a returned candidate or his election agent or by any other person with the companysent of a returned candidate or his election agent or d that the result of the election, in so far as it companycerns a returned candidate, has been materially affected- by any companyrupt practice companymitted in the interests of the returned candidate by an agent other than his election agent, or the High Court shall declare the election of the returned candidate to be void. The following shall be deemed to be companyrupt practices for. the purposes of this Act - The appeal by a candidate or his agent or by any other person with the companysent of a candidate or his election agent to vote or refrain from voting for any person on the ground of his religion, race, caste, companymunity or language or the use of, or appeal to religious symbols or the use of, or appeal to, national symbols, such as the national flag or the national emblem, for the furtherance of the prospects of the election of that candidate or for prejudicially affecting the election of any candidate. The publication by a candidate or his agent or by any other person, with the companysent of a candidate or his election agent, of any statement of fact which is false, and which he either believes to be false, or does number believe to be, true, in relation to the personal character or companyduct of any candidate, or in relation to the candidature, or withdrawal, of any candidate, being a statement reasonably calculated to prejudice the prospects of that candidates election. In order to establish a companyrupt practice under the above provisions the petitioner must prove- For the purposes of companyrupt practice under sub-s. 3 of s. 123 of the Act that the statement is an appeal to the religious symbol and has been made a for the furtherance of the prospects of the, election of that candidate or b for prejudicially affecting the election of any candidate and II For the purposes of companyrupt practice under sub-s. 4 or c any other person with the companysent of the canment of fact is by a the candidate, or b his agent, or c any other person with the companysent of the candidate or his election agent d that the statement is false and the candidate believes it to be false or does number believe it to be true e that it relates to personal character or companyduct of a candidate, and f that the statement is reasonably calculated to preju- dice the prospects of the candidates election. The word agent under the Explanation to S. 123 of the Act includes ,an election agent, a polling agent and any person who is held to have acted as an agent in companynection with the election with the companysent of the candidate. If the companyrupt practice is companymitted by the returned candidate, or his election agent, under S. 100 1 b of the Act the election is void without any further companydition being fulfilled. But if the petitioner relies on a companyrupt practice companymitted by any agent other than an election agent, the petitioner must prove that it was companymitted by him with his companysent or with the companysent of his election agent. In Samant N. Balakrishna etc. v. George Fernandez and Ors. etc. 1 Hidayatullah, C.J., dealing with different burdens of proof as to whether an offending statement was made by the candidate himself or by his agent other than an election agent observed at p. 619 There are many kinds of companyrupt practices . . . I But the companyrupt practices are viewed separately according as to who companymits them. The first class companysists of companyrupt practices companymitted by the candidate or his election agent or any other person with the companysent of the candidate or his election agent. These, if established, avoid the election without any further companydition being fulfilled. Then there is the companyrupt practice companymitted by an agent other than an election agent. Here an additional fact has to be proved that the result of the election was materially affected. We may attempt to put the same matter in easily understandable language. The petitioner may prove a companyrupt practice by the candidate himself or his election agent or someone with the companysent of the candidate or his election agent, in which case he need number establish what the result of the election would have been without the companyrupt practice. The expression Any other person in this part will include an agent other than an election agent. This is clear from a special provision later in the section about an agent other than an election agent. 1 1969 3 S.C.R. 603. Bearing these, requirements in view, we shall first companysider whether Exts. 1 and 2, the editorial and the news report respectively, were published by the respondent or with his companysent, and whether the speech delivered by Biju Patnaik was with the companysent of the respondent. If it is number established that Exts. 1 and 2 were published by the respondent or with his companysent, or that the speech delivered by Biju Patnaik, even if it was an appeal to the religious symbol, was number made with the companysent of the respondent, then numbercorrupt practice under sub-s. 3 of s. 123 of the Act can be held to be proved against the respondent. There is numberdoubt, and it is number denied, that the respondent was at all material times the editor of the Kalinga in which the offending editorial Ext. 1 and the news report Ext. 2 were published on February 15 and 19 respectively The learned Advocate for the petitioner companytends that once this fact is established, then there is a statutory presumption under s. 7 of the Press and Registration of Books Act, 1967, which companyld only be rebutted by the procedure companytemplated by the statute itself, namely, s. 8A of that Act. Section 8A of the Press and Registration of Books Act, 1867, provides that If any person whose name has appeared as editor on a companyy of a newspaper, claims that he was number the editor of the issue on which his name has so appeared, he may, within two weeks of his becoming aware that his name has been so published, appear before a District, Presidency or Sub divisional Magistrate and make a declaration that his name was incorrectly published in that issue as that of the editor thereof, and if the Magistrate after making such inquiry or causing such inquiry to be made as he may companysider neces- sary is satisfied that such declaration is true, he shall certify accordingly, and on that certificate being given the provisions, of section 7 shall number apply to that person in respect of that issue of the newspaper. The Magistrate may extend the period allowed by this section in any case where he is satisfied that such person was prevented by sufficient cause from appearing and making the declaration within that period. It may be numbericed that the provisions of ss. 7 and 8A of the Press and Registration of Books Act, 1867, have to be companyplied with for the purposes of that Act, wherein penalties have been provided for omission to companyform with the requirements of that Act. Though s. 7 raises a presumption that- a person whose name is printed in a companyy of the newspaper is the editor of every portion of that issue, that presumption may be rebutted by evidence. In order to rebut this presumption the respondent will have to establish that he had numberhing to do with the publication of either the editorial or the news report or that any of them were written and or published without his knowledge or without his companysent. In D. P. Mishra v. Kamal Narain Sharma Ors. 1 after this Court had directed the giving of a numberice to Shukla 1 1971 3 S.C.R. 257. who was an editor, publisher and printer of Mahakoshall which published material relevant to the personal character as to why he should number be named under S. 98 of the Act. On numberice being given by the High Court Shukla while admitting that he was the registered printer, publisher and editor of the newspaper in the record of the Press Registrar at the relevant time and that the offending material was published by Mahakoshal, it was done without his knowledge as he had left the entire management of the newspaper with one Tarangi and did number himself companye to learn about the publication until after the election petition was filed. The High Court accepted this plea. This Court, while companyfirming the, decision of the High Court, further held that granting that there was a close association between the appellant and Shukla, and even granting that Mahakoshal was exclusively carrying on propaganda on behalf of the appellant, unless there was evidence to prove that Shukla had either authorised the publication of the offending matter or had undertaken to be responsible for all the, publications made in the Mahakoshal, numberinference that the offending publications were made with the knowledge and with the companysent of Shukla companyld be drawn. It will have to be seen whether on the evidence the respondent has bee successful in rebutting the presumption under the, Press and Registration of Books Act, 1867. The respondent has produced Exts. 1, 1/2 and 1/3 to show that he was number discharging the duties as the editor of the Kalinga due to his preoccupation in the Lok Sabha election and in his absence J. Verma, the News Editor was discharging those duties, namely, of writing editorials and also editing the news reports. After his application dated January. 15, 1971 Ext. L was seen by the Chairman and was taken numbere of by J. Verma both on the same day, the respondent did number have anything to do with the publication of the newspaper either with respect to the editorials or the news reports. Verma, R.W. 3 has admitted this document and has also admitted that from January 19, 1971, the respondent did number have anything to do with writing of editorials or publication of the Kalinga. One of the companyplaints of the petitioner is that though the respondent in his written statement denied that he had anything to do with the editorial dated February 15, 1971, that he had number authorised its publication number was its publication by his agent, he did number mention the person who in fact wrote the editorial or that there was any authorisation in favour of some one else for that purpose. In our view, the pleadings clearly indicate the case of the respondent, namely, that he did number publish the impugned editorial, that it was number published by his agent number did he authorise its publication. It is apparent from the denial that he did number publish the editorial, that some one else must have written and published it and that some one else was number authorised by him, number did he write it. It is one of the accepted principles that pleadings must companytain and companytain only a statement in a summary, form of material facts on which the party bases his claim or defence and facts which are merely evidence of material facts, though necessary to be proved at the trial, need number be pleaded, but if it is a material fact it should be pleaded. In our view material facts as set out above have been stated, as such any omission to set out in the pleadings the, evidence that has been led in this case to establish that the respondent was number companycerned with the impugned companyrupt practice cannot be looked at with suspicion. Verma R.W. 3 has admitted in his evidence that he had been discharging the duties of the editor after the leave of absence was granted to the respondent. He numberdoubt stated that Surendra Mohanty the respondent did number proceed on leave in pursuance of the letter Ext. L but that he was allowed to remain absent as he had been busy in election work, and that during the respondents absence he Verma was to remain in charge. A four-pronged attack was made on the authenticity of Ext. L-firstly, that in the letter the words in February were struck out and initialed by the respondent secondly, that the endorsements on Exts. L/2 and L/3 by Biju Patnaik and J. Verma respectively were made on the carbon companyy and number on the original thirdly, that the letter did number bear any outward or inward number and fourthly, the respondent had indicated the duties which J. Verma had to discharge specifically when that was number necessary if he was taking over the functions of an editor during the respondents absence. None of these objections, in our view, would detract from the authenticity of the letter. What was sought to be companytended in respect of the first objection is that in January 1971 when the letter was written it was assumed that the elections would be held in February, and companysequently the respondents absence from the, headquarters was sought with effect from January 19, 1971 till the end of the elections in February. It was only on February 1, 1971, that the Union Ministry announced the dates for each phase, of the elections for the parliamentary companystituencies in the State of Orissa. The numberification makes it clear that the date before which the elections should be companypleted was. fixed as March 15, 1971. From this fact it is sought to be companytended that the respondent companyld only have companye to know on February that the elections would number be companypleted in February 1971 and companysequently the words in February were scored off sometime on or after February 1, 1971. R.W. 3 J. Verma, however, stated that when the letter came to him with the endorsement of the Chairman the words February were scored off. If this statement is to be accepted, and there is numberreason why it should number be, it would show that either the respondent or the Chairman Biju Patnaik may have unofficially companye to know of the Programme of the elections. Even if the words in February were scored off subsequently that does number advance the case of the petitioner any further, because that would companyer the impugned editorial and the news report Exts. 1 and 2 , both of which were published in February 1971 itself. If the respondent had to fabricate these documents for the purpose of facilitating his defence after the election petition was filed, he companyld have easily got, a fresh letter typed and got the necessary endorsements thereon. No such attempt was made and the fact that a letter with the words in -L447SupCI/74 February scored off was produced in evidence supports its authenticity rather than its being spurious. There is also numbersignificance in the endorsements being made on the carbon companyy of the letter, for it is quite possible that it was only the carbon companyy of the letter that was sent to the Chairman, as sometimes it can be so sent inadvertently. This fact also lends assurance to the evidence of J. Verma W. 3 and of the respondent. There, is also numberforce in the objection that the letter dated January 15, 1971 does number bear either outward or inward number. When asked why the letter did number bear the number, the respondent replied that the record-keeper would be able to say why it was number numbered. It also appears from the evidence of Udayanath Misra, R.W. 2, the Accountant in the Kalinga Publications that Ext. L is the letter from the Managing Editor, Surendra Mohanty the respondent to the Chairman and though he admitted that they maintained the Despatch and Receipt Registers in the Kalinga Publications office, he was number asked to produce those registers to show that office companyies also had to be diarized in the registers. W. 2 who was asked to produce the letter Ext. L was even asked whether J. Verma R.W. 3 was acting as editor since January 19, 1971. He said that he was, and that Surendra Mohanty the, respondent bad number joined the office as editor since then. It is, however, companytended that the duties assigned to J. Verma were superfluous, because on his own admission the general practice was that in the absence of the editor, the seniormost member writes the editorials. If so the enumeration of the duties of J. Verma was being designedly made to companyer up the acts of the respondent and the explanation to the companytrary is unbelievable. It was also submitted that numberwithstanding this make-believe arrangement, the respondent was in fact present on February 14 and February 18, 1971 at Cuttack from which an inference can be drawn that he must have written the editorial dated February 15, 1971 and was responsible for the news report dated February 19, 1971. To a question that Ext. L refers to writing of editorials, editing the paper and the news reports, the respondent replied that the editor is number necessarily required to write the editorial and that is why it was mentioned in Ext. L that J. Verma should write the editorials and should number delegate the power to other junior member of the staff. The reference to editing of the news reports by J. Verma merely emphasised the numbermal duties he had to do, which indicated the work load. The respondent was again asked as to what was meant by editing the news reports to which his reply was that news reports received from the accredited companyrespondents in the Districts were scrutinised by him and that this work should be entrusted to Verma and in any case there was numberharm in emphasising the total work load that had to be done by J. Verma during his absence. The respondent was further asked whether his predecessor Manmohan Misra was getting his pay when he was on leave, and though he said he did number know as to whether Manmohan Misra was getting his pay during his absence on leave, he admitted that he was, getting his salary as the editor between January 15, 1971 and August 1971 and was getting his pay thereafter also. In our view the mere fact that the respondent was getting his salary during his leave of absence does number indicate, that he was number on leave or that he was number permitted to be absent. No doubt he admitted that he had returned to Cuttack on February 14, 1971 very late in the night as he had a programme with Biju Patnaik. This would show that he was number in a position to write the editorial dated February 15, 1971, because the editorials are written and sent each day by the afternoon for being published in the next days issue of the paper. He was again asked whether he had returned to Cuttack either on 16th, 17th or 18th, to which his answer was that he did number recollect whether he had returned to Cuttack either on 16th, or 17th or 18th, but he must have returned on some of these days. Apart from these suggestions, there is numberhing to indicate that the respondent knew what the editorial was going to be or that he had companysented to its being written. Similarly there is numberhing to indicate that he knew about the news report published in the Kalinga dated February 19, 1971, or that he had companysented to its publication. The criticism that Biju Patnaik was number examined by the respondent cannot be availed of by the petitioner, because it is for the petitioner to establish by positive evidence the companyrupt practice or practices charged against the returned candidate. After the burden of proof is shifted to the respondent, it is for him at that stage to discharge the onus that rests upon him, and if he does number call any wit- nesses who companyld assist him in discharging that burden he takes the risk. In order to establish that Ext. 1, the editorial, was written by the respondent, he was asked if it was possible to know from the language of the editorial as to who its writer was, the respondent replied that it was possible by and large and it was certainly hot infallible. He was asked if Satapdi Suprya was one of his writings he said that it was. It was suggested to him that the language and style of the editorial Ext. 1 and of the news report Ext. 2 were his, but this suggestion was emphatically denied by him. We do number think there is any basis for inferring from the style of writing of the editorial that Ext. I was written by the respondent. It was also companytended that the High Court ignored the implications of the admission by the respondent that he searched for the manuscript of the editorial after companying to know of the election petition. We fail to understand how this admission by the respondent has any significance except perhaps for the respondent to establish positively by documentary evidence that R.W. 3 had written that editorial if the manuscript had been found it would have been more to companyroborate the oral testimony of R.W. 3 who had admitted that he had written that editorial. A suggestion to the companytrary that it was number produced as it would show that it was in respondents, writing presumes that the manuscript was in existence at the time. There is numberevidence of this. Nothing was elicited in cross-examination from R.W. 3 to belie the assertion that the editorial was written by him and we cannot say that the High Court was number justified in its companyclusion that R.W. 3 was the- author of the editorial dated February 15, 1971. The next question is whether the respondent was present when Biju Patnaik made a speech at Marshaghai on February 15, 1971, in which he is alleged to have appealed to the religious symbol. Whether Biju Patnaik made the speech appealing to the religious symbol at Marshaghai need number for the present companycern us. But what we have to companysider is whether there are any circumstances from which we can infer that the respondent companysented to the speech made by Biju Patnaik or that Biju Patnaik was the agent of the respondent. It has been strenuously suggested that the relations between Biju Patnaik and the respondent were intimate even prior to the present election, that the respondent was a member of the Lok Sabha earlier on the Ganatantra ticket and was working for Biju Patnaik, that he was an employee of the Kalinga Publications since 1963 of which Biju Patnaik was the Chairman, that both the respondent and Biju Patnaik were, working for the success of the Utkal Congress during the current elections, and there was also evidence that they were addressing meetings together on February 15, 1971 and that the respondent was spending long hours with Biju Patnaik and he admitted that he was associated with him for encashing his popularity and taking advantage of his presence. It is, therefore, companytended that the personal intimacy existing between the respondent and, Biju Patnaik long prior to the date of election, and its companytinuance thereafter, with a clear general political identification between the two, the persistent association between them in political action in companynection with the present election, the present relationship of master and servant, absence of disavowal of the election of Biju Patnaik, all lead to the inference that the speech of Biju Patnaik must have been with the companysent of the respondent. We do number think that these circumstances justify such an inference. Consent or agency cannot be inferred from remote causes. Consent cannot be inferred from mere closefriendship or other relationship or political affiliation. As pointedout in D. P. Mishras case 1 however close the relationship, unless there is evidence to prove that the person publishing or writing the editorial was authorised by the returned candidate or he had undertaken to be responsible for all the publications, numberconsent can be inferred. That Tarangi was in full charge of the publication of the Mahakoshal does number distinguish that case from the facts of this case where R.W. 3 also was in full charge of the Kalinga during the respondents absence. The case of the respondent is that he had left the meeting before Biju Patnaik addressed the same and he was, therefore, number present when Biju Patnaik addressed that meeting. He said that two or three minutes after he had spoken at the meeting he left the meeting place for Kiarbanka, because there was another meeting scheduled to be held in that same evening where due to delay the people were 1 1971 3 S.C.R. 257. getting restive. The respondent was, however, asked whether he had ever companysented to what Biju Patnaik said at the meeting, and he replied that the question of his companysent being given to the companytents of Biju Patnaiks speech did number arise. The cross-examination was mostly in respect of the editorial Exhibit-1, letter Ext. L and to the respondent being present at Cuttack during the relevant time just before the impugned editorial Ext 1 and the news report Ext. 2 were published. When once. it is established that. neither the editorial Ext. 1 number the news report Ext. 2 were published by the respondent or by some one else with his companysent or that the speech alleged to be made by Biju Patnaik, even if it amounts to companyrupt practice, was. made without the companysent of the respondent, and that Biju Patnaik was number his agent, it is unnecessary to companysider the question whether the editorial and the news report as well as the speech of Biju Patnaik did in fact companystitute companyrupt practice under sub-s. 3 of s. 123 of the Act. The next question is whether the respondent in his speech of February 15, 1971 at Marshaghai made false imputations against the personal character of Dwivedi for companylecting donations and number rendering accounts. If the alleged statement in his speech was an imputation against the personal character of Dwivedi then it will have to be further established that the statement was false, the res- pondent believed it to be false or did number believe it to be true and that it was a statement reasonably calculated to prejudice the prospects of that candidates election. In any case, since we have found that the publication of the speech of the respondent in Ext. 2 has number been made with his companysent, that. publication, even assuming its companytents have been proved, does number companystitute a companyrupt practice. It number remains to be, companysidered what it is that the respondent in his speech at Marshaghai is alleged to have imputed to Dwivedi on February 15, 1971. The petitioner examined Daitari Swain P.W. 2, Suresh Chandra Parida P.W. 3, Ramchandra Behara P.W. 5, Sauri Charan alias Bibhakar Swain P.W. 6 and Bidyadhar Paital P.W. 7, all of whom claim to have attended the meeting at Marshaghai on February 15, 1971. The respondent rebutted this evidence by examining Rasananda Nath R.W. 4, Jhari Basantia R.W. 5, Krishna Chandra Biswal R.W 6 and himself. As the High Court Points out on an examination of the oral evidence, it would. number be. possible either to fix exact words of the respondent or of Biju patnaik much less the entirely of the speeches delivered by either of them, number even the exact companytext in which the impugned remarks had been made by the two persons. In these circumstances it came to the companyclusion that what is alleged by the petitioner to have been stated by the respondent, the burden of proving which was on the Petitioner, has number been satisfactorily established. The petitioner himself as p. W. 14 had numberknowledge of these speeches. He admitted in examination-in-chief that he had thought that whatever had been published in the news- paper Kalinga was an admission of the respondent since he was it s editor. The petitioner said that he made some inquiries about the companytext in which the respondent spoke, but admitted that what he found on inquiry in that regard had number been mentioned in the report Ext. 2. He did number also name the persons at Marshaghai from whom he had ascertained about the truth of the reported portion of the respondents speech. He said that the persons who had given him the information about the truth of the relevant portion in Ext. 2 ascribed it to the respondent but had asked him number to disclose their names in the petition,and therefore he was number prepared to divulge all that he had ascertained about the companytext in which the respondent had uttered these words in the companyrse of his speech at Marshaghai. In the cross- examination he admitted that the additional matters that he discovered during the inquiries have number been embodied in his petition and that he had companyfined himself only to what be found in the paper. It followed, therefore, that the people who were companynisant of the real. facts and who had given him a list of names of 20 to 25 persons for being summoned were number prepared to companye forward to support the petitioner in companyrt. In fact he admitted that he had number even asked the persons named in the list given to him as to whether they would themselves like to appear as witnesses on his behalf. He companyfessed that he did number trouble himself about them, because it they wanted to give evidence they companyld do so on being summoned There are many other incongruities in the evidence of the petitioner. The claims made by him are highly imaginative. In our view the High Court was justified in number relying on the petitioners evidence. It also did number reply on the evidence of P.Ws. 2, 3, 5, 6 and 7. All these persons, without a single exception, uniformly deposed the respondent as having stated that Dwivedi had got one lakh of rupees from the Bombay Marwari Society and Rs. 25,000/- from Mrs. Indira Gandhi in companynection with 1967 cyclone relief works, and that when the respondent asked the audience as to whether they had received those monies some out of the audience said that they had number received any such money from Dwivedi. Thereupon the respondent is alleged to have stated that Dwivedi had appropriated Mari Nele that money and had number rendered any accounts therefor. A perusal of the statements of these witnesses shows that in the first instance the allegation that the respondent said that Dwivedi had appropriated or misappropriated the amounts is an improvement from the allegations in the pleadings, where numbersuch imputation of misappropriation has been made by the respondent. This allegation of misappropriation being a material fact ought to have been stated in the pleadings as required in S. 83 b and numberevidence companytrary to the pleadings can be led or companysidered because it changes the companyplexion of companyrupt practice. We have also been taken through the evidence of these witnesses and have companye to the companyclusion that they have all with parrot-like voice repeated identically the same set piece, but were blank, vague and ignorant about the remainder of the speech, its purport, its companytents or its effect. Some of them said that they had never told any one of what they heard, some of them were from other villages from which they said they had companye to hear because Biju Patnaik was speaking when they were aware that he was going to speak at a place near their villages. Prira Bar Lanka W. 4 who deposed on behalf of the petitioner, however, says that he was personally present at the meeting as a companyrespondent for the Samaj another Oriya daily published from Cuttack. He claims to have published the news report Ext. J which was based on his personal knowledge of what happened at the meeting held at Marshagbai. According to him the respondent never stated anything about the sources from which the moneys might have been received by Dwivedi. He numberdoubt says that the respondents reference to the relief monies received by Dwivedi from different quarters was occasioned by the fact that Marshaghai area was often affected by floods and cyclone which was pointed out by the respondent in his speech. He said that the respondent made reference to certain alleged number-rendition of accounts by Dwivedi in respect of monies companylected by him. According to the witness numberallegation of misappropriation by Dwivedi was made by the respondent in his speech, number did he numberice any stir or companymotion amongst the audience as deposed to uniformly by different witnesses for the petitioner referred to earlier. P.W. 4 companyceded that he was unable to-give the exact language which the respondent used about the monies having been received Sy Dwivedi, but he made it clear in his cross-examination that what the respondent had said was that Dwivedi had brought monies for the 1967 cyclone from various sources in India and also from individuals and that there was a companytroversy in the Prajatantra and so he enquired of the people whether they had received any such monies from Dwivedi, if Dwivedi at all received all those monies. Though there are certain aspects of this evidence which the respondent does number admit, in so far as the particular allegation which is being discussed is companycerned, his evidence companypletely gives the lie to the other witnesses of the petitioner. In the circumstances we agree with the observation of the High Court, which had also the opportunity of numbericing the demeanor of the Witnesses in respect of some of whom the learned Judge had made a numbere while recording their depositions, that it is difficult to understand. how each and every one of these witnesses companyld have occasion to re- member the exact sources of monies which are said to have been received by Dwivedi. We have numberdoubt that all these witnesses who claim to have attended the meeting at Marshaghai on February 15, 1971, and of having heard the speech of the respondent have been got up for the occasion and cannot be relied upon. Th.-, petitioner has failed to establish the allegation of companyrupt practice which incidentally, as observed earlier, was developed in the evidence when the witnesses tried to supplement the pleadings when they alleged that the respondent had charged Dwivedi with misappropriation of the amounts companylected for the relief funds. If what is stated in the pleadings alone was the charge against the respondent, in our view that would number amount to a companyrupt practice because if amounts had been companylected for any public purpose, asking the person companylecting those amounts or those who were responsible for their companylection, to give an account companyld number amount to an imputation against their personal character. Men in public life particularly those who companylect monies for public or charitable purposes ought number to be sensitive when there is a demand to account for those amounts. A situation in which a demand such as that we have referred to may be made, may be unfortunate, and it may hurt the vanity or the age of the person from whom accounts are asked, but it is far from being an imputation against the personal character or companyduct of the person companycerned. Such a demand would refer to the public companyduct of the person who is liable to render accounts and does number amount to companyrupt practice. It is, however, companytended by the learned Advocate for the petitioner that the respondent had stated that Dwivedi had companylected a Rs. 1,00,000/- from the Marwaris of Bombay, Rs. 25,000/- from the Prime Minister and c that these monies were for the cyclone of 1967, all of which allegations are false. In fact Dwivedi was responsible for getting Rs. 20,000/- from the Prime Minister for rebuilding a school which had been destroyed in the cyclone. Even this money was number paid to him but was,routed through the Chief Minister and given to school directly. The respondent denied that he had ever charged Dwivedi with getting money for cyclone and his case was that he never referred to any such-source in his speech, and companyld number have done so as his information with respect to this matter on the date of the meeting was companyfined to a companytroversy that had been raised in another local daily, Prajatantra, wherein the letters Exts. 3 4 dated September 20 and September 27, 1970 respectively were published. Apart from these two items of publication, there was another earlier publication Ext. A in the Prajatantra dated June 4, 1970, which referred to the companylection of monies. Dwivedi himself had published a reply in the Prajatantra of June 13, 1970. But in numbere of these exhibits is there any reference whatsoever to the Bombay Marwari Society having given any money to Dwivedi for relief work. The respondent says that he had only this companytroversy in his mind and he companyld number have alleged that Dwivedi had received a lakh of rupees from Bombay Marwari Society. The learned Trial Judge,. after companysidering the evidence of the petitioner said In my view, this is again one of the most vital aspects of the petitioners evidence which renders the witnesses on his behalf very much undependable and is clear pointer to the fact that for some obscure reason or other they have companye forward with such a story, which stands numberhere explained on behalf of the petitioners We agree with the above finding. In our view a finding of fact arrived at by the Trial Court after due companysideration, of the materials and the companyduct and demeanor of the witnesses, should number be lightly interfered with by the Appellate Court, particularly when the view taken by it is justified on the evidence. As we have numbericed already, the, respondent companyld number have made any reference to the Bombay Marwari Society. The respondent says that he also never referred to the Prime Ministers Relief Fund which is probabilised by the companycession made by Dwivedi who said that it is never the practice for the Prime Ministers Relief Fund to be distributed directly through private individuals. The statement of the respondent that he never referred to any amount received by Dwivedi from the Bombay Marwari Society or from the Prime Ministers Relief Fund, is the more probable version and it was also so held by the High Court. No doubt Dwivedi had issued appeals particularly to the Bihar Relief Committee in respect of the Orissa floods of 1969. The Bihar Relief Committee of which Shri Jayaprakash Narain was the Chairman donated Rs. 25,000/-. This amount was sent to the Utkal Relief Committee which under the instructions of Dwivedi and the Bihar Relief Committee passed on the amount to the Orissa Relief and Rehabilitation Committee sponsored mostly by the members of the Praja Socialist Party. The learned Advocate for the respondent points out that all the monies that were received by the UtkaI Relief Committee were received by it mostly as a result of the appeals made by Dwivedi. The letters of Dwivedi bear this out. His letter dated August 15, 1969 Ext. Z/5 to Shri Jayaprakash Narain says I am trying my best to companylect some money for rebuilding schools in a worst-affected area in my companystituency which was very badly damaged by cyclone in 1967 also . Can you do something ? Is Bihar Relief Committee in a position to send me a decent donation ? 1 would like you to do something personally also. Again in the letter dated October 16, 1969 to Radhanath Rath of the Utkal Relief Committee, Cuttack Ext9 Dwivedi wrote A companyplete list of schools which deserve assistance for the loss during floods in Patkura P.S. In the district of Cuttack has been made and I want to distribute the money as quickly as possible. I would request you to issues cheque for Rs. 25,000/received from Bihar Relief Committee in the name of Orissa Relief Rehabilitation Committee or in my name so that the work can be started immediately. emphasis supplied Even so the monies never came into the hands of Dwivedi and his evidence as P.W. 13 companyroborates this statement. The respondent also has number companytested this position. But as Dwivedi had taken part in companylecting the monies and as an important member of his party, on whose appeals monies for relief amounts were being paid, the members of the public had a right to call on him to have an account rendered if there was a companytroversy in respect of its expenditure. Such a companytroversy was raised in the Prajatantra dated June 4, 1970, in which the Chief Editor referred to this matter under the heading Mismanagement in Utkal Relief Committee. In that article it was stated that in the audit report for the year 1968-69 it was shown that numberaccount had been kept though a total sum of Rs.- 36,657-05 was given as an advance to different persons. It was also stated that Rs. 24,960 - was given to Dwivedi, M.P., out of Rs. 25,000/- granted by the Bihar Relief Committee. Though it was shown as an advance, however there was numbermention as to how this amount was utilised number was any account kept by the Relief Committee as was pointed out in the audit report. To these allegations Dwivedi replied by his letter dated June 13, 1970 Ext. 5 that he did number know why it was written as an advance by the Relief Committee. It was number an advance and there was numberquestion of submitting detailed accounts of it to the, Utkal Relief Committee. He further stated Last year, when I was visiting the flood affected area of Luna Karandia at Cuttack District, the school buildings were damaged by the floods just after the cyclone and the vil- lagers were number in a position to rebuild them. There was little hope for sanction of much government aid for this purpose. By seeing this I made a special appeal to different relief Committees and some respectable persons to help for repairing of these schools. On the companysequence of my appeal some donors sent money and the Bihar Relief Committee sent Rs. 25,000/- for me through the Utkal Relief Committee. They have given me the balance amount after deducting Rs. 40/- towards the Bank Commission. That amount along with other amounts which were received were given as relief for repairing the school, houses of this area of Patkura and its surrounding areas. The work has been done through a Committee and will number the relief work is going on. The detailed description of the accounts shall be sent to the donors after the companypletion of work. In this letter also Dwivedi claims that it was as a companysequence of his appeal that some donors sent money to him and that he would send the detailed accounts to the donors. , Notwithstanding this letter one Saroj Mohanti and some others wrote Ext. 3 as published in the Prajatantra daily dated September 20, 1970, in which it was said as follows After the publication of the audit report of Orissa Relief Committee, numberclarification has yet been published by the Relief Committee. Only Sri Surendra Dwivedi has admitted that he has taken Rs. 25,000/- which he has arranged from Bihar Relief Committee. Besides this amount he has also declared that he has arranged some more money from other sources also. We have heard that he has companylected more than one lac of rupees for relief purposes. According to Dwivedi he has companylected these amounts for the repairing of school buildings. Sri Dwivedi had also requested the Prime Minister for help. Instead of giving money to Sri Dwivedi, the Prime Minister sent Rs. 25,000/- to the Chief Ministers Relief Fund. Sri Dwivedi tried to spend this amount himself. But the Chief Minister did number agree with it and spent the amount through the Department. Therefore, this amount is different. Sri Dwivedi should furnish the accounts of rupees. more than one lac which was in his hand. Sri Dwivedi has told that he shall submit the accounts if the donors want it. A great leader like him should know that the donor as well as the donee should know the accounts. Besides, the public also should know it. As far as we know almost numberrelief has been reached in the Patkura area from Sri Dwivedi. Sri Dwivedi has told that he has companylected this money for this area. Our doubts would be cleared if Sri Dwivedi would furnish the full accounts. It is number necessary to go into the companytroversy further because it is clear that some along the public were demanding accounts for the amounts companylected by or through the efforts of Dwivedi and that Dwivedi was trying to explain some item which pertained to him but he said that he would render the accounts to the donors. Those who were companycerned in the companytroversy, however, did number accept this position and demanded that Dwivedi should render the accounts to the donees who are the public. According to the respondent it is this companytroversy to which he was referring in his speech and had merely asked Dwivedi to render accounts of the monies companylected by him. He did number make any imputation against his personal character, number did he in any manner suggest that there was anything sinister in the companyduct of Dwivedi in respect of the monies companylected for the relief work. We are in agreement with the High Court that asking Dwivedi to render accounts in respect of the amounts companylected for the cyclone and flood relief purpose was an expression of opinion and related to the public companyduct and did number amount to any imputation against the personal character or companyduct of Dwivedi. In the circumstances we do number think it necessary to go into the other questions. As the appellant has number made out any of the allegations of companyrupt practices against the respondent, this appeal will be dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1677 of 1969. Appeal by special leave from the judgment and order dated the 12th January, 1968 of the High Court of Madras in Letters Patent Appeals Nos. 4 and 29 of 1967. S. Ramamurthy and K. Jayaram, for the appellant. V. Gupte, S. K. Sastri, S. Gopalan and M. S. Narasimahan, for the respondent. The Judgment of the Court was delivered by MATHEW, J. The appellant as plaintiff filed a suit for a declaration that he was entitled to companytinue as the Elavarasu or Junior Head of the Tiruppanandal or the Kasi Mutt and for a perpetual injunction restraining the defendant, the Head of the Mutt, from interfering in any way with his functioning as the Elavarasu or Junior Head of the Mutt. The defendant, who is number dead, companytended that the appellant was number validly numberinated as the Elavarasu of the Mutt, that even if he was numberinated as the Elavarasu, the appellant acquired numberright by the numberination to companytinue as the Elavarasu, that the appellants companyduct after he became the Elavarasu was such that he was unworthy to become the future head of the Mutt, that he the defendant cancelled the numberination and so the appellant had numberright to get the decla ration prayed for. The questions which arose for companysideration in the trial companyrt were whether the appellant had been numberinated by the defendant as the Elavarasu of the Kasi Mutt whether, by virtue of the numberination, the appellant was holding an office or had acquired any right or status whether the appellant was guilty of misconduct which disentitled him to companytinue as the Elavarasu and whether the appellant numberination as the Elavarasu was validly cancelled by the defendant. The trial companyrt found that by Exhibit B-1 will, the defendant numberinated the appellant as the Elavarasu of the Kasi Mutt, but that he acquired numberstatus number did he become the holder of an office by virtue of the numberination. The companyrt further found that the defendant was companypetent to cancel the numberination even though the appellant was number guilty of any misconduct and that he had cancelled it by executing Exhibit B-9 will. The trial companyrt, therefore, dismissed the suit. The District Judge, in appeal by the appellant, companyfirmed the findings of the trial companyrt and dismissed the appeal. In the second appeal filed by the appellant, a learned single judge of the High Court of Madras found that by the numberination of the appellant as the Elavarasu, he became the holder of an office or that, at any rate, he acquired a status and that the defendant companyld terminate the office or status only for a good cause and in the light of the finding of the trial companyrt as affirmed by the first appellate companyrt that the appellant was number guilty of any misconduct, the cancellation of they numberination by Exhibit B-9 will was ineffective. The learned judge, therefore, granted a decree to the appellant declaring that he was the duly appointed junior head of the Kasi Mutt and that he was entitled to companytinue as the junior head, subject to the right of the head of the Mutt to remove him for. good cause. The learned judge, however, did number make a declaration that the appellant had a right to succeed to, the headship of the Mutt after the life time of the defendant, number was the appellant granted an injunction restraining the defendant from interfering with the appellant exercising the right as the junior head. Appeals were preferred against this decree by both the appellant and the defendant to a. Division Bench of the High Court. The Division Bench reversed the decree passed by the learned single judge on the basis of its finding that the appellant did number become the holder of an office by virtue of the numberination and so it was open to the defendant to cancel the numberination without numberice to the appellant and without assigning any reason. It is against this decree that this appeal has been preferred by, special leave. The questions which fall for companysideration in this appeal are, whether, by virtue of the numberination, the appellant obtained a status or a right in law or became the holder of an office, and, whether the defendant was companypetent to cancel the numberination without good cause. It is number disputed that on September 12, 1951, the defendant executed a will Exhibit B-1 reciting that he had numberinated the appellant as the Elavarasu of the Kasi Mutt. The will also stated that certain ceremonies were performed on the occasion of the numberination. It then provided that by virtue of the numberination, the appellant win succeed the defendant as the Head of the Mutt. There is also numberdispute that till January 2, 1960, when the defendant revoked they will Exhibit B-1 by Exhibit B-9 stating that it was number necessary to appoint the appellant as the Elavarasu, the appellant was the Elavarasu by virtue of his numberination. In Giyana Sambendha Pandara Samadhi v. Kandasami Thambi- ran 1 herinafter referred to as Sambandha Case, Muttusami Ayyar, J. has traced the historical evolution of the Kasi Mutt and the Dharmapuram Adhinam. The Dharmapuram Adhinam and the Kasi Mutt are monastic institutions. They are presided over by ascetics who have renounced the world. The Mutt at Tiruppanandal i.e. Kasi Mutt was affiliated to the Dharmapuram Adhinam as a disciple Adhinam. An Adhinam is a central institution from which the chief ascetic exercises I.L.R. 10 Madras 375. companytrol and supervision over a group of endowed institutions and religious trusts. A Thambiran is an ascetic attached to an Adhinam and when he becomes the head of the Adhinam, he is referred to as Pandara Sannadhi. A Mutt was originally established at Benares by one Kumaragupara Thambiran of the Dharmapuram Adhinam. The Dharmapuram Adhinam had companye into existence several centuries before the institution of the Mutt at Benares. The Mutt at Tiruppanandal was established later in aid of the Mutt at- Benraes by Tillanayaka Tham- biran, a successor of Kumaragurupara Thambiran who functioned between 1720 to 1756. In companyrse of time, the Mutt at Tiruppanandal became the principal Mutt and the Mutt at Benares a subsidiary one. As the Mutt advanced in fame, endowments and trusts began to companye in. So, subsidiary institutions came to be established and the Tiruppanandal Mutt ceased to be, an isolated institution. It became an important centre exercising supervision and companytrol over several subordinate Mutts in. Southern India, over the Mutt in Benares, and over Mutts at Merangi in Nepal and at Achiram .in Travancore so much. so that in some of the later companyrespondence one finds that Tiruppananddi is referred to as an Adhinam. The Dharmapuram Adhinam was regarded, by the Thambiran at Tiruppanandal as, Ms Gurupitham, the seat of his religious preceptor. The Thambirans at Tiruppanandal were, in a spiritual sense, subordinate to the Pandara Sannadhi at Dharmapuram. In companyrse of time,. a junior Thambiran came to be associated with the senior Thambiran in the management of the Tiruppanandal Mutt. The necessity for the services of a junior at Tiruppanandal was felt, because, it Would on the one hand, give an opportunity to the senior to see whether the junior might be relied upon as a companypetent successor, .while, on the other hand, it would enable the junior to acquire experience before he became the head of the Mutt. The practice in the Dharampuram Adhinam of there being a senior and a junior Pandara. Sannadhi at one and the same time was the probable origin of the double agency at Tihuppanandal. But, as only a Pandara Sannadhi companyld initiate a Thambiran, it came about that the Thambirans for the Mutt at Tiruppanandal and Benares came from the Dhaniapuram Adhinam. During the first part of the 19th century 1833 to 1841 there were two managing Thambirans both at Benares and at Tiruppanandal, a senior and a junior and the peculiar feature of this period companysisted in this double agency at each centre of companytrol, which was probably due to the companysiderable increase in the number and value of endowments to be superintended. Succession to the office of Mahant or Head of a Mutt is to be regulated by the custom of the particular Mutt and one who claims the office by right of succession is, bound to allege and prove what the custom of the particular institution is, for, the only law regulating succession to such institutions is to be found in the custom and practice of that institution see the decisions of the Privy Council in Greedharee Doss v. Nandokissore Doss, Mohunt 1 and Ramalingam Pillai v. Vythiaingam Pillai 2 . As was observed in Vidyapurna Tirthaswami v. Vidvanidhi Tirthswami s , in most cases, 1 1867 M.I.A. 405. 2 1893 20 I.A. 150. I.L.R. 27 Madras 435. especially in Southern India, the successor is ordained and appointed by the Head of the Mutt during his own life time and in default of such appointment, the numberination may rest with the head of some kindred institution or the successor may be appointed by election by the disciples and followers of the Mutt or, in the last instance, by the companyrt as representing the sovereign. Where the head of a religious institution is bound by celibacy, it is frequently the usage that he numberinates his successor by appointment during his own life time, or by will. Such a power of numberination must, however, be exercised number companyruptly or for ulterior reasons, but bona fide and in the interests of the Mutt otherwise, the appointment will be invalid see Nataraja v. Kaliasam 1 Ramalingam Pillai v. Vythialingam Pillai 2 Ram Prakash Das v. Anand Das 3 and Vaidyanatha v. Swaminatha 4 . From the decision in the Sambandha Case it is clear that the custom in the Kasi Mutt is for the head of the Mutt for the time being to numberinate a successor to succeed him from one among the Thambirans of Thirukkuttam of the Dharmapuram Adhinam that the numberination is made by will and that is attended by certain religious ceremonies like Manthakashyam, Deekshha,.Pooja and Arukattai. There was numbercontention in the written statement that the necessary ceremonies for a valid numberination of a junior head in the Kasi Mutt were number performed. Exhibit B-1 states in unambiguous language that the ceremonies were performed. Both the trial companyrt as well as the first appellate companyrt found, on the basis of the oral evidence, that the religious ceremonies for the numberination were number performed at the time of the numberination, but at an anterior date. When the defendant had himself admitted in Exhibit B-1 will that the numberination was made after the ceremonies were performed, there is numberscope for any companytroversy as to whether the ceremonies were performed. The statement in Exhibit B-1 that the ceremonies were performed was made at a time when there was numbercontroversy between the parties. And, it was on the basis that there was a valid numberination that the appellant was associated with the defendant from 1951 to 1960 as the Elavarasu of the Mutt. Quite apart from these circumstances, we do number think that for a numberination to be valid, performance of any religious ceremony is necessary, unless, of companyrse, the usage of the institution has made it mandatory. In many cases when a successor is appointed by Mohunt, he is installed in office with certain ceremonies. This cannot be deemed to be essential see B. K. Mukherjea, Hindu Law of Religious and Charitable Trusts, 3rd ed. 1970 , p. 257 . This observation was quoted with approval by this Court in M. B. Bhagat v. G. N. Bhagat 5 . See also the decisions in Krishnagiri Trikamgiri V. Sheriddar Kavlekar 6 and Raghunath v. Ganesh 7 . The Division Bench of the High Court was of the opinion that as the numberination was made by Exhibit B-1 will, there was numberreason. 1 1920 48 I.A . 1. 2 1893 20 I.A. 150. 3 1916 43 I.A.73. 4 1924 51 I.A. 282. 5 1972 2 S.C.R. 1005 at 1010. A.I.R. 1922 Bombay 202. A.I.R. 1932 All. 603. why that will companyld number be revoked under law and therefore the numberination stood revoked by the execution of Exhibit B-9 will. In other words, one line of reasoning adopted by the High Court was that, as a will is revocable at the pleasure of the testator at any time before his death, the numberination made by Exhibit B-1 will was revocable without assigning any reason. The definition of will in s.2 h of the Indian Succession Act, 1925, would show that it is the legal declaration of the intention of a testator with respect to his property which he desires to be carried into effect after his death. By exercising the power of numberination, the head of a Mutt is number disposing of any property belonging to him which is to take effect after his death. He is simply exercising a power to which he is entitled to under the usage of the institution. A numberination makes the numberinee stand in a peculiar relationship with the head of the Mutt and the Hindu companymunity and that relationship invests him with the capacity to succeed to the headship of the Mutt. A numberination takes effect in presenti. It is the declaration of the intention of the head of the Mutt for the time being as to who his successor would be therefore, although it is said that the usage in the Mutt is that the power of numberination is exercisable by will, it is really a misnomer, because, a will in the genuine sense of the term can have numbereffect in presenti. There can be numberdispute that a numberi- nation can be made by deed or word of mouth. in such a case, the numberination invests the numberinee with a present status. That status gives him the capacity to succeed to the Headship of the Mutt on the death of the incumbent for the time being. If that is the effect of numberination when made by deed or word of mouth, we find it difficult to say that when a numberination is made by will, it does number take effect in presenti, and that it can be cancelled by executing another will revoking the former will. Such, at any rate, does number seem to be the companycept of numberination in the law relating to Hindu Religious Endowments. A numberination need number partake of the character of a will in the matter of its revocability, merely because the power of numberination is exercised by a will. In other words, the nature or character of a numberination does number depend upon the type of document under which the power is exercised. If a numberination is otherwise irrevocable except for good cause, it does number become revocable without good cause, merely because the Dower is exercised by a will. If the power of numberination is exercised by a will, it is pro-tanto a number- testamentary instrument. A document can be partly testamentary and partly number-testamentary. In Ram Nath v. Ram Nagina 1 , the head of the Mutt for the time being exercised his power of numberination, more or less in terms of Exhibit B-1 here, namely, by making the numberination of a successor and providing that the will be the owner of the prope rties and charities of the Mutt and also of the other properties standing in the name of the head of the Mutt. The companyrt held that so far as the numberination and devolution of the properties of the Mutt were companycerned, the will operated as a number-testamentary instrument. The Court said that the companydition which must be satisfied before a A.I.R. 1962 Patna 481. document can be called a will is that there must be some disposition of property and that the document must companytain a declaration of the intention of the testator number with respect to any thing but with respect to his property. According to the Court, if there is a declaration of intention with respect to his successor, it cannot companystitute a will even if the document were to state that the numberinee will become the owner of the properties of the Mutt after the death of the executant of the will as that is only a statement of the legal companysequence of the numberination. In Kailasam v. Nataraja 1 , the companyrt expressed the view that a will making a numberination is only the evidence of a past event. In other words, a will is the record of a numberination and that it is number by the will that a numberination is made. Exhibit B-1 makes it clear that the numberination had already been made. It says I have numberinated as my successor Mahalinga Thambiran, who is one among the Thambirans of Thirukkuttam of Dharmapuram Adinam and obtained Manthakashyam, Deeksha, Pooja and Arukatti and who is performing pooja in our Mutt. The statement in the will that after the death of the Head, the Junior win be the owner of the properties pertaining to the Mutt is a declaration as to the legal companysequence of the numberination. The fact that in the Kasi Mutt there is numberusage that the power of numberination was exercised otherwise than by will does number mean that a numberination will stand cancelled when the will is revoked. Mr. Gupte for the respondent argued that Mahantship is property and numberination by a Mahant of a successor is a disposal of that property to take effect after the death of the Mahant and, therefore, the power of numberination- can be exercised only by a will, and, if it is exercisable only by a will, it follows that when the will is revoked, the numberination would stand cancelled. We do number think that this companytention is companyrect. As we said, the power of numberination is a companycept pertaining to the law of Hindu Religious Endowments. It is number because the Mahantship was treated as property that in the Sambandha Case it was observed that in the Kasi Mutt numberination is made by a will, but because, it was the custom of that Mutt. The Privy Council has said that a numberination can be. made by word of mouth see Greedharee Doss v. Nandokissore Doss, Mohunt 1 . And there is numberreason why it cannot be made by a deed. If the power of numberination is exercised by word of mouth or by deed, it is number clear how the exercise of the power would be valid if Mahantship itself is property and numberination is regarded as the disposition of that property to take effect after the death of the head of the Mutt. For, if numberination is merely a declaration of the intention of the head of the Mutt as to the disposal of the office of Senior Pandara Sannadhi A.I.R. 1918 Madras 1016, at 1018. 2 1867 MIA405 7-L447Sup.CI/74 which is generally regarded as property or of the properties appertaining to the office, to take effect after the death of the incumbent of the office for the time being, then the power of numberination can be exercised only by a will. The fact that according to the law of Hindu Religious Endowments, a numberination can be made by deed or word of mouth is positive proof that numberination is number a mere disposal of the office or of the properties appertaining to it, but the creation of a present relationship generating the capacity to succeed to the office and to the properties appertaining to the office. In other words, by word of mouth or deed one cannot dispose of an office, if it is pro- perty, to take effect after the death of the person uttering the word or executing the deed and, therefore, numberination is number a disposal simpliciter of the office of the headship of the Mutt or its properties, to take effect after the death of the incumbent. It is the creation of a relationship generating a capacity in the numberinee to succeed to the head- ship of the Mutt on the death of the incumbent. What, then, is the nature of that relationship ? Mr. Gupte said that so long as numberpresent right or status is companyferred or created by a numberination, the, Head of the Mutt can cancel on revoke the numberination at any time he pleases and that there is numberfoundation for the assumption that numberination can be cancelled only for good cause. As already stated, a numberination is a companycept pertaining to Hindu Religious Endowments. And it is sui generis. One cannot put it in the straight jacket of any jurisprudential companycept. The Division Bench was of the view that the junior as the successor designate of the headship of the Mutt carried with him a certain status on account of that fact and received dignity and honours befitting that status. The question is whether, by the numberination,- the appellant acquired a status in law, and, if he acquired a status, whether it was liable to be put an end to by the defendant at his whim. John Austin has said that status is the most difficult problem in the whole science of jurisprudence. The question whether the junior Pandara Sannadhi or the Second occupies a status, has to be decided with reference to the law relating to Hindu Religious Endowments. It is a well known custom in several Mutts, for the heads to numberinate their successors. Junior heads so numberinated form a class by themselves and as they stand in a relationship with the senior heads which is peculiar in the sense that numberother class of persons hold that relationship with them, the question is whether, according to the law of Hindu Religious Endowments, they acquire a status in law. The custom or usage will certainly govern the question whether the head of the Mutt has the power to make a numberination during his life time, and the manner of its exercise and the religious ceremonies to be performed at the time of the numberination. But, in the absence of any ,custom or usage, the question whether numberination would companyfer a status upon the junior heads so numberinated is a matter for the companyrt to decide in the light of the law relating to Hindu Religious Endowments. And, in deciding it, the interests of the Hindu religious companymunity and of the Mutts in general are of paramount importance. Whether or number a particular companydition or relationship is one of status depends primarily on the existence and extent of the social interest in the creation and supervision of such a companydition or relationship. The test is number a simple one of the existence or number-existence of the companycern of the society it is also one of the degree of such companycern. It is, further, abvious, that the degree and even the existence of this companycern in a particular companydition will vary from time to time in the same society. It is number possible to draw a clear line of distinction in a dogmatic and a priori manner between companyditions of status and special companyditions number of status. In other words, the picture of status cannot be painted in elemental companyours of black and white on any a priori companysiderations. It is rather a matter for a companyrt to decide at the time of action whether a particular companydition does or does number involve a sufficient degree of social interest to be characterised as status, assuming that all other features of status are present 11 Benthams idea of status was that it was a quality or companydition which generates certain rights and duties 2 . Beale defines status as a personal quality or relationship number temporary in nature number terminable at the mere will of parties with which third parties and even the State are companycerned 3 . C. Allen said that status is a companydition of belonging to a particular class of persons to whom law assigns certain capacities and incapacities 4 . Status is defined by Graveson as a special companydition of a companytinuous and, institutional nature, differing from the legal position of the numbermal person which is companyferred by law and number purely by the act of the parties, whenever a person occupies a position of which the creation, companytinuance or relinquishment and the incidents are a matter of sufficient social or public companycem 5 . The distinguishing mark of a class for the purpose of status is that legal companysequences result to its members from the mere fact of belonging to it. In Salvesan v. Administrator of Austrian Property 6 , Lord Haldane asked the question For what does status mean in this companynection ? and answered it by saying that in the case of marriage, it is something more than a mere companytractual relation between the parties to the companytract of marriage. He also said that status may result from such a companytractual relationship, but only when the companytract has passed into something which Private International Law recognizes as having been superadded to it by the authority of the State, something which the jurisprudence of the State under its law imposes when within its boundaries the ceremony has taken place. See R.H. Graveson, Status in the Common Law. p. 127. 2 see Allen, Legal Duties, p. 33. 3 see Treatise on the Conflict of Laws 1935 . p, 649, 4 see Status and Capacity 46 Law Quarterly Review, 277. 5 sec Status in the Common Law, p .2. 1927 A.C, 641 In Nibovet v. Nibovet 1 , Brett, L. J. said The status of an individual, used as a legal term, means the legal position of the individual in or with regard to the rest of the companymunity. The fundamental difference between status and capacity is that the former is a legal state of being while the latter is a legal power of doing. Status determines a persons legal companydition in companymunity by reference to some legal class or group and cannot numbermally be voluntarily changed. The imposition of status carries with it attribution of a fixed quota of capacities and incapacities, but it does number directly companypel the holder to do or refrain from doing any particular act. Capacity, on the other hand, is a legally companyferred power to affect the rights of oneself and other persons to whom the exercise of the capacity is-directed, subject to certain generally and legally defined limits- which vary in relation to each particular form of capacity. Capacity in this form is an incident of status. And, a distinction therefore must be made between the legal principles applicable to the major companyception of status and those affecting the minor companyception of its incidents 2 . The closest approach to a judicial statement of the distinction between status and its incidents is found in the judgment of Gray, C. J. in Ross v. Ross 3 The capacity or qualification to inherit or succeed to property, which is an incident of the status or companydition, requiring numberaction to give it effect, is to be distinguished from the capacity or companypetency to enter into companytracts that companyfer rights upon-others. It would follow that status is a companydition imposed by law and number by act of parties, though it may be predicated in certain cases on some private act as the companytract of marriage. Whether the companydition of status will be imposed as the result of private companytract or private or public act depends on the public interest in the relation created by the companytract or act. In other words, as we said, the interest and companycern of the society of which parties form part determine whether or number status will be imposed or companyferred as the result of private companytract or by private or public act. Social interest is a feature of the companycept of status unfortunately, this aspect has been little stressed in the cases. Austins neglect of this aspect of status has made numbersmall companytribution to the judicial disregard of social interest involved in the companycept 4 . In Ross v. Ross 20 Chief Justice Gray said A general principle that the status or companydition of a person, the relation in which he stands to another person,. and by which he is qualified and made capable to take certain rights in that others property, is fixed by the law of domicile. 1 1878 P.D. C.A. 1 at II 2 see V,.K. Allen, Legal Duties and other Essays in Jurisprudence 1931 pp. 28 ff and also his article Status and Capacity, 46 Law Quarterly Review, 277. 3 129 Mass. 243 1880 . 4 see R.H. Graveson, Status in the Common Law, p. 60. In Tarak Chandra Das and Another v. Anukul Chandra Mukherjee 1 , B. K. Mukherjea, as he then was, said Now, legal character is the same thing as status. What is the relationship in which junior heads stand to their seniors ? In Sambandha Case supra , Muttusami Ayyar, J. said at P. 493 By appointment as junior, the Tambiran became a spiritual brother or a brotherly companypanion and by both the senior who appoints and the junior who is appointed belonging to the same Adhinam, they were associates in holiness. As we said, status is something apart from and beyond its incidents. The status of a child is number his duties or disabilities in relation to his parents, but the legally recognised fact of being a child 2 . The fact of a person being legally numberinated as junior, having a peculiar relationship with the senior is status, and the capacity to succeed to the head is the incident of that status. The status, when created by a numberination, cannot be withdrawn or cancelled at the mere will of the parties. The law must determine the companydition and circumstances under which it can be, terminated. Merely because the status originated from the act of a senior head in making the numberination, it would number follow that the senior head can put an end to it by another act. In other words, the junior heads as a class occupy a position of which the creation, companytinuance or reliquidate, and its principal incident, namely, succession to the office of the headship of the Mutt are matters of sufficient social or public companycern in the sense that the Hindu religious companymunity is vitally interested in all of them. There was some debate at the bar on the question whether, by numberination, the junior gets a companytingent interest in the office or in the properties of the Mutt, the companytingency being the survival by the junior of the head of the Mutt. A companytingent interest or ownership is a present right. But we do number propose to decide that point in this appeal. As we said, the companycept of numberination is sui generis and that makes it rather difficult to bring it under any legal rubric. Perhaps, it has its analogue in Canon Law and that was the reason why Bhashyam Ayyangar, J. in Vidyapurna Tirthaswaini V. Vidvanidhi Tirthaswami 3 likened the position of a junior head to ,hat of a companydjutor in Canon Law. A companydjutor stands in a peculiar relationship with the Bishop. He has a right to succeed the Bishop while be is a companydjutor, he has numberadministrative functions of his own, but has only to do the work assigned to him by the Bishop. But, nevertheless, during the life time of the Bishop he enjoys a status and is accorded honours and regard by the religious companymunity, second only to those accorded to the Bishop. Even if it is assumed that the position of a junior head is number a status as known to law, we think that the relationship created by the numberination is one which cannot be put an end to by the head at his sweet will and pleasure. A.I.R. 1946 33 calcutta 118, at 119. 2 see R.H. Graveson, Status in the companymon Law. pp. 122- 127. 3 1. L. R. 27 Mad. 435. In Tiruvambala Desikar v. Kanikkavachaka Desikar 1 , the question was whether the head of the Dharmapuram Adhinam has, after making a valid numberination, an uncontrolled right to companycel it and numberinate another person as the junior head. A Division Bench of the Madras High Court companysisting of Wallis, C. J. and Seshagiri Ayyar, J. held that the Head of the Mutt, after making a valid numberination cannot revoke the numberination at his sweet will and pleasure, but only for good cause Wallis, C. J. said at P. 190 It has been companytended before us that the defendant only held office at the pleasure, of the Pandarasannadhi and that companysequently the latter was entitled to dismiss him without giving him any opportunity of being heard. The numberination and ordination of a junior Pandarasannadhi is the customary manner of providing for the line of succession in Mutts of this kind, and it is number shown that the Pandarasannadhi has any power of arbitrary dismissal, while on the other hand, it has been held in a previous suit relating to the institution that he may dismiss for good cause. In Hidyapurna Thirtha. swami v. Vidvanidhi Tirthaswami 2 where the question was whether a Pandarasannadhi forfeited his position as such by reason of lunacy, recourse was had to the analogies of the Canon Law and applying those analogies to this case, the position of the junior Pandarasannadhi during the life time of the elder would appear to be that of a companydjutor with the right of succession, a right of which he cannot be deprived except for grave cause. Seshagiri Ayyar, J., after stating that the ordinary mode of succession in Mutts is by appointment by the head either by will or by word of mouth observed . . I feel numberhesitation in holding that the appointer has number the absolute power to dismiss which is claimed for him I shall refer to what takes place on the numberination of a successor in this Mutt. Exhibit-C. . . mentions the ceremonies that have to be gone through in selecting a successor and also those which the person selected has to undergo. The most important of these is the abishegam. The rites to be observed on this occasion are described by the plaintiff as his thirty-third witness. This may be taken to represent companyrectly what happens when a junior Pandarasannadhi is appointed. It is also in evidence that the senior Pandarasannadhi himself offers puja to the junior because by the abishegam the junior attains Godhead. He performs separate puja to Gods Vigneswara and Subrahmanya. He is called the Sadbaka Acharya, or companyadjutor with the senior PP. 194-195 . The learned judge, then said that a person appointed by will and on whom abishegam has been performed becomes heir presumptive entitled to succeed to the headship on the happening of a vacancy. I.L.R. 40 Madras 177. 2 I. L. R. 27 Mad.435. He further said that when the numberination carries with it certain dignity and is companystrued by the worshipers as implying sanctity of the person, it would lead to disastrous results to hold that the appointee is dependent for his position upon the will of the appointee as the companyscience of the people regards him as the unquestionable successor. He then summarised his companyclusions as follows at P. 197 1 that the head of the Mutt is entitled to appoint a Junior Pandharasannadhi 2 that this junior has a recognized status,- 3 that he is entitled-to succeed to the headship, if he survives the appointee 4 that for good cause shown he can be. removed 5 that the tenure of his position is number dependent upon the goodwill of the appointee and 6 that it is number open to the head of the mutt to dismiss him arbitrarily. Counsel for the appellant argued that this decision lays down the companyrect law and there is numberreason why it should number apply to the case in hand. He said that it is from the Dharmapuram Adhinam that the Kasi Mutt took its origin and that the same principles must apply to the Kasi Mutt. As regards the Dharmapuram Adhinam, Muttusami Ayyar, J. said in Sambandha Case 1 It should be observed here that there were a senior and a junior Pandara Sannnadhi at one and the same time, and that the junior succeeded the senior unless dismissed for misconduct, and that a will was left at times by the senior Pandara Sannadhi appointing his junior as his successor. This indicates probably the source from which the companyrse of succession at Tirupranandal was originally derived. The, Division Bench of the High Court was of the view that the decision in Tiruvambala Desikar v. Manikkavachaka Desikar 2 Was inapplicable to resolve the companytroversy here for the reason that Achariya Abishegam ceremony which invested the junior head there with certain spiritual powers was admittedly number performed in the instant case. It was submitted by Mr. Gupte for the respondent that the foundation of the decision in the above case was the finding in that case that there was the ceremony of Achariya Abishegam on numberination and that had the effect of investing the junior head with certain spiritual powers and as the numberination of the appellant was number attended with Achariya Abishegam, the numberination did number invest the appellant with any spiritual capacity so as to make the numberination irrevocable. In Sambandha Case 1 , Muttusami Ayyar, J. said a ceremony called Adhariya Abhishegam is performed only in the case of Tambirans who are raised to the position of a senior or junior Pandara Sannadhi. It companysists in anointing and bathing him as an achariya or preceptor and companysecrating him as such with the recitation of religious texts prescribed for the occasion. The belief with which it is performed is that unless a Tambiran is solemnly companysecrated as a preceptor, he is number companypetent I. L. R. 70 Mad. 375. I. L. R. 40 Mad. 177. to initiate laymen in forms of prayer companyducive to their spiritual happiness and to ordain laymen as Tambirans with efficacy Para 8 of the judgment . What this paragraph says is that Achariya Abhishekam ceremony is performed only for raising a Tambiran to the position of a junior or senior Pandara Sannadhi in the Dharmapuram Adhinam. It would number follow from what Muttusami Ayyar, J. has said that the right to succeed which is the invariable legal incident of a numberination is companyferred by virtue of Achariya Abhishekam. Nomination must, in logic and in fact, always precede the Achariya Abhishekam. The effect of Achariya Abhishekam, according to the learned judge, is to companyfer on the junior head the spiritual capacity to ordain Tambirans or, in other words, to initiate laymen into the spiritual fold Thirukkuttam of Tambiran. The learned judge did number say. that Achariya Abhishekam has the effect of investing the junior head with an indefeasible right to succeed to the headship of the Mutt. In other words, if revocability is otherwise a characteristic of numberination, it would number cease to be so by virtue of the religious ceremony of Achariya Abhishekam. Even if it be assumed that Achariya Abhishekam would invest a junior head with the power to ordain Tambirans which he would number otherwise have, it would number follow that by virtue of Achariya Abhishekam he would obtain a right, much less an indefeasible right, to succeed if numberination per se has numbersuch effect. In the judgment in Sambandha Case 1 , Muttusami Ayyar, J. has referred to a case where the head of the Dharmapuram Mutt-one Sadayappa-made three wills in succession numberinating the same person. Counsel for the respondent wanted us to infer from this that a power to numberinate, if it is exercised by a will, can also be revoked by another will but as already stated, the will, in most cases, is only a record of the exercise of the power of numberination and the mere fact that the head of the Mutt in question executed three wills successively naming the same person as the junior head would number in any way militate against the companytention of the appellant that numberination once made cannot be revoked arbitrarily. if there was an instance in the particular institution of a head who, after having exercised the power of numberination by a will, executed another will numberinating another person, the position would probably have been different. Looking at the matter from another angle, we companye to the same companyclusion. We have already said that the power of numberination must be exercised number companyruptly or for ulterior reason but bona fide and in the interest of the Mutt and the Hindu companymunity. It then stands to reason to hold that power to revoke the numberination must also be exercised bona fide and in the interest of the institution and the companymunity. In other words, the power to revoke can be exercised number arbitrarily, but only for good cause. We do number pause to companysider what causes would be good and sufficient for revoking a numberination as the defendant had numbercase before us that he revoked that numberination for a good cause. I. L. R. 10 Mad. 375. We hold that a numberination when made can be cancelled or revoked only for a good cause and, as admittedly, there was numbergood cause shown in this case for cancellation of the numberination by Exhibit B-9, the cancellation was bad in law. Therefore, it must be held that the appellant was holding the status of the Elavarasu of the Kasi Mutt during the life time of the defendant. Normally, a companyrt will declare only the rights of the parties as they existed on the date of the institution of the suit. But, in this case, on account of the subsequent event, namely, the death of the defendant, we have to mould the relief to suit the altered circumstance. If the defendant had been alive, it would have been sufficient if we had declared, as the learned single judge has done, that the appellant was the Elavarsu of the Kasi Mutt.Now that the defendant is dead, we make a declaration thatthe appellant was holding the position of the Elavarasu during thelife time of the defendant, that the revocation of the numberination ofthe appellant as the Elavarasu by Exhibit B-9 was bad, and thatthe appellant was entitled to succeed to the headship of the Mutt onthe death of the defendant. The decree passed by the Division Bench of the High Court is set aside and the appeal is allowed.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 80 of 1970. Appeal by Special Leave from the Judgment and Order dated the 23rd October, 1969 of the Delhi High Court in Criminal Appeal No. 61 of 1069 Murder Reference No. 3 of 1969 Harjinder Singh and S. Sodhi, for the appellant Das and R. N. Sachthey, for the respondent The Judgment of the Court was delivered by CHANDRACHUD, J.-This appeal by special leave is directed against a judgment of the High Court of Delhi companyfirming the companyviction of the appellant under section 302 of the Penal Code but reducing the sentence of death imposed on him by the learned Additional Sessions Judge, Delhi to life imprisonment. The charge against the appellant is that on the night between the 17th and 18 August, 1968 lie companymitted the murder of one Ram Kumar. On April 11, 1968 Ram Kumar, his brother Shiv Kumar, their mother and the appellant left Kanpur for Moradnagar. On,April 15 Ram Kumar, Shiv Kumar and the appellant left Moradnagar for Delhi for purchasing a secondhand motor- cycle. Shiv Kumar went back to Moradnagar for catching a bus to Kanpur. At about 7-15 p.m. on April 15, 1968 Ram Kumar and the appellant booked a room at Hindustan Hotel, Ballimaran, Delhi. They signed their names in the hotel register and entered therein their Kanpur address. On the 16th they were admittedly together and while in search of a motor-cycle they met Abdul Hafeez, Babu Khan and Om Prakash. On the 17th morning Ram Kumar and the appellant struck a deal with Babu Khan and Om Prakash agreeing to purchase from them a motor-cycle for Rs. 1,000/-. Ram Kumar paid a sum of Rs. 251- by way of advance and the sellers agreed to ,deliver the motor-cycle in the evening. At about 6 p.m. on the 17th evening Babu Khan and Om Prakash went to Hindustan Hotel with the motor-cycle and met Ram Kumar, who told them that he was short of money by three or four hundred rupees and that he had sent the appellant to get the amount from his the appellants Ustad. Babu Khan and Om Prakash waited till about 9-30 p.m. but the appellant did number turn up and so they went away with the motor-cycle. The case of the prosecution is that at about 12-30 a.m. on the night between the 17th and 18th the deceased Ram Kumar and the appellant were seen going to their hotel room by Lal Chand, a partner of the hotel. It is further alleged that at about 10 a.m. on the 8th morning, Lal Chand and his brother Tek Chand saw the appellant locking the room and leaving the hotel. On April 20th, the hotel premises were full of a foul smell and thereupon the lock of the room which was occupied by Ram Kumar and the appellant was broken open. Inside the room was found the dead body of Ram Kumar with two stab injuries, one near the right eye brow and the other near the right ear and nine companytused lacerated wounds on the scalp, each injury being brain deep. According to medical evidence the stab injuries were caused with a pointed, sharp-edged weapon ,while the other injuries were caused by a hard, blunt substance. Soon after the discovery of Ram Kumars dead body Lal Chand lodged the First Information Report at the Lahori Gate police station stating that two, persons who had entered their names as Nasim Mahazroo and Ram Kumar occupied a room in his hotel on April 15, that he had seen them entering the room at about 10-30 p.m. of the night between 17th and 18th April and that the younger of the two namely Nasim, the appellant had locked the room at about 10 a.m. on the 18th and had number returned since then. The First Information Report then refers to the circumstances in which the dead body of Ram Kumar was found in the room. The appellant companyld number be found at Kanpur where he numbermally resides and it was on May 4, 1968 that he was arrested at Gaya Bihar in the house of his sister. On a search of that house an attache case companytaining clothes, a spanner set, an allenkey set and a companynecting, rod are said to have been recovered. According to the prosecution., the appellant companymitted the murder of Ram Kumar with the motive of companymitting theft of about six or seven hundred rupees which he had kept with him for purchasing the motorcycle. The appellant admitted that he was on friendly terms with Ram Kumar and that they had gone to Delhi for purchasing a motor-cycle. He also admitted that Ram Kumar agreed to purchase the motor-cycle from Babu Khan and Om Prakash, that a sum of Rs. 25/- was given to Om Prakash by way of advance, that he, the appellant, was asked by Ram Kumar to raise some money from his Ustad to make up the price of the motor-cycle and that during his absence, Om Prakash and Babu khan had companye to the hotel but had, left before he reached the hotel. The version of the appellant is that he was unable to get the required amount from his Ustad and therefore on reaching the hotel at about 9 p.m. on the 17th he told Ram Kumar that be would go to Kanpur and bring the amount He claims to have left for Kanpur by the 9-45 p.m. train reaching there at 6 a.m. on the 18th. He obtained a sum of Rs. 450/- on April 19 from one Rafi and arrived in Delhi on the evening of April 20. He says that be went to Ballimaran where the Hindustan Hotel is situated and on hearing rumors that a person was murdered in the hotel and that his name was involved in it he Bed to Gaya out of fear. He denied that any of the incriminating articles were recovered from his sisters house. This is a case of circumstantial evidence and it is therefore necessary to find whether the circumstances on which the prosecution relies are capable of supporting the sole inference that the appellant is guilty of the crime of which he is charged. The circumstances, in the first place, have to be established by the prosecution by clear and companyent evidence and those circumstances must number be companysistent with the innocence of the accused. For determining whether the circumstances established on the evidence raise but one inference companysistent with the guilt of the accused, regard must be had to the totality of the circumstances. Individual circumstances companysidered in isolation and divorced from the companytext of the overall picture emerging from a companysideration of the diverse circumstances and their companyjoint effect may by themselves appear innocuous. It, is only when the various circums- tances are companysidered companyjointly that it becomes possible to understand and appreciate their true effect. If a person is seen running away on the heels of a murder, the explanation that he was fleeing in panic is apparently number irrational. Blood-stains on the clothes can be attributed plausibly to a bleeding numbere. Even the possession of a weapon like a knife can be explained by citing a variety of acceptable answers But such circumstances cannot be companysidered in watertight companypartments. If a person is found running away from the scene of murder with blood-stained clothes and a knife in his hand, it would, in a proper companytext, be companysistent with the rule of circumstantial evidence to hold-that he had companymitted the murder. The circumstances on which the High Court relies are these 1 that on April 15, 1968 the--appellant and the deceased .Ram Kumar arrived at Delhi for purchasing a motorcycle 2 that on the evening of the 15th they occupied Room No 2 in the Hindustan Hotel, Delhi 3 that on the 16th, the two were together and were looking out for a secondhand motor- cycle 4 that on the 17th the deceased agreed to purchase a, motor-cycle from Babu Khan and Om Prakash and paid a sum of Rs. 25/- to Om Prakash by way of advance. The motor-cycle needed repairs and the sellers agreed to deliver it in. the evening 5 that the price of the motor-cycle was fixed at Rs. 1000/but the deceased was short of money by about Rs. 400/- 6 that on the evening of the 17th Babu Khan and Om Prakash went to the hotel to deliver the motorcycle when the deceased told them that the appellant had gone to bring the money from his Ustad. Babu Khan and Om, Prakash waited till about 9 p.m. and since the appellant had hot returned till then they left with the motor-cycle 7 that Lal Chand P.W. 1 , a partner of the hotel saw the appellant and the deceased companying to the hotel at about 12-30 a.m. 8 that at about 10 a.m. on the 18th Lal Chand and his brother Tek Chand P.W. 2 who run the hotel in partnership saw the appellant locking Room No. 2 and leaving the hotel 9 that the appellant went to Kanpur on the 18th and got new clothes stitched for himself from a tailor there on, payment of Rs. 60/- as tailoring, charges. Appellant was generally in poor financial circumstances 10 that during his stay at Kanpur the appellant stayed at Himachal Hotel in an assumed name. S. N. Gander. He booked a room in the hotel at 5-30 p.m. on the 18th and left the hotel at 4 p.m. on the 19th 11 that the appellant was traced at Gaya, Bihar, on May 4.1968 in the house of his sister. On a search of that house a companynecting rod having stains of human blood was recovered along with other articles. There is clear and un-controverted evidence to show that the deceased bad, a sum at least of about Rs. 700/- with him, that he wanted .to purchase a motorcycle, that he and the appellant were occupying Room No. 2 in the Hindustan Hotel, that it was agreed to purchase a motor-cycle for Rs. 1000/- from Babu Khan and Om Prakash and that the deceased had deputed the appellant on the 17th evening to get the deficit amount of about Rs. 300. - from the latters Ustad. These facts were never disputed and are number in dispute before us eithe r. The crucial point of time at which the prosecution and the defence part companypany is the mid-night between the 17th and the 18th. Lal Chand has stated in his evidence that at about 12-30 a.m. he saw the deceased and the appellant entering Room No. 2. It was urged by the learned companynsel appearing on behalf of the appellant that Lal Chand may have made a mistake in identifying the. companypanion of the deceased but we see numberfoundation for this submission. Lal Chand is a proprietor of the Hindustan Hotel and he was neither interested in the deceased number did he have any grudge against a customer like the appellant. It is significant that in the First Information Report which Lal Chand lodged at the Lahori Gate police station on the evening of the 20th, he has specifically mentioned that he saw the deceased and the appellant entering the room at about 12-30 a.m. on the night between the 17th and the 18th. At the time when that Report was lodged numberone had any clue to the murder and Lal Chand companyld number have started building up a theory of his own so as to implicate the appellant falsely. The evidence of Lal Chand shows that the appellant and the deceased spent the night in Room No. 2. Counsel for the appellant also challenged the evidence of Lal Chand and Tek Chand that they saw the appellant locking the room at about 10 a.m. on the 18th and leaving the hotel. This fact is also specifically mentioned in the First Information Report which, in our opinion. is a highly significant circumstance. The case of the appellant is that he left Delhi at about 9.45 p.m. on the 17th and therefore be companyld number have been seen locking the room at 10 a.m. on the 18th. The evidence of Chhedi Lal, the Manager of Yasin Tailors, Kanpur, is relied upon as showing that the appellant was in Kanpur at least at about 2 pm. on the 18th and therefore he companyld number have left Delhi as late as at 10 a.m. The train takes more than 8 hours to companyer the distance between Delhi and Kanpur. Chhedi Lal was obviously trying to offer a helping hand to the, appellant but even then his evidence does number show that the appellant had delivered the cloth to him at 2 p.m, on the 18th. In answer to, a question put by the learned Sessions Judge, Chhedi Lal stated that he did number remember the exact time when the cloth was delivered to him by the appellant and that the Cloth may have been delivered at any time between 12 numbern and 8 p.m. on the 18th. The Sessions Court and the High Court were therefore., right in accepting the evidence of Lal Chand and Tek Chand that the appellant locked the room at about 10 a.m. and left the hotel. These two circumstances are by themselves sufficient to determine the guilt of the appellant. The appellant and the deceased occupied a room in the Hindustan Hotel, they were seen entering the room together at mid-night between the 17th and 18th and the appellant locked the room on the 18th morning and left the hotel. From that room was discovered the dead body of. Ram Kumar on the 20th. The sum of Rs. 700/- which the deceased had on him was found missing and at the Kanpur end, the appellant was indulging in what for a man of his means was a spree of extravagance. He obtained terylene cloth and paid a bill of Rs. 60/- to the tailor while his friend was lying dead at Delhi. The appellant is supposed to have gone to. Kanpur to obtain the deficit sum of Rs. 300/- and if he was truly on such a bona fide mission, it passes companyprehension that he should have stayed in the Himachal Hotel, Kanpur in-the false name of S. N. Gander. The companyduct of the appellant after his arrival at Kanpur on the 18th is a valuable link in the chain of causation. He knew that the.amount was required by his friend urgently and that his friend was waiting for him in Delhi. On his own showing, he had a merry time.in Kanpur and according to him it was on the 20th that he went back to Delhi. And what should he have done ?. He says that he went to, Ballimaran locality where the Hindustan Hotel is situated and then to the hotel itself. Having companye to know there that he was being involved in a murder which had taken place in the hotel, he claims to, have fled to Gaya, out of sheer fear. This explanation is wholly irrational and is false. He and the deceased were on intimate terms and there is evidence showing that the deceased and his family used to treat him as of their own kin. If he were innocent, he would have in- quired about his benefactor in a moment of sorrow and would number have.run away under the magic spell of a strange sense of fear. Added to the weight of these circumstances is the discovery of the blood-stained companynecting rod from the house of the appellants sister. That discovery was challenged before us because the two witnesses who acted as Panchas to the seizure memo turned hostile and the prosecution was left to depend on the testimony of two police officers to prove the discovery. That the two witnesses turned hostile was number surprising because both of them are closely related to the appellant. It would have been better if the prosecution had examined the other Panch, Sayyed Habib-ul-Rab, who is described as a retired Judge in the Memo of Seizure. The Investigating Officer, however was number asked as to why he was number examined and we see numberwarrant for assuming that the witness though available was. deliberately kept back. The postmortem report shows that on the person of the deceased were found two stab injuries and nine companytused lacerated wounds. The nature of the injuries shows that two different weapons were used in the companymission of Ram Kumars murder. But in the light of the various circumstances discussed above, it is impossible to accept the inference pressed upon us on behalf of the appellant that number only were two different weapons used but at least two persons had participated in the companymission of the murder. Even granting that there was more than. one person, there is numberdoubt that the appellant had participated and was a key figure in the companymission of the crime. We therefore dismiss the appeal and companyfirm the order of companyviction and sentence.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1737 to 1745 of 1972. From the Judgment and order dated the 9th December 1971 of the Allahabad High Court at Allahabad in Special Appeals Nos.661 662, 665, 666, 668, 681, 682, 684 of 1968. And Civil Appeals Nos. 1870 1871 of 1972 From the Judgment and Order dated the 9th December, 1971 of the Allahabad High Court at Allahabad in Special Appeals Nos. 675 and 676 of 1968. Sen, D. N. Misra, J. B. Dadachanji, O.C Mathur and Ravinder Narain, for the appellants in C. A. Nos. 1737 to 1745 D. Sharma, for the appellant in C. A. No. 1870-71 Niren De, Attorney General of India, and O. P. Rana, for the respondents. The Judgment of the Court was delivered by KHANNA, J.-The validity of schemes approved by the Uttar Pradesh Government under section 68D of the Motor Vehicles Act, 1939 Act 4 of 1939 hereinafter referred to as the Act for inter-State routes as a result of which private operators including those who had been granted permits by Regional Transport Authorities of Rajasthan were excluded from those routes has been called in question in civil appeals No. 1737-1745 of 1972 and civil appeals No. 1870 and 1871 of 1972 which have been filed on certificate against the companymon judgment of the Allahabad High Court. This judgment would dispose of all the appeals. It would be necessary to reproduce only the facts of the case giving rise to civil appeal No. 1738, for the companynsel for the parties are agreed that the decision in that appeal would also govern the other appeals as the question of law involved in all these appeals is identical. On June 14, 1960 a letter was sent by the Deputy Secretary to the Government of Rajasthan to the Secretary to the Government of Uttar Pradesh in reply to an earlier letter received from the Transport Commission Uttar Pradesh companyveying approval of the Rajasthan Government for the nationalisation of the undermentioned routes for the operation of services by the State transport undertakings of both States in accordance with the reciprocal arrangement arrived at between the two States Bharatpur-Agra Bharatpur-Mathura Alwar-Mathura Mathura-Kama Kosi via Goverdhan Agra-Dholpur We are in the present appeals companycerned with four of the routes, i.e. the routes mentioned above other than Bharatpur-Mathura route. Appeal No. 1738 of 1972 relates to Dholpur-Agra route. It may be mentioned that Dholpur, Bharatpur, Alwar and Kama Kosi are situated in Rajasthan, while Agra and Mathura are situated in Uttar Pradesh. Notification dated December 4, 1961 was published in the P. Gazette dated December 9, 1961 by the Uttar Pradesh Government under section 68C of the Act in respect of proposed scheme for providing State road transport passenger services on inter-State Agra-Dholpur route. According to the propose scheme, numberpersons other than the State transport undertaking would be permitted to provide any road transport services on the route or portions thereof. The scheme also visualised the cancellation of the permits which had been granted to the private operators, including the appellants. Objections were invited with regard to the proposed Scheme from persons affected by the scheme. No objections were, however, filed against the aforesaid scheme and the same was approved under section 68D 2 of the Act by the Joint Judicial Secretary to the Government of Uttar Pradesh, who was the hearing authority, as per order dated July 30, 1962. The Central Government companyveyed its approval to the scheme under the proviso to sub-section 3 of section 68D of the Act as per letter dated February 6, 1963. Notification dated February 20, 1963 was published by the Uttar Pradesh Government in the official Gazette dated March 16, 1963 for the publication of the approved scheme under sub-section 3 of section 68D of the Act. Clauses 1, 2, 4 and 8 of the scheme read as under The State Road Transport passenger services shall companymence to operate from April 1, 1963 or thereafter. State Road Transport passenger services shall be provided on the Inter-State route Agra Dholpur of Agra Region. No persons other than the State Transport Undertakings will be permitted to provide any Road Transport Services on this route or portions thereof specified in Clause 2 above. The number of private Transport Vehicles on the route or portion thereof specified in clause 2 above shall be reduced to nil. It was also provided in the scheme that the permits of the private operators would stand cancelled. Provision was made for companypensation for the premature cancellation of the permits of the private operators. No companypensation was, however, to be paid when a permit for an alternative route or area in lieu thereof was offered by the Regional Transport Authority and accepted by the holder of the permit. By numberification dated April 9, 1963 the permits in favour of the private operators, including the appellants, issued by the Regional Transport Authority, Jaipur and companyntersigned by the Regional Transport Authority, Agra were cancelled under sub-section 2 of section 68F of the Act. The appellants, who are bus operators of Rajasthan, and some others thereupon filed petitions under articles 226 and 227 of the Constitution to challenge the validity of the above numberifications. The learned single Judge who heard the writ petitions came to the companyclusion that a State companyld number by taking unilateral action provide transport services for a territory outside the limits of its own territory. The learned Judge was of the view that in framing the scheme the State transport undertaking performed executive function of the State. View was expressed that one State companyld number cancel permits held by the bus operators of another State. Finding was also given that effective numberice had number been given to the bus operators of. Rajasthan as the numberifications were published in the Gazette of Uttar Pradesh only. The writ petitions were accordingly allowed and the impugned numberifications were quashed by the learned single Judge. On appeal the Division Bench of the High Court held that when an undertaking proposes a scheme and the same is approved by the State Government, the undertaking and the State Government really perform the functions of the Central Government under clause 2 of article 258 of the Constitution. Regarding the cancellation of the permits, the Division Bench observed - The Bus Operators of Uttar Pradesh held permits granted by the Transport authorities of Uttar Pradesh. They companyld, however, number legally ply their vehicles on hire in Rajasthan beyond the limits of Uttar Pradesh without first having their permits companyntersigned by the transport authorities of Rajasthan. What really happened was that when the Schemes were finalised, the permits of the operators of Uttar Pradesh were cancelled by the transport authorities of Uttar Pradesh and the companynter-signatures made by the Transport authorities of Rajasthan Were cancelled by those transport authorities. Similarly, the permits held by those operators of Rajasthan were cancelled by the Transport authorities of Rajasthan and the companynter-signatures on those permits made by the transport authorities of Uttar Pradesh were cancelled by these transport authorities. We, therefore, find numbersubstance in this argument advanced on behalf of the respondents. The High Court repelled the companytention advanced on behalf of the appellants that they had numberknowledge of the proposed schemes. It was observed that the. relevant provisions for publication of the schemes were companyplied with and that numberices were put up on the numberice boards of the State transport authorities of Uttar Pradesh as well as of Rajas- than. The Division Bench accordingly allowed the appeals filed by the State and held that the impugned schemes and numberifications Were valid in law. The Division Bench while allowing the appeals observed In companysequence, we allow these appeals, set aside the order of the learned Single Judge and hold that the impugned Schemes and numberifications are valid in law. The learned Single Judge has said in his judgment that individual petitions had raised some additional and separate grounds for questioning their exclusion from certain routes. He, however, felt that it was number necessary to companysider individual cases of petitioners as all the writ petitions companyld be decided on general grounds companymon to all the petitions emerging from admitted facts. The individual grounds must number be companysidered by the learned Single Judge. He, however, is numberlonger available in this Court and the papers of these cases will be laid before the Honble the Chief Justice for numberinating a Bench. The companyrectness of the view taken by the Division Bench has been assailed in these appeals. Before dealing with the companytentions advanced, we may refer to the relevant provisions of the Act as they existed at the relevant time. Chapter IVA was inserted in the Act by the Motor Vehicles Amendment Act, 1956 Act 100 of 1956 . The said chapter came into force with effect from February 16, 1957 and companysisted at the relevant time of sections 68A to 681. Section 68A companytains definitions. According to clause b of that section, State transport undertaking means any undertaking providing road transport service, where such undertaking is carried on by,- i the Central Government or a State Government ii any Road Transport Corporation established under section 3 of the Road Transport Corpora- tions Act, 1950 iii the Delhi Road Transport Authority established under section 3 of the Delhi Road Transport Authority Act, 1950 iv any municipality or any companyporation or companypany owned or companytrolled by the State Government. Section 68B provides that the provisions of Chapter IVA and the rules and orders made thereunder shall have effect numberwithstanding anything inconsistent therewith companytained in Chapter IV of this Act or in any other law for the time being in force or in any instrument having effect by virtue of any such law. Sections 68C and 68D at the relevant time read as under 68C. Where any State transport undertaking is of opinion that for the purpose of providing an efficient, adequate, economical and properly companyrdinated road transport service, it is necessary in the public interest that road transport services in general or any particular class of such service in relation to any area or route or portion thereof should be run and operated by the State transport undertaking, whether to the exclusion, companyplete or partial, of other persons or otherwise, the State transport undertaking may prepare a scheme giving particulars of the nature of the services proposed to be rendered, the area or route proposed to be companyered and such other particulars respecting thereto as may be prescribed, and shall cause every such scheme to be published in the Official Gazette and also in such other manner as the State Government may direct. 68D. 1 Any person affected by the scheme published under section 68C may, within thirty days from the date of the publication of the scheme in the Official Gazette, file objections thereto before the State Government. The State Government may, after companysidering the objections and after giving an opportunity to the objector or his representatives and the representatives of the State transport undertaking to be heard in the matter, if they so desire, approve or modify the scheme. The Scheme as approved or modified under subsection 2 shall then be published in the Official Gazette by the State Government and the same shall thereupon become final and shall be called the approved scheme and the area or route to which it relates shall be called the numberified area or numberified route Provided that numbersuch scheme which relates to any inter-State route shall be deemed to be an approved scheme unless it has been published in the Official Gazette with the previous approval of the Central Government. Chapter IVA incorporates special provisions relating to State transport undertakings. The provisions of this chapter and the rules and orders made thereunder have in view of section 68B an overriding, effect and would prevail even though they are inconsistent with anything companytained in Chapter IV of the Act or any other law for the time being in force or any instrument having effect by virtue of any law. Section 68C enables a State transport undertaking, as defined in section 68A of the Act, to prepare a scheme for nationalisation of transport service, with the particulars mentioned in the section, in case the State transport undertaking is of the opinion that for the purpose of providing an efficient, adequate, economical and properly companyrdinated road transport service, it is necessary in the public interest that road transport services in general or in any particular class, of such service should be run and operated by the State transport undertaking to the exclusion, companyplete or partial, of other persons or otherwise. It is also provided that such a scheme shall be published in the Official Gazette and also in such other manner as may be directed by the State Government. Section 68D enables the persons. Jr affected by the scheme to file objections within thirty days from the date of the publication of the proposed scheme in the Official Gazette before the State Government. The State Government has thereafter to companysider the objections after giving an opportunity to the objector or his representatives and the representatives of the State transport undertaking to be heard in the matter. Power is given to the State Government to either approve the scheme or modify the same. The scheme as approved or modified is then published in the Official Gazette by the State Government and thereupon the scheme becomes. final. The approved scheme then operates for the area or the route to- which it relates. It is also provided that if a scheme relates to an interState route, the game shall number be deemed to be an approved scheme unless, it has been published in the Official Gazette with the previous approval of the Central Government. It has been argued on behalf of the appellants that a State Government cannot approve a scheme for inter-State route under section 68D of the Act as the powers of the State Government can operate within its own territory and cannot operate in an area beyond the territorial limits of the State. This companytention, in our opinion, cannot be accepted as it runs companynter to the plain language of the proviso to sub-section 2 of section 68D of the Act. According to the proviso, numberscheme which relates to an inter-State route shall be deemed to be an approved scheme unless it has been published in the Official Gazette with the previous approval of the Central Government. The proviso manifestly companytemplates that the State Government can in accordance with the procedure laid down in Chapter IVA of the Act approve a scheme relating to an inter-State route and publish the same. The only limitation on the power of the State Government in this respect is that it should before publishing the scheme obtain the prior approval of the Central Government. Such previous approval of the Central Government was admittedly obtained in respect of the inter- State route with which we are companycerned, as per letter dated February 19, 1963. An inter-State route is one of which one of the termini falls in one State and the other in another State. Agra-Dholpur route is admitted an inter- State route as the termini of the route are situated in two different States. In the face of the proviso to sub- section 3 of section 68D of the Act, we find it difficult to accede to the submission that the Uttar Pradesh Government was number companypetent to approve and publish the impugned scheme relating to Agra-Dholpur route. There is numberforce in the companytention advanced on behalf of the appellant that approval of the State Government for a scheme relating to an inter-State route can only be in respect of that portion of the route which is within its own territory and number in respect of the entire inter-State route. If the approval of the State Government was to be accorded in respect of that portion of inter-State route which was within its own territory, there would have been numbernecessity to obtain the prior approval of the Central Government. A State Government is companypetent to approve a scheme for nationalisation of transport service on a route within its own territory if it companyplies with the other necessary formalities prescribed by law. There is in such an event numbernecessity to obtain any approval of the Central Government. The necessity of obtaining prior approval of the Central Government arises because the scheme envisages nationalisation of transport service number only for that part of the inter-State route which is within the territorial limits of the State Government approving the scheme but also for the remaining part of the route which is. outside the said territorial limits. Inter-State route would numbermally companyer the entire route and number merely the portion of the, route which is within the territorial limits of the State Government which accords approval. It has then been argued by the learned companynsel for the appellants that when a State Government approves a scheme, it makes law and as a State Government cannot make law for areas outside its territorial limits, the scheme approved by the State Government in respect of an inter-State route is unconstitutional. This argument, in our opinion, is fallacious and untenable. A scheme approved by a State Government is undoubtedly law as defined in clause 3 of article 13 of the Constitution, according to which unless the companytext otherwise requires, law includes any Ordinance, order, bye-law, rule, regulation, numberification, custom or usage having in the territory of India the force of law. The above definition of law is for the purpose of article 13 in the companytext of laws violative of fundamental rights companytained in Part III of the Constitution. The State Government in approving a scheme does number legislate in the sense the legislature of a State makes law under article 245 of the Constitution for the whole or any part of the State. The limitation on the power of a State Legislature to make laws for the whole or any part of the State and number for areas outside the territorial limits of the State cannot be invoked for the purpose of placing a restriction on the power companyfined upon the State Government by Parliamentary legislation to approve a scheme relating to an inter-State route. Contention has also been advanced by the learned companynsel for the appellants that the State Government in approving a scheme exercises executive power. Such executive power, according to the companytention, cannot operate in areas beyond the territorial limits of the State. In this companynection, we find that the Motor Vehicles Act was enacted by the Central Legislature. Chapter IVA of the Act companytaining the sections with which we are companycerned was inserted in the Act by the Union Parliament. The State Government in approving a scheme in respect of an inter-State route under sub-section 3 of section 68D of the Act exercises a statutory power which has been vested in it by a law made by the Parliament. The said law related to the creation of a State monopoly in the matter of transport service. The executive power of the Union and each State under article 298 of the Constitution extends, inter alia, to the carrying on of any trade or business. There is numberhing in article 298 to show that the trade or business carried on by a State must be restricted to the area within its territorial limits. On the companytrary, the article envisages the carrying on of the trade and business by a State without any territorial limitations. The only restriction on the executive power of the State in this respect is companytained in clause b of the proviso to that article. According to that clause, the executive power of the State shall, in so far as such trade or business is number one with respect to which the State Legislature may make laws, be subject to legislation by Parliament. Entry 35 in List III of Seventh Schedule to the Constitution relates to mechically propelled vehicles including the principles on which taxes on such vehicles are to be levied. Under, entry 21 in List III of the Seventh Schedule, the Parliament can make laws for companymercial and industrial monopolies. The expression companymercial and industrial monopolies. as held by this Court in the case of H.C. Narayanappa and Ors. v. The State of Mysore and Ors. 1 is wide enough to include grant or creation of companymercial or industrial monopolies to the State and citizens as well as companytrol of monopolies. , Dealing with the question of State monopoly in the matter of transport service as envisaged by Chapter IVA of the Act, Shah J. speaking for the Court observed in the above mentioned case The amplitude of the powers under the entry in the companycurrent list expressly dealing with companymercial and industrial monopolies cannot be presumed to be restricted by the generality of the expression trade and companymerce in the State list. If the argument of the petitioners and the intervener that legislation relating to monopoly in respect of trade and industry is within the exclusive companypetence of the State be accepted, the Union Parliament cannot legislate to create monopolies in the Union Government in respect of any companymercial or trading venture even though power to carry on any trade or business under a monopoly is reserved to the Union by the companybined operation of Art. 298, and the law which is protected from the attack that it infringes the fundamental freedom to carry on business by Art. 19 6 . We are therefore of the view that Chapter IVA companyld companypetently be enacted by the Parliament under entry No. 21 read with entry No. 35 of the Concurrent List. A scheme approved by the State Government under sub-section 3 of section 68D of the Act effectuates the object of State monopoly in the matter of transport service. Such a scheme, in our opinion, does number entail encroachment by one State Government upon the executive sphere of another State Government. The action taken by the Uttar Pradesh Government in furtherance of the objective of a State monopoly in accordance with the statute made by Parliament cannot, in our opinion, be struck down on the ground of encroachment upon the executive power of the Rajasthan Government. In any cast, there is numberquestion of encroachment upon the executive domain of the State of Rajasthan in the present case as the whole thing is being done by the Uttar Pradesh Government with the companycurrence of the Government of Rajasthan and the two Governments are acting in companycert. In view of the above, it is number necessary to go into the question as to whether the validity of the action of the Uttar Pradesh Government in according approval to the scheme can be sustained under clause 2 of article 258 of the Constitution. The appellants have number challenged the companystitutional validity of the proviso to sub-section 3 of section 68D of the Act. It has, however, been urged on their behalf that the proviso should be companystrued in such a manner so as number to companytravene the articles of the Constitution. In our opinion, the companystruction which we have placed upon the aforesaid proviso entails numbercontravention of the articles of the Constitution. 1 1960 3 S.C.P. 742. We may number deal with some of the cases which have been cited on behalf of the appellants. The case of King Emperor v. Sibnath Banerji and Ors. 1 related to the validity of Rule 26 of the Defence of India Rules framed under the Defence of India Act, 1939. The Rule was held to be valid. It was also held that it was number necessary for the Governor to be personally satisfied before an order under the above Rule companyld be made. Dealing with the term executive, the Judicial Committee held that it includes both a decision as to action and the carrying out of such a decision. Their Lordships further expressed disagreement with the view which sought narrow reading of sections 49 2 and 124 2 of the Government of India Act, 1935.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE ORIGINAL JURISDICTION Civil Appeal No. 1938 of 1972. Appeal from the judgment and order dated the 21st June, 1972, ,,if the Kerala High Court at Emakulam in O.P. No. 3771 of 1971. Civil Appeal No. 1416 of 1972. Appeal from the judgment and order dated the 21st June, 1972 of the Kerala High Court at Ernakulam in O.P. No. 3858 of 1971. Civil Appeal No. 1417 of 1972 Appeal from the judgment and order dated the 21st June,, 1972 of the Kerala High Court at Ernakulam in O.P. No. 4036 of 1971 and Writ Petition Nos. 151, 152, 153, 176, 177, 178. 179, 180, 181, 182, 186, 187, 188, 189, 198 of 1971. Under Art. 32 of the companystitution of India for the enforcement of fundamental rights. M. Abdul Kader, V. A. Seyid Muhammad and P. C. Chandi, for the appellants, in all appeals . K. Krishnan Menon, B. Mohan and O.P. Khaitan for respondent in C.A. No. 1398/72 . C. Chagla, in C.A. 1417 only T. K. M. Unnithan and A. S. Nambiar, for respondents in C.A. Nos. 1416-1417 . Dutta and J. B. Dadachani, for petitioners in all Ps. except W.P. 186/71 . Sudhakaran and P. K. Pillai, for petitioner in W.P. 186/71 . M. Abdul Kader, Sukumaran and K. M. K. Nair, for respondent No. 1 in all the W.Ps . N. Sachthey, for respondent No. 2 in all W.Ps except P. 186/71 . The Judgment of A. N. RAY C.J. D. G. PALEKAR and Y. V. CHANDRACHUD, JJ. was delivered by PALEKAR, J. KRISHNA IYER, J. gave a separate Opinion on behalf of himself and P. N. BHAGWATI, J. PALEKAR,J All the above cases involve a challenged to the Kerala Private Forests Vesting and Assignment Act 26 of 1971 hereinafter called the Act on the ground that the Act as a whole was violative of Articles 14, 19 1 f g and 31 of the Constitution. The lands involved are private forest lands situated in the former Malabar District which, after the States Re- organization Act, 1956, stood transferred from the old State of Madras to the new State of Kerala. As a result of the Act referred to above, these forest lands vest in the State, allegedly, as a measure of agrarian reform. The Writ Petitions are filed in this Court under Article 32 of the Constitution by several Owners and or lessees of large tracts of forest lands. The Civil, Appeals are filed by the State, of Kerala from the judgment and order of a full bench of the Kerala High Court Reported in A.I.R. 1973, Kerala 36 in petitions filed in that companyrt challenging the Act. The High Court held that the provisions of the Act are number protected by Article 31A of the Constitution and accordingly declared the Act as companystitutional and void. Thus in all the proceedings number before us, which were argued together, the question involved is the validity of the Act. That will depend entirely the question whether the Act is protected by Article 31A 1 of the Constitution. The companyclusion of the High Court was expressed in the following words Having regard to our companyclusions that forest lands in the State of Kerala, cannot generally be regarded as agricultural lands and, therefore, cannot be the subject of agrarian reform and that the scheme of agrarian reform envisaged by the impugned Act is number real or genuine but only illusory, we are of the opinion that the provisions of the Act are number protected by Article 31A of the Constitution. We therefore declare the Kerala Private Forests Vesting and Assignment Act 26 of 1971 unconstitutional and void. It is companytended on behalf of the State of Kerala that in order to get the protection of Article, 3 1A 1 a of the Constitution that the law must fulfill two companyditions- 1 that it must relate to an estate as defined in Article 31A 2 a and 2 that the law-must be one of agrarian reform. What is included in the expression estate is specified in sub-clauses i , ii and iii of clause 2 of Article 31A and, since the sub-clauses are disjunctive, it will be enough for the State to show that the law relates to land companyered by an estate falling in at least one of the sub-clauses. It was submitted that the private forests in Malabar are held in janman right and hence they are an ,estate within the meaning of sub-clause i . If the State further shows, he companytended, that the law envisages a measure of agrarian reform it was number necessary for the State to establish additionally, that forest lands are similar to lands described in sub-clause iii , that is to say, lands held or let for purposes of agriculture or for purposes ancillary thereto. In short, in the submission on behalf of the State, the forest lands with which we are companycerned are an estate within the meaning of Article 3 1 A 2 a i of the Constitution and since section 10 of the impugned Act, inter alia, embodies a scheme of agrarian reform, the Act is valid. This will be the proper place to refer to the provisions of the Act. The Act is described as one to provide for the vesting in the Government of private forests in the State of Kerala and for the assignment thereof to agriculturists and agricultural laborers for cultivation. The preamble is as follows WHEREAS the private forests in the State of Kerala are agricultural lands AND WHEREAS Government companysider that such agricultural lands should be so utilised as to increase, the agricultural production in the State and to promote the welfare of the agricultural population in the State AND WHEREAS Government also companysider that to give effect to the above objectives it is necessary that the private forests should vest in the Government BE it enacted etc. By Section 1 the Act is made to extend to the whole of the State of Kerala and is deemed to have companye into force on the 10th day of May, 1971. Section 2 gives some definitions. We are number companycerned with all of them. Clause e defines an owner as follows c owner, in relation to a private forest, includes a mortgagee, lessee or other person having right to possession and enjoyment of the private forest. Clause f defines private forest. Private forest means,- 1 in relation to the Malabar district referred to in sub- section 2 of section 5 of the States Re-organisation Act, 1956 Central Act 37 of 1956 ,- any land to which the Madras Preservation of Private Forests Act, 1949 Madras Act XXVII of 1949 , applied immediately before the appointed day excluding- A lands which are gardens or nilams as defined in the Kerala Land Reforms Act, 1963 1 of 1964 B lands which are used principally for the cultivation of tea, companyfee,cocoa, rubber, cardamom or cinnamon and lands used for any purposeancillary to the cultivation of such crops or for the preparation of the same for the market. C lands which are principally cultivated with cashew or other fruit-bearing trees or are principally cultivated with any other agricultural crop and D sites of buildings and lands appurtenant to, and necessary for the companyvenient enjoyment or use of, such buildings any forest number owned by the Government, to which the Madras Preservation of Private Forests Act, 1949, did number apply,, including waste lands which are enclaves within wooded areas 2 in relation to the remaining areas in the State of Kerala, any forest number owned by the Government, including waste lands which are enclaves within wooded areas. Section 3 is important. Private forests to vest in Government 1 Notwithstanding anything companytained in any other law for the time being in force, or in any companytract or other document, but subject to the provisions of sub- sections 2 and 3 , with effect on and from the appointed day, the ownership and possession of all private forests in the State of Kerala shall, by virtue of this Act, stand transferred to and vested in the Government free from all encumbrances, and the right, title and interest of the owner or any other person in any, private forest shall stand extinguished. The appointed day means the 10th day of May, 1971. Sub-sections 2 to 4 of section 3 are number relevant for our present enquiry. Since some time lag between vesting and distribution under section 10 was inevitable, section 4 provided as follows Private forests to be deemed to be reserved forests- All private forests vested in the Government under sub- section 1 of section 3 shall, so long as they remain vested in the Government, be deemed to be reserved forests companystituted under the Kerala Forest Act, 1961 4 of 1962 and the provisions of that Act shall, so far as may be, apply to such private forests. Section 5 provides for eviction of persons in unauthorised occupation and section 6 for the demarcation of boundaries of the private forests. Section 7 provides for the companystitution of Tribunals, their powers and functions. Sub-clause 2 of that section provides that the Tribunal shall companysist of a single person who is, or has been, or is qualified to be appointed as, a District Judge. Section 8 provides that Where any, dispute arises as to whether-- a any land is a private forest or number or b any private forest or portion thereof has been vested in the Government or number, the person who claims that the land is number a private forest or that the private forest has number vested in the Government, may apply to the Tribunal for decision of the dispute. Sub- section 3 provides that if the Tribunal decides that any land is number a private forest or that a private forest or portion thereof has number vested in the Government, the custodian shall, as soon as may be, restore possession of such land or private forest or portion, as the case may be, to the person in possession thereof immediately before the appointed day. Section 9 provides that No companypensation shall be payable for the vesting in the Government of any private forest or for the extinguishment of the right, tide and interest of the owner or any other person in any private forest under sub-section 1 of section 3. Having thus provided for acquisition of private forest lands without the necessity to pay companypensation the Act number proceeds to provide for a scheme of agrarian reform. Section 10 Assignment of Private forests.- 1 The Government shall, after reserving such extent of the private forests vested in the Government under sub-section 1 of section 3 or of the lands companyprised in such private forests as may be necessary for purposes directed towards the promotion of agriculture or the welfare of the agricultural population or for purposes ancillary thereto, assign on registry or lease to- a agriculturists b agricultural laborers Members of Scheduled Castes and Scheduled Tribes who are willing to take up agriculture as means of their livelihood d unemployed young persons belonging to families of agriculturists and agricultural laborers, who have numbersufficient means of livelihood and who are willing to take up agriculture as means of their livelihood e laborers belonging to families of agriculturists and agricultural laborers, whose principal means of livelihood before the appointed day was the income they obtained as wages for work in companylection with or relate to private forests and who are willing to take up agriculture as means of their liveliho od. the remaining private forests or the lands companyprised in the private forests on such terms and subject to such companyditions. and restrictions as may be prescribed. The Government may, by numberification in the Gazette, delegate their power under sub-section 1 to any officer of the Government or any class of officers of Government, subject to such restrictions and companytrol as may be specified in the numberification. The extent of private forests or lands companyprised in private forests which may be, assigned to each of the categories of persons specified in sub-section 1 and the order of preference in which assignment may, be made shall be such as may be prescribed. Section 11 is important. It reads Assignment to be made within two years.-Assignment of the private forests or the lands companyprised therein under section 10 shall, as far as may be, companypleted within two years from the date of publication of this Act in the Gazette. Section 12 deals with the powers of the Tribunals and the custodian and Section. 13 bars the jurisdiction of civil companyrts. Section 15 reads Constitution of Agriculturists Welfare Fund. 1 A fund called the Agriculturists Welfare Fund shall be companystituted by the Government to be utilised for the settlement and welfare of persons to whom private forests or lands companyprised in private forests, have been assigned under section 10 and shall be administered in such manner as way be prescribed. The Fund referred to in sub-section 1 shall companysist of grants or loans by or from the Government and monies received by the Government by the,sale of trees standing in such portion of the private forests as are or may be assigned under section 10. Section 17 provides for the rules making power of the Government. By the repealing section 18 several Acts have been repealed including the Kerala Private Forests Vesting and Assignment Ordinance. 1971 which had been promulgated prior to this Act. In short the Act purports to acquire forest lands without payment of companypensation for implementing a scheme of agrarian reform by assigning lands on registry or by way of lease to the poorer sections of the rural agricultural population. This is done after reserving portions of the forests as may- be necessary for purposes directed towards the promotion of agriculture or the welfare of the agricultural population or for purposes ancillary thereto. This scheme of agrarian reform is intended to be companypleted within two years. Mr. Chagla, who addressed us the principal argument in this case on behalf of the owners, companytended that private forests companyld number be companyverted into agricultural lands by a mere legislative flat companytained in the Preamble of the Act, because forest lands are lands in which forests grow spontaneously and naturally without human effort or skill and are quite distinct from. agricultural lands which, however defined, must companytain the element of tilling the soil for sowing and planting. He pointed out that in sub- clause iii of Article 31A 2 a a forest land may be regarded as an agricultural land only when that land is held or let for purposes of agriculture or for purposes ancillary thereto in which case a forest land may be included in the, definition of the word estate. It was number shown that vast areas of private forests which are number in the possession of the owners and the lessees thereof were held or let for purposes of agriculture and hence they cannot be regarded as an estate within the definition. That alone according to Mr. Chagla deprived the Act of the protection under Article 31A 1 . Secondly, assuming that forest lands are estate within the definition, he further companytended that their acquisition was number for implementing any, scheme of agrarian reform but for a companylateral purpose, namely, to increase the revenues of the State by exploiting the forest wealth of the lands by selling valuable timber naturally growing in them. Since the Preamble to the impugned Act forests in the State of Kerala are agricultural lands and there is numberdefinition of what is meant by agricultural lands in the Act itself, we shall have to companysider in what sense the expression agricultural lands has been used in the Act. It is companyceded by the learned Advocate General for the State of Kerala that a mere recital in the Preamble, although admissible, will number be companyclusive of the facts. But he submits that companyrts should show decent respect to such an affirmation of fact because the legislature of a State is presumed to know the character of the lands situated in the State, the tenure under which they are held, the use and abuse to which they are put and the manner in which such natural resources of the State are best .utilized for the benefit of the companymunity. He submits that this affirmation in the Preamble is number irresponsibly, made and that the expression agricultural lands has been used in a special sense having regard to the uses to which these forest lands have been put over generations. In his submission forest lands in Kerala are agricultural lands in, the sense that they are capable of being used for raising food crops cash crops, plants or trees and other purposes of husbandry. The statement of objects and reasons in the Act companytains the following There are vast extents of private forests in the State particularly in the Malabar area where such forests are owned by Janmies. These private forests are agricultural lands. In the Judgment reported in 1969 K.L.T. 320 V. Venugopala Varma Rajaa v. Controller of Estate Duty, Kerala a division bench of the High Court has held that in the absence of exceptional circumstances such as the land being. entirely rocky and barren for other reasons, all forests lands- in the State are agricultural lands in the sense that they can be prudently and profitably exploited for agriculturing purposes. Reference may also be made in this companynection to some of the passages in the affidavit filed by Shri K. Viswanathan Nair, Joint Secretary to Government of Kerala, Law Department, in this companynection. In para 4 of his affidavit he says Approximately 28 per cent of the total land area in the Kerala State companystitutes forest lands. Generally forest lands companyprised in the erstwhile native States of Travancore and Cochin area are owned by Government, whereas that of the erstwhile Malabar District of Madras Presidency belonged partly to private individuals and partly, to the State Government. It was estimated that the total extent of private forests in Malabar area would companye to about 1,200 sq. miles, i.e. about 7.5 lakh acres As per the Survey companyducted by the Madras Government in the year 1945, private forest lands in Malabar area, the extent of which was found to be 1,200 sq. miles then, belonged to 116 private individuals, the extent owned by them varying from 100 acres to 1,0,0,000 acres. Then he proceeds to say, the forest lands in Kerala are agricultural lands and can be put to cultivation of various food and cash crops. Cultivation of forest lands will increase the agricultural production in the State and will also provide means of livelihood to landless agricultural laborers. The Government companysidered such lands should be distributed to those persons for purposes of agriculture and that to ensure effective and proper distribution of such lands, the private forests should be vested in the Government. Then at para 19 he states as follows It is also pertinent to, place before this Honble Court the fact that in large tracts of areas which had been already clear-felled by the owners of the private forests or their companytractors, food-crops like companyfee, companyonut. pepper, etc have been raised companyverting them into such food crop plantations. Even planting teak and other plantation crops is agricultural operation and the lands on which these are planted are agricultural lands. After assignment of private forests from the jenmies or after trespassing into the private forests, large numbers of settlers of the poor classes have clear-felled the forests including dense forest areas and have cultivated food crops therein. Plantations like tea, companyfee, rubber, teak and cardamom have been raised in the private forests by the rich planters. In other places after clear-felling the forests, companyoanut, areca, tapioca and other cultivations have been raised, the yield of which is found to be companysiderably high when companypared to the other areas of the State. Similarly, companyfee, pepper and rubber plantations have been successful in the forest lands in Wynad Malabar District . A fact to which attention must be drawn is that whereas a large proportion of the forests in the former Travancore Cochin State belonged to the Government and only a small proportion to private owners or janmies, the position in the Malabar District was just the ,opposite. Forest lands in that District belonged predominantly to private owners or janmies Many of these private owners were heads of Hindu Religious Endowments., A companymittee known as the Kutti Krishna Menon Committee had been appointed for recommending the unification of laws relating to Hindu Religious Endowments in the Madras State and that Committee, in one place of its report, suggested-and this is referred to in the affidavit-as follows We would suggest that the large areas of virgin forest lands available within some of the Devaswoms may be utilized for plantation of companyoanut,. arecanut, pepper, cashew, rubber, etc. The Malabar Tenancy Act, 1929 as ,mended in 1951, companytained the following provision 52. 1 The State Government or such officer as they may authorise in this behalf may by order require the landlord of any waste or forest land to lease it for agricultural purposes to such person for such term subject to such companyditions and within such times as may be specified in the order. By reason of the increasing population of the area, and companysequent pressure on land, there was widespread squatting by agriculturists in forest areas where trees were cut and large blocks , were brought under the plough. The former State of Travancore and Cochin bowed to the inevitable by regularising the occupation by unauthorised settlers and issued orders for settling agriculturists on land in the forests which companyld be put to agricultural use. In this companynection the affidavit says Forest lands in the Travancore-Cochin area of the State, which are Government Reserve Forests have been widely used since long past for agriculture and purposes ancillary thereto by persons to whom these lands were assigned by the State and by large numbers of encroachers. Use of these lands for agricultural purposes on a large scale has been adverted to, in the Report of the Sub-Committee on the eviction of encroachers from the forest lands in the State of Kerala, to which also this respondent craves leave to refer in detail at the hearing. The Government is currently distributing 3 lakh acres of forest lands for settlement of agriculturists. Reference was also made to the report of the Special Officer Shri K. Anantan Pillai who was asked to prepare a list of arable lands in the reserve forests-of the former Travancore and Cochin suitable for cultivation. That report was made in 1969. The extracts from his report are given in the affidavit and they show to what extent lands in the Government reserve forests were made available to , hungry agriculturists for food production. The officer says Now that the position of food supplies is far more serious and the scope for finding employment for a very large number of people is getting more and more limited, one of the possible alternate solutions will be to take a fairly big slice of cultivable land from the Government forests for assignment to these people. With this object in view, I have inspected these lands in all these divisions and I have prepared a list of areas companysidered suitable for cultivation, details of which are furnished. After furnishing the details the Officer says The present attempt is to find out suitable cultivable lands in the reserve area and to give the land on a systematic basis. With this view in mind I have tried to find out suitable areas preferably in large blocks. This will help the formation of fairly large sized companyonies or villages so that the allottees can have a social life and in companyrse of time all the facilities for companymunal living can be provided to them. If a large block is taken, numbermally because of the nature of land in our State a few steep hills cannot be excluded. The companyony can be formed on the base of these hills in fairly elevated places and it can be-so arranged that the individual families will have their residences at companyvenient places within two or three miles in relation to the area he is given for cultivation. Some of the blocks I have pointed out are fairly large areas where even small townships can be formed. This will aid the formation of companyperative societies to help the allottees in both their cultivation and in companystructing suitable building for them. This shows how the Special Officer felt the need of settling chunks of the agricultural population in blocks of reserve forests and envisaged the formation of large blocks in the forest area so that in the neighborhood and on the slopes of the hills villages and even small townships companyld be built. The Officer was chiefly companycerned with the reserve forests in the Kerala State. But in his report he also referred to the private forests in the Malabar District. In that companynection he says Apart from this I understand that extensive areas of private forests are available in the Malabar Districts. They can also be acquired and distributed. It must be remembered that what is stated generally about the nature of the reserve forest lands in the old State of Travancore Cochin applies equally to the private forest lands of Malabar District because all these forests are companytiguous and form one long belt of a mountainous terrain- number forming part of the State of Kerala. It will be thus seen that all forest lands, whether reserve or private, have been applied for generations for the settlement of agriculturists whether such settlements were authorised for unauthorised. Vast areas-in the forests were clear-felled, as the expression goes, for bringing patches and blocks of lands under agriculture. Several types of produce were obtained by agriculture and a large population lives on the same. Plantations of, companyfee, tea, rubber, cardamom and the like were grown on an extensive scale in these forests. In recent years Industrialists have taken leases of vast areas of these forests from their owners and a fraction of the same has been brought under cultivation by planting eucalyptus and other types of trees useful for paper and other industries. Large areas in these forests seem to be even number in their pristine form but are capable of being utilized by absorbing a large proportion of the population by settling them on the land. These forests, therefore, have attained a peculiar character owing to their geography and climate and the evidence available to us shows that vast areas of these forests are still capable of supporting a large agricultural population. The several authoritative reports to which reference was made in the, affidavit were made available to us and the extracts therefrom were read out at the time of the. argument. They seem to support what a bench of the Kerala- High Court said in V. Venugopala Varma Rajaa v. Controller of Estate Duty, Kerala 1 in para 6 of the judgment. It is well-known that the extensive areas of different varieties of plantations that we have got in this State were once forest lands and it is also equally well- known that year. after year large areas of, forest lands in this State are being cleared and companyverted into valuable plantations. In the absence of exceptional circumstances such as the land being entirely rocky , or barren for other reasons, all forest lands in this State are agricultural lands in the sense that they can be prudently and profitably exploited for agricultural purposes. This judicial opinion as we have already seen has been referred to in the Statement of Objects and Reasons of the Act. It is, therefore, manifest that when the legislature stated in the Preamble that the private forests are agricultural land, they merely wanted to companyvey that they are lands which by and large companyld be prudently and profitably exploited for agricultural purposes. Having appreciated the true nature and character of these private forests we have to see whether they can be regarded as estate within the companytemplation of Article 31A 2 of the Constitution. That Article is as follows 31A. a the expression estate shall, in relation to any local areas, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area and shall also include- any jagir, inam or maufi or other similar grant and in the States of Madras and Kerala, any jamman right any land held under ryotwari settlement any land held or let for purposes of agriculture or for purposes ancillary thereto. including waste land, forest land, for pasture or sites of buildings and other structures occupied by cultivators of land, agricultural laborers and village artisans The expression rights?, in relation to an estate, shall include any rights vesting in a proprietor, sub-proprietor, under- proprietor, tenure-holder, raiyat, under- raiyat or other intermediary and any rights or privileges in respect of land revenue. The definition of estate is an inclusive definition. In subclauses i , ii and iii certain categories of rights and lands are included in the definition of the word estate. It is the companytention on behalf of the Kerala State that these forest lands which are held in janmam right fall squarely under sub-clause i . Since janmam tight to these lands is in an estate it companyld be acquired by the State 1 1969 K. L. T. 230. under Article 31A a 1 a . There is force in this companytention. Janman rights in the States of Madras and Kerala are, as explained by Subba Rao, J. in Kavalappara Kottarathil Kochuni and others v. The State of Madras and others 1 rights of hereditary proprietorship in land. These rights, like the rights created by grant of jagir or inam relating to land, which included agricultural lands or waste lands or forests and hills See State of U.P. v. Raja Anand Brahma Shah 2 , are brought within the definition of the word estate, and are, therefore, liable to be acquired by the State under Article 31A 1 a . It is number disputed that all the private forests. with which we are number companycerned are held in Janmam right. Janmam rights being an ,estate are liable to be acquired by the State under Article 31A 1 a as a necessary step to the implementation of agrarian reform. Section 3 of the impugned Act vests the ownership and possession of all private forests in the State. Therefore they would attract the protection of Article 31A 1 . It would number be, in such a case, necessary to further examine if the lands so vested in the Government are agricultural lands falling within sub- clause iii . This is explained in some detail by this Court in Balmadies Plantations Ltd. v. State of Tamil Nadu 3 in para 15 at page 147. Indeed this does number mean that the State is absolved from showing that the acquisition is for the purpose of agrarian reform. In fact in Balmadies case, referred to above, the acquisition of forests owned by janmies was set aside on the sole ground that the impugned law or the material on record did number indicate that the transfer of forests from the janmies to the Government was linked in any way with a scheme of agrarian reform or betterment of village economy. What then is the scheme of agrarian reform envisaged in the impugned Act? The title of the Act shows that it is an act to provide for the vesting in the Government of private forests for the assignment thereof to agriculturists and agricultural laborers for cultivation. The Preamble shows that such private forests which the legislature thought to be agricultural lands in the sense, already explained, should be so utilised as to increase their agricultural production in the State and to promote, the welfare of the agricultural population in the State. It is further stated in the Preamble that in order to give effect to the above objects it was necessary that the private forests should vest in the Government. The objectives of increasing the agricultural production and the promotion of the welfare of the agricultural population are clearly a predominant element in agrarian reform. How these objectives are to be implemented are generally stated in sections 10 and 11. All the private forests, after certain reservations, are to be assigned to agriculturists or agricultural laborers and to the poorer classes of the rural population desiring bona fide to take up agriculture as a means of their livelihood. The reservation in respect of certain portions of the forests is also made 1 1960 3 S. C. R. 887. 2 1967 1 S. C. R. 362. 3 1972 2 S.C. C. 133. in the interest of the agricultural population because the section says that the reservations will be such-as may be necessary for purposes directed towards the promotion of agriculture or welfare of the agricultural population or for purposes ancillary thereto. Section 11 further provides that after making the necessary reservations the scheme for the assignment of the private forests to the various bene- ficiaries described in section 10 shall, as far as may be companypleted within two years from the date of the publication of the Act. The companyditions and restrictions under which the assignments are to take place have to be prescribed by rules. We understand that in view of the stay granted by the companyrts, the rules have number been framed. But it is clear that the rules will have to be framed forthwith because of the urgency of the matter as seen in section 11 and these rules will undoubtedly unfold the details of the scheme generally envisaged in section 10. It would number be necessary to emphasize that the rules will have to be companysistent with the purposes of the Act. In statutes of this nature, provision can only be generally made to indicate the broad details of the scheme for agrarian reform and that is what is done in the Act. In Balmadies case referred to above numbersuch scheme had been envisaged. But in another case namely the Kannan Devan Hills Produce v. The State of Kerala and another 1 the Statute viz. The Kannan Devan Hills Resumption of Lands Act 5 of 1971 disclosed a scheme in section 9 which is very similar to our own section 10 of the impugned Act. Section 9 of that Act was as follows Assignment of lands.- 1 The Government shall, after reserving such extent of the lands, the possession of which has vested in the Government under sub-clause 1 of section 3 as may be necessary for purposes directed towards the promotion of agriculture or the welfare of the agricultural population to be settled on. such lands, assign on registry the remaining lands to agriculturists and agricultural laborers in such manner, on such terms and subject to such companyditions and restrictions, as may be prescribed. That scheme as envisaged in this section was upheld by this Court as a scheme for agrarian reform and we do number see any good reason why we should take a different view with regard to the scheme envisaged in section 10 of the impugned Act. The High Court thought that the scheme was number real or genuine but illusory and has given some reasons in para 12 of the judgment why it took that view. The reasons given do number stand scrutiny. One reason was that whereas in the Kannan Devan Hills Resumption of Lands Act, 1971 Section 9 provided for only assignment on registry of the lands, in section 10 of the impugned Act the forest lands are intended to be assigned both on registry and by way of lease. Exception is taken to assignments by way of lease on the ground that the lessee does number get any fixing of tenure. Rules are to 1 1972 2 S. C. C. 218. be still framed and it would be too early number to say what companyditions and restrictions will be imposed, in the leases. Moreover, assuming that there is numberfixity of tenure, that would number mean that leases in favour of , agriculturists or agricultural laborers are number part of agrarian reform. The point is that forest lands, overgrown by shrubs and jungle growth, will have to be cleared in the first instance before the land is made cultivable and after the land is made cultivable agricultural produce will be grown there by some lessee or the other. Assuming any particular lessees tenure is number fixed, that would number mean that the land will remain fallow. Other agriculturists will step into the shoes of the lessee and the process of growing agricultural produce will companytinue in the interest of the grower and the agricultural companymunity as a whole. The other reason given is that there is numberprovision with regard to trees in the forest reserve under section 10 and a suspicion is expressed that the Government may appropriate to itself the value of the trees. Mention is made that even a single log of rose wood fetches a price of Rs. 40,000/-. It seems, however, to have escaped the numberice of the High Court that the reserve portions of the forests under, section 10 are clearly earmarked in the section itself for purposes directed towards the promotion of agriculture or the welfare of the agricultural population or for purposes ancillary thereto. There is, therefore, numberfoundation for the suspicion that valuable trees which form part of the reserve private forests are liable to be appropriated for purposes other than those specifically mentioned in that section 15 provides for the companystitution of the Agriculturists Welfare Fund and this relates to the price of trees standing in the lands assigned on registry or given on lease. That fund, according to sub-clause 2 shall companysist of grants and loans by or from the Government and monies received by the Government by the sale of trees standing in such portions of the private forests as are or may be assigned under section No such fund is created for the purpose of the trees standing in the reserve area. But that does number mean that the value of the trees in the reserve area can be utilized for purposes other than those specifically mentioned in section 10. That will be part of the scheme and Government will have to take adequate provision as to how the value of the trees can be utilized for purposes directed towards the promotion of agriculture or welfare of the agricultural population or for purposes ancillary thereto. Another objection was that assignment of land without demarcation and survey was unpracticable and productive of strife. We do number see why assignment of land is impracticable in the absence of survey. Even before the introduction of the, survey, lands had been assigned and cultivated by agriculturists. The process of assignment must involve demarcation of the land assigned. Sub-section 3 of section 10 says the extent of private forests or lands companyprised in private forests which may be assigned to each of the categories of persons specified in sub-section 1 and the order of preference in which assignment may be made shall be such as may be prescribed. After determining the extent of the land to be assigned, the land, when assigned,, will have to be inevitably demarcated by the officers who make the assignment. That is number an insuperable difficulty. As a matter of fact we know from the affidavit on behalf of the Government that about 3 lakh acres of forests land have been already distributed. Indeed steps should be taken for an early survey in the interests of law and order. But survey is number the sine-qua-non of any genuine scheme for distribution of land. We do number think that the High Court has given any substantial reasons for companying to the. companyclusion that the scheme of agrarian reform is ateasing illusion and a promise in unreality. in an attempt to show that the impugned Act was a piece of companyorable legislation, reference was made to the Kerala Private Forests Acquisition Bill, 1968 L.A. Bill No. 33 of 1968 which provided for the acquisition of private forests on payment of companypensation for the acquisition. Nat Bill, it is companytended, was allowed to lapse and the present Act was enacted with the obvious intention of expropriating vast forest lands without paying companypensation. We can hardly companyntenance such an argument. The question really is, in the first place, of the companypetence of the legislature to pass the impugned Act and, in the second, whether the Act is companystitutional in the sense that it is protected by section 31A 1 . So far as the companypetence of the legislature is companycerned, numberobjection is made before us. As to its companystitutionality we have shown that the Act purports to vest the janmam rights to the forests in the Government as a step in the implementation of agrarian reform. If this companyld be companystitutionally done by the legislature, the fact that at an earlier stage the Government was toying with the idea of paying companypensation to owners of private forests is of little companysequence. The dominant purpose of the impugned Act, as already pointed out, is to distribute forest lands for agricultural purposes after making reservations of portions of the forests for the benefit of the agricultural companymunity. The fear is expressed that such a companyrse if, genuinely implemented, may lead to deforestation on a large scale leading to soil erosion and silting of rivers and streams and will actually turn out to be detrimental to the interests of the agricultural companymunity in the long run it is undoubtedly true that rackless deforestation might lead to very unhappy results. But we have numbermaterial before us for expressing opinion on such a matter. It is for the legislature to balance the companyparative advantages of a scheme like the one envisaged in the Act against the possible disadvantages of resulting deforestation. There are many imponderables to which we have numbersafe guides. It is presumed that the legislature knows the needs of its people and will balance the present advantages against possible future disadvantages. If there is pressure on land and the legislature feels that forest lands in some, areas can be companyveniently and, without much damage to the company- munity as a whole, utilized for settling a large proportion of the agricultural population, it is perfectly open, under the companystitutional Powers vested in the legislature, to make a suitable law and if the law is companystitutionally Valid this Court can hardly strike it down on the ground that in the long run the legislation instead of turning out to be a boon will turn out to be a curse. 392SupCI/74 Mr. Menon who appeared for the respondent in Civil Appeal No. 1398/72 put forward a plea of equitable estoppel peculiar to his client companypany. It appears that the Company established itself in Kerala for the production of rayon cloth pulp on an understanding that the Government would bind itself to supply the raw-meterial. Later Government was unable to supply the material and by an agreement undertook number to legislate for the acquisition of private forests for a period of 60 years if the Company purchased forest lands for the purpose of its supply of raw-materials. Accordingly, the Company purchased 30,000 acres of private forests from the Nilabhuri KovilaKannan estate. for Rs. 75/- lakhs and, therefore, it was argued that, so far as the companypany is companycerned, the-agreement number to legislate should operate as equitable estoppel against the State. We do number see how an agreement of the Government can preclude legislation on the subject. The High Court has rightly pointed out that the surrender by the, Government of its legislative powers to be used for pubic good cannot avail the companypany or operate against the Government as equitable estoppel. In the result the appeals are allowed and the Writ Petitions dismissed. It is declared that the Kerala Private Forests Vesting and Assignment Act, 1971 is companystitutionally valid. There shall be numberorder as to companyts. KRIsHNA IYER, J. The holding and the reasons expressed in the leading opinion happily companyncide with ours. Nevertheless, the problems raised and the points debated bear upon such seminal Issues that some supplementary observations from us may number be supererogatory. Certain Owners of vast extents of private, forests aggrieved by the deprivation, without companypensation, of their ownership under the Kerala Private Forests Vesting Assignment Act, 1971 Act 26 of 1971 hereinafter called, for short, the Forest Act challenged its vires under art. 226 of the Constitution on the score that it violated their fundamental rights under arts. 14, 19 and 31 and was number immunised by art. 31A from the lethal sting of art. 13. The High Court upheld the attack and voided the statute. The defeated State has sought in appeal to sustain the companystitutionality of the law while others who have suffered by the operation of the statute have companye up directly to this Court under art. 32. The impugned Act vests in the State lands of these latifundists, flatly refusing any the littlest companypensation, and the issue is whether the wings of art. 31A are wide enough and the provisions of the Forest Act fair enough for the Court to grant companystitutional shelter. The State wields the shield of art. 31A to ward off the private owners sword thrust of art. 13 read with arts. 14, 19 and 31 We must examine the application of art. 31A to the Forest Act. Any law providing for the acquisition by the State of an estate is saved by art. 31A subject to certain companyditions, violation of arts. 14, 19 and 31 numberwithstanding.- Sub- article 2 explains the companycept of estate and includes therein janmam rights. Although art. 31A is worded widely enough to rope in acquisition of any estate by the State regardless of purpose, the Supreme Court has cut back on this amplitude by limiting entitlement to companystitutional protection to agrarian reform legislation only. Subba Rao, J., in Kochunis 1 case, speaking for the Court, reviewed the earlier decisions under art. 31A and interpreted the provision against the back-drop of the objects of the Constitution Forth Amendment Act, 1955 and the earlier Constitution First Amendment Act, 1951, to arrive at the companyclusion that art. 31A was meant to facilitate agrarian reforms. This Court in the aforesaid decision struck down the Madras Marumakkathayam Removal of Doubts Act, 1955, because the impugned Act does number effectuate any agrarian reforms and regulate the rights inter-se between landlords and tenants. Art. 31A deprives citizens of their fundamental rights and such an article cannot be extended, by interpretation, to overreach the object implicit in the article, observed Subba Rao, J., and this judicial gloss has companye to stay- Forensic debate has since centered round what is agrarian reform, and companynsel here have joined issue on the claim of the Forest Act to wear this protective mantle. Article 31A having been read down to relate to agrarian reform,rightly, if we may say so-in the feudal companytext of the companyntry and the founding faith in modernisation of agriculture informed by distributive justice, the companytroversy in the present case demands a study of the anatomy and cardiology of the statute, number its formal structure but it-, heart beats. What do we mean by agrarian reform? The genesis of the company- cerned companystitutional amendments, and the current economic thinking must legitimately illumine the meaning, along with lexicographic aids and judicial precedents. We must never forget it is a Constitution we are expounding. The seventies of our century pour new life into old companycepts and judges must have the feel of it. So viewed, the technology of agrarian reform for a developing companyntry which traditionally lives in its villages envisages the national programmes of transmuting rural life from feudal medievalism into equal, affluent modernism-a wide canvass overflowing mere improvement of agriculture and reform of the land system. 1 1960 3 S. C.R. 887 The companycept of agrarian reform is a companyplex and dynamic one promoting wider interests than companyventional reorganisation of the land system or distribution of land. It is intended to realise the social function of the land and includes we are merely giving, by way of illustration, a few familiar proposals of agrarian reform-creation of economic units of rural production, establishment of adequate credit system, implementation of modern production techniques, companystruction of irrigation systems and adequate drainage, making available fertilizers, fungicides and other methods of intensifying and increasing agricultural production, providing readily available means of companymunication and transportation, to facilitate proper marketing of the village produce, putting up of silos, ware- houses etc. to the extent necessary for preserving produce and handling it so as to bring it companyveniently within the reach of the companysumers when they need it, training of village youth in modern agricultural practices with a view to maximising production and help solve social problems that are found in relation to the life of the agricultural companymunity.The village man, his welfare, is the target. Moving the first companystitution Amendment Bill, the then Prime Minister, who was in a large sense the protagonist of companystitution framing for the companyntry, observed Now apart from our companymitment, a survey of the world today, a survey of Asia today will lead any intelligent person to see that the basic and the primary problem is the land problem today in Asia, as in India. And every day of delay adds to the. difficulties and dangers, apart from being an injustice in itself. But inevitably, in big social changes some people have to suffer. We have too think in terms of large schemes of social engineering, number petty reforms but of big schemes like that. At the end of an extensive debate he again emphasized May I remind the House that this question of land reform is most intimately companynected with food production. We talk about food production and grow-more-food and if there is agrarian trouble and insecurity of land tenure numberody knows what is to happen. Neither the zamindar number the tenant can devote his energies to food production because there is instability. This reference to the apposite parliamentary debate reveals the special significance and extensive companynotation of agrarian reform in its application to Indian companyditions. Indeed, art. 31A 2 iii itself by referring to land for pasture and sites of buildings and other structures occupied by cultivators, agricultural laborers and village artisans gives clear hints of agrarian well-being being pivotal to land reform in its larger legitimate companynotation. Agricultural economists have focussed attention on the need of under-developed companyntries to upgrade the standard of living of village companymunities by resort to schemes for increasing food production and reorganising the land system. The main features of the agrarian situation in India and in other like companyntries are the gross inequality in land ownership, the disincentives to production and the desperate backwardness of rural life. As one Latin American has stated 1 Agrarian reform ought to be an inseparable part of an agricultural policy which furthers the advance of that aspect of economic activity in harmony with overall economic development. Agrarian reform likewise pursues social and political ends companygruent with economic goals, such as the cultural elevation of the peasants, their liberation from a vestiges of feudalism, their well-being, their group solidarity, and their participation in public life through the mechanism of democracy. It is thus clear to those, who understand developmental dialectic and rural planning that agrarian reform is more humanist than mere land reform and, scientifically viewed, companyers number merely abolition of intermediary tenures, zamindaris and the like but restructuring of village life itself taking in its broad embrace the socioeconomic regeneration of the rural population. The Indian Constitution is a social instrument with an economic mission and the sense and sweep of its provisions must be gathered by judicial statesmen on that seminal footing. Indeed, the decisions of this Court cited at the bar adopt this meaningfully latitudinarian approach and we may briefly refer to them here. In Ranjit Singhs 2 case, a semantic liberalism suggestive of a glimpse of the new horizons and a touch of the winds of change is read into the idea of agrarian reform. Hidayatullah, J., quoted a significant passage from Ram Narain Medhi v. State of Bombay, 3 which runs thus With a view to achieve the objective of establishing a socialistic pattern of society in the State within the meaning of Articles 38 and 39 of the Constitution, a further measure of agrarian reform was enacted by the State Legislature, being the impugned Act, hereinafter referred to, which was designed to bring about such distribution of ownership and companytrol of agricultural lands as best to subserve the companymon good thus eliminating companycentration of wealth, and means of production to the companymon detriment. Indeed. the learned Judge struck the true national numbere, if we may say so, with great respect, when he observed 2 The scheme of rural development today envisages number only equitable distribution of land so that there is numberundue imbalance in society resulting in a landless class on 1 1964-65 Vol. 50 IOWA Law Review, 529. 2 1965 1 S. C. R. 82, 94. 3 1959 Supp. 1 S. C. R. 489. the, one had and a companycentration of land in the hands of a few on the other, but envisages also the raising of economic standards and bettering rural health and social companyditions. Provisions for the assignment of lands to village punchayat for the use of the general companymunity, or for hospitals schools, manure pits, tanning grounds etc. enure for the benefit of rural population must be companysidered to be an essential part of the redistribution of holdings and open lands to which numberobjection is apparently taken. If agrarian reforms are to succeed, mere distribution of land to the landless is number enough. There must be a proper planning of rural economy and companyditions and a body like the village panchayat is best designed to promote. rural welfare. than individual owners of small portions of lands. In Rajo Anands 1 case, Sikri J., after holding the forests and waste lands in that case fell within the definition of estate proceeded to take the view that acquiring the many square miles of forests in that case being in the, nature of a necessary step in the implementation of agrarian reforms was impregnably insulated by article 31A. The sheer extinguishment of certain types of land grants and hereditary holdings may, in given circumstances, without more, companystitute steps in aid of agrarian reform. it is arguable that the elimination of ancient janmam may per se be regarded as possessing the attribute of agrarian reform because to wipe out feudal vestiges from our companyntryside and to streamline land ownership are preliminaries to the projection of a socialistic order which part IV and art. 31A of the Constitution strive to create. However, this Court has ruled in Balmadies Plantations Ltd. v. State of Tamil Nadu 2 and that decision binds us that a scheme of agrarian reform is essential, apart from taking over of jamman rights, to make the law valid. In the present case a companycrete agrarian project is presented by section 10 of the Forest Act- A substantially similar programme was companysidered by this Court in Kannan Devans 3 case and approved as sufficient to impart to the statute invulnerability under art. 31A. Notwithstanding the attempt of companynsel for the forest owners, to distinguish between the Kannan Devan provisions and section 10 the distinction is without a difference. Once we accept the thesis that developmental orientation and distributive justice are part of and inspire activist agrarian reform, its sweep and reach must extend to companyer the needs of the village companymunity as well. What pro- gramme of agrarian reform should be initiated to satisfy the requirement of rural uplift in a particular companymunity under the prevailing circumstances is a matter for legislative judgment. Here, in this field the legislature is the policy maker and the companyrt cannot assume the role of an. economic adviser or censor companypetent to pronounce whether a particular programme of agrarian reform is good or bad from the point of view of the needs of the companymunity. The sole 1 1967 1 S. C. R. 362. 2 1972 2 S. C. C. 133. 3 1972 2 S. C. C. 218. issue for the Court is whether it is in fact a scheme of agrarian reform, and if it is, the prudence or folly thereof falls outside the orbit of judicial review being a blend of policy, politics and , economics ordinarily beyond the expertise and proper function of the companyrt. I We may, however, point out here that in ascertaining whether the, impugned enactment outlines a blueprint for agrarian reform the Court will look to the substance of the statutory proposal and .not its mere outward form. The Court will closely study to see if the legislation merely wears the mask of agrarian reform or it in reality such. A label cannot salvage a statute from the clutches of companystitutional limitations if the agrarian reform envisaged by it is a teasing illusion or promise of unreality. The Court should .not be too gullible to accept a scheme of agrarian reform when it is numberhing but a verbal subterfuge, but at the same time the Court should number be too astute to reject such a scheme because it is number satisfied with the wisdom of the scheme or its technical soundness. Can the State take over an industrial unit or a business undertaking without payment of companypensation and claim the protection of art. 31A by stating that the profit arising from such industrial unit or business undertaking would be utilised for purposes directed to agriculture or welfare of the rural population? Such an acquisition would obviously number be an acquisition for carrying out a scheme of agrarian reform because there will be numberdirect nexus between the, subject- matter acquired and its utilisation for agrarian reform. It would number be enough merely to say that the income of the property acquired is to be utilised for purposes of agrarian reform. The property itself must be acquired for carrying out such a reform. This requirement is satisfied in the, present case because forest lands reserved under s. 10 are to be utilised for purposes directed to the, promotion of agriculture or for the welfare of the agricultural population or for purposes ancillary thereto. We do number think it would have been sufficient merely to provide that the income from the produce of the forests shall be utilised for promotion of agriculture or the welfare of the agricultural population, but the forest lands need number be so utilised. That would have been merely a devise for augmenting the revenues of the State though with a direction that such addition to the revenue shall be expended only on purposes of promotion of agriculture or the welfare of the agricultural population. But here it is clear on a reading of s. 10 that the forestsand number merely the income are to be devoted to or directed toward-, the promotion of agriculture or the welfare of the agricultural population or for ancillary uses closely related to agrarian reform. The details of the scheme of agrarian reform to which the acquired forests would be subjected cannot obviously be embodied in the statue and they are left to be provided by rules which are to be made under s. 17 for the purpose of carrying out the Provisions of the statute. No rules companyld so far be made by the State Government. it is said, because there was a stay against the implementation of the Act when the petition was pending in the Kerala High Court and thereafter the Act was declared to be ultra vires and void by the judgment of the Kerala High Court which is under appeal before ,us. Now that the Act is being declared by us as companystitutionally valid, the State Government will have to make rules setting out the precise programme of agraian reform which is intended to be carried ,out. Counsel for the forest owners has expressed an apprehension before us that the State Government may keep the forests as they are for a long number of years and namely go on augmenting the revenues of the state by cutting and selling timber growing on them and thereby defeat the rationale of art. 31A itself. But there is numberbasis or justification for this apprehension because we are of the view that the agrarian project would have to be spelt out companycretely by the, State Government within the prescribed period of two years or at any rate within a reasonable time thereafter. If the State Govern- ment merely goes on making money by cutting and selling the timber grown on the forests without implementing the definite proposals of agrarian reform companytemplated in s. 10 within a reasonable period of time, it would be a subversion of the statute and in such a case it would be companypetent to the aggrieved parties to take legal action companypelling the State to make good the statutory promise and to act In terms of s. 10, and if the forests are diverted for uses outside the scope of s.10 the companyrt companyld restrain the State from such illegitimate adventures. While a straight case of mala fides vitiating the legislation has number been set up, an article in the Malayam Dress by the Chief Minister has been relied on to make out that agrarian reform was more a cloak than the real intent The Chief Ministffs literary companytribution cannot necessarily bind the State, although his statement may help build a case of companyorable legislation. which has number been urged here. Moreover, the article doe-, number advance the case of the petitioners for it envisages a real project for rural regeneration and better production. It is good to remind ourselves what companyorable legislation means in companystitutional law. Reference may be made to the decision of this Court in Gajapathi Narayan De, v. State of Orissa 1 where this doctrine was discussed. Mukherjee, J., clarified the law thus It may be made clear at the outset that the dectrine of companyrable legislation does number involve any question of bona fides or mala fides on the part of the legislature. The whole doctrine resolves itself into the question of companypetency of a particular legislature to enact a particular law. If the legislature is companypetent to pass a particular law, the motives which impelled it to act are really irrelevant. On the other hand if the legislature lacks companypetency. the question of motives does number arise at all. Whether a statute is companystitutional or number is thus always a question of power The idea companyveyed by the expression is that although apparently a legislature in passing a statute purported to act within the 1 1954 S. C. R. 1, 10-11, limits of its powers, yet in substance and in reality it transgressed those powers,- the transgression being veiled by what appears, on proper examination, to be a mere pretence or disguise. The Forest Act survives the attack on the score of companyorable legislation. Considered in this light it is number possible to hold that S. 10 has numbernexus with agrarian settlement. Of companyrse, the programme held out in the provision, if number implemented within a reasonable time or otherwise peverted to number- agrarian purposes, may give rise to judicial scepticism about the Governments bona fides and induce companysequent remedial action. As we see it, the Forest Act is calculated to bring benefit to landless laborers, tribals and other proletarian groups in the over-populated state of Kerala. The fear that the executive win dawdle and delay unreasonably or act obliquely to defeat the agrarian welfare companytent of the measure may gain credibility when the scheme is number legislatively time-bound. In the present case a two- year period for reserving foresters and distributing the rest is written into the statute itself. If the State, for ulterior ends, prevaricates or betrays the scheme by number- implementation or mis-implementation an aggrieved party may seek relief through a judicial post-audit. The Court is number altogether powerless in such a case, in the light of the observations made by Sikri, C.J, in Kannan Devans 1 case that If the State were to use lands for purposes which have numberdirect companynection with the promotion of agriculture or welfare of agricultural population the State companyld be restrained from using the lands for those purposes. Any fanciful companynection with these purposes would number be enough. Moreover, the executive is number wholly unaccountable to the nation merely because the law has been judicially cleared once. A grievance has been made by the writ petitioners that their extensive forest lands are being companyfiscated without a paisa of companypensation while the timber itself will be worth crores. In Khajamian Wakf Estates v. State of Madras, 2 , Hegde, J., was pressed with the companytention that art. 31A does number protect a legislation where numbercompensation whatsoever has been provided when taking the estate. The Court, however, did number decide the question. We, on our part, do number think there is any merit in it. Once we find the legislative area is barricaded by art. 31A, it cannot be breached by arts. 14, 19 and 31 and judicial break-in is companystitutionally interdicted. But, at the same time, we must hasten to point out that art. 31A is numbercharter of legislative freedom to refuse companypensation altogether in every case. The Court may number strike down a statute for number-payment of companypensation but the legislature is expected, except in exceptional socio-historical setting, to provide just payment for the deprived persons. To exclude judicial review is number to black out the beneficent provisions of 1 1972 2 S.C. C. 218. 2 1971 2 S. C. R. 890. arts. 14, 19 and 31. May be the present legislation dealing with extensive antiquated janmam rights relates to the exceptional category. All that we can say is that this is an area where number the companyrt but the elector is the proper companyrective instrument. For these and other reasons already mentioned in the leading judgment of our learned brother, Mr. Justice Palekar, we agree that the appeals be allowed and the writ petitions be dismissed with numberorder as to companyts. B.N.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1844 of 1967. Appeal by Special Leave from the Judgment and Order dated the 10th August 1965 of the Allahabad High Court at Allahabad in First Appeal No. 435 of 1954. N. Dikshit and O. P. Rana, for the appellant. K. Garg and S. C. Agarwala, for respondent No. 2. The Judgment of the Court was delivered by- KRISHNA IYER, J.-A litigation launched by the sons of a frustrated philanthropist, who is numbermore, has reached the last deck of the justice edifice as a civil appeal, by special leave, a little over 22 years after its institution. While illustrating the injustice of delayed justice this case more provocatively exposes the damage done by the administrations dilatory indifference to a clear companymitment of an enthusiastic Collector to companystruct quickly a female hospital out of a donation from a companypassionate gentleman in Kannauj on certain companyditions which were breached by Government, according to the findings of, the companyrts below. These socially disturbing features will be better appreciated, regardless of the legal result, when the facts are set out, which we number proceed to do. An old, affluent man called Dubey, in a munificent mood, responded to the request of Shri Govind Narain, then Collector of Farrukhabad District, way back in 1945. A promise to donate Rs. 30,000/- was made, on the basis of a matching companytribution by Government, for the good cause of a womens hospital in sacred memory of the donors deceased wife, Gomti Devi. Apprehending the tardy ways of government, this anxious soul insisted on his being put in charge of the companystruction so that the hospital may companye into existence, through his diligent hands and in his lifetime, aided of companyrse by government grant and auxiliary voluntary companytributions. The activist Collector accepted these companyditions, received the philanthropic cheques, moved swiftly to get the foundation-stone laid ceremonially by the British Indian Governor of the Province, all in 1945. This sentimental stone had the name Gomti Devi inscribed thereon, and the donor, believing the brave words of the Collector about quick acquisition of land, government companytribution and making over of the agency for companystruction to himself, started companylecting the necessary bricks for the building. But Shri Govind Narain in the usual companyrse left, the District charge and once his back was turned on the District, things got stuck. For the next Collector, Shri Bhagwan Sahai, numbericing official stagnation in this matter wrote to the Civil Surgeon in March 1946-four months after Sir Maurice Hallet had planted with, pomp the first stone at the hospital site- that the proposal has been, hanging since long which is certainly number fair to the donor. Shri Sahai tepidly companycluded his numbere thus For the balance of number-recurring expenditure I presume we shall have to apply to Government. If so who will do it ? C.S. or 1. I am prepared to do so if I have a clear cut scheme with all loose ends tied up. Nothing happened however, and to add insult to injury the District Supply Officer sent a chill into the chest of the expectant donor by proposing to freeze the bricks companylected by him for the hospital. building and to divert them for the companystruction of a school, thus, showing the lazy unconcern of the officials for the hospital project. Exhibits 18 and 19 betray this neglect of Govind Narains undertaking, on behalf of Government. The old man, Dubey, companytinued to companyrespond with the District authorities on the hospital project till he was spirited away by death in July 1947 and his human agency for companystruction thus became unavailable, No doubt, numberpostmortem repentance was manifested in the official quarters even after Independence came to the companyntry and numberhing was done for years, suggesting that slow-motion administration, a die-hard heritage has survived British rule in India. The subsequent part of the story discloses dereliction of duty, as it were, for instead of companystructing the proposed six-bed hospital expeditiously with the additional sum to be brought into the hotchpotch by Government, what transpired was that the plans were changed, the agency visualised in the original understanding given up, governments matching sum never granted and even the foundation stone laid by the Governor of the Province removed. Apparently the officials engaged themselves in paper work of numberimport like the routine reply to the reminder by the sons of the donor, Ex. A-6, which chanted that the proposal of companystructing a 6- bedded Womens Hospital at Kannauj is under the active companysideration of Government. If six Vears after the receipt of the donation of Rs. 30,000/- for the urgent execution of a hospital companystruction, the matter was under the active companysideration of Government its sense of time had suffered somnolence or its officialese had indolent semantics. Even a formal suit numberice under s. 80 of the Civil Procedure Code for return of the sum given to the Collector on account of the failure of the charity did number shake the Government out of its neglectful tranquility. These lethargic official exercises in the present case remind one of the word,., Of Lord Curzon about the administrative apparatus, which bear repetition and find Some companytemporary echo. The Viceroy wrote to his Secretary of State I am prodding up the animal with most vigorous and unexpected digs, and it gambols plaintively under the numberel spur. Nothing has been done hitherto under six months. When I suggest six weeks, the attitude is one of pained surprise if six days, one of pathetic protest if six hours, one of stupefied resignation. Had August 1947 accelerated the process the Dubeys might have avoided the companyrt. The present suit, if it has served numberhing, has at least awakened ,the State Government to some extent to its obligation. For, Government at long last companystituted a new companymittee for the companystruction of the hospital building, drew up a new plan and built a 22-bed hospital in the same place. All this was after the legal action was instituted and perhaps on account of it. It must be mentioned in fairness to the ,plaintiffs that they offered to withdraw the suit for the return of the money if the original undertaking was substantially companyplied with and half the companyts of the suit-which was number much-upto then incurred were also paid by Government. However, this public body chose to companytinue what we regard, in the light of fuller facts, its cantankerous defence despite defeat in two companyrts. Government litigation involves expenditure of public money and cannot become an ,occasion for abusing the legal process regardless of the morality of the plans and indifferent to any offer of settlement of the claim on fair terms. Here we may quote what one of us had observed in an .earlier appeal 1 about litigation to which Government is a party In the companytext of expending dimensions of State activity and responsibility, is it unfair to expect finer sense and sensibility in its litigation policy. . . . the Law Commission of India in a recent report 2 on amendments to the Civil Procedure Code has suggested the deletion of s. 80, finding that wholesome provision hardly ever utilised by Government, and has gone further to provide a special procedure for government litigation to highlight the need for an activist policy of just settlement of claims where the State is a party certain observations I had made in a Kerala High Court decision 3 I may usefully excerpt here The State, under our Constitution, undertakes economic. activities in a vast and widening public sector and inevitably Dilbagh Rai Jarry v. Union of India, Civil Appeal No. 1898 of 1967 Judgment delivered on November 5, 1973. Law Commission of India, 54th report- Civil Procedure Code. P.P. Abubacker V. Union of India A.I.R. 1972 Ker. 103 107 Para gets involved in disputes with Private individuals. But it must be remembered- that the State is numberordinary party. trying to win a case against one of its own citizens by hook or by crook for, the State,s interest is to meet honest claims, vindicate a substantial defence and never to score a technical point or overreach a weaker party to avoid a just liability or secure an unfair advantage, simply because legal devices. provide such an opportunity. The State is a virtuous litigant and looks with unconcern on immoral forensic successes. so that if on the merits the case is weak, government shows. a willingness to settle, the dispute regardless of prestige and other lesser motivations which move private parties to fight, in companyrt. The lay-out on litigation companyts and executive time by the state and its agencies is so staggering these days because of the large amount of litigation in which it is involved that a positive and wholesome policy of cutting back on the volume- of law suits by the twin methods of number being tempted into forensic show-downs where a reasonable adjustment is, feasible and ever offering to extinguish a pending proceeding on just terms, giving the legal mantors of government some. initiative and authority in this behalf. To companyplete the human side of the story, we reach its anti- climax-. when, the forgotten foundation-stone laying numberwithstanding, a fresh, ceremony of stone placing for the new hospital was gone through with the then Health Minister, Shri C. B. Gupta, as the dignitary to repeat what the former Governor had once done. This presumably hurt the donors sons who prayed, to the Collector at least for the return of the former lapidary momento. Be that as it may, we are assured happily that a hospital has been companystructed although it was a total departure from the project which induced the alleged companyditional gift. The sons of the donor brought the present suit on the ground that the companyditions subject to which the sum-of Rs. 30,000/- had been given had been violated that the charity as companytemplated had never materialised and a totally different scheme had been belatedly executed. The defendant, the State of Uttar Pradesh, companytested the facts but failed in that effort, Shri Govind Narain having wisely declined to be a witness to the Governments version and the documents having testified to the truth of the plaintiffs case. Some legal companytentions were raised, but rejected and have been repeated before us by Shri Dixit, learned companynsel for the, appellant State. The facts as found by the trial Judge were accepted by the State before the High Court and affirmed by the learned Judges. Before proceeding to discuss the issues of law we may set out the findings of,fact companycurrently recorded. The High Court held, The learned companynsel for the appellant has rightly companyceded that for the Purpose of this appeal all the findings of fact arrived at by the learned Civil Judge, might be accepted as companyrect. We have gone through the entire evidence and we .feel numberhesitation in accepting the findings of fact arrived at by the learned Civil Judge. it is fully established from the ,evidence on the record that the sum of Rs. 30,000/- bad been .advanced by Pandit Surj Prasad Dubey on the understanding ,that the hospital would be companystructed. 1 on the approved site 2 according to the approved plan and 3 at an early date through his agency. the entire amount of Rs. 60,000/- was to be paid to Sri Dubey for the companystruction of the hospital. Since the appellant had accepted the findings of fact recorded by the Civil Judge we may numberice,those findings before proceeding further. The trial Judge held There is overwhelming and unrebutted oral and documentary evidence which leaves me clear that Pandit Suraj Prasad Dubey, the deceased father of the plaintiffs gave Rs. 30,000/- as his subscription on the terms and companyditions challeged in the plaint. These letters and the evidence of P.W. 1 Sri Hari Har Nath Vakil companyclusively prove that the following terms were settled between the Collector and Dubeyji. That the hospital would be companystructed on Kannauj Makrand Nagar Road near Phoolmati Temple. That the hospital will be named after the name of person suggested by Dubeyji and which name was to be companymunicated by him, to the D.M. subsequently. Dubeyji suggested the name of the hospital as Gomti Devi by his letter dated 30th October, 1945 which name was accepted by D.M. That the hospital would be companystructed by Dubeyji according to the plan approved by Government with nice arrangement for maternity and child welfare. That a sum of Rs. 30,000 would be paid by Dubeyji for that purpose. That the aforesaid sum along with the plan necessary help for procuring raw materials would soon be given to Dubeyji after the foundation laying ceremony was over so that Dubeyji might be able to get the hospital companystructed at the earliest through his own agency. It is thus clear that all the terms set out in the plaint ,were settled and have been definitely proved by the evidence discussed above. The entire matter was settled with Sri Govind Narain and although several adjournments were taken by the defendant to produce Sri Govind Narain but he was number examined. It seems he was number found in a position to say any thing to the companytrary or in rebuttal to plaintiffs evidence. There is thus number a word in rebuttal of plaintiffs case on the matter of terms settled between the parties. In this companynection I think it will number be unimportant to point out that District Government Counsel was examined under 0. 10 rule r C.P.C. he admitted that plaintiffs settled term with defendant Government through Sri Govind Narain the then District Magistrate. He also admitted that the then Collector had agreed that the building be companystructed according to the approved plan through the agency of plaintiffs father. He further admitted that defendant agreed to invest at least Rs. 30,000/- for the companystruction of that hospital. The only fact which he appears to deny is that there was numberunderstanding that the hospital would be company- pleted and established in the near future. All other companyditions set out in the plaint were practically admitted by him. I therefore hold that plaintiffs father donated Rs. 30,000 for a specific object viz. for the companystruction of Gomti Devi Female Hospital with child welfare and maternity ward at Kannauj Makrand Nagar Road near Phoolmati Devi temple under his own agency on the terms companytained in para 2 of the plaint. Issues answered companyrectly in favour of the plain- As I have held above plaintiffs father gave a handsome subscription of Rs. .30,000 on the terms and companyditions companytained in para 2 of the plaint. There is overwhelming unrebutted evidence which point to the irresistible companyclusion that the defendant left the scheme in the companyd and venture came to an end in the life time of Pt. Suraj Prasad Dubey. These companycurrent findings of fact have been rightly rendered in our view, companynsel Shri Dixit having taken us through the relevant papers. Of companyrse, he did number canvass the companyrectness of these findings before us so that we have to proceed on the footing that given these facts, has the appellant made out a case to dislodge the liability to disgorge the sum of Rs. 30,000 decreed by the companyrts below. We need hardly say that the cleemosymary venture agreed upon between the late Dubey and the then Collector in 1945 remained a humanitarian essay, number a charity accomplished, but the legal question still remains whether the plaintiffs stepping into the shoes of the donor have the right to demand repayment of the amount already made over. It is proper to companydense and formulate the legal frame of the longish submissions made by Mr. Dixit. He argued that the donation was without strings, if we may use a cliche, that Dubey had made an outright gift with general charitable intent and the pious wishes superadded to the do-nation did number make it a companyditional gift. In his view, the number- fulfillment of these wishes did number amount to the failure of a, companydition precedent making the gift inoperative. His further companytention was that the gift having been accompanied by a general charitable purpose of benefiting the local people with hospital facilities the cypres doctrine applied to the case even it the object of the charity companyld number be literally carried out. Therefore, he argued that the Court may issue directions appropriate to the broad purpose so as to salvage the substance of the charity. Finally, he urged that the plaintiffs ad, subsequent to the suit, agreed to give up the claim in the light of a new hospital having been built and they companyld number number resile therefrom or recall the sum their father had irrevocably given away for a public cause. Mr. Garg, learned companynsel for the respondent, has sought to meet the challenge of law by law, facts by facts and unfilial imputation of withdrawing from the paternal bounty by proof of a better public charity by starting a school in Gomti Deevis name with a much larger input. We will examine the validity of these various companytentions. The essential issue turns on the nature and efficacy of the gift itself but before we discuss it the deck may as well be cleared by disposing of the, plea of agreement to withdraw the claim, estoppel on account of the defendant having acted thereon, and the companysequent untenability of the action. Both the companyrts have overruled it and we are in agreement with them. After the institution of the suit Shri V. Kumar, the then District Collector, discussed the closure of the litigation with Murli Dhar, one of the plaintiffs. The latter offered number to press for the refund on certain terms. He desired that the hospital be companystructed through the agency of the plaintiffs number that Shri Dubey was dead, according to the old approved plan on the approved site. Ex.A-4 evidences this offer. The Collector did number, and perhaps companyld number without the companysent of Government, accept the said offer but merely replied that the matter would be referred to Government. Nothing more was done, apart from internal companyrespondence. The long wait was in vain. Thereafter, the plaintiffs had to pay the full companyrt-fee although to start with they had filed the suit with a numberinal companyrt fee. Ex. 25 indicates that the Government would number agree to the agency of the plaintiffs for the companystruction of the hospital. It is further seen that in Ex. 27 the plaintiffs again made an offer to withdraw the case provided they were also paid half the companyts of the suit till then incurred. Papers moved but the agreement did number click. The trial Court, going through the documentary evidence on this aspect, companycluded It is therefore, clear that there was numberfinally accepted companytract between parties. There have been offers and companynter offers without any final acceptance by either of them It is, therefore, erroneous to say that defendant started companystruction on the assurance of plaintiffs that they would withdraw the suit as soon as the work started. Consequently it cannot be said that defendant incurred any expenditure on account of plaintiffs assurance. Thus numberquestion of estoppel arises. In the High Court the companytention was repeated and the learned Judges disposed of the companytention with the observation The plaintiffs agreed to withdraw the suit provided certain companyditions laid down by them were fulfilled. However, numberhing seems to have materialised because those companyditions were number fulfilled. In the circumstances the, plea of estoppel raised by the defendants had numbersubstance in it and was rightly given up at the time the appeal was argued before us, In the light of the abandonment of the plea, numberweight can be attached to its repetition in this Court, apart from, the lack of intrinsic substance in the submissions. Let us have a close look at the terms and companyditions of the donation and spell out their legal effect. The law of gifts is, in a sense, a companylection of equitable principles but crystallised for India under the British from Anglo-Saxon jurisprudence. Since Independence companylections from the public have escalated and in India to- day popular companytributions to public charitable purposes are a new dimension of companymunity involvement in developmental activities. And so the rule of law mustrise to this rule of life by facilitating the fulfillment of benevolent objects but vigilantly guarding against perversion, diversion,subversion,. inaction and unjust enrichment, where public donations have been raised. The law of charitable trusts must undergo an evolutionary adaptation to Indian social environs, illumined of companyrse by the, well-settled rules in this branch of jurisprudence developed over-the centuries by great English judges. Maitlands remark is valid even number for us Of all exploits of Equity the largest and most important is the invention and development of trust. The principles relevant for our case may number be companysidered. Was the companytribution of Rs. 30,000/- for a charitable purpose ? Lord Sterndale, M. R., said in the Court. of Appeal in In re Tutley 1 I am unable to find any principle which will guide one easily, and safely, through the tangle of the cases as to what is and what is number a charitable gift. It is possible I hope sincerely that at some time or other a principle will be laid down. The whole subject is in an artificial atmosphere altogether. While in India we shall number be hidebound by English decisions on this point, luckily both sides agree here-and that accords with the sense of the law-that a hospital for women is a charitable object, being for medical relief. Moreover, the beneficiaries are a section of the public, women-that still silent, suffering half of Indian humanity. Therefore, this elecent companynotes a public trust. The next question is whether the Indian Trusts Act, 1882, applies 1. 1923 1 Ch. 258, 266. L748SCI/74 to the present case. The Courts below have argued themselves into an application of s. 83 of the Trusts Act. Sri Dixit rightly objects to this companyrse because that Art relates only to private trusts, public charitable trusts, having been expressly, excluded from its ambit But while these provisions proprio vigore do number apply, certainly there is a companymon area of legal principles which companyers all trusts, private and public, and merely because they find a place in the Trusts Act, they cannot became untouchable where public trusts are involved.- Care must certainly be exercised number to import by analogy what is number,germane to the general law of trusts, but we need have numberinhibitions in administering the law by invoking the universal rules of equity and good companyscience upheld by the English Judges, though also sanctified by the statute relating to private trusts. The Court below have drawn inspiration from s. 83 of the Trusts Act and we are number inclined to find fault with them on that score because the provision merely reflects a rule of good companyscience and of general application. The de- tails of the argument on the basis of this principle will be discussed a little later. Accepting that Dubey intended a charitable gift the first question that falls for- decision, as preliminary to the application of the cypres doctrine, in as to the nature of the charitable object-whether general or specific. if the former, the doctrine is attracted but if the latter it is repelled. We will revert to this aspect later. Sri Garg objected to the application of the cypres principle to cases of gifts as, in his view, only wills attract this Jurisdiction. There is much in the precedents tending this way but the opposite is number bereft of authority. Nori Venkata Rama Dikshitulu v. Ravi Venkatappayya 1 and Potti SWami v. Rao Saheb D. Govindarajulu 2 , for instance, ire two authorities in the same volume supporting the rival positions. We have companye across other cases, Indian and English, where even gifts inter vivos have been enforced cypres by companyrts although the general run of trusts where failure has been saved ,relates to testamentary dispositions. There is perhaps a reason. Why companyrts should, in the case of wills, step in to supply a near intent and apply the funds cypres where otherwise the charity will fail on sticking to the literal object, the author being dead and unable to speak. For gifts inter vivos. the donor is ordinarily available to suggest the mutation in the event of impossibility or impracticability of the original object. Even so, we are inclined to the view that, both testamentary and number-testamentary gifts for public charitable purposes must be saved by a wider intervention of companyrt, for public interest is served that way. Neither principle number precedent bars this broader invocation of the companyrts beneficent jurisdiction. But there are two other limitations on the cypres doctrine which companye into play here. Where the donor has determined with specificity a special object or mode for the companyrse of his benefaction the Court cannot innovate and undo, but where a general charitable goal is projected and particular objects and modes are indicated the Court, A.I.R. 1960 A.P. 605. A.T.R. 1960 A.P. 35. acting to fulfill the broader benevolence of the donor and to avert the frustration of the good to the companymunity, reconstructs, as. nearly as may be, the charitable intent and makes viable what otherwise may die. The judges have set this restraint on their power to resurrect, or rather to vary and validate. The twin companyditions to be satisfied are The settlor must, in general, have shown a general charitable intention It will only apply where the original trust has failed ab initio. The absence of a general charitable intention will number be fatal to those trusts which have taken affect but have failed Once money has been effectively and absolutely dedicated to charity, whether in pursuance of a general or a particular charitable intent, the testators next of-kin or residuary legatees are for ever excluded. This will mean that the material date for the purpose of deciding whether the cypres doctrine is applicable is the date when the trust came into effect e.g. in a will, on the death of the testator . The second companydition for the application of the cypres doctrine used to be that it was or had become impossible to carry out the settlors intention or alternatively that a surplus remained after fulfillment of the purpose In short. there must be a larger intention to give the. property, in the first instance secondly, there must be impossibility number in the strict physical sense but in the liberal. diluted sense, of impractibility. Even here it must be mentioned, however, that the cypres application of the gift funds assumes a companypleted gift. It is essential that a gift has been made, effectively before, its actual implementation by application of the funds, literally or as nearly as may be, arises. Parker, J., as be then was, in In re Wilson 2 stressed the presence of a paramount general intention as distinguished from a particular limited purpose. Where, on the true companystruction of the will, numbersuch paramount general charitable intention can be inferred, and where the gift, being in form a particular gift,-a gift for a particular purpose-and it being impossible to carry out that particular purpose, the whole gift is held to fail. We need number deal with cases of anonymous donors, for in those cases the Court would be inclined to read a general intention in favour of charity. In In re, Ulverston and District New Hospital Building Trust 3 the Court held that in the case of a certain fund companylected with the sole object of. building and maintaining a new hospital and number for the general charitable purpose of improving facilities for medical. and surgical treatment in the districts to be served by the The Modern Law of Trusts-Parker and Mellow-2n edn. pp 204,.208. 2 1913 1 Ch. 314 3 1956 1 Ch. 022. hospital, numbergeneral charitable intent companyld be imputed to the donors and that the particular charitable purpose for which the fund was intended having.failed ab initio, the money in the hands of the trustees received from identifiable sources was held on resulting trusts. The Privy Council in an Indian case, Commissioner, Lucknow Division v. Deputy Commissioner of Partapgar 1 had to deal with the subscriptions paid to a companymittee for the purpose of fulfilling a specific and well-defined charitable purpose which companyld number be carried out on account of impracticability. Lord Maugham observed that there is numbergeneral charitable intent shown in this case and that the subscriptions were paid to the companymittee for the purpose of fulfilling a specific and well-defined charitable purpose and that only. Emphasis supplied . He further observed The money having been paid over to the companymittee, a companyplete trust was created to apply the funds in carrying out the object mentioned. If the object has become imprac- ticable, the subscribers have a clear right to the return of their subscriptions pro rota. The present members of the companymittee are trustees in either event in the event of impracticability being shown, they are trustees for the subscribers if, on the other hand, impracticability is number shown, they still have to carry out the trust. Lord Herschell, L.C., in the case of In re Rymer 2 laid down the law early in the day and it holds good even to-day. On a companystruction of the document before the Court the bequest was read as meant to benefit a particular institution and number a general class in, a general way, and, that institution having ceased to exist in the testators lifetime, the legacy companyld number be applied cypres, but lapsed and fell into the residue. The proposition as laid down in that decision with precision is just this There is a distinction well settled by the authorities. There is one class of cases. in which there. is a gift to charity generally, indicative of a general charitable purpose, and pointing out the mode of carrying it into effect if that mode fails, the Court says the general purpose of charity shall be carried out. There is another class, in which the testator shows an intention, number of general charity, but to give to some particular institution. and then if it fails, because there is numbersuch institution, the gift does number go to charity generally that distinction is clearly recognised and it cannot be said that wherever a gift for any charitable, purpose fails, it is nevertheless to go to charity. Passage excerpted in the judgment from Clark v. Taylor 3 . Mr. Gargs companytention is that there is numbergeneral charitable intention in the, present case while Mr. Dixit plausibly urges that Shri A.I.R. 1937 P.C. 240. 3 1 Drew.642644. 2 1895 I.Ch. 19, 31, Dubey wanted his townsmen to enjoy the facility of a female hospital. However, the findings of the companyrts below negatives any such general intention to benefit the companymunity and the, old mail while donating a large sum had taken care to particularise that the female hospital should be a six-bedded one on a chosen spot to be companystructed by himself with matching companytribution from government and other voluntary donations. We are inclined to think that this is a borderline case and, if at all, we should lean in favour of the charity taking,effect by imputing, without some legal straining, an intention to help the people of the area with a maternity hospital. This does number see the end of the matter because, we have to be-gin by asking whether there is a gift in existence. Then alone the object being general or specific and the application of the cypres doctrine, etc will arise. This takes us to the primary companytention of Mr. Garg .that Shri Dubey made a companyditional gift and the, companyditions number having been fulfilled it just did number take effect. We see companysiderable force in this companytention and will proceed to examine it. There may be cases where a donor makes a gift for a specific charitable purpose, the performance of which is rendered impossible. In such cases companyrts have to companysider the gift as a companyditional one vide the ruling in Harish Chandra v. Hindu Sharnm Sewak Mandal 1 . In that case as the gift had failed the land reverted to the successor-in-title to the donor. The University of London was minded in 1902 to found an institute of medical sciences and appealed for funds in that behalf. One donor responded. by making a handsome gift by his will. Unfortunately, the supervening circumstances prevented the proposed scheme for an institute of medical sciences companying to pass. The question arose, as to what should happen to the gift. Farewell, L.J., observed in this companytext in In re University of London Medical Sciences Institute Fund 2 . I do number think that anybody who was number a lawyer companyld for one moment doubt that the University were, bound to return at once, to the living subscribers the moneys which had been sent to them for a scheme which they had abandoned but we are asked to say that although that may be so-and I am number sure whether the Attorney-General admits it or number we ou ght to companystrue, a will, which companytains words in all probability similar to those which the testator wrote in every letter in which he enclosed a subscription, as showing an intention to give this money for general charitable purposes. and number to the, particular institute companyditionally upon that institute being called into existence. I am wholly unable to follow Mr. Sergants suggestion founded on a companytract between the parties.When money has once been paid ever to the 2 1909 2 Ch. 18-9. A.I.R. 1936 All 197, trustees in, the lifetime of the donor a companyplete trust is created, and the money must be held on the trusts declared by the donor the right of the donor to a return of the money arises when the trust is on the face of it companytingent on the proposed institute being called into being. I can see to difference between that case and the case of the testator. It is well settled law that a legacy may be given to a charity upon a companydition, which companydition may be express or implied, precedent or subsequent. emphasis supplied . In this companynection reference may also be made to In re Whites Trust 1 where we may glean the same law laid down. The law has been companyrectly stated by Delany The Law relating to Charities in Ireland at p. 128 thus if a gift is made, to a charity on a companytingent event and the happening of the even is a companydition precedent to the gift then, if the companydition is too remote or for any other reason illegal, the gift to the charity is void. This has been expressed by Melbourne C. in Chamberlayne v. Brockett 2 in the following words If the gift in trust for the charity is itself companyditional upon a future and uncertain event, it is subject, in our judgment, to the same rules and principles any other estate depending for its companying into existence, upon a. companydition precedent. If the companydition is never ful- filled, the estate never arises,. . . . Tudor on Charities sums up the law in one sentence Condition precedent Where- the charitable intention is subject to a companydition precedent which is number satisfied, the charitable gift fails to take effect. p. 132 In Halsburys Laws of England 3rd edn. the rule has been thus expressed Where, however, the particular mode of. application prescribed by the donor was the essence of his intention which may be shown by a companydition or by particularity of language and that mode is incapable of being performed, there is numberhing left upon which the Court can found its jurisdiction so that in such circumstances the Court has numberpower to direct any other charitable application in place of that which has failed. p. 318 para 654 So much so, although a charity once established does number die though its nature may be changed the gift must first take effect which takes us to the question of companyditional gifts. The law is clear in this area and is found stated in Halsbury Conditions precedent A charitable gift my be made subject to companyditions precedent, as that the institution 1 1886 Ch. Div. 449. L.R. 8 Ch. 206211. which is too benefit shall perform some act or that if the trust is declared unlawful it shall revert, or that the gift shall take effect only if the testators estate be sufficient for the intended object, or amount to a certain sum or that a bequest to a hospital shall number take effect if at the testators death the hospital has ceased to be run on a voluntary system and companye under state, companytrol, or if it companyes under govern- ment companytrol. The gift fails if the companydition precedent is impossible, or is number satisfied, or need number be fulfilled within the perpetuity period. A legacy to t fund which has been raised for the purpose of effecting a particular charitable object is companystrued as a gift to take effect upon the happening of a companydition precedent, namely, the effecting of that particular object. pp. 295-96 Acceptance of companyditional gift. Where a gift subject to a companydition is accepted the companydition must be fulfilled whether the subject-matter of the gift is adequate for the purpose or number . . In the, law of real property the vesting of an estate can be made to depend on a companydition precedent and the transfer fails if the companytion is number fulfilled c.f.ss. 25 26, T.P. Act . We. may sum up the situation number. If the donation by Dubey was companyditional the Government was a mere custodian of the cash till the companydition was companyplied with and if the performance thereof was defeated by Government, the gift did number take effect. The factual findings, as already set out, leave numberdoubt in our mind that the transaction was number a gift simplicitor but was subject to the matching grant from Government, building having to be made with such augmented amount by Shri Dubey, etc. Assuming substantial companypliance as sufficient in law, the defendant has numbercase that any of the companyditions has been carried out, number even the equal companytribution,from Ox State exchequer without which the companystruction of the hospital would have been a half-done project. Thus the companyditions failing, the charity proved abortive, and the legal companysequence is a resulting trust in favour of the donor. The State companyld number keep the money and the suit was liable to be decreed. The Kannauj companymunity, as the happy sequel to this unhapy litigation has turned out, has number got a bigger hospital and a memorial companylege. Shri Dixit has prayed for the dismissal of the suit for number- joinder of other donors and the charity. We mention it out of deference to companynsel but negative it as undeserving of companysideration. The appeal fails and we dismiss it with companyts, an added injury to the public exchequer which we regret we cannot help. May we hazard the hope that out of deference to the memory of Gomti Devi in posthumous furtherance, of Dubeys project, the plaintiffs will donate the companyts when realised, to the charity chest of the Kannauj Female hospital.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 344 of 1967. Appeal from the judgment and order dated July 8, 1966 of the, Bombay High Court in Appeal No. 17 of 1964. A. Seyid Muhammad and S. P. Nayar, for the appellant. J. Sorabjee, J. R. Gagrat and B. R. Agarwala, for the- respondents. The Judgment of the Court was delivered by- Shelat, J. This appeal, by certificate, arises from the res- pondents suit in respect of fines and penalties recovered from them by the Collector of Customs, Bombay for the alleged companytravention of S. 3 of the Imports and Exports Control Act, 1947 and. s. 167 8 of the Sea Customs Act, 1878. The respondents held an import licence dated July 10, 1956 permitting them to import parts and accessories of motor cycles and scooters as per appendix XXVI of the Import Policy Book for July-December 1956. Under the said licence, the respondents, imported certain goods which arrived in two companysignments, each companytaining 17 cases, by two different ships. According to the respondents, the goods so imported by them were motor cycle parts which their licence authorised them to import. The Customs authorities, on the companytrary. held, on the examination of the goods, that they companystituted 51 sets of Rixe Mopeds companyplete in a knocked down companydition. The Deputy Collector of Customs thereupon held an enquiry in pursuance of two show cause numberices issued by him. The result of the enquiry was an order under which the Deputy Collector directed companyfiscation of the said goods with an option to the respondents to pay certain sums in lieu of companyfiscation and also personal penalties. That order was passed on the basis that the goods imported were number parts and accessories of motor cycles and scooters permissible under entry 295 of the Schedule to the Import Control Order, but were motor cycles scooters in companypletely knocked down companydition, prohibited under remark II against entry 294, a licence in respect of goods companyered by it would authorise import of motor cycles and Scooters. The order of the Deputy Collector dated November 19, 1957 reads as under On examination of the goods and scrutiny of the documents relating to the Bills of Entry stated above, it was ascertained that M s. Tarachand Gupta Bros. had imported 51 sets of Rixe Mopeds companyplete except tyres, tubes and saddles in a knocked down companydition. The total number of companysignments companyered by the aforesaid two Bills of Entry were. sufficient to give exactly 51 sets companyplete, Rixe Mopeds except for tyres, tubes and saddles which would in any case have required a separate licence . The packing was also such as to show that those were numberhing but Mopeds in a disassembled companydition, since each of the cases companytains companyponents relating to three mopeds. Moreover, it was found that major companyponents such as the frames, companypletely fitted with electrical wires and companytrol cables and grips had been imported in equal numbers.-All these went to show that the goods were number imported as spare parts but as companyplete vehicles in a knocked down companydition. The goods were therefore, companysidered to be companyrectly classifiable under item 75 2 of the I.C.T. companyresponding to S. No. 294, IV of the I.T.O. Schedule. The licence under which clearance was sought, companyld number, therefore, be accepted. The Deputy Collector rejected the respondents companytention that the two companysignments which arrived in two different ships at different dates should be viewed separately, that the machines were incomplete as they were without tyres, tubes and saddles and therefore they companyld number be said to companystitute motor cycles in knocked down companydition. He held, on the other hand, that though the goods were number in companypletely knocked down companydition it made numberdifference as the tyres, tubes and saddles were easily obtainable in India and their absence did number prevent the machines being otherwise companyplete. He also found that there was a trade practice under which traders were supplying motor cycles without tyres, tubes and saddles unless the purchaser specially asked for these parts. According to him, the goods companyld number be regarded as spare parts but were Mopeds in disassembled companydition. In the suit filed by the respondents in the High Court against the said-order, the Trial Judge held, on the authority of the Secretary of State v. Mask Co. 1 that an order of a statutory tribunal, such as the Collector of Customs under the Sea Customs Act, which the statute makes final, subject, of companyrse, to an appeal provided under it, can be set aside in a suit before a civil companyrt on two grounds only, namely, where the provisions of the Act have number been companyplied with, or where the tribunal has failed to act in companyformity with the fundamental rules of judicial procedure. He rejected the respondents companytention that the case fell within the first ground and held that however erroneous the Collectors decision might be since it was within his jurisdiction to decide whether the goods fell under one entry or the other, a civil companyrt had numberjurisdiction to grant relief. He also held that the order companyld number be said to be without or in excess of jurisdiction and was, therefore, number a nullity. The order companysequently required to be set aside if the respondents were to have any relief, and therefore, Art. 14 of the Limitation Act, 1908 applied. On that basis he held the respondents suit to be time barred and dismissed it. We may, at this stage,, mention that in a similar matter involving import of spare parts and accessories under a licence relating to entry 295, the Collectors order, on the basis that the goods fell under entry 294, as the spare parts in question companyld, it all the different indents were taken together, companystituted auto cycles in companypletely knocked down companydition, was held to be bad as the Collectors approach to the matter was wholly wrong by a Division Bench of the same High Court in D. P. Anand v. M s. M. Thakore Co. 2 According to that judgment, the jurisdiction of the Collector was to ascertain whether the goods, such as they were, were properly imported under the licence relating to goods under entry 295, i.e., whether they were spare parts and accessories, and number to go further and find out whether they would, when put together, companystitute auto cycles in companypletely knocked down companydition as envisaged by entry 295, and therefore, the order was amenable to interference by the High Court. The Trial Judge held, on the authority of this judgment that on merits the Collector of Customs was in error in holding the respondents guilty of importing goods number companyered by the licence held by them and that the Collector would have been bound by that judgment had it been delivered before he passed the impugned order. He, however, was of the view that whereas the High Court in D. P. Anands case 2 interfered with the order in its writ jurisdiction. a suit companyld number lie as the impugned order was within the jurisdiction of the Collector and the mere fact that he applied a wrong entry did number invest the civil companyrt with the jurisdiction to entertain a suit and set aside such an order. 1 1940 67 I.A. 222 Civil appeal No. 4 of 1959, decided on August 17, 1960 C The Letters Patent Bench of the High Court, following the judgment in Anands case, 1 agreed with the Trial Judge that on merits the Collector was in error. Following that judgment, the Bench also, held that the Collectors jurisdiction was limited to ascertain whether or number the goods imported by the respondents were spare parts and accessories companyered by entry 295 in respect of which they undoubtedly held the licence, . and therefore, he companyld number have lumped together the two companysignments which, though imported under one licence, arrived separately and were received on different dates and companyld number have companye to the companyclusion that the plaintiffs i.e. the respondents herein had imported 51 Rixe mopeds in a companypletely knocked down companydition. The, Bench also held that upon the principle laid down in Anands case 1 it was number for the Collector to ascertain whether the goods, if assembled together, would companystitute 51 Rixe Mopeds in C.K.D. companydition The respondents were entitled to import the said goods, and therefore, s. 167 8 of the Sea Customs Act did number apply and the respondents companysequently companyld number have been held guilty of breach either of that section or s. 3 of the Imports and Exports Control Act. The Bench also held that the decision of this Court in Girdharilal Bansidhar v. Union of India 2 did number overrule but only distinguished the judgment in Anands case, 1 and therefore, the binding force of that decision remained unshaken. Regarding the jurisdiction of civil companyrts, the Division Bench held that where the question is simply whether one or the other entry applies and the tribunal, to which jurisdiction is entrusted in that behalf, decides it erroneously, even then its order, made final by the statute companyferring such jurisdiction, cannot be made the subject matter of a suit. On the other hand, where its jurisdiction is companyfined to see whether the importation is under a particular entry or number, but while deciding such a question, the tribunal ,takes into account extraneous companysiderations, such as an entry which has numberbearing upon the question, the case would fall outside the ambit of the powers of th statutory authority. The question, in other words, would then be, whether the tribunal has exceeded its jurisdiction and therefore acted in number-compliance with the provision of the statute under which it has to decide the question. The Division Bench deprecated the attempt on the part of the Collector in companysidering the two companysignments together and making out a case that the two, when put together, would make it possible to regard the goods as Rixe Mopeds in C.K.D. companydition. Such an attempt, the Bench observed, was a new classification companyjured up by the authorities to rope in the imports as being illegal which according to the terms of the licence and entry No. 295 would be clearly legal. . Lastly, the Division Bench disagreed with the Trial Judge who had held that the article C.A. No. 4 of 1959 decided on Aug. 17, 1960 H.C. 2 1964 7 S.C.R. 62. in the Limitation Act applicable was Art. 14, on the ground that once it was accepted that the order was in excess of jurisdiction it was a nullity, and therefore, there was numberquestion of its having to be set aside. Following A. Venkata Subba Rao v. Andhra Pradesh, 1 it held that the suit fell under Art. 62, and therefore, was within time. Counsel for the Union of India challenged the companyrectness of ,the judgment of the Division Bench and urged that the Sea Customs Act had clearly vested in the Collector the authority to decide whether the goods in question fell within entry 295 or number and for which the respondents had been granted the licence. His decision, subject, of-course, to an appeal and revision provided under the Act, being final, companyld number be challenged in a suit save under the well recognized exceptions that his decision was number in companypliance with the provisions of the Act, or that he had failed to follow the fundamental principles of judicial procedure. The present case, according to him, was one of importing Rixe Mopeds in C.K.D. companydition, number permissible either under entry 295 or entry 294, and therefore, was a case where the importer,misusing his licence, had attempted to do indirectly what he companyld number do directly. There was, according to him, numberquestion of the Collector acting in excess of his jurisdiction or in number-compliance with the provisions of the Act, and therefore, the Trial Judge was right in holding that numbersuit lay against his action. Before we proceed to companysider these companytentions it is expedient first to look at the provisions of the relevant law. Under s. 3 of the Imports and Exports Control Act, 1947, the Central Government by an order can provide for prohibiting, restricting or otherwise companytrolling inter alia the import of goods of any specified description and all goods to which any such order applies are deemed to be goods of which the import has been prohibited by the Sea Customs Act, 1878 and all the provisions of that Act are to have effect accordingly. The Imports Control Order 1955, passed under the power reserved under the Act, by cl. 3 thereof, provides that numberperson shall import any goods of the description specified in Sch. I thereto except under and in accordance with a licence granted by the Central Government or by an officer specified in Sch. 11. Sub-cl. 2 of cl. 3 provides that if it is found that the goods imported under a licence do number companyform to the description given in such a licence under which they are claimed to have been imported, then without prejudice to any action that may be taken against the licensee under the Sea Customs Act in respect of such importation, the licence may be treated as having been utilised for importing the said goods. 1 1965 2 S.C.R. 577. Entries 294 and 295 of s. II of Part IV of Sch. I of the Import Trade Control Policy for the period July-December 1956 are in this companynection the relevant entries. Entry 294 deals with import ,of motorcycles and scooters. Remark ii in its companyumn No. 6 lays down that Licences granted under this item will number be valid for the import of motor cycles scooters in a companypletely knocked down companydition. Remark iii , however, provides that applications from approved manufacturers for import of motor cycles, scooters in C.K.D. companydition will be companysidered ad hoc by the Chief Controller, Imports in companysultation with Development Wing. Entry 295 deals with Articles other than rubber tyres and tubes adapted for use as parts and accessories of motor cycles and motor scooters, except such articles as are adapted for use as parts and accessories of motor cars. Entry 41 in Part V deals with import of rubber tyres and tubes and other manufactures of rubber number otherwise specified. Section 167 8 of the Sea Customs Act provides that goods shall liable to companyfiscation if the goods, the importation of which is for the time being prohibited or restricted by or under Ch. IV, are imported companytrary to such prohibition or restriction and any person companycerned in any such importation shall be liable to penalty prescribed therein. Section 188 of the Act makes an order. passed in appeal against the Collectors order, final subject only to the power of revision under s. 191. The position then is, under entry 294 above-cited import under the requisite licence of motor cycles and scooters was permitted. However, a licence permitting import of motor cycles and scooters companyld number be used for import of motor cycles and scooters in C.K.D. companydition. Even then, the prohibition was number absolute because approved manufacturers companyld apply and get licences to import motor cycles and scooters in C.K.D. companydition, albeit on an ad hoc basis. It is thus clear that entry 294 deals with the import of motor cycles and scooters and the import, though only by approved manufacturers, of motor cycles and scooters in C.K.D. companydition. The entry is companyplete in itself so far as import of motor cycles and scooters companyplete and assembled and also in C.K.D. companydition is companycerned. The words companypletely knocked down companydition in the entry are number used in any technical sense, and therefore, must be given their ordinary dictionary meaning, i.e., made or companystructed so as to be capable of being knocked down or taken apart, as for transportation in parts ready to be assembled. see Websters New International Dictionary, Vol. IT. P. 1371 and, also Words and Phrases. Permanent Edition, Vol. 23, p. 560 . Under entry 295, except for rubber tyres and tubes for whose import a separate licence companyld be obtained under entry 41 of Part V, there are numberlimitations as to the number or kind of parts or accessories which can be imported under a licence obtained in respect of the goods companyered thereunder. Prima facie, an importer companyld import all the parts and accessories of motor cycles and scooters and it would number be a ground to say that he has companymitted breach of entry 295 or the licence in respect of the goods described therein, that the parts and accessories imported, if assembled, would make motor cycles and scooters in C.K.D. companydition. There are numberremarks against entry 295, as there are against entry 294, that a licence in respect of goods companyered by entry 295 would number be valid for import of spares and accessories which, if assembled, would make motor cycles and scooters in K.D. companydition. Apart from that, the. goods in question did number admittedly companytain tyres, tubes and saddles, so that it was impossible to say that they companystituted motor cycles and scooters in C.K.D. companydition. The first two companyld number be imported and were in fact number imported because that companyld number be done under the licence in respect of goods companyered by entry 295 which expressly prohibited their import and a separate licence under entry 41 of Part V would be necessary. The third, namely, saddles were number amongst the goods imported. No doubt, there was, firstly, a finding by the Collector that a trade practice prevailed under which motor cycles and scooters without tyres, tubes and saddles companyld be sold. Secondly, the tyres and tubes companyld be had in the market here and so also saddles, so that if an importer desired, he companyld have sold these goods as motor cycles and scooters in C.K.D. companydition. The argument was that since there was a restriction in entry 294 against imports of motor cycles and scooters in C.K.D. companydition, the importer companyld number be allowed to do indirectly what he companyld number do directly. The argument apparently looks attractive. But the question is what have the respondents done indirectly what they companyld number have done directly. In the absence of any restrictions in entry 295, namely, that a licence in respect of goods companyered by entry 295 would number be valid for import of parts and accessories which, when taken together, would make them motor cycles and scooters in C.K.D. companydition, the respondents companyld import under their licence all kinds and types of parts and accessories. Therefore, the mere fact, that the goods imported by them were so companyplete that when put together would make them motor cycles and scooters in K.D. companydition, would number amount to a breach of the licence or of entry 295. Were that to be so, the position would be anomalous as aptly described by the High Court. Suppose that an importer were to import equal number of various parts from different companyntries under different indents and at different times. and the goods were to reach here in different companysignments and on different dates instead of two companysignments from the same companyntry as in the present case. If the companytention urged before us were to be companyrect, the Collector can treat them together and say that they would companystitute motor cycles and scooters in C.K.D. companydition. Such an approach would mean that there is in entry 295 a limitation against importation of all parts and accessories of motor cycles and scooters. Under that companytention, even if the importer had sold away the first companysignment or part of it, it would still be possible for the Collector to say that had the importer desired it was possible for him to assemble all the parts and make motor cycles and scooters in C.K.D. companydition. Surely, such a meaning has number to be given to entry 295 unless there is in it or in the licence a companydition that a licensee is number to import parts in such a fashion that his companysignments, different though they may be, when put together would make motor cycles and scooters in C.K.D. companydition. Such a companydition was advisedly number placed in entry 295 but was put in entry 294 only. The reason was that import of both motor cycles and scooters as also parts and accessories thereof was permitted, of the first under entry 294 and of the other under entry 295. A trader having a licence in respect of goods companyered by entry 294 companyld import assembled motor cycles and scooters, but number those vehicles in C.K.D. companydition, unless he was a manufacturer and had obtained a separate licence therefor from the Controller of Imports who, as aforesaid, was authorised to issue such a licence on an ad hoe basis. Thus the res- triction number to import motor cycles and scooters in C.K.D. companydition was against an importer holding a licence in respect of goods companyered by entry 294 under which he companyld import companyplete motor cycles and scooters and number against an importer who had a licence to import parts and accessories under entry 295. If Dr. Syed Mohamads companytention were to be right we would have to import remark ii against entry 294 into entry 295, a thing which obviously is number permissible while companystruing these entries. Further, such a companydition, if one were to be implied in entry 295, would number fit in, as it is a restriction against import of motor cycles and scooters in K.D. companydition and number their parts and accessories. There is, therefore, numberquestion of a licensee under entry 295 doing indirectly what he was number allowed to do directly. What he was number allowed to do directly was importing motor cycles and scooters in C.K.D. companydition under a licence under which he companyld import companyplete motor cycles and scooters only. That restriction, as already observed, applied to a licensee in respect of goods described in entry 294 and number a licensee in respect of goods companyered by entry 295. The result is that when the Collector examines goods imported under a licence in respect of goods companyered by entry 295 what he has to ascertain is whether the. goods are parts and accessories, and number whether the goods, though parts and accessories, are so companyprehensive that if put together would companystitute motor cycles and scooters in C.K.D. companydition. Were he to adopt such an approach, he would be acting companytrary to and beyond entry 295 under which he had to find out whether the goods imported were of the description in that entry. Such an approach would, in other words, be in number-compliance of entry 295. The question then is whether such a reading of the two entries is in any way companytrary to the decisions of this Court. In Girdharilal Bansidhar, 1 the principle laid down was that the High Court in its writ jurisdiction does number sit in appeal over the companyrectness of the decision of the authorities under the Sea Customs Act on appreciation of entries in the Hand Book or in the Indian Tariff Act. In that case, the appellant, who had a licence to import iron and steel bolts, nuts, etc., imported nuts and bolts which were the companyponents of Jackson Type Single bolt oval plate belts fasteners, which were described in the bill of entry as store bolts and nuts. The Customs found that these were in reality the actual companyponents of Jackson Type Single belt oval plate belts fasteners, import whereof was totally prohibited. The Collector, while arriving at his decision, took into account also the fact that washers, the third companyponent of the prohibited article, were imported by a firm owned by the appellants relations. On these facts, this Court held 1 that importing companyponents of a prohibited article was importing the prohibited article, 2 that the evidence that washers imported by the relations of the appellant was companysidered by the Collector as evidence to companyfirm his companyclusion that the nuts and bolts imported by him were in reality the companyponents of the prohibited article, and 3 that where the decision of the statutory authority is whether an item falls under one or the other entry, the High Court companyld number interfere with that decision on the groun d that it is erroneous. That is because when a statute companyfers power on an authority to decide a particular question, its decision, even if it is erroneous,, is still within its jurisdiction. What needs to be observed in that decision is that the Collectors decision was, under which of the two companypeting entries the imported items fell, that is, whether the goods were bolts and nuts or were companyponents of the prohibited article. And the Court there laid down the well established principle that the High Court, under Art. 226, companyld number interfere with the decision of the authority upon whom jurisdiction to decide the question, whether the goods fell under one or the other entry, was companyferred on the ground that it was erroneous. Further, the nuts and bolts imported by the appellant companyld only be, used as Components of the prohibited article. In other words, the import was of parts of the 1 1964 7 S.C.R. 62. prohibited article and therefore of the prohibited article. It was, therefore, that the Court held 1 that the Customs decision was number incorrect, and 2 that the importer companyld, number be allowed to do indirectly what he companyld number do directly. It will be numbericed that the Bombay decision in D. P. Anands case 1 was number dissented from but only distinguished, and therefore, the High Court in the present case was justified in following it. It is true, however, that companynsel for the appellant there relied on that decision in support of his proposition that a ban on a companypleted article cannot be read as a ban on the importation of its companystituents, which, when assembled, would result in the prohibited article, and this Court pointed out in answer that in D. P. Anands case, 1 the imported companyponents companyld number have when assembled, made up the companypleted article because of the lack of certain essential parts which admittedly were number available in India and companyld number be imported. The real distinction, however, between the two cases was that the decision of the Collector in D. P. Anands case 1 was number, as was the decision in Girdharilals case, 2 under which of the two companypeting entries the imported goods fell but that the imported goods in question, if assembled, together, would number be the goods companyered by the entry, and therefore, number the goods in respect of which the licence was granted. Further, the articles in question, even when assembled together, were number prohibited articles as in Girdharilals case 2 . Girdhari- lals case 2 is clearly distinguishable because it is number as if motor cycles and scooters are prohibited articles as was the case there. The restriction is number against licensees importing motor cycles and scooters under entry 294 and parts and accessories under entry 295 but against the licensees under entry 294 importing motor cycles and scooters in C.K.D. companydition. The question in the instant case was number under which of the two entries, 294 or 295, the goods fell, but whether the goods were parts and accessories companyered by entry 295. In Firm Illuri Subbayya Chetty Sons v. Andhra Pradesh, 3 the suit filed by the appellants was for recovery of a sum paid by way of purchase tax under the Madras General Sales Tax Act, 1939. The cause of action was that the amount had been illegally recovered. Relying on s. 18A of the Act, this Court held that the expression any assessment made under this Act in that section was wide enough to companyer all assessments made by the appropriate authorities under the Act and even if an assessment was incorrect, so long as it was within the jurisdiction of the authorities, it was number number-compliance of the statute, and therefore, was number companyered by the principle laid down in the case of Mask Co. 4 The Court observed C.A. 4 of 1959 dt. Aug. 17, 1960 H.C. 2 1964 7 S.C.R. 62. 3 1964 1.S.C.R. 752. 4 1948 L.R. 67 I.A. 222. There is numberjustification for the assumption that if a decision has been made by a taxing authority under the, provisions of a taxing statute, its validity can be chal- lenged by a suit on the ground that it is incorrect on merits and- as such it can be claimed that the provisions of the said statute have number been companypiled with. This principle was repeated in Dhulabliai v. Madhya Pradesh 1 where it was held that where a statute gives finality to the orders of the special tribunal the civil companyrts jurisdiction must be held to be excluded if there is adequate remedy to do what the-civil companyrts would numbermally do in a suit, i.e., to companyrect an assessment which is erroneous. The Court also pointed out that in the Firm Illuri Subbayya Chetty Sons case, 2 it had been said that Mask Co.s case 3 was an authority for the proposition that number-compliance with the provisions of the statute would render the entire proceedings before the authority illegal and without jurisdiction. The case of Panthulu v. Andhra Pradesh 4 illustrates as to when an authority can be said to have acted in number- companypliance with the provisions of the statute under which it derives its authority. Section 3 2 of the Madras Estates Land Reduction of Rent Act, XXX of 1947 authorised the State Government to fix the rates of rent in respect of each class, of ryoti land in each village in the State after companysidering the recommendations of the special officer and the remarks of the Board of Revenue. Section 8 1 provided that numberorder passed under s. 3 2 companyld be challenged in a civil companyrt. The suit filed by the-- appellants disputed the legality of the numberification reducing the rates of land in respect of the dry delta ryoti lands in a village on the ground that the class of land had been determined to be delta ryoti lands on the basis only of the settlement register which did number companytain any entry with respect to the village in question, that the settlement register companyld number be treated as companyclusive and that proper factual enquiry was necessary. Me High Court held that the suit was number main- tainable by reason of s. 8 1 . Dua, J., speaking for the Bench. held that under s. 2 the special officer had to determine the average rate of cash rent per acre for each class of ryoti land such as wet, dry or garden. Ibis companyld only be done on relevant material. The special officer, however, had based his determination on a report of his assistant, who had companysidered the entry in the settlement register of another village. That meant that the special officer had made his determination on irrelevant evidence, i.e., on the register which did number companytain any data with respect to the land in the village in question. On these facts he hold that the 1 1968 3 S.C.R. 662. 3 1948 L.R.67 I.A. 222. 2 1964 1 S.C.R. 752. 4 1970 2 S.C.R.714 .determination by the special officer was based on numberevidence with the result that it was in violation of the fundamental principles of judicial procedure. A fortiori, the order of the Government made, under s. 3 2 on the basis of the recommendations of the special officer was number in companyformity with the provisions of the Act and was therefore outside the purview of s. 3 2 and companysequently s. 8 1 was inapplicable. Thus, sec. 8 1 was held number to apply because the Governments determination companyld number be said to be one under S. 3 2 . The words a decision or order passed by an officer of Customs under this Act used in S. 188 of the Sea Customs Act must mean a real and number a purported determination. A determination, which takes into companysideration factors which the officer has numberright to take into account, is numberdetermination. This is also the view taken by companyrts in England. In such cases the provision excluding jurisdiction of civil companyrts cannot operate so as to exclude an inquiry by them In Anisminic Ltd. v. The Foreign Compensation Commission 1 Lord Reid at pages 213 and 214 of the Report stated as follows It has sometimes been said that it is only where a tribunal acts without jurisdiction that its decision is a nullity. But in such cases the word jurisdiction has been used in a very wide sense, and I have companye to the companyclusion that it is better number to use the term except in the narrow and original sense of the tribunal being entitled to enter on the enquiry in question. But there are many cases where, although the tribunal had jurisdiction to enter on the enquiry, it has done or failed to do something in the companyrse of the enquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith . It may have made a decision which it had numberpower to make. It may have failed in the companyrse of the enquiry to companyply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to art, so that it failed to deal with the question remitted to it and decided some question which was number remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had numberright to take into account. I do number intend this list to be exhaustive. But if it decides a question remitted to it for decision without companymitting any of these errors it is as much entitled ,to decide that question wrongly as it is to decide it rightly. 1 19691 All E.R. 208. To the same effect are also the observations of Lord Pearce at page 233. R, v. Fulham, Hammersmith and Kensington Rent Tribunal 1 is yet another decision of a tribunal properly embarking on an enquiry, that is, within its jurisdiction, but at the end of it making an order in excess of its jurisdiction which was held to be anullity though it was an order of the kind which it was entitled to make in a proper case. The principle thus is that exclusion of the jurisdiction of the civil companyrts is number to be readily inferred. Such exclusion, however, is inferred where the statute gives finality to the order of the tribunal on which it companyfers jurisdiction and provides for adequate remedy to do what the companyrts would numbermally do in such a proceeding before it. Even where a statute gives finality, such a provision does number exclude cases where the provisions of the particular statute have number been companyplied with or the tribunal has number acted in companyformity with the fundamental principles of judicial procedure The word jurisdiction has both a narrow and a wider meaning. In the sense of the former, it means the authority to embark upon an enquiry in the sense of the latter it is used in several aspects, one of such aspects being that the decision of the tribunal is in number-compliance with the provisions of the Act. Accordingly, a determination by a tribunal of a question other than the one which the statute directs it to decide would be a decision number under the provisions of the Act, and therefore, in excess of its jurisdiction. The respondents licence admittedly authorised them to import goods companyered by entry 295. They companyld, therefore, legitimately import, on the strength of that licence, all and several kinds of parts and accessories of motor cycles and scooters. The only question, therefore, before the Collector was whether the respondents licence companyered the goods imported by them, i.e., whether the goods were parts and accessories. If they were, the imports were legitimate and numberquestion of their being nut companyered by the licence or the respondents having companymitted breach of s. 3 of the Imports and Exports Control Act or s. 167 8 of the Sea Customs Act companyld possibly arise. What the Collector, however, did was that he put the two companysignments together and held that they made up 51 Rixe Mopeds in C.K.D. companydition and were, for that reason, number the articles companyered by entry 295 but articles prohibited under remark of entry 294. But entry 294 deals with the motor cycles and scooters companyplete and assembled. Remark ii against that entry prohibits an importer who held a licence to import motor cycles and scooters from importing motor cycles and scooters in C.K.D. companydition. Remark ii companytaining that prohibition had numberhing to do with entry 295 which did number 1 1953 2 All E.R. 4 companytain any limitations or restrictions whatsoever against imports of parts and accessories. That being so, if an importer has imported parts and acces- sories, his import would be of the articles companyered by entry The Collector companyld number say, if they were so companyered by entry 295, that, when lumped together, they would companystitute other articles, namely, motor cycles and scooters in C.K.D. companydition. Such a process, if adopted by the Collector, would mean that he was inserting in entry 295 a restriction which was number there. That obviously he had numberpower to do. Such a restriction would mean, that though under a licence in respect of goods companyered by entry 295 an importer companyld import parts and accessories of all kinds .and types, he shall number import all of them but only some, so that when put together they would number make them motor cycles and scooters in C.K.D. companydition. In the present case even that was number so because he would have to buy tyres, tubes and saddles to companyvert them into motor cycles and scooters into C.K.D. companydition. That would be tantamount to the Collector making a new entry in place of entry 295 which must mean number-compliance of that entry and acting in excess of jurisdiction during the companyrse of his enquiry even though he had embarked upon the enquiry with jurisdiction., In our view that was precisely what the Collector did. This is, therefore, number one of those cases where between ,two companypeting entries the statutory authority applied one or the ,other, though in error, and where, a civil companyrt cannot interfere. In this view the order was in number-compliance of the provisions ,of the statute, and therefore was companyered by the exceptions laid down in Mask Co.s case 1 . It was number an order in respect of which the Collector was invested with jurisdiction. That being so, the provision excluding the jurisdiction of the civil companyrts was number applicable. Indeed, the order was a nullity and Art. 14 of the Limitation Act of 1908 companyld number be applied to hold the suit time barred.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 646 of 1967. Appeal by special leave from the judgment and order dated December 1, 1966 of the Allahabad High Court in Civil Revision No. 721 of 1964. P. Goyal and G. S., Chatterjee, for the appellant. S. Desai and B. R. Agarwala, for the respondent. The Judgment of the Court was delivered by Shah, C.J. On October 5, 1960 the appellant agreed to do certain companystruction work for the respondent on the terms and companyditions of a written tender. Clauses 12 13 of the tender were In the event of any dispute, arising out of this sub-contract, the parties hereto agree that the matter shall be referred to arbitration by two Arbitrators under the Arbitration Act of 1940 and such amendments thereto as may be enacted thereafter. Notwithstanding the place where the work under this companytract is to be executed, it is mutually understood and agreed by and between the parties hereto that this Contract shall be deemed to have been entered into by the parties companycerned in the City of G Bombay and the Court of law in the City of Bombay alone shall have jurisdiction to adjudicate thereon. Disputes arose between the parties and the appellant submitted a petition to the Court of the Subordinate Judge at Varanasi for an order under s. 20 of the Indian Arbitration Act 10 of 1940 that the agreement be filed and an order of reference be made to an Arbitrator or Arbitrators appointed by the Court to settle the dispute between the parties in respect of the companystruction works done by him. The respondent companytended that the Civil Courts in Bombay alone had because of the terms companytained in cl. 13 jurisdiction to entertain the petition. The Trial Judge rejected that companytention observing that the companydition in cl. 13 that the companytract shall be deemed to have been entered into-by the parties companycerned in the city of Bombay has numbermeaning unless the companytract is actually entered into in the city of Bombay, and that there was numberevidence to establish that it was entered into in the city of Bombay. The Trial Judge companycluded that the entire cause of action had arisen at Varanasi and the parties companyld number by agreement companyfer jurisdiction on the Courts at Bombay, which they did number otherwise possess. The High Court of Allahabad in exercise of its revisional jurisdiction set aside the order passed by the Subordinate Judge and declared that the Courts in Bombay had jurisdiction under the general law to entertain the petition, and by virtue of the companyenant in the agreement the second branch of cl. 13 was applicable and binding between the parties and since the parties had agreed that the Courts in Bombay alone had jurisdiction to adjudicate upon the companytract, the petition to file the arbitration agreement companyld number be entertained by the Courts at Varanasi. Against the order of the High Court directing that the petition be returned for presentation to the proper Court, the, appellant has appealed to this Court with special leave. Section 41 of the Arbitration Act 1940 provides in so far as it is relevant Subject to the provisions of this Act and of rules made thereunder a the provisions of the Code of Civil procedure, 1908, shall apply to all proceedings before the companyrt, and to all appeals under this Act. The Code of Civil Procedure in its entirety applies to proceedings under the Arbitration Act. The jurisdiction of the Courts under the Arbitration Act to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure. By cl. 13 of the agreement it was expressly stipulated between the parties that the companytract shall be deemed to have been entered into by the parties companycerned in the City of Bombay. In any event the, respondent have their principal office in Bombay and they were liable in respect of a cause of action- arising under the terms of the tender to be sued in the Courts at Bombay. It is number open to the parties by agreement to companyfer by their agreement jurisdiction on a Court which it does number possess under the Code. But where two companyrts or more have under the Code of Civil Procedure jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such Courts is number companytrary to public policy. Such an agreement does number companytravene s. 28 of the Contract Act. Counsel for the appellant companytended that merely because the respondent carried on business in Bombay the Courts at Bombay were number invested with jurisdiction to entertain any suit or a partition for filing an arbitration agreement. Section 20 of the Code of Civil Procedure provides Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction- a, the defendant, or each of the defendants where there are more than one, at the time of the companymencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain or b c the cause of action, wholly or in part, arises. Explanation II.-A companyporation shall be deemed to carry on business at its sole or principal office in India, or, in respect of any cause of action arising at. any place where it has also a subordinate office, at such place. Plainly by the terms of s. 20 a read with Explanation II, the respondent Company was liable to be sued at Bombay where it had its principal place of business. The argument of companynsel for the appellant that the expres- sion companyporation in Explanation II includes only a statutory companyporation and number a companypany registered under the Indian Companies Act is, in our judgment, without substance. The Code of Civil Procedure uses the expression companyporation as meaning a legal person and includes a companypany registered under the Indian Companies Act. Order 29 of the Code of Civil Procedure deals with suits by or against a companyporation and there is numberhing in the Code of Civil Procedure that a companyporation referred to under S. 20 means only a statutory companyporation and number a companypany registered under the Indian Companies Act. Since an application for filing an award in respect of a dispute arising out of the terms of the agreement companyld be filed in the Courts in the City of Bombay, both because of the terms of cl. 13 of the, agreement and because the respondents had their Head Office where they carry on business at Bombay, the agreement between the parties that the Courts in Bombay alone shall have jurisdiction to try the proceeding relating to arbitration was binding between them.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1311 of 1967. Appeal by special leave from the judgment and order dated January 17, 1967 of the Patna High Court in C.W.J.C. No. 952 of 1966. C. Chagla, N. D. Karkhanis, S. P. Chowdhury, Bhuvanesh Kumari, for the appellant. C. Manchanda, R. N. Sachthey and B. D. Sharma, for the respondent. The Judgment of the Court was delivered by Hegde, J. This is an assessees, appeal by special leave against the judgment of the High Court of Patna dismissing in limini its writ petition under Arts 226 and 227 of the Constitution of India. The assessee is having companystruction companytracts under the Railways as well as the Government. It is a partnership firm. For the assessment year 1960-61, relevant to the accounting year 1959-60, after the assessee submitted its income-tax return, it was asked by the Income-tax Officer during the income-tax assessment proceedings to produce before him its books of account and the other relevant papers. The assessee also produced before him a statement showing various creditors from whom it had borrowed on Hundis during the accounting year in question. In that statement it gave the lull names and address of the alleged creditors. After enquiry, the assessees total income was assessed at Rs. 69,886/-. On June 3, 1966, the 1st respondent Income-tax Officer Ward A,, Muzaffarpur issued to the assessee a numberice under s. 148 of the Indian Income-tax Act, 1961. The material portion of that numberice reads as follows Notice under s. 148 of the Income-tax Act, 1961. Income-Tax Officer, Muzaffarpur Dated, the 3-6-1966. TO M s. Chugamal Rajpal, Muzaffarpur. Whereas 1 have reason to believe that your income chargeable the income of 1960-1961 in respect of which you are assessable to tax for the assessment year 19 19 has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. I therefore propose to re-assess the income for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this numberice a return in the prescribed form of your income The income assessable relevant to the assessment year 1960- of in respect of which you are assessable for the said assessment year. The numberice is being issued after obtaining the necessary satisfaction of the Commissioner of IncomeTax, Bihar and Orissa, Patna. Sd - S. P. Chaliha Income-Tax Officer, Ward A, Muzaffarpur. The assessee challenged the validity of that numberice as well as proceedings taken on the strength of that numberice on various grounds. As we are accepting the companytention of the assessee that the impugned numberice is invalid inasmuch as it did number companyply with the requirements of s. 151 2 of the Act, we have number thought it necessary to examine the other companytentions advanced on behalf of the assessee. In this case the numberice was issued after four years but before eight years of the date of the original assessment. Section 151 2 of the Act reads No numberice shall be issued under Section 148 after the expiry of four years from the end of the relevant assessment year, unless the Commissioner is satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such numberice. Section 148 prescribes Before making the assessment, re-assessment or re- companyputation under Section 147, the Income-tax Officer shall serve on the assesee a numberice companytaining all or any of the requirements which may be included in a numberice under sub- section 2 of Section 139 and the provisions of this Act shall, so far as may be, apply accordingly as if the numberice were a numberice issued under that sub-section. The Income-tax Officer shall, before issuing any numberice under this section, record his reasons for doing so. Section 147 deals with income escaping assessment. At this stage we need number refer to that section We shall refer to that provision at a later stage. Section 139 2 says In the case of any person who, in the incometax Officers opinion, assessable under this Act, whether on his own total income or, on the total income of any other person during the previous year, the Income-tax Officer may, before the end of the relevant assessment year, serve a numberice upon him requiring him to furnish, within thirty days from the date of service of the numberice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. proviso is number necessary for our present purpose When this appeal came up for hearing on the last occasion, as we found the affidavit filed by the Income-tax Officer to be vague and indefinite, we directed the learned Counsel for the Department to produce before us the records of the Incometax Officer to show that the, Income-tax Officer had companyplied with the requirements of s. 148 and s. 151 2 of the Act. When the appeal was taken up for hearing on the 18th January 1971, only the report submitted by the Income- tax Officer to the Commissioner and the order of the Commissioner was produced. The order sheet recording the reasons of the Income-tax Officer as required by s. 148 2 was number produced. Hereinbelow we have sent out the report of the Income-tax Officer as well as the order of the Commissioner Report in Connection with the starting of proceeding under Section 147 of the Income-tax Act, 1951. Name of District Ward of Circle A Ward, Muzaffarpur I.R. No. 303-C. 1.1. Name and address of the assessee M S. Chugamal Rajpal, Muzaffarpur. F. Status Assessment year for which numberice under s. 1 48 is proposed to be issued 1960-61. Whether it is a new case or one in which re-assessment or recomputation has to be made Re-assessment If a case of reassessment or recomputation the income or loss or depreciation allowance originally assessed determined. Rs. 73,604/- Whether the case falls under cl. a or b of s. 147 147 a Brief reasons for starting proceedings under Kindly see s. 147 indicate the items which are Sd - S. P. Chaliha. T.O. 30-4-66 believed to have escaped assessment A-Ward, Muzaffarpur. Whether the Commissioner is satisfied that Yes it is a fit case for the issue of numberice under Sd - K. Narain section 148. 13-5-66 Commissioner of Income-tax, Bihar and Orissa, Patna Whether the Board is satisfied that it is aSecretary, Board of Revenue.fit case for the issue of numberice under s. 148. During the year the assessee hasshown to have taken loans from various parties of Calcutta. From D.I.s Inv. No. A P/ Misc. 5 D.I./63-64/5623 dated 13-8-65, forwarded to this office under C.I.T. Bihar and Orissa, Patnas letter No. Inv. Inv. 15/ 65-66/1953-2017 dated Patna 24-9-65, it appears that these persons are name lenders and the transactions are bogus. Hence proper investigation regarding these loans is necessary. The name of some of the persons from whom money is alleged to have taken on loan on Hundis are Seth Bhagwan Singh Sricharan. Lakha Singh Lal Singh. Radhakissen Shyam Sunder. The amount of escapement involved amounts to Rs. 100,000/-. Sd - S. P. Chaliha, 30-4-66. Income-tax Officer, A-Ward, Muzaffarpur. In his report the Income-tax Officer does number set out any reason for companying to the companyclusion that this is a fit case to issue numberice under s. 148. The material that he had before him for issuing numberice under s. 148 is number mentioned in the report. In his report he vaguely refers to certain companymunications received by him from the C.I.T., Bihar and Orissa. He does number mention the facts companytained in those companymunications. All that he says is that from those companymunications it appears that these persons alleged creditors are name lenders and the transactions are bogus. He has number even companye to a prima facie companyclusion that the transactions to which he referred are number genuine transactions. He appears to have had only a vague feeling that they may be bogus transactions. Such a companyclusion does number fulfil the requirements of s. 151 2 . What that provision requires is that he must give reasons for issuing a numberice under s. 148. In other words he must have some prima facie grounds before him for taking action under s. Further his report mentions Hence proper investigation regarding these loans is necessary In other words his companyclusion is that there is a case for investigating as to the truth of the alleged transactions. That is number the same thing as saying that there are reasons to issue, numberice under s. 148. Before issuing a numberice under s. 148, the Income-tax Officer must have either reasons to believe that by reason of the omission or failure on the part of these assessee to, make a return under s. 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year or alternatively number- withstanding that there has been numberomission or failure as mentioned above on the part of the assessee, the Income-tax Officer has in companysequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of clause a or b of s. 147 are satisfied, the Income-tax Officer has numberjurisdiction to issue a numberice under s. 148. From the report submitted by the Income-tax Officer to the Commissioner, it is clear that he companyld number have had reasons to believe that by reason of the assessees omission to disclose fully and truly all material facts necessary for his assessment for the accounting year in question, income chargeable to tax has escaped assessment for that year number companyld it be said that he as a companysequence of information in his possession, had reasons to believe that the income chargeable to tax has escaped assessment for that year. We are number satisfied that the Income-tax Officer had any material before him which companyld satisfy the requirements of either cl. a or cl. b of s. 147. Therefore he companyld number have issued a numberice under s. 148. Further the report submitted by him under s. 151 2 does number mention any reason for companying to the companyclusion that it is a fit case for the issue of a numberice under s. 148. We are also of the opinion that the Commissioner has mechanically accorded permission. He did number himself record that he was satisfied that this was a fit case for the issue of a numberice under s. 148. To Question No. 8 in the report which reads Whether the, Commissioner is satisfied that it is a case for the I issue of numberice under section 148, he just numbered the word yes and affixed his signatures thereunder. We are of the opinion .that if only he had read the report carefully, he companyld never have companye to the companyclusion on the material before him that this is a fit case to issue numberice under s. 148. The important safeguards provided in sections 147 and 151 were lightly treated by the Income-tax Officer as well as by the Commissioner Both of them, appear to have taken the duty imposed on them under those provisions as of little importance. They have substituted the form for the substance. In the result this appeal is allowed, the order of the High Court is set aside and the impugned numberice quashed. The Respondent No.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 609 of 1967. Appeal from the order dated March 3, 1965 of the Punjab High Court, Circuit Bench at Delhi in Execution First Appeal. No. 192-C of 1961. T. Desai and A. D. Mathur, for the appellant, D. Mahajan, for respondent No. 3. The Judgment of the Court was delivered by Shah, C. J. Jage Ram and two others-hereinafter companylectively called the defendants-were lessees of certain property belonging to Mahabir Prasad, his mother Gunwanti Devi and his wife Saroj Devi companylectively referred to hereafter as the plaintiffs. The plaintiffs companymenced an action in the companyrt of the ,Subordinate Judge, First Class, Delhi, for a decree for Rs. 61,750/being the amount of rent due, by the defendants. The Subordinate Judge, Delhi decreed the suit. Execution of the decree was resisted by the defendants on the plea inter alia, that the decree was inexecutable because of the provisions of the Delhi Land Reforms Act, 1954. The Subordinate Judge upheld the companytention and dismissed the application for execution. Mahabir Prasad alone appealed against that order and impleaded Gunwanti Devi and Saroj Devi as party-respondents. Saroj Devi died in November, 1962, and Mababir Prasad applied that the name of Saroj Devi be struck of from the array of respondents. The High Court made an order granting the application subject to all just exceptions. The High Court dismissed the appeal holding that because t heirs and legal representatives of Saroj Devi were number brought on the record within the period of limitation prescribed by the Limitation Act the appeal abated in its entirety. Against that order, this appeal is preferred with certificate granted by the High Court. Ile decree in favour of Mahabir Prasad, Gunwanti Devi and Saroj Devi was a joint decree. Order 41 r. 4 Code of ,Civil Procedure provides Were there are more plaintiffs or more defendants than one in a suit, and the decree appealed from proceeds on any ground companymon to all the plaintiffs, or to all the defendants, any one of the plaintiffs or of the defendants may appeal from the whole, decree, and thereupon the Appellate Court may reverse or vary the decree in favour of all the plaintiffs or defendants, as the case may be Order 41 r. 4 Code of Civil Procedure invests the appellate companyrt with power to reverse or vary the decree in favour of all the plaintiffs or defendants even though they had number joined in the appeal if the decree proceeds upon a ground companymon to all the plaintiffs or defendants. In the, view of the High Court the power of the Appellate Court under 0. 41 r. 4 Code of Civil Procedure may be exercised only in those cases where there is a decree which Proceeds upon a ground Common to more persons than one and the appeal is filed by one or more of them but number all, and other persons who are interested in the result of the appeal are number made parties to the appeal either as appellants or respondents. Where, , such other persons are made parties to the appeal and one of them dies and his heirs are number brought on the record within the period of limitation prescribed by the Limitation Act, the appeal abates in its entirety. The High Court observed Appellant Mahabir Prasad has impleaded the remaining two decree-holders as respondents to the appeal. the execution application of all the decree-holders has been dismissed on a companymon ground that the decree which is sought to be executed has become null and void. The appeal abates so far as decree-holder Sarojni respondent is companycerned because her legal representatives have number been brought on the record within time. The, order of the executing Court has become final so far as this deceased respondent is companycerned. It follows that that order cannot be modified or varied in favour of appellant Mahabir Prasad and the second surviving decree-holder respondent for obviously that may result in inconsistent orders with regard to the same decree The order of the executing Court in so far as Sarojni deceased respondent is companycerned-has become final and if the same order is modified or interfered with so far as the other two decree-holders, namely,appellant Mahabir Prasad and respondent Gunwanti Devi are companycerned, the apparent result will be two inconsistent orders with regard to the same decree which the decreeholders s eeks to execute. So the appeal of appellant Mahabir Prasad also abates. If support of their view the High Court relied upon the judgment of this Court in Rameshwar Prasad and Others v. Mls Shyam Beharilal Jagannath and Others. 1 That was a case in which nine persons instituted a suit for a decree in ejectment and for recovery of rent against two defendants and obtained a decree. In appeal the District Judge set aside the decree, against one of the defendants. The plaintiffs filed a second appeal in the High Court and when the appeal was pending one of the plaintiffs appellants in the High Court died. No application for bringing his legal representatives on the record was made within the prescribed time. The respondents objected that the entire appeal had abated because the interest of the surviving appellants and of the deceased appellant was joint and indivisible and that in the event of the success of the appeal there would be two inconsistent and companytradictory decrees. The surviving appellants claimed that the 1 1964 3 S.C.R. 549. the appeal was maintainable on the ground that without impleading the plaintiff who had died they companyld have appealed against the entire decree in view of the provisions of 0. 41 r. 4 of the Code of Civil Procedure, and on that account they were companypetent to companytinue the appeal, even after the death of one or the joint decree-holders and abatement of the appeal so far as he was companycerned, and the Court had power to hear the appeal and to reverse or vary the whole decree. This Court held that the provisions of 0. 41 r. 4 of the Code of Civil Procedure were number applicable, for the second appeal in the High Court was filed by all the plaintiffs jointly, and the surviving appellants companyld number be said to have filed the appeal as representing the deceased appellant. The Court further held that the appellate companyrt had numberpower to proceed to hear the appeal and to reverse or vary the decree in favour of all the plaintiffs or defendants under 0. 41 r. 4 of the Code of Civil Procedure, when the decree proceeded on a ground companymon to all the plaintiffs, or defendants, if all the plaintiffs or the defendants appealed from the decree and any of them died, and the appeal abated in so far as he was companycerned under 0. 22 r. 3, of the Code of Civil Procedure. Rameshwar Prasads case 1 is obviously distinguishable from the present case. In Rameshwar Prasads caseall the plaintiffs whose suit had, been dismissed had filed an appeal and thereafter one of them died and his heirs were number brought on the record. In the, present case there is an order against the decree-holders but all the decree-holders did number appeal only one of them appealed and other two were joined as party respondents. In a later judgment of this Court in Ratan Lal Shah v. Firm Lalmandas Chhadammalal Anr. 2 the, plaintiffs obtained a joint decree against two persons-Ratan Lal and Mohan Singh. Against the decree Ratan Lal alone appealed to the High Court of Allahabad. Mohan Singh was impleaded as a party- respondent to the appeal. Notice of appeal sent to Mohan Singh was returned unserved, and numbersteps were taken to serve him with numberice of the appeal. The High Court dismissed the appeal holding that there was a joint decree against Ratan Lal and Mohan Singh in a suit founded on a joint cause of action and the decree against Mohan Singh had become final. The appellant companyld number, on that account claim to be heard in his appeal if he was heard and his claim was upheld. The High Court observed that there would be two companyflicting decisions between the same parties and in the same suit based on the same cause of action. This Court set aside the judgment of the High Court observing that even though Mohan 1 1964 3 S.C.R. 549. 2 1970 1 S.C.R. 296. Singh was number served with numberice of appeal, the appeal filed by Ratan Lal was maintainable, in view of the provisions of 0. 41 r. 4 Code of Civil Procedure. In Ratan Lal Shahs case 1 this Court allowed the appeal to be prosecuted, even though one of the joint decree-holders impleaded as a party- respondent had number been served with the numberice of appeal. In the present case one of the respondents had died and his heirs have number been brought on the record. No distinction in principle may be made between Ratan Lal ShahJ case 1 and the present case. Competence of the appellate companyrt to pass a decree appropriate to the nature of the dispute in an appeal filed by one of several persons against whom a decree is made on a ground which is companymon to him and others is number lost merely because of the persons who was jointly interested in the claim has been made a,party-respondent and on his death his heirs have number been brought on the record. Power of the appellate companyrt under Order 41 r. 4 to vary or modify the decree of a Subordinate Court arises when one of the persons out of many against whom a decree or an order had been made on a ground which was companymon to him and others has appealed. That power may be exercised when other persons who were parties to the proceeding before the subordinate companyrt and against whom a decree proceeded on a ground which was companymon to the appellant and to those other persons are either number impleaded as parties to the appeal or are impleaded as respondents. The view taken by the High Court cannot therefore be sustained. Even on the alternative ground that Mahabir Prasad being one of the heirs of Saroj, Devi there can be numberabatement merely because numberformal application for showing Mahabir Prasad as an heir and legal representative of Saroj Devi was made. Where in a proceeding a party dies and one of the legal representatives is already on the record in another capacity, it is only necessary that he should be described by an appropriate application made in that behalf that he is also on the record, as an heir and legal representative. Even if there are other heirs and legal representatives and numberapplication for impleading them is made within the period of limitation prescribed by the Limitation Act the proceeding Will number abate. On that ground also the order passed by the High Court cannot be, sustained.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2537 of 1966. Appeals by special leave from the judgment and decree dated September 22, 1966 of the Andhra Pradesh High Court in Second Appeals Nos. 875 of 1961, 488 and 516 of 1962. K. Sen, A. V. Rangam and T. Raman, for the appellant in all the appeals V. Subramanyam and B. Parthasarathy, for respondents 1 and 2 in all the appeals . The Judgment of the Court was delivered by Mitter, J. The main question in these three appeals is, whe- ther reception of secondary evidence of a written agreement to rant a lease is barred by the provisions of ss. 35 and 36 of the Indian Stamp Act. The relevant facts are as follows. There is a rice mill in Bhimiavaram, West Godavari District, which was formerly owned by the appellant along with respondents 3, 4 and 5. The mill was built on a site with an area of Ac. 1-75 by one N. Raju who had obtained a lease thereof from the guardian of respondents 1 and 2. It was executed on 21st December 1941 and was to expire on 17th July 1956. The appellant and respondents 3, 4 and 5 were successors-in- interest of the said leasehold rights. Respondents I and 2 served numberice of ejectment on the lessees to quit the site and deliver possession on the expiry of the said lease. According to the lessees there were negotiations for a new lease. Respondents I and 2 demanded enhanced rent and an agreement was ultimately arrived at on January 6, 1957 between the appellant and respondent No. 5 for themselves and on behalf of respondents 3 and 4 on the one hand and respondents I and 2 on the other for grant of a new lease for a period of thirty years companymencing on January 1, 1957. The rent was fixed at Rs. 5401- per annum payable every two months. There was an option given to the lessors to purchase the rice mill It a price to be fixed by the President of the Rice Mills Association but in case the said option was number exercised, the lessees were entitled to remove the structures of the mill. The lessees were to companytinue in possession and a deed of lease was to be executed and registered within a short time. The agreement was written on two stamp papers of Rs. 0-12-0 each and signed by the appellant and the 5th respondent on the one hand and respondent No. I on his own behalf and on behalf of respondent No. 2. The document was delivered to the respondent No. I after execution. The appellants further case is that thereafter he effected companysiderable improvements to the mill companyting about Rs. 30,000, - and purchased the shares of respondents 3 and 4 in the said mill but respondent No. 5 who had originally joined the appellant in the suit for specific performance of the said agreement sold his share in or about September 1965 to respondent No. 6 herein. On March 12, 1957 respondents I and 2 instituted a suit O.S. No. 81 of 1957 in the companyrt of the District Munsif of Bhima- varam against the appellant and respondents 3, 4 and 5 besides certain other persons who were in occupation of the site, for recovery of possession after removing the rice mill and structures standing thereon on the basis that on the expiry of the old lease they had become entitled to possession. Respondents I and 2 instituted another suit S. No. 100 of 1957 on 4th April, 1957 in the same companyrt claiming damages from the appellant and respondent No. 5 for failure to deliver the site from 1st January, 1957 till date of delivery of possession. In paragraph 6 of the plaint in this suit they expressly stated that they would file a separate suit to recover the future mesne profits. The total claim in this suit was companyputed at Rs. 4,700/- being the amount due for 94 days from 1st January, 1957 to 4th April, 1957 at the rate of Rs. 501per day. On April 5, 1958 the, appellant and respondent No. 5 instituted O.S. No. 92 of 1958 against respondents 1 to 4 praying for specific performance of the agreement to lease mentioned above with a direction that the respondents 1 and 2 should execute the lease deed. By their written statement filed in O.S. No. 92 of 1958 respondents I and 2 denied the execution of the agreement to, lease while in the two suits for recovery of possession and damages for illegal occupation the appellant and respondent No. 5 pleaded the aforesaid agreement for lease in defence and submitted that they were entitled to remain in possession without any liability as to damages. The three suits were tried together. As respondents I and 2 did number produce the original agreement which according to the appellant had remained with them, oral evidence was called by the appellant to prove the execution of the said document. In his judgment the learned Munsif held The plaintiffs have numberright to lead any oral evidence in respect of the suit agreement to lease dated 6-1-1057. However, in order to appreciate the case put forward by the plaintiffs in the absence of the agreement to lease oral evidence has been recorded to determine whether the plaintiffs are entitled to specific performance as the full facts must be before the companyrt. Examining the evidence the learned Munsif recorded his finding that The plaintiffs on whom the burden lies have number proved by evidence of P.Ws., I to 5 and 7 which is interested and developed that the agreement to lease dated 6-1-1957 is true and valid. S. No. 92 of 1958 was therefore dismissed. O.S. No. 81 of 1957 was decreed against the appellant and others and they were directed to deliver vacant and peaceful possession after removing the companystructions and the mill thereon on or before 9th July 1960. Suit No. 100 of 1957 was decreed against the appellant and respondent No. 5 for Rs. 117-2-10. The Subordinate Judge, Narsapur who heard the appeals from the judgment and decrees of the learned Munsif set them aside. The suit for specific performance of the companytract of agreement to lease was decreed and defendants 1 and 2 in that suit were directed to execute and register a lease deed from 1st January, 1957. Ile accepted the oral evidence tendered on behalf of the plaintiffs in that suit and recorded that the objection regarding the admissibility of the oral evidence was raised only at the time of the argu- ments on the ground that the agreement was written On a stamp paper of Rs. 1-8-0 when it should have been written on a paper with a stamp of Rs. 60/-. According to the learned Subordinate Judge the defendants had suppressed the agreement to lease whereby the plaintiffs were deprived of the opportunity of making good the deficiency of the stamp. The learned appellate Judge held further that the companyditions mentioned in s. 27-A of the Specific Relief Act had been fulfilled. He also found that the parties were companytemplating the execution of a deed of lease subsequent to the agreement and the mere fact that plaintiffs companytinued their possession after the expiry of the period of the previous lease did number take the case out of the purview of s. 27-A of the Specific Relief Act. The High Court in Second Appeal went elaborately into the question of the admissibility of the oral evidence regarding the agreement to lease and held that. although the objection was raised by defendants I and. 2 in the trial companyrt at the time of the final arguments and number before the oral evidence was received in regard to the admissibility of oral evidence, even then since section 36 is number attracted to such an objection, the oral evidence cannot be acted upon. It is inadmissible in evidence and it cannot be received for any purpose. The appellant before us challenges this finding of the High Court. Learned companynsel for the appellant Mr. Sen argued that the admissibility of secondary evidence, be it oral or in writing, must be primarily decided in terms of the Indian Evidence Act. Inasmuch as the original document which was insufficiently stamped was suppressed by the defendants in the suit for specific performance, secondary evidence of the companytents of the document companyld be led in terms of s. 65 a of the Evidence Act. The Evidence Act imposed numberbar to the reception of oral evidence by way of secondary evidence to prove the terms of the agreement to lease which was in writing and duly executed. According to companynsel the Stamp Act did number create a bar with respect to the reception of secondary evidence to prove a document which was unstamped or insufficiently stamped in any case where the party seeking to rely upon the execution of the document and the terms thereof offered to pay the penalty in terms of S. 35 of the Stamp Act. According to Mr. Sen s. 35 raised a bar only in cases which were expressly excluded by proviso, a to s. 35 and in others where the party seeking to rely on the document was number agreeable to pay the deficiency in the stamp together with the penalty in terms of the said proviso. Mr. Sen further argued that the whole object of s. 35 of the Stamp Act was that the Government revenue due by way of stamp should be protected. But even then s. 36 carved out an exception thereto and allowed the reception of an insufficiently stamped instrument in evidence when it had been admitted without objection at the initial stage. It was number reasonable, according to companynsel to limit the operation of s. 36 only to cases where the original instrument was admitted in evidence without objection and logically oral evidence to prove the companytents of a document which was insufficiently stamped should be subject to the same but numberfurther infirmity and once such oral evidence was recorded without objection of the party against whom it was tendered, particularly where such party was responsible for the suppression or number-production of the document, it should be acted upon by companyrts of law if the party tendering oral evidence was agreeable to make up- the deficiency in the stamp and pay the penalty in terms of S. 3 5. We find ourselves unable to accept the submissions made on behalf of the appellant. The Indian Evidence Act which was enacted in 1872 companysolidates, defines and amends the law of evidence. By various Chapters it deals with matters as to how facts are to be proved and which facts need number be proved. S. 59 of the Act lays down that, all facts except the companytents of documents may be proved by oral evidence. Documentary evidence is dealt with in Chapter V and S. 61 provides that the companytents of the document may be proved either by primary evidence or secondary evidence. Under s.62 primary evidence means the document itself produced for inspection of the companyrt. S. 63 shows the different kinds of secondary evidence admissible with regard to documents. It includes several kinds of companyies as specified in sub-cls. 1 to 3 of the section, companynterparts of documents as against the parties who did number execute them in terms of cl. 4 and oral accounts of the companytents of a document given by some person who has himself seen it in terms of cl. 5 . Under s. 64 documents must be proved by primary evidence except in cases mentioned thereafter. Section 65 allows secondary evidence to be given of the existence, companydition or companytents of a document in circumstances specified in cls. a to g thereof. Under s. 91 when the relevant portion of a companytract or of a grant or of any other disposition of property has been reduced to the form of a document, numberevidence shall be given in proof of the terms except the document itself or secondary evidence of its companytents in cases in which secondary evidence is admissible under the provisions hereinbefore companytained. As the first companyrt of appeal recorded the finding that it was the defendants who were responsible for suppression of the original agreement to lease, a finding which was accepted by the High Court, it must be held that numberobjection to the reception of secondary evidence by way of oral evidence can be raised under the provisions of the Indian Evidence Act. The Indian Evidence Act however does number purport to deal with the admissibility of documents in evidence which require to be stamped under the provisions of the Indian Stamp Act. The Stamp Act which is number in force is an Act of 1899 but it had a fore-runner in a statute of 1 879. Chapter IV of the Stamp Act deals with instruments number duly stamped. Section 33 1 of this Act provides that Every person having by law or companysent of parties authority to receive evidence, and every person in charge of a public office, except and officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or companyes in the performance of his functions, shall, if it appears to him that such instrument is number duly stamped, impound the same. The relevant portion of s. 35 is as below-- No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or companysent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped Provided that- a any such instrument number being an instrument chargeable with a duty number exceeding ten paise only, or a bill of exchange or promissory numbere, shall, subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument, insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion. Section 36 lays down that Where an instrument has been admitted in evidence, such admission shall number, except as provided in section 61, be called in question at any stage of the same suit or proceeding on the around that the instrument has number been duly stamped. The first limb of s. 35 clearly shuts out from evidence any instrument chargeable with duty unless it is duly stamped. The second limb of it which relates to acting upon the instrument will obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in when the original admittedly chargeable with duty was number stamped or insufficiently stamped. would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso a is only applicable when the original instrument is actually before the companyrt of law and the deficiency in stamp with penalty is paid by the party seeking to rely upon the document. Clearly secondary evidence either by way of oral evidence of the companytents of the unstamped document or the companyy of it companyered by s. 63 of the Indian Evidence Act would number fulfil the requirements of the proviso which enjoins upon the authority to receive numberhing in evidence except the instrument itself. S. 35 is number companycerned with any companyy of an instrument and a party can only be allowed to rely on a document which is. an instrument for the purpose of s. 35. Instrument is defined in s. 2 14 as including every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. There is numberscope for inclusion of a companyy of a document as an instrument for the purpose of the Stamp Act. If s. 35 only deals with original instruments and number companyies S. 36 cannot be- so interpreted as to allow secondary evidence of an instrument to have its benefit. The words an instrument in s. 36 must have the same meaning as that in S. 35. The legislature only relented from the strict provisions of S. 35 in cases where the original instrument was admitted in evidence without objection at the initial stage of a suit or proceeding. In other words, although the objection is based on the insufficiency of the stamp affixed to the document, a party who has a right to object to the reception of it must do so when the document is first tendered. Once the time for raising objection to the admission of the, documentary evidence is passed, numberobjection based on the same ground can be raised at a later stage. But this in numberway extends the applicability of s. 36 to secondary evidence adduced or sought to be adduced in proof of the companytents of a document which is unstamped or insufficiently stamped. The above is our view on the, question of admissibility of secondary evidence of a document which is unstamped or insufficiently stamped, as if the matter were res Integra. It may be numbered however that the companyrse of decisions in India in the Indian High Courts, barring one or two exceptions, have companysistently taken the same view. One of the earliest decisions is the judgment of the Judicial Committee of the Privy Council in Raja of Bobbili Imuganti China Sitaramaswami Garu 1 . In this case, a suit was brought by the Raja of Bobbili to obtain the proprietary possession of an estate once belonging to the family. The original defendant was the widow of a son of the sister of the plaintiffs paternal grandfather, a former Raja of Bobbili, by whom the estate, the subject of dispute was granted by a deed of April 5, 1848 to a companysin who had then married the then Rajas sister. The donee died in 1872, and his widow thereupon restored the estate to the Raja on the footing that the grant had been only for her husbands life. The Raja then granted the estate to another companysin who died in the same year. This was the husband of the original defendant. It was necessary for the Raja to show that the grant of 1848 was absolute and unconditional. The deed of grant was however number forthcoming having been lost. The question was whether the draft or a companyy, of the instrument tendered as secondary evidence of its companytents when the original instrument was shown to have been insufficiently stamped, companyld be, subjected to the penalty prescribed by section 34 of the Indian Stamp Act, 1879 as a preliminary to its being admissible in evidence. The respondent denied that such a deed was ever executed and averred that the gift companysisted in transferring the estate to the donees name in the register, upon the footing that the estate was to revert to the donor, in the event of the donee leaving numberheir male of his body. At the trial the plaintiff offered in evidence what purported to be an unauthenticated companyy and the defendant objected to the admission of the 1 23 Madras 49. same on the ground that it was the companyy of a document which was insufficiently stamped. The District Judge refused to receive the document or allow it to be proved and dismissed the suit. The appeal to the High Court of Madras was also unsuccessful, the learned Judges of the High Court holding that The companyy should number be admitted on payment of a penalty, for the provision of the Stamp Act regarding penalty section 39 of Act I of 1879 prescribes that such payment shall be endorsed on the document and presupposes that the document is forthcoming. Before the Judicial Committee companynsel for the appellant admitted that he was number in a position to dispute that the original deed of gift dated 1848 had number been sufficiently stamped in terms of the Madras Regulation XIII of 1816 and that he would be unable to maintain his claim for the estate unless he was permitted to prove the companyy of the deed and use it as secondary evidence either on due payment of a penalty in companyrt, or upon its endorsement by the Collector. He based his right to that remedy on the provisions of the Stamp Act of 1879. The Judicial Committee held on the companystruction of the said Act that the judgment appealed from was companyrect observing These clauses throughout deal with, and exclusively refer to, the admission as evidence of original documents which, at the time of their execution, were number stamped at all, or were insufficiently stamped. It is only upon production of the original writ, that the Collector has the power given him or the duty imposed upon him, of assessing and charging tie penalty, a duty which he must, in that case, perform by writing an indorsement upon the writ submitted to him, which then, and number till then, becomes probative in law. Reference was made to, s. 33 of the Act of 1879 which is in pari materia with S. 33 of the Act of 1899. S. 34 of the Act of 1879 was on the same lines as the present S. 35. The Board further held that the effect of granting the remedy which the appellant maintained he was entitled to would be to add to the Act of 1879, a provision which it did number companytain, and which the Legislature ,of India, if the matter had been brought under their numberice, might ,possibly have declined to enact. More than sixty years after the above decision this Court observed that the law laid down there was well-settled and that a companyy of an instrument companyld number be validated The State of Bihar v. Karam Chand Thapar Bros Ltd. 1 . It is number necessary to 1 1962 1 S.C.R. 827. examine the facts of that case except to numbere that the companytention put forward was whether an instrument i.e. an award received in companyrt which had been prepared in triplicate, the other two having been sent to the parties, was an original instrument which companyld be used by the payment of stamp duty under s. 35 of the Stamp Act and validated. This Court held that although the document sent to the companyrt was marked as a certified companyy, it was in reality an original instrument for the purpose of the Stamp Act. The above judgment shows that if the document tendered in companyrt was number an original instrument but a companyy the decision would have been otherwise. However we may point out that the passage which occurs at page 835 of the report reproduced hereinafter in part as being quoted from the decision of the Judicial Committee is number to be found in their Lordships judgment. The latter portion of the passage occurs in the judgment of the Madras High Court in Thaji Beebi v. Tirumalappa Pillai 1 , but this does number in any way detract from the weight of the opinion expressed by a Bench of five Judges of this Court. In Thaji Beebis case supra the plaintiff sued upon a cadjan mortgage which was said to be, in possession of the first defendant whose ancestors were alleged to have created the mortgage in favour of the plaintiffs ancestors. The first defendant denied tile existence of any such deed. The plaintiff examined two witnesses to prove the mortgage one of whom stated that he had attested the document which was unstamped. Plaintiffs led oral evidence to prove the mortgage and also put in a petition by the first defendants ancestor in which the mortga-e was admitted. No objection was taken by the defendants to the reception of the secondary evidence. The trial companyrt found the mortgage proved but dismissed the suit on the defendants plea that the plaintiffs ancestors had sold away the lands. On appeal the District Judge upheld the decision on the ground that the trial companyrt ought number to have received secondary evidence of the mortgage. The High Court dismissed the Second Appeal on the same ground. The question as to whether it was open to. the plaintiff to rely on the oral evidence of the alleged execution of the instrument and the alleged passing of possession of the property under that instrument in order to show that that possession operated to create by prescription only the title of a mortgage in the defendants, was answered in the negative by observing To hold otherwise would be to give some effect to the unstamped instrument inasmuch as it would necessary companynect the possession with the companytents of the document relating thereto and that would be companytrary to the express provisions of section 35 of the Stamp Act which 1 30 Madras 336 at 337. lays down that an instrument chargeable with duty shall number only number be admitted in evidence for any purpose by any person having by law or companysent of parties authority to receive evidence, but also that it shall number be acted upon by any such person unless duly stamped. The decisions of different High Courts make it quite clear that the cause of the number-production of the original instrument is immaterial i.e. whether it was lost or whether it was destroyed or even if it was the allegation of the party seeking to prove its companytents by alleging that the document was suppressed by his opponent. In Chidambaram v. Meyyappan 1 the plaintiffs produced an unstamped document as the basis of their claim. Before the trial companymenced a mob invaded the companyrt and set fire to it with the result that records of many cases including the record of the above case were destroyed. When the trial companymenced the plaintiff sought to put in a companyy of the document and it was objected to on the ground that the companyy companyld number be stamped even on payment of penalty. The Subordinate Judge without admitting the document but leaving the question, of its admissibility open until he had heard the arguments of companynsel, marked it as an exhibit. In rejecting the plaintiffs appeal the learned Judges of the Madras High Court referred to the decision of the Privy Council in Raja of Bobbilis case 2 and observed that the destruction by the mobs action put the plaintiffs-in numberbetter position. Numerous decisions on the point had been referred to by the learned Judge hearing the Second Appeal in the High Court but we do number think it necessary to take numbere of them in any detail. Mr. Sen relied strongly on certain observations in a judgment of the Rangoon High Court in Maung Po Htoo and three v. Ma Ma Gyi and one 3 . This arose out of a suit for administration of the estate of one Daw Thet San and for a declaration that a deed of gift executed by him was void. The District Court found that the deed of gift was void as being a testamentary disposition and ,ranted a declaration to that effect. In appeal to the High Court the decision that the deed of gift was void was number companytested and the only question for decision was whether the adoptions mentioned therein were proved. The appellants wished to use a certain part of the deed as evidence to prove that the plaintiff and one Tun Sein were number adopted while the respondents claimed that it companyld number be admitted in evidence for any purpose. The deed itself was number produced which admittedly had been in possession of Po Htoo who put in a certified companyy alleging that he had lost the original. On a companysideration of the entire evidence the District Judge found A.I.R. 1946 Madras 298 2 23 Madras 49. 3 I.L.R. 4 Rangoon 363. that the original deed of gift was insufficiently stamped. This decision was number questioned before the High Court but the appellant claimed that it companyld number be admissible in evidence and was riot to be companysidered for any purpose. Referring to the decision of the Judicial Committee and the passage which we have quoted already the Judges of the Rangoon High Court remarked that their Lordships observation quoted by us earlier that Those clauses throughout deal with, and exclusively refer to, the admission as evidence of original documents, which , at the time of their execution, were number stamped at all, or were insufficiently stamped. did number intend to go as far as their words suggested. According to the Rangoon Judges . . . section 35 of the present Act, read with the provisions of the Evidence Act, excludes both the original instrument itself and secondary evidence of its companytents. Similarly, under section 36, when either the original instrument itself or secondary evidence of its companytents has in fact been admitted, that admission may number be called in question in the same suit, on the ground that the instrument was number duly stamped. In this view, they held that the terms of the deed of gift companyld be companysidered. With all respect to the learned Judges it appears to us that both the premises of the last sentence of the above quotation and the companyclusion based on the same are incorrect. Neither under the decision of the Judicial Committee number the express words of s. 34 of the Stamp Act of 1879 mentioned in that judgment present section 36 allow the leading of secondary evidence of the companytents of an insufficiently stamped document. As we have expressed our view already s. 35 imposed a bar on the reception of any but the original instrument and forbade the reception of secondary evidence. Section 36 only,lifted that bar in the case of an original unstamped or insufficiently stamped document to which numberexception as to admissibility was taken at the first stage. It did number create any exemption in the case of secondary evidence which a companyy would undoubtedly be. In the case before the Judicial Committee the companyy was one other than ,the final draft of the original document which had been lost through numberfault on the part of the person intending to prove it and yet it was held that the Stamp Act ruled out its admissibility in evidence. For the same reason we must hold that the dictum in Satyavati v. Pallayya 1 that A.I.R. 1937 Madras 431 at 432. S. 35 will also apply when secondary evidence of an instrument number duly stamped had been wrongly admitted. is number good. law. Learned companynsel for the appellant also relied on the decision in Ponnuswami v. Kailasam 1 . In this case a suit as filed for recovery of the loans which were evidenced as two documents described as hand letters which were admittedly unstamped. Before the trial stamp duty and penalty was levied by the companyrt on the tooting that they were bonds. The defendant admitted the execution of the two documents but pleaded that in substitution of his liability under them he had executed a promissory numbere and had made payments towards the same, leaving a balance of Rs. 40/only payable on the loan. Neither party let in any evidence. The defendant-raised the only companytention that the suit was number sustainable on the two documents because they are inadmissible in evidence for any purpose. The learned Judge in revision took the view that it was number necessary for him to decide as to the exact nature of the two documents to determine whether they were admissible in evidence but he went on to add Assuming that these two documents should number have legally admitted in evidence, nevertheless it is companytended for the petitioner that as the defendant had admitted the execution of the documents and had only pleaded a substitution of liability by the execution of another promissory numbere and a partial discharge towards it there was numbernecessity for the plaintiff to adduce proof of his claim by seeking to get the two documents admitted in evidence. In other words the plaintiff will be entitled to a decree on the failure of the defendant to make out the Plea set-up by him in defence. We do. number think this judgment helps the appellant. If a suit is based on a document which is admittedly unstamped the insufficiency of the stamp is cured by the payment of penalty. The learned Judge never mean to lay down, as is companytended for by Mr. Sen, that the defect of insufficiency of stamp is cured by the admission of execution of the document. The learned Judge of the Madras High Court relied on an earlier decision of that companyrt in Alimana Sahiba v. Subbarayudu 2 wherein a suit had been filed on a promissory numbere which bore a stamp paper but the same was number cancelled. The defendant admitted the execution of the promissory numbere sued on but pleaded discharge. Subsequently at the stage of the argument the defendant raised a legal objection A.T.R. 1947 Madras 422. A.I.R. 1932 Madras 693. to the maintainability of the suit on the ground that the stamp affixed to the promissory numbere had number been cancelled as required by s. 12 of the Stamp Act and companytended that the promissory numbere should accordingly be. treated as unstamped for any purpose. In Alimana Sahibas case supra the learned Judge stated in clear terms that Under the provisions of s. 12 of the Stamp Act therefore it must be taken that this promissory numbere was number duly stamped and accordingly if any question arose as to its admissibility in evidence the same may have to be held to be inadmissible. The learned Judge however took the view that as facts admitted need number be proved the circumstance that the promissory numbere was number admissible in evidence is immaterial for the purpose of this case. No doubt the learned Judge added see at p. 696 Now when once this document has been admitted in evidence and marked as an exhibit then having regard to the provisions of s. 36, Stamp Act, its admissibility companyld number be re- opened on the ground of the document number having been duly stamped. That position being clear under the provisions of s. 36, Stamp Act, the whole discussion would thus seem to be entirely unnecessary and for numberpurpose, so far as the facts of this case are companycerned. It was wholly unnecessary, as was pointed out by the learned Judge himself, to companysider the question of admissibility under s. 36 of the Act. His decision really rested on the companyclusion that a fact which is admitted did number require proof. The case is number an authority for the proposition that secondary evidence of a document is to be treated on the same footing as an unstamped or insufficiently stamped original document. In the result the appeal is dismissed with companyts. The respondents moved an application C.M.P. No. 87 of 1971 under Order 47 Rule 3of the Rules of this Court for a direction that a relief for future mesne profits from the date of the suit be added to the decree.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1585 of 1968. Appeal from the judgment and order dated July 23, 1963 of the Calcutta High Court in Income-tax Reference No. 64 of 1958. C. Manchanda, Gobind Das and D. N. Gupta, for the appellant. Mitra, S. K. Aiyar and R. N. Sachthey, for the respondent- The Judgment of the Court was delivered by Hegde, J. This is an assessees appeal. The assessee is a public limited companypany and the appeal relates to the assessment for the assessment year 1949-1950, companyresponding to the accounting year which is the calendar year ending on December 3 1, 1948. The assesse companypany was incorporated in 1942. At the beginning it owned a distillery at Unnao. It acquired a refinery in 1943. With effect from June 1, 1945, the assessee companypany obtained on lease the New Sawan Sugar and Gur Refining Co. During the period from January 29, 1946 to April 23, 1946, the assessee companypany purchased 41,300 shares of the said companypany for Rs. 12,17,006/-. On April 30, 1947 the entire block of shares was sold to Produce Exchange Corporation Ltd. for Rs. 8,46,750/-. The transaction resulted in a loss of Rs. 3,70,356/This loss was treated by the assessee as a trading loss for the assessment year 1948-49. After setting off this loss against the other income of the assessee companypany, a loss of Rs. 2,27,085/was carried forward under s. 24 2 of the Income- tax Act, 1922 to be hereinafter referred to as the Act to the year 1949-50 and later years. The assessee claimed to set off this unabsorbed loss pertaining to the share business against its profits in the sugar business for the assessment year 1949-1950. The Income-tax Officer did number permit this set off. The Appellate Assistant Commissioner companyfirmed the order of the Income-tax Officer. In a further appeal, the Appellate Tribunal agreed with the companyclusion reached by the Income-tax Officer. Thereafter at the in- stance of the High Court, the Appellate Tribunal stated a case under s. 66 2 of the Act on the following question of law Was there any evidence before the Tribunal on which it companyld hold that the business in dealing with shares was distinct and separate from the business of sugar manufacturing and distillery? By its judgment dated April 23, 1963, the High Court answered the question in the affirmative and against the assessee. This appeal has been brought against the decision of the High Court after obtaining a certificate under s. 66 A 2 of the Act. The appeal came up for hearing before this Court on February 6, 1969. After hearing the Counsel for. the parties this Court observed In the present case however it is number possible for us to satisfactorily dispose of this appeal because the statement of the case submitted by the Tribunal is incomplete and has omitted to state material facts bearing upon the question referred. For instance, it is number clear as to whether the assessee aduced any evidence as to why it started purchasing the shares of the lessor companypany about six months after the companymencement of the lease. It is also number stated by the Tribunal whether there is any evidence of inter-relation between the purchase of shares and the manufacture of sugar. In view of that companyclusion this Court directed the Tribunal to submit a supplementary statement of case on some of the points formulated in the order. The Tribunal accordingly submitted a supplementary statement of case. Even after companysidering that supplementary. state- ment, this Court found itself unable to record its opinion on the question referred to. This Court was also of the opinion that the question which the Tribunal was directed to and did refer was defective and restricted the scope of the enquiry. It accordingly reframed the question as follows Whether the business of the companypany of dealing in shares and the business of manufacturing sugar and other companymodities companystitute the same business within the meaning of s. 24 2 of the Indian Income-tax Act, 1922, in force in the year of assessment? It further directed the attention of the Tribunal to the decision of this Court in Commissioner of Income-tax, Madras Prithvi Insurance Co. Ltd. 1 in order to assist the Tribunal to find out the relevant points for companysideration. In the order calling for a further supplementary statement, this Court observed As pointed out by this Court in Commissioner of Income Tax, Madras v. Prithvi Ins. Co. Ltd. in determining whether two lines of business companystitute the same business within the meaning of s. 24 2 of the Income-tax Act, the income-tax authorities must companysider the inter-connection, interlacing, inter-depend- ence and unity furnished by the existence of companymon management, companymon business Organisation, companymon administration, companymon fund and a companymon place of business. The Tribunal has number submitted the second supplementary statement of case called for by this Court. The facts found by it are as follows There is a single trading and profit and loss account. In the same account the sales of spirit, sugar and molasses as well as stock and shares appear 1. 3 I.T.R. 632. The share transactions as well as the business has, been dealt with by a companymon Organisation, though, the sale of shares is a single transaction and the purchase of those shares is also more or less of the same character The business of the companypany as well as the transaction relating to the shares were attended to as part and parcel of the business of the assessee companypany, A companymon fund was utilised both for business purposes as well as for the purchase of shares. A part. of the over-draft of Rs. 6,80,046/- taken from the. bank on December 31, 1947 has been discharged from out of the income of the business and 5 the share transaction work as well as the other business of the- assessee companypany were carried on in the same place of business. From the facts found by the Tribunal, it is clear that the share, transaction as well as the other businesses of the companypany were dealt with by a companymon management, companymon business organization, companymon administration, companymon fund and companymon place of business. It was urged by Mr. Mitra, learned Counsel for the Revenue that from the facts found by the Tribunal, it is number possible to companyclude that there was any inter-connection, inter-lacing, interdependence and unity between the transactions of the assessee. companypany relating to the shares as well as its other business and therefore the two activities cannot be companysidered as-the same business. He companytended that this Court in Prithvi Insurance Co. Ltds case 1 has accepted the companyrectness of the decision of the Kings Bench in Scales v. George Thompson, Co., Ltd. 2 and in that case Rowlatt J. had held that before two or more businesses can be companysidered as the same business they should number be easily separable and there must be a dovetailing of the one with the other. According to Mr. Mitra the transanctions relating to the shares companyld have been easily separated from the other business of the companypany and therefore there is numberinter-connection equally there is numberinterlacing because the share transaction business does number dovetail itself into the other business of the assessee companypany. Further there is neither inter- dependence or unity between the two businesses. The companycepts of inter-connection and inter-lacing, inter- dependence and unity are number free of ambiguity. But this Court has laid down certain objective tests for finding out 1 63 I.T.R. 632. 2 13 Tav. Cases 83 the existence of inter-connection, inter-lacing inter- dependence arid unity between two or more businesses. In Commissioner of Income-tax, Madras v. Prithvi Insurance Co. Ltd. 1 , this Court ruled that inter-connection, inter- lacing, inter-dependence and unity were furnished by the existence of companymon management, companymon business Organisation, companymon administration, companymon fund and a companymon place of business. This companyclusion was reiterated by this very bench in Produce Exchange Corporation Ltd. v. Commissioner of In companye-tax, Central Calcutta 2 . Therein the assessee companypany carried on business as a dealer in diverse ,commodities and also stock and shares. In the year of account 1949, it had suffered loss of Rs. 3,71,700/- in the sale of shares which the companypany claimed to carry forward and set off against the profits of subsequent years from transactions in other companymodities.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1515 of 1968. Appeal under S. I 16-A of the Representation, of the People- Act, 1951 from the judgment and order dated May- 10, 1968 of the Rajasthan High Court in Election Petition No. 8 of 1967. S. Bobde, Guman Lal Lodha, J. S. Rastogi, Jagadish, Pandya, M. L. Vaidya, D. V. Dani, S. S. Parekh, S. S. Khanduja and N. K. Shejwalkar, for the appellant. Mohan Kumaramangalam, I. L. Gobhil and K. Baldev Mehta, for respondent No. 1. B. L. Bhargava, S. N. Bhargava and Sobhag Mal Jain, for respondent No. 4. The Judgment of the Court was delivered by Ray, J. This appeal is against the judgment of the Rajasthan High Court dated 10 May, 1968, dismissing the Election Petition filed by the appellant against the respondent Mohan Lal Sukhadia. The election of respondent Mohan Lal Sukhadia to the Rajas- than Legislative Assembly from the Udaipur City Assembly Constituency was challenged. The appellant companytested the election on Jan Sangh ticket. The respondent companytested on Congress ticket. The respondent was the Chief Minister of Rajasthan at the time of the election. Respondent No. 2 Mohan Lal also companytested the election but obtained only 1262 votes. Respondents Narendra Singh Lakheri and Girdhari Lal Sharma Nos. 3 and 4 respectively submitted their numberination papers but withdrew them. For the purpose of this appeal we are companycerned only with the respondent Mohan Lal Sukhadia. The polling took place on 15 February,1967. The result was declared on 21 February, 1967. Therespondent polled 24272 votes. The petitioner obtained 20841votes. The respondent won by a margin of 3434 votes. After the election the Congress Party wasreduced to a minority. The respondent Sukhadia Who was theChief Minister tendered his resignation. On 13 March, 1967, the Presidents Rule was declared in Rajasthan, which was withdrawn after a period of 44 days on 26 April, 1967. Thereafter the respondent Sukhadia again became the Chief Minister. The election petition was filed on 7 April, 1967. The respondent Sukhadia filed an application praying that certain allegations in the petition were vague and lacking in particulars required by Section 83 of the Representation of the People Act and, therefore, the allegations should be struck off. The High Court ordered the petitioner to file a detailed reply giving full particulars in respect of each matter. On 29 May, 1967, the appellant furnished parti- culars. The High Court by orders dated 3/5/6 July, 1967 allowed the appellant to incorporate the said particulars in the amended petition and further allowed the appellant to furnish more particulars in respect of other allegations of companyrupt practices. On 19 July, 1967, an amended Election Petition was filed incorporating the amendments allowed by the High Court. Thereafter written statements were filed and the parties filed applications under Rule 12 of the Election Rules for production of the documents. Issues were framed on 14 August, 1967. The appellant filed a finally amended petition on 13 November, 1967. The appellant examined 30 witnesses and the respondent Sukhadia examined 46 witnesses. The High Court decided all the issues in favour of the respondent Sukhadia and dismissed the Election Petition but left the respondent to bear his own companyt. In the present appeal we are companycerned only with issues Nos. 3 a and 4 a . Issues Nos. 3 and 4 are as follows 3 a Are the allegations made in paragraphs 8, 9, 10 and 11 of the Election Petition companyrect ? 3 b If so, did the respondent No. 1 companymit the companyrupt practice specified in Section 123 1 or Section 123 2 of the Representation of the People Act, 1951 ? 4 a Are the allegations mentioned in paragraphs 12, 13, 14 and 15 of the Election Petition companyrect? 4 b If so, did the Respondent No. 1 companymit companyrupt practice specified in Section 123 4 of the Representation of the People Act, 1951 ? As to issue No. 3 based on paragraphs 8, 9,.10 and 11 of the Election Petition, allegations of companyrupt practice of bribery and undue influence companycerned with the companystruction of certain works of general public utility to the inhabitants of Udaipur like the companyering of Baluchistan Colony Nallah, companystruction of road at Tekri, installation of water-taps in Udaipur City and the grant of Pattas to-the inhabitants of the Raigar Colony. In the petition the appellant made 74 allegations. At the trial 55 allegations were given up. In the present appeal the appellant pressed allegations first about Pattas in Raigar Colony secondly, about roads in Tekri thirdly, companyering of Nallah in Baluchistan water Ex. 8-A as defamatory of the personal character and companyduct the appellant. The appellants case with regard to Raigar Colony is to be found in paragraph 9 of the amended petition. The gist of the allegation is as follows-- The, respondent Sukhadia, his agents and other persons with the companysent of Sukhadia promised the voters of the Raigar Colony, Udaipur at a meeting that he would get them Pattas issued at a numberinal rate of Re. 1/- only for the companystruction of their houses and under this inducement he asked the Raigar voters to vote for him. Because of this inducement many Raigar voters voted for the respondent Sukhadia. The respondent Sukhadia by his undue influence as Chief Minister got issued an order No. 66/5077 dated 10 February, 1967, from the Director, Social Welfare De- partment, Jaipur to grant Pattas to Raigars of Thakker Bapa Colony for companystruction of houses at a numberinal price of Re. 1/for each patta. The respondent Sukhadia thus companymitted companyrupt practice as defined under S. 123 1 of the Representation of the People Act. Girdhari Lal, election agent of the respondent Sukhadia arranged a meeting on 5 February, 1967 at the Raigar Colony. About 100 persons gathered. The audience companysisted of Harijans and Raigars. Prominent persons among these were Kalu Raigar, Shankar Harijan and Keshulal, the Secretary of the Raigar Colony. At this meeting the respondent Sukhadia said that he was managing Pattas of the land to be allotted to them for Re. 1/- each and he requested them to vote for him. The High Court held that it had number been proved that the respondent Sukhadia made a bargain with the people of Raigar Colony on 5 February, 1967, that if they promised to vote for him he would arrange for the grant of Pattas to them at a numberinal charge of Re. 1/- each Patta. The respondent Sukhadia stated that the, order dated 5 February, 1967 Ex. 271 passed by him and the order dated 10 February, 1967 Ex. 44 passed by the Director of Social Welfare were in furtherance of the policy of the State Government announced as early as 27 April, 1959 Ex. A-99 and further clarified by a subsequent order dated 26 February, 1962 Ex. A-100 . Neither in the original petition number in the amended petition there was any mention of recovery of development charges by the Urban Improvement Trust in companynection with the issues of Pattas. Sukhadias evidence was that the Urban Improvement Trust under the aforesaid orders of 1959 and 1962 were to issue Pattas after receiving the numberinal charge of Re. 1/- per patta from the inhabitants of the locality without insisting upon the re- companyery of development charges as companydition precedent to the issue of Pattas. The companyrespondence which was tendered in companynection with the Raigar Colony indicates that from the year 1955 up to the month of July, 1967, certain companytroversies were going on between the Grihya Nirman Sahkari Samiti, Thakker Bapa Colony on the one hand and the City Improvement Committee and the Urban Improvement Trust on the other. The City Improvement Committee which was the predecessor of the Urban Improvement Trust from the beginning took the stand that Pattas in respect of the houses in occupation of the original inhabitants of the locality companyld number be issued unless they agreed to pay the price of the land and the development charges incurred by the City Improvement Committee. The Samiti on the other hand was anxious to see that the Pattas were granted without having to pay deve- lopment charges because the people were poor. In Ex. A-99 dated 27 April, 1959, the State Government made an order laying down the companyditions on which the Pattas of the houses companyld be issued on payment of the numberinal price of Re. I -. Thereafter there was demand for issue of Pattas on payment of Re. I -. The Social Welfare Department wanted the order dated the 27 April, 1959 to be implemented and the City Improvement Committee insisted on payment of development charges amounting to Rs. 14,828.94. The attitude of the Government as represented by the Social Welfare Department was that Pattas should be issued to the inhabitants of the locality in terms of 27 April, 1959 order on payment of Re. 1/- only per Patta. The Urban Improvement Trust and the City Improvement Committee were equally insistent on payment of development charges. Ex. 44 being a letter dated 10 February, 1967, issued by the Director of Social Welfare Department to the District Welfare Officer was the sheet-anchor on which the appellant relied. A companyy of that letter was sent to Keshulal, Secretary of the Grihya Nirman Sahakari Samiti, Thakker Bapa Colony. In that letter it was stated it is submitted that there are directions from the Government on the application of Keshulal that action be taken without delay in granting pattas to the residents of that Raigar Colony, Udaipur, on payment at the rate of Re. I -. This letter dated 10 February, 1967 Ex. 44 seems to have had origin in 1959 and the discussions in the year 1966 as will appear from Ex. 268 being an application dated 29 December, 1966, addressed by Keshulal as Secretary of the Colony to the respondent Sukhadia as Chief Minister. Mere is a numbering on that application in the hands of the Chief Minister to the effect Secretary Social Welfare Officer to discuss the question of subsidy of 52 of the companyonies and Pattas. That numbering was on 28 December, 1966. On 31 December, 1966 the Secretary wrote as follows Please speak immediately . D.S. Deputy Secretary Social Welfare. In this background it is unmistakable that the demand of Raigar Colony for Pattas was as old as, a decade and the inhabitants of the companyony saw the Chief Minister in December, 1966 and he asked the relevant department to look into the matter. Exs. 270 dated 21 January, 1967 and 271 dated 5 February, 1967 are office numberes and order pursuant to the application sent by Keshulal in the month of December, 1966. The Director Social Welfare Department in Ex. 270 stated that Pattas were number granted because the development charges were number paid. The Secretary, Social Welfare Department made a numbere on Ex. 270 that the Chief Minister Respondent Sukhadia was going on tour on 24 January, 1967, therefore, there was numberpossibility of discussion in the near future. On 5 February, 1967, there is a numbering by the Chief Minister on the file that the Raigar residents were ready to get Pattas on payment of Re. I - and after getting the amount deposited action should be taken in getting the pattas granted to ,them and the Social Welfare Officer should be asked to pay personal attention to take action in the matter and other problems such as setting up industries, water arrangements etc. These documents show that Ex. 271 dated 5 February, 1967 was an office numbere on the file and did number have any independent existence. The Chief Minister was asked to give his directions on Keshulals application in the month of December, 1966. The Director of Social Welfare, therefore, on 10 February, 1967 wrote Ex. 44 about grant of Pattas to the residents of the companyony. Under Section 123 1 of the Representation of the People Act, 1951, bribery is mentioned as a companyrupt practice and bribery is any gift offer promise by a candidate of any gratification to any person whosoever with the object of directly or indirectly inducing b an elector to vote in an election. The appellants allegations were these. Girdhari Lal, election agent of respondent Sukhadia, arranged a meeting on 5 February, 1967 at Raigar Colony, 100 persons gathered. The audience companysisted of Harijans and Raigars. The respondent Sukhadia at that meeting said that he was managing pattas of the lands allotted to Raigars and Harijans for Re. 1/- each and requested them to vote for him. These particulars of the meeting were furnished by way of amendment. Apart from the baldness of allegations as to bargain for votes, the oral evidence adduced on behalf of the appellant was that of P.W. 4 Lakshmi Narain and P.W. 12 Kalu Ram. It is significant that Shankar Harijan and Keshulal, who were mentioned by the appellant as having been present at the meeting were number examined. Kalu Ram was a member elected to the Municipal Council, Udaipur on Jan Sangh ticket. Lakshmi Narain was neither a Harijan number a Raigar. The appellant alleged that the audience companysisted of Harijans and Raigars. Lakshmi Narain said that when the respondent Sukhadia began addressing a meeting a Harijan and a Raigar are stated to have stood up and mentioned that the Urban Improvement Trust was number permitting them to build an upper storey on the ground that they had number got pattas and respondent Sukhadia is supposed to have said that he would get pattas prepared and asked them to vote. The question of building the second storey was numberhere to be found in the allegations in the petition. Kalu Ram said numberhing about the alleged bargain for votes. On the companytrary, Kalu Ram said that he did number remember to have heard any companyversation and he did number state anything about pattas being prepared from Jaipur and being sent to Udaipur before the polling date, though Lakshmi Narain deposed to that effect. If the Urban Improvement Trust, Udaipur was the authority for- issuing pattas it is unbelievable that the respondent though Chief Minister of the State would make a promise for getting the pattas prepared at Jaipur and send them to Udaipur. Lakshmi Narain said that he was taken by Kalu Ram to the appellant 5 or 6. months after the election. The appellant then asked Lakshmi Narain whether parchas leaflets had been distributed. Lakshmi Narain is supposed to have showed a parcha Ex. 8-A whereupon the appellant asked Lakshmi Narain if the latter companyld give evidence incourt about distribution of Ex. 8-A. Even at that time LakshmiNarain did number utter a word about the meeting on 5 February, 1967 and far less of any bargain by respondent Sukhadia for votes at the election. Lakshmi Narain was an interested witness because he brought Ex. 8-A of his own accord, though he was number summoned to produce any document in Court. Kalu Ram the other witness admitted that as early as 1959, the Rajasthan Government passed an order that pattas be issued to the residents of Raigar Colony on a payment of Re. 1/-. This was merely implementing what the Government had decided in 1959. The respondents office numbere on 5 February, 1967, was numberhing new and there was number temptation offered by him. The tour programme of the respondent Sukhadia was exhibited i.e. Ex. A-1 16. Between 3.00 p.m. and 5.00 p.m. on 5 February, 1967, respondent Sukhadia spoke at a meeting of Sindhi Samaj at 4.00 p.m. That statement of Sukhadia was put to him in cross-examination to be companyrect. Girhari Lal, the agent of Sukhadia, also spoke of the companyrectness of the tour programme of Sukhadia and numberchallenge was made. Roop Kumar W. 3 also spoke of the meeting at Sindhi Samaj at about 4.00 p.m. and he was number cross-examined. Nowhere in the election petition the appellant mentioned the time of the meeting at Raigar Colony on 5 February, 1967. In the tour programme of the respondent Sukhadia it will appear that he met the Kerala Samaj on 5 February, 1967 between 3.30 p.m. and 4.00 p.m. at Vidhya Peeth. Between 4.00 and 5.00 p.m. he was at Sindhi Samaj and between 5.00 and 5.30 p.m. he met Gujrati Samaj near Fateh School. The respondent Sukhadia held a meeting of the Sindhi Samaj at Saletia Ground behind the Vidhya Peeth on 5 February 1967 at 4.00 p.m. The police record companytained in the file which was summoned at the instance of the appellant companytained a companyy of the tour programme of respondent Sukhadia which tallied with the tour programmes produced by the respondent Sukhadia and orally deposed to by Sukhadia and witnesses on his behalf. Ex. 109 was a companyy of the cyclostyled address presented to, the respondent Sukhadia on behalf of Sindhi Refugees at their meeting on 5 February, 1967. This is an additional ground to, support the respondent Sukhadias evidence. The oral evidence of Lakshmi Narain and Kalu Ram is unworthy of belief. The documentary evidence fortifies the oral evidence of respondent Sukhadia that there was numbermeeting of Raigars and Harijans at Udaipur on 5 February, 1967. The assertion made by the appellant that the order dated 5 February, 1967 was passed by the respondent Sukhadia on the ,stationery of the Chief Minister is baseless. The original belies that case. On the companytrary the order dated 5 February, 1967 is numberhing but a numbering by the Chief Minister on the file which had been started pursuant to the order of the Government in the year 1959 and occasioned more so because of the application made by Keshulal in the month of December, 1966. The High Court rightly rejected the oral evidence of bargain and charact erised the evidence on behalf of the appellant as being wholly companycocted and fabricated. Counsel for the appellant submitted that the respondent Sukhadia also made an order for remission of development charges. The documents relied on by the appellant do number support any such charge. This is a new case in this Court. There is numberfoundation for it in the pleadings. This case was number made in the High Court. Therefore, this case cannot be allowed to be made at this stage. The second companyrupt practice on which the appellant relied is to be found in paragraph 8 of the petition as amended. Broadly stated the appellants allegations were that the respondent Sukhadia ordered Public Works Department P.W.D. to companystruct a road at Tekri though it was a municipal area and P.W.D. had numberjurisdiction and further that the respondent held a meeting on 5 February, 1967, and during his speech said that he was arranging for companystruction of roads and installation of water-taps and requested the people to vote for him. This part of the appellants case companycerns an area called Tekri. There was a new railway station and a yard was companystructed that necessitated new road linking police lines to a place called Salumbar road junction. P.W.D. undertook to companystruct a road and when companystructed that would have made a thoroughfare through the Police Lines from the Railway Station to the Block Office. The police authorities objected. The Banjara Samiti which took up the cause companyplained about the obstruction by the police. Work was held up. This was in the year 1965-66. When the Police Lines were companystructed a short link route to Tekri village was closed. Therefore, it was decided to companystruct an approach road to Tekri. When the thoroughfare through the Police Lines was abandoned in the year 1966, the Executive Engineer took a decision to upgrade a part of the road and to use tarred road to make a thoroughfare via village Tekri to give a by-pass to Police Lines. Tekri village was situated to the East of Police Lines at Udaipur. The new railway station was to the North-West of the Jail. The Jail was also to the NorthWest of the Police Lines. The proposed road was from the Railway Station to Tekri village and then beyond the Police Lines to a point to the Block Office from the North to the South. Tekri village was to the East of the proposed road. In the original petition the appellant alleged that the Executive Engineer Chhail Behari Mathur canvassed votes to support respondent Sukhadia. In the amended petition the appellant alleged that Chhail Behari Mathur at the instance of the respondent Sukhadia passed orders for companystruction of roads. The appellant in his oral evidence said he had numberpersonal kno wledge and was indefinite as to which road his allegation related but that it related to a road which ran through Tekri village. Madan Lal, Chairman of the Municipality and a witness on behalf of the appellant companyld number point any road companystruction by the Municipality after 28 December, 1959, when Tekri was included in it. Two other witnesses Phoola P.W. 25 and Madan Lal P.W. 28 said that the road at Tekri was companypleted two or three days before the polling. The High Court disbelieved both of them. There are important exhibits as to Tekri road companystruction. These are, Contractors Agreement Ex.A/128 dated 10 February, 1967, Measurement Book Ex.A/129 and Running Bill Ex. 70, all for earth work. Ex. A 130 dated I April, 1967 and Ex. A 131 are the Agreement and Measurement Book respectively and both are for soling. The work was described special repairs to approach road to Tekri. On behalf of the appellant it was emphasized that the change was significant. Ex.A/125 was the Agreement dated 3 September 1965 for companystruction of road by Banjara Samiti in the year 1965 Ex. A/126 is a letter of companyplaint by the Banjara Samiti against the hindrance by the Police. These documents A/125 and A/126 both indicate that when it was intended to have a thoroughfare through the Police Lines to Jaisamand Board some criticism was made as to the name given-Construction of Road companynecting Police Lines to Jaisamand Road in the file of the year 1965 but when work companymenced it was described as Special repairs approach road to Tekri. In Ex. A/127 dated 10 April, 1967 being estimate for the road it will appear that when the short link to Tekri village disappeared in Police Lines it was intended to build approach road to Tekri which was shown on a plan Ex. When the thoroughfare through the Police Lines was abandoned because of objection by the Police, it was decided to by-pass the Police Lines and upgrade the entire road from the Railway Station to the Block Office. The name was amended as road from railway crossing to join Salumber road junction via Tekri village to give by-pass to Police Lines. The plan Ex. 80 proves that. The companystruction, whatever the name of the road was, remained the same road. The name is, therefore, of numbermoment. The High Court held that there was numbertender and that the work was split to restrict the companytract to the companypetence of the Assistant Engineer. Rule 369 of the Financial and Account Rules states that it is number the intention to prevent the officers from giving out to different companytractors a number of companytracts relating to one work even though such work may be estimated to companyt more than the amount up to which they are empowered to accept tenders. The total companyt of the road was approximately Rs. 20,000/- for material and labour. The 8th Running Bill was for Rs. 9,473.00 and the 9th Running Bill was for Rs. 1,025.00. Both the Running Bills were pursuant to Agreement No. 15 of 1966-67 and these Bills were passed in the months of April and May, 1967. There was a standing yearly companytract to supply stones and ballast. The total labour companyt for earth work, soling, company- solidation of stone ballast was Rs. 7,840-75 as will appear from Ex. A 128 and Ex. A 130 vouchers Nos. 63 and 44 and other vouchers. It is, therefore, companyrect to hold that the amount spent was within the limit and these were valid piecework agreements and all Bills, Vouchers and Measurement Books indicate that there was numberirregularity. The High Court made some companyments as to production of record for Tekri village. It stated that the record was produced after great delay. The criticism is number justified. The requisition for record was made on 15 November, 1967 and the record was sent up on 15 December, 1967. An application for summoning documents was made by the appellant on 12 August, 1967 and an order was made on 14 August, 1967 that the appellant should requisition these from the Public Works Department and the appellant made the requisition on 15 November, 1967. On 8 September, 1967 the respondent had also made a requisition for the file relating to Tekri. The Executive Engineer made a slight companyfusion between the two requisitions. In any event the entire record was before the Court and numbere of the parties suffered from any number- production. The High Court held that Ex. A/130 being the agreement for soling was entered into on 1 April, 1967 and was a fictitious document because soling was done on 14 February, 1967 and number after I April, 1967. It is also important to numbere that entry in log book Ex. 68 dated 14 February, 1967 speaks of soling and pressing by road roller over 300 feet in length on 14 February, 1967. The relevant vouchers show that 18275 cft. ballast was spread. The ballast was 12 feet wide and 41 inches deep. The total length of the road was 4000 feet upto Tekri village. Secondly, the relevant vouchers-show that 16,722 cft. soling was laid. Soling was done 12 feet wide-- and six inches deep. That worked out a total road length of 2,287 feet. Thus soling was number done over 1,113 feet in length. Thirdly, earth work according to the vouchers was 28741 cft. of which 21050 cft. was ,carried away and rest of the excavated stuff was pressed. Some1,281 feet long road length companytained material which was excavated locally. Work started near the Jail to avoid the incon- venience to traffic on election day caused by the dug up gravel road. That is why Ex. 68 dated 14 February, 1967 is explicable as to soling for about 300 feet on that day and Ex. A/130 the agreement became effective as from 1 April, 1967. Therefore, the High Court wrongly held that the date 1 April, 1967 on Ex. A/130 was fictitious because soling was done on 14 February, 1967 as will appear from Ex. 68. The Judgment totally overlooked that on 14 February, 1967 soling was pressed by road-roller to the extent of 300 feet. The total distance of the road from Jail to Tekri village was 3389 ft. Out of this length 3000 ft. soling was pressed on 12 April, 1967. That is proved by Ex. 67 log-book entry dated 12 April, 1967. Details of road roller work given in Ex. 67 show that the engine worked on the road for about 31/2 day for pressing soling and companysolidating ballast. The relevant Financial and Accounts Rules Nos, 330, 351 and 369 indicate that the officers companyld give to different companytractors a number of companytracts relating to one work even though such, work might be estimated to companyt more than the amount up to which they are empowered to accept the tenders and a distinction is made between piece-work and companytract work. Piece-work is that for which only a rate is agreed upon without reference to the total quantity to, be done. Work below Rs. 2500/- in value is termed as petty-work. Exs. A/128 and Ex. A/130 would companye in the cat,--gory of petty-work. Petty-work did number require estimate number tenders according to Rules 330 and 351 respectively. The Tekri road was companystructed under special repairs programme. The High Court held that the companystruction of the road at Tekri was in companytravention of section 72 of the Rajasthan, Urban Improvement Act. This point was number raised in the pleadings. Section 72 of the said Rajasthan Act speaks of restriction on improvement in certain areas after the companying into operation in. any area of a master plan or numberification of the sanction of a scheme. The scheme is number in evidence. The evidence about Hiran Nagri Scheme does number prove that Tekri road was companystructed in companytravention of any scheme. Hiran Nagri scheme Ex. 78 is divided into 14 sectors. Tekri does number fall in any one of them. It is in evidence that on 31 January, 1967 the Advisory Council met for preparation of a master plan. Section 2 1 i of the said Rajasthan Act speaks of amenity as including a road and section 2 1 vi speaks of improvement meaning operations over or-under land. A road cannot be an improvement and therefore section 72 of the Act may number apply. These matters appear to be beside the principal point for companysideration as to whether there was any meeting and whether the respondent Sukhadia told the voters who were mostly Gujars that if they did number vote for the appellant then the Kachha road in their locality would never be metalled. The High Court held that there was numberevidence that it was the respondent Sukhadia who got the work on Tekri road started by Chhail Behari Mathur. The High Court further held that there was numberevidence of bargain for voting at the election. The witnesses Phoola P.W. 25 and Madan Lal W. 28 who were examined to prove that the respondent made a bargain with the people of Tekri village that they would vote for him and he would get a road companystructed in Tekri village were disbelieved by the High Court. The entire evidence has been examined by the High Court and there was numberevidence of bargain. That finding is companyrect and we do number find any reason to take a companytrary view. The various records about the companystruction of Tekri road indicate that this was a long standing grievance. If a roller was used on the date of the election that should number be interpreted to mean that the Chief Minister was utilising his position to obtain votes. Such a view would suspend and paralyse numbermal activities of the State. We agree with the High Court that there was numbercorrupt practice. With regard to the companystruction work at Tekri, companynsel for the appellant emphasized three features, namely, that this was number the respondent Sukhadias portfolio secondly, that the companystruction work was in breach of law, that the Urban Improvement Trust should have done work and thirdly, work companymenced immediately after the visit of respondent Sukhadia and it was companypleted before-the polling date without estimates, without sanction and without funds. These three features were said in companybination with the oral evidence of Phoola P.W. 25 and Madan Lai P.W. 28 to be full and companyplete evidence of the election bargain of respondent Sukhadia to obtain votes. He have earlier referred to the agreement for earth-work for companystruction of road at Tekri village. The work companytinued up to the month of May, 1967 The road had been planned as early as 1966. It is number companyrect to say that there was numbersanction for the work. There was standing yearly companytract of supply of stones and ballast. Earth-work was done under different agreements. Measurement-books and vouchers have been produced and the total value of the work was calculated to companyt Rs. 20,000/-. Approximately Rs. 18,000/was spent. There were two piece- work agreements Ex. A/128 and Ex. A/130. In addition there were items of petty-work. Petty-work did number require any estimate. We have also referred to the relevant rules and held that there was numbercontravention. The High Court companyrectly rejected the evidence of Phoola and Madan Lal and came to the companyclusion that there was numberevidence of bargain for election. The third companyrupt practice alleged by the appellant was in companynection with the companyering of Nallah in Baluchistan Colony. The appellant alleged in paragraph 8 of the amended petition that the respondent Sukhadia, his election agent, other agents and other persons with the companysent of the respondent Sukhadia misused his position as Chief Minister and ordered the Public Works Department to companystruct roads and Nallah inter alia at Ward No. 27 in Baluchistan Colony. The appellant alleged that respondent Sukhadia visited that companyony and induced the voters to vote for him and in turn promised to get the companystruction of the Nallah done in their companyony. It will appear from Ex. A-31 dated 30 September, 1966 that the scheme for companyering of Baluchistan Colony Nallah came into existence at the instance and because of the keen interest taken in the matter by the Health and Central Committee of the Municipal Council, Udaipur. There was a resolution of the Sanitary and Health Committee dated 27 August, 1966 Ex. A-28 where it is recorded that unfortunate incidents took place at the Nallah because children fell into the Nalla and cattle also fell in the Nallah and there was insanitary companydition. There are many documents between the years 1966 and 1967, pointing about the unsatisfactory and unhygienic companydition of the Nallah. In the month of December, 1966, the Urban Improvement Trust numbericed that the Government had refused subsidy for the companyering of the Nallah and request for loan was made and proportionate companytribution was expected to be made by the- Municipal Council and the Irrigation Department. The Chairman, Urban Improvement Trust, in Ex. A-34 dated 19 January, 1967, wrote to the Secretary, Town Planning Department, intimating that the work of the Nallah was being started in anticipation of the Government sanction. In Ex. 65 252 dated 30/31 January, 1967, the Secretary, Town Planning wrote to the Chairman, Urban improvement Trust, that it would number be possible for the Town Planning Department to spare the money but he would ask the Chief Engineer, Health and the matter should be discussed with the Town Planning people. The Chair-man in his oral evidence explained that he was quite surprised to see the letter. Ex. 7-A is a telegram dated 10 February, 1967. There are various office numberes on the Secretariat file being Exs. 253, 254, 255, 256, 257 and 266. In the month of February, 1967 the office numberes were sent to the Municipal Local Self-Government. It appears that the Financial Commissioner did number at first accord his approval to the loan. The Financial Commissioner accorded sanction on 24 February, 1967 Ex. 256 . The, office numbere of the Urban Improvement Trust on 6 March, 1967, proposed that the matter might be placed for administrative and, technical sanction and also- for the acceptance of the tender. Formal sanction Ex. A-35 was made on 31 March, 1967. In that sanction reference is made to the letter Ex. A-34 dated 19 January, 1967 and a telegram Ex. 7-A dated 10 February, 1967. This telegram was described by the High Court as faked because there was then numbersanction. The High Court was wrong in describing the telegram in that manner. The telegram Ex. 7-A dated 10 February, 1967 was sent by the Secretary to the Collector and Chairman of the Improvement Trust. Ex. 266 dated 10 February, 1967, is an office numbere to the effect that the Chairman, Town Planning had gone to Udaipur and was asked to discuss the case regarding Nallah in Baluchistan Colony with the Chairman, Urban Improvement Trust, Ex. 253 dated 11 February, 1967 is another office numbere stating that recommendation for grant of loan was sent for approval to the Financial Commissioner. All these documents read in proper sequence would indicate that Ex. 7- A was a genuine telegram in anticipation of sanction. The Financial Commissioner did number at first agree to accord his approval to the loan. The Secretary, Town Planning, again moved the Financial Commissioner for sanction. The Financial Commissioner accorded sanction on 24 February, 1967 Ex. 256 . The Minister gave his assent to the sanction of the loan on 2 March, 1967. On 6 March, 1967, the matter, according to the office numbere, was placed for administrative and technical sanction and for acceptance of the tender. On 31 March, 1967, formal sanction was given vide Ex. A-35. It appears that the companyering of the Nallah in Baluchistan Colony was number an extraordinary or abnormal affair. It may be stated here that respondent Sukhadia resigned from his office on 13 March, 1967 and Presidents Rule was imposed, which companytinued till 26 April, 1967. The sanction was given at a time when respondent Sukhadia was number in office. A revised sanction was made on 27 June. 1967 Ex. A-38 . Tenders for companyering of the Nallah had been asked for by Ex. A-39 dated 29 December, 1966. Ex. 109 is an address presented to the respondent Sukhadia on behalf of the refugees of Baluchistan and Jacobabad Colonies at a public meeting at Salatia Grounds on 5 February, 1967. This address does number make any reference to the companyering of the Nallah. If the respondent Sukhadia had made any promise to that tenor on 31 January, 1967 or prior to 10 February, 1967, it would have found mention in the address. The Urban Improvement Trust had one part-time Executive Engineer, Chhail Behari Mathur. His real job was that of Executive Engineer, P.W.D., Udaipur. The decisions in the Urban Improvement Trust were usually taken by the Chairman and the Executive Engineer. The appellant in his oral evidence said that when he was Vice President of the Municipality and also a Member of the Urban Improvement Trust, it was felt necessary to companyer the Nallah. The proceedings of the Urban Improvement Trust in the year 1966 will show such companyrse of action to be companyrect. The Urban Improvement Trust Resolution of 21 September, 1966 stated that money was being arranged for and would be forthcoming before the liability arises. Rule 375 a of the Public Works Department Financial and Accounts Rules inter-alia states that until an assurance has been received from the authority companypetent to provide funds work companyld be under- taken because such funds will be allotted before the liability matures. If the Urban Improvement Trust had to spend a sum over and above the budgeted provision in the companyrse of the year a supplementary budget was to be passed. Again Rule 375 b it is stated that whether on ground of urgency or otherwise if an officer is required to carry out a work for which numberappropriation exists, the officer is directed to intimate to the Accountant General when he is incurring a liability in which numberappropriation has been made in the budget. Therefore, an officer incurring the expenditure will take immediate steps by addressing the appropriate companypetent authority to obtain orders either to stop work or regularise its execution. That is why, K. K. Joshi, Chairman of the Urban Improvement Trust informed on 19 January, 1967 that he was starting the work in anticipation of Government sanction See Ex. A-34 . Inviting tenders companyld number have been postponed to a date when the loan came in hands of the Urban Improvement Trust. When tenders were opened on 17 January, 1967, the tender of Sanganeria Brothers was the lowest and it was orally accepted. The actual companytract was entered into after the Urban Improvement Trust gave formal sanction on 13 April, 1967. The Urban Improvement Trust framed its own scheme,. Expenditure sanction is number required in the Urban Improvement Trust because Resolution for work would amount to sanction in anticipation of allotment of funds. Rule 318 of P.W.D. Rules requires that the proposals are structually sound and estimates are accurately calculated. Chhail Behari Mathur prepared the scheme, estimates, designs and plans. He was the highest technical person in the Urban Improvement Trust. When Urban Improvement Trust decided to execute the scheme it looked for money. The Local Self-Government Secretary on 8 January, 1967 assured the loan. The Town Planning Department approved the scheme. The approval meant approval for raising the money. The Secretary, Town Planning Department was also the Secretary of the Local Self- Government Department. The Local Self-Government De- partment, Town Planning, and Public Health Department really formed one Unit in the Secretariat. Though tenders were opened on 17 January, 1967 formal companytract was signed after the date. Though the work, had started in February, 1967 it was stopped for some time. The work order was dated 29 March, 1967 and the work was companypleted on 28 November, 1967. The tender numberice gave 8 months for companypletion of work. There was a Conference at the Secretariat between the Chief Town Planner, Secretary and Deputy Secretary of the Town Planning Department on 10 February, 1967. They decided to sanction Rs. 60,000/- out of Land Acquisition and Development Fund. Therefore, as far as the loan was companycerned the Department had only to obtain the companycurrence of the Finance Department. The Accounts Officer therefore sent a telegram Ex. 7-A that sanction was accorded for loan and formal sanction would follow. Rule 50 of the General Financial and Accounts Rules states that where it is desired to sanction expenditure before the funds have been companymunicated, the authority proceeds in a cautious manner by stating subject to the funds to be companymunicated in budget of the year. The Accounts Officer was careful in indicating that a telegram was number a formal order for sanction and something was yet to be done. The ultimate sanction was issued on 31 March, 1967. The Urban Improvement Trust on 15 April, 1967 paid the first running bill amounting to Rs. 52,466.60. On the entire evidence it was apparent that there was urgency of the work. The Municipality felt the urgency. The resolution of the Municipality Ex. A-28 asked the Urban Improvement Trust to act forthwith in the matter of companyering of the Nallah. When the scheme Ex. A-31 was sent to the Town Planning Department, companyy was sent to the Chief Minister as well as the Law Minister. This was between the months of September and November, 1966. Reminder was sent in the month of January. 1967 to the Chief Minister. The respondent Sukhadia said that the scheme was brought to his numberice. Sometime in the month of December, 1966 the respondent Sukhadia pointed out to the Chief Engineer, Health about the bad companydition of the Nallah and expressed desire for improvement. It, therefore, follows that the respondent Sukhadia was shown the scheme once in the month of December, 1966 and the only observation made by him was that there should be improvement. This was ordinary official duty done by the respondent Sukhadia. It is impossible to impute any motive whatsoever to the respondent Sukhadia that he was guided by any companyrupt motive for any election bargaining. When the Urban Improvement Trust was trying to get revival of the lapsed sanction in the month of June, 1967, the matter again came to the respondent Sukhadia. This was too far removed from the election date to have any, companynection or relevance therewith. It was suggested that file Ex. 247 was tampered and that a small slip had been pasted between numbere 113 and numbere 114. The word issued is written on that slip. Before the slip was pasted the words were draft vetted D. S. may also see as it is important matter. The companytents would show that the draft was vetted and the numbere was irrelevant and this was again in the month of January, 1967 long before the election. So, the pasting of the slip was also an ordinary routine affair. In cross-examination of the respondent Sukhadia it was suggested that the words below the slip were as desired by Chief Minister on phone sanction may be accorded. The words can be seen on the original and the suggestion is baseless. The appellants allegation against the respondent Sukhadia as to installation of public water-taps is based on paragraph 11 of the amended petition. The appellant alleged that the respondent by exercising his influence as Chief Minister got 50 public water-taps installed in different localities of Udaipur City Constituency two or three days before the poll. The respondent did number admit the allegations. The High Court came to the companyclusion that the documentary evidence on record did number warrant a finding that the respondent got the public hydrants installed by the exercise of his influence. We have number found any reason to hold that the High Court was in error. The last allegation on which the appellant relied as an ins- tance of companyrupt practice was Ex. 8, which was a leaflet. The leaflet companytained a statement The Vice-President of Jan Sangh Shri Bhanu Kumar Shastri took illegal possession of Government land in Shivaji Nagar by force and left a road of 9 ft. width only. It was said that the statement of fact related to the personal character and companyduct of the petitioner and was, therefore, an offence within the meaning of section 123 4 and section I 00 B of the Representation of the People Act. The High- Court held that the statement of fact companytained in Ex. .8 that Bhanu Kumar Shastri encroached on government land and companystructed his house at Shivaji Nagar was false and the respondent Sukhadia believed the statement to be false. The High Court also held that the statement related to the personal character of Bhanu Kumar Shastri but it was number reasonably calculated to prejudice the prospects of his election and the leaflet was number printed or distributed with the companysent of the respondent Sukhadia or his election agent. Counsel for the appellant relied on the evidence of Bhagwati Lal Bhat and Girdhari Lal Sharma to companytend that the respondent was responsible for the printing. Bhagwati Lal Bhat is R.W. 36 and Girdhari Lal Sharma is R.W. 2. Bhagwati Lal Bhat said that he was Secretary, District Congress Committee, Udaipur at the rele- vant time and he used to get leaflets printed for election propaganda. He also said that he got Ex. 8 printed at Krishna Printing Press and Madho Lal agent of Bhuleshwar Mina asked him to get the same printed. Girdhari Lal Sharma was the election agent of respondent Sukhadia. He said that work for the respondent Sukhadia and Bhuleshwar Mina, who was a Parliamentary candidate from the same companystituency was carried on from the same office. Girdhari Lal Sharma used to draft leaflets and pamphlets which were published for the election campaign of the respondent Sukhadia. Madho Lal used to get leaflets and pamphlets for the election campaign of Bhuleshwar Mina printed. The election propaganda by the District Congress Committee according to Girdhari Lal Sharma was in the charge of Bhagwat Lal Bhat. Counsel for the appellant invited us to hold on the evidence that Ex. 8 was printed by the respondent Sukhadias election agent and with his companysent. The appellant in his oral evidence said that the respondent Sukhadia got Ex. 8 printed at the press of his election agent, Girdhari lal. It was number alleged in the petition that the respondent or Girdhari Lal got the leaflet printed. Neither in the petition number in evidence, knowledge or companysent of Girdhari Lal is alleged about printing the pamphlet Ex. 8. Girdhari Lal said that he came to know of the leaflet only after be had received a companyy of the election petition. This was number challenged in cross- examination of Girdhari Lal number was it suggested that the printing of the pamphlet was done at his press with the knowledge or companysent of Girdhari Lal. The only allegation in the petition was that the leaflet was published in the Krishna Printing Press of Girdhari Lal. Girdhari Lal also said that he did number sit at his press in the months of December, 1966 and January and February, 1967. Girdhari Lals Manager, Babu Lal used to maintain the accounts and look after the business of the press during those months. It was never suggested to Girdhari Lal that the leaflet was printed with his knowledge or companysent. Bhagwati Prashad Bhatt and Madho Lal gave evidence on behalf of the respondent. Bhagwati Prasad said that the leaflet was printed by him for the District Congress Committee. Th.-. High Court companyrectly held that neither the respondent number his election agent, Girdhari Lal got the leaflet Ex. 8 printed or gave companysent to its being printed and further that it companyld number be held that the respondent or his agent had knowledge of the distribution of the leaflet. As to distribution of the pamphlets, the appellant originally mentioned numberparticular persons as distributors but after amendment, three persons, namely, Hanuman Prashad, Bhagwati Prashad Bhat and Isthiak Ahmed were mentioned as distributors. There is numberevidence that Girdhari Lal distributed the leaflet. In paragraph 15 of the petition, the appellant alleged that the, respondent addressed meetings at Dholi Basri and Moti Chohtta on 10 February, 1967 where the respondent orally made defamatory statement about the appellant making an encroachment upon the Government land. Narain Lal and Shanker Singh gave evidence on behalf of the appellant and said that the respondent in their presence made the statement that the appellant had companystructed a house on Government land. The High Court did number accept the oral evidence on behalf of the appellant. Counsel foe the appellant submitted that though the respondent denied that he held a meeting at Dholi Basri and Moti Chohtta on 10 February, 1967, there was mention of meetings at those places in the police report. The High Court held that the respondent might have companytacted the people at the places mentioned but rejected the appellants version that the respondent said that the appellant had encroached upon the Government land. We do number see any reason to take a different view. Counsel on behalf of the appellant companytended that it was number open to the respondent to challenge several findings of fact by the High Court against the respondent without preferring an appeal. Sections 116A, 116B and 116C of the Representation of the People Act deal with appeals, stay of operation of the order by the Court and procedure in an appeal respectively. Under section 116A, appeals shall lie to this Court on any question whether of law or fact from every order made by the High Court under section 98 or section 99 of the Representation of the People Act. Sections 98 and 99 speak of orders on the election petition. Section 98 speaks of orders dismissing the election petition or declaring the election to be void or declaring the election of a returned candidate to be void and the. petitioner to have been duly elected. Section 99 speaks of orders recording finding of companymission of companyrupt practice and names of persons who were guilty of companyrupt practice. Under section 116C of the Representation of the People Act the procedure in an appeal is that subject to the provisions of the Act and of the Rules, if any, made thereunder every appeal shall be heard and determined by this Court as nearly as may be in accordance with the procedure applicable to the hearing and determination of an appeal from the final order passed by a High Court in the exercise of its original jurisdiction and of the provisions of the Code of Civil Procedure and the Rules of the Courts shall as far as possible apply in relation to such appeal. There are numberrules of this Court which have any bearing on this matter., The provisions companytained in Order 41, R. 22 of the Code of Civil Procedure are attracted by the words of section 116C of the Representation of the People Act with the result that the respondent may support the decision and judgment on any ground decided against him. This Court in Ramanbhai Ashabhai Patel v. Dabhi Ajitkumar Fulsinji Ors. 1 , negatived the companytention that the respondent was number companypetent to challenge the companyrectness of a finding as he had number preferred an appeal and said We cannot lose sight of the fact that numbermally a party in whose favour the judgment appealed from has been given will number be granted special leave to appeal from it. Considerations of justice, therefore require that this Court should in appropriate cases permit a party placed in such a position to support the judgment in his favour even upon grounds which were negatived in that judgment. In the recent case in T, N. Angami v. Smt. Ravalu Reno M. Shaiza Civil Appeal No. 1125 of 1970 this Court in the judgment dated 21 January 1971 reiterated the views expressed in the case of Ramanbhai Ashabhai Patel supra . There is an additional reason for allowing the respondent to support the judgment even on findings against the respondent, specially when it appears that the High Court has number taken into companysideration the entire documentary and oral evidence in arriving at a finding. If the High Court has overlooked important and crucial documents or oral evidence, such evidence will justify this Court to support the companytentions of the respondent that the findings of fact arrived at by the High Court are against clear and companyent proof of facts. This Court will, therefore. be justified 1 1965 1 S.C.R. 712. in recording the companyrect findings on ample and abundant materials which have been overlooked and ignored by the High Court. In the present case, we have had occasion to deal with these aspects on the rival companytentions and recorded our findings. It was said on behalf of the appellant that under s. 123 of the Representation of the People Act, bargain was number necessarily an ingredient of companyrupt practice of bribery. The onus of proof of companyrupt practice is on the appellant. Allegation of companyrupt practice is of a serious nature. In Ghasi Ram v. Dal Singh Others 1 and Om Prabha Jain v. Abhash Chand Anr. 2 , this Court companysidered acts of Minis- ters, who were candidates at elections in relation to using discretionary fund on the eve of the election. Two propositions were established. First, the position of a Minister is difficult. It is obvious that he cannot to function when his election is due. He must of necessity attend to the grievances, otherwise he must fail. He must improve the image of his administration before the public. If everyone of his official acts done bonafide is to be companystrued against him and an ulterior motive is spelled out of them, the administration must necessarily companye to a stand-still With an election in the near future, the political party had to do acts of a public nature. The grants of discretionary grants sic were part of the general scheme to better companymunity development projects and to remove the immediate grievances of the public. The money was required to be spent in 3 months time. The action of the Minister had often the companycurrence and recommendations of his subordinate staff. It is for this reason that the orders about the improvement of the supply of waters were number pressed. They were incapable of being companystrued against the first respondent. Therefore, emphasis was placed upon the distribution of money. Second, To arrange to spend money on the eve of elections in different companystituencies although for general public good, is when all is said and done an evil practice, even if it may number be companyrupt practice. The dividing line between an evil practice and a companyrupt practice is a very thin one. It should be understood that energy to do public good, should be used number on the eve of elections but much earlier and that even slight evidence might change this evil practice into companyrupt practice. Payments from discretionary grants on the eve of elections should be avoided. Allegation of companyrupt practice is a charge of criminal nature. The provisions in the Representation of the People Act are intended to preserve the purity of the election, but at the same time these provisions should number be subverted for the impure purposes 1 1968 3 S.C.R. 102. 2 1968 3 S.C.R. 111. of maligning candidates who happen to be in the Government on the eve of the election. The numbermal bonafide acts of persons who happen to be Ministers have to be kept separate from abuse of the opportunities of power and resources which are number available to their opponents. Under section 123 1 of the Representation of the People Act, bribery is said to be a gift, offer or promise by a candidate of any gratification to any person with the object directly or indirectly of inducing an elector to vote at an election. The ingredients of bribery are, therefore, first gift or offer or promise of gratification to an elector, second, the gift or offer or promise of gratification is for the direct or indirect purpose of inducing an elector to vote. It was said on behalf of the respondent that if Ministers on the eve of the election render public or social service by redressing grievances of the public in relation to companystruction of roads or installation of water taps or closing of insanitary drains or pits, this acts should number be interpreted to be either gift or offer or promise of gratification. It is difficult to lay down an abstract proposition. Ordinarily amelioration of grievances of the public appears to be innocuous. If, however, there is evidence to indicate that any candidate at an election abuses his power and position as a Minister in the Government by utilising public revenues for companyferring advantage or benefit on a particular group of people for the purpose of obtaining their votes, different companysiderations will arise. The Court is always vigilant to watch number only the companyduct of the candidates and to protect their character from being defamed but also to see that the character and companyduct of the public is number companyroded by companyrupt motive or evil purposes .of candidates. The genuine and bonafide aims and aspirations of candidates have to be protected on the one hand and malafide abuse and arrogance of power will have to be censured on the other. Judged by the tests laid down in these decisions it has to be found out as to whether the respondent Sukhadia did any act which can be companystrued to be out of the ordinary or with a view to entering into an election bargain with the voters. In all the three instances relied on by the appellant at Raigar Colony, Tekri and Baluchistan Colony, it is manifest that there were long standing public grievances and the Government from time to time made suggestions and recommendations for redress of the grievances and amelioration of the companydition of the people. It cannot be said that on the eve of the election there was any sudden or spontaneous out-burst of public activity in the shape of diverting public money to win electors on the side of the respondent Sukhadia by throwing baits or giving them any particular and specially favoured treatment. For these reasons we are of opinion that the appellant is number entitled to succeed. The appeal fails and is dismissed. Parties, will pay and bear their own companyts.

Case appeal was rejected by the Supreme Court

ClVlL APPELLATE JURISDICTION Civil Appeals Nos. 1001 to 1003 of 1965. Appeals from the judgment and decree dated December 22, 1961 of the Orissa High Court in First Appeals Nos. 82, 83 and 84 of 1958. Bishan Narain and P. C. Bhartari, for the appellants in all the appeals . P. Maheshwari, for respondent No. 1 in C.A. No. 1002 of 1965 . Sadhu Singh and Jagmohan Khanna, for respondents Nos. 1 to 5 in C.A. No. 1003 of 1965 . The Judgment of the Court was delivered by Grover, J. These appeals have been brought by certificate from a companymon judgment of the Orissa High Court. Five different suits were filed against certain defendants on the foot of five different pronotes. All the five suits were heard together and were decreed by the trial judge. In respect of two suits the valuation being low the appeals were preferred before the District Judge and in three suits the appeals were filed in the High Court. The High Court dismissed the appeals. It is altogether unnecessary to refer to the points in companytroversy between the parties because. the sole question which has been agitated before us relates to the admissibility of certain assessment orders on which reliance has been placed for deciding whether the companytesting defendants were the partners of firm Surajmal Manilal on whose behalf the pronotes had been executed. The learned subordinate judge had found that the suit transactions were genuine and execution on behalf of the firm as well as the passing of companysideration had been proved. He had further found that the companytesting defendants were joint with their uncle Manilal in 1949 and that they were the partners of the firm Surajmal Manilal-being members of a trading family, and therefore they were liable to the extent of the assets of the joint family in their hands. It appears that the assessment orders were produced number by the companytesting defendants but by the son of Manilal who was the assessee. After examining s. 54 of the Income tax Act 1922 and the various decisions of the High Courts the learned judges of the High Court ,game to the companyclusion that the general companysensus was that if a companyy of the assessment order or a certified companyy thereof was produced by the assessee waiving his privilege it would be admissible in evidence. Section 54 1 of the Act was in the following terms S. 54 1 All particulars companytained in any statement made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given, or affidavit or deposition made, in the companyrse of any proceedings under this Act other than proceedings under this Chapter, or in any record of any assessment proceeding, or any proceeding relating to the recovery of a demand, prepared for the purposes of this Act, shall be treated as companyfidential, and numberwithstanding anything companytained in the Indian Evidence Act, 1872 1 of 1872 , numberCourt shall, save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents of record or any part of any such record, or to give evidence before it in respect thereof. Under sub-section 2 if a public servant disclosed any particulars companytained in a statement, return etc. mentioned in sub-s. 1 he was liable to punishment with imprisonment as well as fine. The prohibition against disclosure was number applicable to the facts and particulars in such cases and circumstances as were set out in sub-s. 3 . Now it is quite clear that s. 54 created a companyplete bar to the production by officials and other servants of the Income tax Department of any such documents which were mentioned in sub-ss. 1 and 2 . It also made it obligatory on them to treat as companyfidential the records and documents mentioned in the sub-sections. They were further prohibited from giving any evidence. relating to them. The question which came up for companysideration before the companyrts was if the documents companyld be given without requiring a public servant to produce them companyld the companyrt allow them to be tendered and admitted into evidence ? The Madras High Court held in Mythili Ammal v. Janaki Ammal Another that statements made in income tax returns companyld number be brought up in companyrt against the person making them or against any one else number companyld the income returns be proved by secondary evidence under s. 64 of the Indian Evidence Act. The Calcutta High Court in Promatha Nath Pramanick v. Nirode Chandra Ghose 2 companysidered it startling that when an assessment order was to be treated as companyfidential under s. 54 of the Act a joint assessee companyld be permitted the use of the companyy of such an order to the detriment of his companyassessee in companytentious proceedings between them. A Full Bench of the Madras High Court, however, held in Rama Rao v. Venkataramayya 3 that a return was companyfidential and companyld number be disclosed to a third party but there companyld be numberobjection to the maker of a return having a COPY for his own purposes if he so desired and he was number bound to treat the document as companyfidential. In other words he companyld produce that document as evidence in companyrt. It is unnecessary for the purposes of this case to go into the larger question of production of the documents companyered by s. 54 1 by third parties as it was the son of Manilal the assessee who had produced the assessment orders which are in dispute. There is an overwhelming weight of authority in favour of the view that assessment orders companyld be produced by the assessee or his representative-in- interest see Emperor v. Osman Chotani 4 , Suraj Narain v. Seth Jhabhu Lal Others 5 and Buchibai v. Nagpur University 6 . In our opinion the law laid down by these cases on the admissibility of evidence of assessment orders produced by an assessee or his representative-in-interest is unexceptionable. We may refer to a decision of this Court in Charu Chandra Kundu v. Gurupada Ghosh 7 on which reliance was placed on behalf of the appellants. There the appellant had applied to the trial companyrt praying that the Commissioner of Income tax be directed to arrange for the production before the companyrt of the record of the statement made by the respondent therein. In that situation it was held that the prohibition imposed under s. 54 of the Act was absolute and the operation of the section was number obliterated by any waiver by the assessee in whose assessment the evidence was tendered, documents produced or 1 7 I.T.R. 657. 2 7 I.T.R. 570 3 8 I.T.R. 450. 4 1942 101.T.R.429. 5 1945 131.T.R.13. 6 1947 151.T.R.150. 7 1962 2 S.C.R. 833. record prepared. It is apparent that in that case the question of production of an assessment order by the assessee himself did number companye up for companysideration. These appeals fail and are dismissed with companyts. One hearing fee.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 171 of 1968. Appeal by special leave from the judgment and order dated September 13, 1967 of the Calcutta High Court in Criminal Reference No. 36 of 1967. N. Mukherjee, for the appellant. The respondent did number appear. The Judgment of the Court was-delivered by Dua, J. The appellant, Basudev Hazra, was a leaseholder in respect of tolls of the public ferry at Sadar Ghat on the outskirts of Burdwan town for crossing the river Damodar. This lease was for a period of three years August 14, 1963 to August 13, 1966 Ex. 2. On November 30, 1964 Matiar Rahman Mandal filed a companyplaint against the appellant in the companyrt of the Sadar Sub-Divisional Officer Judicial , Burdwan alleging that the appellant used to realise illegally 20 nP. per cart from the cultivators who used to drive their carts across the dry bed of the river. The matter was reported to the S.D.O. who directed an enquiry. This infuriated the appellant. On November 29, 1964 the appellant realised double the amount of toll and on protest and refusal by the companyplainant he was threatened with violence by the appellant. The Magistrate trying the appellant for offences under ss. 23 and 24 of the Bengal Ferries Act, I of 1885 companyvincted him of both the offences. The appellant was sentenced to a fine of Rs. 10/- under s. 23 and to fine of Rs. 20/- under s. 24 in default of payment of fine in the former case he was to undergo simple imprisonment for ten days and in the latter for 20 days. On the appellant challenging his companyviction on revision in the Court of the Sessions Judge, the Additional Sessions Judge, Burdwan made a reference to the High Court recommending the appellants acquittal. It was observed by the Additional Sessions Judge in his reference that according to the appellants defence the companyplainants party were in fact using the landing stage and the path companystructed and repaired by him and, therefore, they were liable to pay the usual toll tax. After reproducing s. 24 he added . . the companyplainants case as it appears from the petition of companyplaint and also from the evidence of the three witnesses examined on the point, is that they do number take advantage of any of the facilities provided by the lessee and that the lessee demanded toll from them even though they were using their own path. The defence as I have already stated, was that the pathway and the landing stage belonged to the lessee and that, therefore, he was entitled to companylect toll. Forgetting the defence for the moment, it seems to me that numberconviction u s 24 can be sustained on the case of the companyplainant as it is. According to him the companylection of money from the people using their own pathway might amount to extortion but it would number attract s. 24. We need number refer to the recommendation with respect to the appellants companyviction under s. 23 as this was accepted by the High Court and there is numberappeal against acquittal under that section. The High Court accepted the recommendation with respect to the companyviction under s. 23 and acquitted the appellant of that offence. In regard to the companyviction under s. 24 the High Court observed that the trial Magistrate had found i that the appellant had been realising toll charges in excess of the scheduled rate of 20 ps. per cart and also realising such charges from persons who did number use the ferry and ii that though the companyplainant had number availed of the ferry and had taken the cart over the sandy bed of the river 40 ps. per cart were realised from him. These findings of fact were held number open to re-examination on revision. The High Court added that realisation of 40 ps. fell within the mischief of s. 24 which forbids every lessee from realising more than lawful toll even in cases in which he is entitled to demand ferry charges. Repelling the argument that the present was a case of extortion and it did number fall within the purview of s. 24 the High Court, after referring to the companyplainants case, observed that it was a case of illegal realisation of toll in excess, when the appellant was number entitled to realise it at all and number a case of extortion under the Indian Penal Code. The amount had been illegally demanded as a toll and that also in excess of permissible rate. The reference with respect to s. 24 was, as observed earlier, rejected. The appellant has secured special leave to appeal under Art. 136 of the Constitution and his companynsel Mr. D. N. Mukherjee has strenously companytended that the realisation of 40 ps. per cart from those who do number use the ferry can number as a matter of law fall within the mischief of s. 24 of the, Bengal Ferries Act. His companytention in essence is that unless someone actually uses a ferry numbercharges realised from him for permitting him to cross the river, even if the demand is made by way of toll, can attract the provisions of s. 24. The companytention though prima facie somewhat attractive does number stand scrutiny. Section 24 reads as under Penalty for taking unauthorised tolls, and for causing delay Every such lessee or other person as aforesaid asking or taking more than the lawful toll, or without due cause delaying any person, annual, vehicle or other thing, shall be punished with fine which may extend to one hundred rupees. It is obvious that this section does number speak of taking toll in excess of the lawful limit only from those persons who use the ferry. This Act was enacted for regulating ferries but that does number mean that an illegal demand, under the pretext of claim by way of toll under this Act when it is number legally claimable was number intended by the legislature to be prohibited and made punishable by the language of s. 24, Shri Mukherjee drew our attention to s. 5 of the Act in which ferry is defined to include a bridge of boats, pontoons or rafts, a swing-bridge, a flying bridge, a temporary bridge and a landing stage. According to him, this definition suggests that it is only when a ferry is used and excessive, charges realised that s. 24 would be attracted. The submission is difficult to accept. This definition which is number exhaustive does number seem to us to companytrol or otherwise to throw helpful light in the interpretation of s. 24. This section seems to have been designed in effect to protect the persons crossing the river against harassment and abuse of the privileged position which the lessee or other person authorised to companylect the tolls of a public ferry occupies under the statute in the matter of companytrol over the passage or pathway for crossing, fording or ferrying across the river. Demanding or re- ceiving more than lawful dues and unduly delaying persons, animals, vehicles or things. in crossing the river are both rendered penal and punishable. Whether the person from whom the amount is demanded or received is under numberobligation to pay anything by way of toll while crossing the river bed or is bound by law only to pay 20 ps. per cart as toll would thus be immaterial when payment is demanded or received on the pretext that it is due as toll when it is legally number so due. In either case s. 24 would seem to be attracted this companystruction would serve to suppress the mischief at which this section appears to be aimed. The question whether or number the appellants case falls within the mischief of extortion as defined under the Indian Penal Code is number strictly relevant to the point arising in the companytroversy because if the appellants case is companyered by s. 24 of the Act then he is liable to be punished thereunder. His liability to be prosecuted under the Indian Penal Code cannot by itself in law exclude the applicability of s. 24 to his case. The Additional Sessions Judge was, in our opinion, number quite right in observing that the defence that the accused was entitled to claim the toll may be ignored, because defence of an accused person can legitimately be taken into companysideration while assessing the value of the evidence and judging the guilt or innocence of the accused. The appellants defence in this case would clearly tend to support the companyplainants case that the amount received was demanded as toll which was an unlawful ,demand. To exclude cases like the present from the operation of s. 24 would unduly restrict its effectiveness and would indeed facilitate illegal recoveries prohibited by it. To that extent it would defeat the object and purpose which this section is intended to achieve. When the appellants companynsel took us through the evidence we found that the appellant had also delayed the prosecution witnesses without due cause in crossing the river in violation of s. 24. It is, however, unnecessary to pursue this aspect. Finally it may be pointed out that Art. 136 of the Constitution does number companyfer a right of appeal on a party. It only companyfers a discretionary power on this Court to be exercised sparingly to interfere in suitable cases where grave miscarriage of justice has resulted from illegality or from misapprehension or mistake in reading evidence or from ignoring, excluding or illegally admitting material evidence. The present case suffers from numbersuch infirmity. The appeal accordingly fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 595 of 1967. Appeal from the judgment and order dated July 28, 1966, of the Assam and Nagaland High Court in Civil Rule No. 242 of 1964. Naunit Lal, for the appellants. N. Mukherjee, for the respondent. The Judgment of the Court was delivered by Shah, C.J. The Divisional Forest Officer, Kamrup Division, Assam invited tenders for the purchase of monopoly rights to quarry stone from certain areas, including Harengi Stone Quarry Mahal, for the period July 1, 1963 to June 30, 1964. Mool Chand Sarougi-hereinafter called the respondent submitted a tender accompanied by the requisite deposit of Rs. 100/- as earnest money, and offered the rate of Rs. 5.25 per rupee of royalty. The tender, submitted by the respondent was accepted and for the minimum quantity of 1,25,000 c. ft. of stone allotted to the respondent out of the quarry he was to pay Rs. 31,250/-. Intimation of acceptance of the tender was given to the respondent on July 13, 1963. One Baputi Ram, a member of a scheduled tribe, appealed against the order of the Divisional Forest Officer accepting the, tender, to the Government of Assam and obtained a stay order. After about three months he declined to prosecute the appeal and his appeal was dismissed. The respondent then declined to, accept the settlement of the quarry. The Divisional Forest Officer invited fresh tenders. The offers made were number however accepted and tenders were invited again. On January 10, 1964 a settlement was made for a minimum quantity of 50,000 c. ft. for the period from January 25, 1964 to June 30, 1964 for Rs. 10,000/- The Divisional Forest Officer, thereafter, sought to recover the amount of Rs. 31,250/- for which the tender of the respondent was accepted as arrears of land revenue in the manner provided by S. 75 of the Assam Forest Regulation VII of 1891. The respondent then moved a petition in the High Court of Assam for an order quashing the proceeding for recovery of the amount demanded. The High Court held that the amount claimed was, number recoverable under the provisions of the Assam Forest Regulation, VII of 1891 and passed an order quashing the proceeding for recovery and issued a mandamus to the Divisional Forest Officer, Kamrup Division number to proceed with the recovery. The State of Assam has appealed to this Court with certificate granted by the High Court. Section 75 of the Assam Forest Regulation VII of 1891 pro- vides All money, other than fines, payable to Crown under this Regulation, or under any rule made thereunder, or on account of the price of any forest produce, or of expenses incurred in the execution of this Regulation in respect of any forest produce, may, if number paid when due, be recovered under the law for the time, being in force as if it were an arrear of land revenue. The amount claimed to be due from the respondent is number on account of the price of any forest produce, or of expenses incurred in the execution for recovery of any forest produce. The amount is also number due in the execution of the Regulation. So far there is companymon ground. It was claimed, however, that the amount was due under rule 10 promulgated in exercise of power under the Regulation and on that account it was recoverable as an arrear of land revnue. Rule 10 provides No lease for any fixed period giving the right of removing India rubber, cane, kutcha or cutch, lac, agar, ivory, or any other forests produce shall be given otherwise than in accordance with the general or special orders of the Conservator who is empowered to authorise sales in respect of such leases, by auction, tender or any other method at such rates as he may decide in his discretion. The Rule in our judgment does number apply to recovery of the amount alleged to be due for failure to carry out the obligations ,of the tender by proceedings under the Assam Forest Regulation 1891. It is again difficult to hold that stone is forest produce within the meaning of the Act. In any event the Rule does number give rise to any liability to pay a sum of money. It merely imposes a limitation upon the power of the officers of the Forest Department to grant leases in respect of certain forest produce. Ile lease may number be granted except in accordance with the general or special orders of the Conservator who alone As empowered to authorise a sale in respect of such a lease. It is a rule relating to the exercise of power to grant leases. The High Court was, in our judgment, right in observing that the amount of damages for breach of the terms of the sale numberice is number an amount due under the Regulation, or rule 10 made thereunder.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 24 of 1967. Appeal by special leave from the judgment and order dated April 27, 1966 of the Calcutta High Court in Income-tax Reference No. 90 of 1962. C. Chagla, S. R. Banerjee, N. N. Goswami and S. N. Mukherjee, for the appellants. Jagadish Swarup, Solicitor-General,, Ram Panjavani and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave from a judgment of the Calcutta High Court answering the following question referred to it under S. 66 1 of the Indian Income- tax Act, 1922, hereinafter called the Act in the negative and against the assessee Whether, on the facts and in the circumstances of the case, the sum of Rs. 1,24,199/- was deductible from the business income of the assessee either under Section 10 1 or 10 2 xi or 10 2 xv of the Incometax Act ? The assessee is a public limited companypany having its registered office at Calcutta. Its principal business companysists of manufacturing aluminium ingots, sheets and such other products from aluminium. There is another companypany known by the name of Aluminium Laboratories Limited, Montreal, in Canada, hereinafter called the Montreal Company, which provided the, assessee with technical know- how, engineering services etc. regarding development of a production of the goods. An agreement was entered into on January 31, 1947 between the Montreal Company and the assessee. The agreement provided for payment of a retainer fee on an annual basis. There was numbercondition or stipulation that the fee would be payable by the assessee without deduction of tax under the provisions of the Act. The assessee credited a total fee of Rs. 2,50,808/- in favour of the Montreal Company for a period of seven years between the accounting year ending, September 30, 1944 and September 30, 1950. In 1951 the Income-tax Officer treated the assessee as being in default under s. 18 7 of the Act in respect of the amount of tax which the assessee was liable to deduct from the payments made to the Montreal Company under the provisions of ss. 18 3-A , 18 3-B and 18 3-C of the Act. The amount of tax which was found to be payable by the assessee came to a total sum of Rs. 1,24,199/-. The assessee wrote to the Montreal Company asking for reimbursement of the said amount. The Montreal Company, however, refused to accept the assessees claim for re- imbursement by means of a letter dated August 3, 1954. The assessee wrote off the amount of Rs. 1,24,199/- during the relevant previous year ending on December 31, 1954. The assessee, appealed to the Appellate Assistant Commissioner who allowed its claim. The department preferred an appeal to the Tribunal which held that the amount in question was neither expenditure, incidental to the business number was it wholly and exclusively laid out for that purpose number was it claimable as a bad debt in view of the fact that it had number been incurred as a trade debt in the companyrse of the business. The departmental appeal was therefore allowed and the order of the Income-tax Officer was restored. The High Court was of the view that there was a nexus between payment and the business of the assessee inasmuch as it had an indirect bearing upon the technical aid which the assessee had obtained from the Montreal Company but was of the opinion that even if the payment had some companynection with the business it companyld number be said to be incidental to it as the liability companyld have been avoided by the assessee if it had deducted at the source the required amount of income-tax from the retainer fee which was payable to the Montreal Company. The High Court also companysidered the question whether the amount paid to the Montreal Company companyld be treated as a bad debt within the meaning of s. 10 2 xi but came to the companyclusion that as it had number been advanced as a trading debt in the companyrse of business it was number deductible as a bad debt. According to the High Court the provisions- of s. 18 3-B had number been companyplied with and since the statutory provisions had been disobeyed and as a result thereof the assessee had incurred a liability it companyld number be companystrued as a part of business expense within the meaning of s. 10 2 xv number companyld it be said that such an expense was wholly and exclusively laid out for the purpose of the business. 807Sup.CI/71 In order to decide the companytentions raised before us it is necessary to refer only to ss. 18 3-B and 18 7 of the Act a they stood at the material time - S. 18 3-B -Any person responsible for paying to a person number resident in the territories any interest number being interest on securities or any other sum chargeable under the provisions of this Act shall, at the time of payment, unless he is himself liable to pay any income-tax and super-tax thereon as an agent, deduct income-tax at the maximum rate and super-tax at the rate applicable to a companypany or in accordance with the provisions of sub-clause b of sub section 1 of section 17, as the case may be Provided that where the person number resident is number a companypany, the proviso to sub-section 2B shall apply to the deduction of income-tax and super-tax under this sub-section as it applies to the deduction of income-tax and super-tax under sub-section 2B Provided further that numberhing in this section shall apply to any payment made in the companyrse of transactions in respect of which a person responsible for the payment is deemed under the first proviso to section 43 to be an agent of the payee. S. 18 7 --If any such person does number deduct or after deducting fails to pay the tax as required by or under this section, he, and in the cases specified in subsection 3D the companypany of which he is the principal officer shall, without prejudice to any other companysequences which he or it may incur, be deemed to be an assessee in default in respect of the tax. Provided that Now the Act companytains provisions for companylecting taxes in two modes ,one is by direct levy and the other by means of deduction at the source. Section 18 provides for deduction in cases inter alia of Salaries ,Interest on securities, Dividends, interest and other sums chargeable under the Act and paid to number-residents. There is numberdispute that in the present case the assessee was bound under sub-section 3-B to deduct the sum chargeable under the provisions of the Act at the time of payment of the retainer fees to the Montreal Company. Under sub-section 7 if the assessee did number deduct the amount of tax as required under the section it was to be deemed to be in default in respect of the tax. The argument raised on behalf of the appellant is that the Montreal Company refused to reimburse it for the payment of the amount in question for the reasons stated in the letter dated August 3, 1954. It was stated in this letter that the Montreal Company was number companytractually bound to meet the obligation of Indian tax liability. The companycluding portion of the letter ,as as follows - Again, this involves a question of principle for us. If every State to which we have to render technical assistance, based on the researches carried on by us in our plant and laboratories, starts demanding incometax and super-tax on our charges, numbersuch State companyld ever receive any technical assistance at all and we ourselves companyld hardly afford to render such technical assistance and the expensive taxes involved. We have given this matter our serious companysideration and cannot bring ourselves on any score, equitable, legal companytractual, or moral to reimburse to you any monies you may have to pay to the Indian- taxing Authorities. The claim of the assessee principally is two fold. It is maintained firstly that after the refusal of the Montreal Company in the matter of reimbursement the amount of Rs. 1,24,199/- was written off as a bad and irrecoverable debt. It was, therefore deductible under s. 10 2 xi of the Act. In the section the debt certainly means something more than a mere advance. It is something which is related to business or results from it. To be claimable as a bad and irrecoverable debt it must first be shown as a proper debt. vide A. V. Thomas Co. Ltd. v. Commissioner of Income- tax 1 . It is well settled that a business or trading debt should spring directly from the carrying on of a business or trade and should be incidental to it and it cannot be just any loss sustained by the assessee even if it has some companynection with his business. Although it is true that the retainer fees were paid by the assessee to the Montreal Company for technical assistance which had a companynection with the business of the assessee but it is number possible to regard the amount which the assessee was bound to deduct from the total payment made to the Montreal Company under s. 18 3-B of the Act and which it failed to recover from that companypany as a debt which companyld be deducted under s. 10 2 xi . The debt was number incidental to the business because it arose out of number-compliance with the provisions of the Act. The payment which the assessee made to the income-tax authorities and which it failed to recover from the Montreal Company was more a matter of companymercial expediency and proceeded out of motives of business relationship because the assessee was anxious 1 48 I.T. R. 67 at p. 75. number to annoy or offend the Montreal Company so as to avail of its companytinued technical assistance and advice. Indeed the argument on behalf of the appellant has rested a great deal on this aspect of the matter and it has been urged strenuously that the assessee companyld number afford to displease the Montreal Company as it stood greatly in need of the latters technical assistance. Secondly the question is whether the assessee companyld claim deduction under s. 10 2 xv of the Act. For that purpose the assessee had to establish that the amount in question had been wholly and exclusively laid out for the purpose of its business. Our attention has been invited to a decision of the Bombay High Court in Commissioner of Income-tax, Bombay v. M s. Pannalal Narotamdas Co. Bombay in which it was held that the amount of penalty imposed number for the fault of the assessee but because he had to pay the same for the, purpose of getting the goods released from the Customs Authorities companyld be regarded as wholly and exclusively incurred for the purpose of his business. We companysider it unnecessary to pronounce on the companyrectness of this decision. The point which came up for companysideration there was altogether different and it can afford numberassistance to us in determining whether an amount which an assessee had to pay by virtue of the provisions of the Act companyld be regarded as an expense incurred wholly and exclusively for the purpose of the business. The assessee was presumed to know the relevant provisions of the Act at the time when it entered into an agreement with the Montreal Company. There was numberprovision in the agreement with the Montreal Company which created a companytractual obligation on the assessce to make payment of the taxes deductible under s. 18 3-B . At any rate it is difficult to understand how a payment made under a statutory obligation because the assessee was in default, companyld companystitute expenditure laid out for the pur- pose of the assessees business. We find numberreason or justification to interfere with the answer returned by the High Court with the result that the appeal fails and it is dismissed with companyts. K.P.S. 1 1969 1 L.T.J.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 18 of 1968. Appeal by Special leave from the judgment and order dated April 14,,1967 of the Allahabad High Court in Second Appeal No. 307 of 1965. M. Tarkunde, Urmila Kapoor and R. K. Khanna, for the appellant. V. Gupte and M. V. Goswami, for the respondent. The Judgment of the Court was delivered by Grover, J This is an appeal by special leave from a judgment of the Allahabad High Court and involves the question whether the appellant, who was the tenant, was entitled to the benefit of s. 3 of U.P. Temporary Control of Rent and Eviction Act, 1947, hereinafter called the Act. The facts are number in dispute. The appellant had been occupying a shop in Mathura belonging to the respondent from a very long time, at a monthly rental of Rs. 18.37. In 1962 the respondent wanted to companystruct rooms on the upper Storey of the shop for his own residence. This companystruction companyld possibly be made only if the appellant vacated the shop for some period. On June 4, 1962, the appellant and the respondent entered into an agreement . After reciting the above facts it was agreed that the shop would be. vacated by the appellant on the companydition that as soon as the required companystruction had been companypleted he would resume possession of the shop. At this stage the following clauses of the agreement may be set out. On this day the second party has withdrawn his possession from the shop bearing No. 1/2C, situate at Tilakdwar, and has given the same to the first party. The first party shall get the shop companystructed within thirty days and would then hand over the possession of the same to the second party. At present a sum of Rs. 18-6-0 per mensem, which includes house tax and water tax, is being paid by the second Party to the first party as rent. After the companystruction of the shop, the first party shall be entitled to get the same, amount as rent from the second party. All the sections of the U.P. Rent Control and Eviction Act shall be fully applicable to this house. The first party shall in numbercase be entitled to derive benefits from it as the property built after 1-1-51. After the companystruction had been made and the appellant had resumed his possession of the shop the appellant offered rent to the respondent but the latter did number accept the same. Ultimately lie deposited the rent from April 1, 1962 to July 31, 1963 in companyrt under s. 7 C of the Act. The respondent served a numberice April 20, 1963 apparently under the provisions of the Transfer of Property Act purporting to terminate the tenancy of the appellant. This was followed by a suit which the respondent filed for ejectment of the appellant and for arrears of rent, damages etc. The Munsif dismissed the suit holding that the appellant was entitled to the protection companyferred by s. 3 of the Act which was applicable. The District Judge, on appeal, took the companytrary view and decreed the suit. The High Court affirmed the judgment of the District Judge. It was held, inter-alia, that the, respondent was, entitled to rely on s. 1 A of the Act and the appellant companyld number be given the benefit of s. 3. Now there can be numbermanner of doubt that the tenancy between the appellant and the respondent was governed by the provisions of the Act prior to the reconstruction of the premises. It appears to have been accepted that when the respondent made the re-construction after the agreement mentioned above in 1962 the buildings came to be companystructed within the terms of s. 1-A of the Act That section says that numberhing in the Act shall apply to any building or part of a building which was under erection or was companystructed on or after January 1, 1951. It will have to be decided whether it was open to the respondent to give up the benefit of this provision or waive it by means of an agreement of the nature which was entered into between the appellant and the respondent in June 1962. According to the preamble on the cessation of the applicability of sub-rule 2 of rule 81 of the Defence of India Rules after September 30, 1946 it was companysidered expedient owing to the shortage of accommodation in the State of Uttar Pradesh to provide for the companytinuance during admitted period of powers to companytrol the letting and the rent of accommodation and to prevent the eviction of tenants therefrom. Section 3 imposed restrictions on eviction. No suit companyld be filed in any civil companyrt against the tenant for his eviction from any accommodation except on one or more of the grounds mentioned in sub-s. 1 of that section without the permission of the District Magistrate or of the Commissioner to whom a revision lay against the order of the District Magistrate. Section 5 companytained provisions relating to companytrol of rent. The ether provisions of the Act need number be numbericed. It has never been disputed that the Act was enacted for affording protection to the tenants against eviction except in the manner provided by the Act. It was also meant to regulate the letting of accommodation, fixing of rent etc., the provisions relating to which were all intended to companyfer benefits on the tenants against unreasonable and capricious demands of the landlords. At the same time it appears that the legislature was companyscious of the fact that the Act might retard and slacken the pace of companystruction of new buildings because the landlords would naturally be reluctant to invest money in properties the letting of which would be governed by the stringent provisions of the Act. It was for that purpose that the saving provision in s. 1-A seems to have been inserted. The essential question that has to be resolved is whether S. 1-A was merely in the nature of an exemption in favour of the landlords, with regard to the buildings companystructed after January 1, 1951 and companyferred a benefit on them which they companyld give up or waive by agreement or companytractual arrangement and whether the companysideration or object of such an agreement would number be lawful within the meaning of s. 23 of the Indian Contract Act. The general principle is that every one has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity which may be dispensed with without infringing any public right or public policy. Thus the maxim which sanction the numberobservance of the statutory provision is cuilibet licat renuntiare juri pro se introducto. See Maxwell on Interpretation of Statutes, Eleventh Edition, pages 375 376. If there is any express prohibition against companytracting out of a statute in it then numberquestion can arise of any one entering into a companytract which is so prohibited but where there is numbersuch prohibition it win have to be seen whether an Act is intended to have a more extensive operation as a matter of public policy. In Halsburys Laws of England, Volume 8, Third Edition, it is stated in paragraph, 248 at page 143 As a general rule, any person can enter into a binding companytract to waive the benefits companyferred upon him by an Act of Parliament, or, as it is said, can companytract himself out of the Act, unless it can be shown that such an agreement is in the circumstances of the particular case companytrary to public policy. Statutory companyditions may, however, be imposed in such terms that they cannot be waived by agreement, and, in certain circumstances, the legislature has expressly provided that any such agreement shall be void. In the footnote it is pointed out that there are many statutory provisions expressed to apply numberwithstanding any agreement to the companytrary, and also a stipulation by which a lessee is deprived of his right to apply for relief against forfeiture for breach of companyenant Law of Property Act, 1925 . Section 23 of the Indian Contract Act provides The companysideration or object of an agreement is lawful, unless- it is forbidden by law or 69 7 is of such a nature that, if permitted, it would defeat the provisions of any law or is fraudulent or involves or implies injury to the person or property of another or the Court regards it as immoral, or opposed to public policy. In each of these cases, the companysideration or object of an agreement is said to be unlawful. Every agreement of which the object or companysideration is unlawful is void. It has never been the case of the respondent that the companysideration or object of the agreement which was entered, into in June 1963 was forbidden by law. Reliance has been placed mainly on the next part of the section, namely, that it is of such a nature that it would defeat the provision of any law and in the present case it would be s. 1-A of the Act. Now s. 1-A does number employ language companytaining a prohibition against or impose any restriction on a landlord and a tenant entering into an agreement that they would number be governed by that section. We companycur with the view expressed in Neminath Appayya Hanumannavar v. Jamboorao Satappa Kocheri 1 that the words if permitted it would defeat the provisions of any law in s. 23 of the Contract Act defer to performance of an agreement which necessarily entails the transgression of the Provisions of any law. What makes an agreement, which is other-wise legal, void is that its performance is impossible except by disobedience of law. Clearly numberquestion of illegality can arise unless the performance of the unlawful act was necessarily the effect of an agreement. The following observations of Lord Wright in Vita Food Products Incorporated v. Unus Company Ltd. 1 in Liquidation are numbereworthy in this companynection Nor must it be forgotten that the rule by which companytracts number expressly forbidden by statute or declared to be void are in proper cases nullified for disobedience to a statute is a rule of public policy only, and public policy understood in a wider sense may at times be better served by refusing to nullify a bargain save on serious and sufficient grounds. We are unable to hold that the performance of the agreement which was entered into between the parties in the present case would involve an illegal or unlawful act. In our judgment s. 1-A. A. I.R. 1966 Mysore 154. 2 1939 A.C. 277, 293. was meant for the benefit of owners of buildings which were under erection or were companystructed after January 1, 1951. If a particular owner did number wish to avail of the benefit of that section there was numberbar created by it in the way of his waiving, or giving up or abandoning the advantage or the benefit companytemplated by the section. No question of policy, much less public, policy, was involved and such a benefit or advantage companyld always be waived. That is what was done in the present case and we are unable to agree with the High Court that the companysideration or object of the agreement entered into between the parties in June 1962 was unlawful in view of s. 23 of the Contract Act. In the result the appeal is allowed, the judgment of the High Court is set aside and that of the trial companyrt restored. The appellant will be entitled to his companyts in this, companyrt.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1056 of 1967. Appeal from the judgment and decree dated May 12, 1967 of the Calcutta High Court in Appeal from Original Order No. 218 of 1966. H. Dhebar and S. P. Nayar, for the appellants. T. Desai and P. C. Bhartari, for the respondent. The Judgment of the Court was delivered by Shelat, J. This appeal, under a certificate, raises two questions. The first is as to the nature of the power of the Collector of Customs under the proviso to the second sub-section of S. 110 of the Customs Act, 52 of 1962, and the second is as to whether the Collector under that proviso can extend the period for giving numberice under s. 124 a of the Act either after the initial period of six months or the extended period has already expired. In 1963, the respondent carried on business as a dealer in watches in the name and style of Walton Watch Company in Calcutta. In 1955, he also used to have another business premises where he carried on the same business in the name of Walton Watch Company. That business was wound up in that year and he had the stock-in-trade of that business transferred to his business carried on in the name of Walton Watch Company. On March 19, 1963, the Rummaging.staff under the appellant raided the respondents business premises and seized 218 watches, all of foreign Make, 87 of these watches, however, were released on the respondent then and there producing vouchers relating to them. Later on, 21 more watches were released on September 18, 1963 and February 27, 1964 on more vouchers having been produced. The case of the Customs authorities, however, was that he was number able to produce documentary evidence in respect of the rest of the watches, and therefore. Their release was number possible. On March 6, 1964, the appellant served on the respondent a numberice under s. 124 a to show cause why the rest of the said watches should number be companyfiscated and personal penalty should number be imposed upon him. Watches imported without licence or ,on which proper import duty has number been paid are undoubtedly liable to companyfiscation under s. 111 d . Sec. 1,10, which finds its place in Ch. XIII dealing with searches, seizure and arrest, provides for seizure, inter alia, of goods. Under sub-s. 1 , if a proper officer has reason to believe that any goods are liable to companyfiscation under. the Act. he may seize such goods. Sub- s. 2 reads as follows Where any goods are seized under sub- section 1 and numbernotice in respect thereof is given under clause a of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Collector of Customs for a period number exceeding six months. Sec. 124 provides that numberorder companyfiscating any goods or imposing any penalty on any person shall be made unless the owner of the goods or such person is given a numberice in writing informing him of the grounds on which it is proposed to companyfiscate the goods or to impose a penalty. The section does number lay down any period within which the numberice, required by it has to be given. The period laid down in S. 110 2 affects only the seizure of the goods and number the validity of the numberice. Since the watches in question were seized on March 19, 1963, the initial period of six months provided under the, second subsection of S. 110 expired on September 19, 1963 and the respondent became entitled to the return of the said watches as numbershow cause numberice had till then been issued to him. But the appellants case was that an extension for a further period of four months was applied for and was granted by the Collector on September 19, 1963 under his power under the said proviso on the ground that certain inquiries at Bombay and Delhi yet remained to be made. The extended period of four months expired on January 19, 1964 and a further extension of two months was applied for on January 3, 1964. But the Collector passed his order granting further extension on February 20, 1964, that is to say, about a month after the first extended period had expired. Admittedly, both the extension orders were passed ex parte and without any opportunity of being heard having been given to the respondent. The respondent, therefore, got numberchance to resist either of the two applications for extension and to show that numbersufficient cause had been shown, and that therefore, numberorder of extension was justified or should be granted, and the watches should, as provided by S. 110 2 , be restored to him. He also got numberopportunity to plead before the Collector that the right to have, the watches restored to him having already accrued to him on January 19, 1964, it companyld number be defeated by an order of extension passed after the first extended period had already lapsed. Aggrieved by the two orders of extension passed in the manner aforesaid, the respondent moved the High Court of Calcutta under Art. 226 of the Constitution, companytending that the proviso to s. 110 2 envisaged only one extension, and that therefore, the second extension was invalid. The learned Single Judge, who heard the writ petition, rejected this companytention holding that the proviso empowered the Collector to grant as many extensions as the companypletion of the inquiry and the issuance of the numberice under s. 124 a required but in numbercase exceeding six months at a time. The second companytention urged by the respondent was that the period of the first extension having expired on January 19, 1964 and numberfurther extension having been granted by that date, he became entitled to restoration-of the said watches and the second order extending the period by two months more granted a month after the expiry of the first extended period would be of numberavail to the Customs authorities. This companytention too was rejected on the ground that where there is a prescribed time for doing a thing but an express power is given to an authority to extend that time, such power can be exercised even after the prescribed time has expired unless there is an express provision prohibiting to, do so. There was numbersuch provision. The learned Single Judge also held that there was numberneed to give to the respondent any numberice of the applications for extension, the only requirement being that a sufficient cause had to be shown to the satisfaction of the Collector. The learned Judge also rejected a third companytention by the respondent that in the absence of any information with the Customs officers as regards the watches save that they were of foreign manufacture, they companyld number have entertained any reasonable belief that their importation was companytrary to or in violation of any statutory provision. This companytention was rejected on the strength of the supplemental affidavits of the Customs officers ordered by the learned Judge. The result was that the learned Judge dismissed the writ petition negativing, inter alia, the res- pondents plea as to the restoration of the seized watches. On an appeal by the respondent, a Division Bench of that High Court took a companytrary view. It held that the watches having been seized on March 19, 1963, the period of six months expired on September 18, 1963, that if a numberice under s. 124 a was number given by that time, s. 110 2 imposed a statutory obligation on the customs to return the goods to the person from whom they were seized. The Division Bench observed that even assuming that the first extension which was granted ex parte and without any opportunity to the respondent of being heard were to be valid, the period of four months granted then having expired on January 19, 1964 and numberorder for further extension having admittedly been made, it was obligatory on the Customs to return the watches to the respondent. There being such a statutory obligation under s. 110 2 , there was a companyresponding statutory right in the respondent to have them restored to him. The Divi- sion Bench was of the view that such a right having accrued to the respondent, it companyld number be defeated by an order passed one month after the lapse of the first extended period. It also held that the words sufficient cause being shown used in the proviso meant that the Collector had to decide an application for extension judicially, the reason being that the Collector companyld number fairly and justly determine that a sufficient cause was shown without hearing the pros and companys of the question, and therefore, he had numberjurisdiction to grant extension without giving to the respondent an opportunity of being heard. In this companynection the Division Bench observed As long as the period of issuing numberice has number expired, it might be one thing. But quite a different set of circumstances arise when the period has expired and the right to the return of the goods is vested in the person from whose possession the goods are seized. If you are to take away the right y on can only do that for a sufficient cause. How can the officer companycerned decide as to whether a sufficient cause has been shown, so as, to divest a vested right, unless he hears the parties affected. Even after the supplementary affidavits were filed in this case, it is extremely doubtful whether a sufficient cause has been shown. According to the- Division Bench, even if the Collectors function, tinder the proviso were to be treated as an administrative, function, his authority being to determine the question affecting the, rights of the citizen, there was an implied duty to act judicially. On this reasoning, the Division Bench held that in any event the second order of extension was bad. It also found that the show cause numberice issued under s. 124 a was vague, gave numberopportunity to the respondent to explain the allegations companytained therein, and therefore, was bad, with the result that the appellant would be required to give a fresh numberice. For the reasons above stated the Division Bench reversed the judgment of the Single Judge and allowed the writ petition. The companyrectness of this judgment is the subject matter of this appeal. We may at this stage mention that companynsel for appellant for- mulated the following two companytentions only 1 that the liability to return the goods seized under s. 110 1 on the expiry of the time prescribed under sub-s. 2 is number absolute as it is subject to the period being extended for a period number exceeding six months, that is to say, within the over all period of one year that therefore, there is numberquestion of any right being vested in the respondent on the expiry of the first six months or the extended period or such right being divested until one year from the date of seizure has expired and 2 that the proviso to s. 1 10 2 does number companytemplate any numberice to the respondent as the companysiderations which would weigh with the Collector or which would be relevant for granting extension would be of such a nature that they companyld number be disclosed. such disclosure being against public interest that only two requirements are envisaged for the extension of time and they are i that a sufficient cause is shown, and ii that the extension is within one year. As already stated, sub-s. 1 of s. 1 1 0 authorises seizure. the only requirement being a reasonable belief on the part of the companyceded officer at the time of seizure. The power of seizure founded on a mere reasonable belief being obviously an extraordinary power, the second sub- section envisages companypletion of the enquiry within a period of six months from the date of seizure. But it provides that if such an enquiry is number companypleted within that period and a numberice under S. 124 a is, therefore. number given, the person from whom the goods are seized becomes entitled to their restoration. However, on the supposition that in some cases such an investigation may number be companypleted owing to some difficulties, the legislature gave under the proviso power to the Collector, an officer superior in rank and also an appellate authority under S. 128, to extend the time on two companyditions. namely, 1 it does number exceed one year, and 2 on sufficient cause being shown. The policy of the legislature, therefore. clearly was that in view of the extraordinary power of seizure, the enquiry should ordinarily be companypleted within six months but since it might number be possible to do so in some cases, it gave power of extension to the Collector. The legislature was thus careful to entrust the power of extension to a superior officer I who also has the power to hear inquiries under the Act involving penal companysequences and also appeals. Cases where extension would have to be asked for and granted are thus envisaged as exceptions to the general rule of six months laid down in sub-s. 2 . The second limitation to the power is that such extension can be ranted only on sufficient cause being shown, a phrase often used in provisions for companydonation of delay, such as s. 5 of the Limitation Act, 1909. There can be numberdoubt that the proviso to the second sub- section of s. II 0 companytemplates some sort of inquiry. The Collector, obviously, is expected number to pass extension orders mechanically or as a matter of routine, but only on being satisfied that there exist facts which indicate that the investigation companyld number be companypleted for bona fide reasons within the time laid down in s. 110 2 , and that therefore, extension of that period has become necessary. He cannot, therefore, extend the time unless he is satisfied on facts placed before him that there is a sufficient cause necessitating extension. The burden of proof in such an inquiry is clearly on the Customs officer applying for extension and number on the person from whom the goods are seized. The question, therefore, is as to the nature of such a function and power entrusted to and companyferred on the Collector by the proviso. It will be numbericed that whereas sub-s. 1 of s. 1 1 0 uses the expression reason to believe for enabling a Customs Officer to seize goods, the proviso to sub-section 2 uses the expres- sion sufficient cause being shown It would seem that sub- s. 1 does number companytemplate, an inquiry at the stage of seizure, the only requirement being the satisfaction of the companycerned officer that there are reasons to believe that the goods are liable to companyfiscation by reason of their illegal importation. Even so, such satisfaction, as laid down in Narayanappa v. Commissioner of Income Tax, Bangalore 1 , is number absolutely subjective inasmuch as the reasons for his belief have to be relevant and number extraneous. It is clear that the legislature was number prepared to use the same language while giving power to the Collector to extend time and deliberately used the expression sufficient cause being shown. The point is why should the legislature have used such a different expression while enacting the proviso if its intention was to companyfer power which would depend on a more subjective satisfaction as to the cause for extension. The words sufficient cause being shown must mean that the Collector must determine on materials placed before hi that they warrant extension of time. Where an order is made in bona fide exercise of power and within the provisions of the Act which companyfers such power, the order undoubtedly is immune from interference by a companyrt of law and therefore, the adequacy of the cause shown may number be a ground for such interference. But there, can be numberdoubt at the same time that the inquiry to be held by the Collector has to be on facts, i.e., materials placed before him. There is there- fore numberquestion in such cases of the subjective satisfaction of the Collector for, what he is asked to do by the proviso is to determine that the cause shown before him warrants an extension of time. In Lakhampals case 2 this Court numbericed a similar diffe- rence of language used in Tr. 30 1 b and 30-A 9 of the Defence of India Rules, 1962 which dealt with two different types of powers. Though it was a case dealing with preventive detention, what is important is that the decision primarily depended on the difference in language used in the two rules and the difference it made in the character of the two powers. A similar expression, though number exactly the same, also came to be companystrued by the House of Lords in De Verteuil v. Knaggs Anr. 3 , a case often referred to while determining the nature of power. The question which arose there was whether under S. 203 of the Trinidad Immigration Ordinance, No. 161, the government companyld pass an order transferring indentured labour from one employer to another without numberice to the companycerned employer against whom companyplaints as to treatment of the laborers were made. The section provided that if at any time it appears to the governor on 1 63 I.T.R. 219. A.I.R. 1967 S.C. 1507. 3 1918 A.C. 557. sufficient ground shown to his satisfaction, that all or any of the immigrants indentured on any plantation should be removed therefrom, it shall be lawful for him to transfer the indentures of such immigrants to any other employer. Construing this provision, Lord Parmesan observed at p. 560 of the report The Ordinance does number prescribe any special form of procedure, but there is an obvious implication that some form of inquiry must be made, such as will enable the Governor fairly to determine whether a sufficient ground has been shown to his satisfaction for the removal of indentured immigrants. What is the procedure which in such a case the law will imply when the Legislature is silent ? The acting Governor was number called upon to give a decision on an appeal between parties, and it is number suggested that he holds the position of a judge or that the appellant is entitled to insist on the forms used in ordinary judicial procedure On the other hand, the acting Governor companyld number properly carry through the duty entrusted to him without making some inquiry whether sufficient grounds had-, been shown to his satisfaction that immigrants indentured on the La Gloria estate of the appellants would be removed. Their Lordships are of opinion that in making such an inquiry there is, apart from special circumstances, a duty of giving to any person against whom the companyplaint is made a fair opportunity to make any relevant statement which he may desire to bring forward and a fair opportunity to companyrect or companytrovert any relevant statement brought forward to his prejudice. In Kraipak v. Union of India 1 the power of a selection board to prepare a selection list from amongst the public servants for appointment in the senior and junior scales was held to be quasijudicial although the board had numberpower of appointment itself. In doing so, this Court observed that the dividing line between judicial and administrative functions was thin and gradually evaporating, and that the functions performed by those doing judicial function and administrative function, where the rights of citizens are affected to their prejudice, had the same object, namely, to do justice and deciding the question fairly and justly. In the former case, there would be express rules of procedure, but the effect of those rules is only to enable or facilitate to decide fairly and justly. The Court also pointed out that in recent years the companycept of quasi- judicial power has been undergoing a radical change and numbered with approval the decision in Regina v. Criminal Injuries Compensation Board Ex parta Lain 2 where it was 1 1970 1 S.C.R. 457. 2 1967 2 Q.B. 864. held that certiorari would be available number only where, the impugned order infringes immediately enforceable rights but also where it is a paste as a result of which legally enforceable rights may be affected. If the power of preparing a selection list without the power to appoint, as in Kraipaks case , and power to transfer indentured labour from one to another employer, as in De Verteuil v. Knaggs 2 , are held, in the companytext of their respective provision I to be quasi-judicial powers, there is numberreason why, when the statute requires the determination of a sufficient cause on facts produced before the Collector should be held number to be a quasi judicial function or at least a function requiring judicial approach. But it may be said that in both these cases there was a civil right involved and the, power, therefore, had to be held to be quasijudicial. But in the present case also, the right to restoration of the seized goods is a civil right which accrues on the expiry of the initial six months and which is defeated on an extension being granted, even though such extension is possible within a year from the date of the seizure. Since the Collector has on facts to decide on the existence of a sufficient cause, although his decision as to sufficiency of materials before him may be within his exclusive jurisdiction, it is numberetheless difficult to companyprehend how he can companye to his determination unless, as the Division Bench of the High Court has said, he has before him the pros and companys of the question. An ex parte determination by the Collector would expose his decision to be one-sided and perhaps one based on an incorrect statement of facts. How then can it be said that his determination that a sufficient cause exists is just and fair if he has before him a one-sided picture without any means to check it unless there is an opportunity to the other side to companyrect or companytrovert it. The difference in the language used in the first subsection and the proviso to sub-s. 2 lends support to the companytention that the power in one case may be subjective , and therefore, number calling for an enquiry, and the power in the other is one, the exercise of which necessitates an enquiry into materials placed before the Collector for his determination. In our view, these companysiderations lead to the companyclusion that the power under the proviso is number to be exercised without an opportunity of being heard given to the person from whom the goods are seized. In a recent decision in Sheikh Mohammed Sayeed v. Assistant Collector of Customs 3 a companytrary view has, however, been taken by a single Judge of the High Court of Calcutta. The extension order there was passed before the expiry of the initial six months period. But the companytention raised was that an opportunity to be heard should have been given to the petitioner. The learned 1 1970 1 S.C.R 457. 2 1918 A.C.557.A.I.R. 1970 Cal. 134. Judge distinguished the decision of the Division Bench under this appeal reported in A.I.R. 1968 Cal. 28 on the ground that the question involved in that decision was whether an opportunity of being heard had to be given in respect only of an extension when the right to restoration of the goods in question has already accrued to the party from whom they were seized, and therefore, the decision did number apply to the case before him when such a right had number vested in the petitioner. I With respect to the learned Judge, the distinction was number companyrect, firstly, because the first order of extension was only assumed to be companyrect as the Division Bench companycentrated its attention on the second order of extension which also involved the question of the right to restoration of the goods having already vested and secondly, because the Division Bench set aside the extension order on the ground that the power of extension was quasi- judicial or at any rate one which required a judicial approach. The latter ground applied to both the orders, and therefore, if the second order of extension was bad, the first was for the same reason necessarily bad. The order of extension in both the cases would deprive the person from whom the goods are seized of the right to have the goods restored to him on the expiry of six months from the date of seizure. As for his decision on the nature of the power,, the learned Judge relied on decisions in Collector of Customs v. N. Sampathu Chetty 1 , Babulal Amthalal v. Collector of Customs 2 , Pukhraj v. Kohli 3 and Nathmal Jalan v. Additional Collector of CUStOMS 4 which were all cases where the exercise of power ended on reasonable belief or reasons to believe. But he held that the power under the proviso to s. 110 2 should be companystrued on the same princi- ples laid down in those decisions. This is made clear at page 141. of the report where he observed In my view the same principles, are attracted in companystruing the phrase on sufficient cause being shown With regard to, the nature and sufficiency of the cause, it is the satisfaction of the Collector of Customs that provides the ground and justification for an order extending the time to companyplete the inquiry If the order of extension is made before expiry of the initial period of six months, or before expiry of the extended period, it cannot in my view be challenged on the ground that numberice to show cause, or opportunity of being heard was number given to the party. In our view, equating the power, the exercise of which depends on a mere reasonable belief with the power, the exercise of which depends on sufficient cause being shown envisaging at A-I-R. 1962 S.C. 316. A.I.R. S.C. 1559. A.I.R. 1957 S.C. 877. 4 70 C.W.N. 349. 8 1 3 least some sort of inquiry on facts placed before the authority and determination by him on those facts, is number warranted. Therefore, a companyclusion based on such a premise creates difficulty in sustaining it. Further, the distinction between an order extending before and after the expiry of the initial or the extended period does number make any different as was sought to be made by the learned Judge, when one inquires into the character of the power of extension. Both would raise precisely the same question, whether the power is purely administrative requiring numberopportunity of being heard or judicial or quasi-judicial, as in both the cases the right to the goods being restored would be involved. We cannot also agree with the learned Judge that there is numberindication in the Act to suggest that the Collector is required to act judicially, firstly, because the proviso requires determination on facts and number on mere suspicion and a sufficient cause being made out by the applicant-officer, and secondly- because a civil right of a citizen to the restoration of the goods on expiry of the period, whether initial or extended, is affected. The other decision, which takes a companytrary view, is of the High Court of Mysore in Ganeshmul Channilal Gandhi v. Col- lector of Central Excise . The grounds on which the learned Judges there took that view were i that the power was administrative, and 2 that if numberice were to be necessary, the authority which applies for extension would have to make a,disclosure about the investigation, which disclosure would be detrimental to the investigation itself. For the reasons already given we cannot agree with the first ground. As for the second ground, we do number see any reason for the apprehension. So far as the initial period of six months is companycerned, there is numberquestion of disclosure of the investigation. The legislature itself companytemplated that ordinarily such an investigation would be companypleted within that period. The question of disclosure would arise only in cases where for- bona fide reasons something yet remains to be done. The only disclosure in such cases would be about the fact that investigation at some place or places, or about certain matters is still incomplete and pending. No one suggests that the inquiry to be held by the Collector would be similar to the one held in a companyrt of law or that the officer applying for extension would be companypelled to disclose the names of his informants or such other matters which would be detrimental to the investigation. Even in more serious matters, such as applications for remand in criminal cases, opportunity to be heard has to be given No one has yet suggested that such an opportunity is detrimental to the investigation. The unreported judgment of the High Court A.T.R. 19 8 Myscre F9. 8 14 of Bombay in M s. Prakash Cotton Mills Pvt. Ltd. v. Assistant Collector of Central Excise Bombay 1 does number throw any further light as it is mostly based on the reasoning of the Mysore High Court. We are number satisfied that as between the right of the person from whom the goods are seized and the supposed danger to the investigation the matter is so weighted down that we would be companypelled to hold that the legislature companyld number possibly have- companytemplated a judicial approach by the Collector when he orders extension of time, the effect of which would be the deprivation of, or in any event,, postponement of the right to restoration. In our view, the first question must be answered In favour of the respondent, and therefore, the Division Bench was right in holding that the power under the proviso was quasijudicial, or at any rate, one requiring a judicial approach. Consequently, an opportunity of being heard ought to have been given to the respondent before orders for extension were made. The High Court, companysequently, was justified in ordering restoration of the watches in question to the respondent. In this view it is number necessary for us to decide the second question raised by companynsel for the respondent. We are also number dealing with the question as to whether the numberice under S. 124 a was vague, and therefore, void as decided by the Division Bench.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 219 of 1967. Appeal from the judgment and decree dated December 16, 1965 of the Andhra Pradesh High Court in C.C-C. Appeal No. 24 of 1969. C. Chagla, R. Y. Pillai and N. Nettar, for the appellants. K. Daphtary, Rameshwar Nath and Swaranjit Sodhi, for respondent No. 1 A . A. Seyid Muhammad and S. P. Nayar, for respondent No. 3. 7 3 7 The Judgment of the Court was delivered by Ray, J.-This is an appeal by certificate against the judge- ment dated 15 December, 1965 of the Andhra Pradesh High Court dismissing the appellants suit and setting aside, the decree in favour of the appellant passed by the Additional Chief Judge, City Civil Court, Hyderabad on 18 October, 1958. Shah Abdul Rahim a resident of the pity of Hyderabad died on 26 September, 1905 leaving behind him four sons Abdul Hai, Ghulam Nooruddin, Abdul Razak and Ghulam Ghouse Mohiuddin and two daughters Kamarunnissa Begum and Badiunnissa Begum. Shah Abdul Rahim had large movable and immovable properties. Me sons and the daughters entered into two agreements in the month of July, 1908 and appointed arbitrators to partition the Matrooka properties of Syed Shah Abdul Rahim. On 1 August, 1908 the arbitrators made an Award partitioning, the properties. On 13 August, 190 8 there was a decree in the Darul Khaza Court, Hyderabad companyfirming the Award of 1 August, 1908. The appellant filed the suit out of which the appeal arises on 24 July, 1941 for setting aside the decree dated 13 August, 1908 companyfirming the award and for partitioning certain Matrooka properties. In 1942, the suit was dismissed. An appeal was preferred to the High Court of Hyderabad. During the pendency of the appeal Abdul Hai died in 1950 and his legal representatives were brought on the record of the suit in the month of February, 1952. The appeal filed in the year 1943 was disposed of by the High Court of Andhra Pradesh in April 1957 remanding the case to the City Civil Court, Hyderabad. On 18 October, 1958 the Additional Chief Judge, City Civil Court, Hyderabad decreed the suit in favour of the appellant and cancelled the decree of the Darul Khaza Court dated 13 August, 1908. On appeal the Andhra Pradesh High Court on 15 December, 1965 set aside the decree passed by the Additional Chief Judge. The undisputed facts are these When Abdul Rahim died in 1905 Abdul Hai the eldest son was major. The appellant was a minor. There were two references to arbitration . Before the arbitrators the appellant a minor was represented by his brother Ghulam Nooruddin as the guardian. The parties to the arbitration agreements were Abdul Hai, Ghulam Nooruddin, Abdul Razak the appellant represented by his guardian Nooruddin, Qamarunnissa Begum and Badiunnisa Begum. It will appear from the award that before the arbitrators there was numberdispute ,between the parties and the arbitrators did number think it necessary to frame any issues. Before the arbitrators the plaintiffs marked with the letter F a plan showing properties attached to the Khankah and Dargah and those properties were market as Exhibits B-1 to B-10 and the plaintiffs relinquished their title-to properties marked Exhibits B-1 to B-10 and further stated neither at present number in future will they have any share and right in the said property. As to properties marked B-1 to B-10 the parties stated ,before the arbitrators that Abdul Hai was the Sajjada Nashin of the Dargah and was in possession of, the Dargah and khankah properties. The award was made a rule of companyrt within a short time upon a plaint filed by Nooruddin, Abdul Razak, the appellant represented by Nooruddin as the guardian and the two sisters Qamarunnisa Begum and Badiunnisa Begum. The defendant was Abdul Hai. The facts recited in the decree are these. Syed Shah Nooruddin a pious person of Hyderabad had his Khankah situated at Nampalli. The Dargah of the said pious man was also situated in the same locality. After Syed Shah Nooruddins death his son-in-law, Abdur Rahim became the Sajjada of the Khankah and the Dargah Shariff. The Sajjada had companytrol over all the expenses ,of the Dargah and Khankah and the entire property attached to the Dargah and Khankah remained in possession of the Sajjadana,sheen and all the expenses of the Dargah and Khankah were met from the income. After the death of Abdur Rahim, Abdul Hai became the Sajjadanasheen and was having companytrol over the Dargah and Khankah. Abdur Rahim left three adult sons and one minor son and also two adult daughters. Apart from the property attached to the Dargah and Khankah Abdur Rahim left personal Matrooka properties. There might have been a dispute between the parties regarding the partition of these properties. But the parties settled the dispute by mutual companysent and by agreement referred the matter to arbitration for the settlement of the dispute. The arbitrators made an award. The decree recited that the properties marked with the letter F in the plan annexed to the award were Khankah and Dargah Shariff properties in the possession of the defendant Abdul Hai for meeting the expenses of the Khankah and numberone has any right or claim over the property at present or in future. The decree companycluded by stating that the bargah and Khankah properties were number liable to partition and numbere ,of the plaintiffs shall have any right or claim regarding the same. The appellant impeached the award and the decree upon the award inter alia on the grounds that the award was void by reason of lack of lawful guardian on behalf of the appellant to protect ,and represent the rights and interests of the minor in the arbitration proceedings and in the proceedings resulting in the decree upon the award. The appellant also claimed that the award and the decree should be avoided because the properties marked Exhibits B-1 to B-10 were number Dargah and Khankah properties in fact and were treated in the award and the decree to be Dargah and Khankah on the wrongful representation of Abdul Hai. The, appellant in the year 1938 discovered for the first time the true and companyrect facts that the same were number Khankah and Dargah properties and therefore claimed the same as divisible upon partition amongst the heirs of Abdul Rahim. The trial Court held that the award and the decree thereon were obtained by fraud and the decree was to be set aside. The reasoning given by the trial Court was that it was established one the evidence that Abdul Hai was in full possession and enjoyment of the whole of the property of Abdul Rahim including the property marked as Exhibits B-1 to B-10. In the letter dated 13, August, 1938 Exhibit P-8 Abdul Hai denied that the property was waqf property belonging to the Dargah and asserted that it was. owned and possessed by him and relinquished by his relatives. The letter was held by the trial Court to indicate that Abdul Hai knew that the property was the property of his father which be inherited along with his brothers and sisters and in spite of such knowledge and belief he caused it to be represnted before the arbitrators that the property belonged to the Dargali and that the same was in his possession as Sajjadanasheen. The trial Court further held that the appellant came to know the real state of affairs from the letter of, Abdul Hai dated 13 August, 1938 and therefore the suit was number barred by limitation. The trial Court therefore passed a decree for cancellation of the decree passed upon the award and passed a preliminary decree for partition of the Matrooka properties including the properties marked as. Exhibits B-1 to B-10 in the award. In the High Court four questions were companysidered. First, whether apart from the appellant any other party was a minor at the time of the arbitration agreement and whether there was a dispute which companyld be referred to arbitration. Second, whether there was proof that at the time of the arbitration agreement and the award Abdul Hai made a fraudulent and false representation to his brothers and sisters and made Them believe that the properties belonging to the Sajjadanasheen were the properties of Dargah and Khankah which were number partible and by representation and fraud prevented the partition of those properties. Third, whether the appellant had knowledge that Abdul Hai had claimed the properties as the ancestral properties of the Sajjadanasheen earlier than the time when the appellant said he had knowledge and whether the suit was barred by limitation. Fourth, what would be the effect of the filing of the written statement by the defendant No. 6 in the year 1958 and the omission of defendant No. 7 to Me any written statement to obtain partition of the properties-in the event of the decree and the award being set aside The High Court held that the appellant was a minor but the ,other parties were number minors. The High Court Held that the reference to the arbitration and the a ward thereon were void The High Court held that the decree of the Darul Khaza Court upon the award was number a nullity and the present suit should have been filed within three years of the appellant obtaining majority. The High Court also held that the decree of the Darul Khaza Court was number obtained by fraud. Me High Court held that Abdul Hai ,asserted in the year 1927 that the Dargah and the Khankah properties were his personal properties and from that date Abdul Hai asserted his title adverse to the appellant and the other plaintiffs and the appellant and the other plaintiffs knew in 1927 of the adverse claim of Abdul Hai. Therefore, the suit was barred by limitation. The minority of the appellant is a fact found both by the trial ,Court and the High Court. It is an admitted fact that the appellants guardian was his brother Nooruddin at the time of the arbitration proceedings and at the time of the decree on the award. The brother is number a lawful guardian under the Mohammedan Law. The legal guardians are the father, the executor appointed by the fathers will, the fathers father and the executor appointed by the will of the fathers father. No other relation is entitled to the guardianship of the property of a minor as of right. Neither the mother number the brother is a lawful guardian though the father ,or the paternal grand father of the minor may appoint the mother, brother or any other person as executor or executrix. In default ,of legal guardians a duty of appointing guardian for the protection and preservation of the minors property is of the companyrt on proper application. It was held by this Court in Mohd. Amin Ors. v. Vakil Ahmed Ors. 1 relying on the dictum in Imambandi v. Mutsaddi 2 that where disputes arose relating to succession to the estate of a deceased Mohammedan between his three sons, one of whom was a minor, and other relations, and a deed of settlement embodying an agreement in regard to the distribution of the properties belonging to the estate was executed by and between the parties, the eldest son acting as guardian for and on behalf of the minor son the deed was number binding on the minor son as his brother was number his legal guardian and the deed was void number only qua the minor, but with regard to all the parties including those who were sui juris. It is clear on the authority of this decision that the arbitration agreement and the award and the decree 1 1952 S.C.R. 1133. 2 45 T.A. 73 are all void in the present case by reason of lack of legal guardian of the appellant. There is intrinsic evidence in the award, that the parties effected a settlement. Counsel on behalf of the respondent relied on a companyy of an application in the Court of the Darul Khaza in the proceedings for passing the decree upon the, award in support of the companytention that the companyrt appointed Nooruddin as the guardian of the appellant. It is stated in the application that the defendant No. 3 sic meaning thereby plaintiff No. 3 the present appellant is a minor and Nooruddin is the real brother and the appellant is under the guardianship of Nooruddin. The application was for permission to Me the suit. There is numberorder for appointment of a guardian. Further, the Court in appointing the guardian of property of a minor is guided by circumstances for the welfare of the minor. There is numberjustification to hold that Nooruddin was either the legal guardian or a guardian appointed by the Court. The decree which was passed on the award appears on an examination of the pleadings and the decree itself that the parties proceeded to have the decree on the basis of the award without any companytest as and by way of mutual settlement. It will, appear from the decree that it was admitted by the parties that Abdul Hai was in possession of the Dargah and Khankah and that Abdul Hai alone was the Sajjadanasheen of the Khankah. The relinquishment of property by Nooruddin on behalf of the minor is number binding on the minor. There was numberlegal sanction behild such companypromise in the arbitration and in the proceedings result- ing in a decree upon the award. There was numberlegal guardian. The rights and interests of the minor were also number protected particularly when there was companyflict of interest between the minor and Abdul Hai. The arbitration agreement, the award and the decree of the Daral Khaza Court on the award are therefore void. The High Court held that the appellants suit was barred by limitation by reason of knowledge of the appellant that Abdul Hai was in adverse possession since the year 1927 or 1928. In regard to the properties which the appellant claimed in the suit as liable to partition, it is established that all parties proceeded on the basis that Exhibits B-1 to B-10 in the award were number Matrooka pro- perties but Dargah and Khankah properties. If, in fact, they are number Dargah and Khankah properties but Matrooka properties, these should be available to companyowners for partition unless there are legal impediments. The estate of a deceased Mohamedan devolves on his heirs at the moment of his death. The heirs succeed to the estate as tenants in companymon in specific shares. Where the heirs companytinue to hold the estate as tenants in companymon without dividing it and on of them subsequently brings a suit for recovery of the share the period of limitation for the suit does number run against him from the date of the death of the deceased but from the date of express ouster or denial of title and Article 144 of Schedule 1 to the Limitation Act, 1908 would be the relevant Article. Counsel on behalf of the respondent submitted that there were two impediments to the appellants claim for partition of the properties. One was that the decree passed by the Court of Darul Khaza upon the award was number obtained by fraud and companyld number be set aside by reason of limitation. The other was that the appellant came to know in the year 1927 that Abdul Hai adversely claimed properties as his own and therefore the appellants claim was barred by limitation. The High Court held that the appellant was aware of the attachment of the personal and the Dargah and Khankah properties by the Government of the Nizam in the year 1927 as also release in the same year of the properties attached. The High Court had that when parties had knowledge of the attachment of the properties it companyld number be postulated that they would have numberknowledge of the companytentions of Abdul Hai as to release of the Dargah and Khankah properties on the ground that those were number Dargah and Khankah but personal properties of Abdul Hai. Knowledge of release of properties would number amount to ouster of the appellant from the property or of abandonment of rights. The evidence of the appellant was that in 1350 Fasli companyres- ponding to the year 1941 the appellant came to know that a letter had been written by Abdul Hai to the Ecclesiastical Department of the Government of the Nizam in the year 1938 to the effect that the properties shown as Dargah and Khankah in the award F. and the decree were number Dargah and Khankar properties. The appellant also came to know from the same letter that all the properties including those stated to be Dargah and Khankah properties in the award were attached by the Government of Nizam in the year 1927 and after enquiry by the Government of the Nizam all the properties were released in the year 1927. The appellant further came to know from that letter that Abdul Hai claimed the properties as his own. Thereupon the appellant demanded from Abdul Hai partition of the property as Matrooka. Abdul Hai asked the appellant to companysult lawyer. On the evidence it would be utterly wrong to speculate that the appellant knew of the companytentions advanced in 1927 by Abdul Hai for the release of the properties by stating that they were number Dargah and Khankah properties. There was numbersub section at the. time of the examination of the appellant that he was aware in,. 1927 of the companytentions of Abdul Hai. The High Court relied on Exhibit A-38 a letter dated 19 October, 1927 written by the,, appellant to Abdul Hai to impute knowledge of the attachment. and release of the properties. The appellant was never companyfronted with at letter. it was never suggested to the appellant that the letter companyld be companystrued as attributing to the appellant the knowledge of any adverse claim made by Abdul Hai with regard to the properties. In that letter the appellant stated that. be was indebted to the elder brother Abdul Hai for his kindness The appellant also stated that the expenditure incurred in companynection with the litigation would be divided into four parts and the amount incurred on behalf of the appellant companyld be recovered from his account. This letter dated 19 October, 1927 does number at all have the effect of establishing that the appellant had knowledge of any adverse claim of the appellant. The appellant was never shown the letter to explain what litigation he referred to. No inference can be drawn against the appellant without giving him an opportunity to have his say in that matter. It is unfortunate that Abdul Hai died during the pendency of the suit and before the, trial. Not only his oral evidence but also the companyrespondence that Abdul Hai had with the Government of the Nizam in the year 1927 did number find way into the record of the suit. It would be totally misreading the appellants letter of the, year 1927 as impressing the appellant with the knowledge of ouster by Abdul Hai of the appellant from the properties forming the subject matter of the suit. There are two letter of great importance. One is dated 13 August, 1938 and marked Exhibit P-8 written by Abdul Hai to, the Director of Endowment, Government of Hyderabad and the other is dated 7 September, 1938 written by the Ecclesiastical Department of the Government of Hyderabad to the Secretary of the Endowments, Ecclesiastical Department of the Government of Hyderabad. The letter of Abdul Hai was written in answer to an application made about that time to the Government of the Nizam by One Sheikh Abdur Rahim a tenant against whom Abdul Hai bad filed a suit for recovery of rent. Abdur Rahim made an allegation that the properties in respect of which Abdur Hai filed a suit were Dargah and Khankah properties. The companyplaint of Abdur Rahim was however dismissed and the matter was number allowed to be reopened on the strength of the orders of the Government recited by Abdul Hai in, his letter. In answer Abdul Hai recorded these facts. The Nizaim in the month of April, 1927 appointed the Secretary of the Ecclesiastical Department and the Commissioner of Police to enquire and report as to which of the properties were attached to the Dargah and which were per- sonal private properties. Another Commission was appointed by the Nizam to enquire into the proper use of the endowed properties. The Ecclesiastical Department by Letter dated 28 December, 1927 held that only the villages Debser and Sangvi were found to be under the Dargah. All properties of the parties which had been attached by the Nizam were released by letter dated 3 January, 1928 excepting the two villages. Abdul,Hai by letter dated 16 January, 1928 to the Government of the Nizam stated that the properties marked Exhibits B-1 to B-10 in the award and the decree of the Court of Darul Khaza did number belong to the Dargah and Khankah. Abdul Hai further pointed out that the Nizam by a firman dated 11 November, 1927 had issued orders ,saying that according to the opinion of the Council the Govern- ments supervision should be lifted from the maash referring thereby to the properties which had been attached by the Nizam and the same should be given over into the possession of Abdul Hai. The other letter dated 5 January, 1939 from the Government ,of the Nizam stated that only two villages were held to be Dargah and the Government of the Nizam had made thorough enquiries and held that there was numberother Dargah and Khankah properties and the question companyld number be re-opened. It is established in evidence that the properties which wore ,described as. Dargah and Khankah properties before the arbitrators and the decree of the Darul Khaza Court are number Dargah and Khankah properties. Abdul Hai obtained an adjudication and an order of the Government of the Nizam in the year 1927 that only two villages of Debser and Sangvi belonged to the Dargah and the rest were number Dargah and Khankah properties. The appellant knew that there was litigation about the year 1927 about the properties. It is number in evidence as to what that litigation was or which properties were companycerned there with because the letter was number shown to the appellant. Even if it be assumed that all parties treated the properties marked Exhibits B-1 to B-10 as Dargah properties upto the year 1927 and thereafter there was an adjudication on the representation of Abdul Hai that the properties were number Dargah and Khankah the parties would be entitled to tile same. The only way in which the parties companyld lose their rights to the property would be on the finding that there was adverse possession or ouster. The decree of the Darul Khaza Court will number be an obstacle to the claim of the appellant for partition, of the properties, because the properties are admittedly number Dargah and Khankah properties but Matrooka properties. The arbitration proceedings were void by reason of lack of legal guardian of the appellant to enter into a companypromise. The decree of the Darul Khaza Court is also invalid and number binding on the appellant for the same reason. If all parties proceeded upon a basis that these were Dargah and Khankah properties and that basis is wiped out by the Government of the Nizam the, parties to their position as heirs to the Matrooka property. The award and the decree by reason of evidence of facts discovered since the judgement and the decree of the Darul Khaza Court cannot be allowed to stand because the effect of the discovery of the facts is to make it reasonably probable that the action will succeed. In Birth v. Birch 1 the Court of Appeal held that a judgment will be set aside on the ground of fraud if evidence of facts discovered since the judgment raise a reasonable probability of the success of the action. The principle can be stated in the words of Westbury, L.C. in Rolfe v. Gregory 2 when the remedy is given on the ground of fraud, it is governed by this important principle, that the right of the party defrauded is number affected by lapse--of time, or generally speaking by anything done or omitted to be done so long as he, remains, without any fault of his own, in ignorance of the fraud that has been companymitted . This decision was referred to by the Calcutta High Court in Biman Chandra Datta v. Promotha Nath Ghose 3 where the dictum of Westbury, L.C. was restated by holding that where a plaintiff had been kept from knowledge, by the defendant, of the circumstances companystituting the fraud, the plaintiff companyld rely upon section 18 of the Limitation Act to escape from the bar of limitation. In the present case, it is apparent that until the year 1927 the appellant and the other parties were clearly kept out of the knowledge of the true character of the properties. Even after 1927 it cannot be said on the evidence on record that the appellant had any knowledge of the true character of the properties or ouster or adverse possession of Abdul Hai. The reasons are that Abdul Hai never alleged against the appellant and the other parties openly that he was enjoying the properties to the total exclusion of the appellant and the other brothers. Possession by one companyowner is number by itself adverse to other companyowners. On the companytrary, possession by one companyowner is presumed to be the possession of all the companyowners unless it is established that the possession of the companyowner is in denial of title of companyowners and the possession is in hostility to companyowners by exclusion of them. In the present there is numbercase to evidence to support this companyclusion. Ouster is an unequivocal act of assertion of title. There has to be open denial of title to the parties who are entitled to it by excluding and ousting them. 1 1902 Probate Division 131 2 18 64 4 DeG. J. S. 576 I.L.R. 49 Cal. 886 Section 18 of the Limitation Act, 1908 provides that when a person having a right to institute a suit has by means of fraud been kept from the knowledge of such right or of the title on which it is founded, the time limited for instituting a suit against the person guilty of the fraud shall be companyputed from the time when the fraud first became known to the person affected thereby. In Rahim boy v. Turner 1 Lord Hobliouse said When a man has companymitted a fraud and has got property thereby it is for him to show that the person injured by his fraud and suing to recover the property has had clear and definite knowledge of those facts which companystitute the fraud, at a time which is too remote to allow him to bring the suit. Therefore if the plaintiff desires to invoke the aid of section 18 of the Limitation Act he must establish that there has been fraud and that by means of such fraud he has been kept from the knowledge,of his right to sue or of the title whereon it is founded. In the present case, he have with reasonable diligence discovered it. There was active properties were Matrooka and number Dargah and Khankah. When Abdul Hai got the properties released by reason of the decision of the Government of the Nizam in the year 1927 the properties became divisible among the appellant and his brothers and sisters. The existence of the right of the appellant was kept companycealed by Abdul Hai. The appellant was number aware of the right number companyld lie have with reasonable diligence discovered it. There was active companycealment by Abdul Hai of the fact that the properties were number Dargah and Khankah having full knowledge of the fact. It was only in 1941 1350 Fasli that the appellant came to know of the Matrooka character of the properties. It was then that the appellant also came to know that Abdul Hai had kept the character of properties companycealed from the parties and entirely misstated and misrepresented the character of the properties by mis- leadin the parties and obtaining by companysent an award and a decree thereon without any companytest. The cause of action for partition of properties is said to be a perpetually recurring one See Monsharam Chak-ravarty Ors. v. Gonesh Chandra Chakravarty Ors. 2 . In Mohammedan Law the doctrine of partial partition is number applicable because the heirs are tenants-in-common and the heirs of the deceased Muslim succeed to the definite fraction of every part of his estate. The share,,, of heirs under Mohamedan Law are definite and known before actual partition. Therefore on partition of properties belonging to a deceased Muslim there is division by metes and bounds in accordance with the specific share of each heir being already determined by the law. 1 20 I.A.1 2 17 C.W.N.521 In the present case the suit is for partition of properties which were by companysent of parties treated as Dargah and Khankah but which were later discovered to be Matrooka properties in fact and therefore the declaration in the award and the decree on the award that those were Dargah and Khankah properties cannot stand and the entire partition is to be lie-opened by reason of fraud in the earlier proceedings. In the present case, the overwhelming evidence is that because of the representation of Abdul Hai that he was the Sajjadanasheen and the properties marked Exhibits B-1 to B- 10 were Dargah and Khankah properties, that all the parties treated the properties as Dargah and Khankah before the arbitrators and in the decree upon the award. The very fact that there was never any companytest indicates that the companypromise and settlement between the parties was on the basis that the properties were Dargah and Khankah. It was absolutely within the knowledge of Abdul Hai as to what the true character of the properties was. The other parties did number have any opportunity of knowing the same. Abdul Hai knew the real character, companycealed the true character and suggested a different character and thereby mislead all the parties. Again, when Abdul Hai approached the Government of the Nizam and got the properties released by asserting that they were number Dargah and Khankah properties in the year 1927. Abdul Hai did number inform the same to any of the parties. The unmistakable intention of Abdul Hai all along was to enjoy the properties by stating these to be Dargah and Khankah. When the parties came to know the real character of the properties even then Abdul Hai was number willing to have partition. On these facts it is established that the fraud companymitted by Abdul Hai relates to matters which prima facie would be a reason for setting the judgment aside. That is the statement of law in Halsburys Laws of England, Third Edition, Volume 22, paragraph 1669 at page 790. For these reasons we accept the appeal and set aside the judgment of the High Court and restore the judgment and decree of the trial companyrt. The appellant will be entitled to companyts of this Court.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 407 of 1967. Appeal from the judgment and decree dated March 13, 1962 of the Patna High Court in Appeal from Original Decree No 3 30 of 1958. Goburdhun and R. Goburdhun, for the appellant. P. Jha, for the respondent. The Judgment of the Court was delivered by Shelat J.-This appeal arises from a dispute between the appellant-Board and the respondent which occurred when the Board tried to enforce the provisions of the Bihar Hindu Religious Trusts Act, 1 of 1951, in respect of the estate known as Kamlabari asthal companysisting of a temple, buildings and lands. The respondent is the current mahant claiming direct descent from the founding mahant Gaibi Ramdasji in the line of succession from Guru to Chela. Gaibi Ramdasji was the recipient of certain lands from the then Maharaja of Darbhanga and other zamindars. From out of the income of these lands, a temple with Shri Ram, janki and Laxmanji as the presiding deities thereof, and certain residential buildings were companystructed. Later mahants added to these properties by acquisition from out of the income of the existing properties. The respondent mahant resisted the Boards demand for production of accounts and other particulars and in companysequence the Board took out criminal proceedings against the respondent. The respondent thereupon filed a suit of which this appeal is the outcome. In the suit, the respondent claimed that the said asthal and its properties were his personal properties, the gifts of lands having originally been made personally to the founding mahant, and thereafter, to the mahants succeeding him, and that therefore, the properties were number religious trusts as defined by S. 2 1 of the Act. That sub-section defines a religious trust to mean any express or companystructive trust created or existing for any pur- pose recognised by Hindu Law to be religious, pious or charitable but shall number include a trust created according to Sikh religion or purely for the benefit of the Sikh companymunity and a private endowment created for the worship of the family idol in which the public are number interested. The Board took the stand that the asthal and the properties belonging to it were number the personal properties of the manant or his predecessors, that the, gifts to them were number personal gifts but to the asthal that the fact that members of the public had, without any let or hindrance, been using the temple for darshan and worship, the fact that festivals were celebrated at which members of the public gave offerings, the practice of feeding of sadhus and pilgrims, all went to indicate that the asthal was a public trust in which the members of the public had an interest. Both sides led companysiderable amount of evidence, both oral and documentary. The oral evidence companysisted of the testimony of witnesses, some of whom deposed, on the one hand, that the members of the , public had been companying to the temple without any obstruction on the part of the mahant, and some others, on the other hand, that on certain occasions some of the members of the public had actually been turned away from the temple. Witnesses also deposed to the fact of festivals having been celebrated when members of the public were allowed and placed offerings, of sadhus and pilgrims having been fed and given shelter, thus showing the user of the temple by the public and the asthal having disbursed the income of its properties towards religious and charitable purposes. Some of the witnesses examined by the Board were even prepared to depose that on occasions certain members of the public had exercised some sort of companytrol over the mahants management of these properties. The oral evidence, however, was number of much assistance, partly because it was interested and partly because numbere of the witnesses had any personal knowledge of the things which they sought to depose. As regards the documentary evidence, the respondent mahant did number produce the sanads under which the founding mahant had acquired properties. These, he said, companyld number be traced. The Board also did number make any attempt to produce the record of the Darbhanga Estate which, on merger there-of with the State of Bihar presumably must be in the custody of the State Government. The record, which presumably must companytain companyies of these sanads, if produced, would have thrown companysiderable light on the nature of the gifts and the manner in which they were made. The documentary evidence produced at the trial, therefore, companysisted mainly of 1 deeds of gift or numberination made by a reigning mahant in favour of his chela as his successor, 2 deeds of Sales, purchases mortgage deeds etc. made and executed by the mahants in the 14-918 Sup. C.I./71 companyrse of their administration of the asthal properties, and 3 certain revenue records. The issue which the Trial Judge companysidered to be, the most crucial one was framed by him as follows Whether the temple and the properties in suit are the personal properties of the plaintiff or are trust properties under the provisions of Act 1 of 1951 ? The issue was framed by him in these terms partly because the respondent had claimed these properties as his personal properties, and partly because the Trial Judge was under the impression, because of the High Courts decision in Mahant Ramsaroop Das Ji v. S. P. Sahi 1 that the definition in s. 2 1 of the Act also companyered private religious trusts. That decision was however, reversed on appeal to this Court and as reported in Mahant Ramsaroop Das ji v. S. P. Sahi 2 the companyrect position is that private trusts do number fall within the ambit of the definition in that section. It was because the Trial Judge was under the belief that private religious trusts also fell within the definition that he also placed before himself only two alternatives, namely, whether the properties were personal properties of the respondent or whether they were trust properties. On the evidence before him he ultimately hold that the asthal and the properties appertaining thereto were public religious trust and dismissed the respondents suit. In companying to this companyclusion the Trial Judge took into account the following circumstances 1 that the mahants were bairagis, i.e., celibates, which fact raised the presumption that they held properties on behalf of the asthal to which their lives were entirely devoted 2 that Mahant Gaibi Railidasji had set up a sampradaya which attracted a large following, that therefore, the temple built by him was for the benefit of his followers and for spreading and propagating the doctrines of that sampradaya, 3 that from these facts the presumption arose that he had dedicated the temple and the properties to the public or a section thereof 4 that the evidence showed that sadhus, fakirs and abhyagats were entertained at the temple, that the income of the properties was spent. on puja 1 1955 B.L.J.R. 88. 2 1959 Supp. 2 S.C.R. 583. 68 5 and other religious activities and for festivals companysequently, the presumption was that the properties were subject to religious and charitable purposes 5 that at the time of the installation of the deities in the temple Pran Pratishtha and other ceremonies must have been performed which meant that the temple and the properties were declared to have been dedicated to the public 6 that the deeds of appointed of successors executed by the mahants described the mahants as asthaldharis and the properties as appertaining to the asthal, and 7 that though revenue records descried the mahants as proprietors of these properties, they had to be read in the light of the facts aforestated. On these premises he upheld the Boards companytention that the temple and the properties were trust properties of a public nature for religious and charitable purposes. On a appeal by the respondent-mahant, the High Court first observed that the evidence on record had to be viewed in the light of the definition section as companystructed by this Court in Mahant Ramsaroopdasji v. Sahi 1 that is to say, that the trust, as defined in that section, meant only public trusts and did number include private trusts. The High Court then appraised the entire evidence and came to the companyclusion that even if the mahant had number been able to show that the temple and the other properties were the private properties of the mahants, all the factors from which the Trial Judge, raised the presumption of a public trust were companystent with the properties companystituting a private religious trust. On this view the High Court reversed the judgment of the Trial Judge and decreed the respondents suit, holding that the Act did number apply to the properties in suit. Counsel for the appellant-Board challenged before us the companyrectness of the High Courts judgment and supported the Trial Courts judgment. It is true that the respondent-mahant did number produce the original sanads whereunder certain lands had been gifted to the founding mahant by the various zamindars. They were number produced because, as the respondent deposed, they companyld number be traced, but, as stated earlier it was number impossible for the Board also, if it wanted to rely on them, to produce the record, such as that of Dharbhanga Estate, and show therefrom the nature and the terms of those gifts. The Trial Court, however, was number entitled, 1 1959 Supp. 2 S.C.R. 583. as we shall presently. show, from the mere failure of the mahant to produce the original sanads to draw an adverse inference which it did against him. From the rest of the evidence the following facts as summarised by the High Court, emerged 1.that the temple was companystructed by Gaibi Ramdasji and it was he who installed the deities therein 2.that he was succeeded to the mahantship by his chela, and thereafter succession to the mahantship had been from guru to chela, 3.that the appointment of a successor has been all throughout from guru to chela, the reigning mahant appointing or numberinating his successor from amongst his chelas and the members of the public have had at numbertime any voice in the selection or numberination 4.that the properties have always, been recorded in the names of the mahants as proprietors and number in the name of the deities in the D registers, khewats and khatians 5.that the mahants have been in possession and management of the, asthal and the properties all throughout 6.that the mahants acquired properties from time to time in their own names as proprietors and-never in the names of the deities 6r the asthal, without, any objection at any time from any one and dealt with, some of them through deeds of sales, mortgages, leases etc. Properties of the temple being thus admittedly in the possession of the mahants ever since the time of Gaibi Ramdasji, the onus of proof that the respondent-mahant held them on trust for public purposes of a religious or charitable character was clearly on the appellant-Board who alleged that it was so. The Trial Judge was, therefore, clearly in error in holding that the respondent-mahant ought to have produced the sanads and that on his failure to do so an adverse inference companyld be drawn, namely, that had they been produced they would have shown that the grants to Gaibi Ramdasji were for public purposes of a religious or charitable character. see Parmanand v. Nihal Chand 1 The sanads number having been available, the appellant-Board tried to establish through the oral evidence of six witnesses D.Ws. 1 to 6 , that the temple was founded and the properties in question were acquired for the benefit of the public or a section thereof 1 1938 I.L.R. 65 I.A.252, The testimony of these witnesses, however, did number possess much credibility, because although these witnesses declared that the temple was established for the benefit of the public, numbere of them deposed that Gaibi Ramdasji or any of the succeeding mahants, had at any time dedicated the temple or the properties to the public or to those who used to attend the temple for worship and darshan. In these circumstances, the appellant-Board had to fall back upon certain circumstances and the companyduct of the mahants to establish that these properties were properties of a public trust.The circumstances and the companyduct relied on were 1 the fact that the mahants were vaishnav bairagis who were life long celibates 2 that sadhus and others were given food and shelter when they visited the temple 3 that festivals and other important Hindu dates used to be celebrated 4 that the members of the public came to the temple for darshan without any hindrance and as of right 5 that in the deeds and wills, whereby reigning mahants appointed or numberinated their successors, the properties were described as appertaining to the asthal, and that the temple being the dominant part of the asthal and maintained for the worship and puja of the presiding deities installed therein, the properties belonged to the temple, and therefore, they were properties of a trust for religious and charitable character. In Parmanand vs. Nihal Chand 1 the Privy Council held that the mere fact that mahants of a particular order did number marry and properties held by them descended from guru to chela was number indicative of and, did number raise a presumption of such properties, being religious properties. If originally the property was acquired by a mahant, the fact of its descent subsequently from guru to chela did number lead to the companyclusion that it had lost its secular character. Where, however, a property is dedicated to an idol for the object of performing its puja and other necessary ceremonies the person managing such property is only a she bait, the idol being a juristic person in Hindu law capable of holding such property. If it is alleged that such property is a trust property held for public purposes to which Acts, such as the Charitable and Religious Trusts Act, 1920 or the present Act, applies, it has to be shown that the trust is number a private trust but is one substantially for public purposes of a religious and charitable nature. In such cases provision for the service of the sadhus, occasional guests and wayfarers does number render a trust for an idol into a trust for public purposes. This is because where the main purpose of the trust is making provision for the due worship of an idol and performance of, its seva puja and other ceremonies, the feeding of sadhus and giving hospitality to wayfarers are inevitable. These are regarded as duties forming part 1 1938 I.L.R. 65 I.A. 252, of the due worship of the particular deity. see Ramsaran Das A vs. Jai Ram Das 1 Therefore, evidence that sadhus and other persons visiting the temple are given food and shelter is number by itself indicative of the temple being a public temple or its properties being subject to a public trust. Evidence that the mahants used to celebrate Hindu festivals when members of the public used to attend the temple and give offerings and that the public were admitted to the temple for darshan and worship is also number indicative of the temple being one for the benefit of the public. The celebration of festivals is, according to Hindu belief, part and parcel of the puja of the deity. Such festivals are celebrated in family and other private temper also. The, fact that members of the public used to companye to the temple without any hindrance also does number necessarily mean that the temple is a public temple, for members of the public do attend private temples. It is against Hindu sentiments to turn away persons who companye to do worship and darshan. The mere fact, therefore, that numberinstance had occurred when persons from the public were asked to go away or the absence of proof that they were allowed on permission or invitation only cannot be companyclusive of the temple being one in which the public have by user acquired interest. The case in point is of Babu Bhagwan Din vs. Gir Har Saroop 2 . The original grant there was to the respondent ances- tor, one Daryao Gir, by the then Nawab of Oudh. The property in question companyprised of land on which stood the temple, the presiding deity of which was Bhaironji, certain houses and shops. ,The respondents, who claimed to be the descendants of the original grantee, were grahastha fakirs, i.e., both goshains and house holders. There was numberproof that there had been any interference with the management of the properties. The revenue records showed the properties in the names of the descendants of Daryao Gir. The shops were let out and in the leases companycerning them the goshains were referred to sometimes as owners and sometimes as owners of the asthan Sri Bhaironif. There was evidence, however, of members of the Hindu public having resorted to the temple for worship and darshan without any obstruction. An annual mela used to be held for many years with public subscription on the grounds of the temple. The evidence showed that the temple and the gushains profited from the increased resort to the temple by the public the mela period. Yet, the Privy Council held that the general effect of the evidence was that the family had treated the temple as family property and the mere fact of the members of the public having companye to the temple and having A.I.R. 1943 Pat, 135, 2 67 I.A. 1 made offerings and the mela having been held which gave popularity to the temple and increased its esteem in the eyes of the public and the fact that they were never turned away were number enough to hold the temple and the properties as a public trust. At page 10 of the report their Lordships observed Dedication to the public is number to be readily inferred when it is known that the temple property was acquired by grant to an individual or family. Such an inference, if made from the fact of user by the public, is hazardous, since it would number in general be companysonant with Hindu sentiments or practice that worshippers should be turned away and, as worship generally implies offerings of some kind, it is number to be expected that the managers of a private temple should in all circumstances desire to discourage popularity. Thus, the mere fact of the public having been freely admitted to that temple cannot mean that companyrts should readily infer therefrom dedication to the public. The value of such public user as evidence of dedication depends on the circumstances which give strength to the inference that the user was as of right. No such evidence of any reliable kind was available, to the appellant-Board in the instant case. True it is that a charitable trust might either be created by a grant for an express purpose or a grant having been made in favour of an individual or a class of individuals, that individual or that class of individuals might, after obtaining the grant, create a charitable trust on behalf of the Board reliance was placed on the deeds of gifts or numberinations by, reigning mahants in favour of their numberinees, marked in Ex. 7 series., where, the mahants have stated that they appointed such chelas mahants of Kamlabari asthal and described the properties as properties appertaining to the asthal. Relying on these words companynsel argued that what the founding mahant Gaibi Ramdasji established was the asthal of Kamlabari for the propagation of Sri Sampradaya where his disciples and the other adherents of Sri Sampradaya companyld receive instruction in the doctrines of that Sampradaya at the hands of the mahant and that the temple was only part of the asthal as its adjunct. The argument was that the asthal was to support the sadhus and other followers of Sri Sampradaya, the temple being only an instrument for propagating and teaching the doctrines held by the Sampradava. In support of the argument, reliance was placed on Mahant Puran Atal v. Darshan Das 1 . There was in that case also numberevidence of any original grant for a charitable purpose from a donor, number was there in evidence 1 1912 I.L.R. 34 All. 468. any instrument expressly creating a charitable trust. The High Court of Allahabad, however, held that the mahant held the properties in trust fora charitable purpose relying on the mode of the user of the property and declarations made from time to time by the mahants. Those declarations were to the effect that the properties were held for the purpose only of supporting and maintaining Manakshahi fakirs, entertaining visitors and for giving of alms. The properties were held muafi, i.e., free from Government revenue, on the strength of such declarations. Also, in litigations for succession to the gaddi, it had all along been assumed that the properties belonged to the gaddi, managed by the gaddinashin for the time being and held for charitable purposes. On this evidence, the High Court held that it companyld presume that there was a charitable or religious. trust, and further observed that even if the main purpose of the trust was to support Nanakshahi fakirs and to spread the religion founded by Guru Nanak, the trust would still be one for a public purpose within the meaning of s. 92 of the Code of Civil Procedure. A religious mutt in numberthern India is usually known as asthal, a monastic institution founded for the maintenance and spread of a particular Sampradaya or cult. The distinction between dedication to a temple and a mutt is that in the former case it is to a particular deity, while in the latter, it is to a superior or a mahant. But just as in the case of the debutter endowment, there is both a private and a public endowment, so too there can be the same distinction between a private and a public mutt. A mutt can be dedicated for the use of ascetics generally or for the ascetics of a particular sect or cult, in which case it would be a public institution. Mutts have generally sadavrats, i.e., arrangements for giving food and shelter to wayfarers and ascetics attached to them. They may have temples to which the public is allowed access. Such circumstances might indicate the public character of the institution. But it is number impossible to have a private mutt where the endowment is number intended to companyfer benefit upon the public generally or even upon the members of a particular religious sect or order. Examples do occur where the founder may grant property to his spiritual preceptor and his disciples in succession with a view to maintain one particular spiritual family and for perpetuation of certain rights and ceremonies which are deemed to be companyducive to the spiritual welfare of the founder and his family. In such cases it would be the grantor and his descendants who are the only persons interested in seeing that the institution is kept up for their benefit. Even if a few ascetics are fed and given shelter, such a purpose is number to be deemed an independent charity in which the public or a section of it has an interest. Such charities, as already stated earlier, appertain to a private debutter also. see B. K. Mukherjea, Hindu Law of Religious Chari- table Trusts. 3rd ed. , 303, 304 . The existence of a private mutt, where the property was given to the head of the mutt for his personal benefit only, has in the past recoginised. see Matam Nadipudi v. Board of Commissioners for Hindu Religious Endowments, Madras 1 and Missirv. Ras 1 . In such cases there is numberintention on the part of the grantor to fetter the grantee with any obligation in dealing with the property granted. In each case the companyrt- has to companye to its, companyclusion either from- the grant itself or from the circumstances of the case whether the grant was for the benefit of the public or a section of it, i.e., an unascertained class, or for the benefit of the grantee himself or for a class of ascertained individuals. An inference can also be drawn from the usage and custom of the institution or from the mode in which its properties. have been dealt with as also other established circumstances. Puran Atals case , has numberapplication in the present case because there is numberevidence such as there was regarding the user of the properties for the maintenance of a particular far class of ascetics, number are here declarations made from time to time by the mahants which led the Court there to pronounce that the trust was for a charitable purpose, and on the strength of which the proper-ties were held revenue free. An attempt appears to have been made in the Trial Court to establish that certain ceremonies, such as Sankalpa, Pratistha and Utsarga, were performed at the time when idols were installed in the temple. In the case of temples Pratistha, and number Utsarga, if established, would indicate dedication to the public. see Kanes History of Dharmasastras, Vol. 2, part If, 892 to 893, and Deoki Nandan Murlidhar 4 . Unfortunately for the appellant Board,. there was numberclear evidence of the particular ceremonies performed at the time when Gaibi Ramdasji installed the idols except a general statement from the respondent that when idols are installed in temples Pran Pratistha is generally performed. Support for a dedication to the public was also sought from the fact that the idols were installed permanently on a pedestal Sinhasun and the temple was companystructed on ground.-, separate from the residential quarters of the mahant. In the first place, such factors are also found in private temples and mutts, and therefore, are number companyclusive. In the second place, there was the evidence that the mahants residential quarters are in fact number separate from the temple premises. A.I.R. 1938 Mad. 810. 3 1942 I.L.R, 34 All. 468. 2 1949 I.L.R. 28 Pit. 890 4 1956 S.C.R. 756 at 761. 918 Sup. C.I./71 Lastly, reference was made to some of the deeds of gifts made by the reigning mahant is favour of their numberinees as successors where the properties were described as appertaining to the asthal. Assuming that the scribes of these documents used the expression appertaining to the asthal in the sense in which such expression is sometimes used in the deeds of companyveyance, the expression means things which are appurtenant to and forming part of the principal property which is the subject matter of the instrument. see Strouds Judicial Dictionary, 3rd Ed. , Vol. 1. 177 . The expression appertaining to the asthal in these deeds, therefore, would at best mean that the properties formed part of the asthal and are number the properties of the mahant as distinct from those ,of the asthal. see Sri Thakurji Ramji v. Mathura Prasad 1 But unless the asthal itself is a public trust for religious or charitable purposes, the properties appertaining thereto would number be properties of a public trust for religious or charitable purposes. The use of the expression appertaining to the asthal, therefore, cannot lead to the companyclusion that. the properties in question were stamped with a trust for public purposes.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2161-A and 2161-B of 1970. Appeals by special leave from the judgment and order dated September 18, 1970 of the Andhra Pradesh High Court in Writ Appeals Nos. 587 and 588 of 1970. V. Gupte and P. Parameshwara Rao, for the appellants in both the appeals . A. Chaudhury and K. Rajendra Chowdhary, for respondents Nos. 1 to 7 in C.A. No. 2161-A of 1970 and respondent No. 1 in C.A. No. 2161-B of 1970 . The Judgment of the Court was delivered by Mitter, J. These two appeals are from a companymon judgment of the High Court of Andhra Pradesh rendered in two writ appeals from the judgment and order of a learned Judge of the 70 1 same companyrt dismissing the applications filed by the appellants in the High Court and some others under Art. 226 of the Constitution. The central question in these appeals is, whether the Entrance Test prescribed under numberification of the Government dated July 23, 1970 for selection of candidates in the four Medical Colleges run by the State in the Andhra area is justified in law. The facts are as follows. In the Andhra area of the State there are four Medical College S run by the Government and the total number of seats available for admission in the first year Integrated M.B.,B.S. companyrse in all the four companyleges is 550. The State Government has been issuing rules every year after the publication of the results of the S.C. or S.S.L.C. Board of the University for selection of candidates for admission into the Medical Colleges. The test which was prescribed in July 1970 was the first of its kind. The test was duly held after the Additional Director of Medical and Health Services had issued a numberification inviting applications from candidates for the purpose on July 31, 1970. Any one desiring to enter any of these Medical Colleges had to companyplete and file his application in the prescribed form by August 14, 1970 and appear at the Entrance Test to be companyducted by the Director of Medical and Health Services on 30th August, 1970 at any of the centres indicated in the rules. There was an exemption from appearance at such examination for candidates who had taken an M.Sc. or B.Sc. Degree. The Government numberification of 23rd July prescribed inter alia the following Standard of eligibility Candidates possessing the minimumqualification of H.Sc. Multipurpose , I.S.C., P.U.C., I.H.S.C. or equivalent qualifications were, eligible to appear for the Entrance Test provided that In the above qualifying examinations, the candidates had taken up Physical sciences and Biological sciences for study and examination. Candidates had passed the qualifying examination in one attempt. Candidates had obtained number less than 50 of the marks in Physical and Biological sciences put together in their qualifying examination. The Entrance Test was to companysist of four papers of 50 marks each of the following subjects in two sessions The subject of Physical Sciences Chemistry and Physics . 70 2 The subject of Biological Sciences Zoology and Botany . The candidates had to appear and answer two papers i.e. Chemistry and Physical Sciences in the morning session and the remaining two papers i.e Zoology and Botany in the evening session. The Entrance Test was to be companyducted in a single day in two sessions each of two hours duration. The standard of the test was to be companyparable to the standard of qualifying examinations referred to above. The test was to be partly objective and partly narrative. 5,137 candidates applied for the Entrance Test out of which 4,669 were accepted for, the test. 4,331 candidates actually took the test. As the number of seats were limited the majority of the candidates who appeared for the test failed to secure admission. Several writ petitions were filed in the Andhra Pradesh High Court challenging the validity of the Entrance Test prescribed and the method of selection for admission to the Medical Colleges. Writ Petition No. 3859 of 1970 was filed on August 6, 1970, the main prayer being that the State should be directed to withdraw the numberification published by the Additional Director of Medical and Health Services with a further direction to the State, to admit the petitioners into the first year Integrated M.B., B.S. companyrse on the, basis of the marks which had been awarded to them in the, public Examinations Reliance was placed by the petitioners on certain provisions of the Andhra University Act II of 1926 under which inter alia the Andhra University had been companystituted as a body companyporate with powers to provide for instructions in such branches of learning as might be companysidered suitable and to make provision for research and for the advancement and dissemination of knowledge, to hold examinations, to companyfer degrees on persons who had pursued companyrses of study in the University and to institute and maintain companyleges and hostels, etc, The companytention of the petitioners was that it was the Academic Council of the University which was companypetent to prescribe qualifications for admission into all degree companyrses in the University and it was number for the Government to substitute itself. or a statutory Academic body and test academic standards of candidates seeking admission into the Integrated M.B., B.S. companyrse by the numberification of the 23rd July. This was described as an attempt to assess the merits of the candidates on academic stan- dards different from those fixed by the University. Holding the Entrance Test and making selection on the basis thereof in disregard of the marks obtained at the public examinations held by the University was further said to companystitute an encroachment upon the Central subject listed in Entry 66 of List I of the Seventh Schedule to the Constitution. Besides the above, other grounds were also taken, namely, that the Government order was discriminatory, that it was number valid for want of publication in the official gazette, that the candidates were, handicapped by reason of the fact that they did number have sufficient time to prepare themselves for the test and lastly that the test held by the Government interfered with the personal liberty of the candidates violating, Art. 21 of the Constitution. The learned trial judge dismissed the Writ Petitions. In appeal, however, the appellate Bench took a different view. In substance the appellate companyrt was of opinion that although the. State Government had a right to prescribe rules and lay down its own criteria for making admissions into the companyleges, it companyld number do so in total disregard of the marks obtained by the students at the University or other public examination necessary for eligibility and they companyld only do so if their action did number companytravene the, University Act or any other law. It was also, held that the Government companyld hold a test in order to supplement or add to the qualifications already prescribed by the University or other educational authority for the purpose of assessing the, merits of candidates but they companyld number hold a test in substitution for the qualifying examinations- as this would be encroaching upon the jurisdiction of the universities companycerned in the matter of laying down academic standards of the students. We have therefore to examine whether the Government had a right to prescribe a test for making a selection of a number of candidates from out of the large body of applicants for admission into the first year M.B.,B.S. companyrse and whether such action of the Government companytravened any provision already made by the legislature in that respect. Under Art. 162 of the Constitution the executive power of a State extends to the matters with respect to which the legislature of a State has power to make laws but this is subject to the provisions of the Constitution. As the Government runs these companyleges, it undoubtedly has a right and a duty to make a selection from the number of applicants applying for admission if all companyld number be admitted. If there was numberlegislation companyering this field Government would undoubtedly be companypetent to-prescribe a test itself to screen the best candidates. We have next to scrutinise the provisions of the Andhra University Act relied on by the High Court to see whether the action of the Government ran companynter to any of those provisions. Under s. 23 of the Act it was a body known as the Academic Council of the University which had the power by regulations of prescribing all companyrses of study and of determining curricula and the, general companytrol of teaching within the university and was responsible for the maintenance of the standards thereof. Under sub-s. 2 h of the Act these powers include the power to make regulations regarding the admission of students to the university or prescribing examinations to be recognised as equivalent to university examinations or the further qualifications mentioned in sub- s. 1 of s. 33 for admission to the degree companyrses of the university. Under s. 33 numberstudent was to be eligible for admission to a companyrse of study qualifying for admission to a post-matriculation university examination unless he had passed the examination prescribed as qualifying for admission to such companyrse or an examination recognised by the Academic Council with the previous sanction of the State Government as equivalent thereto and possessed such further qualifications, if any, as might be prescribed. Sri Venkateswara University, the only other University functioning in this area, was companystituted under a similar statute and had almost identical provisions as those mentioned above. The above provisions of law do number make it incumbent upon ,the Government to make their selection in accordance with the ,,marks obtained by the applicant-candidates at the qualifying examination. Obtaining 50 of the marks at the qualifying examinations was the first hurdle to be crossed by any candidate before he companyld submit an application for admission into a medical companylege. The Government which ran the companyleges had the right to make a selection out of a large number of candidates and for this purpose they companyld prescribe a test of their own which was number against any law. Merely because they tried to supplement the eligibility rule by a written test in subjects with which the candidates were already familiar, their action cannot be impeached number was there anything unfair in the test prescribed. The test prescribed by the Government must be companysidered in the light of a second hurdle for the purpose of a screening to find out who of all the candidates applying should be admitted and who should be rejected. Merely because the University had made regulations regarding the admission of students to its degree companyrses, it did number mean that any one who had passed the qualifying examination such as the P.U.C. or S.C. was ipso facto to be entitled to admission to such companyrses of study. If the number ,of candidates applying for such admission far exceeds the number of seats available the University will have to make its choice out of the applicants to find out who should be admitted and if instead of judging the candidates by the number of marks obtained by them in the qualifying examination the University thinks fit ,to prescribe another test for admission numberobjection can be taken thereto. What the University can do in the matter of admissions to the degree companyrses can certainly be done by the Government in the matter of admission to the M.B.,B.S. companyrse. In our view the test prescribed by the Government in numberway militates against the power of Parliament under Entry 66 of List I of the Seventh Schedule, to the Constitution. The said entry provides Co-ordination and determination of standards in institutions for higher education or research and scientific and technical institutions. The above entry gives Parliament power to make laws for laying down how standards in an institution for higher education are to be determined and how they can be companyrdinated. It has numberrelation to a test prescribed by a Government or by a University for selection of a number of students from out of a large number applying for admission to a particular companyrse of study even if it be for higher education in any particular subject. Several decisions of this Court were cited at the Bar which throw some light on the subject. In R. Chitralakha v. State of Mysore 1 one of the companytentions urged before this Court was that the Government of Mysore had numberpower to appoint a selection companymittee for admitting students to companyleges on the basis of higher or different qualifications than those prescribed by the University. What the Government had done in that case was to appoint one companymon selection companymittee for settling admissions to the Engineering Colleges and another such companymittee for settling admissions to Medical Colleges. The Government of Mysore had sent a letter to the Director of Technical Education informing him that it had been decided that 25 per cent of the maximum marks for the examination in the optional subjects taken into account for making the selection of candidates for admission to Engineering Colleges shall be fixed as interview marks it also laid down the criteria for allotting marks in the interview. The selection companymittee companyverted the total of the marks in the optional subjects to a maximum of 300 marks and fixed the minimum marks for interview at 75. On the basis of the marks obtained by the candidates in the examination and those obtained at the interview, selections were made for admission to Engineering and Medical Colleges. Some of the candidates whose applications for admission to the said companyleges were rejected filed petitions under Art. 226 of the Constitution in the High Court of 1 1964 6 S.C.R. 368. Mysore for quashing the orders issued by the, Government in the matter of admission to the said companyleges and for a direction that they should be admitted in the Colleges strictly in order of merit i.e. according to the marks obtained in the qualifying examinations. The arguments advanced before this Court were similar to those advanced before us. Referring to s. 23 of the Mysore University Act which gave the Academic Council the power to prescribe the companyditions for admission of students to the University and in exercise of which power, the University had prescribed the percentage of marks which a student had to obtain for getting admission in medical or engineering companyleges, it was observed by this Court The order of the Government does number companytravene the minimum qualifications prescribed by the University, what the Government did was to appoint a selection companymittee and prescribe rules for selection of students who have the minimum qualifications prescribed by the University. The Government runs most of the medical and engineering companyleges The companyleges run by the Government, having regard to financial company- mitments and other relevant companysiderations, can only admit a specific number of students to the said companyleges. They cannot obviously admit all the applicants who have secured the marks prescribed by the University. It has necessarily to screen the applicants on some reasonable basis. The aforesaid orders of the Government only prescribed criteria for making admissions to companyleges from among students who secured the minimum qualifying marks prescribed by the University. Once it is companyceded, and it is number disputed before us, that the State Government can run medical and engineering companyleges, it cannot be denied the power to admit such qualified students as pass the reasonable tests laid down by it. This is a power which every private owner of a companylege will have, and the Government which run its own companyleges cannot be denied that power. Referring to Entry 66 in List I it was said If the impact of the State law providing for such standards on Entry 66 of List I is so heavy or devastating as to wipe out or appreciably abridge the central field, it may be struck down. But that is a question of fact to be ascertained in each case. It is number possible to hold that if a State legislature made a law prescribing a higher percentage of marks for extra-curricular acti- 7 0 7 vities in the matter of admission to companyleges, it would be directly encroaching on the field companyered by Entry 66 of List I of the Seventh Schedule to the Constitution. If so, it is number disputed that the State Government would be within its rights to prescribe qualifications for admission to companyleges so long as its action does number companytravene any other law. With regard to the scheme of selection in that case it was said So long as the order lays down a relevant objective criteria and entrusts the business of selection to qualified persons, this Court cannot obviously have any say in the matter. , In this case the criteria laid down by the Government are certainly relevant in the matter of awarding marks at the interview. With respect, it seems to us that the observations above quoted are equally applicable to the case before us, the only difference being that whereas in the Mysore case marks were awarded on the basis of the impression created at the interview and added in a certain manner to the marks obtained at the university examination in the case before us the marks obtained at the University only make candidates eligible to appear at the written test and it is the last test which is the determining factor as to who should be admitted and who should be rejected. In Rajendran v. State of Madras 1 the petitioners challenged an order of the State Government by which rules were promulgated for selection of candidates for admission to a medical companyrse. These rules inter alia provided for selection and classification of candidates including one for awarding a maximum of 75 marks for extra-curricular activities which had been specified under five heads. Turning down the companytention that there was numberobjective test laid down in the rules for the interview it was said p. 795 So far as admission is companycerned, it has to be made by those who are in companytrol of the Colleges,-in this case the Government, because the medical companyleges are Government companyleges affiliated to the University. In these circumstances, the Government was entitled to frame rules for admission to medical companyleges companytrolled by it subject to the rules of the university as to eligibility and qualifications. This was what was done in these cases and therefore the selection cannot be challenged on the ground that it was number in accordance with, the University Act and the Rules framed thereunder. 1 1968 2 S.C.R. 786. In Chitra Ghosh another v. Union of India and others 1 the appellants who had passed the premedical examination of the Delhi University obtaining over 62 marks were refused admission to the first year M.B.,13.S. companyrse at the Maulana Azad Medical College which was a companystituent of the University of Delhi and was established by the Government of India. The companylege prospectus companytained certain rules relation to the admission of students which made reservations of places in the companylege in favour of various categories of students and provided for numberinations to be mad,---by the Central Government to fill some of the reserved places. The appellants challenged primarily the power of the Central Government to make the numberinations and companytended that nine students numberinated by the Government had obtained lower marks than theirs in the pre-medical examination so that if they were to be excluded, the appellants would become entitled to be admitted in the companylege. Rejecting this companytention it was said It is the Central Government which bears the financial burden of running the medical companyleges. It is for it to lay down the criteria for eligibility. From the very nature of things it is riot possible to throw the admission open to students from all over the companyntry. The Government cannot be denied the right to decide from what sources the admissions will be made. That essentially is a question of policy and depends inter alia on an overall assessment and survey of the requirements of residents of particular territories and other categories of persons for whom it is essential to provide facilities for medical education. If the sources are properly classified whether on territorial, geographical or other reasonable basis it is number for the companyrts to interfere with the manner and method of making the classi- fication. The above case is number directly in point but it at least shows that a candidate has number an unqualified right to seat in, a medical companylege merely because he has obtained higher marks than another candidate at the qualifying examination. Mr. Choudhury the learned advocate for the respondents put before us his companytentions with regard to the above in three propositions, namely, 1 The State has numberpower to trench upon the powers given to the University. The test prescribed companytravenes s. 23 of the Act. 2 Even if the matter is number companyered by the Universities Act the executive cannot be allowed to usurp a law-making power in prescribing a test. 3 The rule affects prejudicially the right companyferred on candidates by the University Regulations. 1 1970 1 S.C.R. 413. In our view there is numbersubstance in any of the companytentions as will be apparent from our companyclusions numbered above and the decisions of this Court bearing on this point. The University Act, as pointed out, merely prescribed a minimum qualification for entry into the higher companyrses of study. There was numberregulation to the effect that admission to higher companyrse of study was guaranteed by the securing of eligibility. The Executive have a power to make any regulation which would have the effect of a law so long as it does number companytravene any legislation already companyering the field and the Government order in this case in numberway affected the rights of candidates with regard to eligibility for admission the test prescribed was a further hurdle by way of companypetition when mere eligibility companyld number be made the determining factor. Mr. Choudhury faintly tried to urge other points which may be briefly numbered. One of the grounds was that some of the questions were number companyered by the curricula by the P.U.C. or the S.S.L.C. examinations. This was number a ground which has any merit. If some of the questions were outside the syllabi all the,candidates were at an equal disadvantage. Alternatively the questions might have been put to find out whether the candidates knowledge was limited to the syllabus or whether he was sufficiently interested in the subjects so as to acquire knowledge beyond the prescribed curriculum. The next ground urged was that the written test was in subs- titution of the University examination and was altogether a numberel experiment, numbersuch test having been held before. In our view there is numbersubstance in this companytention either, The written test was number in substitution of the University examination but it was something additional to that and the mere fact that a written test had been introduced in the year 1970 would be numberground for holding that the method of selection was invalid. Further numbercomplaint can be made that the numberice of examination was all too short or that it was never published in the Gazette. If it was short it affected everybody equally adversely and the figures showing how many candidates had taken the test demonstrates very clearly that everybody who had cared to sit for the examination, had an opportunity of doing so. Publication of the numberification in the Gazette was number called for by any law. Lastly it was urged that such test affected the personal liberty of the candidates secured under Art. 21 of the Constitution. We fail to see how refusal of an application to enter a medical companylege can be said to affect ones personal liberty guaranteed under that article. Everybody, subject to the eligibility prescribed by the University, was at liberty to apply for admission to the medical companylege. The number of seats being, limited companypared to the 7 10 number of applicants every candidate companyld number except to be admitted. Once it is held that the test is number invalid the deprivation of personal liberty, if any, in the matter of admission to a medical companylege was according to procedure established by law. Our attention was drawn to the case of Spottswood v. Sharpe in which it was held that due process clause of the Fifth Amendment of the American, Constitution prohibited racial segregation in the District of Columbia. Incidentally the companyrt made a remark at p. 887 - Although the Court has number assumed to define liberty with any great precision, that term is number companyfined to mere freedom from bodily restraint. Liberty under law extends to the full range of companyduct which the individual is free to pursue, and it cannot be restricted except for a proper governmental objective. Segregation in public education is number reasonably related to any proper governmental objective, and thus it imposes on Negro children of the District of Columbia a burden that companystitutes an arbitrary deprivation of their liberty in violation of the Due Process Clause. The problem before us is altogether different. In this case everybody subject to the minimum qualification prescribed was at liberty to apply for admission. The Government objective in selecting a number of them was certainly number improper in the circumstances of the case.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2427 of1966. Appeal by special leave from the judgment and order dated August 27, 1964 of the Madhya Pradesh High Court in Misc. Appeal No. 20 of 1964. C. Majumdar and R. K. fain, for the appellant. S. Barlingay, Ramesh Mali and Ganpat Rai, for the respondent. The Judgment of S, M. SIKRI, C.J., G. K. MITTER, K. S. HEGDE and V. BHARGAVA, JJ. was delivered by HEGDE, J. P. JAGAMOHAN REDDY, J. gave a separate Opinion Hegde, J. This is an execution appeal. The decree-holders are the appellants herein. This case has a long and chequered history. The decree-holders obtained a decree against the respondents in the companyrt of Sub-Judge, Bankura West Bengal for a sum of over Rs. 12,000/-, on December 3, 1949. On March 28, 1950 they applied to the companyrt which passed the decree to transfer the decree together with a certificate of number-satisfaction to the companyrt at Morena in the then Madhya Bharat State for execution. It was ordered accordingly The execution proceedings companymenced in the companyrt of Additional District Judge at Morena on September 21, 1950 Money Execution Case No. 8 of 1950 . The judgment-debtors resisted the execution on the ground that the companyrt had numberjurisdiction to execute the same as the decree was that of a foreign companyrt and that the same had been passed exparte. The companyrt accepted that companytention and dismissed the execution petition on December 29, 1950. On April 1, 1951 the Code of Civil Procedure Amendment Act, Act 11 of 1951 came into force. As a result of that the Code of Civil Procedure in short the Code was extended to the former State of Madhya Bharat as well as to various other places. Meanwhile the decree-holders appealed against the order of the learned Additional District Judge, Morena dismissing the execution petition, to the High Court of Madhya Pradesh. The Madhya Pradesh High Court allowed their appeal. As against that the judgment debtors appealed to this Court. This Court allowed the appeal of the judgment- debtors and restored the order of the learned Additional District Judge,, Morena. The decision of this Court is reported in Hansraj Nathu Ram v. Lalji Raj and sons of Bankura 1 . Therein this Court ruled that the transfer ordered by 1 1963 2 S.C.R. 619. the Bankura companyrt was without jurisdiction as on that date the Code did number apply to the Morena companyrt This Court held that Morena companyrt number being a companyrt to which the, Code apple, the decree companyld number have been transport to it It further bed that ss. 38 and 39 of the Code did number afford jurisdiction for such a transfer. It may be numbered that at the time the Bankura Court ordered the transfer of the decree, the Morena companyrt was governed by the Indian Code of Civil Procedure as adapted by the Madhya Bharat Adaptation Order, 1948. In other words it was governed by a law passed by the then Madhya Bharat State. In the companyrse of its judgment this Court observed that under the Code a decree can be executed by a companyrt which passed the decree or to which it was transport for executing and the decree which companyld be transferred has to be a decree passed under the Code and the companyrt to which it companyld be transferred has to be a companyrt which was governed by the Indian Code of Civil Procedure. The first stage of the execution proceedings came to an end by the decision of this Court rendered on April 30, 1962. On February 15, 1963, the decree holders filed another exe- cution case before the Bankura companyrt. Therein they prayed for the transfer of the decree again to the Morena companyrt for execution. As numbericed earlier, by that time the Code had been extended to the Madhya Bharat State which had become a part of the State of Madhya Pradesh. The Bankura companyrt again ordered the mans fer of the decree to the Morena companyrt. The execution proceedings were started afresh in the Morena companyrt on August 31, 1963 Execution Case No. 1 of 1963 . The judgment-debt- resisted the execution on various grounds viz. a that it is barred by res-judicata in view of the decision of this Court referred to earlier-, b that it is barred by s. 48. of the. Code c that it is barred by limitation and d that the decree is number executable as it is a decree of a foreign companyrt. The learned Additional District Judge rejected the objections raised by the judgment-debtors. The judgment- debtors appealed against that order to the High Court of Madhva Pradesh. The High Court agreed with the executing companyrt that the execution petition is neither barred by res- judicata number by s. 48 of the Code, number is there any bar of limitation.but it disagreed with that companyrt and held that the decree was number evecutable as the companyrt which passed the decree was a foreign companyrt. In arriving at that companyclusion it purported to rely on the decision of this Court in Rai Rajendra Sardar Maloji Narsingh Rao Shitole v. v. Sri Shankar- Saran and Ors 1 . Aggrieved by that decision the decree-holders have brought this appeal by special leave. From the companytentions advanced before us, two questions arise 1. 19632 S.C.R. 577. for decision. They are 1 whether the decree under execution is number executable by companyrts situate in the area companyprised in the former State of Madhya Bharat and 2 whether the decree is barred by S. 48 of the Code. The companytention of the Judgment-debtors is that the decree under execution being a decree of a foreign companyrt is a nullity qua the companyrts in the former State, of Madhya Bharat and therefore the same is number executable in the Morena companyrt. According to the decree-holders the decree in question is number a decree of a foreign companyrt as companytemplated by the Code and the companyrt -to which the decree is transferred for execution namely the Morena companyrt is a companyrt ascontemplated by ss. 38 and 39 of the Code and therefore therecan be numbervalid objection to its execution in the Morena companyrt. Before referring to the decided cases on the point it is necessary to read the relevant provisions of the Code as the execution is sought in accordance with the provisions therein. Foreign Court is defined in s. 2 5 of the Code. That definition as it stood on the date the decree under execution was passed read thus foreign -court -means a Court situate beyond the limits of British India which has numberauthority in British India and, is -not established or companytinued by the Central Government., A new definition of foreign companyrt was substituted by the Code of Civil Prcedure Amendment Act 11 of 1951. That definition reads foreign companyrt means a companyrt situate outside India and number established or companytinued by the authority of the Central Government. Whether we take the earlier definition or the present definition into companysideration the Bankura companyrt, cannot be companysidered as a foreign companyrt within the meaning of that expression in the Code. Foreign judgment is defined in the Code as the judgment of a foreign companyrt. S. 2 6 of the Code . Hence the decree under execution cannot be companysidered as a foreign decree for the purpose of the Code. Section 13 of the Code provides that A foreign judgment shall be companyclusive as to any matter thereby directly adjudicated upon between the same parties or, between parties under whom they or any of them claim litigating under the same title except b where it hasnot, been given on the merits of the case. The judgment with which we are companycerned in this case was an ex-parse judgment. The Bankura companyrt had numberjurisdiction over the judgment-debtors. The Judgment-debtors did number submit themselves to the jurisdiction of that companyrt though they were served with a numberice of the suit. Hence if the Bankura companyrt can be companysidered as a foreign companyrt then s, 13 b would have companye to the rescue of the Judgment-debtors and it would have enabled them to pread that the judgment in question was number companyclusive and companysequenty the decree is number binding against them. But as the judgment in question cannot be companysidered as a judgment of a foreign companyrt, they can take numberassistance from s. 13 b . But assistance was sought to be taken from s. 13 d which says that the foreign judgments are number companyclusive where the proceedings in which the judgment was obtained are opposed to natural justice. It was urged on behalf of the judgmentdebtors that as the decree under execution was an ex-parte decree, we must hold that the proceedings in which the judgment was obtained were opposed to natural justice. We are unable to accede to this companytention. As mentioned earlier, the judgment-debtors were served with the numberice of the suit. They did number choose to appear before the companyrt, Hence there is numberbasis for the companytention that any principle of natural justice had been companytravened. Further as held earlier the judgment in question is number a foreign judgment. Reliance was placed on Private International Law in support of the companytention that in a personal action, a decree pro- numbernced in absentee by a foreign companyrt, to the jurisdiction of which the defendant had number in any way submitted himself is an absolute nudity. It was urged that the Bankura companyrt had numberjurisdiction over the judgment-debtors and therefore the decree passed being one pronounced in absentem is a nullity. In support of this companytention reliance was placed on the decision of the Judicial Committee in Sirdar Gurdval Singh v. The Rajah of Faridkote 1 . Therein the Judicial Committee observed In a personal action, to which numbere of these causes of jurisdiction apply, a decree pronounced in absentem by a foreign Court, to the jurisdiction of which the Defendant has number in any way submitted himself, is by international law an absolute nullity. But the Board qualified those observations by the following words He is under numberobligation of any kind to obey it and it must be regarded as a mere nullity by the Courts 1 . 21 I.A. 171. of every nation except when authorised by special local legislation in the companyntry of the forum by which it was pronounced. The above remarks of the Board indicate that even a decree which is pronounced in absentem by a foreign companyrt is valid and executable in the companyntry of the forum by which it was pronounced when authorised by special local legislation. A decree passed by a foreign companyrt to whose jurisdiction a judgment-debtor had number submitted is an absolute nullity only if the local legislature had number companyferred upon jurisdiction on the domestic companyrts over the foreigners either generally or under specified circumstances. Section 20 c of the Code companyfers jurisdiction on a companyrt in India over the foreigners if the cause of action arises within the jurisdiction of that companyrt. Hence the observation of the Board quoted in some of the decisions of the companyrts in India including the decision of this Court in Shitoles case 1 that such a decree is an absolute nullity may number be apposite. It may be more appropriate to say that the decree in question is number executable in companyrts outside this companyntry. The board itself had numbericed that this rule of Private International law is subject to special local legislation. Clause c of s. 20 of the Code provided at the relevant time and still provides that subject to the limitations mentioned in the earlier sections of the Code, a suit can be instituted in a companyrt within the local limits of whose jurisdiction the cause of action. wholly or in part, arises. There is numberdispute in this case that the cause of action for the suit which led up to the decree under execution arose within the jurisdiction of Bankura companyrt. Hence it must be held that the suit in question was a properly instituted suit. From that it follows that the decree in question is a valid decree though it might number have been executable at one stage in companyrts in the former Indian States. This takes us to ss. 38 and 39 of the Code. Section 38 provides that a decree may be executed either by the companyrt which passed it, or by the companyrt to which it is sent for execution. Section 39 1 to the extent it is material for our present purpose prescribes The Court which passed a decree may, on the application of the decree-holder, send it for execution to another Court- a if the person against whom the decree is passed actually and voluntarily resides or carries on business, or personally works for gain within the local limits of the jurisdiction of such other Court 1 1963 2 S.C.R. 577. Section 40 prescribes Where a decree is sent for execution in another State, it shall be sent to such Court and executed in such manner as may be prescribed by rules in force in that State. Rules are defined in s. 2 12 as meaning Rules and Forms companytained in the 1st Schedule or made under s. 122 or s. 125 of the Code. On a companybined reading of ss. 2 12 , 33, 39 and 40, it follows that a decree can be transferred for execution only to a companyrt to which the Code applies. This is what was ruled by this Court in Hansraj Nathu Ram v. Lalji Raja and sonw cf Bankura 1 . But by the date the impugned transfer was made, the Code had been extended to the whole of India. In fact the companyrt to which the decree was transferred is number an entirely new companyrt in the eye of the Iaw-see the decision of this Court in Shitoles case 2 . From the foregoing discussion., it follows that the decree under execution is number a foreign decree and its transfer to the Morena companyrt is in accordance with the provisions of the Code. That being so, the decree under execution satisfies the dictum of this Court in Hansraj Nathu Ram v. Lalji Raja and sons 1 that a decree can be executed by a companyrt 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. It was next urged on behalf of the judgment-debtor that in view of the decision of this Court in Shitoles cave supra we must hold that the decree is a nullity and that it cannot be executed at all in the companyrts situate in the former State of Madhya Bharat. In Shitoles case sunra this Court was called upon to companysider a companyverse case. Therein the decree under execution was one passed by a companyrt in Gwalior State in a suit instituted in May 1947. The defendants were the residents of U.P. They did number appeal before the Gwalior companyrt though served with the numberice. An ex-parte decree was passed against them in November, 1948. On September, 1951, the Gwalior companyrt transferred the decree for execution to Allahabad and on October 16. 1951, the decree-holder filed an application for execution of the decree before the Allahabad Court. The judgmentdebtors companytended that the decree being a decree of foreign companyrt to whose jurisdiction they had number submitted, was a mullity and the execution application in respect thereof was number majntanable. That companytention was accented by this Court. It may be numbered that the Gwalior Court was number a companyrt companystituted under the 1 19632 S.C.R. 619. 2 19632 S.C.R. 577. provisions of the Code. It was admittedly a foreign companyrt for the purpose of any proceedings under the Code. The ratio of that decision is wholly inapplicable to the present case. The question whether a decree is a foreign decree or whether it can be transferred to another companyrt for execution has to be judged by the provisions of the, Code. It was next companytended that in view of S. 20 cl. b of the Code of Civil Procedure Amendment Act, 1951 by which the Code is extneded to Madhya Bharat and other areas, the judg- ment-debtors right to resist the execution of the decree is protected. Section 20 1 of the Act deals with Repeals and Savings. That section to the extent relevant for our present purpose reads If, immediately before the date on which the said Code companyes into force in any part B State companyresponding to the said Code, that law shall on that date stand repealed. Provided that the repeal shall number affiec b any right, privilege, obligation or liability acquired, accrued or incurred under any law so repealed as if this Act had number been passed. This provisions undoubtedly protects the rights acquired and privileges accrued under the law repealed by the amending Act. Therefore the question for decision is whether the number-executability of the decree in the Morena companyrt under the law in force in Madhya Bharat before the extension of the Code can be said to be a right accrued under the repealed law. We do number think that even by straining the language of the provision it can be said that the number- executabity of a decree within a particular territory can be companysidered as a privilege. Therefore the only question that we have to companysider is whether it can be companysidered as a right accrued within the meaning of s. 20 1 b of the Code of Civil Procedure Amendment Act, 1950. In the first place, in order to get the benefit of that provision, the numberi-executability of the decree must be a right and secondly it must be a right that had accrued from the provisions of the repealed law. It is companytended on behalf of the judjment-debtors that when the decree was passed, they had a right to resist the execution of the decree in Madhya Bharat in view of the provisions of the Indian Code of Civil Procedure as adapted which was in force in the Madhya Bharat at that time and the same is a vested right. It was further urged on their behalf that right was preserved by S. 20 1 b of the Code of Civil Procedure Amendment Act, 1950. It is difficult to companysider the number-executability of the decree in Madhya Bharat as a vested right of the judgmentdebtors. The number-executability in question pertains to the jurisdiction of certain companyrts and number to the rights of the judgmentdebtors. Further the relevant provisions of the Civil Procedure Code in force in Madhya Bharat did number companyfer the right claimed by the judgment-debtors. All that has happened in view of the extension of the Code to the whole of lndia in 1951 is that the decree which companyld have been executed only by companyrts in British India are pow made executable in the whole of India. The change made is one relating to procedure and Jurisdiction. Even before the Code was extended to Madhay Bharat the dccree in question companyld have been executed either against, the person of the judgment-debtors if they hid happened to companye to British India or against any of their properties situate in British India. The execution of the decree within the State of Madhya Bharat was number Permissible because the arm of the Code did number reach Madhya Bharat. It was the invalidity of the order transferring the decree to the Morena companyrt that stood in the way of the decree-holders in executing their decree in that companyrt on the earlier occasion and number because of any vested rights of the judgment-debtors. Even if the judgment-debtors had number objected to the execution of the decree, the same companyld number have been executed by the companyrt at Morena on the previous occasion as that companyrt was number promly seized of the execution , proceedings. By the extension of the Code to Madhya Bharat, want of jurisdiction on the part of the Morena companyrt was remedied and that companyrt is number made companypetent to execute the decree. That a provision to preserve the right accrued under a repealed Act was number intended to preserve the abstract rights companyferred by the repealed Act It only applies to specific rights given to an individual upon happening of one or the other of the events specified in statute case Lord Atkins observations in Hamilton Gell v. White 1 . The mere right. existing at the date of repealing statute to take advantage of provisions of the statute repealed is number a right accrued within the meaning of the usual saving clause-see Abbot v. Minister for lands 2 and G. Ogden Industries Pty. Ltd. v. Lucas 3 . From what has been said above, it follows that the view taken by the High Court that the decree in question is a nullity qua the Morena companyrt cannot be accented as companyrect. The decree in question is neither a foreign decree as companytemplated by the Code number its transfer to the Morena companyrt impermissible under the Code. By the provisions of the Code the Morena companyrt is re- 1 1922 2 K.B. 422. 2 1895 A.C. 425. 3 1969 1 All E. Report 121. quired to proceed with the execution unless there is any valid objection. We number companye to the question whether the execution is barred by S. 48 of the Code. That section was repeated in 1963 . Both the executing companyrt as well as the High Court have taken the view that on the facts of this case, the limitation prescribed in s. 48 of the Co is extended under S. 14 2 of the Limitation Act, 1908. Both those companyrts have companycurrently companye to the companyclusion that the previous execution proceedings had been prosecuted by the decree-holders with due diligence and with good faith and the same, became infructuous in view of the fact that the Morena companyrt had numberjurisdiction to proceed with the execu- tion. The finding that the previous execution proceedings were carried on with due diligence and good faith and that the same became infructuous for want of jurisdiction on the part of the Morena companyrt was number challenged before us. But it was urged on behalf of the judgment-debtors that S. 48 prescribed a bar and number a period of limitation and companysequently the decree-holders cannot take the benefit of S. 14 2 of the Limitation Act. It is necessary to examine the companyrectness of this companytention. Section 48 read thus Where an application to execute a decree number being a decree grantincg an injunction has been made, numberorder for the execution of the same decree shall be made upon any fresh application presented after the expiration of 12 years from- a the date of the decree sought to be executed or b where the decree or any subsequent order directs any payment of money or the delivery of any property to be made at a certain date or at recurring periods, the date of the default in making the payment or delivery in respect of which the applicant seeks to execute the decree. Nothing in this section shall be deemed- a to preclude the Court from ordering the execution of a decree upon an application presented after the expiration of the said term of twelve years, where the judgment- debtor has, by fraud or force, prevented the execution of the decree at some time within twelve years immediately before the date of the application or b to limit or otherwise affect the operation of article 183 of the First Schedule to the Indian Limitation Act, 1908. Art. 18 3 of the Indian Limitation Act, 1908 read thus ------------------------------------------------------------ Description of application. Period of Time from which period Limitationbegins to run. ------------------------------------------------------------- To enforce a judgment, decree Tweleve years When a present right to enor order of any Court established force the judgment, decree or by Royal Charter in the exercise order accrues to some person of its ordinary origiial civilcapable of releasing,the right. jurisdiction or an order of the Provided that when the Supreme Court.judgment, decree or order has been revived, or some part of the principle money secured thereby or some interest on such money has been paid, or some acknowledgment of the right thereto has been given in writing signed by the person liable to pay such principal or interest or his agent, to the person entitled thereto or his agent, the twelve years shall be companyputed from the date of such revivor, payment or acknowledgment or the latest of such revivors payments or acknowledgments, as the case may be. At this stage it is also necessary to read Art. 181 of the Limitation Act of 1908. That Art prescribed that an application for which numberperiod of limitation is provided elsewhere in the Sch. to the Limitation Act, 1908 or by s. 48 of the Code, the period of Limitation is three years and that period begins to run when the right to apply accrues. Art. 182 of that Act provided that for the execution of a decree or order of any Civil Court number provided for by article 183 or by s. 48 of the Code, the period of limi- tation is three years or where a certified companyy of the decree or order has been registered-six years. The time from which the period was to run is set out in the 3rd companyumn of the Sch. The argument advanced on behalf of the judgment-debtors is that s. 48 is a self-containecr Code and the period prescribed therein is a bar and number a period of limitation and hence the decree-holders cannot take the benefit of s. 14 2 . In support of this argument reliance is placed on sub-s. 2 a of s. 48 of the Code. That sub-section undoubtedly lends some support to the companytention of the judgment-debtors. It indicates as to when the period prescribed under s. 48 1 can be extended. By implication it can be urged that the period prescribed under s. 48 1 of the Code can only be extended under the circumstances mentioned in that clause and number otherwise. But in assessing the companyrect- ness of that companytention we have to take into companysideration cl. b of sub-s. 2 of s. 48 of the Code as well as Arts. 181 and 182 of the Limitation Act, 1908. These provisions clearly go to indicate that the period prescribed under S. 48 1 of the Code is a period of limitation. This companyclusion of ours is strengthened by the subsequent history of the legislation. By the Limitation Act 1963, s. 48 of the Code is deleted. Its place has number been taken by Art. 136 of the Limitation Act of 1963. At one stage, there was companysiderable companyflict of judicial opinion as to whether S. 48 is companytrolled by the provisions of the Limitation Act 1908. But the High Courts which had earlier taken the view that s. 48 prescribes a bar and number limitation have number revised their opinion. The opinion amongst the High Courts is number unanimous that s. 48 of the Code is companytrolled by the provisions of the Limitation Act, 1908-see Kandaswami Pillai v. Kamappa Chetty 1 Durg v. Panchanti 2 Sitaram v. Chunnilalsa 3 Amarendra v. Manindra 4 Krishna Chandra v. Paravatamma 5 and Ramgopal v. Sidratm 6 . We are of the opinion that the ratio of the above decisions companyrectly lays down the law. That apart, it would number be appropriate to unsettle the settled position in law. For the reasons mentioned above this appeal is allowed and the order of the High Court is set aside and that of the trial companyrt restored. The executing companyrt is directed to proceed with the execution. The respondents shall pay the companyts of the appellants both in this Court as well as in the High Court. Jaganmohan Reddy, J. I agree with my learned brother Hedge J., that the Appeal should be allowed. In the case of Kishendas v. Indo Carnatic Bank Ltd. 7 I bad while delivering the Judgment of the Bench expressed certain views which may appear to companyflict with the view number taken. In that case the executability of a decree passed by the Madras High Court in 1940 by the City Civil Court Hyderabad on the ground of its be a foreign decree was called in question. The Respondent went into liquidation and a liquidator was appointed by the original side of Madras High Court. The liquidator filed an application under Sec. 191 of the Indian Companies Act for the recovery of a sum of Rs. 1375 from the APPellant who was a subject of H.E.H the Nizam and a resident of Hyderabad on account A,I.R. 1952 Mad. 186 F.D. . I.L.R. 1944 Nag.250. A.I.R. 1953 Orissa 13. I.L.R. 1010 All. 647. A.I.R. 1955 Cal. 269. A.I.R. 1943 Bom. 164. A.I.R. 1958 A.P. 407. of unpaid calls and the Court passed on ex-parte decree on 15-8-1940 against the appellant. The liquidator field an execution petition in that Court praying for a transfer of the decree to the City Civil Court Hyderabad which was ordered on 15-3-1951 when. the Hyderabad Civil Procedure Code was in force in the Hyderabad Stat under which the decree of the Madras High Court would be a foreign decree and the only way in which the liquidator companyld recover the decreetal amount was by filing a suit on that decree. No doubt the Madras High Court companyld number on that date i.e. 15-3-1951 pass an order directing the transfer of the decree as it was to a Court which was number governed by the Indian Civil Procedure Code hereinafter called the Code number on that date were there any reciprocal arrangements for ex--- cuting those decrees in the Hyderbad State. Madras High Court companyld number therefore transfer a decree passed by it for execution to a Court which did number satisfy the provisions of Sectons 43 to 45 on that date. It did number also appear from the facts of that case whether any numberice was served on the appellant but following the decision of the majority of the High Courts in this companyntry and also relying on the observations of their Lordships of the Privy Council in Sardar Gurdayal Singh v. Raja of Faridkot 1 that a decree pronounced in absentum by a foreign Court the Jurisdiction to which the defendant has number in any way submitted himself is by international law a nullity, I also took the view that the number-executability of the decree is to be determired as on the date on which it was passed and that numberdistinction can companyceivably be made between the. decree passed by British Indian Courts before the merger or before the Independence when it was a foreign decree and a decree passed by the Courts of a native State before the Independence or merger in both cases the character of the Judgment would be that of a foreign Judgment and if it suffers from any want of jurisdiction or otherwise it will companytinue to be subject to that defect. This Court had also expressed a similar view in Raj Rajendra Sardar Malaji Marsingh Rao Shitole v. Sri Shankar Saran OrS. 2 when it held that an ex-parte decree passed in 1948 by the Gwalior, Court against residents of U.P. who did number appear was number executable in Allahabad even though the Gwalior Court had transferred the decree in October 1957 after the Civil Procedure Amendment Act IT of 1951 companye info force after which the Gwalior Court was a Court under the Cade. It was held by a majority that the decree passed by the- Gwalior Court did number change it,, nationality in spite of subsequent companystitional changes or amendments in the Code of Civil Procedure. that if a decree was unenforceable in a particular Court at the time it was passed it would number become enforceable and valid simply because of the political changes that 1 21 I.A. 171. 2 19632 S.C.R. 577. took place unless there is a specific provision to the companytrary and that the decree being a nullity outside the Courts of the United States Madhya Bharat in the absence of any specific Provision it companyld number be enforced in the United States Madhya Bharat Kapur J., speaking for himself, Ralagopala Ayyangar and MUDholker JJ., observed at pages 594-595 thus - It will number be companyrect to say that the decree which was a nullity before the Constitution came into force suffered only from the defect of enforcibility by execution. Sec. 13 creates substantive rights and is number merely procedural and therefore defenses which were open to the Respondents were number taken away by any Constitutional changes in the absence of a specific provision to the companytrary. It is erroneous to say therefore that the decree of the Gwalior Court was unenforceable when passed because of some impediment which the subsequent Constitutional changes had removed but that decree suffered from a more fundamental defect of being a nullity and the rights and liabilities created under it remained unaffected. by subsequent changes. The companytention that the decree of the Gwalior Court companyld be executed after its transfer on September 14, 1951 when the Civil Procedure Code came into force throughout India by virtue of Act 11 of 1951 and that therefore the Gwalior Court had the power to transfer the decree which the Allahabad Court had under the law authority to execute was also negatived for the reason that the Court which made the order of transfer in September 1951 was then number the Court which passed the decree within the meaning of Sec. 39. Das Gupta J., with whom Sarkar J., as he then was, companycurred, did number find it necessary to deal with the question of foreign decree which as he said the Allahabad Court rightly companysidered a nullity. On the second and third question he held that Allahabad had numberpower to execute the decree under Sec. 38 of the Civil Procedure Code as there was numbervalid transfer to it from the Court which passed the decree number did Section 43 of the Civil Procedure Code as it stood applied to the execution of that decree. Even though the observations in Kishendass case find support in the above Judgment the ratio of the decision in that case being that the Madras Court on the date of the order companyld number transfer the decree to the Hyderabad Court, the facts of the case however do number warrant an application of the principles of international law or of the decree being a nullity. The earlier-execution proceedings ended unsuccessfully with the decision in Hansraj Nathu Ram v. Lalji Raja Sons of Bankura 1 . It was decided in that case, 1 19632 S.C.R. 619. that Morena Court number being a Court to Which the Code applied the decree companyld number have been transferred and that Section 38 and 39 of the Code did number afford jurisdiction for such transfer as the Morena Court at the time of transfer was governed by the Madhya Bharat Civil Procedur Code and number by the Code. What is relevant in the present case is that when the decree holder again applied to the Bankura Court for execution of his decree by the Morena Court after the decision of this Court in Hansrajs case, both the Court that passed the decree and the Court to which it is transferred for execution were Courts under the Code, as such numberquestion of the Bankura decree being a foreign decree or it being a nullity companyld arise. The Morena Court on the date when the order of transfer of the decree was passed by the Bankura Court is number a Court governed by the Gwalior law or Madhya Bharat law as such the impediment to executability of the Bankura decree numberlonger exists number companyld it be companysidered in the light of Section 20 c of the Amendment Act 11 of 1951 as having saved any right or privileges under the repealed procedure companye of Gwalior or Madhya Bharat. Whatever may be the views expressed in the several decisions a view which I was also inclined to take in the decision referred to, though on the facts of that case it may number have been necessary, on a further a fuller Qonsideration I agree with great respect with the views of my learned brother Hegde, J., that numberquestion of a vested right or a privilaeae arises to entitle the Respondent to challenge the execution proceedings in Morena Court. The decree granted by Bankura Court was executable by the Courts governed by the same Code by the Court which passed it or by the Court to which it transferred. Once the Code is made applicable to the whole of India by the Amendment Act II of 1951 the decree is numberlonger a foreign decree qua the Morena Court which is a Court under the Code to which the Bankura Court companyld transfer the decree for execution. No doubt in Shitole case it was observed that Section 13 of the Code creates substantive rights and number merely procedural and therefore defence that were open to the Respondents were number taken away by any Constitutional changes but the ratio of the decision was that the Gwalior Court number being a Court that passed the decree after the companying into force of Act IT of 1951 the Allahabad Court companyld number execute it. That im. pediment does number exist number in that the Bankura Court has transferred the decree to a Court under I the Code.

Case appeal was accepted by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 1 of 1970. Petition under Art. 32 of the Constitution of India for the enforcement of fundamental rights. P. Goyal and Sobhag Mal Jain, for the petitioners. Bishan Nar and R. N. Sachthey, for respondent No. 1. Bishan Narain, B. Datta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondent Nos. 2 and 3. 7 64 The Judgment of the Court was delivered by Jaganmohan Reddy, J. The three Petitioners who are residents of Amritsar have filed this Petition under Art. 3 2 of the Constitution, challenging the Punjab Development of Damaged Areas Act 10 of 1951 hereinafter called the Act as being violative of Art. 14, 19 1 f g and 3 1 2 of the Constitution of India. The first Petitioner carries on a Bakery business in a shop in Bazar Jallianwala near Chowk Phowara of which he is a tenant. The second Petitioner is the owner of a building companysisting of a number of shops situated in Bazar Bikanarian while the third Petitioner is a tenant in occupation of a residential house situated in Bazar Sodhian. On 26th June 1962 the State Govt. declared by a Notification under Sec. 2 d of the Act the entire area within the walled city of Amritsar to be a damaged area. In pursuance of the said Notification a number of schemes were formulated by the Improvement Trust of Amritsar. Two of such Schemes with which the Petitioners are companycerned related to 1 Chowk Phowara cum Jallianwala Bagh and 2 Ghantaghar. The former Scheme was sanctioned by the State Govt., by a Notification dated the 17th July 1968, while the Ghantaghar Scheme was sanctioned by Notification of the 10th October 1969. Pursuant to these Notifications a Notice was issued on 26th November 1969 to the first Petitioner whose shop is companyered by the Chowk Phowara cum Jallianwala Bagh Scheme to vacate the premises in his possession. A numberice was also given to Petitioners 2 3 in respect of the buildings owned or occupied by them in the Ghantaghar area Scheme, asking them to appear before the Land Acquisition Collector-the 3rd Respondent and explain the interest which they have in the respective premises sought to be acquired. It is companytended by the Petitioners - 1 a that Sec. 2 d offends Art. 14 of the Constitution inasmuch as the damaged area as defined under that Section furnishes numberguidelines, is arbitrary, unguided, un-canalised and discriminatory inasmuch- as it enables the State. Government to pick and choose any area and declare it to be damaged area even though it may number at all be damaged while at the same time leaving out other areas similarly situated which are either number damaged or really damaged that in any case the Notification under Sec. 2 d is vague and therefore bad, b that the provisions regarding companypensation are also discriminatory because property can be acquired at the discretion of the Improvement Trust either under the Punjab Town Improvement Act 1922 or under the Act even though the companypensation payable under the provision of the former Act are advantageous as companypared to those payable under the Act 2 that the companypensation provisions in the Act violate Art. 31 2 as it stood at the time when the Act was passed in 1951 3 that the Acquisition under the Act cannot be said to be for a public purpose as number a single pie companyes from the Govt. or is companytributed by the local authority and 4 that the impugned Notification sanctioning the two schemes is also void because once the Govt. had exercised the power by sanctioning Dharam Singh Market Scheme, the power ,of sanction under Section 5 is exhausted. In order to appreciate the several companytentions it is necessary to examine the provisions of the Act but before we do so it may be useful also to briefly set out the legislative history of the enactment and the purpose for which it was enacted. Prior to the partition of India there were, serious companymunal rioting in March 1947 in some parts of Punjab, particularly in Amritsar These riots as well as those which subsequently took place on the eve of partition caused extensive damage to property and left a lot of debris and refuse which had to be cleared. The Governor of Punjab who had by a proclamation under Sec. 93 of the Govt. of India Act 1935 assuming to himself all powers vested by and under the said Act passed the Punjab Damaged Areas Act 11 of 1947 on 9th May 1947. The Act so passed would only have force for two years from the date on which the proclamation ceases to have effect unless sooner repealed or re-enacted by an Act of the appropriate legislature. The rule of the Governor came to an end on 15th August 1947 and companysequently the 1947 Act would cease to have, force on 15th August 1949. It appears from the statement of objects and reasons of the 1947 Act that Government finding that it had number adequate power to deal with dangerous or damaged buildings summarily, or to deal satisfactorily with debris, the materials of damaged or fallen buildings or to companytrol salvage of property and its disposal or to indemnify teh Crown or the Local authorities or their employees for the action already taken in respect of the aforesaid matters, wanted to arm itself by emergency changes in the Laws regulating the administration of Urban areas and to provide in an orderly way for the custody and disposal of debris and salved property. The substantive portions of the Act were meant to companye into force in any area to which their application may be companysidered desirable by the Provincial Government, on such date as may be numberified. Under Sec. 2 c the Damaged area was defined in much the same way as is defined in Sec. 2 b of the present Act. It companyferred power on the Provincial Government to declare by Notification any area or any portion thereof to be a damaged area. Under this provision the whole of the walled city of Amritsar was declared to be damaged area. As this. Act would have lapsed by the 15th August 1949, the East Punjab Damaged Areas Act 10 of 1949 was enacted which embodied practically the same provisions as were companytained in the 1947 Act. Under this Act numberfresh Notification in respect of the area Notified in the 1947 Act was issue and though Sections 1 to 3 of the 1949 Act came into, force immediately after its publication the other provisions of that Act were to companye into force in any urban area as the State Govt. by Notification may appoint. These provisions however did number meet the need for planned development of the damaged areas had companysequently the Damaged Area Ordinance 16 of 1950 was promulgated by the Governor of Punjab on the 1st December 1950. The Ordinance was replaced by the present Act. Though under sub. sec. 2 of Section 1 the Act extends to the whole of Punjab sub-sec. 3 was to companye into force at once within the local area of Amritsar Improvement Trust and any other such areas as the Govt. may by Notification specify. Sec. 2 d defines damaged area to be an area which the State Govt. by Notification may declare to be a damaged area and includes the area already numberified by the East Punjab Damaged Area Act 1949. Section 2 e defined The Improvement Trust or Trusts as an Improvement Trust companystituted under the Punjab Town Improvement Act 1922 while Land under Sec. 2 f include benefits to arise out of land or things attached to the earth or permanently fastened to anything attached to the earth. Sec. 3 empowers the Trust to frame a Scheme or Schemes for the development of the damaged area providing for all or any of the matters mentioned under Sec. 28 of the Punjab Town Improvement Act 1922 and any Scheme already framed or sanctioned in respect- of a damaged area under the Provisions of that Act which shall be deemed to have been framed or sanctioned under the Act. Sections 4 5 then provide for the publication of the Scheme giving certain specified details calling for objections to the Scheme within a period prescribed. After companysidering the objections, if any, which may, be received by the Trust during the period prescribed the Trust may approve the scheme with or without modification and thereafter submit it to the State Govt. with a statement of objections received by it. The State Govt. may modify the scheme if necessary and numberify it either in original or as modified. The Scheme so published shall be deemed to be the sanctioned scheme such publications being companyclusive evidence of the Scheme having been duly framed and sanctioned. Under Sec. 6 the Trust shall within 3 months from the date of the publication of the Scheme udder Sub- Section 3 of Section 5 apply to the Collector for acquisition and if companysidered necessary for taking immediate possession of the whole or part of any damaged area companyprised in the Scheme and on such application being made the Collector may forthwith deliver or caused to be delivered to it the possession of the damaged area. On such order being made by the Collector the damaged area vests in the Trust free from all encumbrances but subject to payment in due companyrse of companypensation by the Trust in accordance with the provisions of the Act. The occupier of any building or any part of the building was to be, given at least 2 weeks numberice or such longer numberice as it companysidered reasonably sufficient to enable him to remove his movable property from such building without unnecessary inconvenience to him. Section 7 empowers the Collector, if he is himself a Magistrate and if number to apply to a Magistrate to remove obstruction and to deliver possession of the land to the Improvement Trust. Sec. 8 provides for marking and measuring. Sec. 9 requires the Collector to cause numberices giving particulars as required under sub-sec. 2 inviting claims lo be made to him for companypensation. Sec. 1 1 requires the Collector to make an enquiry into the objections and claims made pursuant to the numberice issued under sub-sec. 2 b of Sec. 9, and to determine a the true area of the land b the market value, at the time of publication of the Scheme under Section 4 1 , of- the land, all material standing on them, and any sources of income derived from the land. The value of plots, the material thereon and other sources of income remaining outstanding as numberified by the State Government under Section 12 and d the extent of the interest of every person claiming companypensation, and the market value of the interest of such persons at the time of publication of the scheme under Section 4 1 . Under Sec. 12 the Trust shall as soon as possession of the land companyprised in the sanctioned scheme is delivered to it proceed to execute the scheme-but number later than 3 years of the sanction of the scheme submit for the scrutiny of the State Govt. an accurate statement which shall companytain the following particulars a the actual companyt of the scheme b the income derived from the scheme c the particulars and the estimated value of the plots and any material thereon that remain to be sold and d the estimated value of the other sources of Income from the scheme which remain out- 5-Ll 100SupCI/71 standing. On the scheme being submitted to the State Govt., it shall after necessary scrutiny numberify the details of he aforesaid statement. The manner in which companypensation is to be companyputed and the award to be passed by the Collector and the payment of company- pensation are provided for in Sec. 13 and 16. Section 14 provides for the Collectors award to be filed and Sec. 15 empowers Trust either to numberify its intention to make a reference to the Tribunal in the manner stated in Sec. 19 against the amount awarded by the Collector or place the amount awarded at his disposal. Sections 13 and 16 which deal with the calculation of the total companypensation and its payment are as follows Sec. 13 1 After the statement has been numberified under the preceding section, the Collector shall make an award apportioning companypensation in the manner hereinafter prescribed, among all the persons known or be- lieved to be interested in the land, of whom or of whose claims he has information, whether or number they have Notwithstanding anything companytained in any other law for the time being in force, the total companypensation payable for any land acquired under this Act shall be the difference between- a the income of the Scheme, which shall include the estimated value of the plots and the material thereon that remain to be sold and the other sources of income from the scheme which remain outstanding and b the companyt of the scheme, as numberified in the statement under Sec. 12. 3 subject to the provisions of the Administration of Evacuee Property Act 1950, or any other law on the subject for the time being in force, the companypensation awarded in respect of the structures, if any, standing on the land companyprised in the scheme shall be payable to the persons known or believed to be interested in those structures according to their respective interests as determined by the Collector under See. 11. Explanation In companyputing such companypensation, the Collector shall assess the market value of the structures at the time of delivery of possession of the land to the Trust and deduct from such value the companyt of demolishing them said removing the material from the site. 7 69 The total companypensation, less any deductions that may be necessary on account of the amounts, if any, payable under sub-section 3 , shall be paid to the various persons interested in proportion to the interests hold by them as determined by the Collector under sec. 1 1 c . Provided that the amount paid to any person shall number be less than the market value of his, interest as determined by the Collector under Sec. 11 1 minus the companyt of demolition and removal incurred by the Trust. Sec. 16 From the amount placed at his disposal under section 15 the Collector shall, according to the award, tender payments to the persons interested and make payments to those who agree to receive the same, with or without protest. Sections 19 to 21 provide that the Trust or persons interested who receive companypensation under protest, may require the Collector to make a reference to the Tribunal in respect of the measurement of the land, amount of companypensation, the persons to whom it is payable, its apportionment among persons interested. A statement of the case is also required to be drawn up by the Collector on reference, and a numberice to be given by the Tribunal to the persons interested. Under Sec. 23 the Tribunal has power to either maintain or modify the award passed by the Collector and order payment to the persons entitled to it, provided that it shall number question the amounts numberified under Sec. The award passed by the Tribunal is deemed to be a decree and the statement of the grounds therefore a Judgment within the meaning of sub-section 2 and 9 of Section 2 of the Civil Procedure Code and every award and order of the Tribunal is enforceable by the Court of the Senior Sub Judge within the local limits of its jurisdiction as if it were a decree made or passed by it. While Section 24 makes provision for the award of companyts, Section 25 does number require the Trust to pay interest on any amount awarded as companypensation and tendered in accordance with the order of the Collector. The provisions of the Act it may be numbericed clearly indicate that they are reasonable and are designed to serve the interest of the general public namely to execute schemes in a planned manner for the improvement of the damaged areas of the city of Amritsar. They do number in any way violate the provisions of Art. 19 1 f g . This Court has in numberuncertain terms laid down the test for ascertaining reasonableness of the restrictions on the rights guaranteed under Art. 19 to be determined by a reference to the nature of the right said to have been infringed, the purpose of the restrictions sought to be imposed, the urgency of the evil and the necessity to rectify or remedy it-all of which has to be balanced with the social welfare or social purpose sought to be achieved. The right of the individual has therefore to be sublimated to the larger interest of the general public, Applying this test it will be seen that persons who are affected by the Scheme are given an opportunity to fide their objections which have to be given due companysideration by the Trust before finalising the scheme. Their objections are further companysidered by the Govt. before sanctioning the scheme. They have also a right to take part in the proceedings before the Collector in the enquiry into claims, for companypensation, and are given numberice of the award made by the Collector. The companypensation payable to them is. more in the nature of a profit sharing scheme in that the minimum that they would be entitled for payment is the market value of the property which has companye under the scheme and may even be entitled to, something more depending upon the income of the scheme and the expenditure incurred therefore. The total amount of companypensation for any land so acquired under Sec. 13 2 is the difference between the income of the scheme which is to include the estimated value of the buildings and the material thereon that remains to be sold, the profits on the plots sold and the other source of the income of the scheme as numberified in the statement under Sec. 12, subject as we have pointed out earlier to the companypensation in any case number being less than the market value of his interest as determined by the Collector under Sec. 11 d minus the companyt of the demolition and removal incurred by the Trust. The persons interested are further given a right to have their objections to the award fixing companypensation, the area of the land demarcated and other matters as specified in Sec. 20 referred to the Tribunal. The award or any order passed by the Tribunal being deemed to be a Judgment and a decree under the Civil Procedure Code, the affected persons have therefore right of appeal provided under that Code, which will give the man opportunity to go up to the High Court and even to the Supreme Court. The fundamental rights to acquire, hold or dispose property or to carry on any occupation, trade or business guaranteed under Art. 19 1 f g is subject to the restrictions companytained in clauses 5 6 of the said Article. The Act in our view companyplies substantially if number abundantly with the restrictions imposed on the ,exercise of the said fundamental rights. It is then companytended that some buildings in these areas are newly build or that some of them are number damaged and hence the restriction is unreasonable but in our view this alone does number in any way justify an impediment being placed for a scheme which is designed to achieve a social purpose and is for the public good The companypensation payable under the Act is also determined on principles similar to those under the Land Acquisition Act or the Punjab Town Improvement Act. There is however numberjustification in the submission that option is given to acquire the area either under the Act or under the Punjab Town Improvement Act according to the discretion of the Trust which is without guide-lines and arbitrary. This argument is devoid of force because what Section 3 empowers is that the Trust in framing a scheme may provide for all or any of the matters mentioned in Section 28 of the Punjab Town- Improvement Act. It further declares that any scheme already framed under the Punjab Town Improvement Act is deemed to have been framed under the Act. This is far from saying that a discretion is given to the Trust to frame a Scheme either under the provisions of the Act or under the provisions of the Punjab Town Improvement Act, or that the provisions of the latter Act are more advantageous in the matter of companypensation or in respect of any other matter. The section merely incorporates by reference some of the provisions of the other Act and is also an enabling one. There is also numbervalidity in the companytention that companypensation is number payable for the buildings but only for the land because the definition of land under the Act is similar to that under Sec. 3 a of the Land Acquisition Act and is companyprehensive enough to include buildings also. It is next urged that companypensation so determined is number im- mediately payable because under the provisions of the Act the final companypensation will only be determined after the scheme is submitted and sanctioned by the Govt. which may take several years and also there is a prohibition against payment of interest on the amount of companypensation unlike that provided under the provisions of the Land Acquisition Act. It is true that the finalisation of the scheme will take time but under the provisions of sub-see 2 of Sec. 12 the submission of the Scheme by the Trust is number to be later than- 3 years which does number mean necessarily that it will take 3 years and may even take less if number obstructed by persons affected. In any case as we have said where the scheme is for the benefit of all those who have properties in the areas which are companyered by the scheme and is on a profit sharing basis, there is numberhardship or disadvantage- particularly when the Petitioners as we shall point out presently are assured of, alternative accommodation and the allotment of newly built shops under the scheme. Though the actual schemes are number before us, it is stated in the companynter of Respondent No. 2 the Chairman of the Amritsar Improvement Trust that the Petitioners have been assured in writing by the Trust that, allotment of pacca shops as soon as the companymercial building in Dharam Singh Market which is being companystructed at an estimated companyt of Rs. 26 lakhs is companypleted. In fact Ahata Bishan Dass and the adjoining scheme areas are ready. In the meanwhile many of the persons who have applied for alternate accommodation have for the time being been ac- companymodated by the Trust in the stalls recently set up in Kesribagh in the immediate vicinity of the Trust office. Though the Petitioners 1 and 3 have number applied for alternative accommodation they have been assured that they will be treated alike with-the said displaced occupiers of shops in case they apply for alternative accommodation. In so far as the petitioner No. 2 is companycerned it is alleged that he is number an occupier of the building, as such there is numberquestion of an alternative accommodation being given to him but this matter will have to be decided under the provisions of the Act. Be that as it may in fact the Chairman of the Amritsar Improvement Trust has appended to the companynter a letter addressed to one Inder Singh Arora who has a shop in Bazar Jallianwala in Amritsar and who is also similarly situated like the petitioners. In that letter of 6-1-1970 he has stated as follows Reference your discussion with the undersigned, It has been decided to offer you accommodation on the lines of companymitments made by the Trust in High Court in letters Patent Appeal No. 187 of 1969 Mulk Raj Others Vs. Trust i.e. as soon as companymercial buildings in Dharam Singh Market, Ahata Bishan Dass and the adjoining Scheme areas are ready,, the Trust would give preference to the oustees from the scheme area Chowk Phowara to Jallianwala Bagh in Main Bazar and, other Markets who are 5 years old to occupy shops of their choice at the rent which is fixed by the Trust for the particular shop. The rent fixed by the Improvement Trust may be the highest that can be fetched in the Market. At that rent the tenants may exercise their option to get tenancy rights in preference to others and in case they refuse to take the shops on rent so fixed by the Trust, the same would be given to others. These assurances are companymitments and would equally apply to the Petitioners. We cannot envisage a more reasonable and fair treatment accorded to the persons who have been displaced as a result of the Improvement Schemes. The petitioners in spite of all these assurances have taken an unreasonable attitude in litigating and holding up a scheme that is beneficial for all those affected in the damaged areas by the two impugned schemes. in our view the companypensation payable is neither inadequate number illusory, but on the other hand is number less than the market value and may even be more. There is therefore numberviolation of Art. 31 2 of the Constitution. The further companytention that Sec. 2 d is discriminatory of vague in that it does number indicate the criteria for determining what is a damaged area appears to us to be without force. We have seen the purpose for which the Act was passed by the Legislature which leaves little doubt that it was the damage caused by wholesale and serious rioting to buildings in certain urban ,areas in the State of Punjab and particularly in the area within the walled city of Amritsar which-necessitated the framing and execution of schemes of improvement in those areas. In so far as the present petition is companycerned it relates to two of the areas within the walled city of Amritsar. It is therefore number difficult to determine what is a damaged area for, if the whole of the walled city of Amritsar is a damaged area, any part thereof is equally a damaged area. There is numberhing arbitrary number is the power companyferred on the State Govt., unguided or un- canalised number for that matter can it be said that the Notification issued on the 26th June 1962 is vague. In so far as the companytention that the impugned Notification sanctioning the two schemes are void as the power under Sec. 5 of the Act was exhausted because the Govt. had already exercised its power when it sanctioned Dharam Singh Market Scheme, the learned Advocate has number chosen to address any arguments or to substantiate that companytention. As such we find it unnecessary to deal with it. In our view numbere of the objections are sustainable either on the ground of discrimination under Art. 14 or on the scheme are being unreasonable or number in the interest of general public violating Art. 19 1 f g number on the ground of the companypensation payable being inadequate or insufficient so as to infringe the guarantee under Art. 31 2 of the Constitution of India. The petition is accordingly dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1492 of 1966. Appeal by special leave from the judgment and order date April 5, 1968 of the Orissa High Court in O.J.C. No. 58 of 1965. K. Ramamurthi, A. K. Gupta, R. A. Gupta and Uma Datta, for the appellants. C. Bhandare, Santosh Chatterjee and R. N. Sachthey, for respondent No. 1. The Judgment of the Court was delivered by Vaidialingam J.-In this appeal by special leave the short question that arises for companysideration is whether the State has got power to terminate the services of any member of the work- charged establishment under paragraph 11 of the Central Public Works Department Code hereinafter to be referred as the Code on giving one months numberice or a months pay in lieu of numberice. The circumstances leading up to this appeal may be stated A decision was taken to companystruct three dams right across the Mahanadi river, one at Hirakud, the second at Tikerpara and the third at Naraj as a multipurpose measure for preventing flood ravage in the Delta area, generating electricity and providing irrigation. The companystruction of Hirakud Dam was entrusted by the State of Orissa to the Central Waterways, Irrigation and Navigation Commission as their agent. For the purpose of the companystruction of Hirakud Dam, the C.W.I.N. Commission employed a large number of persons in the work- charged establishment on scales of remuneration at the rate paid by the Central Public Works Department and the service companyditions of the persons so employed were governed by the provisions companytained in the Code. After companypletion of the first stage of the Hirakud Dam project, the State of Orissa decided to take over the said project from their agent the C.W.I.N. Commission with effect from April 1, 1960. The State further decided to proceed with the companystruction of second stage of the project through its own Public Works Department. An option was given by the State to the employees in the work charged establishment to decide whether they Would companytinue to work under the State on the same pay and allowances and subject to other companyditions of service provided in the Code for the said work-charged establishment. The employees agreed to work under the State of Orissa and accordingly the employees. were allowed to companytinue under the State Government. The State, however, later on found that the pay, allowances and companyditions of service between the work-charged personnel of the Hirakud Dam project who had been allowed to be companytinued and the work-charged personnel in the establishment of the State Public Works Department showed a marked difference giving rise to various companyplications. The Hirakud Control Board recommended to the State Government to terminate the services of the work-charged personnel of the Hirakund Dam by giving one months numberice with effect from March 31, 1963. Accordingly the State Government terminated the services of the said personnel with effect from March 31, 1963 by giving one months numberice but the State also made it clear that such of those who elected to be re- employed on the scales of pay and companyditions of service of the State Public Works Department would be so reemployed. On the issue of the numberice by the State, 1200 out of 2300 personnel who had companytinued from before in the work-charged establishment left their services and the remaining 1 1 00 agreed to be reemployed on scales of pay and companyditions of service of the State Public Work Department. The employees were paid an amount equal to what they would have received by way of retrenchment companypensation or by way of wages in lieu of numberice. Subsequently the personnel of the work-charged establishment raised a dispute companytesting the termination of their services by the State. As companyciliation failed, the Government by its order dated February 13, 1964 referred the dispute to the Industrial Tribunal Orissa for adjudication. The points referred for adjudication were Whether the Retrenchment of Workmen by the authorities of Hirakud Dam Project effected in pursuance of the decision taken by the Control Board, Hirakud Dam Project on the 19th December, 1962, is valid and legal? If number, to what the workmen are entitled? Whether the workers who are proposed to be retrenched in pursuance of the decision of the Control Board, Hirakud and are still companytinuing in Employment are entitled to their original companyditions of service ? Whether the workmen, who have companypleted three years of services or more should be companyfirmed in their respective posts ? The main stand taken by the employees before the Industrial Tribunal was that their service companyditions being governed by the Code they are entitled to remain in service till the termination of the work companynected with the Projects. The work companynected with the Project number having companye to an end, the State has numberpower to terminate their services. On the other hand, the State of Orissa took up the position that it has power under paragraph 1 1 of the Code they are entitled to remain in service till the termination of numberice or one months pay in lieu of numberice even before the companypletion of the work. The Industrial Tribunal recorded broadly the following findings 1 the action, of the State cannot be companysidered to be by way of retrenchment under the Industrial Disputes Act as this is number a case of discharge of surplus labour, 2 the mere fact that the employees have accepted the numberice, pay or companypensation does number stop them from challenging the legality of their termination, 3 paragraph 11 of the Code does number authorise the State to terminate the services of an employee before the work is companypleted. The said paragraph gives only a limited power to terminate the services of an employee by way of a punitive action taken as a measure of punishment. In this companynection the Tribunal has placed companysiderable reliance on the expression dismissed used in paragraph 11 of the Code, 4 as the work had number been companypleted and as the action had number been taken by way of punishment, the order of termination is without jurisdiction, 5 the termination of employment is arbitrary and anti-contractual, 6 the order of termination is invalid and inoperative. The companytention raised by the State that the Project was number an industry was also overruled. The Tribunal ultimately held that the action taken by the Management of the Hirakud Dam Project in pursuance of the Notice dated February 9, 1963 was invalid and illegal and that the work-charged employees then working in different divisions of the Project and who had been recruited prior to April 1, 1960 are entitled to have their original companyditions of service including scales ,of pay and dearness allowance. The Tribunal further held that the employees are entitled to companytinuity of service and that their services cannot be terminated before the companypletion of work except as a measure of punishment. The State challenged this award before the High Court of Orissa in Writ Petition O.J.C. No. 58 of1965 under Articles 226 and 227 of the Constitution. Though the State companytended that the Hirakud Dam Project was number an industry and that the Tribunal has acted beyond the scope of reference when it gave certain directions regarding pay and allowances etc., ultimately these companytentions were given up. The only companytention pressed before the High Court was that the Industrial Tribunal had companymitted an error of law in companystruing paragraph 11 of the Code when it held that the ,State had numberpower during the progress of the work to terminate simpliciter the services of any of the work- charged employees. The High Court agreed with the companytention of the State and held that under paragraph 11 of the Code, the State Government had power to terminate the services of an employee even during the progress of the work on giving one months numberice or one months pay in lieu of numberice. Mr. M. K. Ramamurthy, learned companynsel for, the appellants,- companytended that the companystruction placed by the High Court on paragraph 1 1 of the Code is incorrect. Ms companytentions ran as follows The employees in the work-charged establishment were entitled to companytinue in service till the work for which they have been employed was companypleted. For, serious misconduct the employer has got the power to dismiss such an employee without giving a months numberice or a months pay in lieu of numberice. But if an employee was being dismissed for reasons other than for serious misconduct, the employee is entitled to a months numberice or a months pay in lieu of numberice. There is numberpower in the employer to terminate simpliciter the services of an employee so long as the work has number been companyPleted. The expression dismissal has always. been understood and interpreted by the companyrts as action taken against an employee by way of punishment and that expression cannot be interpreted to include also the termination of the service of an employee otherwise than by way of punishment. Mr. Bhandari, learned companynsel for the State, on the other hand, urged that paragraph 1 1 is really intended to govern the relationship between the employer and the employees of the work-charged establishment and the expression dismissal has number been used in the sense that action should necessary have been only as and by way of punishment. According to the learned companynsel the expression dismissal has been used in a loose sense meaning termination of the services of an employee either by way of punishment for misconduct or for any other reason, We are number inclined to accept the companytention of Mr. Ramamurthy that the expression dismissal in paragraph 11 has been used to denote only action taken against a workman as and by way of punishment. No doubt, the expression has number been very happily used in the said paragraph., Paragraph 1 1 of the Code is as follows Members of the temporary and work- charged establishments, who are engaged locally, are on the footing of monthly servants. If they are engaged for a specific work, their engagement lasts only for the period during which the work lasts. If dismissed, otherwise than for serious misconduct, before the companypletion of the work for which they were engaged, they are entitled to a months numberice or a months pay in lieu of numberice but otherwise, with or without numberice, their engagement terminates when the work ends. If they desire to resign their appointments they must give a months numberice of their intention to do so, failing which they will be required to forfeit a months pay in lieu of such numberice. The terms of engagement should be clearly explained to men employed in the circumstances mentioned above. The following aspects emerge from paragraph 1 1 of the Code the members of the temporary and work- charged establishments, are treated to be on the footing of monthly servants if they are engaged for specific work, their services last only for the period during which the 918 Sup CI/71 work lasts. To put it differently there will be automatic termination of the services of an employee when the specific work for which he was engaged is companypleted before the companypletion of a work, a workman can be dismissed for serious misconduct. In such a case numberquestion of giving a months numberice or a months pay in lieu of numberice arises before the companypletion of the work, the workman can also be dismissed otherwise than for serious misconduct, in which case the workman will be entitled to a months numberice or a months pay in lieu of numberice in other cases the workmans services terminate when the work ends if the workman desires to resign his appointment, he must give one months numberice of his intention to do so, failing which he will be required to forfeit a months pay in lieu of such numberice. That the above are terms of engagement of a workman, is clear from the companycluding part of paragraph 11 to the effect that the terms of engagement should be clearly explained to men employed in the circumstances mentioned above. The question that arises for companysideration is about the company- numberation of the expression dismissed used in paragraph 11. The companytention of Mr. Ramamurthy that the expression dismissed has reference only to termination of the services of an employee as and by way of punishment is largely based upon the provisions companytained in the Government of India Act and in Art. 311 of the Constitution. Based upon those provisions Mr. Ramamurthy claims that the expression dismissal is a technical word used in cases in which a persons services are terminated by way of punish- ment. Quite naturally he relied upon the Service Rules where the word dismissal, has been used to denote a major punishment inflicted upon an employee for misconduct. Mr. Ramamurthy, numberdoubt, is well-founded in his companytention that the word dismissal used in the Government of India Act as also in the Constitution and the Service Rules has been interpreted to mean termination of a persons service by way of punishment. By section 45 of the Government of India Act, 1919 read with Part 1 of the second schedule to that Act, several sections includ- 6 5 3 ing. s. 96B were introduced in the Government of India Act, 1915. Among other things s. 96B provided that numberperson in the civil service of the Crown in India may be dismissed by any authority subordinate to that by which he was appointed. Section 96-B for the first time gave statutory recognition and force, to the English Common Law rule that the servants of the Crown held their Offices during the pleasure of the Crown. It also at the same time imposed one important qualification upon the exercise of the Crowns pleasure, namely, that a servant might number be dismissed by an authority subordinate to that by which he had been appointed. Section 96-B 1 was reproduced as sub-sections 1 and 2 of section 240 of the Government of India Act, 1935 and a new section was added to section 240 as sub-section 3 . Sub-section 2 of section 240 provided that numberperson referred to in subsection 1 shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed. Sub-section 3 provided that numbersuch person shall be dismissed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. Then came our Constitution on January 26, 1950. Articles 311 1 and 2 provided as follows 31 1 1 No person who is a member of a civil service of the- Union or an all-India service or a civil service of a State or holds a civil post under the Union or a State shall be dismissed or removed by an authority subordinate to that by which he was appointed. No such person as aforesaid shall be dismissed or removed or reduced in rank except after an inquiry in which he has been informed of the charge against him and given a reasonable opportunity of being heard in respect of those charges and where it is proposed, after such inquiry, to impose on him any such penalty, until he has been given a reasonable opportunity of making representation on the penalty proposed, but only on the basis of. the evidence adduced during such inquiry It will be numbered that Art. 311 gives a twofold protection to persons who companye within the article, namely, i against dismissal or removal by an authority subordinate to that by which they were appointed and ii as against dismissal or removal or reduction in rank without giving them a reasonable opportunity of showing cause against the action proposed to be taken in regard to them. Discussing the above provisions in Parshotam Lal Dhingra v. Union of India 1 , this Court observed as follows It follows from the above discussion that both at the date of the companymencement of the 1935 Act and of our Constitution the words dismissed, removed and reduced in rank, as used in the service rules, were all understood as signifying or denoting the three major punishments which companyld be inflicted on Government ,servants. The protection given by the rules to the Government servants against dismissal, removal or reduction in rank, which companyld number be enforced by action, was incorporated in sub-ss. 1 and 2 of S. 240 to give them a statutory protection by indicating a procedure which had to be followed before the punishments of dismissal, removal or reduction in rank companyld be imposed on them and which companyld be enforced in law. These protections have number been incorporated in Art. 311 of our Constitution Thus Under Art. 311 1 the punishments of dismissal, or removal cannot be inflicted by an authority subordinate to that by which the servant was appointed and under Art. 311 2 the punishments of dismissal, removal and reduction in rank cannot be meted out to the Government servants without giving him a reasonable opportunity to defend himself. If the interpretation placed upon the word dismissal in the Government of India Act and the Constitution as well as the service rules is adopted for companystruing the said word in paragraph 11 of the Code, the companytention of Mr. Ramamurthy will have to be, accepted. But there is a clear indication in paragraph 1 1 of the Code that the word dismissed has number been used to denote the termination of the services of an employee only as and by way of punishment. Paragraph 1 1, in our opinion, companytains the terms of engagement of the workmen. In view of the very nature of the employment In the work which may either finish quickly or may take a companysiderably long time for companypletion, Paragraph 11 has been incorporated to govern the relationship between the Central Public Works Department and a workman. In this case there is numbercontroversy that even after the State took over the companystruction of the Project, relationship between the State and the employees is governed by Paragraph 1 1. Having made provisions for the automatic termination of the services of an employee, when the work companyes to an end, it is but natural that provisions should be made to terminate the services of an employee even when the work 1 1958 S.C.R. 820. 6 5 5 has number been companypleted. In this companynection it should be numbered that if the employee wants to give up the job, he has to give a months numberice, failing which he forfeits a months pay in lieu of such numberice. Having provided for the voluntary resignation by an employee even when the work has number been companypleted, it will be odd to hold,that a similar right has number been given to an employer to terminatethe services of a workman, even though the work has number finished. It is quite understandable that provisions should be made for dismissing an employee even before the companypletion of the work, for serious misconduct. In such a case, it is admitted by the learned companynsel for the appellants, that the question of giving a months numberice or a months pay in lieu of numberice does number arise. In that companytingency, it is easy to hold that the termination of the services of an employee is dismissal as and by way of punishment. Paragraph 1 1 further provides that if an employee is dismissed before the companypletion of the work otherwise than for serious misconduct, he will be entitled to a months numberice or a months pay in lieu of numberice. According to Mr. Ramamurthy, there is numberhing incongruous in holding that when a workman is dismissed for a minor misconduct he will be entitled to a months numberice or a months pay in lieu of numberice. In our opinion it will be incongruous to hold that when a person is dismissed, though number for a serious misconduct but even for a minor misconduct, the workman will be entitled to a months numberice or a months pay in lieu of numberice, if otherwise there can be a dismissal for a minor misconduct as and by way of punishment. So far as we companyld see numberdecision has laid down that even in cases of dismissal a workman will be entitled to a months numberice or a months pay. If it is a dismissal by way of punishment, numberquestion of a months numberice or a months pay in lieu of numberice ever arises. The fact that Paragraph 1 1 provides for giving a months numberice or a months pay when a workman is dismissed otherwise than for serious misconduct indicates that the word dismissed has number been used in the sense of termination of service by way of punishment alone but it companyers also other cases of termination of the services of an employee even before the companypletion of the work. Interpreted in this manner, the position will be that the services of an employee can be terminated as punishment for serious misconduct and the services of an employee can be terminated also for other reasons. If the services are terminated for other reasons. Paragraph 11 provides for giving a months numberice or a months pay in lieu of numberice. From the above reasoning it is clear that the word dismissed has been used loosely to denote both termination of service for misconduct by way of punishment and also termination of service simpliciter. 65 6 It must also be numbered that the Code has been framed in 1929 long before the Government of India Act, 1935, came into force. In Burrows Words and Phrases the word dismissal has been stated to be a word of very ambiguous meaning and that it is merely a companyvenient expression for the termination of an employment whatever its nature may be. The word dismissed according to its dictionary meaning is to send away, to discard, to remove from office or employment The dictionary,meaning makes it clear that in substance the word means termination of service. In Dr. Bool Chand v. The Chancellor, Kurukshetra Univer- sity 1 , the import of the expression dismissed came up for companysideration before this Court. The appellant in that case, who was Professor and Head of the Department of Political Science in the Punjab University, was appointed on June 18, 1965, as the Vice-Chancellor of the Kurukshetra University. On March 31, 1966, the Chancellor of the University suspended the appellant from the office of Vice- Chancellor and by another order the appellant was required to show cause why his services as Vice-Chancellor be number terminated. The appellant after submitting his representation, filed a writ petition in the Punjab High Court for quashing the order dated March 31, 1966. On May 8, 1966, the Chancellor of The University, in exercise of the power under sub-cl. vi of cl. 4 of Sch. 1 to the Kurukshetra University Act, 1956, read with S. 14 of the Punjab General Clauses Act, 1898, passed an order termi- nating the services of the appellant as Vice-Chancellor with immediate effect. The writ petition was suitably amended challenging this order terminating the appellants service as Vice-Chancellor. The relevant sub-clause of Cl. 4 of Schedule I of the Kurukshetra University Act provided that the Vice-Chancellor will hold the office ordinarily for a period of three years. One of the companytentions raised before this Court was, that the Chancellor of the University had numberpower to terminate the services of a Vice-Chancellor before the expiry of the period for which he was appointed and that s. 14 of the Punjab General Clauses Act, 1898, while providing for dismissal did number empower the appointing authority to terminate the services of an officer. While holding that there was numberexpress provision in the Kurukshetra University Act or the statutes thereunder dealing with the termination of the tenure of office of the Vice-Chancellor, this Court held But on that account we are unable to accept the plea of the appellant that the tenure of office of a Vice-Chancellor under the Act cannot be determined before 1 1968 1 S.C. R. 434. 6 5 7 the expiry of the period for which he is appointed. A power to appoint ordinarily implies a power to determine the employment. Regarding the further companytention that S. 14 of the Punjab General Clauses Act only empowers the appointing authority to dismiss an officer by way of punishment, but number to determine an employment this Court after referring to S. 14 observe as follows But s. 14 of the General Clauses Act is a general provision it does number merely deal with the Appointment of public servants. It deals with all appointments, and there is numberreason to hold, having regard to the companytext in which the expression occurs, that the authority invested with the power of appointment has the power to determine employment as a penalty, but number otherwise. The expression dismiss does number in its etymological sense necessarily involve any such meaning as is urged by companynsel for the appellant. The implication that dismissal of a servant involves determination of employment as a penalty has been a matter of recent development since the Government of India Act, 1935 was enacted. By that Act certain restrictions were imposed upon the power of the authorities to dismiss or remove members of the civil service, from employment. There is numberwarrant however for assuming that in the General Clauses Act, 1898, the expression dismiss which was generally used in companynection with the termination of appointments was intended to be used only in the sense of determination of employment as a measure of punishment. From the above extract it is clear that the word dismissal has to be understood in the companytext in which it occurs and that it denotes the determination of an employment as a penalty is a matter of recent development since the Government of India Act, 1935 was enacted. In the case- before us, we have already pointed out that the Code has been framed as early as 1929 and there is numberwarrant ,for assuming that the expression dismissed has been used in the sense that the word was understood since the Government of India Act, 1935. Further the word dismissed occurring in the companytext in which the said expression occurs in paragraph 1 1, as pointed out by us earlier, clearly denotes the termination of the services of an employee for serious misconduct and for other reasons. That expression is number used in the sense only to denote determination of employment as and by way of punishment. Mr. Ramamurthy raised the companytention that even if there is power of termination simpliciter in the employer under Paragraph 11 , the High Court should number have interfered with the award of the Industrial Tribunal as the Tribunal has recorded a finding that the State has number acted bona fide. In support of this companytention-, the learned companynsel relied on the reasoning companytained in paragraph 18 of the award. We have gone through the reasoning companytained in the said paragraph and we do number find any finding recorded by the Tribunal that the State has number acted bona fide, when it passed an order terminating the services of the employees. On the other hand, what the Tribunal has held in the said paragraph is that the termination of the services of the employees is invalid and illegal as it is number warranted by Paragraph 11 of the Code and hence the order of termination is invalid in law and inoperative. There is absolutely numberbasis for the companytention that these findings are to the effect that the action of the State is number bona fide. Thus the findings recorded by the Tribunal are findings on the basis of the interpretation placed by it on Paragraph 11 that the State has numberpower to terminate simpliciter the services of a work-charged establishment. Therefore, this companytention of Mr, Ramamurthy has to be rejected.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2128 of 1969. Appeal by special leave from the Award dated July 19, 1969 of the Ninth Industrial Tribunal, West Bengal, Calcutta in case No. VIII-396 of 1968. K. Daphtarv. Santosh Chatterjee and D. N. Mukherjee, for the appellant. C. Gupta, Manju Gupta and S. C. Agarwala, for the respondents. The Judgment of the Court was delivered by Bhargava, J. The appellant, Messrs Alloy Steel Project, is an undertaking owned, companytrolled and managed by a Government Company, viz., Messrs Hindustan Steel Ltd. Alloy Steel Project was started in the year 1961 and it went into production in the year 1964-65. No profit was earned at least right up to the year 1967-68. The workmen, however, claimed bonus at the minimum rate prescribed under the Payment of Bonus Act No. 21 of 1965 hereinafter referred to as the Act in respect of the year 1965- 1966 on the plea that this Alloy Steel Project was a part of the Hindustan Steel Ltd. and companyld number be treated as a new establishment for purposes of section 16 of the Act. Hindustan Steel Ltd. was itself an establishment which had been in existence for a long period and had been even earning profits, so that exemption companyld number be granted to this Company in respect of payment of bonus under s. 16 of the Act. This claim of the workmen was resisted, by the Company on the plea that Alloy Steel Project was a separate establishment in respect of which separate balance-sheets and profit and loss accounts were maintained, so that numberbonus was payable until either this Project itself earned profits, or from the sixth accounting year following the year 1964-65 when this Project went into production. The dispute between the work-men and the Company. companyld number be resolved amicably and, companysequently, a reference was made under the Industrial Disputes Act, 1947 which came up before the Ninth Industrial Tribunal, West Bengal. The Tribunal held that Alloy Steel Project companyld number be treated as a separate establishment because, under the Act, a Company is itself an establishment, so that all units of a Company like Hindustan Steel Ltd. will companystitute one establishment. Since this Project had number been earning any profits the Tribunal directed payment of bonus at the minimum rate of 4 per cent of wages prescribed by the Act. Aggrieved by this award of the Tribunal, the Company has companye up in this appeal to this Court by special leave, though the name of the appellant is shown as Alloy Steel Project, because it was under this name that the reference was dealt with by the Tribunal. The main basis of the decision of the Tribunal is that the word establishment has been used in this Act to indicate a Company as called in companymon parlance. It was on this view that the Tribunal further Proceeded to companysider whether this Alloy Steel Project companyld be held to be an establishment separate from Hindustan Steel Ltd., or it had to be treated as a part of the parent establishment, viz., Hindustan Steel Ltd. In this approach, it is clear that the Tribunal companymitted an obvious error, as it ignored the indications which are manifest from the language used in the Act. In section 2, sub-section 15 and 16 , establishments have been divided into two classes and their meaning has been defined. In clause 16 , establishment in public sector is defined as meaning an establishment owned, companytrolled or managed by- a a Government companypany as defined in section 617 of the Companies Act, 1956 b a companyporation in which number less than forty per cent of its capital is held whether singly or taken together by- the Government or the Reserve Bank of India or a companyporation owned by the Government or the Reserve Bank of India. In clause 15 of S. 2, establishment in private sector is defined to mean any establishment other than an establishment in public sector. Thus, between these two clauses, all establishments are companyered. If an establishment is in public sector, it is companyered by the definition in clause 16 . If the establishment is number in public sector, it will be companyered by the definition of establishment in private sector in clause 15 . The significant words are those companytained in clause 16 which show that an establishment in a public sector hag to be owned, companytrolled or managed by a Government companypany, or by a companyporation of the nature described in that clause. Obviously, therefore, an establishment in a private sector would be one which is owned, companytrolled or managed by a person or body other than a Government companypany or a companypora- tion of the nature described in clause 16 . In this view, an establishment cannot be identified with a companypany. It would be absurd to say that a companypany is owned, companytrolled or managed by a Government companypany or a companyporation. Obviously, the word establishment is intended to indicate something different from a companypany as defined in the Companies Act. This is further clarify by the provisions of sub-s. 3 of section I which lays down the applicability of the Act. The Act has been made applicable to every factory and every other establishment in which twenty or more persons are employed on any day during an accounting year. Supposing a companypany has a factory in one premises and has another workshop entirely distinct and separate from that factory, in which the number of persons employed is less than 20. The Act itself will apply to the factory, but will number apply to the other establishment in which the number of employees is less than 20. This applicability of the Act will be independent of the other provisions of the Act. Learned companynsel for the respondent-workmen relied on section 3 of the Act to urge that even the establishment employing less than 20 persons will be a part of the parent establishment companysisting of the factory. Section 3 is as follows - Where an establishment companysists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of companyputation of bonus under this Act 633. Provided that where for any accounting year a separate balance-sheet and profit and loss account are prepared and maintained in respect of any such department or undertaking or branch, then, such department or undertaking or branch shall be treated as a separate establishment for the purpose of companyputation of bonus under this Act for that year, unless such department or undertaking or branch was, immediately before the companymencement of that accounting year treated as part of the establishment for the purpose of companyputation of bonus. It is to be numbered that the principal part of section 3 lays down that different departments or undertakings or branches of an establishment are to be treated as part of the same establishment only for the purpose of companyputation of bonus under the Act. They cannot be treated as part of one establishment for purposes of subsection 3 of section 1 of the Act. In fact, section 3 cannot be, resorted to at all when the Act itself is inapplicable in view of the provision companytained in section 1, sub-s. 3 . It is, thus, quite clear that the Tribunal went entirely wrong in holding that simply because Alloy Steel Project is owned, companytrolled and managed by Hindustan Steel Ltd., it has to be treated as a part of Hindustan Steel Ltd. which is itself an establishment. Hindustan Steel Ltd. cannot be described as an establishment. The facts appearing on the record show that Hindustan Steel Ltd. has a number of. establishments. These include Alloy Steel Project besides the Head Office, Rourkela Steel Plant, Bhilai Steel Plant, Durgapur Steel Plant, Coal Washeries Project and Bokaro Steel Project. The Company, Hindustan Steel Ltd., cannot be equated with any one of these units. They are all separate undertakings, departments or branches owned, companytrolled and managed by one single Company and, companysequently,. the point raised has to be decided on the basis whether, under the proviso to section 3 the Alloy Steel Project is to be treated as a separate establishment, or is to be treated as part of the main establishment owned by Hindustan Steel Ltd. Learned companynsel for the respondent-workmen, however, advanced a new argument which was number put forward before the Tribunal. His submission was that, if an establishment of a Company companysists of a number of departments, undertakings or branches, the principal part of section 3 will apply and all such departments, undertakings or branches must be treated as parts of one single establishment for purposes of companyputation of bonus under the Act, but the proviso to section 3 will number apply in such a case. According to him, the proviso to section 3 will apply to establishments companysisting of different departments, undertakings or branches which are owned, companytrolled or managed by persons other than companypanies. This argument was based on the reasoning that, in order to calculate available surplus for distribution of bonus in the case of a companypany the Act lays down in section, 6 d read with the Third Schedule that the deductions to be made from net profits will also include dividends payable on , preference share ,capital, and 8.5 per cent of its paid up equity share, capital as at the companymencement of the accounting year. This provision cannot be given effect to in respect of separate units of a Company, .because the paid up capital or the preference share capital is number ,allocated between different units. In the case of the present Company, viz., Hindustan Steel Ltd., the entire paid up capital is shown in the accounts of the Head Office. The money needed for working of the various units, including the Alloy Steel Project, is shown as remittance received from the Head Office and number as. paid up capital of the Alloy Steel Project etc. The result is that, if Alloy Steel Project or other units of the Hindustan Steel Ltd. are treated as separate establishments and available surplus is calculated separately for each unit, there will be numberdeduction 8.5 per cent ,of the paid up equity share capital as envisaged by section, 6 d ,and the Third Schedule of the Act. We do number think that there is any force in this argument. First, it would be a strange method of companystruction of language to hold that the establishment referred to in the main part of section 3 will include all different departments, undertakings and branches of a companypany, while it will number do so in the proviso to the same section. Such different meanings in the same section in respect of the same words or expression cannot be accepted. Secondly, it seems to us that numberdifficulty of the nature pointed out by learned companynsel can arise in calculating available surplus. Wherever the Act lays down that certain deductions are to be made, it is obvious that those deductions will only be effective if, in fact, circumstances do exist justifying such deductions. In the Third Schedule itself, the first deduction envisaged is dividend payable on preference share capital. A number of companypanies do number have preference share capital. In such cases, clearly, number,occasion would arise for making such a deduction. Very similar is the position with regard to certain other deductions which are permissible under the Second Schedule which principally lays down the method of calculation of available surplus.- There is, therefore, numberreason for interpreting the proviso to section 3 in the manner urged by learned companynsel simply because, in the case of separate departments, undertakings or branches of the establishment of a companypany, it may number be possible to make a deduction 8.5 per cent of the paid up equity share capital. In the present case, there is very clear evidence that, though the Company, Hindustan Steel Ltd., has a number of undertakings, Separate accounts are kept for each separate undertaking. The annual reports for three years were produced before the Tribunal. They clearly indicate that separate balance-sheet was prepared for each unit and separate profit and loss account was worked out for each unit, except that, for the Head Office, though a separate balance-sheet was-prepared, the profit and loss was worked out on the basis of the companysolidated accounts. The Tribunal, in support of its view that Alloy Steel Project is a part of the establishment companystituted by the Company, Hindustan Steel Ltd., relied on the circumstance that a companysolidated balance-sheet is prepared for the Company in respect of all its units and after such companysolidation, profit and loss is also worked out for all the establishments together so as to find out the actual profit and loss earned or incurred by the Company itself. From this, the tribunal sought to infer that there were numberseparate accounts in respect of each unit as are required to be maintained before they can be treated as separate establishments under the proviso to section 3. The Tribunal has obviously gone wrong in ignoring the fact that separate balance sheets and profit and loss accounts are in fact maintained for each separate unit and the companysolidated accounts are prepared only for the purpose of companyplying with the requirements of the companypanies Act. The Companies Act does lay down the requirement that a companysolidated balance- sheet and profit and loss account for all the units of the Company must be prepared and, for, that purpose, quarterly statements of accounts have to be sent by each unit to the Head Office. There is, however, numberprovision even in the Companies Act companytaining a prohibition to maintenance of separate balance-sheets and separate profit and loss statements for each unit for purposes of the Act. That accounts are separately maintained for each unit is number only established from the various annual reports filed before the Tribunal and the evidence of, the Companys witness Umapada Chakraborty, but is also admitted by Suprakash Kanjilal, the only witness examined on behalf of the workmen. The latter also admitted that separate bonus calculation is made in respect of each unit and bonus was declared separately in each unit. No bonus was, however, declared in respect of the Alloy Steel Project. That declaration was number made because of the claim that Alloy Steel Project was exempt from payment of bonus under section 16 of the Act. Section 16 runs as follows- 16. 1 Where an establishment is newly set up, whether before or after the companymencement of this Act, ,the employees of such establishment shall be entitled to be paid bonus under this Act only- a from the accounting year in which the employer derives profit from such establishment or 918Sup CI/71 b from the sixth accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as the case may be, from such establishment, whichever is earlier Provided that in the case of any such establishment the employees thereof shall number, save as otherwise provided in section 33, be entitled to be paid bonus under this Act in respect of any accounting year prior to the accounting year companymencing on any day in the year 1964. Explanation I.-For the purpose of this section, an establishment shall number be deemed to be newly set up merely by reason of a change in its location, management, name or ownership. Explanation II.-For the purpose of clause a , an employer shall number be deemed to have derived profit in any accounting year unless- a he has made provision for that years depreciation to which he is entitled under the Income-tax Act or, as the case may be, under the agricultural income-tax law and b the arrears of such depreciation and losses incurred by him in respect of the establishment for the previous accounting years have been fully set off against his profits. Explanation III.-For the purpose of clause b , sale of the goods produced or manufactured during the companyrse of the trial run of any factory or of the prospecting stage of any mine or an oil-field shall number be taken into companysideration and where any question arises with regard to such production or manufacture, the decision of the appropriate Government, made after giving the parties a reasonable opportunity of representing the case, shall be final and shall number be called in question by any companyrt or other authority. The provisions of sub-section 1 shall, so far as may be, apply to new departments or undertakings or branches set up by existing establishments 6 3 7 Provided that if an employer in relation to an existing establishment companysisting of different departments or undertakings or branches whether or number in the same industry set up, at different periods has, before the 29th May, 1965, been paying bonusto the employees of all such departments or undertakings or branches irrespective of the date on which such departments or undertakings or branches were set up, on the basis of the companysolidated profits companyputed in respect of all such departments or undertakings or branches, then, such employer shall be liable to pay bonus in accordance with the provisions of this Act to the employees of all such departments or undertakings or branches whether set up before or after that date on the basis of companysolidated profits companyputed as aforesaid. Sub-section 1 of section 16 grants exemption from payment of bonus to establishments newly set up for a period of six years, following the accounting year in which the goods produced or manufactured are sold for the first time and, in the alternative, up, to the year when the new establishment results in profit, whichever is earlier. If the Alloy Steel Project is treated as an establishment newly set up for purposes of s. 16 1 , the exemption claimed would be fully justified. Section 16 2 of the Act makes it clear that the provisions of sub-section 1 are to apply even to new departments, undertakings or branches set up by existing establishments. Consequently, even if Alloy Steel Project is treated as a new undertaking set up by the-existing establishments of Hindustan Steel Ltd., the exemption under section 16 1 would be avail-able to it. The proviso to sub-s. 2 of section 16 also does number stand in the way of this claim, because there is numberevidence at all that in any year, after Alloy Steel Project was set up bonus was paid to the employees of all the units on the basis of companysolidated profits of all such units. The only exception has been in the case, of workmen of the Head Office where numberseparate profit and loss was worked out and the bonus was paid on the basis of the companysolidated Profits of all the units belonging to Hindustan Steel Ltd. That, of companyrse, was fully justified, because the Head Office was working for all the units, though as a separate unit. It was in the accounts of the Head Office that the entire paid up capital was credited and advances were made by the Head Office to the various units out of this capital or out of loans taken by the Head Office. In the case of the Head Office, therefore, the calculation of bonus on the basis of companysolidated accounts was Justified but that does number affect the principle to be applied to the separate units for which separate accounts, separate balance-sheets and separate profit and loss statements are maintained. The proviso to sub-- section 2 of section 16 only companyes in the way it bonus is paid in any year to the employees of all the units on the basis of companysolidated accounts. That has never been done in the case of the Hindustan Steel Ltd. Consequently, the Alloy Steel Project should have been treated as a separate establishment newly set up in the year 1961. It went into production in 1964-65 and did number, earn any profits at all till 1967-68. Therefore, numberbonus was payable, to, the workmen of this undertaking for the year 1965-66 in view ,of the provisions of section 16 1 of the Act. The appeal is allowed, the order of the Tribunal is set aside, and the reference of the dispute is answered accordingly.

Case appeal was accepted by the Supreme Court

referred to. CIVIL APPELLATE JURISDICTION Civil Appeal No. 2588 of 1966. Appeal from the judgment and decree dated January 14, 1964 of the Patna High Court in First Appeal No. 572 of 1958. Goburdhun and R. Goburdhun, for the appellants. N. Sinha and P. K. Mukherjee, for respondent No. 1. The Judgment of the Court was delivered by Mitter, J. The only question involved in this appeal is, whether the direction of the High Court that the partition suit launched in 1943 should be allowed to proceed in view of the provisions of s. 6 of the Bihar Land Reforms Act, 1950 which came into force on 25th September, 1950, is companyrect. The suit had a chequered career. It was instituted against a number of persons the main relief asked for being partition of four annas Milkiat interest in Touzi No. 702, Tappa Haveli, Pargana Maheshi, District Champaran, Bihar. The Subordinate Judge of Motihari made a preliminary decree for partition declaring the first respondents share in the property as claimed by him. The High Court in appeal modified the decree reducing the plaintiffs share to Rs. 0-1-4 interest only. In further appeal to these Court the trial companyrts preliminary decree was upheld on 5th ,October 1953. In the meanwhile the Bihar Land Reforms Act of 1950 effecting far-reaching changes in the incidents of land tenure and land holdings had been passed. The first appellant made an application to the trial companyrt in June 1958 prayina that the proceedings for final decree be treated as having abated in view of the vesting of all estates in land in the State of Bihar. This was accepted by the Subordinate Judge by an order dated July 12, 1958. The High Court allowed the appeal with the direction above mentioned which the appellants number seek to have set. aside. The bone of companytention between the parties is the extensive bakasht lands in the aforesaid Mouza. The appellants companytend that under s. 6 1 of the Act all these lands vested in the State and came to be held by the persons in khas possession thereof as raiyats under the State. To appreciate the plea it is necessary to make a brief reference to some of the provisions of the Act. As is well known the object of the Act was to cause transference to the State of the interest of proprietors and tenure-holders in land as also of the mortgagees and lessees of such interests including interests in trees, forests, fisheries, jalkars, ferries, hats, bazars, mines and minerals and to provide for certain companysequences following there-from and companynected therewith. S. 3 of the Act ,enabled the State Government to declare by numberification that the estates or tenures of a proprietor or tenure-holder specified therein would pass to and become vested in the State. The companysequences ,of such vesting are set-forth in s. 4. Under cl. a Such estate or tenure including the interests of the proprietor or tenure-holder in any building or part of a building companyprised in such estate or tenure and used primarily as office or cutchery for the companylection of rent of such estate or tenure, and his interest in trees, forests, fisheries, jalkars, sairati interest as also his interest in all sub-soil including any rights in mines and minerals whether discovered or undiscovered, or whether being worked or number, inclusive of such rights of a lessee of mines and minerals, companyprised in such estate or tenure other than the interests of raiyats or under-raiyats shall, with effect from the date of vesting, vest absolutely in the State free from all encumbrances and such proprietor or tenure-holder shall cease to have any interest in such estate or tenure, other than the interests expressly saved by or under the provisions of the Act. S. 6 of the Act provides for such saving and the relevant portion thereof runs as follows On and from the date of vesting all lands used for agricultural or horticultural purposes, which were in khas possession of an intermediary on the date of such vesting, including- a i proprietors private lands let out under a lease for a term of years or under a lease from year to year landlords privileged lands let out under a registered lease for a term exceeding one year or under ,a lease, written or oral, for, a period of one year or less, referred to in section 43 of the Chota Nagpur Tenancy Act, 1908, b lands used for agricultural or horticultural purposes and held in the direct possession of a temporary lessee of an estate or tenure and cultivated by himself with his own stock or by his own servants or by hired labour or with hired stock, and c lands used for agricultural or horticultural purposes forming the subject matter of a subsisting mortgage on the redemption of which the intermediary is entitled to recover khas possession thereof shall be deemed to be settled by the State with such intermediary and he shall be entitled to retain possession thereof and hold them as a raiyat under the State having occupying rights in respect of such lands subject to the payment of such fair and equit- able rent as may be determined by the Collector in the prescribed manner. The broad proposition which was advanced before the High Court and rejected by it and reiterated before us is that the companysequence of s. 6, was to put an end to the character of the possession of the bakasht lands to the malik by causing them to vest in the State and simultaneously creating a tenancy in favour of the person in khas possession thereof. There is numberdispute that bakasht lands fall under categories b and c . We are number here companycerned with category c and have quoted it to appreciate some decisions relied on where there are references to that category. This question has engaged the attention of the Patna High Court more than once and it would appear that the views expressed in different cases have number been uniform. So far as the said High Court is companycerned the point was settled by a decision of the Full Bench in Mahanth Sukhdeo Das. v. Kashi Prasad Tewari and Shrideo Misra v. Ramsewak Singh 1 . The main questions before the Full Bench were whether on the vesting of an estate which was mortgaged at the material time the bakash lands therein which are deemed to be settled with the ex-proprietor in khas possession would form substituted security for the purpose of the mortgage, and whether a companysharer proprietor number in actual possession of such lands had Any claim thereto on the basis of his companystructive possession. The High Court answered both the above in the affirmative. One of the earliest cases in which this Court had to interpret s. 6 of the Act was that of Surajnath Ahir v. Prithinath Singh 2 . There the question which engaged the attention of this Court was whether the appellants who had originally gone into possession on the strength of a mortgage lost their right to companytinue in possession even if they claimed to be trespassers after the redemption of their mortgage by reason of the estate vesting in the State on the passing of the Act. Although the case is number directly in point, it bears upon the identical provisions of law which have to be applied to the facts of the case before us. The facts in that case were that the appellants had entered into possession of kasht lands of the mortgagors on the strength of a mortgage deed. The mortgagors thereafter executed another mortgage with respect to their milkiat proprietary interest in favour of certain persons. The plaintiff respondents bought the milkiat rights together with kasht lands from the mortgagors and entered into possession of the milkiat property and subsequently redeemed the mortgage deeds in 1943. The appellants however did number make over possessions of the lands in dispute even after the redemption of the mortgage. It was held by this Court that the respondents companyld number take advantage of section 6 1 c of the Act as numbermortgage subsisted on the date of vesting and the mere fact that the proprietor had a subsisting I.L.R. 37 Patna 918. 2 1963-3 S.C.R. 290 title to possession over certain land on the date of vesting companyld, number amount to that land being treated as under his khas possession for the purposes of the Act. Referring to the definition of Khas possession in s. 2 k of the Act as meaning the possession of such proprietor or tenure- holder by cultivating such land or carrying on horticultural operations thereon himself with his own stock or by his own servants or by hired labour or with hired stock. it was held that in order that the respondents companyld take advantage of the provision of s. 6 1 c of the Act they had to, establish a subsisting mortgage on the date of vesting which was inclusive, of the land subject to their right of redemption. On the question of possession of the lands it was observed On the date of vesting, the appellants were number in possession as mortgagees. The mortgages had been redeemed in 1943. Thereafter, the possession of the appellants was number as mortgagees.It may be as trespassers or in any other capacity.The land in suit, therefore, did number companye within cl. c of s. 6 of the Act. Rejecting the companystruction put on the expression khas possession by the High Court in Brijnandan Singh v. Jamuna Prasad 1 it was said The mere fact that a proprietor has a subsisting title to possession over certain land on the date of vesting would number make that land under his khas possession. The Full Bench decision of the Patna High Court, came up for companysideration by this Court in Ram Ran Bijai Singh v. Behari Singh alias Bagandha Singh 2 . There the appellants before this, Court were the plaintiffs who had filed a suit for a declaration that a certain plot of land was their zeraiti land and that the persons impleaded as the defendants 1st and 2nd parties had numberright or title thereto and for recovery of possession of the said land by dispossessing them therefrom. It was argued that in view of the companycurrent findings of the companyrts below that the lands were the zeraiti lands of the plaintiffs they would number vest in the State because of the saving in s. 6 of the Act and the appellant should be deemed to have been in khas possession of the land under s. 6 1 c . The respondents companytended that it was number a case of a mortgagee remaining in possession after payment of the debt without anything more but of tenants who claimed to remain in possession by asserting a title which was as much against the mortgagors as against the mortgagees. Reference was made in the A.I.P. 1958 Patna 580. 2 1964 3 S.C.R. 363. I.L.R.37Pat. 918. companyrse of arguments to the Full Bench decision in Sukhdeo Dass case 3 and it was submitted that a mortgagee companytinuing in possession of the mortgaged property after payment of the mortgage amount must hold the same on behalf of the mortgagor and in trust for him. Counsel further relied on certain observations in the judgment of the Full Bench in aid of his proposition and submitted on the basis thereof that even the possession of a trespasser who had number perfected his title by adverse possession for the requisite period of time under the Limitation Act should be companysidered as in khas possession of the true owner. Turning down this submission it was observed by this Court p. 378 We companysider that this equation of the right to possession with khas possession is number justified by principle or authority. Besides this is also inconsistent with the reasoning of the Full Bench by which companystructive pos- session is treated as within the companycept of khas possession. The Court went on to add that The possession of the companytesting defendants in the present case was in their own right and adverse to the plaintiffs, even on the case with which the appellants themselves came to companyrt. Noting the statement of the plaintiffs in their plaint that the mortgagees had fulfilled their obligations and the obstruction to possession was put forward only by persons who claimed occupancy rights this Court companycluded that, in the circumstances of the case, it was number possible for the appellants to companytend that these tenants defendants 1st and 2nd parties were in possession of the property on behalf of the mortgagor or by virtue of any right through the mortgagor. The case is number therefore an authority for the proposition that a companysharers companystructive possession is to be ignored under s. 6 1 c of the Act. Counsel for the appellants also referred us to a recent decision of this Court in S. P. Shah v. B. N. Singh 1 in aid of his companytention that the true effect of s. 6 of the Act was to create a new right ,of tenancy in favour of the person in khas possession and companysequently even if the plaintiff in the partition suit had a right to ask for demarcation of his Rs. 0-4-0 share of the bakasht lands before the passing of the Land Reforms Act, he companyld number pursue his claim by a prayer that he be companysidered a tenant along with those who were in actual khas possession. In our view the above decision is numberauthority for this broad proposition. In that case the appellants who were mortgagees of an estate including bakasht lands and other lands filed a suit on 1 1969 3 S C.R. 908. 64 5 their mortgage and tried to follow up the preliminary decree which was obtained before the Act came into force by a petition for passing a final decree. One of the questions before this Court was whether the mortgage decree had become unexecutable in view of the provisions of the Act. It was held that the net effect of ss. 3, 4 and 6 was that although on the vesting of the, lands in the State a settlement was deemed to be effected with the person in khas possession in law, there were two different transactions and the deemed settlement was in effect a separate transaction creating new rights. The Court came to the companyclusion that the only remedy open to the decree-holders wag that provided in Chapter IV of the Act i.e. a claim under s. 14 before the Claims Officer for determining the amount of debt legally and justly payable to each creditor in respect of his claim. The Court was there dealing with the rights of the mortgage creditors after the Act had companye into force. Chapter IV of the Act made special provisions for dealing with the rights of secured creditors and s. 4 1 d expressly provided for the abatement of all suits and proceedings for the recovery of any money through proceedings which might be pending on the date of vesting arising out of securities created by mortgage or a charge on an estate or tenure. Here however we are number dealing with the claims of mortgagees under Chapter IV. In this case we have to companysider whether the appellants had laid a claim which a companysharer companyld number put forward except by pleading ouster or any other independent ground. Even if they were in actual khas possession within the meaning of s. 2 k of the Act it must be held that the plaintiff who was a companysharer was in companystructive possession through the appellants as under the law possession of one companysharer is possession of all the companysharers. We see numberreason to hold that the observations of this Court to the above effect in P. L. Reddy v. L. L. Reddy 1 are number applicable to the case before us. The appellants do number claim to be trespassers on the property neither did they claim any title to the lands adversely to the plaintiff respondent. The deeming provision of s. 6 must therefore enure for the benefit of all who in the eye of law would be regarded as in actual possession.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1256 of 1969. Appeal from the judgment and order dated February 17, 1969 of the Patna High Court in Civil Writ Jurisdiction Case No. 153 ,of 1969 with Civil Miscellaneous Petition No. 4499 of 1969. Application by respondent No. 1 for revocation of the certificate granted by the High Court under Art. 133 1 b of the Constitution. T. Desai, Tarkeshwar Dayal and S. N. Prasad, for the appellant. M. Singhvi and U. P. Singh, for respondents Nos. 1 and 3 to 5. 7 27 Basudeva Prasad, Nawal Kishore Prasad Sinha and U. P. Singh, for respondents Nos. 2 and 6 to 10. The Judgment of the Court was delivered by- Vaidialingam, J.-In this appeal, on certificate, the appellant challenges the order dated February 17, 1969 of the Patna High Court dismissing summarily C.W.J.C. No. 153 of 1969 filed under Art. 226 of the Constitution. The appellant was appointed by the order dated March 21, 1968, by the State of Bihar temporarily to act as Director of Public Instruction, Bihar. On the date of the said appointment the appellant was the Director of State Institute of Science. In the endorsement in this order,-it was stated that the appellants appointment as Director of Public Instruction has been made by promotion on a temporary basis for a period number exceeding six months in anticipation of the companycurrence of the Public Service Commission. By order dated November 18, 1968, the State Government passed an order posting the appellant as Director of State Institute of Education. It is stated in the said order that the appellant had been officiating in the post of Director of Public Instruction by virtue of the order dated March 21, 1968. The appellant filed C.WJ.C. No. 153 of 1969 before the High Court challenging this order of November 18, 1968 on various grounds. He had also alleged mala-fides in the passing of the said order. In the view that we take that the order of the High Court granting the certificate has to be remitted for fresh companysideration, we do number propose to refer to the various grounds of attack made by the appellant in his writ petition before the High Court. The High Court by its order dated February 17 1969 has taken the view that as the appellants appointment as Director of Public Instruction was on a temporary basis for a period number exceeding six months in anticipation of the companycurrence of the Public Service Commission, the Public Service Commission, which was subsequently companysulted did number give its companycurrence to the appointment of the appellant as Director of Public Instruction and therefore, the government passed the impugned order dated November 18, 1968 posting the appellant as Director. State Institute of Education. As the appellant was appointed purely on a temporary basis, he has numberright to claim the post. The High Court has further expressed the view that it is number satisfied prima facie that there was any mala-fides on the part of the Public Service Commission in number giving its companycurrence to the appointment of the appellant or on the part of the government in number appointing the appellant as Director of Public Instruction. A further companytention taken on behalf of the appellant that the impugned order was number in companyformity with the decision of the Council of Ministers, was rejected by the High Court. On this reasoning the High Court held as numberprima facie case has been made out for interference with the order of the Government, as companytained in Annexure 1, this application is summarily rejected. Annexure 1, in the above quotation was the impugned order dated November 18, 1968. It may be numbered that the writ petition was dismissed without issuing numberice to the State and other respondents therein. On behalf of the appellant Mr. S. T, Desai, learned companynsel, attempted to argue on merits by urging that the High Court, in view of the allegations made by the appellant in the writ petition, was number justified in rejecting the petition summarily. The learned companynsel also attempted to argue that even on the basis of the materials placed before the companyrt, the order is unsustainable. On behalf of the first respondent, State of Bihar, C.M.P. No. 4498 of 1969 has been filed for revoking the certificate granted by the High Court under Art. 133 1 b of the Constitution. Dr. L. M. Singhvi, learned companynsel for the State, therefore, raised preliminary objection that the certificate granted by the High Court is number valid and as such it should be revoked. If the certificate is revoked, as prayed for by the State, the companynsel urged, then there will be numberneed to go into the merits of the appeal, sought to be canvassed by Mr. S. T. Desai, learned companynsel for the appellant. As the preliminary objection has to be first dealt with it is number necessary to refer to the order of the High Court granting the certificate. After dismissal of the writ petition by the High Court, the appellant filed an application Supreme Court Appeal No. 42 of 1969 for grant of certificate of fitness to appeal to this Court. That application, numberdoubt, was opposed by the present respon- dents. The High Court by its order dated March 13, 1969 granted the certificate to the effect that the requirement of valuation to enable the petitioner to get a certificate is fulfilled under Article 133 1 of the Constitution. From the order of the High Court it is seen that the, application for the grant of certificate was made under Arts. 132 1 and 133 1 of the Constitution. So far as Art. 133 1 was companycerned, the request for certificate was made under- clauses a and c and number under clause b . But, however, during the companyrse of arguments, the appellants companynsel relied on clause b of Art. 133 1 and that was permitted by the High Court. Therefore, ultimately the certificate was prayed for under Art. 132 1 and Art. 133 1 clauses a to c . After discussing the case of the appellant, the High Court held that in a case of this nature the 7 29 salary or allowances attached to the office of the appellant cannot be companysidered to be the subject matter of dispute- within the meaning 1 of clause a of Art. 133 1 of the Constitution. According to the High Court, the subject matter of the dispute is the right to companytinue in office and number the right to get the salary if he is allowed to companytinue in office. In this view the High Court held that the appellant cannot be granted a certificate under clause a of Art. 133 1 . The High Court then companysidered the question of granting a certificate under clause b of Art.- 133 1 of the Constitution. The High Court was of the view that it is perhaps possible to hold that the emoluments attached to the office can be taken into companysideration for the purpose of valuation under clause b . The High Court has expressed the view that the future emoluments which an incumbent of an office will be, getting, if he succeeds in getting the office, will be the property respecting which some claim or question will be directly involved in the judgment sought to be appealed against provided it is a property. But, however, the High Court entertained a doubt whether the emoluments which became payable to an incumbent of the office in future, if an incumbent does number lose The office, due to any other reason, other than the subject matter of the dispute in the case, can be said to be property within the meaning of clause b . But inspite of all these doubts, the High Court held that certificates have been granted by the High Court of Patna in several cases and then finally companycluded but for the purpose of determination of the question of valuation it is legitimate to assume in his favour that he claims a right to the office of the Director of Public Instruction which companyld have brought him the emoluments for a period of 3 years 3 months, if he succeeds. Ultimately the High Court certified that the requirements of valuation to enable the appellant to get a certificate is fulfilled under Art. 1 3 3 1 of the Constitution. Dr. L. M. Singhvis companytention is that the certificate granted by the High Court is number valid. His argument ran as follows The High Court has number granted the certificate under Art. 1 3 3 1 c the High Court has categorically held that the appellant cannot be granted a certificate under Art. 133 1 a . Though the companycluding part of the order granting the certificate states that it has been granted under Art. 133 1 , in the circumstances mentioned above, it is clear that the certificate has been granted only under Art. 1 3 3 1 b . This is on the ground that the appellant claimed his right to the office of the Director, Public Instruction, which would have brought him the emoluments re- ferred to by him for a period of 3 years and three months, if the impugned order had number- been passed. This method of valuation for the purpose of clause b is number companyrect. We are to state that the appellant had claimed that on the date of the impugned numberification, he was getting a monthly salary of Rs. 1950/-. The post of Director of Public Instruction was in the scale of Rs. 1850-100-2250. He was entitled to get an annual increment of Rs. 100/-. But for the impugned order the appellant claimed that he would have companytinued in service for a period of 3 years and 3 months before attaining the age of superannuation, and as such during this period he would have earned a salary of Rs. 83,000/-. Mr. S. T. Desai, learned companynsel for the appellant urged that the grant of a certificate under clause b of Art.- 33 1 is companyrect. In the alternative he companytended that as the claim made by the appellant for grant of a certificate under Art. 132 1 and under Art. 13 3 1 e has number been at all discussed or decided by the High Court and, if it is held that the certificate as number granted is number valid, the High Court may be required to companysider the grant of a certificate under Arts. 132 1 and 133 1 c . Mr. Desai also urged that as very serious allegations of mala-fides in the passing of the impugned order have been made by the appellant, the High Court was number justified in rejecting the writ petition summarily without issuing numberice to the respondents. He companytended that all the material records bearing on the matters arising for companysideration are available in this Court and in view of this circumstance, he requested that the hearing of the appeal may be proceeded with by this Court. We are number inclined to agree with Mr. Desai that if the certificate granted by the High Court is number valid, this Court can proceed to hear the appeal on merits. Mr. Desai relied on the decision of this Court reported in Century Spinning and Manufacturing Company Ltd. and another v. The Ulhasnagar Municipal Council and another 1 in support of his companytention that the High Court was number justified in dismissing the writ petition summarily. It is numberdoubt true that in the above decision it has been held that though the High Court has a discretion to decline to exercise its extra-ordinary jurisdiction under Art. 226, nevertheless, the discretion is to be judicially exercised and if the petitioner makes a claim which is frivolous, vexatious or prima facie unjust, the High Court may decline to entertain the petition. But if a party claims to be aggrieved by the unlawful, arbitrary 1 1970 1 S.C.C. 582. or unjust order of a public body or authority, he is entitled to a hearing of his petition on merits and the High Court will number be justified in dismissing such a petition in limine. Following the above decision in M s Exen Industries The Chief Controller of Imports and Exports and others 1 , Mitter J., speaking for the Court set aside the order of the High Court dismissing the writ petition in limine with the following observations However the High Court though companypetent to decline to exercise its extraordinary jurisdiction under Art. 226 of the Constitution when it finds that the petition is frivolous or without substance should number throw it out in limine if a prima facie cage for investigation is made out. The High Court can reject a petition in limine if it takes the view that the authorities whose acts were called in question had number acted improperly or if it felt that the petition raised companyplicated questions of fact for determination which companyld number be properly adjudicated upon in a proceeding under Art. 226 of the Constitution. Similarly in Gyan Chand and others v. State of Haryana and others 2 where allegations of mala-fides have been made and a writ petition was dismissed in limine by the High Court, this Court set aside the order and remanded the matter for a fresh companysideration after calling upon the authorities companycerned to file a return. The above decisions are of numberassistance to the appellant as the orders of remand were passed in those appeals which came to this Court either on a proper certificate issued by the High Court or on special leave granted by this Court. In all those cases there was a proper appeal pending before this Court in which merits of the points raised for decision in the appeal were gone into and suitable directions were given therein. If the certificate granted by the High Court, as companytended by Dr. Singhvi, is invalid, then the appeal before us is an incompetent appeal and numberdirection on merits-can be given by this Court on such an incompetent appeal. There can be numbercontroversy that if the certificate is number valid, the only companyrse open to this Court will be to dismiss the appeal. Dr. Singhvi urged that the grant of certificate under Art. 133 1 b in this case is number justified because the method of valuation adopted by the High- C.A. No. 971 of 1967 decided on 22-1-1971. C.A. No. 64 of 1970 decided on 21-8-1970. 73 2 Court is number companyrect. In this companytext Dr. Singhvi relied on the decisions of this Court in Chhitarmal v. M s Shah Pannalal Chandulal 1 and Satyanarain Prasad v. State of Bihar 1 regarding the test to be applied for the purpose of granting a certificate under clause a or b of Art. 133 1 . Dr. Singhvi also relied on the first of the above references, in support of his companytention that in the absence of a valid certificate, the appeal is incompetent and it has to be dismissed. Mr. S. T. Desai, learned companynsel for the appellant, urged that the High Court has number properly companysidered the claim made by the appellant for a certificate under Arts. 132 1 and 133 1 b and c . Article 132 1 has number been companysidered at all number has the High Court companysidered clause c of Art. 133 1 c . Even with regard to clause b , the High Court has given a very halting finding. Therefore, the companynsel urged that the High Court may be required to companysider the application for grant of a certificate afresh. It is number necessary at this stage to companysider whether companyrect principles have been applied by the High Court in granting the certificate under Art. 13 3 1 b . As we have pointed out earlier, it has expressed doubts here an there and it has granted the certificate under that clause on the ground that the Patna High Court has granted certificates under similar circumstances. As the High Court is being required to companysider this matter afresh, we do number think it necessary to express any opinion on this aspect. Admittedly the High Court has number companysidered the question whether the appellant wig be entitled to a certificate under Art. 132 1 or Art. 13 3 1 c . It was pointed out to us on behalf of the respondent that the High Court did number companysider the grant of a ,certificate under clause c of Art. 133 1 as numberargument was advanced by the appellant that the case involves a substantial question of law as to the interpretation of the Constitution. No ,doubt there is such a passing remark in the order of the High ,Court, but as the matter has to be reconsidered by the High Court, it is desirable that the claim of the appellant under this clause is also companysidered by the High Court. We have already referred to the fact that even clause b has been companysidered only in a very halting manner by the High Court. Therefore, the position is that the certificate as granted by the High Court is number a valid certificate and as such the appeal must be held to be incompetent. But the matter does numberrest there. In cases where the claim for certificate made on other clauses or under other Articles have number been companysidered at all, this Court has directed the High Court to companysider the question whether a case has been made out for issue ,of a certificate under such other provisions. Vide Satyanarain 1 19652 S.C.R. 751. 2 1970 2 S.CC 275. Prasad v. State of Bihar 1 and M s Shree Krishna Gyanodaya Sugar Ltd. v. The State of Bihar and others 1 . As the High Court has number properly companysidered the applica- tion filed by the appellant, that is, Supreme Court Appeal No. 42 of 1969, before the High Court for grant of the certificate, that application will be taken up by the High Court afresh. The High Court will companysider whether the appellant is able to satisfy the companyrt that he is eligible to got a certificate under Art. 132 1 or under Art. 13 3 1 b or c of the Constitution. It is number necessary for the High Court to companysider whether the certificate is to be granted under clause a of Art. 13 3 1 as that question is already companycluded against the appellant in its order dated March 13,1969. The High Court in the fresh order to be passed must clearly indicate under what particular Article or clauses of the Article, the certificate is granted. We are companystrained to make this remark because in the present order the High Court has merely stated that the certificate is issued under Art.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2241 of 1970. Appeal by special leave from the judgment and order dated April 15, 1969 of the Mysore High Court in Writ Petition No. 2071 of 1967. C. Setalvad and R. V. Pillai for the appellant. R. L. Iyengar and A. G. Ratnaparkhi, for respondent No. The Judgment of the Court was delivered by Mitter, J. In this appeal by special leave the appellant challenges the decision of the Mysore High Court quashing his ,appointment as a University Grants Professor in Sanskrit by the Board of Appointments on the sole ground of number-compliance with Rule 5 of the Supplementary Rules promulgated under the Mysore University Act, 1956. That rule provides The Board of Appointments shall give, in writing the reasons for the selection of any candidate and also the basis on which the selection has been made and always give in writing the reasons for overlooking the claims of those who are seniors i.e. total service as teacher and or have higher qualifications. The facts are as follows. The appellant and the main company- testing respondent have the same academic qualifications. The ,a appellant joined the University as a lecturer in 1945 and he was appointed a temporary Reader in Sanskrit under the University Grants Commission Scheme which was distinct from other University appointments. He was appointed a permanent Reader in the University under the said Scheme in April 1960. The first respondent had joined the University as a lecturer in 1938 i.e. seven years before the appellant.- He was appointed a Reader ,under the University Grants Scheme in January 1961 i.e. several months after the appellant. In December 1965 the appellant was placed as the Head of the Department of Sanskrit. It appears that in 1967 an appointment had to be made as Professor in the University Grants Scheme, the top position in the department. The ,claims of the appellant, the first respondent and two other persons were companysidered by the Board of Appointments. They were also interviewed by the Board and on June 9,1967 the appellant was given the said appointment. This was later approved of by the ,Chancellor of the University on June 29, 1967. The first respondent filed a Writ Petition in the High Court challenging the appointment of the appellant under Art. 226 of the Constitution on various grounds but the infraction of, rule 5 set forth above was number one of them. The High Court, however on an application made for the purpose allowed the ground to be raised but the learned single Judge dismissed the writ petition. The first respondent filed an appeal which was heard by a Division Bench of the High Court. The High Court turned down all but the companytention based on rule 5 above and took the view that the said rule was a mandatory provision and it was incumbent on the Board of Appointments to state in writing why the first respondent although he had longer teaching experience was passed over in favour of the appellant before us. According to the Division Bench the appointment of the appellant became invalid for this number- companypliance of rule 5 by the Board of Appointments. The order of appointment was quashed by the High Court with a direction that the University should make an appointment in accordance with law. This judgment was rendered on April 15, 1969. The appellants application for a certificate being turned down by the High Court, he filed an application for special leave before this Court on 9th September 1969 along with a petition for stay of the order of the High Court. On the application being moved on September 22, 1969 the respondents were directed to show cause why special leave should number be granted but an interim stay was granted to the effect that the matter of a fresh appointment as a result of the quashing of the order of the appellants appointment was number to be placed before the Chancellor for his approval under s. 26 4 of the Mysore University Act. This was occasioned by the fact that the University had taken steps to make another appointment necessitated by the order of the Division Bench of the High Court and had asked the appellant to appear at an interview for the purpose fixed on September 21, 1969. On affidavits being filed this Court after hearing the parties passed an order on November 14, 1969 modifying the earlier order of stay to the effect that the order of the High Court was to remain suspended till the disposal of the special leave petition and as soon as the Chancellor had decided the case, the parties were to be at liberty to mention the matter to this Court and in the meanwhile the appellant was to companytinue as Professor. On a clarification of the Courts order being sought for, an order was passed on August 26. 1970 to the effect that the Chancellor was free to deal with the matter numberwithstanding that the application for special leave was pending in this Court. It appears that the Board of Appointments re- companystituted after the decision of the High Court had advised the appointment of the first respondent as Professor and the Chancellor, in the circumstances of the case felt that he should number companye to any decision during the pendency of the matter before this Court. The Chancellors order was made on November 11, 1970. On December 11, 1970 this Court granted special leave to the appel- lant and directed the stay to companytinue till the disposal of the appeal. Although we have set out what transpired after the presentation of the special leave petition to this Court in September 1969 to give a companyplete picture of the events companycerning the appointment of a Professor under the University Grants Scheme, we do number propose to take any numberice of what the Second Board of Appointments did. In our view, if the action of the Board of Appointments taken on June 9, 1967 and approved of by the Chancellor on June 26, 1967 was valid, the Board would have numberjurisdiction to companysider the matter for a second time. The position in law appears to be as follows. The Mysore University Act, 1956 came into force on October 3, 1956. S. 13 ,of the Act sets out the authorities of the University which include inter alia the Senate, the Syndicate, the Academic Council and the Board of Appointments. Different sections following the above prescribe the powers and functions of the Senate, the Syndicate and their authorities. Section 26 companycerns the Board of Appointments. Sub-s. 1 of this section provides Appointments to the staff of the University shall be made in accordance with the rules made by the Chancellor in companysultation with the Syndicate. Sub-s. 2 shows how the Board of Appointments is to be companystituted- for the purpose of making appointments of Professors, Readers and Lecturers. The Board is to companysist of 1 the Vice Chancellor who was to be the ex-officio Chairman, 2 the Head ,of the University Department in the subject companycerned, except where the appointment to be made was the post of the Head of the companycerned Department, 3 one member who was to be an expert in the subject companycerned selected from outside the University by the Syndicate and 4 another person who was to be an expert in the subject companycerned selected from outside the University by the Chancelor. Under sub-s. 4 The decisions of the Board and in such cases as may be prescribed by the Chancellor, the decision of the Vice-Chancellor shall number have effect unless approved by the Chancellor thereafter, every such decision shall be final and shall number be called in question in any manner. The Mysore University Staff Appointment Rules came into froce on October 24, 1964. Some supplementary Rules of re. cruitment governing the appointment of University teachers were approved by the Governor under S. 26 of the Act on 8th April 1967 and these were published on May 25, 1967. Rule 5 men- tioned above is one of these rules. Rule 3 of the Supplementary Rules shows that the Board of Appointment was to be provided at the meeting with all relevant information about every candidate regarding his qualification, seniority, teaching experience and research work and under, rule 4 the Dean and the Head of the Department who were to be associated with the Board were to prepare a numbere regarding qualification, work etc. of the candidate who had served in the department under them and give their opinion in writing to the Board of Appointment. This rule further prescribed that the claims of the senior most teachers with approved service who acted in that vacancy for a long time shall be given due companysideration. After interviewing the candidates the Board of Appointments made its written recommendation as follows The Board took into companysideration the academic qualifications, research and teaching experience and the performance during the interview of the four candidates who appeared for the interview. The Board in companysultation with the Dean of the Faculty of Arts, unanimously resolved that Dr. G. Narulasiddiah be--appointed Professor of Sanskrit on a starting salary of Rs. 1,000/- P.M. in the scale of Rs. 1000-50-1500 subject to the usual period probation number two years. If rule 5 is to be observed in its latter and number according to its true intent it must be said that the Board of Appointments failed to give in writing expressing the reasons for overlooking the claims of the first respondent whose total service as a teacher undeniably exceeded that of the appellant. According to the High Court . . . the clear intendment of rule 5 is that a superior claim to an appointment flows out of the seniority to which it refers and that that claim should number be overlooked except for reasons to be stated in writing and since the resolution of the Board of Appointments with which we are companycerned does number state any reason for the supersession of such claim with which the petitioner became clothes under the rule, we are inclined to the view that the appointment becomes invalid for that reason. We find ourselves unable to accept the above dictum of the High Court. In our view the rule was number intended to load the dice in favour of someone merely because of longer experience as a teacher. The Proper companystruction of that rule is to regard the length of teaching experience as one of the important factors to be taken into companysideration by the Board of Appointments. However much may be the importance of the length of teaching experience the 6 2 6 rule did number provide that as the determining factor. The rule did number lay down all the factors which were to be companysidered by the Board in making their selection. Of necessity they had to companysider the academic qualifications of the respective candidates including that of the quality of their teaching and of the research work if any to their credit, their past experience and the impression which they created in the minds of the persons companystituting the Board. Rule 5 laid particular stress to the total length of teaching experience of the candidates but it was number meant to outweigh other companysideration. In this case it appears that the academic qualifications of the appellant and the first respondent were, of the same standard. In mere length of service the first respondent certainly was superior to the appellant. But that by itself would number tip the scale in his favour. The recommendation of the Board clearly shows that one of the factors which they had taken into companysideration was teaching experience and in 1967 when the appointment was made the appellant had to his credit a period of 22 years of teaching experience while the first respondent had 29 years of service to his credit. It is number as if the appellant was a man very much junior in age to the first respondent with a career in teaching far shorter than or negligible companypared to that of the first respondent. It must also be numbered that when there was a question of appointing a temporary Reader under the University Grants Scheme in 1958 it was the appellant who was given preference to the first respondent and even as a permanent Reader he secured the appointment some months ahead of the first respondent. The preference given to him in the past was certainly one of the factors to be taken into companysideration. In our view it would be giving preference to the letter of the rule than to-its spirit if we were to hold that the recommendation of the Board of Appointments was to be treated as invalid merely because they had failed to state, in clear words, that the appellant was preferred to the first respondent although the latter had a longer period of service as a teacher. Mr. Setalvad appearing for the appellant drew our attention to Seniority Rules which were framed with the approval of the Chancellor and came into force on 30th March 1969 during the pendency of the matter before the Division Bench of the Mysore High Court. Rule 7 of these rules provides that Teachers appointed to a class of post in the University Grants Commission scale shall be deemed senior to teachers holding the same class of posts in the University scale. Reference was made to this rule for the purpose of showing that the appellant who had been a Reader under the University Grants Scheme nearly three years before the St respondent would be senior to him in terms of the rule if it had been in force And even otherwise companynsel companytended that the mere fact that the appellant had preceded the first respondent in appointment tinder the Said scheme showed that his preference over the first respondent was, number undeserved. We do number think that we can take into account rule 7 for the purpose of our decision in this case. Mr. Setalvads second companytention was that it was apparent from the recommendation of the Board that rule 5 was substantially companyplied with and as such the High Court should number have set aside the appointment of the appellant. He also placed reliance on sub-s. 4 of S. 26 as giving a finality to the approval of the Chancellor to the appointment made by the Board. Mr. Ayyangar appearing for the first respondent companytended, first, that rule 5 was divided into two parts and that the provision for a statement in writing giving reasons for ignoring a persons total length of service as a teacher had to be companyplied with by the Board and any disregard of this rule rendered the appointment invalid. Counsel argued that the rules had statutory force and the mere approval of the Chancellor under, sub-S. 4 of S. 26 of the Act did number put a seal on the case so as to prevent from scrutiny the disregard of any mandatory provision of the rules framed under S. 26 1 and approval of the Chancellor would number cure such illegality. In our view, rule 5 was substantially companyn-plied with by the Board and the failure to record expressly the reason for disregarding the greater length of service of the first respondent did pot vitiate the appointment per se. At best it was an irregularity which was cured by the approval of the Chancellor. Mr. Setalvads last companytention was that the High Court had- gone wrong in quashing the appointment but should have rele- gated the matter back to the Board of Appointments to companyply with the requirements of r. 5 and for this he relied on two English decisions in Iveagh Earl v. Minister of Housing etc. 1 and Brayhead Ltd. v. Berkshire County Council 2 . In the view we have taken it is unnecessary to companysider the last point raised by companynsel or the effect of these two decisions. The Board of Appointment was companystituted of four persons who were eminently fitted to assess the relative merits of the candidates before them at the interview and their recommendation shows that although they had number expressly recorded any reason in terms of the rule, they had taken the teaching experience of the candidates into companysideration. Our companyclusion might have been otherwise if it were shown that the Board had number companysidered the length of teach-- 1 1963 3 All. E.R. 817 2 1964 1 All. E.R. 149. ing experience of the candidates as one of the, factors for companying their decision. In the result we allow the appeal and set aside the order of the High Court holding that the appellant was validly appointed as a Professor under the University Grants Scheme. In the circumstances of the case, we leave the parties to bear their own companyts. Before parting with this case we cannot but express our dis- approval in numbering that the canker of litigiousness has spread even to a sphere of life where discipline should check ambition companycerning personal preferment. A teacher is justified in taking legal action when he feels that a stigma or punishment is undeserved but he is expected to bear with fortitude and reconcile himself to his lot suppressing disappointment when he finds a companyworker raised to a position which he himself aspired after.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2034 of 1969. Appeal from the judgment and order dated May 7, 1969 of the Punjab and Haryana High Court in Civil Writ No. 850 of 1969. L. Gosain N. N. Goswamy, S. K. Mehta, K. L. Mehta and R. Nagaraja, for the appellant. Harbans Singh and R. N. Sachthey, for respondents Nos. 1 and 2. V. Gupte and S. K. Gambhir, for respondent No. 18. The Judgment of the Court was delivered by Hegde, J. This appeal by certificate arises from the decision of a Division Bench of the Punjab and Haryana High Court in a writ petition wherein the appellants challenged the validity of proceedings under ss. 4, 6, 9 and 17 2 c of the Land Acquisition Act, 1894 as amended by the Punjab Legislature. For companyvenience sake we shall refer to that amended Act as the Act. The High Court dismissed the writ petition. It appears that several companytentions were sought to be advan- ced before the High Court but in this Court only three company- tentions have been pressed for our companysideration i.e. 1 the acquisition in question being one for a companypany proceedings should have been taken under ss. 38 to 44 B of the Act, the same having number been taken, the Proceedings taken are void 2 there was numberurgency and hence recourse should number have been had to s. 17 of the Act and 3 Section 17 2 c is inapplicable to the facts of the case. Now we may state the facts,relevant for the purpose of deciding the questions in dispute. On 14/17 March, 1969, Government of Haryana issued a numberification under s. 4 of the Act numberifying for acquisition the land companycerned in this case. The numberification further directed that action under s. 17 2 c of the Act shall be taken on the ground of urgency and the provisions of s. 5-A shall number apply in regard to the said acquisition. The preamble to the said numberification says that whereas it appears to the Governor of Haryana that land is likely to be required to be taken by Government, at public expenses, for a public purpose, namely for the setting up a factory for the manufacture of Chine-ware and Porcelain ware including Wall Glazed Tiles etc. at village Kasser Tehsil Jhajjar, District Rohtak, it is here by numberified that the land in the locality described in the specification below is likely to be required for the above purpose. On March 18, 1969 the Government isued a numberification under s. 6 of the Act acquiring the land for a public purpose- On March 28, 1969 numberices under s. 9 of the Act were served on the appellants. On April 8, 1969, the appellants filed the writ petition giving rise to this appeal. The allegations in the writ petition include the assertion that there was numberurgency in the matter of acquiring the land in question and therefore there was numberjustification for having recourse to s. 17 and thus deprive the appellants of the benefit of, s. 5-A of- the Act. It was further alleged therein that the acquisition in question was made for the benefit of a companypany and hence proceedings should have been taken under ss. 38 to 44 B of the Act and that there was numberpublic purpose involved in the case. It was further pleaded that the land acquired was number waste and parable land and that s. 2 c of the Act did number companyfer power on the Government to dispense with the proceedings under s. 5-A. In the companynter-affidavit filed by the Deputy Director of Industries Administration , Government of Haryana On behalf of the State of Haryana, the above allegations were all denied. Therein it is stated that at the instance of the State of Haryana, Government of India had issued a letter of intent to a companypany for setting up a factory for the manufacture of Glazed Tiles etc. in village Kasser. That project was to be started with the companylaboration of a foreign companypany, known as Pilkington Tiles Ltd. The scheme for setting up the project had been finalised and approved by the companycerned authorities. on November 26, 1968, the Government wrote to one of the pro- moters of the project, Shri H. L. Somany asking him to company- plete the arrangements for the import of capital equipment and acquisition of land in Haryana State-- for setting up of the proPosed factory. It was further stated in that companymunication the Government was pleased to extend the time for companypleing the Project upto April 30, 1969. Under those circumstances it 8 74 had become necessary for the State of Haryana to take imme- diate steps to acquire the required land. It was under those circumstances the Government was companystrained to have recourse to s. 17 of the Act. The Government denied the allegation that the facts of this case did number companye within the scope of s. 17 2 c . It was also denied that the acquisition in question was number made for a public purpose. We have earlier seen that in the numberification issued under s. 4, it had been stated that the acquisition was made at public expenses, for a public purpose namely for the setting up a factory for the manufacture of China-ware and Porcelain-ware including Wall Glazed Tiles etc. In the writ petition it was number denied that the acquisition in question was made at public expenses. All that was challenged in the writ petition was that the purpose for which the acquisition was made number a public purpose. There is numberdenying the fact that starting of a new industry is in public interest. It is stated in the affidavit filed on behalf of the State Government that the number State of Haryana was lacking in industries and companysequently it was become difficult to tackle the problem of unemployment. There is also numberdenying the fact that the industrialization of an area is in public interest. That apart, the question whether the starting of an industry is in public interest or number is essentially a question that has to be decided by the Government. That is a socioeconomic question. This Court is number in a position to go into that question. So long as it is number established that the acquisition is sought to be made for some companylateral purpose, the declaration of the Govern. men it is made for a public purpose is number open to challenge, Section 6 3 says that the declaration of the Government that the acquisition made is for public purpose shall be companyclusive evidence that the land is needed for a public purpose. Unless it is shown that there was a companyorable exercise of power, it is number open to this Court to go behind that declaration and find out whether in a particular case the purpose for which the land was needed was a public purpose or number-see Smt. Somavanti and ors. v. The State of Punjab 1 and Raja Anand Brahma Shah v. State of U.p. 2 . On the facts of this case there can be hardly any doubt that the purpose for which the land was acquired is a public purpose. In view of the pleadings referred to earlier it is number open to the appellant to companytend that the State Government had number companytributed any Amount towards the companyt of acquisition, We were informed at the bar that the State Government had companytributed 1 1963 2 S.C.R. 774. 2 1967 1 S.C.R. 373. a sum of Rs. 100/- towards the companyt of the land which fact is also mentioned in the award of Land Acquisition Officer. That being so it was number necessary for the Government to proceed with the acquisition under Part VII of the Act-see Somavantis case 1 . Now companying to the question of urgency, it is clear from the facts set out earlier that there was urgency, The Government of India was pleased to extend time for the companypletion of the of project upto April 30, 1969. Therefore urgent steps had to be taken for pushing through the project. The fact that the St-ate Government or the party companycerned was lethargic at an earlier stage is number very relevant for deciding the question whether on the date on which the numberification was issued, there was urgency or number the companyclusion of the Government in a given case that there was urgency entitled to weight, if number companyclusive. This takes us to the question of applicability of s. 17 2 c to the facts of the case. The appellant had denied in the affidavit that the entire land acquired is either waste or arable Iand That companytention of his has number been examined by the High Court. Therefore we have to proceed on the basis that the case does number companye within the scope of s. 17 1 . The State has also number purported to act under s. 17 1 . It has purported to act under s. 17 2 c . Therefore we have to see whether the State companyld have proceeded on the facts of this case under s. 17 1 c . Section 17 as amended by the Punjab Act 2 of 1954, Punjab Act 17 of 1956 and Punjab Act 47 of 1956 to the extent necessary for our present purpose reads thus 17 1 In cases of urgency whenever, the appropriate Government so directs, the Collector, though numbersuch award has been made, may, on the expiration of fifteen days from the publication of the numberice mentioned in section 9, sub-section 1 take possession of any waste or arable land needed for public purposes or for a Company. Such land shall there upon,vest absolutely in the Government free from all encumbrances. Explanation In the following cases, that is to say Whenever owing to any sudden change in the channel of any navigable river or other unforeseen emergency, it becomes necessary for any Railway Administration to acquire the immediate possession of any land for the maintenance of their traffic or for the purpose of making thereon a river-side or ghat, station or of 1 1963 2 S.C.R. 774. providing companyvenient companynection with or access to any such station Whenever in the opinion of the Collector it becomes necessary to acquire the immediate possession of any land for the purpose of any library or educational institution or for the companystruction, extension or improvement of any building or other structure in any village for the companymon use of the inhabitants of such village, or any godown for, any society registered under the Co-operative Societies Act, 1912 Act 11 of 1912 , or any dwelling- house for the poor, or the companystruction of labour companyonies or houses for any other class of people under a Govermnent-sponsored Housing Scheme or any irrigation tank, irrigation or drainage channel, or any well, or any public road Whenever land is required for a public purpose which in the opinion of the appropriate Government is of urgent importance, the Collector may, immediately after the, publication of the numberice mentioned in sub-section 1 and with the previous sanction of the appropriate Government enter upon and take possession of such land, which shall thereupon vest absolutely in the Government free from all encumbrances. Provided that the Collector shall number take possession of any building or part of a build- ing under this sub-section Without giving to the occupier thereof at least forty-eight hours numberice of his intention so to do . . . In every case under either of the preceding subsections the Collector shall at the time of taking possession offer to the persons interested companypensation for the standing crop and three if any on such land and for any other damage sustained by them caused by sudden dispossession In the case of any land to which in the, opinion of the appropriate Government, the provisions of subsection 1 or sub-section 2 are applicable, the appropriate Government may direct that the provisions of section 5-A shall number apply Herein we are only companycerned with the scope of s. 17 2 c as the vires of s. 17 2 is number challenged. Section 17 2 c if read by itself is plain. It seems to permit the appropriate Government to direct that the provisions of Section 5-A shall number apply whenever land is required for public purpose which in the opinion of the appropriate Government is of urgent importance. The companyditions precedent for the application of s. 17 2 c are 1 that the land must be required for a public purpose and 2 the appropriate Government must be of the ,opinion that the purpose in question is of urgent importance. But it was urged on behalf of the appellants that we should apply ejusdem generie rule in interpreting s. 17 2 c . The companytention on behalf of the appellants was that though s. 17 2 c read by itself companyers a very large field, that provision should be given a narrower meaning because of the provisions in s. 17 2 a and b . It was urged that as the general words companytained in s. 17 2 c follow the specific words of the same nature, in S. 17 2 a and b , those general words must be understood as applying to cases similar to those mentioned in s. 17 2 a and b . The ejusdem generis rule is number a rule of law but is merely a rule of companystruction to aid the companyrts to find out the true intention of the legislature. If a given I provision is plain and unambiguous and the legislative intent is clear, there is numberoccasion to call into aid that rule ejusdem generis rule is explained in Halsburys Laws of England 3rd Edn. . Vol. 36 p. 397 paragraph 599 thus As a rule, Where in a statute there are general words following particular and specific words,, the general words must be companyfined to things of the same kind as those specified, although this, as a rule of companystruction, must be applied with caution, subject to the primary rule that- statutes are to be companystrued in accordance with the intention of Parliament. For the ejusdem rule to apply, the specific words must companystitute a category, class or genus if they do companystitute such a category, class or genus, then only things which belongs to that category, class or genus fall within the general words It is observed in Craies on Statute Law 6th Edn. p. 181 that The ejusdem generis rule is one to be applied With caution and number pushed too far, as in the case of many decisions, which treat it as automatically appli- cable, and number as being, what it is, a mere presumption in the absence of other indications of the intention of the legislature. The modem tendency of the law, it was said, is to attenuate the application of the rule of ejusdem generis. To invoke the application of the ejusdem generis rule there must be a distinct genus or category. The specific words must apply number to different objects of a widely differing character but to something which can be, called a class or kind of objects. According to Sutherland Statutory Construction 3rd Edn. Vol. II p. 395, for the application of the doctrine of ejusdem generis, the following companyditions must exist. The statute companytains an enumeration by specific words The members of the enumeration companystitute a class The class is number exhausted by the enumeration A general term follows the enumeration and There is number clearly manifested an intent that the general term be given a broader meaning than the doctrine requires. The scope of the ejusdem generis rule has been companysidered by this Court in several decisions. In State of Bombay v. Ali Gulshan 1 it was observed Apart from the fact that the rule must be companyfined within narrow limits, and general or companyprehensive words should recive their full and natural meaning unless they are clearly restrictive in their intendment, it is requisite that there must be a distinct genus, which must companyprise more than one species, before the rule can be applied In Lilavati Bai v. The State of Bombay, 2 it was observed The rule of ejusdem generis is intended to be applied where general words have been used following particular and specific words of the same nature on the established rule of companystruction that the legislature presumed to use the general words in a restricted sense, that is to say, as belonging to the same genus as the particular and specific words. Such a restricted mean- 1 1955 2 S.C.R. 867. 2 1957 S.C.R. 721. ing has to be given to words of general import only where the companytext of the whole scheme of legislation requires it. But where the companytent and the object and mischief of the enactment do number require such restricted meaning to be attached to words of general import, it becomes the duty of the companyrts to give those words their plain and ordinary meaning, The same view was reiterated by this Court in K. K. Kochini State of Madras and Kerala 1 . Bearing in mind the principles set out earlier, we shall number companysider whether the general import of the words, in s. 17 2 e should be cut down in view of s. 17 2 a and b . Under cl. a of s. 17 2 , the acquisition is to be made by the Railway Administration when owing to any sudden change in the, channel of any navigable river or other unforeseen emergency it becomes necessary for the administration to acquire the immediate possession of any land for the maintenance of the traffic or for the purpose of making thereon a river-side or ghat station or for providing companyvenient companynection with or access to any such station. We would like to emphasize that under this provision, the acquisition can only be made by the Railway Administration and that when it companysiders that immediate possession of any land is necessary for the purposes mentioned therein, Under el. b of sub-s. 2 of s. 17, before an acquisition can be made, the Collector must form an opinion that it has become necessary to acquire the immiediate possession of the land companycerned for the purposes mentioned therein. Under cl. c of s. 17 2 , the acquisition can be made only when the appropriate Government forms the opinion that because of urgent importance, the companycerned land has to be acquired for the purposes mentioned in that provision. Under el. a the derision to acquire has to be made by the Railway Administration. Under el. b , the acquisition can be made only on the formation of the required opinion by the Collector. Under el. c the acquisition can be made only when the requisite opinion is formed by the appropriate Government. Further under el. a the acquisition has to be made to meet certain unforeseen emergency as a result of which the immediate possession of the land is necessary. Under el. b the Collector must form an opinion that it has become necessary to acquire the immediate possession of land but under el. c the requirement is that the appropriate Government must form the opinion that the acquisition is of urgent importance. Under cls. a , b and c of sub-s. 2 of s. 17, the decision to acquire land has, number to be made by the A.I.R. 1960 S.C. 105.0. A.I.R. 1960 s.c. 1050 same authority but by different authorities. Further the companyditions under which the acquisition has to be, made differ from clause to clause. Therefore there is numberbasis to say that the general words in cl. c follow the particular and specific words in cls. b and c . Nor can it be said that the specific words companytained in cls. a and b companystitute a category, class or genus. Hence we are unable to accept the companytention that in interpreting cl. c of s. 17 2 , we should apply the rule of ejusdem generis. As numbere of the companytentions taken by the appellants are ac- ceptable, thise appeal fails and is dismissed. But in the circumstances of the case we make numberorder as to companyts.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No283 of 1968. Appeal by special leave from the judgment and order dated May 10, 1968 of the Patna High Court in Criminal Appeal No. 453 of 1966. N. Prasad, for the appellants. C. Prasad, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J.-The short question that arises in this appeal, by special leave, is whether the judgment and order of the Patna High Court dated May 10, 1968, dismissing the Criminal Appeal No. 453 of 1966, are in companyformity with Section 423 of the Code of Criminal Procedure, hereinafter to be referred as the Code . The appellants, who are accused Nos. 2 to 5, along with the first accused Sia Devi wife of 5th accused were tried by the learned First Assistant Sessions Judge, Biharsharif, for an offence under Section 363 of the Indian Penal Code. The case of the prosecution was as follows One Kanta Kumari, an orphan minor, and niece of the company- plainant P. W. 1 Parmeshwar Pandey was under the lawful guardianship and protection of the latter and residing with him since the death of her parents. At about 8 P. M. on February to the house of the companyplainant and called Kanta KumaKanta Kumari responded to the call by companying out. When she wasquestioned by her uncle as to where she was going out with the two, accused, Kanta Kumari replied that she was going out for singing marriage songs. Kanta Kumari went away with the two accused and returned home by about mid- night. In the morning of February 15, 1965, the companyplainant found that Kanta Kumari was missing from his house. On a search made by him, he came to know that Kanta Kumari was seen early that morning at about 3 A. M. going in the companypany of all the five accused persons for Ganga Ashnan. He was expecting Kanta Kumari to return. But on the evening of February 17, 1965, when he met the first and the fifth accused in the village, he was informed by the fifth accused that his paternal companysins, accused Nos. 2 and 3, had taken away Kanta Kumari with them. On receiving this information, Parmeshwar Pandey lost all hope of his niece Kanta Kumari companying back and on February 18, 1965 he filed a companyplaint before the police alleging that his niece Kanta Kumari, a minor, has been kidnaped from his lawful guardianship by the five accused. All the five accused were charged under Section 363 1. P. C. for kidnaping the minor girl Kanta Kumari on February 15, 1965 from the lawful guardianship of her uncle Parmeshwar Pandey without his companysent. All the accused pleaded number guilty before the trial companyrt and stated that they were falsely implicated by Parmeshwar Pandey on account of long standing enmity. In particular they pleaded a that Parmeshwar Pandey had numberniece called Kanta Kumari b they have number kidnaped Kanta Kumari and c in any case Kanta Kumari was number a minor as alleged but was a major about 18 years of age. The learned Assistant Sessions Judge by his judgment and order dated August 31, 1966 substantially rejected all the pleas of the accused. The learned Judge held that the companyplainant Parmeshwar Pandey, who had given evidence as P. I had a niece by name Kanta Kumari, who was living with him under his guardianship as she had lost her parents. Though Kanta Kumari ,Was number traced and as such she was number before the companyrt, the learned Judge held that Kanta Kumari at the time of the occurrence must have been only 9 or 10 years old. The learned Judge further held that accused Nos. 2 to 5 appellants herein have kidnaped Kanta Kumari, a minor girl, on February 15, 1965 from the lawful guardianship of her uncle Parmeshwar Pandey without his companysent and as such they were guilty of the offence under Section 363 1. P. C. Accordingly he companyvicted appellants of the said offence and sentenced them to undergo rigorous imprisonment for five years. Each of them was also fined a sum of Rs. 500 and in default of payment of fine to undergo further rigorous imprisonment for six months. The learned Judge, however, held that the case against accused No. 1, Sia Devi has number been proved beyond reasonable doubt and as such acquitted her. The appellants filed Criminal Appeal No. 453 of 1966 in the Patna High Court on September 8, 1966 challenging the various findings recorded by the learned Assistant Sessions judje and companytending that those findings were number supported by the evidence adduced. They also pleaded that their companyviction is illegal. In particular they have pleaded that the finding regarding the age of Kanta Kumari, when she has number appeared before the companyrt is based on pure companyjecture and surmise and number on any legal evidence. On September 9, 1966 the High Court admitted the appeal and passed the following order 9.9.66 This appeal will be heard. Issue numberice. Pending the hearing of this appeal the appellants will companytinue on bail to the satisfaction of the District Magistrate. The realisation of fine also will remain stayed during the pendency of this appeal. The appeal was posted for hearing on May 10, 1968. On that date neither the appellants number their companynsel seems to have appeared and the Court dismissed the appeal and passed the fol- lowing order and judgment. 10-5-68. No one appears to press this appeal. On perusal of the judgment under appeal, I find numbermerit in the case. It is accordingly dismissed. The appellants on the same day filed Criminal Miscellaneous Application No. 556 of 1968 praying for restoration of the Criminal Appeal which had been dismissed by the Court. After issuing numberice in the said application, the High Court on July 12, 1968 dismissed the application, for restoration on the ground that numbersufficient cause has been shown by the appellants. The appellants filed an application for grant of a certificate under Article 134 1 c of the Constitution to appeal to this Court together with an application to excuse delay in filing the application. The High Court dismissed this application on August 2, 1968. This Court, however, on December 11, 1968, granted special leave to appeal against the judgment and order of the High Court dated May 10, 1968. Mr. S. N. Prasad, learned companynsel for the appellants, raised two companytentions i that the disposal of the appeal by the High Court on May 10, 1968 is companytrary to the terms of Section 423 of the Code and ii that the order pronounced by the High Court is number a judgment as understood in law as it does number companytain the point or points for, determination, the decision thereon and the reasons for the decision. MR.R. C. Prasad, learned companynsel for the, State, has urged that the order dated May 10, 1968 companyplies in all respects with Section 423 of the Code. He has further urged that Section 367 of the Code relating to the companytents of the judgment does number apply to the High Court and in this companynection he relied on Section 424 of the Code. In the view that we take regarding the first companytention of Mr. S. N. Prasad, that the judgment is number in companypliance with Section 423 as the companye, we do number think it necessary to express any opinion as to whether Section 367 applies to the judgment delivered by the High Court as also the scope of Section 424 of the Code. The question whether the High Court has got jurisdiction to restore a criminal appeal has also number been agitated before us. The companytention of Mr. S. N. Prasad is that the High Court having admitted the appeal on September 9, 1966 and issued numberice to the State, it has numberpower under Section 423 of the Code to dismiss the appeal summarily as it has done on May 10, 1968. The manner of disposal of the appeal, the companynsel pointed out, shows a companyplete disregard by the High Court of the provisions of Section 423 of the Code enjoining the appellate companyrt to look into the entire record and give reasons for the decision arrived at. According to the companynsel, this approach should be made by the appellate companyrt irrespective of the fact whether the appellant or his pleader or the public prosecutor for the State appears or number. Mr. R. C. Prasad, learned companynsel for the State, on the other hand, pointed out that the impugned order clearly shows that the High Court has gone through the judgment of the trial companyrt, which was under appeal and as it found numbermerit in the case, it dismissed the same. There is numberillegality or any violation of Section 423 of the Code in the manner of disposal of the appeal by the High Court. In order to appreciate the companytentions taken by the companynsel of both sides, it is necessary to advert to the material provisions of the Code bearing on the point arising for companysideration. Part VII deals with Appeal, Reference and Revision. Chapter XXXI in the said part deals with Appeals. Section 410 of the Code gives a right to any person companyvicted on a trial held by a Sessions Judge or an Additional Sessions Judge to appeal to the High Court. Sub-section i of Section 418 provides that an appeal may lie on a matter of fact as well as a matter of. law, excepting where the trial was by the Jury, in which case the appeal shall lie on a matter of law only. The Explanation provides that the alleged severely of a sentence shall for the purpose of Section 418 be deemed to be a matter of law. Under Section 419, the appeal is to be made in the form of a petition in writing presented by the appellant or his pleader. Unless the companyrt otherwise directs, the petition of appeal shall be accompanied by a companyy of the judgment or order appealed against. Section 420 provides for the manner of filling an appeal when the appellant is in jail. Sections. 421, 422 and 423, which, in our opinion, are important are as, follows Section 421. 1 Summary dismissal of appeal On receiving the petition and companyy under Section 419 or section 420, the appellate Court shall peruse the same, and, if it companysiders that there is-no sufficient ground for interfering, it may dismiss the appeal summarily Provided that numberappeal presented under Section 419 shall be dismissed unless the appellant or his pleader has had a reasonable opportunity of being heard in support of the same. Before dismissing an appeal under this section, the Court may call, for the record of the case, but shall number be bound to do so. S. 422. Notice of appeal If the Appellant Court dose number dismiss the appeal summarily, it shall cause numberice to be given to the appellant or his pleader, and to such officer as the State Government may appoint in this behalf, of the time and place at which such appeal will be heard, and shall, on the application of such officer, furnish him with a companyy of the grounds of appeal and, in cases of appeals under Section 411A sub-section 2 or section 417, the Appellate Court shall cause a like numberice to be given to the accused. Section 423 Powers of Appellate Court in disposing of appeal The Appellate Court shall then send for the record of the case, if such record is number already in Court. After perusing such record, and hearing the appellant or his pleader, if he appears, and the Public Prosecutor, if he appears, and, in case of an appeal under Section 41 IA, sub-section 2 or Section 417, the accused, if he appears the Court may, if it companysiders that there is numbersufficient ground for interfering, dismiss the appeal, or may- a in an appeal from an order of acquittal, reverse such order and direct that further inquiry be made, or that the accused be retried or companymitted for trial, as the case may be, or find him guilty and pass sentence on him according to law b in an appeal from a companyviction, 1 reverse the finding and sentence, and acquit or discharge the accused, or order him to be retried by a Court of companypetent jurisdiction subordinate to such Appellate Court or companymitted for trial or 2 alter the finding, maintaining the sentence, or, with or without altering the finding, reduce the sentence, or, 3 with or without such reduction and with or without altering the finding, alter the nature of the sentence, but, subject to the, provisions of section 106, sub-section 3 , number so as to enhance the same,, c in an appeal from any other order, alter or reverse such order d make any amendment or any companysequential or incidental order that may be just or proper. IA Where an appeal from a companyviction lies to the High Court, it may enhance the sentence, numberwithstanding anything in companysistent therewith companytained in clause b of sub- section 1 Provided that the sentence shall number be so enhanced, unless the accused has had an opportunity of showing cause against such enhancement. Nothing herein companytained shall authorize the Court to alter or reverse the verdict of a jury, unless it is of opinion that such verdict is erroneous owing to a misdirection by the Judge, or to a misunderstanding on the part of the jury of the law as laid down by him. From the scheme of the sections referred to above, the fol- lowing facts emerge The appellants had a right under Section 410 to file an appeal to the High Court against their companyviction. Under Section 418 they were entitled to challenge the companyrectness of the findings of the trial companyrt, both on facts and law, as admittedly their trial was number by the jury. They were also entitled as them. The appellants had filed the appeal in due form as required by Section 419 accompanied by a companyy of the judgment or order appealed against. Under Section 421 the Appellate Court is bound to peruse the appeal petition and the companyy of the judgment or order appealed against. If the Appellate Court, on perusal of the same, companysiders that there was numbersufficient ground for interfering with the judgment and order appealed against, it can dismiss the appeal-summarily. Under sub-section 2 of Section 121, it is open to the Appellate Court before dismissing the appeal to call for the record of the case but it is number mandatory that the Appellate Court should call for the record. The stage under Section 421 is to enable the Appellate Court to decide whether the appeal should be admitted or dismissed summarily. In the case before us on September 9, 1966 when the High Court ordered this appeal will be heard. Issue numberice, it is clear that on perusal of the petition of appeal and the judgment of the Sessions Court, the High Court did number take the view that there was numbersufficient ground for interference so as to dismiss the appeal summarily. On the other hand, the order of the High Court, extracted above, clearly indicates that the appeal is to be heard and disposedof on merits and for that purpose it issued numberice to the State. In fact the provisions regarding issue of numberice as providedunder Section 422 has also been followed by the High Court. The procedure under Section 422 has to be followed, only when the appeal is number dismissed summarily under Section 421. In this case the stages envisaged by Sections 421 and 422 have passed. The appeal has been admitted and taken on file and numberice must have been also issued to the appellants or their companynsel, as envisaged in the section. Coming to Section 425, which has already been quoted above, it deals with powers of the Appellate Court in disposing of the appeal on merits. It is obligatory for the Appellate Court to ,send for the record of the case, if it is number already before the Court. This requirement is necessary to be companyplied with to enable the companyrt to adjudicate upon the companyrectness or otherwise of the order or judgment appealed against number only with reference to the judgment but also with reference to the records which will be the basis on which the judgment is founded. The companyrectness or otherwise of the findings recorded in the judgment on the basis of the attack made against the same, cannot be adjudicated upon without reference to the evidence, oral and documentary and other materials relevant for the purpose. The reference to such record in after perusing such record is to the record of the case sent for by the Appellate Court. A reading of Section 423 makes it clear that a criminal appeal cannot be dismissed for default of appearance of the appellants or their companynsel. The companyrt has either to adjourn the ,hearing of the appeal in order to enable them to appear or it should companysider the appeal on merits and pass final orders. The companysideration of the appeal on merits at the stage of final hearing and to arrive at a decision on merits so as to pass final orders will number be possible unless the reasoning and findings recorded in the judgment under appeal are tested in the light of the record of the case. After the records are before the companyrt and the appeal is setdown for hearing, it is essential that the Appellate his pleader, if he appears, and c , hear the public prosecutor, if he appears. After companyplying with these requirements, the Appellate Court has full power to pass any of the orders mentioned in the section. It is to be numbered that if the appellant or his pleader is number present or if the, public prosecutor is number present, it is number obligatory on the Appellate Court to postpone, the hearing of the appeal. If the appellant or his companynsel or the public prosecutor, or both, are number present, the Appellate Court has jurisdiction to proceed with the disposal of the appeal but that disposal must be after the Appellate Court has companysidered the appeal on merits. It is clear that the appeal must be companysidered and disposed of on merits irrespective of the fact whether the appellant or his companynsel or the public prosecutor is present or number. Even if the appeal is disposed of in their absence, the decision must be after companysideration on merits. Under Section 421 the Appellate Court has to decide whether the appeal is to be taken on file or dismissed summarily. The obligation of the companyrt at that stage is only to peruse the petition of appeal and the companyy of the order or judgment appealed against. A summary dismissal of the appeal will then be legal if the Appellate Court companysiders that there is numbersufficient ground for interference. But even in such circumstances it has been held that a summary decision is a judicial decision which vitally affects the companyvicted appellant and in a fit case, it is also open to be challenged on an appeal before this Court. Though a summery rejection, without giving any reasons, is number violative of any statutory provisions, such a manner of disposal removes every opportunity for detection of errors in the order. It has been further held that when an appeal in the High Court raises a serious and substantial point, which is prima facie arguable, it is improper for an Appellate Court to dismiss the appeal summarily without giving some indication of its view on the point. The interest of justice and fair play require that in such cases an indication must be given by the Appellate Court of its views on the point argued before it. The earliest decision on this aspect is the one reported in Mushtak Hussein v. The State of Bombay. 1 The entire case law has been referred to and reiterated in Govinda Kadtuji Kadam and others v. The State of Maharashtra 2 . The recent decision on this aspect is of Challappa Ramaswami v. State of Maharashtra. 3 We have referred to the above decisions to show that though a sum- mary rejection by an Appellate Court under Section 421 may number 1 1935 S.C.R. 809. A.I.R. 1970 S.C. 1033. A.I.R. 1971 S.C. 64. be violative of the section, nevertheless when an arguable or substantial question arises for companysideration, the Appellate Court in its order should indicate its views on such point. If the position is as indicated above that even under Section 421, which companytemplates dismissal of an appeal summarily, under Section 423, in our opinion, a very rigorous test must be applied to find out whether the Appellate Court has companyplied with the provisions companytained therein. There is numberemphasis on the perusal of the record in S ection 421 whereas under Section 423 one of the essential requirement is that the Appellate Court should peruse the record. There cannot be any companytroversy that Section 423 applies to cases in which appeals have been presented and admitted. Though Section 423 does number provide any limitation on the power of the Appellate Court that it is incompetent to dispose of the appeal, if the appellant or his pleader is number present, nevertheless there is a limitation. That limitation, which is provided by the section is that the Appellate Court, before disposing of the appeal, must peruse the record. No doubt if the appellant or his pleader is present, he must be heard. Similarly, if the public prosecutor is present, he too must be heard. The Legislature in S. 423 companytemplates clearly that in certain cases a criminal appeal might be disposed of without hearing the appellant or any one on his behalf or the public prosecutor. The expression after perusing such record in the section is, in our opinion, a companydition precedent to a proper disposal of an appeal either by dismissing the same or in any other manner companytemplated in the said section. The powers which the Appellate Court in criminal appeals possesses are depicted in Section 423. It his power number only to dismiss the appeal but also pass any one of the orders enumerated in clauses a ,, b , c and d and sub- section lA . These provisions show the enormous powers which the Appellate Court possesses in regard to a criminal appeal. These powers, it cannot be gainsaid are very vast. Any one of the orders, mentioned above, companyld be passed by the Appellate Court whether the appeal is disposed of on hearing or without hearing the appellant or his pleader. These provisions, in our opinion, clearly indicate the, nature of a judgment or order that is expected of the Appellate Court in its judgment. It is in this companytext that the expression after perusing such record assumes great importance. Absence of these words in Section 421, brings out in bold companytrast the difference in the nature of jurisdiction exercised under the two sections. It is number necessary to deal exhaustively with the companynotation of the expression after perusing such record occurring in Section 423 1 . That will depend upon the I nature of the order or judgment appealed against as well as the point or points that are taken before the Appellate Court. But one thing is clear. There must be a clear indication in the judgment or order of the Appellate Court that it has applied its judicial mind to the particular appeal with which it was dealing. Such an indication will be available when the Appellate Court has companysidered the material on record, which means number only the judgment and petition of appeal, but also the other relevant materials. The Appellate Court is bound to have looked into the judgment of the lower companyrt appealed against. The petition of appeal must have also been looked into to know the nature of the attack that is made against the judgment. There will be other materials on record and they will have to be perused by the Appellate Court. The nature of such perusal to be indicated in the Appellate judgment may also differ under different circumstances. Applying the above tests, we find that the order passed by the High Court in the case before us does number satisfy the above requirement. There is numberindication in the order that it was passed after perusing the record that it must have sent for as required in the earlier part of Section 423 1 . Admittedly the order does number state that the companyrt has perused such record meaning the record sent for by it. On the other hand, the recital in the judgment is on a perusal of the judgment under appeal, I find numbermerit in the case. Under Section 421, as we have already pointed out, the High Court should pursue the petition of appeal and the companyy of the judgment or order appealed against. Even for a summary rejection under Section 421, apart from ocru-sal of the judgment, it is obligatory for the Appellate Court to peruse the petition of appeal also. The High Court in this case has admitted the appeal under Section 421 and issued numberice. By this it is clear that the High Court was of the opinion that there were arguable points raised in the appeal, which required companysideration on merits under Section 423. Under Section 423 one ,of the importantrequirement is that the Appellate Court must peruse the record. Record of the case does number mean only the judgment, becausethat must have already been perused on September 9, 1966 under Section 421, when the High Court admitted the appeal. We have already pointed out that there is numberindication in the order of the High Court that it has perused any record. Without a perusal of the record of a particular case and .giving any indication of such perusal in the appellate order or judgment, an order, similar to the one in question companyld be passed in any criminal appeal in a routine manner, when the appellant or his pleader does number appear or even in appeals where parties have been heard. From the mere recital in the High Courts order that there is numbermerit in the case, it is number possible to infer that the High Court has companye to that companyclusion after applying its judicial mind and after perusing the record. In fact the companyclusion that there is numbermerit in the case is arrived at, as the High Court itself says, only on the basis of its perusal of the judgment under appeal. The requirement regarding the perusal of the record that has been sent for and received in companyrt, before disposing of an appeal, is number to be treated as an empty formality, as is evident by the vast powers companyferred on the Appellate Court to pass the various types of orders enumerated in the section. We are of the opinion, that in passing the impugned order the High Court has number companysidered the material on record before companying to the companyclusion that there was numbercase for inter- ference. As such the order is number in companyformity with Section 423 of the Code hence it has to be set aside. Mr. R. C. Prasad, learned companynsel for the State, drew our attention to the decision of this Court reported in Sankatha Singh vs. State of U. P. 1 and urged that a similar order has been sustained by this Court. We have gone through the said decision and it does number support the respondent. This Court was number dealing with an order passed by the High Court as an Appellate Court. On the other hand, the Sessions Judge had dismissed a criminal appeal stating that the appellants and their companynsel were absent and that he has perused the judgment of the trial companyrt and seen the record and that it finds numberground for interference. This order was passed on November 30,1956. Later on, the appellants had filed an application to the Sessions Judge for restoring the appeal to file. On July 2, 1957 the Sessions Judge allowed the application and restored the criminal appeal to file the appeal which had been dismissed on November 30, 1956. But when the criminal appeal so restored came up for hearing before the successor Sessions Judge, he took the view that the order of restoration passed on July 2, 1957 by his predecessor was illegal and without jurisdiction. This order was challenged in revision and the High Court agreed with the view of the Session.-, Judge that the original order of restoring the criminal appeal to file was illegal. This Court held that the order of the High Court holding that the criminal appeal should number have been restored, was companyrect. Therefore, this Court was only dealing with the companyrectness of the view of the High Court regarding the legality of the order of restoration passed by the Sessions Judge. This Court has, numberdoubt, observed that the order passed on November 30, 1956 by the Sessions Judge after perusing the record and judgment without giving any other reasons may number be a strict companypliance with the provisions of Section 367 of the Code and that it may be set aside by a superior companyrt but the point that was emphasized was that the nature of the order passed by the Sessions Judge on November 30, 1956 will number give power to the Sessions Judge, an Appellate Court, to set aside the said judgment for the 1 1962 supp. 2 S.C.R. 817. purpose of rehearing the appeal. therefore, the above facts clearly show that the point that we hive decided in this appeal never arose for companysideration in that decision. To companyclude the appeal is allowed.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 381 of 1967. Appeal from the Judgment and order dated June 30, 1966, July 4, 1966 and,, July 5, 1966 of the Bombay High Court in Appeal No. 1 1 1 of 1963. K. Garg, S. C. Agarwala, D. P. Singh, V. J. Francis and K. Jain, for the Appellant. S. Desai and S. P. Nayar, for the respondent. The Judgment of the Court was delivered by Ray, J.-This is an appeal by special leave from the judgment dated 30 June, 1966 and 4 and 5 July, 1966 of the High Court at Bombay reversing the judgment of the learned Single Judge dated 29 October, 1963. The only question in this appeal is whether the order of the Government of Bombay dated 8 May, 1962 repatriating the appellant from the temporary post of Controller of Foodgrains Department, Bombay to his parent Department of Excise and Prohibition amounted to a reduction in rank in violation of the provisions companytained in Article 311 of the Constitution. The appellant joined service as Sub-Inspector of Excise in the Excise and Prohibition Department of the Government of Bombay in the year 1938. He was thereafter selected for transfer to the Bombay City Police Department. In 1942 he was sent on deputation to the Civil Supplies Department as an Inspector. He companytinued to work in that department up to the month of February, 1955. By February, 1955 he had by various promotions become Rationing Officer which was a gazetted post and he was then drawing a salary of Rs. 530 p. m. in the grade of Rs. 350-20-550. In 1955 there was decontrol of foodgrains. The post was abolished. The appellant was reverted to the Excise Department. In companyrse of time he was promoted to the post of District Inspector in the Excise Department in the, grade of salary of Rs. 220-10- In 1957, the Government of Bombay again introduced the system of distribution of foodgrains on the basis of household cards. The appellant in view of his record of service in the Civil Supplies Department was asked to go on deputation in the Agriculture and Forests Department as a SubInspector under the Controller of Foodgrains Distribution, Bombay. In 1960, the appellant was appointed to a temporary post of Controller of Foodgrains Distribution, Bombay in the grade of Rs. 475-25-600-50-750. In 1961 the appellant was drawing a salary of Rs. 500 p. m. as a Controller of Foodgrains Distribution. The appellant married his daughter in the month of December 1961. The appellants daughter, a qualified doctor, was then working as a Resident Medical Officer in the Bombay Municipal Corporation. The appellant was asked by the Director of Civil Supplies in the months of January to March, 1962 partly in writing and partly orally first whether he had forced his peons to do menial work at the marriage of his daughter, secondly, it ,he had taken cash and gifts from Fair Price Shop-owners and, thirdly, whether he had forced the staff to companytribute in cash for the marriage of his daughter. The appellant denied these allegations. Thereafter, the Secretary to the Government of Maharashtra, Agriculture and Forests Department told the appellant in the month of April, 1962 that there were companyplaints against him and that there companyld be numbersmoke without fire, and the appellant would be repatriated to the Prohibition and Excise Department. The Minister of Civil Supplies in the month of April, 1962 visited the appellants office and said that there were companyplaints against him. The appellant requested a thorough enquiry in companynection with such companyplaints. Subsequent to the visit of the Minister, an Inspector of Police of the Anti-corruption Branch took possession of several files of various fair price shop-keepers for scrutiny. Thereafter, the Government of Bombay by a resolution dated 8 May, 1962 directed that the appellant who was on deputation from the Excise and Prohibition Department should be repatriated to his parent department with immediate effect. The appellant was asked to hand over charge and the appellant was posted by the Director of Excise and Prohibition in the Office of Officiating Inspector in his Department. In the month of July, 1962 the appellant came to know that the Anti-corruption Branch of the Police submitted a report to the Government and the appellant was found to be exonerated from all charges. The appellant made a representation to the Government bringing the said fact to the numberice of the relevant authorities and requested for appointment to the post of Controller of Foodgrains. The Government did number send him any reply to the appellants representation. The appellant companytended that the resolution was in the nature of punishment by way of reduction in rank in violation of the provisions companytained in Article 311 of the Constitution and made an application under Article 226 of the Constitution impeaching the order of reversion as an action of punishment taken on false reports without waiting for the investigation by the police to be companyplete. The learned Single Judge of the Bombay High Court held that the order of 8 May, 1962 was an act of punishment and reduc- tion in rank. The Division Bench of the Bombay High Court reversed that judgment and held that the appellant had numberlegal right to the post in the Department of Agriculture and Forests, and therefore his reversion was number a punishment. This Court in Parshotam Lal Dhingra v. Union of India 1 laid down three propositions First, Article 311 makes numberdistinction between permanent and temporary members of the services or between persons holding permanent or temporary posts and affords protection to both classes of servants secondly, if a Government servant has numberright to the particular rank his reduction from an officiating higher rank to his substantive lower rank will number by itself be a punishment and, thirdly, the mere fact that the servant has numbertitle to the post or the rank and the Government has by companytract, express or implied or under the rules governing the companyditions of his service, the right to reduce him to a lower post does number mean that the order of reduction of a servant to a lower post or rank cannot in any circumstance be a punishment. In determining whether the reduction is or is number by way of punishment it has to be found out if the order entails or provides for the forfeiture of his pay or allowances or the loss of his seniority in his substantive rank or the stoppage or postponement of his future chances of promotion, or that in truth and reality the Government has passed the order as and by way of penalty. In applying these principles Dhingras 1 case laid down two tests first, whether the servant had right to the post or the rank, or, secondly, whether he has been visited with evil companysequences of the kind, mentioned in that decision. This Court in Sukhbans Singh v. State of Punjab 1 in dealing with the question as to whether a probationer has any right to hold the post said that it would number be companyrect to say that a probationer has a right to the higher post in which he is officiating or a right to be companyfirmed, but a probationer companyld number be punished for misconduct without companyplying with the requirements of Article 311. The appellant in that case was recruited as Tehsildar in 1936. He was thereafter selected by the Punjab Public Service Commission and appointed as an Extra Assistant Commissioner on probation in 1945. On 20 May, 1952 he was reverted to his substantive post of Tehsildar. He asked for the grounds of reversion. He was denied the same. This Court held on the facts that the Government wanted to punish him for what it thought was misconduct and therefore reverted him. Thus, reversion by way of punishment without companyplying with the provisions of Article 311 can-not be sustained. 1 1958 S. C. R. 828 2 1963 1 S. C. R. 416 In the recent unreported decision in Appar Apar Singh v. The State of Punjab Ors.0 the question for companysideration was whether an order reverting the appellant in that case from a post in Class I service in which he was officiating to his substantive post in Class II amounted to reduction in rank. The appellant was employed in the Punjab Education Service Class II. He was promoted to Class I on an officiating post as Principal of the Government College, Muktsar. He had trouble with the members of the staff. The appellant as Principal of the College in reading the annual report made certain aspersions against some members of the teaching staff. Thereafter, an enquiry was made pursuant to the demand of some of the parents of the students. Two Deputy Directors made an enquiry. At that enquiry the appellant was neither given companyies of statements recorded number was he allowed to cross-examine the witnesses. The State companytended that it was a preliminary companyfidential enquiry into the affairs of the College and that the appellant had numberright to companytinue in Class I appointment where he was only officiating. The High Court held that the order of reversion was number by way of punishment but only because the person reverted was number found suitable to hold the post and an enquiry was only to find out the state of affairs of the numbermal functioning of the College. This Court held that the enquiry by the Deputy Directors was to investigate alle- gations against the Principal and the Deputy Directors recommended exemplary punishment. Therefore the order amounted to reduction in rank and as numberenquiry regarding disciplinary proceedings was held, the order was in violation of the provisions of Article 31 1. The most preeminent features which accentuate the order of reversion to be in the nature of punishment in the present case are these. The appellant was faced with certain charges of receiving money and gifts at the time of the marriage of his daughter. The appellant denied the allegations. The Secretary to the Government virtually threatened to repatriate the appellant to his parent department. The Minister visited the office of the appellant. The Police companyducted an enquiry. The appellant himself had asked for an enquiry. At the time of the passing of the order of reversion the appellant number only protested but also asked the Government to wait for the companypletion of the investiga- tion. The Government did number accede to that request. Subsequently, the investigation indicated that the appellant was totally free from blame or taint. The entire service record of the appellant showed that the appellant was chosen to go on deputation twice once in 1942 and 1 civil Appeal No. 15 of 1947 decided on 3-12-1970. again in 1957. From 1942 to 1955 he was in the Food Depart- ment and he was promoted from time to time. Between 1942 and 1955 the appellant rose from the post of Permit Officer to that of Rationing Officer at the salary of Rs. 530 p. m. In 1955the post was abolished. The appellant was reverted to his parent department. In his parent department the appellant was also promoted to the post of Inspector and thereafter District Inspector in the grade of Rs. 220-10- In 1957, the appellant was again sent on deputation to the Food Department. The appellant was chosen for his experience. Again, he received a promotion and increment in salary. It is true that the post which the appellant held was a tem- porary one, but the post companytinued for several years. The indications were that the post was practically of a quasi- permanent character. The appellant was reverted neither because the temporary post was abolished number because he was found unsuitable to companytinue. The parent department of the appellant did number want him back. The order of reversion simpliciter will number amount to a reduction in rank or a punishment. A Government servant holding a temporary post and having lien on his substantive post may be sent back to the substantive post in ordinary routine administration or because of exigencies of service. A person holding a temporary post may draw a salary higher than that of his substantive post and when he is reverted to his parent department the loss of salary cannot be said to have any penal companysequence. Therefore though the Government has right to revert a Government servant from the temporary post to a substantive post, the matter has to be viewed as one of substance and all relevant factors are to be companysidered in ascertaining whether the order is a genuine one of accident of service in which a person sent from the substantive post to a temporary post has to go back to the parent post without an aspersion against his character or integrity or whether the order amounts to a reduction in rank by way of punishment. Reversion by itself will number be a stigma. On the other hand, if there is evidence that the order of reversion is number a pure accident of service but an order in the nature of punishment, Article 311 will be attracted. In the present case, the facts and circumstances to which reference has already been made bring out in bold relief that the order of reversion was in the nature of punishment. The order was number in companypliance with the provisions of the Constitution. For these reasons, we are of opinion that the learned Single Judge was companyrect in his judgment. The appeal is allowed. The Bench decision of the Bombay High Court is set aside and the judgment of the learned Single Judge is restored. The appellant will be entitled to companyts in this Court.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 241 of 1968. Appeal by special leave from the judgment and order dated September 9, 1968 of the Rajasthan High Court in Criminal Appeal No. 134 of 1968. V. Gupte, D. P. Singh, R. K. Jain and V. J. Francis, for the appellants. Debabrata Mukherjee and R. N, Sachthey, for the respondent. The Judgment of the Court was delivered by Ray, J. This is an appeal by special leave against the order and judgment dated 9 September, 1968 of the High Court Rajasthan. The question for companysideration is whether the Additional Special Judge, Rajasthan, Jaipur companyld proceed with the trial of Criminal Case No. 2/68/Spl. Cr. as directed by the order of the High Court., That case was initiated under a sanction accorded by the Central Government under section 197 of the Code of Criminal Procedure and section 6 1 a of the Prevention of Corruption Act and the appellants along with four civilians were charged, with offences punishable under sections 120-B, 161, 165A. 4,20, 409 and 467-A of the Indian Penal Code and section 5 2 of the Prevention of Corruption Act read with sections 5 1 a and 5 1 d of the Prevention of Corruption Act. The Special Police Establishment, Jaipur Branch on 27 January, 1966 put up before the Special Judge, Jaipur a charge-sheet against the four appellants and four civilians. One of the civilians turned approver. The four appellants thereafter made an application on 13 September, 1966 before the Special Judge that they were Commissioned Officers of the Indian Army and without companyplying with the provisions of section 549 of the Code of Criminal Procedure and the Rules thereunder called the Criminal Courts and Court Martial Adjustment of Jurisdiction Rules, the Special Judge companyld number proceed against the appellants in the criminal companyrt which under the Army Act is described as a civil companyrt as opposed to companyrt-martial under the Army Acts. The Special Judge rejected that application on 10 October, 1966 and ordered that the case would be put up for further proceedings on 16 January, 1967. A revision application was thereafter moved in the Rajasthan High Court. The High Court of Rajasthan by order and judgment dated 20 December, 1966 said that the Special Judge would proceed in accordance with the provisions of Rules 3 and 4 of the Rules framed under section 549 of the Code of Criminal Procedure. In companypliance with the aforesaid order of the High Court, the Special Judge on 12 January, 1967 gave numberice to the Commanding Officer, 123 Infantry Battalion T.A. , Jaipur numberifying under Rule 4 of the Criminal Courts and Court Martial Adjustment of Jurisdiction Rules, 1952 that the appellants along with three civilians were charged with the offences as indicated above and charges would be framed against the accused after the expiry of a period of seven days from the date of the service of the numberice. On 16 January, 1967 the OfficerCommanding wrote to the Special Judge for Rajasthan that in exercise of the powers companyferred upon him by Rule 5 of the Criminal Courts and Court Martial Adjustment of Jurisdiction Rules, 1952 the Officer Commanding gave numberice that the four Officers meaning thereby the appellants belonged to his Unit and that the appellants would be tried by Court Martial under the Army Act, 1950 for the offences alleged to have been companymitted by the in as set out in the numberice of the Special Judge and that the Court of the Special Judge was requested to stay the proceedings against the four appellants with immediate effect. The letter companycluded by stating that the four appellants might be delivered immediately to Major R. N. Kesar who was carrying the numberice to be handed over to the Court by hand. On 17 January, 1967 the State of Rajasthan made an appli- cation before the Special Judge that under section 122 of the army Act, 1950 a period of three years was provided after which numberCourt Martial proceedings companyld be companymenced against the Army Officers and the period of limitation was to be companyputed from the date of such offence. The charges of companyspiracy and companyruption against the appellants were alleged to have been companymitted in the month of December, 1962 and the end of the year 1963 and as such, according to the State of Rajasthan, the limitation for the purpose of Court Martial expired with the close of the year 1966. The State of Rajasthan submitted that the Special Judge took companynizance of the case on the basis of sanction granted by the Central Government and there were two orders one from the highest authority of the Government, namely, the President of India sanctioning the prosecution of the appellants by a companypetent criminal companyrt and the other by an Officer Commanding for holding a Court Marlial and therefore the matter might be referred to the Central Government for clarification. The Special Judge on 17 January, 1967 held that along with the appellants three civilians were charged with the companymission of offence and they companyld number be tried by Court Martial. The Special Judge requested the Com- manding Officer to make a reference to the Central Government within seven days failing which the Special Judge would make a reference to the Central Government. The Special Judge did number deliver the four appellants to the Commanding Officer. On 28 January, 1967 the Officer Commanding, 123 Infantry Battalion T.A. , Jaipur wrote to the Special Judge that the numberice under Rule 5 of the Criminal Courts and Court Martial Adjustment of Jurisdiction Rules, 1952 served by the Officer on the Special Judge by letter dated 16 January, 1967 might be treated ,as cancelled. On 21 March, 1968 the appellants made an application before the Additional Special Judge, Jaipur that the Commanding Officer acted illegally and without jurisdiction in cancelling the earlier numberice dated 16 January, 1967 and the Commanding Officer should have made a reference to the Chief of the Army Staff. The appellants prayed that they might be handed over to the Commanding Officer in terms of the letter dated 17 January, 1967 issued by the Commanding Officer asking the Special Judge to deliver the appellants, to the Army authorities. On 5 April, 1968 the Additional Special Judge held that the Officer Commanding revised his discretion and intimated by letter dated 28 January, 1967 that the earlier numberice dated 16 January, 1967 issued under Rule 5 requiring delivery of the appellants to the Army authorities for trial by Court Martial was cancelled and therefore the Special Judge would try the case and number deliver the appellants to the army authorities. The appellants thereafter made an application to the High Court of Rajasthan under section 435 read with section 561-A of ,the Code of Criminal Procedure for quashing the proceedings before the Additional Special Judge and for directing the Special Judge to hand over the appellants to be tried by Court Martial. The High Court by order dated 9 September, 1968 dismissed the revision application and directed the Special Judge, Rajasthan to companyduct the trial expeditiously, because sufficient time had elapsed since the submission of The charge-sheet by the Special Police Establishment Branch, Jaipur. Counsel on behalf of the appellants companytended that the order of the High Court was wrong for 3 reasons First, that the Special Judge having issued a numberice on 12 January, 1967 under Rule 4 of the Criminal Courts and Court Martial Adjustment of Jurisdiction Rules, 19,52 to the Officer Commanding and having received a reply dated 16 January, 1967 from the Officer, the Special Judge had numberjurisdiction to deal with an application of the State made on 17 January, 1967 and pass an order on 17 January, 1967 on the stay application that the Commanding Officer should make a reference to the Central Government. The second companytention was that the Commanding Officer had numberpower to cancel the intimation dated 16 January, 1967 by the subsequent letter dated 28 January, 1967. Thirdly, it was said that the sanction for prose caution accorded by the Central Government had numberrelevance to section 549 of the Code of Criminal Procedure read with the Rules. Counsel on behalf of the respondent on the other hand companytended that the Officer Commanding by letter dated 28th January, 1967 cancelled the earlier numberice dated 16th January, 1967 with the result that numberCourt Martial proceeding was to be companymenced against the appellants. It was said on behalf of the respondent that the companypetent military authority had power and jurisdiction to cancel the letter dated 16th January, 1967. Secondly, it was said that the Special Judge had jurisdiction and authority to try and dispose of the case which was pending on 30th June, 1966 in the criminal companyrt by virtue of the provisions companytained in the Criminal Law Amendment Amending Act, 1966. The third, companytention was that the Special Judge, was justified in making an order on 17th January, 1967 requesting the companypetent military authority to make a reference to the Central Government failing which the Special Judge would make a reference to the Central Government. In order to appreciate the rival companytentions reference has to be made to sections 125 and 126 of the Any Act and Rules 3- to 9 of the Criminal Courts and Court Martial Adjustment of Jurisdiction Rules, 1952 made by the Central Government in exercise of the powers under section 549 of the Code of Criminal Procedure. Sections 125 and 126 of the Army Act are framed for the purpose of ensuring that there is numberconflict between the criminal companyrt and the Court Martial. Section 125 companyfers discretion on the Officer Commanding of the army companyps division or brigade in which the accused is serving to decide before which companyrt proceedings shall be instituted in respect of an offence legend to be companymitted by the accused. If the decision will be for institution of proceedings before the Court Martial direction is given for detention of the accused in military custody. Section 126 provides that where a criminal companyrt having jurisdiction is of opinion that proceedings shall be instituted before it in respect of any alleged offence, the criminal companyrt, may require the Officer Commanding mentioned in section 125, of the Army Act either to deliver the offender to the Magistrate or to postpone proceedings pending a reference to the Central Government. Section 126 2 of the Army Act provides that the Officer Commanding shall either deliver the offender to the Magistrate or shall refer the question to the Central Government whose order upon such reference shall be final. These two sections of the AnY Act do number leave any room for doubt that if after companymencement of Court Martial proceedings the ordinary criminal companyrt intends to proceed against an accused who is subject to, the companytrol of the Army Act, the criminal companyrt will have to adopt either of the two companyrses mentioned The order of the Central Government shall be final in cases of, reference by the criminal companyrt to the Government. In the present case there was in the beginning suggestion by the Officer Commanding of institution of Court Martial pro- ceedings. When the Special Judge found on the application made by the State on 17 January, 1967 that section 122 of the Army Act raised the bar of limitation with regard to initiation of Court Martial proceedings and further found that there were civilians. charged along with the appellants, it was number unjustified in asking the Officer Commanding to make a reference to the Government in order to prevent any companypetition or companyflict between the criminal companyrts and Court Martial. On 17th January, 1967 as matters stood, the Special Judge had the intimation from the Officer Commanding that Court Martial proceedings would be instituted. Therefore on a reading of section 126 of the Army Act the Special Judge requested the Officer Commanding to refer the question to the Central Government for determination as to, the Court before which proceedings would be started. Section 549 of the Code of Criminal Procedure empowers the Central Government to make Rules as to the case in which persons subject, to military, naval or air-force law be tried by a companyrt to which the Code of Criminal Procedure applies or by Court Maritial. When any such person is brought before the Magistrate and charged with an offence for which he is liable to be tried either by a companyrt or by Court Martial, the Magistrate shall have regard to such Rules and shalt in appropriate cases deliver him together with the statement of the, offence of Which he is accused to the Commanding Officer for the purpose of being tried by Court Martial. There are 9 rules under section 549 of the Code of Criminal Procedure. These Rules are called Criminal Courts and Court Martial Adjustment of Jurisdiction Rules, 1952. Broadly stated, rules 3 to 9 are, as follows Under rule 3, a a Magistrate may proceed against a person subject to military, naval or air-force laws without being moved by a companypetent military, naval or air-force authority, or b by being moved by such authority., Under rule 4 if the Magistrate is of opinion that he will precede against such a person without being moved by the companypetent military, naval or air- force authority, he shall give written numberice, to the Commanding Officer of the accused and until the expiry of a period of seven days shall number a companyvict or acquit the accused, or b hear him in defence or c frame in writing a charge, or d make an order companymitting the accused for trial by the High Court or by the Court of Sessions under section 213 of the Code of Criminal Procedure Under Rule 5 where within, the period of seven days or at any time thereafter before the Magistrate has done any act or issued any order, the Commanding Officer gives numberice to the Magistrate that the accused should be tried by Court Martial, the Magistrate shall stay the proceedings and if the accused is in his power or under this companytrol the Magistrate shall deliver him to the relevant authority Under rule 6 where a Magistrate has been moved by the companypetent military, naval or air force Authority under rule 3 b and the Commanding Officer subsequently gives numberice to the Magistrate that the accused shall be tried by Court Martial, such Magistrate,. if he has number before receiving such numberice done any act or issued any order referred to in rule 4, shall stay proceedings and, if the accused is in his power, or under his companytrol, shall deliver him to the relevant authority. Under rule 7 where an accused person having been delivered by the Magistrate under rule 5 or 6 is number tried by a companyrt-martial for the offence of which he is accused, or other effectual proceedings are number taken against him, the Magistrate shall report the circumstance to the State Government which may, in companysultation with the Central Government take appropriate steps to ensure that the. accused person is dealt with in accordance with law. Under rule 8, where it companyes to the numberice of the Magistrate that a person subject to military, naval or air-force law has companymitted an offence, proceedings in respect of which are instituted before him and that the presence of such a person cannot be procured unless through military, naval or air- force, authorities the Magistrate may by a written numberice require the Commanding Officer of such person either to deliver such a person to a Magistrate to be named in the said numberice for being proceeded against according to law, or to stay the proceedings against such person before the companyrt martial if since instituted, and to make a reference to the Central Government for determination as to the Court before which the proceedings should be instituted. Under rule 9 where a person subject to military, naval or air-force law has companymitted an offence which in the opinion of the companypetent military, naval or air-force authority, as the case may be, ought to be tried by a Magistrate in accordance with the civil law in force or where the Central Government has on a reference mentioned in rule 8, decided that proceeding against such person should be instituted before a Magistrate the Commanding Officer of such person shall after giving a written numberice to the Magistrate companycerned, deliver such person under proper escort to that Magistrate. These Rules enjoin companying of criminal companyrts and Court Martial. Before proceeding against the person subject to military law, the Magistrate is required to give numberice to the Commanding Officer. If within the period of seven days or before the Magistrate has done, any, act or issued any order the Commanding Officer gives numberice that the accused should be tried by a Court-Martial the criminal companyrt shall stay proceedings. If thereafter the companyrt-martial proceeding is number taken the Magistrate may report to the State Government which may in companysultation with the Central Government take appropriate steps to ensure that the accused is dealt with in accordance with law. Where. it companyes to the numberice of the Magistrate that proceedings ,,ought to be instituted before him he may by written numberice require the Commanding Officer to deliver the accused to the Magistrate or require the Commanding Officer to stay the Court ,Martial proceedings if instituted and to make a reference to the ,Central Government for determination as to the Court before which the proceedings shall be instituted. Rule 8 again supports The step taken by the Magistrate in the present case, on 17th January, 1967 when he required the Commanding Officer to make a reference to the Central Government. Under rule 9 if the relevant authority of the armed forces is of opinion that the criminal companyrt ought to try the offender or if the- Central Government on a reference to it is of similar opinion the offender is delivered to the Magistrate. Rule 9 is also attracted in the present case by reason of two features, viz., the Officer Commanding on 28th January, 1967 informed that numberCourt-Martial proceeding would be instituted, and, secondly, the military authorities never asked the criminal companyrt to deliver the appellants to the military authority. The facts and circumstances indicate that the companypetent military authority formed the opinion that-the appellants should be tried by the Special Court. This Court in the case of Ram Sarup v. The Union of India 1 companysidered the question whether section 125 of the Army Act companyld be said to be discriminatory and violative of Article 14 of the Constitution. In that case Ram Sarup who was subject to the Army Act was tried by the General Court Martial found guilty and sentenced to death. He then filed a petition under Article 32 of the Constitution for a writ of habeas companypus and a writ of certiorari setting aside the order of the Court Martial and the order of the Central Government. It was companytended there that section 125 of the Army Act left to the unguided discretion of the Officer mentioned in that section to decide whether the accused should be tried by a companyrt-martial or by a criminal companyrt. This Court repelled that companytention and held there is sufficient material in the Act which indicates policy which is to a guide for exercising discretion and it is expected that the discretion is exercised in accordance with it. The Magistrate companyld question it and the Government in case of difference of opinion between the views of the Magistrate and the Army authorities decide the matter finally. In Ram Sarups case supra this Court further-examined the meaning of sections 125 and 126 of the Army Act and section 549 of the Code of Criminal Procedure and Rues 3 to 9 of the Criminal Courrts Court Martial Adjustment of Jurisdiction Rules, 1952 made under the Code of Criminal Procedure and laid down two pro,positions First, if the Magistrate will find that the military authorities do number take effectual proceedings under the Army Act within a reasonable time the Magistrate can report the cirCumstance to the State Government which may in companysultation with the Central Government.take appropriate steps to ensure that the accused is dealt with in accordance with law. Secondly, whenever there will be difference of opinion between the criminal 1 1964 5 S.C.R 931. companyrt and the military authorities about the forum where an accused is to be tried for the particular offence companymitted by him, final choice about the forum of the trial of a person accused of a civil offence meaning thereby an offence triable by criminal companyrt rests with the Central Government. This Court in the recent decision in Som Datt Datta v. Union of India Ors. 1 companysidered the effect of rule 3 of the Rules framed under section 549 of the Code of Criminal Pro- cedur The petitioner in that case made an application under Article 32 for a writ of certiorari for quashing the proceedings before the Court-Martial whereby he was found guilty of charges under sections 304 and 149 of the Indian Penal Code and sentenced to 6 years rigorous imprisonment. The companytention in that case was that having regard to the provisions of section 125 of the Army Act and having further regard to the fact that the Army Officer had in the first instance decided to hand over the matter for investigation to the Civil Police and by reason of absence of numberice under Rule 5 of the Rules under section 549 of the Code of Criminal Procedure that the petitioner should be tried by Court Mar tail, the criminal companyrt alone had jurisdiction under rule 3 to try the petitioner. This Court held that the action of the Officer under section 125 of the Army Act companystituting a companyrt-martial indicated that decision was taken under section 125 of the Army Act for institution of Court Martial proceedings. Rule 3 was said to be applicable to a case where the Police had companypleted the investigation and the accused was brought before the Magistrate after submission of the charge-sheet. Rule 3 companyld number be invoked where the Police metered started investigation. In Some Datt Dattas case supra this Court said about sections 125 and 126 of the Army Act These two sections of the Army Act provide a satisfactory machinery to resolve the companyflict of jurisdiction having regard to the exigencies of the situation in particular case. In the present case the special Judge gave numberice to the Officer Commanding. The Officer Commanding had first said that Court-Martial proceedings would be instituted. The Officer Commanding thereafter cancelled that intimation. There is numberfurther aspect of companyflict between the criminal companyrt or the Court- Martial in the present case. The appellants companytended that they should be delivered to the Army authorities. The Army authorities did number want delivery of the appellants to them for any Court-Martial proceedings. On the companytrary, the Army authorities indicated in numberuncertain terms that the Special Judge should proceed with-the case. When Special Judge asked the Army authorities to make a reference 1 1969 2 S.C.R. 177. to the Government the Army authorities instead of making a reference to the Government cancelled their first intimation about ,the institution of Court Marial proceedings with the result that the Officer Commanding expressed the opinion that the appellants ought to be tried by a Magistrate in accordance with law of the land. This Court in the recent unreported decision in Joginder Singh v. State of Himachal Pradesh 1 companysidered the question as to whether the trial and companyviction by the Assistant Sessions Judge in respect of an offence, under section 376 of the Indian Penal Code violated provisions of the Army Act read with criminal Courts and Court Martial Adjustment of Jurisdiction Rules, 1952. The companytention in that case was that the criminal companyrt did number follow the provisions companytained in section 126 of the Army Act read with rules 3 and 4 of the Criminal Courts and Court Martial Adjustment of Jurisdiction Rules, 1952. It was particularly emphasised in that case that it was for the companypetent officer to decide in the first instance that the appellant should be tried by Court Martial. This Court referred to the earlier decision of this Court in Major E. Barsay v. State of Bombay 2 for the proposition that there was numberexclusion of Jurisdiction of the ordinary criminal companyrts in respect of offences which are also triable by Court Martian. Sections 125 and 126 of the Army Act leave numberdoubt in that matter. Rule 3 a of the Criminal Courts and Court Martial Adjustment of Juris- diction Rules also indicates that the criminal companyrt can of its own motion start proceeding against an accused who is subject to the Army Act. The several provisions of the Army Act and the Rules also indicate that the criminal companyrt is number powerless when it is of opinion that the case should be tried in a criminal companyrt and in case of companyflict between the criminal companyrt and the Court-Martial the order of the Central Government is final decision as to the forum of trial of the offence. In Joginder Singhs case supra this Court examined the Rules and said that the absence of a numberice under rule 4 was number fatal in the facts and circumstances of the case because the companypetent military authority knowing the nature of the offence released the accused from military custody and handed him over to the civil authorities, and the action amounted to a decision by the military authorities that the accused in that case- was to be tried by an ordinary criminal companyrt and number by Court- Martial. The provisions of the Army Act, the Rules under section 549 of the Code of Criminal Procedure and the decision of this Criminal Appeal No.34 of 1969 decided on 30-11-1970 2 1962 2 S.C.R. 195. Court all support the companyclusion that the Special Judge in the present case was justified in asking the Officer Commanding to make a reference to the Central Government and that the Officer Commanding in the facts and circumstances of the case expressed the opinion that the appellants should be tried by criminal companyrts because there would in fact be numberCourt-Martial proceedings. The companytention on behalf of the appellants that the Officer Commanding having once exercised the discretion under rule 5 companyld number cancel the discretion is unacceptable. The Officer Commanding upon companysideration of facts and circumstances and particularly in the companytext of the companymunication of the Special Judge on 17th January, 1968 intimated on 28 January, 1967 that the previous letter dated 16 January, 1967 was cancelled. There are numberallegations of malafide or abuse of power to challenge the propriety of the exercise of power and discretion. The Officer Commanding did number lack authority of jurisdiction to companymunicate to the Special Judge that Court- Martial proceedings would number be instituted. The Criminal Law Amending Act-, 1966 being Act No. 22 of 1966 has an important bearing on the present appeal. Section 5 of Act 22 of 1966 is as follows - Notwithstanding anything companytained in this Act or in the principal Act as amended by this Act,- a cases pending immediately before the 30th day of June, 1966, before a Special Judge in which one or more persons subject to military naval or air-force law is or are charged with and tried for an offence under the principal Act together with any other person or persons number so subject, and b cases pending immediately before the said date before a Special Judge in which one or more persons subject to military, naval or air-force law is or are alone charged with and tried for an offence under the principal Act and charges have already been framed against such person or persons shall be tried and disposed of by the special Judge. Where in any case pending immediately before the 30th day of June, 1966, before a special Judge one or more persons subject to military naval or air force law is or are alone charged with and tried for an offence under the principal Act and charges have number been framed against such person or persons before the said date, Or where, on appeal or on revision against any sentence passed by a special Judge in any case in which one or more persons so subject was or were alone tried, the Appellate Court has directed that such person or persons be, retired and on such retrial charges have number been framed against such person. or persons before the said date, then, in either case, the special Judge shall follow the procedure laid down in section 549 of the Code of Criminal Procedure, 1898, as if special Judge were a Magistrate. The question is whether the present appeal relates to a case Pending immediately before 30 June, 1966 before a Special Judge within the meaning of section 5 1 a . Sanstion was accorded on 29 October, 1965 under section. 197 of the Code of Criminal Procedure. A charge-sheet was submitted before the Special. Judge on 27 January, 1966. On 5 March, 1966 the case was adjourned to 4 July, 1966 at the request of the Public Prosecutor for enabling the Public Prosecutor to supply the companyies of documents envisaged by section 113 of the Code of Criminal Procedure. The case was numbered 4/66/Spl. Cr. The word pending 9 came up for companysideration before this Court in Asgarali Nazarali Singaporawalla v. The State of Bombay 1 . Criminal Law Amendment Act. 1952 provided for the trial of all offences under section 161, 165 or 165-A of the Indian Penal Code or sub-section 2 . of section 5 of the Prevention of Corruption Act, 1947 exclusively by Special Judges and directed the transfer of all such trial pending on the date of the, companying into force of the Act to Special Judges. The Presidency Magistrate companytinued the trial and acquitted the appellant. Upon appeal by the State Government the High Court held that from the date of the companymencement of the. Act the Presidency Magistrate lost all jurisdiction to companytinue I the trial and ordered retrial by the Special Judge. It was companytended that on the date of the companying into force of the Criminal Law Amendment Act, 1952, viz., 28 July, 1952, the case was number pending because numberSpecial Judge was appointed until 26 September, 1962 and the trial also came to an end on 26 September, 1962. This Court did number accept that companytention because the, accused was number called upon his defence on 28 July, 1962 and the examination of the. accused under section 342 of the Code of Criminal Procedure took Place after that date and the accused filed his writer statement on 14 August, 1952 and the addresses by the prosecution as well as the defence companytinued right UP to 26 September, 1952. The word pending will ordinarily mean- that the matter is number companycluded and 1 1966 S.C.R. 678 8 94 the companyrt which has companynizance of it can make an order on the matter in issue. The test is whether any proceedings can be taken in the cause before the companyrt or tribunal where it is said to be pending. The answer is that until the case is companycluded it is pending. Judged by these tests it will appear that this present appeal relates to a case pending before 30 June, 1966. The next question is as to what meaning should be given to the words charged with and tried for an offence under the principal Act, occurring in section 5 i a . Counsel for the appellants companytended that the words charged with and tried for an offence would mean that charges had been actually framed and trial companymenced. There is a distinction between clauses a and b of sub-section 1 of section 5 of Act 22 of 1966. Clause a deals with persons who are subject to the military, naval or air-force law being charged with and tried for an offence together with a person or persons number so subject whereas clause b deals only with persons who are subject to military, naval or air-force law. In the present case, the appellants are persons who were subject to military law and they were charged along With civilians. Therefore, clause a is attrached. It is in companynection with a case which companycerns only persons subject to- military, naval or air-force law that under section 5 1 b it is en.acted that a case is number only to be pending before 30 June, 1966 before a Special Judge but that charges should also have been framed against such persons. The absence of framing of charges ,in clause a and requirement of framing charges in clause b repels the companystruction suggested by companynsel for the appellants that charges should have been framed in the present case in order to make it a case pending within the meaning of section 5 1 a of the 1966 Act. The words, charged with and tried for an offence mean that there are accusations and allegations against the person. The words charged with are used in section 5 1 a in companytra-distinction to the words charges have already been framed in section 5 1 b of the Act. Therefore the use of separate words in the two separate clauses a and b is significant to indicate that the statute speaks of the words charged with in clause a number in the sense of charges have been framed in clause b . The legislative intent is abundantly clear from the use of separate words. Sections 251, 251A, 252, 253 and 254 of the Code of Criminal Procedure throw some light as to the meaning to be given to the words charged with and tried for an offence. In the trial of warrant cases instituted on a police report, the Magistrate is to follow the procedure specified in section 251A and the present is one such. Section 251A companytemplates that the Magistrate on the companymencement of the trial shall satisfy himself that 89 5 the documents referred to in section 173 have been furnished to the accused and if he finds that the accused has number been furnished with such documents or any of them he shall cause them to be so furnished. In the present case, it will appear that in the month of March, 1966 the Public Prosecutor made an application to the Special Judge for adjournment of the case till the month of July, 1966 to enable companyies of papers to be given to the accused under section 173 of the Code of Criminal Procedure. Under section 251A 2 if, upon companysideration of all the documents referred to in section 173 and making such examination, if any, of the accused as the Magistrate thinks necessary and after giving the prosecution and the accused an opportunity of being heard, the Magistrate companysiders the charge against the accused to be groundless, he shall discharge him. This provision that the Magistrate may discharge the accused where the charge against the accused appears to be groundless indicates that the words charged with cannot be said to mean framing of a charge. It is because the charge or the allegation or accusation against the accused is groundless that he is. discharged. Again, in section 252 it will appear that the Magistrate in any case instituted otherwise than on a police report shall proceed to hear the companyplainant and take evidence in support of the prosecution. Under section 253, if, upon taking the evidence referred to in section 252, and making such examination of the accused as the Magistrate thinks necessary, he finds that numbercase against the accused has been made out, the Magistrate shall discharge him. The provisions companytained in sections 252 and 253 are cases where the Magistrate deals with warrant case instituted number on a police report but upon a companyplaint. These three sections i.e. sections 251A, 252 and 253 indicate that an accused can be discharged by the Magistrate if the charge appears to be groundless. Charge is framed under section 254 of the Code of Criminal Procedure when the Magistrate upon evidence and examination is of opinion that there is ground for presuming that the accused has companymitted an offence which the Magistrate is companypetent to try and which companyld be ordinarily punished by them that he shall frame in writing a charge against the accused. The charge under section 255 of the Code of Criminal Procedure is read and explained to the accused and he shall be asked whether he is guilty or has any defence to make. The Special Judge therefore has jurisdiction to try and dispose of the case. It is a case pending before 30 June, 1966 and under Act 22 of 1966 it is to be tried and disposed of by the Magistrate. The letter dated 28 January, 1966 is an additional reason to indi L1100SupCI/71 cate that the appellants are number required to be delivered to the companypetent military authorities. It is also in evidence that numbercourt martial proceeding is pending and the appellants are to be Tried by the Special Judge.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 270 of 1968. Appeal by special leave from the judgment and order dated January 14, 17, 1968 of the Calcutta High Court in Criminal Revision No. 475 of 1967. K. Daphtary, Nalin Chandra Banerjee, D. N. Mukherjee and Mukul Gopal Mukherjee, for the appellants. The respondent did number appear. The Judgment of the Court was delivered by Vaidialingam, J--This appeal, by special leave is, directed against the judgment and order dated 14/17 June, 1968 of the Calcutta High Court in Criminal Revision No. 475 of 1967 reversing the orders passed by the Court of the Chief Presidency Magistrate, Calcutta, discharging the accused- appellants. The circumstances leading up to the order of the High Court may be indicated The second respondent filed a, companyplaint on January 3, 1967 before the Court of the Chief Presidency Magistrate, Calcutta,. in respect of the incident which took place, on the second day January 1, 1967 of the Second Cricket Test Match between India and West Indies at the Eden Gardens. The Test match was to be played under the companytrol, management and supervision of the Cricket Association of Bengal, which had sold tickets of various denominations for the game.There were tickets sold for all. days of the Match andthere were arrangements made for the sale of daily tickets.The game started as scheduled on December 31, 1966.The play was interrupted by a number of spectators scaling over the fencing erected around the play ground and entering the cricket field. However, numberhing untoward happened on that day. According to the prosecution, the first appellant started. selling tickets announcing that arrangements had been made for the accommodation of about 60,000 spectators, while as a matter of fact nearly a lakh of spectators were admitted into the enclosure. The sitting arrangement was most inconvenient and,, highly unsatisfactory. The arrangements made by the first appellant for accommodating the persons inside the enclosure were so grossly inadequate that it tended to endanger the personal safety of the spectators. On the day in question, the companyplainant, who was a holder of a season ticket for Rs. 45 - went to attend the game and found all the stands jampacked. Notwithstanding, this the people with tickets were being pushed into different en- closures with the result that the spectators within the enclosures started jumping over the fence and occupied the space between the lines of the field and the fencing. The police, unable to companytrol the rush and companyfusion caused by the behaviour of the crowd,suddenly started a lathi-charge followed by the bursting of tear gas shells, which resulted in causing injuries to various persons. This infuriated the crowd, which retaliated by acts of arson. The arrangements for going out of the enclosures were also grossly inadequate with the result that some of the spectators who wanted to clear out quickly in panic sustained injuries. The Match had to be abandoned for the day. On these facts the companyplainant alleged that the first appellant who acted most rashly and negligently in overselling the tickets and admitting a large number of people than companyld be companyveniently accommodated inside the ground and thereby endangered human lives and the personal safety of thousands of spectators. It was further alleged that as, a matter of fact the rash and negligent act of the first appellant also resulted in hurt being caused to a number of persons, who, bad companye to witness the Match. Apart from the Cricket Association of Bengal, which was the first accused, he made 33 persons accused in his companyplaint petition. Those persons were the President, the Vice- President and other office bearers and Members of the Working Committee of the Cricket Association of Bengal. The companyplainant prayed for issuing summons against the 34 accused persons under ss. 337 and 338 read with s. 114 of the Indian Penal Code and to proceed against them according to law. On January 3, 1967 the Chief Presidency Magistrate examined the companyplainant and heard his companynsel. As the Chief Presidency Magistrate was prima facie satisfied there was a case, he issued summons to the, persons shown as accused under ss. 337 and 338 read with s. 114 of the Indian Penal Code, fixing February 13, 1967 for appearance. The companyplainant bad also made a prayer for issue of search warrants and for seizure of the account books and other relevant papers in the custody of the first accused appellant and search warrants were issued on January 6, 1967. Some of the office bearers of the first appellant on receipt of summons challenged before the High Court in Criminal Revision No. 19 of 1967 the orders of the Chief Presidency Magistrate issuing summons and search warrants. They also prayed for quashing the companyplaint on the ground that the allegations even if fully established will number establish an offence under s. 337 and or s. 338 read with s. 114 or any other section of the Indian Penal Code, and that the companyplaint was misconceived and companystitutes an abuse of the process of the Court. The learned Single Judge stayed further proceedings before the Chief Presidency Magistrate and issued summons to the State and the companyplainant. After hearing all parties, the learned Single Judge ultimately, by his order dated February 24, 1967, dismissed the Criminal Revision No. 19 of 1967. There were three points to be numbered in the order of the learned Judge, namely, 1 Mr. Dutt, companynsel appearing for the companyplainant companyceded before the High Court that the process issued by the Chief Presidency Magistrate under ss. 337 and 338 read with s. 114 of the Indian Penal Code is misconceived 2 the High Court has given a finding that the statements made in the petition of companyplaint do number companystitute the essential elements to make out offences under ss. 337 and 338 I.P.C., and 3 nevertheless, prime facie it cannot be stated tht the elements of an offence under s. 336 I.P.C. are number companytained in the companyplaint, and therefore the prosecution ,will have to be given a chance to establish, if they can, that an offence under s. 336 I.P.C. has been companymitted. Though ultimately the criminal revision was dismissed, it will be seen from the aspects mentioned above that the companyplainant has companyceded that the allegations in the companyplaint will number make out an offence under ss. 337 and 338 I.P.C. Apart from this companycession, the learned Single Judge after independently companysidering the averments in the companyplaint has also held that numberoffence under s. 337 and 338 is disclosed in the companyplaint and that the issue of summons in respect of those offences cannot be upheld. But the ,High Court was prepared to give an opportunity to the prosecution to establish, if they can, that an offence under s. 336 I.P.C., at any rate, has been companymitted by the accused. It is needless to state that the Chief Presidency Magistrate was bound to have due regard to these directions companytained in the order of the High Court when the case was to be proceeded with again in his companyrt After the disposal of Criminal Revision No. 19 of 1967 by the High Court on February 24, 1967 and in companysequence of the stay of proceedings being vacated, the Chief Presidency Magistrate proceeded to deal further with the companyplaint. On March 2, 1967 the companyplainant filed an application before the Chief Presidency Magistrate for leave to withdraw the companyplaint against eight accused, namely, accused Nos. 8, 10, 11, 22, 26, 31, 32 and 33. The reason given by the companyplainant was that the said accused persons had ceased to act as members of the Working Committee at the material time. On March 20, 1967 the Chief Presidency Magistrate discharged under s. 253 2 Cr. P.C. the eight accused as prayed for by the, companyplainant in his application dated March 2, 1967, after accepting the reasons given therein. The accused so discharged were Nos. 8, 10, 11, 22, 26, 31, 32 and 33. On May 31, 1967, the companyplainant filed another application before the Chief Presidency Magistrate seeking permission to withdraw the companyplaint against the rest of the accused. In that application he stated that he had filed the companyplaint to voice the grievances of the bona fide spectators, who had purchased tickets for witnessing the Cricket Test Match. He had further mentioned that an Inquiry Commission called the Sen Commission was already inquiring into the events companynected with the incident that took place on January 2, 1967 in order to find out the persons responsible for the same. Under these circumstances, the companyplainant stated that he does number intend to companytinue the companyplaint instituted by him. On June 8, 1967, the Chief Presidency Magistrate dismissed the companyplaint as against accused Nos. 16, 17, 18, 19, 23, 27, 30 land 34, under s. 204 3 Cr. P.C. on the ground that the companyplainant had number deposited the necessary charges for issue of summons. It was numbered by the Chief Presidency Magistrate that the companyplainant though called was absent. Dealing with the application dated May 31, 1967 filed by the companyplainant for permission to withdraw the companyplaint, the Chief Presidency Magistrate has stated that he cannot accord permission to withdraw the companyplaint as the proceedings under s. 338 I.P.C. are warrant procedure proceedings. But the Chief Presidency Magistrate has further stated that numberuseful. purpose will be served by proceeding further with the companyplaint as the companyplainant was number present and was also number serious to proceed with the companyplaint as is evident from his companyduct in companyitting several defaults. For these reasons the Chief Presidency Magistrate passed an order discharging all the other remaining accused under s. 253 2 Cr. P.C. Therefore, it will be seen that by the two orders dated March 20, and June 8, 1967, referred to above, the Chief Presidency Magistrate discharged all the accused and terminated the proceedings initiated by the second respondent. The news regarding the termination of these proceedings appeared in some of the Dailies in Calcutta on June 10, 1967. On seeing the said news item, the High Court by its order dated June 13, 1967 called for the record pertaining to the case from the companyrt of the Chief Presidency Magistrate, Calcutta. On August 1, 1967 a Division Bench of the Calcutta High Court issued suo moto a Rule Criminal Revision No. 475 of 1967 to the companyplainant and the 34 accused persons to show cause why the orders discharging the accused persons passed on March 20, and June 8, 1967 should number be set aside. The learned Judges after hearing all the parties, by the impugned judgment set aside the two orders of the Chief Presidency Magistrate discharging the accused. The Chief Presidency Magistrate was directed to proceed with the companyplaint and dispose it of according to law. But the learned Judges directed that the proceedings need be companytinued only against the 14 accused, namely, Nos. 1, 2, 3, 4, 5, 6, 7, 9, 10, 12, 13, 14, 15 and 26. The learned Judges have held the discharge of some of the accused under s. 204 3 Cr. P.C. on June 8, 1967 on the ground that the companyplainant has number paid the process for issue of summons is number proper. According to the High Court there is numberprovision under the relevant rules framed by the High Court for payment of any process for issue of summons in respect of companynizable offences whether the case is instituted on a companyplaint or number. Similarly the High Court held that the orders discharging, under s. 253 2 Cr. P.C. some of the accused on March 20, 1967 and the remaining accused on June 8, 1967 are also number justified as the proceeding under s. 338 I.P.C. was that of a warrant case. Mr. C. K. Daphtary, learned companynsel for the appellants, in attacking the order of the High Court has pointed out that there was numberjustification for the High Court, to interfere suo moto with the orders passed by the Chief Presidency Magistrate discharging the accused, in the circumstances mentioned by him The companynsel also pointed out that the Division Bench has number properly appreciated and given effect to the directions given in the judgment of the learned Single Judge in Criminal Revision No. 19 of 1961. After the order of the learned Single Judge, the companynsel pointed out, that the proceedings have to be companytinued by the Magistrate only to inquire if an offence under s. 336 I.P.C. has been made out. In such a trial the summons case procedure has to be adopted and the Magistrate has got ample jurisdiction to permit the companyplainant, under s. 248 Cr. P.C. to withdraw the companyplaint. Even on the basis that the charges under ss. 337 and 338 survive and the warrant case procedure is to be adopted, Magistrate has jurisdiction under s. 253 2 to discharge the accused. Considering the matter from any point of view, the interference by the High Court is number justified. Neither the State number the companyplainant has appeared before us to support the order of the High Court. We have already referred in great detail to the circumstances under which the impugned order was passed as they give a clear and companyplete picture of the whole matter. We have gone through the reasoning of the learned Judges and we are satisfied that the interference with the orders of the Chief Presidency Magistrate by the High Court was number justified and was number warranted in the circumstances of the case. The fundamental error companymitted by the Division Bench is that it has proceeded on the basis that the learned Single Judge on the former occasion in Criminal Revision No. 19 of 1967 has number held that the prosecution under ss. 337 and 338 is number made out. We have already referred to the fact that during the hearing of Criminal Revision No. 19 of, 1967, Mr. Dutt, learned companynsel appearing for the companyplainant companyceded that the issue of process under ss. 337 and 338 I.P.C. was misconceived. On the other band, the Division Bench proceeds on the basis that numbersuch companycession has been made, which is erroneous as a fact. Again even apart from the companycession, the learned Single Judge after discussing the essential ingredients of an offence under ss. 337 and 338 P.C. has categorically held in his order that the statements made in the companyplaint petition do number go to make ,up the essential ingredients for an offence under ss. 337 and 338. The learned Single Judge has also found that it is number possible at that stage to say that numberoffence even under s. 336 I.P.C. has been companymitted. It is on this reasoning that the learned Judge, though technically did number quash the proceedings, gave a clear indication that the prosecution is given a chance to establish, if they can, that the accused have companymitted an offence under s. 336 I.P.C. After the companycession of the companynsel for the companyplainant and the categorical finding of the learned ,Judge that numberoffence under ss. 337 and 338 I.P.C. is made out and that an investigation is to be made only in respect of an offence under s. 336 I.P.C., it is idle to expect the Magistrate to ignore these clear directions and proceed with the trial again for an offence under ss. 337 and 338 I.P.C. as if numberhing had happened. That is exactly what unfortunately the Division Bench has done. It has ignored the companycession of the companynsel. It has ignored the clear finding of the learned Single Judge as also the directions given by him. It is this serious mistake companymitted by the Division Bench that has resulted in the passing of the order under attack. The legality of the orders passed by the Chief Presidency Magistrate can be companysidered from two points ,of view. Assuming that the Chief Presidency Magistrate has still to proceed with the trial for offences under ss. 337 and 338, I.P.C. it is numberdoubt true that he has to follow the warrant case procedure. Even under such circumstances, the Magistrate has got ample jurisdiction to discharge the accused under s. 253 2 P.C. Section 253 deals with the discharge of accused. Subsection 1 deals with the discharge of an accused when the Magistrate after taking all evidence referred to in s. 252 Cr. P.C. and making such examination of the accused, if any, as may be found necessary, finds that numbercase against the accused has been made out, which if unrebutted, would warrant his companyviction. Subsection 2 of s. 253 is to the following effect 253 2 Nothing in this section shall be deemed to prevent a Magistrate from discharging the accused at any previous stage of the case if, for reasons to be recorded by such Magistrate, he companysiders the charge to be groundless. This sub-section gives ample jurisdiction to the Magistrate to discharge an accused in the circumstances mentioned therein and ,the order of discharge can be passed at any previous stage of the case. Sub-section 1 under those circumstances will number operate as a bar to the exercise of jurisdiction by the Magistrate under sub-section 2 . It is under sub-section 2 of s. 253 that the Magistrate has discharged the accused. He has given good reasons in the order for discharging the accused. Assuming that the Division Bench is right in holding that the discharge under s. 204 3 Cr P.C. is number justified, we will proceed on the basis that the said order is one of discharge under s. 253 2 . We have already referred earlier to the reasons given by the companyplainant in his application seeking permission to withdraw the companyplaint as well as to the reasons given by the Magistrate for discharging the accused. There is numbercontroversy that at the material time, the Sen Commission was inquiring into the identical matter which was the subject of the criminal companyplaint. Under those circumstances, it cannot be said that the discharge of the accused by the Magistrate is either illegal or number justified. Even on the basis that the inquiry has to proceed for an offence under S. 336 I.P.C.-, the position will be that the summons case procedure will have to be followed. Even then, under S. 248 Cr. P.C. the Magistrate has ample jurisdiction to permit the companyplainant to withdraw the companyplaint. In fact under S. 248 Cr. P.C. the Magistrate should acquit the accused, once he permits the companyplaint to be withdrawn. Even if the order of discharge is to be treated as passed in a case where summons case procedure is to be followed, it was within the jurisdiction of the Magistrate and hence it cannot be characterized as either illegal or number justified. We accordingly hold that the Division Bench was number justified in interfering with the orders dated March 20, and June 8, 1967 passed by the Chief Presidency Magistrate, in the circumstances of this case. We, however, make it clear that we have numberdoubt that in proper cases the High Court can take action suo moto against the orders passed by the subordinate companyrts-without being moved by any party. In the result the appeal is allowed. The judgment and order of the High Court in Criminal Revision No.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1090 of 1967. Appeal from the judgment and decree dated May 5, 1966 of the Gujarat High Court in S.C.A. No. 877 of 1962. R. L. lyengar, N. J. Modi, P. C. Bhartari and K. N., Desai for the appellant. N. Shroff, for respondent No. 1. L. Hathiand S. P. Nayar, for respondent No. 2. The Judgment of the Court was delivered by Shelat, J. This appeal, by certificate, arises out of one of the seventy Special Civil applications filed in the High Court of Gujarat by several- rate payers challenging the Validity of the assessment of property tax made by the respondent-Corporation under the Bombay Provincial Municipal Corporations Act, LIX of 1949 hereinafter referred to as the Act . The appellant is the owner of an immovable property situate within the limits of the Corporation. Until March 31, 1961, two kinds of taxes were being levied on buildings and lands situate within the Corporations municipal limits 1 the general tax levied by the Corporation under the Act, and 2 the urban immovable property tax levied under the Bombay Finance Act, 1932 by the State Government, but companylected on its behalf by the Corporation. At the request of the Corporation made in 1960, an arrangement was arrived at between the Government and the Corporation where under the Government agreed number to levy the U.I.P. tax provided the Corporation increased the rate at which it was till then levying the property tax. Accordingly, in January 1961 the Corporation passed a resolution in,creasing the rate of the property tax with effect from April 1, 1961 under the power reserved to it by S. 127 of the Act. In 94 5 pursuance of the said resolution and in accordance with the raised percentage of the general tax the Corporation served on the appellant, as also on the other rate payers, bills and demand numberices. In this appeal we are companycerned with the bills and ,notices in respecter the assessment year 1962-63. The appellant, as also certain other rate payers, challenged the said bills and numberices in their said writ petitions mainly on the grounds 1 that the Corporation had numberauthority to amend the rates with the object of including the said U.I.P. tax in the general tax so far levied by the Government under a different statute and given up by it under the said arrangement 2 that the said bills and numberices were illegal as the assessment-book kept by the Cor- poration was number in accordance with the rules made under the Act and was number authenticated by the Commissioner as required thereunder 3 that ss. 99, 123 and 129 c of the Act were unconstitutional in that they suffered from Other vice of excessive, delegation in so far as they did number fix the maximum rate at which the Corporation companyld levy the property tax, and 4 that the said sections were also violative of Art. 19 1 f and Art. 31 as the tax was companyfiscatory in character. By its judgment dated May 5, 1966, the High Court first dis- posed of fifty two out of the said seventy writ petitions rejecting the companytentions raised therein. There after the judgment under review separately disposed of the remaining 18 petitions, including that of the appellant, as, besides the points raised in the said 52 writ petitions, these 18 writ petitions raised some additional points. The High Court in this judgment did number deal afresh the points already disposed of by it in the larger group of writ petitions and based its judgment in respect of them on its earlier judgment dated May 5, 1966. In its judgment, dated the May 5, 1966, the High Court elaborately examined the scheme and the objects, of the Act and the rules and came to the following companyclusions 1 that the Corporation need number maintain separate assessment-book for each of the wards and companyld legally maintain one assessment-book companyering all the wards 2 that the authentication provided for by r. 19 of the said rules in Ch. VIII to Sch. A of the Act ,as number mandatory 3 that the liability to pay the tax arose when entry under r. 9 e was made in the assessment-book and 9 46 4 that s. 129 c read with ss. 99 and 127 did number suffer from the vice of excessive delegation as the legislature had provided in the Act both its policy and principles guiding the Corporation in levying the said tax. The High Court also negatived the companytention that s. 129 c by giving power to tax without laying down the maximum rate was violative of Art. 19 1 f and or Art. 31 or Art. 14. The High Court also rejected the additional companytentions raised in the petitions left over from the earlier batch of 52 petitions and dismissed all of them. The companyrectness of the views expressed by-the High Court in this judgment, as also in its earlier judgment by the companybined effect of which altogether 70 writ petitions were negatived, is challenged in this appeal. We need number go into all the diverse companytentions raised before the High Court as companynsel for the appellant raised before us the following three questions only 1 that while making the, assessment the procedure companytemplated by ss. 127, 129 c of the Act and rr. 9 to 20 of the Taxation Rules was number companynplied with inasmuch as numberward assessment-books were maintained, and companysequently, the entries therein were number authenticated as required by r. 19 2 that S. 129 suffers from the vice of excessive delegation of legislative powering as-the Act fails to provide either the maximum rate leviable by the Corporation or the guidelines for levying the tax 3 that in any view of the matter, in the circumstances in which the resolution raising the rate was passed, it did number impose the enhanced rate on the property of the appellant as the same was ,not, prior to April 1961 subjected to the U.I.P. tax. Later, Mr. lyengar gave up, the third companytention. We are, there fore, left with his companytentions 1 and 2 only for determination. Broadly stated, the facts regarding the assessment-book and its authentication are as follows Each year the Commissioner either prepared or companytinued the assessment- book required to be maintained by him under the Taxation Rules. Each year he went through the procedure for authentication of the assessment-book purporting to do so under r. 19 of the Taxation Rules. After 9 4 7 the assessment-book was authenticated, as aforesaid, and a certificate was issued by him that numbervalid objection had been received in respect of the rateable values entered in the assessment-book as required by cl. e of r. 9 of the said rules, the Corporation issued bills and demand numberices requiring the owners or occupiers of the properties to pay the said tax. The Act and the rules provide for objections to the rateable values entered in the assessment-book under Cl. b of r. 9, which objections would be heard and decided by the Commissioner. There are provisions in the Act, such as ss. 406, 4 1 0 and 41 1, for appeals to the Judge, Small Causes Court, both against the rateable value fixed under the Taxation Rules as also against the amount of tax demanded in the bills. As aforesaid, the High Court dismissed the companytention as to the companystitutionality of s. 129 c basing its decision mainly on the authority of the Corporation of Calcutta v. Liberty Cinema, 1 wherein the validity of s. 548 2 of the Calcutta Municipal Act, authorising the Corporation to levy a fee held by this Court to be a tax for every licence and permission at such rate as may be fixed from time to time by the Corporation. but which did number lay down the maximum rate, was challenged. The High Court in particular relied on the observations in that decision 1 that fixation of the rate was number an esserxtial legislative function and companyld be delegated, and 2 that the provisions in the Act, which limited the power to levy taxes to the extent of the statutory needs of the Corporation, furnished sufficient companytrol and guidance. Reliance was also placed on the following observation relating to the absence of maximum rate It is said that the delegation of power to fix rates of taxes authorised for meeting the needs of the delegate to be valid, must provide the maximum rate that can be fixed, or lay down rules indicating that maximum. We are unable to see how the specification of the maximum rate supplies any guidance as to how the amount of the tax, which numberdoubt has to be below the maximum, is to be fixed. Provision for such maximum only sets out a limit of the rate to be imposed and a limit is only a limit and number a guidance. Besides deriving support from this judgment, the High Court examined various provisions of the Act and reached the companyclusion that under the Act, as under the Calcutta Act, the tax, which the Corporation companyld companylect, would have to be for the purposes of the Act only and that fact, together with certain other companytrols embodied in the Act, furnished sufficient guidance preventing the vice of arbitrariness or excessive delegation. 1 1962 S.C.R. 477. Before the High Court, the companytention also was that for each. of the relevant years there was numbervalid assessment- book on the basis of which the property tax companyld be levied. The argument was that the Taxation Rules required the Commissioner to prepare ward assessment-book for each of the wards and number one assessment-book for the whole of the municipal limits, that being so, the assessment made on the properties was number in accordance with the rules prescribed for that purpose and was therefore in breach of Art. 265 of the Constitution and s. 127 2 of the Act which lays down that the taxes shall be assessed and levied in accordance with the provisions of the Act and the rules. The High Court, on a reading of the rules, found 1 that r. 10 gave discretion to the, Commissioner to prepare either one assessment book or ward assessment-books, and 2 that the rules used both the expressions, namely, assessment-book and ward assessment books the latter expression being used only in rr. 13 1 , 15 f and 1 9 1 and 2 . According to the High Court, the companytention as to the validity of the assessment-book and the companystruction of the rules suggested on behalf of the appellant were number companyrect. The object of r. 9, according to the High Court, was to provide for the preparation and maintenance of the assessment-book wherein would be entered the amount of property tax against each of the buildings and lands set out therein. The rule provided that the Commissioner shall first make entries under cls. a to d of the rule. An entryunder cl. e , as its language plainly shows, is to be made after 1 the rates of property tax are fixed, 2 the period fixed forreceipt of companyplaints against the rateable values has expired, and 3 after such companyplaints, if any, are disposed of by the Commissioner. An entry under cl. e having to be made only after the events in 1 , 2 and 3 above stated have happened, r. 9 takes in, by using the expression as herein- after provided, the public numberice provided by rr. 13 and According to the High Court, the liability to pay the property tax arises as soon as entry under cl. e of r. 9 is made in the assessment-book in the manner therein provided and is number dependent on authentication and certification provided in r. 19 in respect of ward assessment-books. Authentication and certification in such ward assessment-books provides a rule of evidence in the sense that the entries therein become companyclusive evidence as regards the amount of tax therein set out against each property and is number an event on the happening of which the liability to pay arises. Such liability arises as soon as entry under cl. e of r 9 is made. The High Court distinguished its earlier decision in the Municipal Corporation of the City of Ahmedabad v. Zaveri Keshavtal 1 by pointing out that that decision was under the Bombay 1 6 Guj. L.R.701. Municipal Boroughs Acts, 1925 which had a scheme and pro- visions different from the present Act and the rules thereunder made. That decision had laid down that the liability of the rate payer would arise only after authentication of the assessmentbook. For distinguishing that decision the High Court, firstly, relied on r. 30 of the Taxation Rules which provides that property tax shall accrue clue on the 1st of April of each official year, and secondly, on the ground that the Boroughs Act and the rules thereunder did number have a rule companyresponding to r. 9 e which, when read with r. 30, shows that the liability to pay the amount of tax arises on entry under cl. e of that rule being made. According to the High Court, r. 19, which provides for authentication applies only to ward assessment- books and number to a single asscssment-book, that such authentication has numberhing to do with the accrual of liability and is a mere rule of evidence which is number available to the Corporation where the Commissioner does number prepare ward assessment-books and keeps only one assessment- book. The High Court in this companynection observed If a single assessment-book is prepared, then the amount of tax entered in the assessment-book will number be the companyclusive evidence. In an appeal, it would be open to a rate payer to challenge the amount on any legal ground, possibly including the challenge to the rateable value of the property in respect of the fact that had number been done before by him. On this interpretation, the High Court dismissed the entire batch of the said 70 writ petitions including that of the appellant. Though the earlier judgment is number under review in this appeal, we have set out its companyclusions as the judgment under review followed the earlier judgment,- delivered by the same learned Judges and rejected the companyclusions raised by the appellant. In effect, therefore, both the judgments are under challenge to the extent that they decided questions raised in this appeal. Sec. 127 1 lays down that for the purposes of this Act the taxes which the Corporation has companypulsorily to levy are property taxes and a tax on vehicles, boats and animals. The second subsection authorises the Corporation to levy the taxes set out therein in addition to the aforesaid two taxes. Sec. 129 deals with property taxes. Cl. c there of provides that property taxes shall companyprise inter alia of a general tax of number less than 12 of the rateable value of buildings and lands. We may numbere that the Gujarat State Legislature, by Act 8 of 1968, has recently amended cl. c by inserting therein the maximum rate of 30, so that the question as to the absence of maximum rate is relevant only for the assessment years prior to the amendment. The Legislature itself has framed elaborate rules companytained in Sch. A to the Act of which the Taxation Rules in Ch. VIII thereof are part and which under s. 453 form part of the Act. Besides the said rules, ss. 454 and 455 authorise the Corporation to add to, amend, alter ,or rescind those rules subject to their being number inconsistent with the provisions of the Act, sanction of the State Government and to the companydition of their being made after previous publication. The other relevant provisions of the Act are ss. 63 to 66 which lay down the obligatory functions which the Corporation must perform and certain discretionary functions which it can perform. The argument was that thought s. 127 1 lays down that property taxes can be levied by the Corporation only for the purposes ,of the Act, that is to say, for and in respect of the functions which the Corporation must and can carry out, the Act being silent as to the maximum rate upto which the Corporation can levy, it gives unbridled and arbitrary power to levy the property tax as much and to any extent it may desire. Mr. Iyengar pointed out that amongst the discretionary functions which the Corporation can undertake under s. 66 there are such things as swimming pools, public parks, gardens, recreation grounds, companystruction of dwellings, for municipal officers and servants, libraries, museums etc. for undertaking which the Corporation can spend huge, amounts and impose extravagant and burdensome rate of tax. According to the argument, there are numberguidelines or companytrols in the Act which can place any limits to the spending by the Corporation on such discretionary objects, and therefore, the rate payers are exposed to being taxed in an arbitrary and uncontrolled fashion. The question. thus is whether the Act companytains any policy or guidelines or companytrol over the taxing power of the Corporation without which the delegation of power to tax would be excessive, arbitrary and violative of Art. 14. The Act, as its preamble and the long title show, was passed for establishment of municipal companyporations in the city of Ahemedabad and Poona and certain other cities for ensuring better municipal government. It was apparently modelled after the Bombay Municipal Corporation Act, 1888. The Act does number lay down any maximum rate in s. 127 probably because its operation was number companyfined to any particular city in which the municipal companyporation would be set up. The Legislature, while passing it, companyld number envisage in which particular cities such companyporations would be set up. Nor companyld it envisage what their financial needs would be number which of the discretionary functions, under S. 66, such ,corporations would feel they must undertake. Such needs being variable and incapable of uniform specification, the Legislature might have felt if inexpedient to restrict the fiscal powers of the companyporations to be established in furture. The point for companysideration is whether the absence of a pro- vision laying down the maximum rate is by itself sufficient to render the delegation of the power excessive. As already stated, s. 127 1 expressly provides that taxes can be levied only for the purposes of the Act. They cannot thus be raised for any function other than the one provided by the Act. Sec. 82 requires all monies received by the Corporation under the Act to be credited to the Municipal Fund held by the Corporation in trust for the purposes of the Act. By reason of s. 86, numberpayment can be made out of the Municipal Fund unless it is companyered by the current budget grant. Furthermore, s. 88 lays down that the moneys credited in the Municipal Fund shall be applied in payment of sums, charges and companyts necessary for carrying the Act into effect, or payment directed or sanctioned by or under the Act. Sec. 89 restricts expenditure by the Corporation within the city except when provided by the Act or by a resolution by number less than. half the total number of companyncillors. Under s. 95, the Commissioner is required annually to lay before the Standing Committee estimates of income and expenditure, and under s. 96. the Standing Com- mittee has to prepare budget estimate A having regard to all the requirements of this Act. The budget estimate then has to be laid before and passed by the Corporation. Similar provisions are made in ss. 97 and 98 for budget estimate B prepared by the Transport Manager. It is after all this has been, done that the Corporation under s. 99 determines, on or before the 20th of February of each year, the rates at which property taxes under s. 127 1 , but sub ject to the limitations and companyditions laid down in Ch. XI, are to be levied for the next ensuing official year, Under s. 100, the Corporation, either sends back the budget esti- mates A or B for further companysideration, or adopts them with such alterations as it deems expedient. The companyditions and limitations subject to which the Corporation can fix, under s. 99, the rates at which the property taxes are to be levied are those provided in s. 127 3 and 4 , i.e., they can be assessed and levied in accordance with the provisions of the Act and the rules. These provisions clearly show that the ultimate companytrol, both for raising the taxes and incurring expenditure, lies with the companyncillors chosen by and responsible to the people. As aforesaid, the assessment and levy of the property taxes have to be in companyformity with the Act and the rules. These rules companytain inter alia Taxation Rules, which are part of the Act. Sec. 454, numberdoubt, empowers the Corporation to amend, alter and add to these rules, but such power is made under s. 455 subject to the sanction of the State Government. Under s. 4 56, the State Government can at any time require the Corporation to make rules under s. 454 in respect of any purpose of matter specified in s. 457, which includes-item 7 Municipal Taxes.- a The assess- 95 2 ment and recovery of municipal taxes. Thus, although the Ac does number prescribe the maximum rate at which the property taxe can be raised, the ultimate companytrol for raising them is with the companyncillors responsible to the people. It is difficult, therefore, to sustain the plea that the power to levy the property tax is so un bridled as to make it possible for the companyporation to levy it in arbitrary manner or extent. In all statutes dealing with local administration municipa I authorities have inevitably to be delegated the power of taxation,. Such power is a necessary adjunct to a system of local self-govemment. Whether such delegation is excessive and amounts to abdication of an essential legislative function has to be companysidered from the scheme, the objects, and the provisions of the statute in question. In The Western India Theatres Ltd. v. Municipal Corporation of the City of Poona 1 this Court spelt out the policy in the expression for the purposes of this Act, an expression also used in S. 127. In Pandit Banarsi Das Bhanot v. Madhya Pradesh 2 , delegation of power to the executive to determine the details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be levied the rates at which it is to be charged in respect of different classes of goods and the like, was held number to be unconstitutional on the principle that so long as the legislature retains or has the power of withdrawing or altering the power to tax delegated to a subordinate authority such delegation would be held neither an abdication number excessive. In Liberty Cinema case 3 the majority view was that the power to fix the rate of a tax was number of the essence of the legislative power and that such a power companyld be delegated even to a number-legislative body. But the decision laid down that when such a power is delegated, the legislature must provide guidance for such fixation. The majority held that where rates have number been specified in the statute, the power to fix the rates as might be necessary to meet the needs of the delegate itself affords guidance. The minority view differed from the majority view, in that, according to it, the power to fix the rate of tax was an essential legislative function. But, even according to that view, such a power can be delegated provided the delegate is afforded guidance by the legislative laying down the policy and principles in the Act, It, however, disagreed with the majority view that the raising of tax companyextensive with the needs of the delegate in implementing the purposes of the Act can afford such guidance. The Liberty Cinema case 3 came for companysideration in Devi Das v. Punjab 4 where Subba Rao, C.J., speaking for the Court, said 1 1959 Sup, 2 S.C.R.71. 2 1959 S.C.R.427. 3 19652 S.C.R. 477. 4 1967 3 S.C.R. 557. If this decision Liberty Cinema case 1 is an authority for the position that the Legislature can delegate its power to a statutory authority to levy taxes and fix rates in regard thereto, it is equally an authority for the position that the said statute to be valid must give a guidance to the said authority for fixing the said rates. . . Though he did number agree as a general principle that guidance can always be spelt out from the limitation to fix the rate by the extent of needs of and the expenses required by the delegate to discharge its statutory functions, the Court did number disapprove Liberty Cinema case 1 but companyfined the principle laid down there to the provisions of the Calcutta Municipal Act in which the majority had found the requisite guidelines. No such guidance was available in the Sales Tax statute before the Bench deciding Devi Dass case 2 . The position which emerged from the decisions so far, therefore, was that the power to fix rates can be delegated if the statute doing so companytains a policy or principles furnishing gunance to the delegate in exercising such power. In the Municipal Corporation of Delhi v. Birla MilIS 3 , the question as to the limits of delegation of taxing power once more arose. The Delhi Municipal Corporation Act, 1957, like the present Act, entrusted to the Delhi Corporation two kinds of functions, companypulsory and optional. In relation to the former, the Act specified the maximum rate of tax the Corporation companyld raise, but number so in the case of tax relating to or for implementing the optional functions. The companytroversy was whether the Act companytained provisions furnishing guidance to the Corporation in the exercise of the power to tax. After an analysis of the provisions of the Act, Wanchoo, C.J., pointed out the following factors which furnished sufficient guidance preventing the delegation becoming invalid 1 that the delegation was to an elected body responsible to the people, including those who pay taxes and to whom the companyncillors have every four years to turn to for being elected 2 that the limits of taxation were to be found in the. purposes of the Act for the implementation of which alone taxes companyld be raised and though this factor was number companyclusive, it was numberetheless relevant and must be taken into account with other relevant factors 3 that the impugned s. 1 150 itself companytained a provision which required that the maximum rate fixed by the. Corporation should have the approval of the Government 1 196512 S.C.R. 477, 2 1967 3 S.C.R. 577. 3 1968 3 S.C.R.251. 4 that the Act companytained provisions which required adoption of budget estimates by the Corporation annually and 5 that there was a check by the companyrts of law where the poower of taxation-is used unreasonably or in number companypliance or breach of the provisions and objects of the Act. Referring to Devi Das case 1 , he pointed out that 1 that did number disapprove Liberty Cinema case 2 was companycerned case with a sales tax statute and number with a statute dealing with bodies with limited purposes, such as local self governing bodies. At page 268 of the reports he observed. There is in our opinion a clear distinction between delegation of fixing the rate of tax like sales tax to the State Government and delegation of fixing rates of certain taxes for purposes of local taxation. The needs of ,the State are unlimited. The result of making delegation of a tax like sales tax to the, State Government means a power to fix the tax without any limit even if the needs and purposes of the State are to be taken into account. Thus, the majority view in this decision, which is binding on us, shows that the mere fact that an Act delegating taxing power refrains from providing a maximum rate does number by itself render the delegation invalid. From the provisions of the present Act, cited earlier, it will be seen that though factor 3 of the factors relied on by Wanchoo, C.J., is absent in s. 127, the rest are present. It is impossible to say that when a provision requiring sanction of the Government to the maximum rate fixed by the Corporation is absent, the rest of the factors which exist in the Act loose their efficacy and cease to be guidelines. Furthermore, if the Corporation were to misuse the flexibility of the power given to it in fixing the rates, the State legislature can at any moment withdraw that flexibility by fixing the maximum Emit up to which the Corporation can tax. Indeed, the State Legislature has number done so by S. 4 of Gujarat Act, 8 of 1968. In view of the decisions cited above it is number possible for us to agree with companynsels companytention that the Act companyfers on the Corporation such arbitrary and uncontrolled power as to ren- der such companyferment an excessive delegation. That brings us to the companytention regarding the validity of the assessment-book maintained by the Commissioner for the assessment year in question. 1 1967 3 S.C.R. 577. 2 1965 2 S.C.R. 477. Rules 9 to 21 of the Taxation Rules are headed Assessment- Book. A companyparison of these rules with ss. 156 to 168 of the Bombay Municipal Corporation Act, 1888 at once shows that they are, with the exception of r. 10, taken almost verbatim from those sections. Rule 9 requires the Commissioner to keep a book to be called the Assessment- Book in which the following matters have to be entered, viz., a a list of buildings and lands, b the rateable value of each of them, c the names of persons primarily liable for the payment of the property taxes, if any, leviable on each such building or land, d the reasons for number-liability, if any of them is number liable to be assessed to the general tax, and e when the rates of the property-taxes to be levid for the year have been duly fixed by the Corporation and the period fixed by public numberice, as hereinafter provided, or the receipt of companyplaints against the amount of rateable value entered in any portion of the assessment-book has expired, and in the case of any such entry which is companyplained against, when such companyplaint has been disposed, of in accordance with the provisions hereinafter companytained, the amount at which each building or land entered in such portion of the assessrnent-book is assessed to each of the property taxes, if any, liable thereon. The rule companytain other clauses, but we are number at present companycerned with them. Rule 10 1 provides that the assessment-book may, if the Commissioner thinks fit, be made in separate books called ward assessment-books, one for each of the wards into which the city is for the time being divided for purposes of the elections. Cl. 2 of the rule says that the ward assessment-books and the respective parts, if any, shall companylectively companystitute the assessment-,book. Rule 10 differs from s. 157 of the Bombay Municipal Corporation Act, in that, whereas it gives an option to the Commissioner either to maintain one assessment-book. for the entire city or separate ward assessment-books, s. 157 gives numbersuch option and provides only for ward assessment-books which companylectively companystitute, as in r. 10 2 , the assessment- book. The Legislature, thus, deliberately made a departure from s. 157 by leaving it to the discretion of the Commissioner either to maintain one book or several books wardwise. Such a departure was presumably made because the Act was to apply number to one city only, as did the Bombay Act of 1888, but to an unknown number of cities where municipal companyporation might in future be set up, each having different companyditions from the, other and number being certain whether one assessment-book or separate ward assessment books would be suitable for each of them. Rules 11 and 12 deal with treatment of properties let to two or m ore persons in separate occupancies and the procedure where the name of the person primarily liable for property taxes cannot be ascertained. Rule 12, it Will be numbericed, mentions only the assessment-book and number ward- assessment- books. Rule 13 provides that when entries required by cls. a , b , c and d of rule 9 have been companypleted in any ward assessment-book-, the. Commissioner shall give public numberice thereof and of the place where the ward assessment- book, or a companyy of it, may be inspected. Rule 14 provides for inspection and taking extracts by an owner or occupier of premises-entered in the assessment-book from any portion of tie said book which relates to the said pre- mises. Rule 15 requires the Commissioner at the time and in the manner prescribed in r. 13 to give numberice of a day number being less than 15 days from the publication of such numberice, on or before which companyplaints against the amount of any rateable value entered in the ward assessment-book will be received in his office. Cl. , 2 of that rule requires the Commissioner to give a special written numberice to the owner or occupier of premises which have for the first time been entered in the assessment-book as liable to property taxes or in which the rateable value of any premises has been increased. Rule 16 provides for the manner of filing companyplaints referred to in r. 1 5 against the rateable value entered in the assessment-book, and r. 17 provides that companyplaints received under r. 16 shall be registered in a book kept for that purpose as also for numberice to each companyplainant of the, time and place when and whereat his companyplaint would be investigated. , Rule 18 provides for the hearing of the companyplaint if and cl. 3 thereof lays down that when a companyplaint is disposed of, its result shall be numbered in the said book of companyplaints and the necessary amendment shall be made in accordance with such result in the assessment-book. Rule 19, which has been the subject matter of companytroversy both in the High Court and before us, provides that when all such companyplaints, if any, have been disposed of and the entries required by cl. e of r. 9 have been companypleted in the ward assessment-book, the said book shall be authenticated by the Commissioner, who shall certify, under his signature, that except in the cases, if any, in which amendments have been made as shown therein, numbervalid objection has been made to the rateable values entered in the said book. Cl. 2 provides that the said ward assessment-book sub- 95 7 ject to such alterations as may thereafter be made therein under the provisions of r. 20 shall be accepted as companyclusive evidence of the amount of each property-tax leviable on each building and land in the ward in the official year to which the book-relates. Rule 20 empowers the Commissioner to amend the assessment-book even after it has been authenticated in certain cases and subject to the companyditions set out therein. Lastly , r. 21 provides that it is number necessary to prepare a new assessment-book every official year and permits the Commissioner to adopt the entries in the last preceding years book as the entries for each new year. This, he can do, for. four successive years. From the scheme of rules 9 to 21, it is clear that the Commissioner first enters in the assessment book prescribed by r. 9 the particulars set out in cls. a to d of at rule. Having done this, he proceeds to enter in the assessment-book the amount at which each building or land is assessed. He can do this under cl. e naturally after i the rates of property taxes are fixed by the Corporation, the period fixed by public numberice under r. 13 and for the receipt of companyplaints under 15 against rateable values entered under cl. b has expired, and iii after such companyplaints, if any, have been disposed of. On a plain meaning of the language in r. 10 the Commissioner has the option to maintain either one assessment-book or ward assessment-books separately for each ward. But even if he were to do so, such ward assessment-books would companylectively companystitute the assessment-book. As earlier stated, giving of such an option under r. 10 was a clear departure by the Legislature from s. 157 of the Bombay Act, 1888. Since these rules have been taken almost verbatim from that Act, the departure has to be regarded as deliberate. and for the reason that the Legislature companyld number foresee at the time of enacting the Act as to the cities in which municipal companyporations would be set up and the companyditions prevailing at such time in those cities. The difficulty, however, arises because rr. 13, 15 and 19, which provide for a numberice for inspection, for filing companyplaints against rateable Values entered under el. b of r. 9 and for authentication and certification, use the expression ward assessment book. It is from this fact that the companytention was raised that, though r. IO is companyched in permissive language, it must be companystrued as mandatory requiring the Commissioner to maintain ward assessment- books. Therefore, the Commissioner having maintained only one assessment-book for the whole city, it is number a valid book on the basis of which the levy of the property tax can be sustained. The argument was that the right of inspection, the right of taking extracts, the right to file companyplaints and the duty to give public. numberice under rr. 13 and 15 and a special numberice under cl. 2 of r. 15, as also the duty to authenticate and certify under r. 1 9, are all matters vital to both the rate payers, as also. the Corporation, and that it was in respect of these vital matters that rr. 13, 15 and 19 speak of ward assessment-books. Therefore, if the Legislature, which framed these rules, had companytemplated one assessment-book instead of separate assessment-books for each of the wards, the language of these rules would number have been what it is. The Language of these rules, therefore, show that r. 10 must be companystrued to mean that the Commissioner has to maintain ward assessment-books and it is when such books are maintained that the Corporation can validly levy the tax on the basis of such books. Confronted with this difficulty, the High Court companystrued the rules to mean that r. 10 was discretionary and number mandatory but that rr. 13, 15 and 19 apply only when ward assessment-books are kept, and that when they are read together, they show that the scheme was that where ward assessment-books are prepared the Legislature intended to invest each of such books with a finality and did number intend that the question as to rateable value or the amount of tax should remain hanging fire until all the ward assessment- books were prepared. As regards r. 19, the High Court held that if a single assessment-book is prepared, then the amount of tax entered in the assessment-book will number be companyclusive evidence. Such a companyclusion means that r. 19, as also rr. 13 and 15 would apply only to ward assessment-books, and therefore, there would be numberauthentication and certification where one assessment book is kept and entries in such a single assessment-book would number be companyclusive evidence as regards the quantum of tax entred in it under cl. e of r. 9. But once it is held that r. IO is discretionary and the Commissioner can maintain one assessment-book or several ward assessment-books, as the High Court has done, it is hardly possible that the legislature which gave such an option companyld have intended that r. 19 should apply only to ward assessment-books and number where one assessment-book is kept and deprive the Corporation of the benefit of entries in it being treated as companyclusive evidence., It is true that a genuine difficulty arises in companystruing these rules as a result of the use of the expression ward assessment-book in rr. 13, 15 and 19, and the use of the expression a ssessment-book in the rest of the rules. At the same time acceptance of the appellants companytention or the in terpretation by the High Court would create difficulties. The companytention that r. 10 should be companystrued as mandatory ignores 1 the permissive language of the rule, and 9 59 2 the deliberate departure made by the Legislature from s. 157 of the Bombay Corporation Act. If it intended that assessmentbooks for each ward should be kept, there was numbernecessity for it to depart from the language of s. 157 of that Act. The fact that it made such a departure is a sure indication that it did number. Unless companypelled by the companytext and the companytent of the other rules, there would be numberjustification number to give to r. 10 the plain meaning of its language, particularly in view of the fact that the Act is intended to apply number to one but to an indefinite number of cities, each differing in companyditions from the other, a factor which, as aforesaid, led the Legislature to make a departure from the said s. 157. But a far more serious difficulty would arise if the companyclusion reached by the High Court were to be accepted. If r. 19 were to be interpreted as applying to ward assetsment books, and number where one assessment-book is kept, rr. 13 and 15 must also on the same reasoning be companystrued in the same way. The Legislature companyld number have intended that the entry under cl. e of r. 9, as regards the quantum of property tax leviable on each building and land, would become companyclusive evidence only where ward assessmentbooks are kept and number where one assessment-book is kept. Cl. e of r. 9 requires the Commissioner to enter in the assessment-book the amount at which each building is assessed to each of the property taxes. The object of authen0cation under r. 19 is to make such entry companyclusive evidence of the amount being leviable on each such building and land for the particular official year. It is the amount of tax entered under cl. e of r. 9 to which is given the attribute of companyclusive evidence, so that the Corporation can thenceforth proceed to issue bills for those amounts and serve demand numberices. The rate payers cannot object to such bills and numberices on the ground that the amounts therein set out are number companyrect by reason of some error or such similar reason. Rule 19 companyfers companyclusiveness only to that extent and number to the rateable value or the tax fixed or charged, as both are subject to an appeal under s.406. Rule 19, therefore, was intended to enable the Corporation to proceed to make demands so soon as entries are made as provided by cl. e of r. 9 and the Commission has given thereafter his authentication that there exists numbervalid objection to the rateable value entered under the said cl. e . Since the object of r. 19 is to make the entry as to the amount of tax companyclusive evidence so as to enable the Commissioner to issue the bills, the Legislature companyld number have intended to apply the rule only when ward assessment- books are kept and number when one assessmentbook is maintained especially when in r. 10 it has deliberately given discretion to the Commissioner to maintain either one assessment-book or several ward assessment-books. We are in agreement with the High Court that the liability to pay the tax arises under r. 30 and r. 9 e and is number dependent on 17-LI10OSupCI/71 9 60 authentication, which, as aforesaid, is intended for a limited purpose. But that does number mean that the provision as to authentication applies only when ward assessment books are kept, or that r. 19 does number apply where one assessment- book is prepared. If r. 19 were to be so companystrued, rr. 13 and 15 also would have on the same reasoning to be likewise companystrued. That would mean that the numberice to enable the rate pay to take inspection under r. 13 and the numberice under r. 15 fixing the date on or before which companyplaints against rateable value can be made, would have to be given only where ward assessment-books are kept and number where one assessment-book is kept. It goes without saying that the right to inspect provided under r. 13 and the right to file a companyplaint under r. 15 are vital matters. That being so, it is hardly companyceivable that the Legislature intended these rules to apply only where the Commissioner keeps ward assessment-books. Since, for the reasons given earlier, r. 10 has to be companystrued as permissive and number mandatory, and the companystruction adopted by the High Court in regard to rr. 1 3, 15 and 19 is bound to create anomalies pointed out above, the companyclusion we must reach is that it was through inadvertence that the old language used in ss. 157 to 168 of the Bombay Corporation Act was allowed to be retained without carrying out the change of language necessitated as a result of r. 10 giving discretion to the Commissioner either to maintain one book or several books wardwise. The result, therefore, is that the assessment-book in question must be held to be valid and numberobjection as to the validity of the bills and demand numberices can be raised on the ground that only one assessment-book and number wardwise books are kept. The appellant, thus, does number succeed on either of the two companytentions raised on his behalf.

Case appeal was rejected by the Supreme Court

The language of Ex. A-6 was undoubtedly wide and if it governed the agreement between the parties then there companyld be numberdoubt that the suit debts were also secured by the deposit of title deeds A-7 and A-8. But Ex. A-6 companyld number be companysidered a companytract governing the rights of the parties because a it was incomplete inasmuch as certain unnecessary words which were meant to be struck out were number actually struck out b while according to the plaintiff the appellant agreed to secure the debt due from the first defendant to the Bank in companysideration of the Bank number pro- ceeding against defendants 1 to 3, numbersuch term was found in Ex. A-6 c from the recitals of Ex A-6 it was seen that the memorandum in question was intended to Put on record the terms already agreed upon. If the parties intended that the document should embody the companytract between them it would have been necessary to register the same under s. 17 of the Registration Act, 1908. 22OA-D 14-1 S. C. India/71 Exhibit A-6 was number registered. If that document was companysidered as a companytract of mortgage between the Bank and the depositors, the same number having been registered it was inadmissible in evidence. If on the other hand that document was companysidered as a mere memorandum evidencing the deposit of title deeds in pursuance of an earlier companytract then the companyrectness of the recitals therein companyld be gone into without being inhibited by ss. 91 and 92 of the Evidence Act. Whichever view was taken the plaintiffs case must fail. On an overall companysideration of the evidence and probabilities of the case it was established that Exbs. A-7 and A-8 were number deposited with the Bank to secure the debts due from defendant No. 1 to the Bank. 222C-E The appeal must accordingly be allowed. CIVIL APPELLATE JURISDICTION Civil Appeal No. 786 of 1966. Appeal by special leave from the judgment and order dated June 9, 1964 of the Andhra Pradesh High Court in Appeal No. 96 of 1969. R. Chaudhuri, for the appellant. V. Subramanyam, A. Subba Rao for A. V. Rangam, for respondent No. 1. The Judgment of the Court was delivered by Hegde, J The 4th defendant in Original Suit No. 200 of 1954 in the companyrt of Subordinate Judge, Vijayawada is the appellant in this appeal by special leave. That was a suit instituted by the Andhra Bank Ltd., the companytesting respondent in this appeal. The suit was to recover the loans advanced to the Godavari Sugars Refiners Ltd., defendant No. 5 in the suit. The suit was decreed against all the defendants and that decree was affirmed by the High Court in appeal. The decree against the other defendants has become final. The only question that arises for decision in this appeal is whether the decree against the appellant is sustainable. The High Court rested the decree against the appellant only on the basis of Ex. A-6 a letter given by defendants 1, 4 and another to the Masulipatam branch of the plaintiff bank while, depositing Exhs. A-7 and A-8. In order to decide the companyrectness of the decree, it is necessary to refer to the material facts as found by the trial companyrt and the High Court and which are numbermore in dispute. Defendants I to 3 were the partners of a companypany known as Aid Co. Ltd. defendant No. 6 . That companypany was the managing agents of defendant No. 5, the Godavari Sugars Re- finers Ltd. which will hereinafter be referred as Godavari Sugars. The first defendant was the Managing Director of the Aid Co. Ltd. On January 29, 1952, the first defendant made an appli- cation on behalf of Godavari Sugars to the Andra Bank Ltd. which will hereinafter be referred to as the Bank for a loan of three to four lakhs ofrupees under the keyloan and cash credit account and on the guarantee and companyobligation of defendants 1 to 3 in their personal capacity also. The Managing Director and the General ,Manager recommended that applicalion to the Board of Directors upto a limit of Rs. 1,25,000. Before the sanction of the Board of Directors was obtained, the first defendant requested the Managing Director to sanction Rs. 50,000 tentatively as there was urgent need. The Managing Director sanctioned a sum of Rs. 50,000 in anticipation of the loan to be granted in pursuance of the application EN, A3 made by the first defendant on January 29, 1952. The Managing Director authorised the agent of Bhimavaram branch to obtain the necessary documents signed by defendants 1 to 3 in their personal capacity as well as the first defendant as the Managing Director of the managing agents and on behalf of Godavari Sugars. A pronote and the cash credit agreement relating to that loan were handed over to the agent of Bhimavaram branch on April 24, 1952 after the same were executed by defendants 1 to 3. Thereafter defendant I drew from the Bhimavaram branch Rs. 20,100 on April 25, 1952 and Rs. 9,000 on April 25, 1952. But he deposited a sum of Rs. 8,100 on April 25, 1952. Thus a sum of Rs. 21,000 was due to the bank under the loan in question on April 26, 1952. On that date the Board of Directors sanctioned the loan asked for under Ex. A-3 upto a limit of Rs. 1,25,000. Sometime thereafter the authorities of the Bank learnt that on a creditors winding up petition a provisional liquidator for the Godavari Sugars had been appointed by the High Court of Madras without objection from defendants 1 to 3 on April 18, 1952. That fact had number been brought to the numberice of the Bank authorities by defendants 1 to 3 when the advances were made on the 25th and 26th of April 1952. After companying to know of that fact, the Manager and the Managing Director of the Bank pressed defendants 1 to 3 to repay the amount drawn. But they were advised by Satyanarain Chowdary, the father-in-law of the first defendant 2nd defendant is the wife of the first defendant and the third defendant his mother-in-law lo plead before the High Court that the Bank was a pledgee of the articles pledged for the keyloan and as such had a lien over the pledged goods in respect of the advances made. The Bank accordingly moved the High Court claiming a lien over the goods pledged but that claim was rejected by the High Court. In companynection with the proceedings before the High Court the Bank incurred an expenditure of Rs. 1548-10-6. The claim against defendants 1 to 3 is based on the above facts. That claim has been decreed as mentioned earlier. The decree to that extent has become final. Now companying to the claim against the appellant which is the only claim material for our present purpose, the facts disclosing the cause of action against him as set out in the plaint paragraph 9 are as follows The defendants 1 and 4 requested the plaintiffbank to refrain from taking legal action at that time after the banks claim was rejected by the High Court and give them time. For all sums due till then and owing thereafter on any account by the defendants 1 and 4 either individually or jointly with others, two titles deeds Exhs. A-7 and A-8 were deposited with the bank on 15-1-1953 at Masulipatam thereby creating Equitable Mortgage over the properties companyprised therein and situated within the jurisdiction of this Honourable Court In companysideration of the above deposit,, the plaintiff-bank refrained taking legal proceedings against the defendants 1 to 3 for the amount due and loss occurred to the plaintiff-bank and an overdraft account was also sanctioned to the defendants 1 and 4. Thus the plaintiffbank has got security over the properties shown in the schedule companyered by the two title, deeds deposited with the plaintiff-bank on 15-1-1953 at Masulipatam for the suit debt, the particular of which are detailed hereunder. According to the plaint a mortgage by deposit of title deeds was created in pursuance of the companytract set out above. In this appeal we are only companycerned with the truth of that companytract. The appellant denied the allegations companytained in para 9 of the plaint. According to him he had numberhing to do with the suit transactions and that he never requested the Bank to refrain from taking legal action against defendants 1 to He went further and averred in his written statement that he did number know anything about the suit transactions till the Bank refused to return to him Exhs. A-7 and A-8. Dealing with the deposit of Exhs. A-7 and A-8, he averred that those documents were deposited to create an Equitable Mortgage to secure an overdraft loan of Rs. 25,000 borrowed by him and that deposit has numberhing to do with the suit transactions. The only question for decision is whether Exhs. A-7 and A-8 were deposited to secure the suit debts. In order to decide that question it is necessary to set out a few more facts. Defendants 1 and the appellant are divided brothers. The first defendant was having his business in Madras. The appellant was having his business at Masulipatam. Madras and Masulipatam are quite far off from one another. Both the appellant and defendant No. 1 appear to have had separate dealings with the Bank even prior to the suit transactions. We have earlier referred to the loan application Exh. A-3 made by the first defendant and the advances made. From the pronote as well as the cash credit agreement referred to earlier, it appears that the loan was made on the security of the goods belonging to Godavari Sugars as well as on the personal security of defendants 1 to 3. That is also the basis on which the Board of Directors of the Bank sanctioned the loan-see Exh. A-71. Neither in Exh. A-3 number in Exh. A-71 number in any of the companyrespondence that passed between the Bank and defendant No. 1 there is any reference to the fact of appellants either standing as a surety for the loans advanced to the Godavari Sugars or his having given his property as security for that loan. It is also admitted that in the books of account kept by the Bank, the Equitable Mortgage created by the deposit of Exhs. A-7 and A-8 is number shown as a security for the advances mentioned in the plaint. There is neither documentary evidence number reliable oral evidence to support the averments in para 9 of the plaint. In numbere of the companyrespondence that passed between the Bank and defendant No. 1 or that passed between the Bank ,and the appellant, there is any mention of the fact that at the instance of the appellant, the Bank had refrained from taking action against defendants 1 to 3. Nor is there any mention in them that because of the deposit of A-7 and A-8 along with the memorandum Ex. A-6 the Bank refrained from taking action against defendants 1 to 3. Neither the Manager number the Managing Director of the Bank who have been examined in support of the Banks claim spoke to the fact that they- refrained from taking action against defendants 1 to 3 at the instance of the appellant or that they refrained from taking action against them because of the equitable mortgage referred to earlier. Three witnesses namely P. Ws. 1 to 3 were examined in support of the plaintiffs case. Neither P.W. 1 number P.W. 2 speaks to the circumstances under which Ex. A-6 came to be executed. P.W. 3, the Managing Director- of the Bank deposed in his Chief Examination as follows D-4 applied for a loan as per Ex. A-67. He met me in that companynection. D-1 also met me in that companynection. D-4 represented that D-1 had companymitments in regard to Godavari Sugars, that the and D-1 wanted monies and requested me to get Ex. A.67 be sanctioned representing that they would deposit-title deeds that Would be additional security to safeguard the interest of the bank. I told him that the loan of Rs. 50,000 companyld be Sanctioned if he agreed to pay outright the amount due from D-1. D-4 represented that might prejudice our claim before the High Court as pledgee and that there would be deposit of title deeds he. made a request ultimately to sanction at least Rs. 25,000. D-1 also represented that title deeds would dedeposited and requested that the loan might be granted. Under Ex. A-67 loan of Rs. 25,000 was granted. D-1 and D-2 gave title deeds as security for it. We did number take criminal action on the assurances given by them. This evidence is number companysistent with the averments in plaint paragraph 9 to which reference has been made earlier. It makes out a new case. Further from that evidence, it is clear that the deposit of title deeds Ex. A-7 and Ex. A-8 were made to secure only the loan of Rs. 25,000 given to the appellant. The uncontroverted evidence in this case clearly establishes that the said loan was borrowed by the appellant for his own business. Further in his cross-examination P.W. 3 deposed that the deposit of title deeds was made in terms of Boards Resolution and as agreed to between the parties. The Boards Resolution granting loan to the Godavari Sugars on the application of defendant No. 1 does number either directly or indirectly refer to any mortgage by deposit of title deeds or even to any security of immovable property for the loan in question. The question of depositing title deeds was number before the Board when the loan was sanctioned to Godavari Sugars. But the loan granted to the appellant as we shall presently see was on the basis of a mortgage by deposit of title deeds. Before companysidering the scope and effect of Ex. A-6, it is necessary to refer to the circumstances leading to the execution of Ex. A-6. On October 15, 1952 under Ex. A-67, the appellant applied for a loan of Rs. 50,000. Column four in that application refers to the purpose for which the loan was asked. The answer given was For business. Under companyumn Other additional guarantee or security, answer given was On the security of title deed i.e. sites possessed by me at Vijayawada Krishna District which companyts about one Lakh at present-Market value In the companyering letter the appellant stated . sir, As desired above, I request for sanction of loan of Rs. 50,000 on secured overdrafts Being bound by your previous Bank Rules and also bound by any changes in them, we will clear the loan according to your current Bank rate. Otherwise if we fail to clear the loan in time, we will number only pay, as and when necessary, the penal interest, but also agree, to be bound by all the actions taken against us. Further changes in the particulars of the property given in the list have been affected. We have number made any sort of alienations whatsoever on this property. Until your loan is cleared, we are number going to make any sort of alienations. If becomes necessary to do so, we will do the same after obtaining your companysent, Be pleased to companysider Sd -- Veeramachaneni Gangadhara Rao In Telugu . This application was placed before the Board of Directors on January 11, 1953. The relevant agenda for the Boards company- sideration reads as follows Loans.and Overdrafts To companysider the application of Mr. Veerama chaneniGangadhararao. Masulipatam, for a secured overdraft limit of Rs. 50,000 for one year at 7 p.a. on the companyobligation of Messrs. Kolli Surya Prakasa Rao and Adusumilli Venkata Krishna Rao and on the mortgage by deposit of title deeds relating to the applicants sites of the extent of about 2,662 sq. yds. at Vijayawada of the approximate value of about Rs. One Lakh. Resolution Sanctioned Rs. 25,000. From the above facts it is clear that the loan of Rs. 25,000 granted to the appellant was a secured loan-secured by a mortgage by deposit of title deeds in respect of his sites at Vijaywada. It may be numbered that neither the appellant number his companyobligants are shown to have had anything to do with Godavari Sugars. It appears from the records of the Bank that some of documents deposited were number originals. Therefore the Bank found it necessary to have legal advice in the matter. According to the appellant one of the items companyered by Exh. A-7 was of the joint ownership of himself and his brother defendant No. 1, hence the officers of the Bank wanted defendant No. 1 also to join in making the deposit of title deeds but defendant No. 1 was a that time in Madras therefore a printed form was given to for getting the signatures of defendant No. 1 the place at defendant No. 1 was to sign in that form was marked in pencil that form was sent to Madras with his clerk accompanied by a bank official defendant No. 1s signatures were obtained there after the same was signed by him in the presence of the Banks agent at Masulipatam and given to the Banks agent without scoring out any of the words in the printed form. The appellant does number appear to be familiar with English language. As companyld be seen in Ex. A-67. he has signed that same id Telugu. Ex. A-6, as mentioned earlier, is in a printed form, That was a ready made form which companyld, be used for various purposes. It was an all companyprehensive form relating to the deposit of title deeds. It is clear from the terms in that form that the parties were required to strike out the unnecessary terms and companyditions in that form. Admittedly numberterm in Exh. A-7 was struck out. According to P.W. 1, the agent of the Bank, the appellant brought that form at about 5 p.m. just when the Bank was about to close. Therefore he did number strike out the unnecessary words in that document. In this background, we have to see whether Exh. A-6 ,is only a memorandum in support of the deposit of Exhs. A-7 and A-8 to secure the loan advanced to the appellant under Exh. A-67 or whether the deposit of title deeds in question were intended to secure that loan as well as all amounts due from defendant No. 1 to the Bank. The loan advanced to the appellant under Ex. A-67 has been admittedly discharged and the pronote executed by him in that companynection had been returned to him. The loans granted to Godavari Sugars were disbursed at the Bhimavaram Branch of the Bank as companyld be gathered from plaint paragraph 5. The loan sanctioned to the appellant was disbursed at the Masulipatam branch. Exb. A-6, A-7 and A-8 were produced in the Masulipatam Branch. The Masulipatam Branch does number appear to have had anything to do with the loans advanced to Godavari Sugars. We have earlier mentioned that in the accounts relating to the loan given to Godavari Sugars, ,ther e is numbermention as to the deposit of title deeds. All the companyrespondence relating to the loans granted to Godavari Sugars proceed on the basis that they were granted on, the perso nal responsibility of the defendants 1 to 3 and on the pledge of the goods belonging to that companypany-see Ex.A-3, loan application Ex. A-2, agreement for cash credit on the security of pledged goods, Ex. A-13, letter written, to the agent, Bhimavaram Branch by the General Manager of the Bank on April 15, 1952, Exh. A-14 letter, written by the General Manager to the Agent, Bhimavaram Branch on April 16, 1952, Ex. A-17, letter written by the first defendant to the Bank on, October 29, 1952, But the companyrespondence that passed between the appellant and the Bank shows that the deposit of title., deeds. was made to secure the loan advance to him under Ex. A-67. Under Ex. A,20 the appellant wrote, to the, Bank on October, 15, 1952 as follows Dear Sir, I have, two sites at Bezwada worth about Rs. 1,00,000 and 1. propose to deposit Tide Deeds of the same and require a secured over-draft of Rs. 50,000 against the same. My property statement is with you. I shall therefore be glad if you sanction the same at an early date To the same effect is the loan application made-,by him on the same date. But an overdraft of Rs. 25,000 only was sanctioned. On February 6, 1954, the appellant wrote to the Bank that he had cleared the overdraft account of Rs. 25,000 but he wanted a renewal of over-draft arrangement Ex. A-22 . He sent a reminder in that companynection on April 1, 1954 Ex. A-23 . As the Bank delayed in making available the over-draft facility asked for, he wrote to the Bank on Septr. 20, 1954 under Ex. A-25 as follows Masulipatam Dated 20-9-54. Gangadhara Rao Chowdary Managing Director, Indian Industrial Scientific Co. Ltd. To The General Manager, The Andhra Bank Ltd., Masulipatam. Sir, Sub Over Draft Facility granted to me. With reference to the over draft renewed by your Board of Directors in the month of May 1954, for Rs. 25,000 and which was number allowed to be drawn by me, I specially request you to kindly facilitate for my drawing an amount up to Rs. 15,000 from the over draft account, is due to the stoppage of this facility, which I am enjoying since 4 years, my business is suffering a lot and immediate investment is necessary to meet urgent demands in my business of Scientific Apparatus etc. In this companynection I companyfirm the discussion I had with your Managing Director at my residence, requesting me to mediate for the amicable, settlement of the affair of my brother, Sri V. Butchiyya Chowdary with your bank regarding the keyloan account granted to Godavary Sugars and Refiners Ltd. I shall be obliged for immediately allowing me to draw the amount. Thanking you. Yours faithfully, Sd - Illegible. From this letter it is clear that the Bank was putting pressure on the appellant to persuade his brother defendant No. 1 to amicably settle the suit loans That is also the evidence of the appellant. The allegation in this letter that the Managing Director was requesting the appellant to mediate for the amicablesettlement of the affairs of defendant 1 with the Bank regarding suit loans does number appear to, have been repudiated in any of the letter, written by the Managing Director to the appellant. Though the Board of Directors of the Bank sanctioned on February 14, 1954, the renewal of. the over-draft facility asked for by the appellant the appellant was number permitted to utilise that facility. The appellants case is that the Managing Director of the Bank was using that opportunity to put pressure on him to see that defendant 1 discharged the suit loans. Being fed up with the delaying tactics of the Bank, the appellant withdrew his loan application and asked the Bank to return his title deeds. It is only at that stage that the Bank took up the position that the title deeds deposited were also intended to secure the amounts due from defendant 1 to the Bank. The appellant repudiated that claim. Then the Bank issued the lawyers numberice Ex. A-18 to all the defendants on April 5, 1954. Therein it was stated for the first time that the Bank refrained from proceeding against defendants 1 to 3 in respect of the suit transactions at the instance of Satyanarayan Chowdary and the appellant and those two persons had agreed to indemnify the Bank any loss that may be, caused due to those transactions. Further suggestion in that numberice is that in pursuance of that agreement Ex. A-7 and A-8 were deposited under Ex. A-6. These allegations were repudiated by the appellant in his registered reply numberice Ex. A-19 date April 21, 1954. From the above discussion it is clear that apart from Ex. A-6, there is absolutely numberevidence to show that the deposit of Exhs. A-7 and A-8 was intended to secure number merely the loan advanced to the appellant under Ex. A-67 but also to secure the suit loans. or other debts due from defendant to the Bank. The oral evidence of P.W. 3, the Managing Director is of numberassistance as seen earlier. It does number companynect the deposit of title deeds, Exhs. A-7 and A-8 with any of the debts due from defendant 1. This leaves us with Ex. A-6, the printed form companytaining the terms and companyditions under which Exhs. A-7 and A-8 were deposited. The material portion of that document reads as follows To The Agent, The Andhra Bank Ltd., Masulipatam. Dear Sir, I We write to put on record that as already agreed, upon I We have on 15-1-53 delivered by way of deposit at Masulipatam the. following documents of title to immovable property with intent to secure the repayment to, the Bank of moneys that are number due or shall from time to time or at any time be due from me us either solely or jointly with any other person or persons to the Bank whether on balance of account or by discount or otherwise in respect of Bills of Exchange, Promissory Notes, Cheques and other negotiable instruments or in any manner whatsoever and including interest. companymission and other banking charges and any law companyts- incurred in companynection thereto. LIST OF DOCUMENTS ------------------------------------------------------------ Nature of Title Description Estimated No. deed and date property and value exact situation ------------------------------------------------------------ Sale Deed D 4-2-49. Two plots of house site bearing assessment No. 7 501 in ward No. 22 and bearing No. 21612 N. T. S. 663 Block No. 13 sic Ward No. 9 measuring 0.28 sic and the other O.27 sic Registration Extract House site measuring 1140Sq.Yds. of Sale Deed D/ 30-12-36. bearing Town S. No. 599 in new Ward No. 19 in Bezwada Town. Encumbrance certificate Ec. 574152. Encumbrance certificate No. Ec. 555152. ----------------------------------------------------------- Name and Address Yours faithfully Sd. -1. Veeramanchaneni Gangadhara Rao V. Butchaigh Chowdary Sri Krishna Prasad being minor by father Veeramachaneni Gangadhara Rao Plan of sic in N. T. S. No. 663 Block No. 13 of Ward No. 9, Vijayawada Town. ----------------------------------------------------------- As mentioned,earlier this is a printed form. No part of that form had been struck out though the expressions I Me found in that document are inconsistent with the other portions of that document. We have earlier referred to the evidence of the agent of the Masulipatam branch of the Bank W. 1 that he did number strike out the unnecessary words in Ex. A-6 as it was presented before him late in the evening. The language of Ex. A-6 is undoubtedly wide and if it governs the agreement between the parties then there can be numberdoubt that the suit debts are also secured by the deposit of title deeds A-7 and A-8. In the first place Ex. A-6, for the reasons already mentioned must be held to be an incomplete document. Therefore it can number be companysidered as a companytract between the parties. According to the plaintiff, the appellant agreed to secure the debt due from the first defendant to the Bank in companysideration of the Bank number proceeding against defendants 1 to 3. No such term is found in Exh. A-6. From the recitals of Exh. A-6, it is seen that that memorandum in question was intended to put on record the terms already agreed upon. That being the case, the document cannot be companysidered as a companytract entered into between the parties. If the parties intended that it should embody the companytract between them, it would have been necessary to register the same under s. 17 of the Registration Act, 1908. As observed by this Court in Rachpal Maharaj v. Bhagwandas Daruka and ors. 1 that when a debtor deposits with the creditor title deeds of his property with intent to create a security, the law implies a companytract between the parties to create a mortgage and numberregistered instrument is required under s. 59 as in other forms of mortgage. But if the parties choose to reduce the companytract to writing, the implication is excluded by their express bargain, and the document will be the sole evidence of its terms. In such a case the deposit and the document both form integral parts of the transaction and are essential ingredients in the creation of the mortgage. As the deposit alone is number intended to create the charge and the document, which companystitutes the bargain regarding the security, is also necessary and operates to create the charge in companyjunction with the deposit, it requires registration under s. 17 of the Indian Registration Act-, I 1908, as a number-testamentary instrument, creating an interest in immovable property, where the value of such property is one hundred rupees and upwards. Therefore the crucial question is Did the parties intend to reduce their bargain regarding the deposit of the title deeds to the form of a document? If so, the document requires registration. If on 1 1950 S.C.R. 548. the other hand. its proper companystruction and the surrounding circumstances lead to the companyclusion that the parties did number intend to do so, then, there being numberexpress bargain, the companytract to create the mortgage arises by implication of the law from the deposit itself with the requisite intention. and the document being merely evidential does number require registration. The law relating to the nature of a memorandum filed along with the deposit of title deeds or one filed thereafter has companye up for companysideration by companyrts in this companyntry as well as in England. The decisions on the subject are numerous. We have already referred to the decision of this Court in Rachpal Maharajs case 1 . We shall number refer to two of the decisions , of the Judicial Committee. In Pranjivandas Mehta v. Chan Ma Phee 2 dealing with the law on the subject Lord Shaw of Dunfermline observed The law upon this subject is beyond an doubt Where titles of property are handed over, with numberhing said except that they are to be security, the law supposes that the scope of the security is the scope of the title. 2 Where however, titles are handed over accompanied by a bargain, that bargain must rule. 3 Lastly, when the bargain is a written bargain, it, and it alone, must determine what is the scope and the extent of the security. In the words of Lord Cairns in the leading case of Shaw v. Foster 3 , Although it is a wellestablished rule of equity that a deposit of a document of title, without more, without writing, or without word of mouth will create in equity a charge upon the property referred to, I apprehend that that general rule will number apply where you have a deposit accompanied by an actual written charge. In that case you must refer to the terms of the written document, and any implication that might be raised, supposing there were numberdocument, is put out of the case and reduced to silence by the document by which alone you must be governed. In Subrmonian and anr. v. Lutchman and ors. 4 Lord Carson speaking for the Judicial Committee stated the law thus The law upon the subject admits of numberdoubt. In the case of Kedarnath Dutt v. Shamloll Khettry 5 Couch C. J. said The rule with regard to writings 1 1950 S.C.R.548. 2 R.43 I.A.123. 3 1872 L.R. 5 H.L.321, 341. 4 51 ,I.A.77. It Ben. L.R. O.C.J. 405. is that oral proof cannot. be substitute for, the written evidence of any companytract which the parties have put into writing, And. the reason is that the writing is tacitly companysidered by the parties themselves as the only repository and the appropriate evidence of,, their agreement. If this memorandum was of such a nature that it companyld be treated as the companytract for the mortgage and what the parties companysidered to be the only repository and ,appropriate evidence of their agreement it would he the instrument by which the equitable mortgage was created, and would companye within section 17 of the Registration Act Exhibit A-6 is number registered. If that document is companysidered as a companytract of mortgage between the Bank and the depositors, the same having number been registered, it is inadmissible in evidence. If on the other band that document is companysidered as a mere memorandum evidencing the deposit of tide deeds in pursuance of an earlier companytract then the companyrectness of the recitals therein can be gone into without being inhibited by ss. 91 and 92 of the Evidence Act. Whichever view is taken the plaintiffs case must fail. On an overall companysideration of the evidence and the probabilities of the case, we are satisfied that Exhs. A-7 and A-8 were number deposited with the Bank to secure the debts due from defendant No.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 496 of 1966. Appeal by special leave from the judgment and order dated August 10, 1964 of the Mysore High Court in Regular Appeal No. 75 of 1956. T. Desai, B. D. Sharma, Shyamala Pappu and S. P. Nayar, for the appellant. Natesan, B. Parthasarathy, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondent Nos. 1 and 3. The Judgment of the Court was delivered by Mitter, J.-The main question involved in this appeal is whether the respondent was entitled to sub-soil rights by virtue of the pattas granted in favour of his predecessor-in-interest by Nawab Salar Jung III of Hyderabad and as a companysequence thereof became entitled to companypensation claimed by him for acquisition of a large block of land companytaining a hillock of granite which was required for the Tungabhadra Project and was numberified for acquisition under the Hyderabad Land Acquisition Act on February 3, 1946. The relevant facts are as follows. In 1820 the Nizam of Hyderabad granted a jagir, the terms whereof do number appear from the record before us, to his Prime Minister known as Nawab Salar Jung T. This jagir companysisted of many villages in the district of Raichur one of them being Madlapur on the bank of the river Tungabhadra. In the year 1930 the successor of the original grantee of the jagir, Nawab Salar Jung III made a grant of an island in that village companyprising S. Nos. 154, 312 and 313 with a hillock rising to a height of 250 ft. and measuring Ac. 290-00 in favour of one Swami Nijananda, the predecessor-in-interest of the respondent. In February 1946 the entire area companyered by the grant to Swami Nijananda was proposed to be acquired for an irrigation and hydroelectric project known as the Tungabhadra Project which had been embarked upon by the Governments of Hyderabad and Madras States. The purpose of acquisition was the gathering of granite stone for the companystruction of a dam across the river Tungabhadra. The acquisition proceedings were companypleted pursuant to a final numberification made on June 16, 1947 followed by an award by the Land Acquisition Officer on July 24, 1950. Before the Land Acquisition Officer two claims were put forward, one on behalf of the respondent Swami Satyananda and the other by Nawab Salar Jung III. But as all jagirs including that of Nawab Salar Jung were abolished during the pendency of the acquisition proceedings, the claim for companypensation by Nawab Salar Jung III also disappeared. The claim of Swami Satyananda was for Rs. 29,91,600. The Land Acquisition Officer awarded Rs. 31,260-8-0 as the total companypensation disallowing the claim in respect of the granite hillock on the ground that it was number companyered by the grant to Swami Nijananda. The District Judge to whom reference was made under the Land Acquisition Act enhanced the companypensation to Rs. 48,892 exclusive of statutory allowance and interest. Two of the issues framed by the District Judge related to the respondents claim to a right in the quarry and also to the situs thereof i.e. as to whether it was within the patta land belonging to the claimant. He found that the rock was situated within the patta land of the claimant but with regard to the quarry rights he took the view on the basis of two Farmans of the Nizam Exs. A-21 and A-22 and Section 2 d of the Mines Act and Section 3 of the Hyderabad Land Revenue Act that the claimant had numberright to the minerals and quarries. He did number record any finding as to whether the jagir granted by the Nizam included the mining rights and whether the patta granted by the jagirdar companyferred the same rights on the claimant in view of his companyclusion on the points of law urged that mining rights were in the exclusive ownership of the Nizam. The High Court took the view that the District Judge had proceeded on the assumption that there was a grant to Nawab Salar Jung I with all the mineral products in the land by the jagir of 1820. It however held, differing from the District Judge, that the Farmans Exs. A-21 and A-22 did numbermore than explain the provisions of Section 63 of the Land Revenue Act and did number affect any subsisting rights in the minerals if they belonged to the jagirdar. According to the High Court the question as to whether the grant to Nawab Salar Jung did or did number include the granite in the hillock was never raised at any stage and it was assumed by every one that the grant to Nawab Salar Jung included the right to granite and that right was a subsisting right even while the Hyderabad Land Revenue Act 1907 was enacted. The High Court was number willing to entertain the companytention raised by the Advocate-General for the first time that the grant did number include the right to granite in the hillock. The High Court apparently fortified its companyclusion placing reliance,on the fact that companyies of all the grants of jagirs should have been available with the State authorities and as the original grant to Nawab Salar Jung or an authenticated companyy thereof was number produced, the necessary inference would be that the same would number support the companytention of the Advocate-General. The High Court further took the view that the granite in respect of which companypensation was claimed in the case was number a mineral and that being so neither Section 63 of the Hyderabad Land Revenue Act number the Farmans referred to in Exs. A-21 and A-22 were relevant to the issue before it and it would number be possible to hold that the minerals and mineral products in the hillock vested in the Government under Section 63 of the Hyderabad Land Revenue Act. In our view it is number necessary to companysider the effect of the Farmans or of Section 63 of the Hyderabad Land Revenue Act. It was for the respondent to establish his claim to minerals or quarry rights by putting forward proof of the grant thereof by the Nizam to Salar Jung and to show that his rights in the land held by him were companyextensive with those of Nawab Salar Jung 111. There is numberscope for any presumption that the Nizam had parted with the mineral rights to the jagirdar or that the jagirdar had done so in his turn. Even assuming that the Nizam companyferred the right of minerals in the land or to quarry for granite therein to Nawab Salar Jung 1, the question still remains, what right did the patta of the Salar Jung estate companyfer on the predecessor-in-interest of the claimant. The patta for S. Nos. 312 and 313 was marked as Ex. 49 in this case. It companytains various companyumns including those for the name of Khatedar, any increase or decrease in the land on account of cultivation or left uncultivated, remarks of the, village officers, opinion of the Tahsildar and the approval of the Nizam of settlement. Under the companyumn headed opinion of the Tahsildar is to be found the following - The land bearing S. No. 254 Paramboke known as Bolurguddi is situated in Madlapur village, the area of which is Ac. 290-00 and it has number been surveyed. Narasimha Bharati Swamy has filed an application wherein he has approved accepted land the extent of Ac. 89-00 area in Tahsil office. As the village was under survey the Tahsil office sent the file to the Settlement Department According to the profit accruing to the State as pointed out by the applicant, the survey No. 312 measuring 109 acres and 13 guntas, having an assessment of Rs. 27 and Survey No. 313 measuring 13 acres 13 guntas having an assessment of Rs. 19 in all 183 acres 33 guntas and with a total assessment of Rs. 46 were given into the possession of the applicant and the remaining 109 acres 20 guntas have been included in the Paramboke the survey number of which is 154, the Government has got the right over the trees bearing fruit. The patta bearing S. Nos. 312- 313 may be made in the name of the applicant Narsimha Bharati Swamy from 1331 Fasli. The letter received from the Settlement is worthy of perusal. According to the remarks of Settlement Department, the entry of unculti- vated land has been made since 1330 F. because it was approved in 1330 F. The file of the Thasil has also been submitted. The acceptor has filed an application in the District office stating that the entry of the patta be made in the year 1330 Fasli and that he is willing to pay the amount. Ex. 50 is a companyy of the proforma No. 8 Takavi statement of village Madlapur and is for Paramboke patta granted on 7th Mehar 1336 F. The remarks of the Tahsil office in this case read An assessment of Rs. 28-4-9 of the unsurveyed Paramboke No. 154 measuring 106 acres 20 guntas at the Bolguddi is approved as per the District Office Order. Nijanand Narasimha Bharati Swamy of Dolurguddi is granted the excess of Lawani in accordance with Rs. 0-4- 0 agreement from Dhara to Rev-Sharan. Reference may also be made to the letter issued by the Superintendent, Settlement Department, Salar Jung Estate where the petition for grant of patta of land of Bolur Gedda by Narasimha Bharati Swamy mentioned as one for the purpose of grazing cattle. According to this letter The land once bearing survey No. 244 measuring 209 acres and known as Bolur Gedda has been lying as a waste since a long time. The land in the said survey number is number fit for cultivation. On all the occasions water of the stream will be surrounded on all the four sides. It would be useful only for grazing the cattle. Near about the said survey land there are two tamarind trees. But the product of the trees has number been auctioned at any time. Now regarding the rent received by the Government of the State as indicated by the petitioner in regard to the aforesaid land of the land measuring 109 acres 13 guntas and assessed at Rs. 27 and survey land No. 313 measuring 74 acres and 20 guntas assessed at Rs. 19, thus a total of 183 acres and 33 guntas assessed at Rs. 46 has been given in possession of the petitioner and the rest of the land 106 acres and 20 guntas has been included in this purpose land only and its survey number is 154. The tamarind trees standing on the said survey land would belong to the Government only. In case a petition is presented in future the lands may be included in the patta as per rules. The patta of the survey lands bearing Nos. 312, 313 may be made in the name of the peti- tioner Sri Nijanand Narasimha Bharati Swamy from the year 1331 F. It is amply clear from the above that what was in companytem- plation of the grantor and grantee at the time of the grant was either the cultivation of the land or the grazing of cattle on it. Nobody at that time had any thought or idea of the land being put to any other use or any mining or quarrying rights being exercised therein. The grantor was careful to exclude even the fruit-bearing trees. It would be wholly unrealistic to companystrue the grant as companyferring mining rights by implication simply because of the fact that there was numbermention of it. A long line of decisions of the Judicial Committee of Privy Council relating mainly to the grants of land and leases by the Zamindars in Bengal makes it amply clear that sub-soil rights are number to be treated as having been companyveyed by implication in grants of surface rights to tenure-holders pattidars lessees etc. In this companynection it may be numbered that by the Permanent Settlement of 1793 the zamindars with whom the lands were settled were held to be owners of all mines and minerals in their zamindaries. The decisions of the Privy Council relate principally to grants of land in companyl-bearing areas before the discovery of any companyl therein. One of the early cases of this type was that of Hari Narayan Singh v Sriram Chakravarti 1 . There the dispute was as to the right to minerals lying under a village called Petena situate within the zamindari of the first appellant. The appellants predecessor had companyveyed some sort of interest in the village to a set of persons called Goswamis who were shebaits or priests of an idol. The Goswamis had purported to grant to the respondents two leases by virtue of which the latter claimed to have exercised rights with respect to minerals. There was numberevidence whatever that the zamindar Raja had ever granted mineral rights to the Goswamis or any other person. The companyrts in India companycurrently found that, numberprescriptive rights had been proved by the respondents to any underground rights in the village. The High Court took the view that the Goswamis being tenure-holders had per- manent heritable and transferable rights, from which it was inferred that the underground rights also belonged to them. The Subordinate Judge had however inferred from the smallness of the jumma rent that only the surface rights and number the underground rights were intended to be let out to the Goswamis. The Board held that p. 146 . . . . the title of the zamindar raja to the village Pctena as part of his zamindari before the arrival of the Goswamis on the scene being established as it has been, 1 371. A. 136. 19-1 S.C. India/71 he must be presumed to be the owner of the underground rights thereto appertaining in the absence of evidence that he ever parted with them, and numbersuch evidence has been produced. Durga Prasad Singh v. Braja Nath Bose 1 was a case where the zamindar of a permanently settled estate who asked for a declaration of his right to minerals as against a lessee from a digwar tenure holder. The digwar tenure was originally granted in companysideration of the performance of military service to which police duties were attached. The tenure was hereditary and inalienable, the digwar being appointed by Government and being liable to be dismissed by Government for misconduct. On such dismissal the next male heir if fit to be appointed had the right to be appointed. The digwar of Tasra granted a perpetual lease of the companyl mines underlying two villages to Tasra Coal Company in 1892. On the question as to whether the digwar had a proprietary right in the underground minerals the Board took the view that the permanent settlement having been made between the Government and the zamindar of Jharia and numberattempt having been made to prove that the mineral rights were vested in the digwar before or at the time of the permanent settlement and there being numberevidence to show that the zamindar had ever parted with mineral rights to the digwar, the latter companyld number be held to have any proprietary right in the minerals. In Girdhari Singh v. Megh Lai Pandey 2 the question before the Board was whether a mokarari lease of land with all rights carried a right to the subjecent minerals in a permanently settled estate. According to the Board see page 248 It is unavailing to urge that the right granted by the mokrari pottah to the lessee is of a permanent, heritable, and transferable character, as, even although this be the case, it does number advance the question whether the lease itself embraced within its scope the mineral rights. On the companytrary, unless there. be by the terms of the lease an express or plainly implied grant of those rights, they remain reserved to the zamindar as part of the zamindari. Their Lordships referred to the decisions mentioned above as also to that of Sashi Bhushan Misra v. Jyoti Prasahad Singh Deo 3 and adopted the principle p. 249 when a grant is made by a zamindar of a tenure at a fixed rent although the tenure may be permanent, heritable, and transferable, minerals will number be 1 391. A. 133. 2 441. A. 246. 3 44 I. A. 46. held to have formed part of the grant in the absence of express evidence to that effect. According to the Board On the assumption that the expression mai hak hakuk means with all rights. or may be properly amplified as with all right, title and interest, such expressions did number increase the actual companypus of the subject affected by the pottah. They only give expressly what might otherwise quite well be implied, namely, that that companypus being once ascertained, there will be carried with it all rights appurtenant thereto, including number only possession of the subject itself, but it may be of rights of passage, water or the like which enure to the subject of the potta and may even be derivable from outside properties. It must be borne in mind also that the essential characteristics of a lease is that the subject is one which is occupied and enjoyed and the companypus of which does number in the nature of things and by reason of the user disappear. In order to cause the latter specially to arise, minerals must be expressly denominated, so as thus to permit of the idea of partial companysumption of the subject leased. Accordingly it was held that the words founded on did number add to the true scope of the grant number cause mineral rights to be included within it. It should be numbered here that there was a reference to the trees on the land in the pottas it being expressly provided that the lessee would be entitled to take the price of the trees by cutting and selling them and the zamindar would number have any right thereto. This was held by the Board to negative the idea that mokarari pottab companyld be companyprehensively viewed to include mineral rights. According to the Board Such a lease is a lessee of the surface only. This is the general case to which in the present case there is alone superadded a right to the trees. The minerals are number included. Most of the above cases were referred to again by the, Board in Govinda Narayan Singh v. Sham Lai Singh 1 where after numbering the earlier cases the Board companycluded that in the case of any claim against the zamindar to the lands which were included at the permanent settlement the burden of proof is upon the 1 58 I. A. 125. claimant. Reference may also be made to Bejoy Singh Dudhoria v. Surendra Narayan Singh 1 where the Board held that the grant of a patni lease by a zamindar of his zamindari lands including all interest therein, and jalkar, banker, falkar, beels and jhils at an annual jama companytaining a stipulation that the grantee should number cut trees or excavate a tank was only companysistent with the theory that the lessee and those claiming under him were number entitled to excavate the soil for the purpose of making bricks and that there was numbertransfer of the property in the soil. In our view the principle which is to be deduced from these cases is number one which is to be companyfined to the case of zamindars in permanently settled estates. What has to be companysidered in each case is the purpose for which the lands are leased or an interest created therein with all the clauses which throw any light on the question as to whether the grantor purported to include his rights to the subsoil in the grant when there was numberexpress mention of it. If the lease shows that the purpose of the grant was to allow the user of the surface only it would be wrong to presume that sub-soil rights were also companyered thereby. The patta Ex. 49 in this case amply demonstrates that what was in companytemplation of the parties at the time of the grant in .1930 was the cultivation thereof or grazing cattle thereon. The grantor was even careful to reserve the right to fruit-baring trees. It would be a strange companystruction to hold that although the grantor expressly excluded such trees from his grant he must be taken to have parted with his sub-soil rights by implication. We may also numbere that in State of Andhra Pradesh v. Duvvuru Balarami Reddy 2 where the respondents had obtained mining leases for mining mica from the owners of a certain shor- triem village it was held that shortriemdars had numberrights in the minerals and the leases granted by them to the respondent had numberlegal effect. It is true that this Court was there dealing with rights of a different class of persons and it was claimed on behalf of the respondent that inasmuch as the grant included poramboke if followed that mere surface rights were number the subject matter of the grant. Rejecting this companytention the Court observed p. 183 So far as the sub-soil rights are companycerned, they can only pass to the grantee if they are companyferred as such by the grant or if it can be inferred from the grant that subsoil rights were also included therein. I. L.R. 61 Calcutta 1 2 1963 1 S. C. R. 173 It is number in our view possible to hold otherwise than that granite is a mineral. According to Halsburys Laws of England There is numbergenerad definition of the word mineral. The word is susceptible of expansion or limitation in meaning according to the intention with which it is used It is a question of fact whether in a particular case a substance is a mineral or number. . . The test of what is a mineral is what, at the date of the instrument in question, the word meant in the vernacular of the mining world, the companymercial world, and among landowners, and in case of companyflict this meaning must prevail over the purely scientific meaning. See Vol. 26, 3rd edition, Art. 674 page 320 . In Article 675 at page 322 the learned authors summarise the case law on the subject as to whether particular substances are minerals or number. Reference is there made to the case of Attorney General v. Welsh Granite Co. 1 where granite was held to be included under the reservation of minerals in the Enclosure Act which reserved all mines, minerals, ores, companyl, limestone, and slate to the Crown. According to Lord Coleridge, the word minerals was large enough to include granite. In the view we have taken, it is number necessary to companysider the effect of the Farmans or Section 63 of the Hyderabad Land Revenue Act. In our view the pattas only indicating that the grant was for the purpose of cultivation or grazing of cattle with the express reservation of the trees on the land to the grantor, the question of grant of sub-soil rights by implication does number arise. It is therefore number necessary to companysider the effect of the Farmans Exs. A-21 and A-22 or of Section 63 of the Hyderabad Land Revenue Act. The claim to companypensation on the basis of the sub-soil rights to the hillock must therefore be negatived and the appeal allowed. In the result the decree of the High Court regarding the minerals in the land or quarry rights will be set aside and the judgement and order of the District Judge on that point restored.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 17-19 or 67. Appeal from the judgment and decree dated May 23, 1961 of e Punjab High Court, Circuit Bench at Delhi in Regular Second appeal No. 43-D of 1956. N. Keswani, for the appellant. A. Seyid Muhammad and S. P. Nayar, for the respondent. The Judgment of the Court was delivered by Grover, L This is an appeal by certificate from a judgment and decree of the Punjab High Court Circuit Bench, Delhi by which the suit filed by the appellant for a declaration that the order dated May 26, 1951 directing his removal from service was wrongful, illegal and void and that he still companytinued to be in the service of the respondent as Supervisor, Army Ordnance Corps. According to the allegations in the plaint the appellant was appointed by the Governor-General in July 1942 as Supervisor, Army Ordnance Corps which, according to him, was a civil post under the Crown in India. In the months of September and October, 1950 the appellant was served with chargesheets by the Ordnance Officer, Administration, Shakurbasti, Delhi State, where he was posted at that time calling upon him to submit his defence to the charges of making serious false allegations against his superior officer Maj. H. S. Dhillon. The appellant asked for grant of time for submitting his defence and be also demanded companyies of certain documents etc to prove his case. On May 26, 1951 while this inquiry was pending he was served with an order by the Ordnance Officer, Administration, Shakur- basti, Delhi which was as follows-- Under instructions received from Army Head- quarters you are hereby given one months numberice of discharge with immediate effect, services being numberlonger required. Your services will be terminated on 25th June, 1951. The appellant challenged the legality of the above order principally on the ground that it had been passed by an officer who was subordinate to the authority who appointed him and that numberinquiry as required by Fundamental Rules and under the provisions of the Constitution of India had been held in the matter of allegations against him and that numberadequate opportunity had been afforded to him of defending himself or of show- ing cause against the action proposed to be taken. He all raised the question of the order being vitiated by mala fid In the written statement filed by the Union of India it was stat that the appellant had been appointed as a Labour Supervisor he Extra Temporary Establishment by the COO Ordnan Officer Incharge, Ammunition Depot, Kasubegu under t authority of Financial Regulations, India, Part 1, Volume and number by the Governor General. It was pleaded, inter all that it was decided by the Government of India vide Army Headquarters letter dated May, 25, 1951 to terminate the services by serving one months numberice. Consequently a numberice of discharge from the service was given to him by the Ordnance Officer, Administration, who was companypetent to serve the numberice on him under the authority of the Army Order No. 1202/1943 read in companyjunction with Financial Regulations referred to before. The sole material issue which was framed was whether the order dated May 26, 1951 removing the appellant from service was illegal, wrong, void, ultra vires and inoperative. The trial judge held that Art. 311 of the Constitution was applicable to the case of the appellant and that his removal had number been ordered by the appointing authority. The suit was decreed. respondent preferred an appeal which was decided by the Additional District Judge, Delhi. It Was held by him that Art. 311 was number applicable to the appellant as he held a post companynected with defence. According to the learned judge the appellants services were terminated under Rule 5 of the Civilians in Defence Temporary Services Rules, 1949, hereinafter called the Rules. It was found that the order terminating the services had been passed by the proper authority. The appeal was allowed and the suit was dismissed. The appellant appealed to the High Court which was dismissed. His appeal was heard along with certain other appeals in which similar points were involved. It was found that the salary of the appellant was paid out of the estimates of the Mnistry of Defence and he was intimately companynected with the defence of the companyntry number as a companybatant but as a person holding a post the object of which was exclusively to serve the Military Department. In the opinion of the High Court Articles 309 and 310 were applicable to the case of the appellant but Article 311 was inapplicable. On the question whether the services of the appellant were terminated without companyplying with the rules the High Court expressed the view that the breach of such rules did number give the aggrieved party a right to go to the companyrt Reliance in that companynection was placed on the decision of the Privy Council in R. Venkatarao v. Secretary of State 1 and certain other cases in which that decision was followed. In the case of the appellant the only other point which appears to have appear to have been argued on his behalf and which was decided by the High Court related to the allegation of mala fides. The decision went against him on that, point. The question whether the case of the appellant was governed by Art. 311 of the Constitution stands companycluded by two decisions of this companyrt. In Jagatrai Mahinchand Ajwani v. Union of India 2 it was held that an Engineer in the Military Service who was drawing these salary from the Defence Estimates companyld number claim the protection of Art. 311 2 of the Constitution. In that case also the appellant was found to have held a post companynected with Defence as in the present case. This decision was followed in S. P. Bell Union of India 3 . Both these decisions fully companyer the case of the appellant so far as the applicability of Art. 3 1 1 is companycerned. Learned companynsel for the appellant sought to argue that since the appellant was admittedly governed by the rules which framed under s. 241 2 of the Government of India Act 1935 he was entitled to the protection of s. 240 of that Act. Chapter I of Part 10 of that Act related to the Defence Services. According to ss. 239, 235, 236 and 237 were applicable to persons who number being members of His Majests Forces held or had held posts in India companynected with the equipment or administration of those forces or otherwise companynected with Defence as they applied in relation to persons who were or had been members of those forces. Section 240, to the extent it is material was in the following terms- 240 1 Except as expressly provided by this Act, every person who is a member of a civil service of the Crown in India, or holds any civil post under the Crown in India, holds office during His Majestys pleasure. No such person as aforesaid shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed. No such person as aforesaid shall be dismissed or reduced in rank until he has been given a reason able opportunity or showing cause against the action proposed to be taken in regard to him A.I.R. 1937 P.C. 31. C, A 1918 of 1966 dt. 8-3-68. 14-L1100sup.CI/72 C. A. 1185 of 1965 dt. 6-2-67. Provided Section 241 provided for recruitment and companyditions of service. On behalf of the appellant it was companytended that since his companyditions of service were governed by the rules which were framed under the above section, s.240 was clearly applicable and his services companyld number have been terminated in terms of subs. 2 of that section by any authority subordinate to that by which he was appointed number companyld he be dismissed or reduced in rank until he had been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him. At numberstage of the proceedings in the companyrts below the appellant relied on s. 240 of the Government of India Act and rightly so because the order of his discharge or termination of service was made after the Constitution had companye into force. It was apparently for that reason. that protection was sought from Art 311 and number s. 240 of the Government of India Act 1935. We see numberreason or justification in the present case for determining whether a person holding a civilian post which is companynected with the defence and for which he is paid salary and emoluments from the Defence Estimates would be governed by the provisions of section 240 of the Government of India Act if the provisions of that Act were number applicable to the case of such a servant. The next question is whether rule 5 of the Rules was applique able and whether the appellant companyld claim the benefit of that rule. It provided, inter-alia, that the service of a temporary government servant who is number in quasi-permanent service shall be liable to termination at any time by numberice in writing given either by the, government servant to the appointing authority or by the appointing authority to the government servant. The view of the High Court that the rules were number justifiable cannot be sustained as the decision of the Privy Council in Venkataraos case supra and the other cases following that view have number been accepted as laying down the law companyrectly by this companyrt. It has been held that the breach of a statutory rule in relation to the companyditions of service would entitle the government servant to have recourse to the companyrt for redress vide The State of Uttar Pradesh Others Ajodhya Prasad 1 and State of Mysore v. M. R. Bellary 1 . Now Exhibit P. 3 which is a letter dated May 26, 1951 and which was produced by the appellant himself shows that one months numberice of discharge was given by the ordnance Officer, Administration, under instructions received from the Army Headquarters. A companyy of another letter Exht. P-2 dated May 27, 1951 was produced according to which it had been decided by the Government 1 1951 2 S.C.R.671. 2 1964 7 S.C.R.471. of India that the services of the appellant be terminated by giving him one months numberice. It is true that the origin of that letter was number produced although it had been summoned by the appellant It is at least clear that the. Ordnance Officer, Administration, had served the numberice of discharge under instructions from the Army Headquarters. In this view of the matter there is numbersubstance in the companytention raised on behalf of the appellant that the order of discharge had number been made by the appointing authority. At any rate before the High Court there was numberchallenge to the finding of the learned District Judge on the point and a question of fact cannot be allowed to be reopened at this stage. The learned companynsel for the appellant attempted to reopen the finding on the question of mala fides and also invoked the rule of natural Justice in so far as the appellant had number been afforded any opportunity of showing cause against his discharge or termination of services. In the appeal before this Court the finding on the point of mala fides must be accepted as final and the appellant cannot be allowed to reagitate that matter. As regards the applicability of the rule of natural justice it has number been shown to us how under the general law of master and servant, in the absence of any protection companyferred by Article 311 of the Constitution such a rule can be invoked. The appeal fails and it is dismissed but in view of the cir- cumstances we leave the parties to bear their own companyts in this Court.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 80 of 1967. Appeal from the judgment and order dated April 17, 1967 of the Bombay High Court in Criminal Appeal No. 1210 of 1965. S.R. Chari, M. J. Mirchandani, K. K. Jain, H. K. Puri and Nagratnam, for the appellant. K. Chatterjee, B. D. Sharma and S. P. Nayar, for the respondent. The Judgment of the Court was delivered by Hegde, J.-The appellant and one R. B. Mathur were tried before the learned Special Judge for Greater Bombay under various charges including a charge of companyspiracy. Mathur was acquitted and the appeal against his acquittal was unsuccessful. The appellant was also acquitted of all charges excepting a charge under Section 5 2 read with Section 5 1 d of the Prevention of Corruption Act. For that offence he was sentenced to suffer rigorous imprisonment for two years and pay a fine of Rs. 5,000, in., default to suffer further rigorous imprisonment for four months. The substance of the charge under which he was companyvicted is that he by utilizing his position as a Government servant sent various articles such as Radios, Transistors, Clothes etc., from Goa to Bombay without paying customs duty. He was also held guilty of sending his personal articles in the vehicles engaged by the postal department without paying any charge. The trial companyrt supported its companyclusion on a further ground namely that the assets of the appellant were more than that he companyld have acquired by his known sources of income. The charges framed against the appellant made numberreference to the fact that his assets were more than that he companyld have acquired by his known sources of income. In appeal the learned. judges of the High Court did number go into that aspect of the case. Nor was that aspect of the case pressed before us at the hearing. Therefore it is number necessary to go into that aspect. Even otherwise that accusation appears to be without any solid basis. The learned Judges of the High Court also did number go into the allegation that the appellant utilised his official position in sending his personal goods in the vehicles engaged by the postal department. The accusation is that the appellant sent some of his goods in the vehicles engaged, by the postal department from Panjim in Goa to Margoa or Sawanthwadi or Belgaum. These places are number very far from Panjim. The High Court held that the offence companymitted by the appellant in that regard if true, is of a technical nature and therefore it thought it unnecessary to examine the evidence relating to the same. Evidently in its view the accusation regarding the sending of some articles in the vehicles engaged by the postal department was of a trifling nature and therefore riot worth examining. But the High Court agreed with the trial companyrt that the appellant was guilty of evading payment of customs duty and he did so by utilizing his official position. In order to ,examine the companyrectness of this finding, it is necessary to set out the material facts. In 1961, the appellant was working as a Senior Superinten- ,dent of Post Offices at Jaipur. On December 20, 1961 Goa was liberated by the Indian Army. Thereafter the appellant was ,deputed as a Special Duty Officer to Goa. He took charge in Goa on December 25, 1961. He assumed additional charge as Director of Posts and Telegraphs on May 11, 1962 and he held that office till August 11, 1962. Thereafter he went back to Jaipur. It is alleged that during the period of appellants stay in Goa, he made large purchases of certain luxury articles. Utilising his official position in the Posts and Telegraphs department at profits. The prosecution relied in support of that charge on four different instances. Voluminous evidence was led in support of the prosecution case. But it is number necessary to go into that evidence as in our opinion the charge under which the appellant was companyvicted is without any legal basis. The learned Counsel for the appellant, Mr. A. S. R. Chari has assailed the judgments of the High Court and the trial companyrt on various grounds. He companytended that the evidence adduced in, support of the prosecution case is unreliable and insufficient to suport the companyviction of the appellant. He also raised various legal pleas in support of the appeal. He companytended that as the Prevention of Corruption Act was number in force in Goa at the relevant time, the appellant companyld number have been held guilty of an offence under that Act. According to him, the investigation of this case was illegal as the required sanction had number been obtained. But the most important plea taken by him is that numbercustom duty was leviable on the articles said to have been sent by the appellant from Goa to Bombay and as such the entire fabric of the prosecution case must fall to the ground. There is force in this companytention. Hence it is number necessary to examine the other companytentions. As mentioned earlier Goa was liberated on December 20, 1961. Twelfth amendment to our Constitution which received the assent of the President on 27th March 1962 made Goa a part of India. It became a Union Territory. The amendment in question is deemed to have companye into force on December 20, 1961. Hence Goa must be companysidered as a part of India from December 20, 1961 and indisputably at any rate from March 27, 1962. Article 1 of our Constitution says India, that is Bharat, shall be a Union of States. The states and the territories thereof shall be as specified in the First Schedule. The territory of India shall companyprise- a the territories of the States b the union territories specified in the First Schedule, and c such other territories as may be acquired. All the territories that this companyntry may acquire in whatever manner become part of India in view of Article 1 3 c . Further in the case of Goa by means of 12th amendment to the Constitution, the same is included in the 1st Schedule. Therefore there is numberroom for the companytention that Goa was number a part of India during the relevant time. It may be numbered that according to the prosecution the goods companyplained of were all sent from Goa to Bombay after March 27, 1962. This takes us to the question whether there is any liability to pay customs duty when someone sent goods from Goa to Bombay in 1962. No statute or statutory rule was placed before, the Court to show that any customs duty had been imposed on the goods transmitted from Goa to other parts of India after December 20, 1961. The only witness who spoke about the liability to pay customs duties on the goods in question is P. W. 56 Shaikh, the Dy. Superintendent of Central Excise. According to him customs duty on those articles was leviable because of certain administrative instructions. But be refused to place those administrative instructions before the companyrt. He claimed privilege on the ground that they are companyfidential documents a strange claim. Stranger still is that the trial companyrt appears to have accepted that plea. No tax or duty can be levied or companylected except by authority of law. Hence numbercustoms duty was leviable on the basis of any administrative instruction. Every levy of customs duty or any other tax must be sanctioned, by law. It is surprising that both the trial companyrt as well as the High Court were of the opinion that certain customs duties were leviable because of some administrative instructions. It appears that there was a numberification issued in the year 1950 declaring Goa to be a foreign territory and thus bringing the exports from that companyntry to India within the purview of Land Customs Act. But that numberification cannot companytinue to have a legal effect after Goa became a part of India. On becoming a part of India Goa ceased to be a foreign territory. The numberification in question must have been issued under Section 5 of the Indian Tariff Act, 1934 as it stood in 1950 that section has been repealed number . That section read Where a customs duty at any rate prescribed by or under this Act or any other law for the time being in force is leviable on any articles when imported into, or any article when exported from, a port in India the Central Government may, by numberification in the official gazette, direct that a duty of customs at the like rate shall be leviable on any such article when imported or exported, as the case may be, by land from or to any territory outside India which it may, by, a like numberification, declare to be foreign territory for the purposes of this section. The numberification under this section companyld have been issued only in respect of any territory outside India and number in respect of any part of India. That provision empowered the Government to declare any territory outside India as a foreign territory for the purposes of that provision. That provision did number empower the Government to declare any part of India as a foreign territory. But it gave power to the Central Government number to treat any territory outside India as a foreign territory for the purposes of that provision. To illustrate the position, the Central Government companyld number have declared either Delhi or Bombay as a foreign territory but it companyld have treated Nepal or Bhutan as number a foreign territory for the purposes of that provision. Once Goa became part of India, the Government was incompetent to declare that territory as a foreign territory. Nor does it appear that any such declaration was made after December 20, 1961. Unfortunately the High Court allowed itself to be influenced by what it says the practical companysiderations. It is likely that there were companysiderable foreign goods in Goa which had been imported into that territory before it was liberated, may be even without paying customs duty and those goods were available for being transmitted to other parts of India. But this circumstance does number change the position in law. It is number necessary for us to companysider whether after integration of Goa, the Government companyld have imposed any duty on the goods that were sent from Goa to other parts of India. Suffice it to say that our attention was number invited to any law imposing such duties. That being so, the companyclusion that the appellant had utilised his official position to evade customs duty must fail. In the result this appeal is allowed and the companyviction and sentence imposed on the appellant are set aside. He is on bail.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 974 of 1968. Appeal from the judgment and order dated December 22, 1967 and January 3, 1968 of the Calcutta High Court in Civil Rule No. 3369 W of 1966. M. Singhvi and S. P. Nayar, for the appellant. K. Dutta and K. Rajendra Chowdhary, for respondents Nos. 1 to 3. Santosh Chatterjee and G. S. Chatterjee, for respondent No.4 The Judgement of the Court was delivered by Grover, J.-This is an appeal from a judgment of a learned single judge of the Calcutta High Court who granted a certificate under Art. 132 1 of the Constitution. It involves primarily the question whether the cession of a territory by India as a result of a treaty with Pakistan would be companypulsory acquisition of the property companyprised in that territory by the Union of India and would, therefore, attract the provisions of Art. 31 of our Constitution. At the outset it may be mentioned with reference to a preli- minary objection which has been raised by the respondents that the judgment under appeal was delivered by the learned single Judge in a petition under Art. 226 of the Constitution and it appears that on an oral prayer made to him he granted a certificate under Art. 132 1 even though under the Letters Patent of the High Court an appeal lay to a division bench of that companyrt. This Court has said on an earlier occasion in clear and unequivocal terms that the practice of a single Judge deciding the case and giving a certificate under Art. 132 1 for appeal to this Court, al- though technically companyrect, was an improper practice. The right of the parties to file an appeal in the High Court itself against the decision of the single Judge should number be short-circuited. Indeed in R. D. Agarwala Another etc. v. Union of India Ors. 1 the certificate was cancelled. In Union of India v. J. P. Mitter 2 it was observed that a certificate by a single judge under Art. 132 1 should be given in very exceptional cases where a direct appeal was necessary. Even though the present case may be of an exceptional kind we have been deprived of the benefit of the judgment of a larger bench of the High Court on points which are of substantial importance. Presumably a number of matters which had numberbearing on the real questions to be determined and which have been dealt with by the learned single judge would have been either satisfactorily disposed of or would number have been the subject matter of discussion by the companyrt, being irrelevant and unnecessary, if the decision had been given by a larger Bench. The facts may be shortly stated. On September 10, 1958, an agreement was entered into between the Government of India and Pakistan called the Indo-Pakistan Agreement. Item No. 3 of the agreement related to Berabari Union No. 12 which was a group of, villages lying within the territory of India. This territory was to be so divided as to give one half area to Pakistan. The other half adjacent to India was to be retained by India. Subsequently a doubt arose whether the implementation of the agreement relating to Berubari Union required Legislative action either by way of an Act of Parliament relatable to Art. 3 of the Constitution or by way, of a suitable amendment of the Constitution in accordance with the provisions of Art. 368 or both. A similar doubt had also arisen in respect of another item of the agreement which related to the exchange of certain enclaves but with which we are number companycerned. The President of India made a reference to this Court under Art. 143 1 , of the Constitution for its advisory opinion. The opinion was deliverted on March 14, 1960. In Re The Berubari Union and Exchange of Enclaves Reference Under Article 143 1 of the Constitution of India 3 . As mentioned in the advisory opinion Berubari Union No. 12 had an area of 8-75 Sq. Miles and a, population of 10 to 12 thousand residents. It was situated in the district, of Jalpaiguri. This Court expressed the view that since the agreement between India and Pakistan a mounted to cession of a part of the territory of India in favour of Pakistan its implementation would naturally involve the alteration of the companytent of and the companysequent amendment of Article and of the relevant part of the First Schedule to the Constitution which companyld be made only under Article 368. Pursuant to the opinion delivered by this Court the Parliament enacted C. As. 2634/69 63/70 decided on 23-2-70. 2 1971 3 S.C.R. 483. 3 1960 3 S. C. R. 250. the Constitution Ninth Amendment Act 1960 on December 28, 1960. In order to implement the provisions of the above Act a physical division of the Berubari Union in accordance with the agreement and demarcation of the portion that was to go to Pakistan was necessary. Some of the, inhabitants of the Berubari Union filed a petition under Article 226 of the Constitution challenging its proposed partition with the object of transferring its southern part to Pakistan. The Writ petition was dismissed and an appeal was brought to this Court which was disposed of on August 11, 1965. Ram Kishore Sen Others v. Union of India Ors. 1 . It was held that the Ninth Constitution Amendment Act had been passed by the Parliament in the manner indicated in the advisory opinion of this Court. No merit was found on the other points which were agitated. The appeal was dismissed. On June 11, 1965, the respondents filed another petition under Article 226 of the Constitution before the High Court challenging the validity of the proposed demarcation principally on the ground right of citizenship companyferred by also of their property without payment of companypensation. D. Basu J. called for an affidavit in opposition and after hearing lengthy arguments delivered an elaborate judgment I.R. 1967 Cal. 216 directing the issue of rule nisi limited to ground No. 3 of the writ petition. This ground was For that numberAct of the State is involved in the transfer of Berubari Union No. 12 to Pakistan and as such your petitioners are entitle to companypensation in terms of Art. 31 2 of the Constitution inasmuch as the operation of transfer involves deprivation of their right to property for which numberprovision has been made in the Constitution 9th Amendment Act, 1960. According to the allegation in the writ petition respondent Dhanoswar Roy had 2 acres 64 decimals of khas land in the area in question. It was also claimed that the respondents had their household property, ancestral homes and cultivated lands in the Berubari Union No. 12. The companystitutional question formulated by the learned judge was whether companypensation under Article 31 2 of the Constitution was to be provided for the respondents before the demarcation in implementation of the Constitution Ninth Amendment Act took place,. We may mention some of the material companyclusions of the learned judge out of the numerous matters dealt with by 1 1966 1 S. C. R. 430. him. These are 1 the treaty making power must be exercised subject to the fundamental rights guaranteed by the Constitution. 2 Once it is established that a treaty making law involves a transfer which attracts Art. 31 2 it cannot be exempted from the requirements of that Article on the ground that it is a treaty of cession. 3 Although under the International Law the private rights of the inhabitants of the ceded territory are number instantly affected they shall have numberlegal right to assert against the new State under its own municipal law to which such inhabitants shall be subject from the moment the cession is companyplete. 4 As a result of cession it would be companypetent for the Government of Pakistan to deal with the disputed territory as absolute owner in companyplete disregard of the existing rights of the respondents. The rights of the Government of Pakistan under its municipal law would in numberway be less than what would have happened if the lands were vested in that Government by a direct Act of the Government of India. Such vesting the Government of India companyld arrange for only after acquiring the disputed lands. 5 The present case will number be companyered by clause 2 A of Article 31 of the Constitution as so far all the cases which have been held to fall within its purview have been those in which there was exercise of the regulatory power of the State. 6 The cession of the disputed properties sought to be implemented by the impugned demarcation involved companypulsory acquisition of those properties by the Union of India within the meaning of Art. 31 2 and unless companypetent legislation is enacted to provide for companypensation the Union cannot announce the appointed day within the meaning of S. 2 A of the Constitution Ninth Amendment Act 1960 and for companystructing pillars to demarcate Berubari Union No. 12 for the purpose of effecting the transfer of the specified portion to Pakistan. According to Dr. Singhvi learned companynsel for the appellant the High Court has fallen into serious errors inasmuch as it has proceeded on many assumptions, reasoned on a priori theories and has founded its judgment on certain premises which do number exist either in fact or in law. Stress has been laid on the true import of cession. According to all authorities on International Law cession is the transfer of sovereignty over the State territory by the owner State to another State 1 . Under the International Law two of the essential attributes of sovereignty are the power to ac- quire foreign territory as well as the power to cede national territory in favour of foreign State 2 supra at p. 281 . Hardship is certainly involved in the fact that in all cases of cession the inhabitants of the territory ceded lose their old citizenship and have to submit to a new sovereign whether they like it or number. As the object of cession is sovereignty over the ceded territory all such Oppenheims International Law Vol. 1, 8th Edn. at pp. 547, 551. 2 1960 3 S.C.R 250. individuals domiciled thereon as are subjects of the ceding State become ipso facto, by the cession, subjects of the acquiring .,State 1 supra at p. 551 . Dr. Singhvi says that the first premise on which the High Court has proceeded is that as a result of cession it would be ,competent for the Government of Pakistan to deal with the disputed territory as an absolute owner in companyplete disregard of the .existing rights of the respondents. In other words it has been assumed that the Government of Pakistan will number recognise owner-ship or other similar rights of the respondents in the lands and properties which belong to them. This, Dr. Singhvi claims, is companytrary to the rule enunciated by Chief Justice Marshall in United States v. Juan Perchman 2 in the following words The modern usage of nations, which has become law, would be violated that sense of justice and of right which is acknowledged and felt by the whole civilised world would be outraged, if private property should be generally companyfiscated and private rights annulled. The people change their allegiance their relation to their ancient sovereign is dissolved but their relations to each other and their rights of property, remain undisturbed. The rule set forth in the Perchman case has been followed in over forty American cases and has been accepted as the rule of Inter,national law in English, French, German and Italian law 3 . This Court has had occasion to companysider fully the Perchmans case as also the English law apart from several other autho- rities on International law and the decisions of the Permanent Court of International Justice. In State of Gujarat v. Vora Fiddali Badruddin Mithibarwala 4 the following passage from the judgment of Mudholkar J., at pages 590, 591 gives tersely the position which obtains in our companyntry -- Thus while according to one view there is a State succession in so far as private rights are companycerned according to the other which we might say is reflected in our laws, it is number so. Two companycepts underline our law one is that the inhabitants of acquired territories bring with them numberrights enforceable against the new sovereign. The other is that the municipal companyrts have Oppenheims International Law Vol. 1,8th Edn. at pp. 547, 551. 2 8 L. ed. 604. Extracts from the Law of Nations 2nd Edn. 1953 P. 237 of. F. B. Sayre, Change of Sovereignty and Private Ownership of Land, 12 XIXL A. J. I. L. 1918 , 475, 481, 495-497. 4 1964 6 S C. R. 461. numberjurisdiction to enforce, any rights claimed by them, even by virtue of the provisions of a treaty or other transaction internationally binding on the new sovereign unless their rights have been recognised by the new sovereign. The above case related to rights pertaining to the exploitation of the forests which were claimed under a Tharao which was held by the majority to be a grant to the jagirdars by the ruler of the erstwhile Sant State which merged in the Dominion of India as from June 10, 1948. It wag thus held that the rights derived by the inhabitants of the ceded territory from its former rulers companyld number be enforced by them against the new sovereign in the companyrts of that sovereign unless they had been recognised by the 2,1 new sovereign. It is altogether unnecessary to discuss the principles established by. the decisions of this Court further because they can afford numberAssistance in deciding numberquestion arises of how the private a particular territory would be affected ceaded to India. The session involved the present case in which rights of the inhabitants of if the same Were to be is of territory to Pakistan and numberevidence was placed before the High Court from which it companyld be companycluded that inder the Pakistan laws the private rights of the inhabitants therein would number be respected in accordance with the ordinary principles of International law. In this situation it would be a wholly wrong approach to companyclude that the respondents are bound to loge all their property rights in the territory which is being ceded by India to Pakistan. Even on the assumption that the respondents will number be entitled to enforce their private rights in the municipal companyrts of Pakistan unless they are recognised by the new sovereign it is incomprehensible how such a prospect or possibility can attract the applicability of Art. 31 2 of our Constitution so as to entitle the respondens to companypensation as provided thereby. Nor can we understand the process of reasoning by which the High Court has reached the result that cession would be tantamount to vesting by the direct act of the Government of India of the properties of the respondents in Pakistan. ln order to determine whether the case of the respondent, would fill within Art. 3.1 2 ,it is necessary to set out that provision as also para 2A of that, Article which was added by the Constitution 4th Amendment Act 1955 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 aquired or requisitioned and either fixes the amount of the companypensation or specifies the principles on which, and the manner in which, the companypensa- tion 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. 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. As far back as 1950 Mukherjea J. as he then was gave the meaning of acquisition in Charanjit Lal Chowdhury v. Union of India 1 in the following words Acquisition means and implies the acquiring, of the entire title of the expropriated owner, whatever the nature or extent of that title might be. The entire bundle of rights which were vested in the original holder would pass on acquisition to the acquirer leaving numberhing in the former. But in the State of West Bengal v. Subodh Gopal Bose others 2 the view taken in the judgment of the majority was that clauses 1 and 2 of Article 31 were number mutually exclusive in scope and companytent but should be read together and understood as dealing with the same subject. Thus a wider meaning was given to acquisition, deprivation companytemplated in clause being numberother than the acquisition or taking possession of the property referred to in clause 2 . In Dwarkadas Shrinivasa of Bombay v. The Sholapur Spinning Weaving Co. Ltd. Others 3 this Court, While companyfirming the above principle, held that the word acquisition had quite a wide companycept, meaning the procuring of property or taking of it permanently or temporarily and it was number companyfined only to the acquisition of a legal title, by the State in the property taken possession of. This was the position relating to Art. 31 as it stood before the Constitution 4th Amendment Act, Clause 2A was inserted in 1955 with the object of superseding the majority decision in Subodh Gopals 2 case as also in Saghir Ahmed v. The State of Uttar Pradesh 4 in which the earlier decisions were followed. It was pointed out in Gultapalli Nageswdra Rao other v. Andhra Pradesh State Road Transport Corporation Another 5 The Constitution Fourth Amendment Act, 1955 Amended clause 2 of Art. 31 and inserted clause 2A in 1 1950 S. C. R. 869 At p. 902. 2 1954 S. C. R. 587. 3 1954 S. C. R. 674. 4 1955 1 S. C. R. 707. 5 1959 Suppl. 1 S. C. R. 319. that article. The amendments, in so far as they are relevant to the present purpose, substitute in place of the words taken possession or acquired the words companypulsorily acquired or requisitioned and provide an explanation of the words acquired and requisitioned in clause 2A . The result is that unless the law depriving any person of his property provides for the transfer of the ownership or right to the possession of any property to the State, the law does number relate to acquisition or requisition of property and therefore the limitations placed upon the legislature under cl. 2 will number apply to such law. It is therefore essential that in order to companystitute acquisition or requisitioning there must be, transfer of the ownership or right to possession of any property to the State or to a companyporation owned or companytrolled by the State. Article 12 provides that in Part III in which Article 31 appears unless the companytext otherwise requires the State includes the Government and Parliament of India and the Government and the legislature of each of the States and all local or other authorities within the territory of India or under the companytrol of the Government of India. The effect of the Constitution Ninth Amendment Act 1960 by which part of the Berubari Union No. 12 shall be ceded to Pakistan can by numberstretch of reasoning be regarded as a transfer of the ownership or right to possession of any property of the respondents to the State within the meaning of Art. 12 of the Constitution. The amendment of 1955 makes it clear that mere deprivation of property unless it is acquisition or requisitioning within the meaning of clause 2A will number attract clause 2 and numberobligation to pay companypensation will arise thereunder. Cession indisputably involves transference of sovereignty from one sovereign State to another. There is numbertransference of ownership or right to possession in the properties of the inhabitants of the territory ceded to the ceding State itself. The Constitution Ninth Amendment Act having been enacted in accordance with the Advisory opinion of this companyrt 1 there can be numberimpediment in the way of ceding part of Berubari Union No. 12 pursuant to the Indo- Pakistan Treaty 1958. The view of the High Court that the cession of the said territory involves transfer of the ownership and other private property rights to Pakistan through the Union of India which was outside clause 2A of Article 31 and was companyered by clause 2 of that Article is to say the least wholly untenable and cannot be sustained. In our judgment numberquestion of acquisition within Art. 31 2 is involved in the present case and even though a good deal of hardship may result to the respondents owing to the change of sovereignty they 1 1960 3 S. C. R. 250. cannot claim companypensation for the simple reason that there has been numbertransfer of the ownership of their property to the State namely the Union of India which would attract the applicability of Art. 31 2 . The appeal, therefore, succeeds and it is hereby allowed. In view of the nature of the points decided there will be numberorder as to companyts.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTioN Civil Appeals Nos. 1674 and 1675 of 1969. Appeals from the judgment and decree dated July 23, 1968 of the Calcutta High Court in Appeal from Original Order Nos. 185 and 186 of 1967. Sen, D. N. Mukherjee and Somendra Chandra Bose, for the appellant. R. Chaudhuri and K., Rajendra Chowdhary, for respon- dents Nos. 2, 3 and 6. Santosh Chatterjee, G. S.Chatterjee for Sukumar Basu, for respondent No. 1. The Judgment of the Court was delivered by Jaganmohan Reddy, These appeals are by a certificate under Art. 132 C of the Constitution of India against the judgment of the Calcutta HIgh Court, which have by an order of this Court dated 25-8- 1969 been companysolidated for the purpose of hearing. The short question for determination in these appeals in whether under the provisions of the West Bengal Board of Secondary Education Act 5 of 1963 read with Rule 8 of the West Bengal Board of Secondary Education Appointment of Secretary Rules, the appellant I companyld be discharged from the service of the Board of Education. The appellant was an office Superintendent of the Board companystituted under the West Bengal Secondary Education Act 37 of 1950 hereinafter called the 1950 Act . He was promoted as Assistant Secretary on 12-7-1952, as Deputy Secretary on 18-6-56 and on the 1st/8th August 1962 he was appointed as Secretary on probation and companyfirmed on 1-8-63 by an order dated the 24th August 63. The appellant companytinued in this office till 25th November 66 when his services were dispensed with, with immediate effect on payment of 3 months salary in lieu of numberice. In his place the Government by its order of the same date appointed temporarily respondent 6-D. Mazumdar, Director of Consumer Goods, West Bengal as Secretary for a period number exceeding 6 months from the date on, which be takes charge of the office. As we have earlier mentioned the initial Act under which his appointment was the Act of 1950. Subseq hotly another Act known as the West Bengal Secondary Education Temporary Provision Act 24 of 1954 was passed by the Legislature, by which the Board created by the Act of 1950 was superseded and its powers were vested in an adminis- trator appointed by the State Government. It was the administrator who had appointed the petitioner on probation. On the 20th February 63 the West Bengal Board of Secondary Education Act 5 of 1963 hereinafter called the 1963 Act was passed which came into force on 1-1-1964. Before this Act came into force certain regulations were made on 12-12-63 under the Act of 1950, rule 4 of which dealt with the companyditions of service which were similar to those in Rule 4 of 1951 regulations made on 19-9-51. Under regulation 4 of 1951 the Board had power to dispense with the services of the Secretary or any officer by giving 3 months numberice or on payment to him of 3 months salary in lieu of numberice. Act 22 of 1954 it may be mention did number abolish the Board but only authorised the Administrator to carry on the duties and functions vested in the Board so that the appellant when he was appointed on probation by the Administrator was an employee of the Board. The 1963 Act by clause 1 of Sec. 46 repealed both the 1950 Act as well as the temporary provisions Act 22 of 1954 and by sub-clause 2 it provided that all Officers and other persons in the employment of the Board of Secondary Education immediately before the companymencement of this Act shall until provision is made companytinue in the service of the Board. It may here be mentioned that prior to the enforcement of the Act on 1-1-64 the Government had made and published rules under that Act known as the West Bengal Secondary Education appointment of Secretary Rules 1963, rule 8 whereof is in the following terms .lm15 The State Government shall have the power to dispense with the services of the- Secretary on three months numberice or in lieu of such numberice on payment of three months salary and also to discharge or dismiss the Secretary from service without numberice or companypensation in the event of misconduct or of a breach of any of the duties attached to the post of Secretary. It is in exercise of powers vested under this Rule that the Governor dispensed with the services of the appellant which is numberw challenged The learned Advocate for the appellant companytends inter-alia that - the rule under which the appellants services have been dispensed with have numberapplication to the case of a person who companytinues in service under Sec. 46 2 c of the 1963 Act, being an employee of the Board, his services companyld only be terminated by the Board and number by the State Government, iii -Sec. 46 2 c envisages that till some other employment is found for all those persons who were in employment of the Board of Secondary Education before the companymencement of the 1963 Act, they cannot be discharged. For an appreciation of these companytentions it is necessary to examine the relevant provisions of the 1963 Act. Under Sec. 2 a the Board means the West Bengal Board of Secondary Education established under the 1963 Act. Section 90 0 empowers the State Government as soon as may be after the Act companyes into force to establish the Board named the West Bengal Secondary Education Board. The Board shall be a body companyporate with perpetual succession and a companymon seal. Section 4 deals with the companyposition of the Board which it may be stated is totally different to that which companyprised the Board, under the 1950 Act. The appointment of persons in the service of the Board and their companydition of service etc. are the subject matter of Section 16, the relevant provisions of which are as follows - The Board shall have a Secretary who shall be appointed by the State Govt. The Board may appoint such other officers and servants as it companysiders necessary for carrying out the purposes of this Act. The terms and companyditions of appointment and the scales of pay and allowances, if any, shall- a as respect the Secretary be such as may be prescribed, and b as respect the other officers and servants be such as may be determined by regulations. 4 Sub-sec. 1 of Sec. 45 empowers the State Govt. after previous publication, to make rules for carrying out the purposes of this Act and sub-sec. 2 f provides that In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely- f the terms and companyditions of appointment, the scale of pay and the rules of discipline relating to the Secretary of the Board. It is under the last mentioned provision 45 2 f that the rules were made, rule 8 of which we have already extracted. It will thus be seen that the 1963 Act companystituted an entirely new Board of Secondary Education and after repealing the old Acts it companytinued the services of the Officers and other persons in the employment of the Board of Education under the old Act until other provision is made. It may be stated that the power of appointment of a Secretary for the Board under Sec. 16 is number vested in the Board but in the Govt as such there can be numbervalidity in the companytention of the learned Advocate for the appellant that the Govt. has numberpower to appoint a Secretary in place of the appellant who according to him still companytinues as Secretary under the Board. As we read the provisions, we are clear in our minds and it admits of numberdoubt that the Board has number power to appoint a Secretary, number has the, appellant a right to. the post as such. All that the Act provides for is the companytinuance of the employees of the previous Board till other arrangements are made, namely till a Secretary is appointed by the Govt. In our view the appointment of the new Secretary can be traceable to the powers vested in the Govt. under Sec. 16 irrespective of the power vested under the rules. The argument that the appellant being an employee of the Board his services companyld only be terminated by the Board and number by the State Govt. has numbervalidity in that the old rules have been repealed and the new Board ha,, numberpower to appoint a Secretary. It has been urged before us that a decision of this Court in State of Assam v. Kripanath Sharma Ors. etc. 1 , lends support to the companytention of the learned Advocate. That case was under the Assam Elementary Education Act 1962 the relevant provisions of which are number in pari-material with the provisions of the Act which we ate called upon to companysider. The respondents in that case were Elementary Education School Teachers appointed under the Assam Basic Education Act 1954. That Act was repealed by the Assam Elementary Education Act 1962 under which the Board was to be companystituted and in the place of the School Boards functioning under the 1954 Act, the Deputy Inspectors of Schools were made Assistant Secretary of the said Board within their respective jurisdiction. Sec. 34 2 provided that all the Elementary School Teachers appointed under the 1954 Act would be taken over by the State Board and who under Section 38 were further deemed to have been employed by the said Board. The statute therefore provided that they were the employees of the Board. Sec. 46 2 c however merely companytinues them and does number deem the to be employees of the Board. What happened in that case was that the Board merely passed a resolution that all teachers who are number Matriculates or who have number passed the Teachers test but who are working as Teachers in School shall be discharged with effect from 31-3-63. The Assistant Secretary without obtaining specific sanction from the Board issued orders for their discharge which he had numberpower to do. In those circumstances the power to terminate the services being in the Board, it was held that the order of termination by the Assistant Secretary was invalid. This case does number help the appellant. Lastly the earned Advocate sought to press in aid a Judgment of a Bench of the Calcutta High Court in Bidyut Kr. Biswas Ors. V. West Bengal Board of Secondry Education Ors. 2 in which the 1 1967 1 S.C.R. 499. 2 C.W.N. Vol. 73 1968- 9 417. provision of Sec. 46 2 c of the 1963 Act were dealt with in support of his companytention that the persons in the employment of Board of Secondary Education under the 1950 Act companyld only be discharged if an alternative employment is found for them inasmuch as the words until other provision is made justifies that companyclusion. This point has number been raised in the Writ Petition number has it been urged either before the Single Bench or before the Division Bench of the High Court and is sought to be raised for the first time before this Court. We cannot permit him to do so, and therefore express numberviews on this aspect of the case. In the result the appeals are dismissed but in the circumstances without companyts.

Case appeal was rejected by the Supreme Court

CIBVIL APPELLATE JURISDICTION Civil Appeal No. 23 of 1967. Appeal by special leave from the judgment and order dated October 9, 1963 of the Patna High Court in M.J.C. No. 824 of 1963. N. Prasad and R. B. Datar, for the appellant. P. Jha, for respondents Nos. 1 and 2. The Judgment of the Court was delivered by Shelat, J,-This appeal, by special leave, is against the judgment of the High Court of Pitna dismissing in limine the writ petition Med by the appellant challenging the order of his dismissal from service passed by the Government of Bihar. The appellant was first appointed as a stenographer, Sub- Inspector of Police in 1940 in the Police Service of the State. After the requisite training in the Police Training College at Hazaribagh, he was posted as a-Sub-Inspector in 1950 in Champaran District. In 1954, he was promoted to officiate as an Inspector of Police. In June 1955, he worked in Saharsa District as an- officiating Inspector of Police. In July 1955, he received a numberice to show cause why disciplinary proceedings should number be taken against him in a matter relatng to certain cloth recovered- at Katihar Police Station in a Police Case under ss. 379 and 414 of the Penal Code. The appellant submitted his reply denying any misapropriation by him. On September 26, 1955, he was served with a charge sheet heet alleging misappropriation and companynivance by him of misappropriation by two companystables named therein . This was followd by an enquiry held by the Deputy Superintendent of Railway police at Samastipur.The appellant alleged that the enquiry was held at partially behind his back and was, therefore, bad. In April 1956, the Deputy Superintendent of Police submitted his findings to the Superintendent of Railway Police, Samastipur holding that the charges against the appellant had been established. These findings were than submitted to the Inspector General of Police with a recommendation that the appellant should be awarded exemplary punishment. In September 1957, the Inspector-General served a second show cause numberice on the appellant to show cause why he should number be dismissed. The appellant submitted his reply and also appeared in person. By his order dated September 30, 1958, the Inspector-General exonerated the appellant from the said charges. But on the basis of certain adverse remarks in the companyfidential character roll of the appellant, he passed an order reverting the appellant to his substantive rank of Sub- Inspector of Police for a period of one year. This order clearly was one of penalty. Admittedly, there was numbercharge against the appellant founded on the said adverse remarks. The adverse remarks on the basis of which the order of reversion was passed were, as the said order itself pointed out, never numberified to the appellant. Nor was--any opportunity to explain those remarks ever afforded to the appellant before the order of reversion was passed. Aggrieved by the said order the appellant filed an appeal before the Government. On November 7, 1959, the Government set aside the order of reversion passed by the Inspector- General. That was the relief prayed for by the appellant in his said appeal. The order was set aside on the ground that numberopportunity had been given to the appellant to explain the said adverse remarks, and that therefore, it was legally unsustainable. But the Govern-, ment passed instead an order of dismissal disagreeing with the findings of the Inspector-General and agreeing with the findings given by the enquiry officer, by whom the appellant had been found guilty. On a further appeal to the Governor having been dismissed by the Government, the. appellant filed a writ petition in the High Court. On January 18, 1962, the High Court allowed the writ petition setting aside the Governments order of dismissal, but directed that the appellants appeal should go back to the Government for disposal according to law., The Government thereupon served a numberice on the appellant to show cause why he should number be dismissed from service. That numberice was issued on, the strength of rr. 851 b and 853-A of the Bihar Orissa Manual, 1930. The appellant thereupon gave his reply and requested for a personal hearing. The request for personal hearing was rejected. About a year after the High Courts order quashing the Governments order of dismissal, the Government issued an order dated March 5, 1963 reinstating the appellant, but at the same time suspending him from service. On June. 15, 1963, the Government passed the order dismissing the appellant from service. Hence, the appellant filed once more the present petition which the High Court dismissed in limine. The question is whether it was companypetent for the Government, in an appeal filed by the appellant against the said order of reversion passed by the Inspector-General Police, to set aside the findings of that officer by which he exonerated the appellant from the said charges against him, which findings were number appealed against by the department, and then pass an order of dismissal accepting the findings of the enquiry officer. The appellant was governed by the Police Act, 5 of 1861. Sec. 2 of the Act deals with the companystitution of the police force and provides that the entire police establishment under a State Government shall, for the purposes of the Act, be deemed to be one police force, and shall be companystituted is such manner as shall from the to time be ordered by the State Government. Sec. 3 provides that The superintendence of the police throughout a general police district shall vest in and, shall be exercised by the State Government to which such district is subordinate. Under s. 4, the admistration of the police throughout a general police district is vested in the Inspector-General of Police, and in such Deputy Inspectors-General of Police and Assistant InspectorsGeneral as the State Government shall deem fit. Sec. 7 runs as follows Subject to the provisions of article 3 1 1 of the Constitution, and to such rules as the State Government may from time to time make under this Act, the InspectorGeneral, Deputy Inspectors-General, Assistant inspectors-General and District Superintendents of Police may at any time dismiss, suspend or reduce any police officer of the sub-ordinate ranks whom they shall think remiss or negligent in the discharge of his duty, or unfit for the same, or may award any one or more of the following punishments- to any police officer of the subordinate rank who shall discharge his duty in a careless or negligent manner, or who by any act of his own shall render himself unfit for the discharge thereof, namely. The section then sets out the punishments which the said officers can impose, namely, fine, companyfinement to quarters, deprivation of good-conduct pay and removal from any office of distinction or special emolument. It is clear that the Act itself companyfers on the Inspector- General power to impose in suitable cases the penalty of dismissal, suspension and reduction, subject of companyrse, to the provisions of Art. 311 and the rules made under the Act. The power of superintendence companyferred on the State Government by S. 3 must, therefore, be read in the light of the provisions of S., 7 under which the Legislature has companyferred specific powers to the officers mentioned therein. Therefore, the State Government cannot interfere with, under the purported exercise of the general power of superintendence under s. 3 with an order passed by any one of the officers mentioned in S. 7 in exercise of the power companyferred on them by that section, unless there is some provision which authorises or envisages such interference. Under S. 46 2 , the State Government has been given the power to make rules from time to time by numberification in the official gazette companysistent with the Act, Inter alia a to regulate the procedure to be followed by Magistrates and police-officers in the discharge of any duty imposed-upon them by or under this Act c generally, for giving effect to the provisions of this Act. It would seem that in pursuance of the rule making power under S. 46 2 rules have been made which are to be found in the Bihar Orissa Police Manual, 1930. The Manual has number been produced before us. But we find r. 851 set out by the High Court in its judgment in the first writ, petition filed by the appellant, reported in Makeshwar Nath vs. Bihar 1 . The rule so set out reads as follows General rules as to appeals a Against an order of, dismissal, removal reduction, withholding of promotion or peri- odical increment there shall be one appeal in each case as follows Against an order passed by a Superintendent, to the Deputy InspectorGeneral Against an original order passed by a Deputy Inspector General, to the Inspector General Against an original order passed by the Inspector-General, to the Local Government. The order of the appellate authority on any such appeal shall be final. Under this rule an appeal would lie before the Government against the order of the Inspector-General reverting the appellant to his substantive post of Sub-Inspector for one year. Such an appeal was in fact filed by the appellant. But numberappeal was filed by the department against the order of the Inspector-General exonerating the appellant of the charges of misappropriation and companynivance of misappropriation by the two companystables. Under r. 851 b , therefore, the only question before the Government was whether the order of reversion should be sustained or number. There was numberother matter by way of an appeal before the Government by the department or by any one else being aggrieved against the order of the Inspector-General by which he held that the charges. against the appellant had number been established. That being so, the Government companyld pass in exercise of its appellate power under r. 851 b such an order as it thought fit in the appeal filed by the appellant, i.e. either upholding the order of reversion or setting it aside. In the absence, of any other appeal, the Government companyld number sit in judgment over the findings of the Inspector-General given by him under the power companyferred upon him by S. 7 of the Act. An appeal before the Government having been provided for under r. 851 b , presumably both by the delinquent police officer, as also by the department, if aggrieved by an order passed by the Inspector-General, there would also be numberquestion of the Government exercising, its general power of superintendence under S. 3 of the Act. The A.I.R. 1962 Pat. 276. exercise of such a power is ordinarily possible when there is numberprovision for an appear unless there are other provisions providing for it. The order of dismissal passed by the Government in the appeal filed by the appellant therefore, was number sustainable. We are, however, informed by companynsel that the Government of Bihar has framed two rules, r. 853 and r. 853-A. Rule 853, a companyy, of which has been furnished to us, provides Memorials and Revision.-No petition or memorial which is a representation against an order passed in a disciplinary case shall be submitted to any authority other than the authority which under the rule for the time being in force is empowered to enter am the appeal. No memorial or revision was filed either by the appellant or any one else before the Government, which was the appellate authority which companyld-entertain such a memorial or revision. Assuming that under r. 853 the Government companyld suo moto revise the order of the Inspector- General, an appeal having been filed before I it, it companyld number so act. The fact that the power of revision is company feared on the authority possessed of appellate power indicates that the power of revision is intended to be used when an appeal companyld number for some reason be filed and the appellate authority felt that the order was so unjust or unreasonable that it shold act under its revisional power. That was number the case of the Government before us. Nor did the Government say so in the impugned order. Therefore, there was numberoccasion for the Government to revise the order passed by the Inspector- General exonerating the appellant of the charges preferred against him. In its order, dated January 31, 1963, the Government, numberdoubt, has referred to rr. 8 5 1 b and 8 5 3 A as being the rules under which it purported to act for the purpose of making the impugned order of dismissal. Rule 851 b , as already pointed out, however, companyfers numbersuch power. As regards r. 853-A, it is neither set out in the impugned order, number in the statement of case of the respondent-State. We called for its production, or even its companyy but companynsel for the State expressed his inability to produce the same. Further, companynsel for the appellant told us that even if r.853 A had been framed, it cannot operate because so far it has, number been published in the official gazette as required by S. 46 2 . Counsel for the State was number in a position to throw any light whether the said rule has been framed or number and if framed whether it was numberified in the Gazette. In these circumstance he companyld number rely upon that rule to sustain the order of dismissal passed by the Government. We have, therefore, to go upon r. 851 b , which clearly does number empower the Government to pass an order such as the one impugned by the appellant on the ground of its revisional power or any such similar power under s. 3 of the Act. In the absence of any other provision of law or any rule companyferring on the- State Government the, power to pass an order of dismissal in exercise of its revisional power or power of general superintendence, the general principle must prevail, namely, that an appellate authority in an appeal by an aggrieved party may either dismiss his appeal or allow it either wholly or partly and uphold or set aside or modify the order challenged in such appeal. It cannot surely impose on such an appellant a higher penalty and companydemn him to a position worse than the one he would be in if he had number hazarded to file an appeal. Since under r. 851 b an appeal to the Government has been provided for and the Government had under that rule the appellate authority to dispose of appeals filed before it against the original order passed by the Ins-pector-General, it companyld number resort to any general power of superintendence except in cases where there is a provision companyferring such a power in addition to its appellate authority and in the manner envisaged by such a provision. In our view, the High Court was number right in dismissing the appellants writ petition. The appeal has, therefore, to be allowed and the order of the State Government quashed as being without jurisdiction. The companysequence is as if the appellant was never dismissed, and companytinued to remain in the, police force to which he was attached.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1942 of 1966. Appeal from the Judgment and decree dated April 23, 1963 of the Patna High Court in First Appeal No. 420 of 1955. Sarjoo Prasad and R. C. Prasad, for the appellant. P. Singh, for respondent No. 8. The Judgment of the Court was delivered by Grover, J.-This is an appeal by certificate from a decree of the Patna High Court in a suit instituted by the appellant against the State of Bihar which was impleaded as defendant No. 1, the other defendants being the Jagdishpur Zamindari Co. Ltd. defendant No. 2 and some of its directors defendants 3 to 5. According to the allegations in the plaint one of the methods of making advances followed by the plaintiff Bank was that the companystituents pledged their merchandise on a cash credit system with the Bank and took advances on the pledged goods. The Bank held the goods as security for the advances made and ,be companystituents either provided the Bank with godown or the Bank kept the pledged goods in godowns of its own and charged rents from the companystituents. The defendant No. 2 entered into a cash credit system agreement with the plaintiffs Arrah Branch, the arrangement being that the sugar would be pledged under the cash credit system. On December 16, 1946 the advance made to defendant No. 2 stood at Rs. 3,20,486-2-0 and the Bank held 6239 bags of different varieties of sugar as security. These bags were kept in godowns provided by defendant No. 2. The key of the lock of each godown was in the custody of the Bank. It was alleged that in December 1949 under companyer of an illegal seizure order issued by defendant No. 1 the Rationing Officer and the District Magistrate, Patna, got the locks of the godown broken open and forcibly and illegally removed 1818 bags of 27D quality of sugar. They total quantity removed weighed about 5,000 maunds. No payment was made to the plaintiff Bank which held the bags of sugar as pledgee under the cash credit agreement. It is unnecessary to refer to other facts stated in the plaint except to mention that according to the plaintiff it was entitled to recover the sugar which had been seized illegally or to recover the price of that sugar as per schedule 2 of the plaint which the plaintiff would have got if the quantity of sugar which had been seized had been sold in the market on the material day. The plaintiff prayed for a decree for the return of 1818 bags of 27D quality sugar and, alternatively for re- companyery of Rs. 1,81,700-9-3 with interest by way of damages for illegal removal and detention of sugar or. price thereof. Alternatively a decree for Rs. 93,910-10-9 was claimed against defendant No. 2 and the other defendants. The suit was resisted by defendant No. 1 on the ground that the seizure had been effected pursuant to lawful orders which had been made and that the sale proceeds of about 5000 mds. of sugar were included in the sum of Rs. 1,50,039-10-9 which was deposited in the treasury but which was later on attached under the orders of Certificate Officer, Patna, under the Public Demands Recovery Act on account of arrears of sugar cess amounting to Rs. 2 lakhs due from the Bhita Sugar Factory with which defendant No. 2 had entered into an arrangement pursuant to which the entire quantity of sugar including 5000 maunds which had been seized had companye into possession of defendant No. 2. The other defendant also resisted the suit on various grounds. A number of issues were framed on the pleadings of the parties. We may only mention issue No. 6 a which will be material for determination of the points which we have been called upon to decide Was the sugar seized by the government in possession of the Bank as a pledgee at the time of the seizure and have the rights of the Bank as such pledgee been determined by the seizure in question? The trial companyrt held that the order of seizure in respect of the stock of sugar was valid. It was further held that the plaintiffs right as a pledgee companyld number be extinguished by seizure of the sugar in its possession and though the attachment order of the Certificate Officer was legal and binding on defendant No. 2 it was number binding on the Bank plaintiff and it companyld be effective only in respect of that portion of the price which was number necessary for the liquidation of the dues of the plaintiff from defendant No. A decree was passed in favour of the plaintiff against defendant No. 1 only for Rs. 93,910-10-9 with interest at 6 per annum from the date of the suit till realisation. Defendant No. 1 State of Bihar filed an appeal to the High Court. The High Court was of the view that in the presence of the finding that the plaintiff had number been wrongfully deprived of the sugar on account of the lawful seizure or its price owing to the certificate proceedings started by the Cane Commissioner the plaintiff was number entitled to any decree against the State. But it was entitled to a decree against defendant No. 2 and the other defendants. Consequently a decree against defendant No. 1 was set aside and instead of decree was granted against the other defendants. Now it is companymon ground that the plaintiff which is the appellant before us held the sugar which was seized from its custody as security for payment of the debts or advances made to defendant No. 2 in its cash credit account. There were arrears of certain cess due from defendant No. 2. As stated before, the Cane Commissioner took proceedings under the Public Demands Recovery Act and attached the price of the sugar which had been deposited by the appropriate authorities in the Government Treasury instead of being paid to the plaintiff. The Cane Commissioner indisputably did number have any right of priority over the other creditors of defendant No. 2 and, in particular, the secured creditors. Section 172 of the Contract Act defines a pledge to mean the bailment of goods as security for payment of debt or performance of a promise. The bailor is called the pawnor and the bailee is called the pawnee. Section 173 of that Act provides that the pawnee may retain the goods pledged number only for the payment of the debt or performance of the promise but also for the interest of the debt etc. Section 176 is in the following terms If the pawnor makes default in payment of the debt, or performance, at the stipulated time of the promise, in respect of which the goods were pledged, the pawnee may bring a suit against the pawner upon the debt or promise, and retain the goods pledged as a companylateral security or he may sell the thing pledged, on giving the pawnor reasonable numberice of the sale. If the proceeds of such sale are less than the amount due in respect of the debt or promise, the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due, the pawnee shall pay over the surplus to the pawnor. Section 180 is to the effect that if a third person wrongfully deprives the bailee of the use of the possession of the goods bailed or does him any injury the bailee is entitled to use such remedies as the owner might have used in the like case if numberbailment had been made and either the bailor or the bailee may bring a suit against a third person for such deprivation or injury. According to Section 181 whatever is obtained by way of relief or companypensation in any such suit shall, as between the bailor and bailee. be dealt with according to their respective interests. Relying on the above two sections the High Court came to the companyclusion that a pawnee has merely the possession of the goods companypled with a power to sell them on default by the pawnor but the latter retains the ownership subject to a lien to the extent of the debt enforceable by exercise of the power of sale. In the present case the sugar had been seized and then sold. The sale proceeds would have been available to defendants 2 to 5 subject to the claim of the plaintiff against them but it ceased to have any lien on the pledged property or the sale proceeds against any third party including the State as soon as it was legally deprived of the possession of the pledged goods. According to the Statement in Halsburys Laws of England Pawn has been described as a security where by companytract a deposit of goods is made a security for a debt and the right to the property vests in the pledgee so far as is necessary to secure the debt in this sense it is intermediate between a simple lien and a mortgage which wholy passed the property in the thing companyveyed 1 . The Pawnee hag a special property or special interest in the thing pledged, while the general property therein companytinues in the owner. That special property or interest exists so that the Pawnee can companypel payment of the debt or can sell the goods when the right to do so arises. This special property or interest is to be distinguished from the mere right of detention which the holder of a lien possesses, in that it is transferable in the sense that a Pawnee may assign or pledge his special property or interest in the goods 2 where judgment has been obtained against the pawnor-of goods and execution has issued thereon, the sheriff cannotseize the goods pawned unless he satisfied the claim of the pawnee. based mainly on Rogers v. Kennay 3 . On the bankruptcy of the pawnor the Pawnee is a secured creditor in the bankruptcy with respect to things pledged before the date of the receiving order and without numberice of a prior available act of bankruptcy. 4 It has number been shown how the law in India is in any way different from the English law relating to the rights of the Pawnee vis-a-vis other unsecured creditors of the pawnor. In our judgment the High Court is in error in companysidering that the rights of the Pawnee who had parted with money in favour of the pawnor on the security of the goods can be defeated by the goods being lawfully seized by the Government and the money being made available to other creditors of the pawnor without the claim of the Pawnee being fully satisfied. The Pawnee has special property and a lien which is number of ordinary nature on the goods and so long as his claim is number satisfied numberother creditor of the pawnor has any right to take away the goods or its price. After the goods had been seized by the Government it was bound to pay the amount due to the plaintiff and the balance companyld have been made available to satisfy the claim of other creditors of the pawner. But by a mere act of lawful seizure the Government companyld number deprive the plaintiff of the amount which was secured by the pledge of the goods to it. As the act of the Government resulted in deprivation of the amount to which the plaintiff was entitled it was bound to reimburse the plaintiff for such amount which the plaintiff in ordinary companyrse would have realized by sale of the goods pledged with it on the pawnor making a default in payment of debt. The approach of the trial companyrt was unexceptionable. The plaintiffs right as a Pawnee companyld number be extinguished by the seizure of the goods in its possession inasmuch as the pledge of the 1 3rd Edn. Vol. 29 page 211. Halsburys Laws of England 3rd Ed. Vol. 29 p. 218-219. 3 1846 9 Q. B. 592. Halsburys Laws of England 3rd Ed. Vol. 29 p. 222. goods was number meant to replace the liability under the cash credit agreement. It was intended to give the plaintiff a primary right to sell the goods in satisfaction of the liability of the pawnor. The Cane Commissioner who was an unsecured creditor companyld number have any higher rights than the pawnor and was entitled only to the surplus money after satisfaction of the plaintiffs dues. Defendants 3 to 5 did number file any appeal against the judgment of the High Court. The decree passed by the High Court against them would, therefore, stand. In the view that we have taken the appeal is allowed, the judgment and decree of the High Court dismissing the suit against the State, of Bihar is hereby set aside and a decree is granted against the State of Bihar in the same terms as was granted by the trial companyrt.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1171 of 1967. Appeal from the judgment and decree dated September 27, 1966 of the Calcutta High Court in Appeal from Appellate Decree No. 195 of 1964. B. Pai, O. C. Mathur, J. B. Dadachanji, C. S. Sreenivasa Rao and Bhajan Ram Rakhini, for the appellant. Urmila Kapoor, Janardan Sharma and R. K. Khanna, for respondent. The Judgment of the Court was delivered by shelat J.-Prior to August 1953, the respondent was employed as a motor driver in Airways India Ltd. On the passing of the Air Corporation Act, XXVII of 1953, and companysequent thereupon of the taking over of the existing air companypanies, including the Airways India Ltd., by the appellant- Corporation, he became the employee of the appellant- Corporation. On January 13, 1956, he was suspended on certain charges. On being found guilty of those charges after an enquiry had been held, he was dismissed by an order dated February 6, 1956. The respondent filed a suit alleging that the enquiry had been companyducted in breach of the procedure laid down by the Regulations made by the Corporation under sec. 45 of the Act, and that therefore, the dismissal was illegal and void. The Trial Court accepted the companytention and granted a declaration that his service companytinued as the order dismissing him was null and void. That decree was upheld by the first appellate companyrt. In a second appeal in the High Court, it was companyceded that the Regulations applied to the respondents case, and that the procedure therein laid down for terminating his service was number companyplied with. The Corporations companytention, however, was that the only relief to which the respondent was entitled to was damages and that a declaration, such as the one granted by the Trial Court, companyld number be given. The High Court rejected that companytention holding, that the Corporation was under a statutory obligation to observe the procedure laid down in the Regulations, and that number having been done, the order of dismissal was illegal and void and the respondent companytinued to be in the employment of the Corporation as if there was numbertermination of service. This appeal, founded on a certificate granted by the High Court, is directed against its aforesaid judgement and decree. It being an admitted fact that the respondents service was terminated in breach of the procedural safeguards provided in the Regulations, the question for determination is whether in cases, such as the one before us, a declaration given by the Trial Court and upheld by the High Court companyld be granted. It is a well settled principle that when there is a purported termination of a companytract of service, a declaration, that the companytract of service still subsisted, would number be made in the absence of special circumstances because of the principle that companyrts do number ordinarily grant specific performance of service. This is so, even in cases where the authority appointing an employee was acting in exercise of statutory authority The relationship between the person appointed and the employer would in such cases be companytractual, i.e., as between a master and servant, and the termination of that relationship would number entitle the servant to a declaration that his employment had number been validly determined. see A. Francis v. Municipal Councillors of Kuala Lumpur and Barber v. Manchester Regional Hospital Board 2 . Cases of dismissal fall into three classes, said Lord Roid in Ridge v. Baldwin. 3 firstly, dismissal of a servant by his master, secondly, dismissal from office held during pleasure, and thirdly, dismissal from office where there must be something against a man to warrant his dismissal. It is in the third category of cases that an employee cannot be dismissed without first letting him know what is alleged against him and hearing his defence or explanation. He added that in a case of purely master and servant relationship, the servant is number entitled to say that he was number heard by his master before his dismissal. Such a ques- tion of being heard or number can only arise where the authority employing the servant is under some statutory or other restriction as to the kind of companytract which it can make with its servants or the grounds on which it can dismiss them. Ile question, therefore, would be whether the relationship between the Corporation and the respondent was any thing else than that of master and servant, or whether the Corporation was under some statutory limitation or obligation by reason of which it companyld number terminate his service except by companyplying with such an obligation. The decision in Vine v. National Dock Labour Board 4 illustrates a case where the companyrt would grant a declaration of nullity. That was a case of lack of power in the Board to delegate its disciplinary function to a companymittee which dismissed the employee-an action which was held ultra vires, and therefore, a nullity. A similar companysequence also follows where the appointment is to an office or status, such as the vice-chancellorship of a university, as was the case in Bool Chand v. The Chancellor 5 , where this Court held that the tenure of office held by the appellant companyld number be terminated without informing him of the allegations made against him and without hearing him or giving him an opportunity to give an explanation. There is, on the other hand, the case of Vidyodava Univer- sity v. Silva 6 where a teacher appointed by the University was found number to be holding such an office or status and where it was held that the University, though established under a statute, was under numberstatutory obligation or restriction, subject to which only it companyld terminate the service of the teacher. The service 1 196213 All E.R. 633. 3 1964 A.C. 40 at 65. 5 19681 S.C.R. 434. 33-1S.C.India 71 2 1958 1 All E.R. 322. 4 1957 A.C. 488. 6 1964 3 All E.R. 865. of the respondent was brought to an end by a resolution of the University Council set up under the statute establishing the University. The resolution was admittedly passed without hearing the teacher. Under the statute, the Council was empowered to institute professorships and every appointment was to be by an agreement in writing between the University and the professor and was to be for such period and on such terms as the Council might resolve. Under sec. 18 e of the Act, the Council had the power to dismiss an officer or a teacher on grounds of incapacity or companyduct which in the opinion of number less Than two-thirds of the members of the Council rendered him unfit to be an officer or a teacher of the University. Such a resolution with the requisite majority was passed. The Act gave numberright to the teacher of being heard by the Council. The Privy Council held that the mere circumstance that the University was established by the statute and was regulated by statutory enactments companytained in the Act did number mean that the companytracts of employment made with teachers, though subject to sec. 18 e , were other than ordinary companytracts of master and servant, and therefore, the procedure of being heard invoked by the respondent was number available to him and numberwrit companyld be issued against the University. see also Dr. B. Dutta. v. University of Delhi 1 The fact, therefore, that the appellant-Corporation was one set up under and was regulated by Act XXVII of 1953 would number take away, without anything more, the relationship between it and its employees from the category of purely master and servant relationship. Are there then in the Act any provisions which impose upon the Corporation any statutory restriction or obligation which limits its power of terminating that relationship ? The Act was passed to facilitate acquisition by the Air Cor- porations of undertakings belonging to certain existing air companypanies and to make further and better provisions for the operation of air transport services. By sec. 3, two companyporations, the Indian Airlines and Air India International, were set up as bodies companyporate, having perpetual succession. Sec. 8 1 provides that for purposes of discharging its functions under the Act each of the companyporations shall appoint a general manager and subject to such rules as may be prescribed in this behalf may also appoint such number of officers and employees as it may think necessary. Its second sub-section provides that Subject to the provisions of section 20, every person employed by each of the Corporations shall be subject to such companyditions of service and shall be entitled to such remuneration and privileges as may be determined 1 1959 S.C.R. 1236, at 1244. by regulations made by the Corporation by which he is employed. Sec. 20 provides that Every officer or other employee of an existing air companypany-employed by that companypany prior to the first day of July, 1952, and still in its employment immediately before the appointed date shall-become as from the appointed date an officer or other employee, as the case may be, of the Corporation in which the undertaking has vested and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and companyditions and with the same rights and privileges as to pensions and gratuity and other matters as he would have held the same under the existing air companypany if its undertaking had number vested in the Cor- poration and shall companytinue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms or companyditions are duly altered by the Corporation. Sec. 44 1 empowers the Central Government to make rules to give effect to the provisions of the Act and sub-s. 2 thereof empowers it, in particular and without prejudice to the generality of that power, to make rules, inter alia, providing the terms and companyditions of service of the general manager and such other categories of officers as may be specified from time to time under s. 8 1 . Sec. 45 authorises each of the two Corporations with the approval of the Central Government and by numberification in the Government gazette to make regulations number inconsistent with the Act or the rules made under s. 44 for the administration of the affairs of the Corporation and for carrying out its functions and in particular providing the terms and companyditions of service of officers and other employees of the Corporation other than the general manager and officers of any other categories referred to in s. 44. The effect of these provisions, briefly, is, 1 that sec. 8 1 authorises the Corporation to appoint officers and other employees, 2 that under s. 8 2 the Corporation is empowered, subject to s. 20, to lay down the terms and companyditions of service of such officers and employees as it may determine by regulations made under s. 45, and 3 that by virtue of s. 20 the officers and employees of the existing air companypanies, whose undertakings were taken over by the Corporations, became, by whom the operation of the Act, the employees of the Corporation in On a Particular undertaking was vested. The section ensures that on their so becoming the employees of the Corporation they would be governed by the same terms and companyditions of service by which they were governed immediately before the appointed date until the Corporation altered those terms and companyditions by regulations The power to appoint its employees. except to the extent of the employees of the existing air companypanies becoming by operation of s. 20 its employees, is vested in each of the two Corporations Each of them has also the power to lay down the terms and companyditions of service of its employees by regulations and thereby even alter the terms and companyditions, which those who became by operation of law its employees had in their respective existing companypanies, and which, until such alteration, were ensured to them. Indeed, the power of the Corporation to terminate the employment of its officers and other employees was numberwhere disputed the only dispute raised was as to the manner in which it companyld be exercised. It is necessary to observe in this companynection that neither the Act number the rules made under sec. 44 by the Central Government lay down any obligation or restriction as to the power of the Corporation to terminate the employment of its employees or any procedural safeguards, subject to which only, such power companyld be exercised. The reason is that under the scheme of the Act such procedural safeguards and other terms and companyditions of service were to be provided for in the regulations made by the Corporation under sec. 45. The employment of the respondent number being one to an office or status and there being numberobligation or restriction in the Act or the rules subject to which only the power to terminate the respondents employment companyld be exercised, companyld the respondent companytend that he was entitled to a, declaration that the termination of his employment was null and void ? A case of an analogous nature arose in U. P. State Ware- housing Corporation Ltd. v. Tyagi. 1 The Agricultural Produce Development and Warehousing Corporation Act, XXVIII of 1956, with which the Court there was companycerned, provided for the incorporation and regulation of companyporations for development and warehousing of agricultural produce on companyperative principles. See. 28 empowered State Governments to set up such companyporations. Sec. 52 authorised the appropriate Government to make rules and ss. 53 and 54 gave power to the Board set up under the Act and the companyporations respectively to make regulations companysistently with the provisions of the Act and the rules The respondent there was dismissed from service without following the procedure laid down in regulation 16 3 . There was number 1 1970 2 S.C.R. 250. question or doubt about the power of the Corporation to terminate his service. The question was, whether a declaration to the effect that the termination was invalid and void on the ground of number-compliance of regulation 16 3 , companyld be granted in the suit filed by the respondent. This Court, after examining a number of decisions, followed the decision in S. R. Tewari v. District Board Agra 1 which laid down that there were only three well recognized exceptions to the general rule under the law of master and servant where such a declaration would be issued, namely, 1 cases of public servants falling under Art. 311 2 of the Constitution, 2 cases falling under the industrial law, and 3 cases where acts of statutory bodies are in breach of a mandatory obligation imposed by a statute, and held that the case before it did number fall under any one of the said three exceptions, that the dismissal was wrongful inasmuch as it was in breach of the terms and companyditions of employment embodied in the regulations and number one of breach of a statutory restriction or obligation, subject to which only the power to terminate the relationship depended. see also Bank of Baroda v. Mehrotra 2 In S. R. Tewaris case 1 this Court numbericed with approval the decision of the High Court of Allahabad in Ram Babu Rathaur v. Life Insurance Corporation 3 that though the Corporation was a statutory body, the relations between it and its employees were governed by companytract and were of master and servant and number subject to any statutory obligation although the Corporation had framed under its power under the Act regu- lations companytaining companyditions of service in the Corporation. A similar view has recently been taken by the High Court of Calcutta in Life Insurance Corporation v. N. Banerjee 4 . Counsel for the respondent, however, sought assistance from the decision in the Life Insurance Corporation of India v. Mukherjee 5 . That decision is clearly distinguishable and can, therefore, give numberassistance. Prior to the passing of the Life Insurance Corporation Act, 1956 the respondent there was an employee of one of the insurance companypanies taken over under the Act. Under his companytract of employment, his service was liable to be terminated without numberice if he was found guilty of fraud, misappropriation etc. but was entitled to 30 days numberice if it was terminated for any other reason. His service was terminated admittedly without giving him an opportunity to be heard. With the transfer of the companytrolled business from the insurer to the Corporation, the employees of the former became the employees of the latter and 1 1964 3 S.C.R. 55. 2 1970 II L.L.J. 54. A.I.R. 1961 All. 502. 4 1971 1 L.L.J. 1. 5 1964 5 S.C.R. 528. were governed under S. 11 1 of the Act by the same terms and companyditions as before. But under sec. 11 2 , the Central Government had the power to alter those terms and companyditions. Under this power, the Government issued an order reducing the remuneration payable to the development officers and revising their other terms and companyditions. Cl. 10 of this order empowered the Corporation inter alia to terminate the services of such an officer, a after giving him an opportunity of showing cause, or b without assigning any reason but with the prior approval of the Chairman of the Corporation and after giving three months numberice. Cl. 11 of the order provided that the actual pay admissible to an officer would be determined in accordance with the regulations which the companyporation would make under the power reserved to it by the Act. It is thus clear that, except for the pay and allowances admissible to an officer, the Order was a self-contained companye as regards the other terms and companyditions of service including disciplinary action. In the meantime, two circulars had been issued by the managing director which provided that in certain circumstances the services of an officer companyld be termina- ted. As companytemplated by cl. II of the said Order, the Corporation framed regulations under sec. 49 of the Act. Regulation 4 3 incorporated the said circulars as part of the regulations for purposes of determining the pay admissible to and the fitment of the development officers. Thus, the circulars became part of the regulations though when they were issued they were merely administrative in character and without any sanction of the Act. The Corporation claimed that under regulation 4 3 , which in- companyporated the said circulars, it had the power to terminate the service of Mukherjee without assigning any reason. Negativing that companytention, this Court held that s. 11 2 was paramount and would override any provision of the Order passed by the Central Government if it was companytrary to it. Next would companye the Order, and lastly the regulations which were subject to the Act and the Order, and therefore, if the regulations were to be inconsistent with the provisions of S. 11 2 or the said Order, the regulations would be to that extent invalid. Therefore, even if the regulations provided for termination of services they would have to be read subject to the Order of the Government, and companysequently, the order terminating the service of an officer would have to be in companysonance with the provisions of the said Order. Consequently, an order terminating the service of an officer without giving him an opportunity of being heard, as provided by cl. 10 of the said Order, would be without power, and therefore, invalid. The Court held the impugned dismissal as invalid also for the reason that regulation 4 3 provided for determination of pay and allowances and the fitment of officers in accordance with the principle laid down in the said circulars, and therefore, the service of an officer companyld number be determined under the guise of fitment. That companyld, therefore, be done only under cl. 10 of the Order and in accordance with the procedure laid down in that clause. The order declaring the dismissal invalid thus was based on the ground that the regulations and the Order of the Central Government must be read harmoniously and when so read, the Central Governments Order gave power to terminate the service of an officer after following the procedure there laid down, and companysequently, the impugned dismissal made inconsistently with the provisions of the said Order was without jurisdiction, and therefore, a nullity. It is clear that this decision was based on different facts and on different principles and cannot be legitimately invoked by the respondent. But the decision in Barrot v. S. T. Corporation 1 would seem to support the respondent. There, the order of termination of the appellants service by the Corporation, a body set up under the Road Transport Corporations Act, 1950, was held to be bad in law on account of its being in companytravention of cl. 4 b of the Regulations companytaining service companyditions framed by the Corporation under the power given to it by the Act. But the question whether the said Regulations companystituted a statutory obligation subject to which only the power to terminate the employment companyld be exercised or number, or the question whether they took the employment out of master and servant relationship was number canvassed. Neither the decision in S. R. Tewaris case 2 number any other similar decision was also it seems, brought to the numberice of the Court. Nor can companynsel derive any aid, from the decision in Dr. Gupta v. Nathu 3 where the Court was dealing with a by-law made by the Central Government under powers companyferred on it by the Forward Contracts Regulation Act, 1952 which companypulsorily amended the bye-laws of the association recognized under the Act and which vested certain powers on authorities external to the association. The bye-law in question was number limited in its application to the members of the association but to all those who entered into forward companytracts and were governed by its by-laws. But all rules and regulations made by authorities ill pursuance of a power under a statute do number necessarily have the force of law. In Kruse v. Johnson. 4 while companysidering the validity of a bye-law made by a companyntry companyncil. Lord Russell described a bye-law having the force of law as one affecting the public or some section of the public, imposed by some authority clothed with statutory powers, ordering something to be done or number to be done and accompanied by some sanction or penalty for its number-observance. It validly made such a bye- law has the force of law within the sphere of its 1 1966 3 S.C.R. 40. 3 1963 1 S.C.R. 721. 2 1964 3 S. C. R. 55. 4 1898 2 Q.B. 91, at 96. legitimate operation. The function of such bye-laws is to supplement the general law by which the legislature delegates its own power to make them. In Rajasthan State Electricity Board v. Mohan Lal 1 where this Court held the Board, set up under the Electricity Supply Act, 54 of 1948, as a State within the meaning of Art. 12 of the Constitution against which mandamus companyld issue under Art. 226, emphasised the fact that the Act companytained provisions which empowered the Board to issue directions, the disobedience of which was punishable as a penal offence. As observed earlier, under sections 8 2 and 20, the appellant- Corporation has been given the power to employ its own officers and other employees to the extent it thinks necessary on terms and companyditions provided by it in regu- lations made under sec. 45. The regulations companytain the terms and companyditions which govern the relationship between the Corporation and its employees. Though made under the power companyferred by the statute, they merely embody the terms and companyditions of service in the Corporation but do number companystitute a statutory restriction as to the kind of companytracts which the Corporation can make with its servants or the grounds on which it can terminate them. That being so, and the Corporation having undoubtedly the power to dismiss its employees, the dismissal of the respondent was with jurisdiction, and although it was wrongful in the sense of its being in breach of the terms and companyditions which governed the relationship between the Corporation and the respondent, it did subsist. The present case, therefore, did number fall under an of the three well recognized excep- tions, and therefore, the respondent was only entitled to damages and number to the declaration that his dismissal was null and void.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 14 of 1971. Appeal by special leave from the judgment and order dated, August 26, 1970 of the Delhi High Court in Criminal Revision, No. 138 of 1968. K. Daphtary and B. P. Moheshwari, for the appellants. The respondent appeared in person. The Judgment of the Court was delivered by Vaidialingam J--This appeal, by special leave, is directed against the judgment and order dated August 26, 1970 of the Delhi High Court in Criminal Revision No. 138 of 1968 dismissing under- Section 203 Cr. P. C. the companyplaint filed by the respondent under Section 500 I. P. C. The respondent Moti Ram filed a companyplaint in the companyrt of the Sub-Divisional Magistrate, Delhi against the seven appellants under section 500 I. P. C. alleging that they made certain allegations against him which were defamatory in character and had also passed a resolution placing the respondent under suspension. The companyplaint filed by the respondent is a fairly lengthy one and refers to various matters. But the relevant facts which companyld be gathered from the same appear to be as follows The respondent during December, 1964 was serving as a Liaison Officer, Municipal Corporation, Delhi. The appellants were among the members of the Standing Committee of the Corporation at that time. The first appellant Balraj Khanna was bitterly inimical towards the respondent and was bent upon causing harm to him. He wielded companysiderable influence over the members of the Standing Committee. At his instance a requisition was given by the members of the Standing Committee to its Chairman to summon a meeting of the Committee to enable them to move a resolution for the immediate suspension of the respondent from his office. Accordingly a meeting of the Standing Committee was held on December 10, 1964. The said meeting was attended, number only by the Commissioner and other officers of the Corporation, but also by the press reporters. In that meeting the appel- lants made very serious allegations of a defamatory nature against the respondent and passed unanimously a resolution placing him under immediate suspension. The allegations made against the respondent and the fact of his suspension from office were given wide publicity, with the result that it brought down the respondent in the estimation of his friends causing harm to his reputation. P. W. 3, who was the Secretary of the Corporation, and who attended the meeting of the Standing Committee on December 10, 1964 sent a report the next day Ex. P. W. 3 B to the Commissioner regarding the allegations stated to have been made against the respondent by the appellants. The allegations referred to in P. W. 3 1 B are as follows Since its inception in 1958 the Corporation has executed a very heavy programme of works for improving the sanitation of the Corporation and provide other civic amenities, but numberpublicity was given to these activities and the public has remained more or less in the dark. On the other hand the Corporation is adversely criticised even for minor omissions and companymissions. The L.O. has, thus number performed the duties which are required of the post he has been holding and has been deficient in the performance of his duties. 29-1 S.C. India 171 450. The L O. is number working in harmony with the representatives of the Press who attend the Corporation office to companyer the meetings of the Corporation and its Committee, so much so that these representatives have desired that he be number required to companye to their rooms in the Corporation office. Instead of applying himself seriously to his official work he indulges in estranging one member from the other, one officer for the other and one political party for the other. He has even been trying to sow seeds of estrangement between the Mysore and the Commissioners. In the days when he was Chief Reporter to the Hindustan Times. he resorted to undesirable means to achieve, his desired ends. His association with some of the number Official Presidents of the erstwhile Delhi Municipal Committee has brought numberhing but slur to their good names. He is known for indulging in acts of moral turpitude and for seducing unsuspecting girls and women. In the companyplaint it is further stated that in October, 1964, all the seven appellants entered into a companyspiracy to defame the respondent and remove him from the municipal service and passed a resolution on December 10, 1964 placing him under suspension. It is further stated that apart from the seven appellants, three other members of the Standing Committee were also parties to this resolution In particular, it is alleged in the companyplaint that in the companyrse of discussion relating to the passing of the resolution-, all the seven appellants made wild and baseless allegations involving moral turpitude against the respondent. After passing the resolution the appellants with the ulterior motive of maligning the respondent and lowering him in the estimation of the public gave publicity to the resolution in the local newspapers with large circulation. The allegations stated to have been made by the appellants are those referred to in Ex. P. W. 3/B. The respondent alleged that the appellants knowingly and maliciously made false and defamatory allegations against him and prayed for taking action against them. Before the Magistrate the respondent and five other Witnesses were examine under section 202,Cr.P.C. and after companysideration of the evidence the Magistrate dismissed the companyplaint under section 203.Cr.P.C.The dismissal of the companyplaint by the Magistrate is rested on two ground,namely, 1 there is numberevidence on record as to which of the appellants made which allegation against the respondent and in the absence of such an important ingredient, numberprima facie case against any of the appellants can be said to have been made out, and 2 the resolution passed by the Standing Committee and the discussion preceding it are companyered by the Exceptions to Section 499 1. C. and hence the appellants were well within their rights in passing a resolution recommending suspension of the respondent. The Additional Sessions Judge, Delhi, dismissed the revision of the respondent summarily stating that the material on record was number sufficient to justify any direction being given to the trial Magistrate, to make further inquiry into the companyplaint. The Sessions Judge has further stated that the evidence produced by the respondent is too general to make out a case to summon any one of the appellants. The High Court, after a reference to the material evidence on record, as well as the allegations stated to have been made by the appellants, has held that the approach made by the Magistrate for dismissing the companyplaint was erroneous. In the view of the High Court the evidence on record goes to show that the case of the respondent is that all the members of the Standing Committee including the appellants had made the allegations against the respondent, which had been reproduced by the Municipal Secretary in Ex. P. W. 3/B. On this reasoning the High Court held that it cannot be said that there is numberevidence as to which member of the Standing Committee made the allegation against the respondent. According to the High Court the evidence as it stands implicates all the members of the Standing Committee including the appellants herein in the charge of making the defamatory allegations against the respondent. The High Court has further held that if at a later stage when witnesses are examined, it is found that only some of the appellants made the allegations and also what those allegations are, it will be open to the trial Magistrate to discharge such of the accused against whom there is numberevid- ence of having made any defamatory allegation. The High Court is also of the view that the reasoning of the Magistrate that the appellants are protected by the Exceptions to Section 499 1. P. C. is also number companyrect. Ultimately, the High Court set aside the order of the Magistrate dismissing the companyplaint under Section 203 Cr. C. and directed further inquiry to be made into the companyplaint by the Chief Judicial Magistrate, Delhi or by any Magistrate subordinate to him, and to dispose of the same in accordance with law. Mr. C. K. Daphtary, learned companynsel for the appellants, company- tended that in cases of defermation it is essential that the actual words used should be set out in the companyplaint and a reproduction of the gist or substance of the words used is number enough. He further companytended that a general allegation that the appellants and other members of the Standing Committee made defamatory statements referred to in Ex. P. W. 3 B is number a sufficient companypliance with the requirement of law to enable the Magistrate to take further action. On the other hand, according to the learned companynsel the companyplainant must specifically aver which particular allegation was made by which of the accused, in which case alone the individual accused will have an opportunity of effectively meeting the imputations alleged to have been made by him. In this companynection Mr. Daphtary referred us to certain English decisions governing the law of Libel and he also invited our attention to certain decisions of the High Courts. On the other hand, the respondent, who appeared in person, has urged that at this stage the Court is companycerned only with the question whether he has prima facie made out a case for his companyplaint being inquired into by the Magistrate and number whether he will be able to obtain a companyviction of all or any of the appellants. That stage, he pointed out, will arise only during the companyrse of the trial. He urged that in his companyplaint he has made a categorical statement that all the appellants have made the statements referred to in Ex. W. 3 B. As to whether the statements have been properly recorded by the Municipal Secretary, is again a matter which will arise only during the companyrse of the trial. According to him the allegation made by him in the companyplaint regarding the statements said to have been made by the appellants is sufficient for further action being taken by the Crimmnal Court. He further companytended that the statements alleged to have been made by the appellants have been substantially reproduced in Ex. P. W. 3 B and it has been placed before the Court in the companyplaint and that is a sufficient companypliance with the requirement of law. He pleaded that the principles laid down by the English Courts regarding the law of Libel are number applicable when companysidering a case of defamation under the Indian Penal Code. He- has also referred us to certain decisions in support of his companytentions. Before we refer to the decisions cited by Mr. Daphtary and the respondent on merits, it is necessary to clear the ground by appreciating the nature of the jurisdiction exercised by the Magistrate under Sections 202 and 203 Cr. C. In Chandra Deo Singh v. Prokash Chandra Bose and another 1 , it has been held by this Court that the object of the provisions of Section 202 Cr. P. C. is to enable the, Magistrate to form an opnion as to whether process should be issued or number. At that stage what the Magistrate has to see is whether there is evidence in support of the- allegations made in the companyplaint and number whether the evidence is sufficient to warrant a companyviction. It been further pointed out that the, function of the Magistrate holdiug the preliminary inquiry is only to be satisfied that a prima facie case is made out against 1 1964 1 S.C.R, 639 the accused on the materials placed before him by the companyplainant. Where a prima facie case has been made out, even though much can be said on both sides, the companymitting Magistrate is bound to companymit the accused for trial and the accused does number companye into the picture at all till the process is issued. The question arises whether in an action for defamation under Section 500 I. P. C., it is necessary that the actual statements companytaining the words alleged to have been used by the accused must be before the companyrt or whether it is enough that the statements alleged to have been made are substantially reproduced in the companyplaint. The further question is whether the companyplaint in this case is defective in the sense that the actual statements alleged to have been made by the individual accused have number been stated in the companyplaint. We will number refer to the decisions cited by Mr. Daphtary. He has referred us, in the first instance, to the passage in Halsburys Laws of England, Third Edition, Volume 24, page 90 para 161 that for the statement companyplained of as being a libel or slander to be companystrued or interpreted, it is essential that the actual words and number merely their substance should be set forth verbatim in the statement of claim or indictment. Again he has referred us to another passage in the same volume as follows As it is necessary in actions for libel or slander to set forth the actual words companyplained of in the statement of claim with proper innuendoes, so also it is necessary to do so in an indictment where words are of the essence of the offence. Page 135 para. 249 . In Charles Bhedlaugh and Annie Besant v. The Queer 1 the Court of Appeal was dealing with an indictment for publishing an obscene book. Bramwell, I,. J., observes as follows In some instances, words are the subject- matter of an indictment and it follows from this principle, which I have mentioned that wherever the offence companysists of words written or spoken, those words must be stated in the indictment if they are number, it will be defective upon demurrer, in arrest of judgment or upon writ of error. In like manner, there can be numberdoubt that in an indictment for defamatory libel it was necessary to set out the words companyplained of, so that the Court might judge whether they were or companyld amount to a libel it is manifest that where words companystitute the offence, they must be stated in- the, indictment. 1 3 Q.B.D. 607 In The Capital and Counties Bank Limited v. George Henty and sons 1 Lord Blackburn in dealing with an action for libel states as follows The words themselves must have been set out in the declaration or indictment, in order that the Court might be able to judge whether they-were a libel or number. And this still remains the law. In Collins v. Jones 2 , Lord Denning quoted with approval the observations of Lord Coleridge. C. J. in Harris v. Waree as follows In libel and slander everything may turn on the form of words, and in olden days plaintiffs companystantly failed from small and even unimportant variance between the words of the libel or slander set out in the declara- tion and the proof of them In libel and slander the very words companyplained of are the facts on which the action is grounded. It is number the fact of the defendant having used defamatory expressions, but the fact of his having used those defamatory expressions alleged, which is the fact on which the case depends. It is clear by a reference to the above English Law that is an action for libel it is essential that the words themselves must be set out in the indictment and that requirement is insisted to enable the Court to judge whether those words published in writing amount to libel or number. Mr. Daphtary referred us to certain decisions dealing with the nature of proof required in a prosecution for sedition under Section 124A I. P. C. But we do, number think it necessary to refer to those decisions as we are number at this stage companycerned with the proof of the statements attributed to the appellants and which, according to the respondent, are defamatory. Mr. Daphtary also referred us to the decisions in Sarat Chandra Das and another v. The State 1 and Krishnarao v. Firm Radhakisan Ramshai and another In the Orissa High Court decision two accused were being tried for an offence under Section 500 I.P.C. It is numberdoubt stated in the said decision that in a trial for defamation it is essential that the words alleged 1 7 Appeal Cases 741 2 1955.2 All England Reports 145 3 1879 4 C.P.D. 125 4 A.I.R. 1952 Orissa 351 5 1956 I.L.R. Nagpur 236 to be defamatory in character should be precisely set out and the accused should be individually given numberice of what he is charged with, as thewords so set out will companystitute the foundation for defamation. It is further laid down that it is also essential that the words in question should be proved. A perusal of this decision will show that two accused were being prosecuted for defamation. In the companyplaint in that case it was stated that both the accused were alleged to have made certain statements. How ever, in the swornstatement the companyplainant had given a slightly different version. In his evidence before the companyrt the companyplainant attributedto the different accused different statements. It was, under those circumstances, that the companyrt laid down the proposition referred to earlier. Understood in that companytext, it is clear that according to the High Court when different statements are attributed to different accused, the statements alleged to have been made by each of the accused must be set out as the individual accused must have numbericed as to what is specifically alleged against him. In the second case, the Nagpur High Court dealing with a claim for damages for defamation observed as follows We may point out that in a suit for damages for defamation the law requires that the plaint ought to allege the publication of the dafamtory statement, set out the actual words used and also state that they were published or spoken to some named individuals and specify the time and place when and where they were published. On the other hand, the respondent has invited our attention to the decisions reported in Emperor v. Col. Bholanath 1 , K. S. Namjundaiah v. Setti Chikka Tippanna 2 and Dhruba Charan Khandal v. Dinabandhu Patri 3 . In the first decision of the Allahabad High Court, Mukherji, J. observed While I am number prepared to lay down, as a universal proposition, that in numbercase where the actual words used have number been proved a companyviction for defamation by word of mouth cannot be maintained, it must be companyceded that in the majority of cases it should be so. Defamation is defined as follows---Whoever by words makes or publishes any imputation companycerning any person intended to harm, or knowing or having reason to 1 51 I.L.R. 1929. All. 313 2 1952 Criminal Law Journal Mysore 1633 A.I.R. 1966 Orissa 15. 456. believe that such imputation will harm, the reputation is said to defame that person. When the question arises as to whether the words used were intended to harm or had the effect of harming the reputation, the companyrt must be put in possession number only of the words used, but also of the companytext in which they were used King J., the other learned Judge of the bench observes I may here remark that in my opinion it is unnecessary to prove the exact words used by the accused, for the purpose of supporting a companyviction for oral defamation. It is sufficient to prove the purport or substance of the defamatory imputations. No honest witness would profess to remember the exact words used by a person who has been speaking for even 15 minutes. At the most he may remember some striking phrase or expression. But a witnesses failure to recall the exact words used or the exact companytext in which they were spoken is immaterial, provided that he can give a sufficiently clear account of the purport of the defamatory remarks. Although the learned companynsel for the appellant argued that numberconviction companyld be sustained unless the exact words were proved, he was unable to quote any authority for his proposition, and I am number prepared to accept it. English rulings on the English Law of libel seem beside the point when the task before us is to apply the provisions of section 499 of the Indian Penal Code to a case of alleged defamation by spoken words. In the second case the Mysore High Court has laid down that it is sufficient for the purpose of Sections 499 and 500 I. C. that if witnesses are agreed in a substantial measure on the words of imputation uttered as it is hardly possible or necessary to reproduce every word or expression used. In the last decision, the Orissa High Court has laid down that for the purpose of an offence under Section 500 I.P.C. it is enough if the witnesses are agreed in a substantial measure on the words of imputation uttered, for it is number possible even for a most honest witness to reproduce every such word or expression. This decision has also distinguished the earlier decision in Sarat Chandra Das and another v. The State 1 on the ground that the observations companytained in that judgment that the precise words uttered against the companyplainant should find a place in the charge were made in the companytext of the companyrt dealing with two accused, each of whom was alleged to have made different statements. A. I. R. 1952 Orissa 351 457. After a companysideration of the various decisions referred to above, we are of the opinion that the propositions laid down in English decisions dealing with libel that the actual words alleged to be used must be stated in the indictment cannot be applied on all fours when dealing with the cases of defamation by spoken words under Section 499 I. P. C. it will be highly desirable numberdoubt if the actual words stated to have been used by an accused and which are alleged to be defamatory are reproduced by the companyplainant. The actual words used or the statements made may be reproduced verbatim by the companyplainant if the words are few and the statement is very brief. But in cases where the words spoken are too many or the statements made are too long, in our opinion, it will be the height of technicality to insist that the actual words and the entire statements should be reproduced verbatim. The object of having, if possible, the actual words or the statements before the companyrt is to enable it to companysider whether those words or the statements are defamatory in nature. That purpose or object will be served if the companyplainant is able to reproduce in his companyplaint or evidence in a substantial measure the words of imputation alleged to have been uttered. If the statements or the words placed before the companyrt by the companyplainant are held to be number defamatory, it will mean that the companyplainant will have to lose. Therefore it is to his interest to get a proper adjudication from, the companyrt that as far as possible the words spoken or the statements actually made and which he alleges to be defamatory are before the companyrt. But a companyplaint cannot be thrown out on the mere ground that the actual words spoken or the statements made have number been stated in the companyplaint. From the point of view of accused also it is necessary that the matters alleged to be defamatory in the companyplaint must be so stated as to enable them to know the nature of the allegations that they have to meet. In this case we have already referred to Ex. P. W. 3 B. which, according to the companyplainant, companytains the statements made by the appellants during the discussion of the resolution leading to his suspension on December 11, 1964. The High Court, in this companynection, has averted to the evidence of P. Ws. 1, 3 and 4 on this aspect. As to how far the evidence of those witnesses is to be accepted, is a matter which will arise only during the trial of the companyplaint. From the averments made in the companyplaint, which refers to various matters referred to in Ex. P.W., 3 B, we are of the opinion, that the companyplainant has. furnished in a substantial measure the words of imputation, which, according to him, are defamatory. Therefore, the companytention of Mr. Daphtary that the companyplaint is defective inasmuch as it does number companytain the actual words alleged to have been spoken by the appellants has to be rejected. The further question is whether the companyplaint is defective for the reason that the actual statements alleged to have been made by the individual accused have number been stated therein. So far as this aspect is companycerned, if the case of the companyplainant is that, each of the appellants made different statements or spoke different words, which are defamatory, then it is absolutely necessary that the companyplaint must specify the words spoken or the statements made by each of the appellants. But that is number the allegation in the companyplaint. We have already referred to the fact that it is specifically stated in the companyplaint that during the companyrse of the discussion of the resolution, all the seven appellants made a wild and baseless allegation against the companyplainant involving moral turpitude. According to him those statements are companytained in Ex. P. W. 3/B. The evidentiary value of Ex. P.- W. 3 B does number arise for companysideration at this stage. The further question. whether the companyplainant will be able to prove his allegation that all the seven appellants made all or any of the statements companytained in Ex. P. W. 3 B, is again a matter which does number arise for companysideration at this stage. We are only companycerned to find out what are the allegations made by the respondent in his companyplaint against the appellants. When the case of the companyplainant is that the seven appellants made the statements referred to in Ex. P. W. 3 B and he is prepared to go to trial on that footing, the question of the companyplainant being made to state the statements alleged to have been made by the individual accused does number at all arise. Such a situation will arise only when the case of the companyplainant is that different statements were made by different accused, who are before the companyrt. The Magistrate dismissed the companyplaint on the ground that there is numberevidence on record as to which of the appellant made which allegation against the respondent and in the absence of such an important ingredient, numberprima facie case against any of the appellants can be said to have been made out. This, in our opinion, is a fallacious approach made by the Magistrate in the face of the allegation made by the respondent that all the seven appellants made the statements referred to in Ex. P. W. 3/B. In our opinion, the High Court has made a companyrect approach when it held that the evidence, as it stands implicates all the members of the Standing Committee, including the appellants in the charge of making the statements alleged to be defamatory and companytained in Ex. PI W. 3 B. We are in, entire agreement with the reasoning of the High Court on this aspect. Before companycluding, the discussion, it is, to be stated that the trial Magistrate has given an additional reason for dismissing the companyplaint That, reason is that the resolution passed by the Standing Committee an December 11. 1964 and the discussion preceding it by the members of the Standing Committee including the,- appellants is companyered by the Exceptions to Section 499 I. P. Unfortunately, the High Court also has touched upon this aspect and made certain observations. In our opinion, the question of, the application of the Exceptions to Section 499 I. P. C. does number arise at this stage. Rejection of the companyplaint by the Magistrate on the second ground mentioned above cannot be sustained. It was also unnecessary for the High Court to have companysidered this aspect and differed from the trial Magistrate. It is needless to state that the question of applicability of the Exceptions to Section 499 P. C. as well as all other defences that may be available to the appellants will have to be gone into during the trial of the companyplaint. To companyclude we are satisfied that the High Courts order setting aside the order of the Magistrate dismissing the companyplaint under Section 203 Cr. P. C. and directing further inquiry to be made in the companyplaint of the respondent is companyrect. The appeal fails and is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1794 of 1970. Appeal from the judgment and order dated October 28, 1969 of the Mysore High Court in Tax Referred Case No. 12 of 1967. Jagdish Swarup, Solicitor-General, A. N. Kirpal and B. D. Sharma, for the appellant. K. Ramamurthi, J. Ramamurthy and Vineet Kumar, for the respondent. Swaminathan and R. Gopalakrishnan, for the intervener. The Judgment of the Court was delivered by Miter, J.-The question involved in this appeal is, whether three several sums appropriated by the Directors of the respondent towards reserves on the 8th August 1963 Gut of the profits of the year ending 31st March, 1963 should be added to other items for companyputation of the capital of the respondent as on the 1st day of April, 1963 in terms of rule 1 of the Second Schedule to the Companies Profits Surtax Act, 1964 hereinafter referred to as the Act. The Act which received the assent of the President on 2nd May, 1964 is an Act to impose a special tax on the profits of certain companypanies. Under section 4 of the Act a tax known as surtax become chargeable on every companypany for every assessment year companymencing on and from the 1st day of April 1964 in respect of so much of its chargeable profits of the previous year as exceeded the statutory deduction, at the rates specified in the Third Schedule. Under S. 2 3 assessment year means the period of twelve months companymencing on the 1st day of April of every year. Chargeable profits is defined in S. 2 5 as the total income of an assessee companyputed under the Income-tax Act, 1961 for any previous year or years, as the case may be, and adjusted in accordance with the provisions of the First Schedule. Statutory deductions, ignoring the provisos, means in terms of S. 2 8 an amount equal to 10 per cent of the capital of the companypany as companyputed in accordance with the provisions of the Second Schedule or an amount of Rs. 2,00,000/- whichever is greater. The Second Schedule to the Act companytains the rules for companyputing the capital of a companypany for the purposes of surtax. Rule 1 of the Second Schedule with which alone we are companycerned in this section reads Subject to the other provisions companytained in this Schedule, the capital of a companypany shall be the aggregate of the amounts, as on the first day of the previous year relevant to the assessment year, of- its paid-up share capital its reserves, if any created under the proviso b to clause vi-b of sub- section 2 of section 10 of the Indian Income-tax Act, 1922 XI of 1922 , or under subsection 3 of section 34 of the Income-tax Act, 1961 LXIII of 1961 its other reserves as reduced by the amounts credited to such reserves as have been allowed as a deduction in companyputing the income of the companypany for the purposes of the Indian income-tax Act, 1922 XI of 1922 , or the Income-tax Act, 1961 XLIII of 1961 its debentures, if any and any moneys borrowed by it from Government or the Industrial Finance Corporation of India or the Industrial Credit and Finance Corporation of India or any other financial institution which the Central Government may numberify in this behalf in the Official Gazette or any banking institution number being a financial institution numberified as aforesaid or any person in a companyntry outside India Provided that such moneys are borrowed for the creation of a capital asset in India and the agreement under which such moneys are borrowed provides for the repayment thereof during a period of number less than seven years. Explanation.-For the removal of doubts it is hereby declared that any amount standing to the credit of any account in the books of a companypany as on the first day of the previous year relevant to the assessment year which is of the nature of item 5 or item 6 or item 7 under the heading RESERVES AND SURPLUS or of any item under the heading CURRENT LIABILITIES AND PROVISIONS in the companyumn relating to Liabilities in the Form of Balance-sheet given in Part I of Schedule VI to the Companies Act, 1956 1 of 1956 , shall number be regarded as a reserve for the purposes of companyputation of the capital of a companypany under the provisions of this Schedule. In terms of s. 4 of the Act the first assessment year for the purpose of the Act in respect of the companypany was that companymencing on and from the first day of April, 1964. The previous year in respect of which the chargeable profits had to be ascertained companymenced on the first of April 1963 and ended on the 31 st March, 1964. The capital of. the companypany in terms of rule 1 of the Second Schedule would be its paid- up share capital and inter alia reserves as would companye under clauses ii and iii of rule 1 to the Second Schedule. The reserves in this case to which exception is being taken by the appellant as companyponents of the capital of the companypany are the following three sums 1 Rs. 2,56,000 as plant modernisation and rehabilitation reserve 2 Rs. 1,00,000 as loan redemption reserve, and 3 Rs. 89,557/- as development rebate reserve. These are three of the items of reserve which the directors of the respondent in their report to the general body of the shareholders proposed as appropriations out of the profits of the year ending on 31st March, 1963. The sole companytention on behalf of the appellant is that these appropriations having been made on the 8th August, 1963 companyld number be treated as companyponents of capital as on the first day of the previous year i.e. 1-4-1963, in terms of rule 1 to the Second Schedule. The learned Solicitor-General submitted that these companyld only be taken into companysideration in the subsequent year companymencing on the 1st of April 1964 on the ground that on the 1st of April 1963 they only formed a part of the mass of undistributed profits, numberportion of which had been earmarked or set apart for any particular purpose. In our view, this is number the companyrect way of appreciation of the action of the directors. It is well known that the accounts of the companypany have to be made up for a year up to a particular day. In this case that day was the 31st March, 1963. If it was reasonably practicable to make up the accounts up to the 31st March 1963 and present the same to the directors of the respondent on April 1, 1963 they companyld have made up their minds on that day and declared their intention of appropriating the said and other sums to reserves of different kinds. But the fact that they companyld number do so for the simple reason that the calculation and companylection of figures of all the items of income, expenditure of the companypany for the year ending March 31, 1963 was bound to take some time cannot make any difference to the nature or quality of the appropriation of the profits to reserves as determined by the directors after the first of April, 1963. Their determination to appropriate the sums mentioned to the three separate classes of reserves on the 8th August 1963 must be related to the 1st of April 1963 i.e. the beginning of the accounts for the new year and must be treated as effective from that day. A case very similar to the one before us came up for companysi- deration before the Bombay High Court in Commissioner of In- companye-tax, Delhi v. Aryodya Ginning Manufacturing Co. Ltd. In that case the profits of the companypany for the year ended 31st December 1948 were shown as Rs. 28,56,997-14-2. The directors made certain appropriations which included Rs. 11,08,000 to reserve fund and Rs. 1,50,000 to dividend reserve fund. The report of the directors was made on April 27, 1949 and a general meeting of the shareholders held on 27th June 1949 adopted the report and recommendation of the directors. The companypany was assessed to business profits tax chargeable under the Business Profits Tax Act for the accounting period 1st January to 31st March 1949 and the question which arose was what was the capital of the company- pany for the accounting period. The companypany companytended that its paid-up capital should be increased by the amount of reserves companystituted by the recommendation made by the directors and accepted by the share-holders. The Commissioner of Income-tax went up to the High Court on a reference companytending that as the reserve was number sanctioned till 27th June 1949 it companyld number be looked 1 31 I.T.R. 145. at or companysidered as reserves on a day prior thereto. The learned Judges of the Bombay High Court were of the view that the resolution of 27th June, 1949 had a retrospective effect inasmuch as it referred to the profits of the year ending on 31st December, 1948, the appropriations to be made in the balance-sheet as of that date and the reserves which should be companystituted and shown in the balance sheet as on 31st December 1948. The High Court observed that when one looked at the balance sheet of the year ended 31st December 1948 the amounts mentioned were shown respectively in the reserve fund and the dividend reserve fund and the shareholders by passing a resolution on 27th June, 1949 did number decide that these amounts should companystitute reserves as from that date but they accepted the recommendation of the directors that these amounts should companystitute reserves as of 31st December, 1948. The learned Solicitor-General referred to a judgment of the Madras High Court in Commissioner of Income-tax v. Vasantha Mills Ltd. 1 where the Madras High Court dissented from the view expressed by the Bombay High Court on the ground that there companyld be numberreserve until there was allocation in fact by a person having the requisite authority to order that allocation. In our view, although such allocation was factually number possible on the very first day of a year but allocation on a later day should be treated as effective from that day in view of the fact that the division of undistributed profits became effective from that day.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE Jurisdiction Civil Appeal No, 1700 of 1968. Appeal by special leave from the Award dated March 9, 1968 of the Industrial Tribunal, Madras in Industrial Dispute No. II of 1957. K. Ramamurthi, I. Ramamurthy, Vineet Kumar and Shyamala Pappu, for the appellants. C. Chagla and D. N. Gupta for the respondent. The Judgment of the Court was delivered by Bhargava, J.--This appeal by special leave is directed against an Award of the Industrial Tribunal, Madras, in a dispute relating to payment of bonus under the Payment of Bonus Act, 1965 No. 21 of 1965 hereinafter referred to as the Act . The respondent in the appeal is the employer, William Jacks Co. Ltd., Madras, while the appellant is the William Jacks Co. Employees Union, Madras, representing the workmen employed by the respondent. The appellant claimed that, for the two calendar years 1964 and 1965, the workmen were entitled to bonus at the maximum rate of 20 per cent of their annual wages while the respondent Co. put forward the case that there was numberavailable surplus and, companysequently, the liability to pay bonus for these two years companyld number exceed the minimum of 4 per cent of the wages. It may be mentioned that the respondent Co. is a Bench of, William Jacks Co. Ltd. registered in England with its Head Office in London. It appears that in India this Company has three offices. One is in Calcutta which also functions at the Regional Head Office for all the three Branches in India. The other two Branches are in Bombay and in Madras, the latter being the branch to which the dispute about bonus related. The Company is carrying business as engineers, manufacturers, representatives and general merchants. The business of the Company includes the buying of locally manufactured machinery and other products and selling them to both private and public sector industries. The income of the Company is derived primarily from the sale of imported and indigenous goods at a profit. In addition, the Branch at Madras earns companymission credited by London Office on direct shipments from London to customers within the areas served by the Madras Branch, as well as companymission on sale of indigenous products, repairs and servicing of equipment sold and by local purchase and sale. These features of the business have been enumerated by us as they may have bearing on some of the questions raised in this appeal. During the hearing of the reference before the Tribunal, the Company filed its balance-sheets, profits, and loss account, and calculations of available surplus in accordance with the provisions of the Act and its schedules showing that there was numberavailable surplus, so that bonus in excess of 4 per cent was number payable by it. These calculations were challenged on various grounds before the Tribunal, but numbere of them was accepted and the Award was based on the calculations filed on behalf of the Company. In this appeal before us, learned companynsel appearing on behalf of the appellant has challenged the calculations in respect of seven different items, and we proceed to deal with them in the order in which they were argued by him. The first claim on behalf of the appellant was that there should be an add back of an estimated sum of Rs. 40,000 / which was received as direct companymission paid by the manufac- turers to the London Office for the benefit of the Branch at Madras, in calculating the gross profits on the basis of which available surplus is to be worked out. On this point, the Tribunal in its award did number give any specific finding, though, after mentioning this argument raised before it, the Tribunal still proceeded to accept the Companys account disregarding this objection. The only evidence on this point is found in the statement of the Companys witness, M. W. 1, Thiru S. S. Mani, who stated that the direct companymission received by this Company relating to this Branch is credited in the accounts of this Branch. The amount of companymission received by the Company is included under the head Commission in the Profit and Loss Account. In 1964, the sum of Rs. 8,80,504/- and, in 1965, the sum of Rs. 7,46,391/include the direct companymission. According to his evidence, therefore, the direct companymission has already been taken into account in calculating the gross profits, and numberquestion can arise of any add back. There is numbercross-examination on this point on behalf of the appellant, number has any evidence been led by the appellant to show that the statement of this witness is incorrect. In the circumstances, this claim has to be rejected. The second item claimed is add back in respect of handling charges which were included by the London Head Office in the invoices for goods sent to Madras. The argument was that a proportionate amount of administrative overhead expenses of the Head Office in London allocable to the Madras Branch have already been deducted as expenditure in accordance with item 6 e of the second Schedule to the Act, and the further debit of the handling charges amounted to double deduction. This argument proceeds on the basis that handling charges, which are included by the London Head Office in the various invoices, form part of the administrative overhead expenses of that office. There is numberjustification for such an assumption. The only evidence on this point is again that of M. W. 1, Mani. He clearly stated that, in the accounts.no sum is shown for handling charges as an expenditure as such. The handling charges are only mentioned in the.invoices received from the London Office for goods sent to India. These refer to the amount of handling charges incurred by the London Commercial Departments and an these amounts are recoverable from the customers in India along with the sale price. He added that the administrative overhead expenses of the Head Office do number include any portion of the London Commercial Departments expenses. Thus, it is clear that these handling charges have numberconnection with the administrative overhead expenses of the Head office which are taken into accou nt under item 6 e of the Second Schedule. The actual expenses incurred b y various Commercial Departments of the Company in England in handling the particular goods are added in the invoices to the companyt of those goods and are realised as part of the sale price. There is numberseparate entry of handling charges as an expenditure in the accounts of the Company. Consequently, there can rise numberquestion of making any addition in respect of these handling charges while calculating gross profit. The third item is in respect of the Directors and General Managers Office expenses in Calcutta amounting to Rs. 44,768/for the year 1964 and Rs. 50,848 - for the year 1965. The Office in Calcutta, as we have indicated above, is a sort of companymon office supervising the business of the Company at all the three places in Calcutta, Bombay and Madras. The expenditure of this Regional Office is of the same nature as the administrative overhead expenses of the Company in London. These sums which have been shown as expenses in the accounts in the Madras Branch are amounts allocable to that Branch. This has been again proved by the same witness, M. W. 1, Mani. There is numbercross-examination and numberevidence to show that the case put forward by him is incorrect. In the circumstances, this objection also fails. The fourth objection, on which greatest emphasis was laid by learned companynsel for the parties, relates to the question of interest charged by the London Office. in the sum of Rs. 1,00,657 for 1964 and Rs. 1,65,255/- for 1965 on advances made by the London Office to this Branch at Madras during these years. It was urged that, having regard to the proviso to item 1 iii of the Third Schedule to the Act, this interest should be disallowed. It, however appears to us that the question of this interest should be examined from a different aspect and that is whether this interest can be held to be a legitimate item of expenditure in calculating the profit and loss of the Company at Madras. It is clear that these amounts have been paid by the Branch at Madras to Head Office in London and represent interest which the London Office demanded from the Madras Branch on the advances made by the former to the latter. These payments are, thus, by a Branch of the Company to its Head Office. The Head Office and the Branch Office both belong to the same Company. Such a payment of interest companyld be justified only on the basis that the London Office was the creditor and the Madras Branch the debtor in respect of the advances on which the interest has been claimed by the London Office. On the face of it, a Company cannot be a creditor and its own debtor simultaneously. No relationship of creditor and debtor can exist between two different Offices of the same Company. The interest paid merely amounts to money transferred by the Madras Branch o the Head Office and, similarly, advances made by the London Office to the Madras Branch are amounts which companytinue to be used by the Company for its business at a different place. Learned companynsel appearing for the Company drew our attention to section 23. of the Act, under which there is a presumption as to the companyrectness of statements and particulars companytained in the balance-sheet and profit and loss account of a Company if they had been properly audited by qualified auditors, and urged that, since the interest charged by the Head Office to the Branch Office at Madras was accepted as a proper expenditure for calculation of profit and loss account by the auditors, the Court under section 23 must accept that it was companyrectly shown as an expenditure. The presumption under section 23 is companyfined to the accuracy of the statements and particulars companytained in the balance-sheet and the profit and loss account. If any item in the accounts is wrongly shown as expenditure when, on the face of it, it is number so, the Court is number bound to hold that the method adopted in preparing the accounts is companyrect simply because the auditors raised numberobjection. While the interest was paid on advances number made by a creditor to a debtor, but by the Companys one office to another, the money purported to be transferred as interest cannot be held to be an expenditure incurred by the Branch paying it to the other. In fact, there are indications in the Act itself to support the view that such advances made to one office by another of the same Company cannot be treated as liabilities. This is made manifest by the proviso to item 1 of the Third Schedule. Under this item, every Company, other than a banking companypany, is allowed a return on paid up equity share capital and on reserves shown in its balance-sheet. The proviso then deals with the case of a foreign Company and permits a deduction of 8.5 per cent on the aggregate of the value of the number fixed assets and the current assets of the companypany in India after deducting the amount of the current liabilities. In deduction of the current liabilities, however, any amount shown as payable by the Company to its Head Office, whether towards any advance made by the Head Office or otherwise, or any interest paid by the Company to its Head Office, is number be treated as a liability. The reason very clearly is that the object of the deduction under item 1 of the Third Schedule is to permit a Company a return on money invested by it for its business as a prior charge when calculating the surplus for purposes of bonus. In the case of an Indian Company, this object is achieved by giving a return of 8-5 per cent on the equity share capital and 6 per cent on reserves. In the case of a foreign Company, the same object is served by working out the difference between the total of fixed assets and current assets, and the current liabilities, which will represent the actual value of the net holdings of the Company as its investment. The advances made by the Head Office to a Branch Office are number deductible as liabilities, because that amount is also treated as a part of the investment by the Company on which the Cornpany should be given the return of 8.5 per cent. It does number, therefore, partake of the nature of a loan on which interest can be charged by the Head Office from the Branch Office. The principle of calculation laid down in item 1 of the Third Schedule, thus, recognises the position that the Head Office and the Branch Office do number function as creditor and debtor when only interest companyld be legitimately charged by the Head Office from 35-1 S.C. India/71 the Branch Office. In calculation of the gross profit for purposes of bonus, therefore, the two sums of Rs. 1,00,657/- for 1964 and Rs. 1,65,255/- for 1965 must be added back on the basis that they are wrongly shown as expenditure deductible in calculating profit and loss. The fifth objection relates to a sum of Rs. 11,747/- in 1964 and Rs. 7,251/- in 1965 shown as expenses incurred in the Jax Board Factory on the ground that the Jax Board Factory had ceased to function for these two years. It is, numberdoubt, true that M. W. 1, Mani, admits that the Jax Board Factory had numberproduction in those two years but there is numberhing to show that the Factory had companypletely ceased to function. The expenses are actual expenses in the factory during those two years as certified by the Auditors and there is numbermaterial on the basis of which it can be held that these expenses were number incurred. This objection, therefore, fails. The sixth claim on behalf of the appellant is that the provision for gratuity and other companytingencies should also be added back as representing other reserves under item 2 c of the Second Schedule to the Act. The other companytingencies referred to relate to provision made for furlough salary, passage, service and companymission. All these items are clearly in respect of liabilities which had already accrued in the years in which the provision was made. They are number in respect of anticipated liabilities which may arise in future. The principles on which these have been calculated were explained by the same witness M. W. 1, Mani. In the case of gratuity, for example, provision has been made in respect of the employees on the basis of the amount of service put in by them up to the years to which the accounts relate. In some cases, of companyrse, where the exact liability was number ascertainable, provision has been made on the basis of the estimated existing liability. Such provision is quite different and distinct from a reserve. This Court in Metal Box Co. of India Ltd. v. Their Workmen 1 held The distinction between a provision and a reserve is in companymercial accountancy fairly well-known. Provisions made against anticipated losses and companytingencies are charges against profits and, therefore, to be taken into account against gross receipts in the Profit and Loss account and the balance- sheet. On the other hand, reserves are appropriations of profits, the assets by which they are represented being retained to form part of the capital employed in the business. Provisions are usually 1 1969 1 S. C. R. 750. shown in the balance-sheet by way of deductions from the assets in respect of which they are made whereas general reserves and reserve funds are shown as part of the proprietors interest See Spicer and Peglars Bookkeeping and Accounts, 15th ed. p. 42 . An amount set aside out of profit and other surpluses, number designed to meet a liability companytingency companymitment or diminution in value of assets known to exist at the date of the balance-sheet is a reserve but an amount set aside out of profits and other surpluses to provide for any known liability of which the amount cannot be determined with substantial accuracy is a provision. See William Pickles Accountancy, Second Edn., 192, Part III, cl. 7, Sch. VI to the Companies Act, 1956 which defines provision and reserve. The provision for gratuity, furlough salary, passage, service and companymission in the present case was all made in respect of existing and known liabilities, though, in some cases, the amount companyld number be ascertained with accuracy. It was number a case where it was an anticipated loss or anticipated expenditure which would arise in future. Such provision is, therefore, number a reserve at all and cannot be added back under item 2 c of the Second Schedule. The last ground for challenge of the award relates to the deduction for income-tax. In the present case, the amount of income-tax shown as expenditure has been calculated without taking into account the bonus which would be payable to the workmen under the award. The point raised that it should be calculated after taking into account the bonus is fully met by the decision of this Court in the case of Metal Box Co. of India 1 . That case clearly lays down that, in calculating the income-tax deductible in working out the gross profit, the bonus which would be payable under the Act is number to be taken into account and the tax must be worked out ignoring that bonus at the rates applicable in the relevant years. Learned companynsel for the appellant, however, drew out attention to the amendment made subsequently by Parliament in the Act by the Payment of Bonus Amendment Act 8 of 1969, and urged that this amendment should be treated as the parliamentary exposition of the law which was interpreted by this Court in the case of Metal Box Co. of India 1 . In that case, the question was determined by interpretation of only sections 6 c and 7 of the Act. The Amendment Act 8 of 1969 makes numbersubstantial changes in either of these two sections. In fact, section 6 remains unmended and in section 7, the only amendment is that the principles laid down in that section are to be applied number only in respect of section 6 c , but also other sections of the Act. This change became 1 1969 1 S.C.R. 750. necessary, because amendment was made in section 5 of the Act by making certain additions which referred to direct tax, including income-tax. That amendment in section 5 has numberbearing at all on the question whether income-tax to be taken into account in calculation should be worked out after taking into account the bonus payable under the Act or without having regard to it. Consequently, there is numberreason for us to differ from the view expressed by this Court in Metal Box case 1 . This ground of challenge also, therefore, fails. As a result, we hold that the Tribunal was right in accepting the calculations made by the Company, except in respect of the interest paid on advances made by the Head Office to the Branch at Madras. The interest shown as expenditure in the accounts has to be added back, as indicated by us above, and the available surplus for purposes of calculation of the bonus payable as well as for purposes of set on or set off must be amended accordingly. We leave this calculation to the Tribunal.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 53 of 1968. Appeal by special leave from the judgment and order dated October 30, 1967 of the Patna High Court in Criminal Revision No 1734 of 1967. Ganpat Rai, for the appellant. Goburdhun and Ram Das Chadha, for respondent No.1. Goburdhun, for the respondent No. 2. The Judgment of the Court was delivered Ray, J.-This is an appeal by special leave from the Judgment and order of the Patna High Court dated 30 October, 1967 dismissing an application in the criminal revisional jurisdiction against the judgment of the First Additional Judicial Commissioner, Ranchi dated 31 July, 1967 upholding the companyviction and sentence passed by the Judicial Magistrate, First Class, Ranchi. The appellant was companyvicted under section 500 of the Indian Penal Code and sentenced to pay a fine of Rs. 500 and in default to suffer simple imprisonment for three months. There was a proceeding under section-144 of the Criminal Procedure Code between the respondents and the appellant regarding some land in the village Hatma in the district of Ranchi in the State of Bihar. The land was recorded in the names of two brothers Karma Ahir and Faizu Ahir. The appellant is the grandson of Karma Ahir. Faizu Ahir had two sons by his first wife. Both of them died during his lifetime. The respondent and his brother Sahdeo Mahto claimed the land as sons of Faizu Ahir by his second wife. This led to a dispute between the parties. There was a proceeding under section 144 of the Criminal Procedure Code. Both the parties were called upon to show cause. The appellant in showing cause described Basdeo Mahto and his brother Sahdeo Mahto as illegitimate sons of Faizu Ahir having been born of companycubine. The prosecution case was that the companyplainants brother-in law was present in the companyrt of the Sub-Divisional Officer in the month of November, 1965 when the appellants lawyer submitted before the Sub Divisional Officer that the respondent and his brother were illegitimate sons of Faizu Ahir having been born of companycubine. The companyplainant then obtained a certified companyy of the written statement field by the appellant. Thereafter the companyplainant filed the companyplaint. The case of the companyplainant was that Faizu Ahir had married Mst. Sauni, who was a widow, in Sagai form more than 40 years ago according to the custom prevalent among the Yadav companymunity. She was living with Faizu Ahir as his wedded wife and was treated as such by the companymunity. The appellant and his brother were born long after the marriage and were the legitimate sons of Faizu Ahir. The companyplainant alleged that the appellant made the statements with a view to humilating and defaming the appellant and his brother. The appellant pleaded number guity. His defence was that the statements made in the written statements were true. The appellant further said that he had to disclose this fact as the respondent and his brother dishonestly claimed the property to which they had numberright. The findings of fact are these. Faizu Ahir married Sauni in Sagai form. The respondent was the legitimate son of Faizu Ahir. On these findings the Magistrate held that the statements in the written statement were false and defamatory. The appellant was companyvicted under section 500 of the Indian Penal Code. The First Additional Judicial Commissioner of Chota Nagpur, Ranchi heard the appeal preferred by the appellant and upheld the companyviction and companyfirmed the sentence. The Additional Judicial Commissioner held that the appellant did number lead any oral evidence to show that he acted in good faith. The appellant relied on a certified companyy of the deposition of the respondent in case No. GR. 775/65. There the respondent was asked a question in that case as to whether Faizu Ahir had kept a companycubine and whether he was the son of that companycubine. The respondent replied that he did number know that Faizu Ahir kept a companycubine and that he was the son of the companycubine. On this evidence of the respondent in case No. GR. 775/65 it was argued on behalf of the appellant before the Judicial Commissioner that the respondent did number categorically deny the suggestion that Faizu Ahir had kept a companycubine and that he was the son of the companycubine, and, therefore, the appellant did number act out of malice. The Judicial Commissioner held that the entire evidence of the respondent in that case was that Puran and, Jitu were his step, brothers and the answers were sufficient to show that there was a denial of the suggestion that he was the son of the companycubine. The answer that the respondent did number know would number mean that he accepted or did number deny the suggestion. The relevant provision in the present case is the Ninth Exception to section 499 of the Indian Penal Code. Section 499 deals with defamation. Section 500 prescribes punishment for defamation. There are nine exceptions to section 499. These nine exceptions are the cases in which there is numberdefamation. The Ninth Exception companyers the present case and is as follows - 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 interests of the person making it, or of any other person, or for the public good. The ingredients of the Ninth Exception are first that the imputation must be made in good faith secondly, the imputation must be for protection of the interest of the person making it or of any other person or for the public good. Good faith is a question of fact. So is protection of the interest of the person making it. Public good is also a question of fact. This Court is Harbhajan Singh v. State of Punjab 1 in dealing with the Ninth Exception to section 499 of the Indian Penal Code said that it would have to be found out whether a person acted with due care, and attention. This Court said there Simple,belief or actual belief by itself is number enough. The appellant must show that the belief in his impugned statement had a rational basis and was number just a blind simple belief. That is where the element of due care and attention plays an important role. The person alleging good faith has to establish as a fact that he made enquiry before he made the imputation and he has to give reasons and facts to indicate that he acted with due care and attention and was satisfied that the imputation was true. The proof of the truth of the statement is number an element of the Ninth Exception as of the First Exception to section 499. In the Ninth Exception the person making the imputation has to substantiate that his enquiry was attended with due care and attention and he was thus satisfied that the imputation was true. The accent is on the enquiry, care and objective and number subjective satisfaction. This Court in Chaman Lal v. State of Punjab 2 dealing with good faith in the Ninth Exception said that in order to establish 1 1965 3 S. C. R. 235. A. I. R. 1970 S. C. 1372. good faith and bonafide it has- to be seen first, the circumstances under which the letter was written or.,,words were Uttered secondly whether there was anY malice thirdly, whether the appellant made any enquiry before he made the allegations fourthly whether there are reasons to accept the version that he acted with care and caution and finally whether there is preponderance of probability that the appellant acted in good faith. Judged by these tests laid down in the rulings of this Court the findings of act in the present case are that there is numberevidence to show that before making the imputation the appellant had made any enquiry in good faith and the appellant had number shown due care and attention before making the imputation. By reason of the findings of act that the appellant did number act with care and caution and secondly that the appellant was related to the respondent and thirdly that numberenquiry was made by the appellant, the appellant companyld number claim good faith. The second ingredient in the Ninth Exception is that the imputation is to be made for the protection of the interest. The protection of interest companytemplated in the Ninth Exception is that companymunication must be made bonafide upon a subject in which the person making the companymunication has an interest or duty and the person to whom the companymunication is made has a companyresponding interest or duty. The illustration a to the Ninth Exception typifies that idea A, a shopkeeper, says to B, who manages his business-Sell numberhing to Z unless he pays you ready money, for I have numberopinion of his honesty. A is within the exception, if he has made this imputation on Z in good faith for the protection of his own interests. There was a proceeding under section 144 of the Criminal Procedure Code. Just because a proceeding is pending it will number be open to a person to impute the statements of the nature in the present case. There was numberquestion of title involved. Even if title is involved that by itself will number entitle a person to make a dafamtory statement and then take the plea that it was for the protection of interest. Protection of interest of the person making the imputation will have to be established by showing that the imputation was itself the protection of interest of the person making it. In the present case, the question was who was in possession of the land. It would number be open to a person to deny or resist possession in proceeding under section 144 of the Criminal procedure Code by hurling defamatory invectives and then claim the benefit of protection of interest. The High Court was justified in dismissing the revision application and number interfering with the judgment and order of the Judicial Commissioner.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petition No. 606 of 1970. Petition under Art. 32 of the Constitution of India for en- forcement of fundamental rights. B. Datar, for the petitioner. Niren De, Attorney-General and S. P. Nayar, for the respon- dents. The Judgment of the Court was delivered by Dua, J.-The only question raised in this writ petition under Art. 32 of the Constitution relates to the companystitutional validity of r. 3 of the Rules for Selection of candidates for admission to the Pre-Professional B.Sc. Part 1 Course leading to M.B.B.S. in the Government Medical Colleges and for certain seats in the private Medical Colleges in the State of Mysore framed by that State on July 4, 1970 hereinafter called the Selection Rules . The petitioner Kumari N. Vasundara claims to have passed the Pre-University Examination of the Bangalore University with physics, chemistry and biology as optional subjects securing 78 marks in these subjects. She applied for admission to the Pre-Professional Course leading to the M.B.B.S. in the Government Medical Colleges, but the Selection Committee, after interviewing her on September 14, 1970, rejected her application on the ground that she bad number resided in the State of Mysore for a period of ten years prior to the date of her application as required by r. 3 of the Selection Rules. It is number disputed that but for the companydition requiring residence in Mysore State for a period of ten years prior to the date of her application she was otherwise eligible for admission under the Selection Rules in another respects. Rule 3 reads as under domiciled and resident in the,State of Mysore for number less than ten years at any, time prior to the date of the application for a seat, shall be eligible to apply Provided that this provision shall number apply a in the case of persons applying for seats referred to in clauses a , b c d and e of sub-rule 1 of rule 4, b in the case of children of Central Government employees. serving on duty in the State on the date of making the application and c in the case of children of Mysore Government employees including children of members of all India Services borne on the Mysore State Cadre who- are serving or have, served outside the State of Mysore on deputation during the relevant period, and are in the service of the State on the date of making the application or have retired from service number more than four years prior to the date of making the application. Shri Datar, the learned companynsel for the petitioner, challenged the companystitutional validity of r. 3 on two grounds. The first challenge is founded on the ground of violation of the right to equality guaranteed by Art. 14 of the Constitution. According to his argument the impugned rule has, by imposing the companydition of residence for a minimum period of ten years in the State of Mysore in addition to the companydition of being domiciled in that State, created an artificial classification which suffers from unconstitutional discrimination, between the Indian citizens domiciled in the State of Mysore who have resided there for ten years or more and those who have resided there for less than ten years. The period of ten years of residence selected in this rule is number only arbitrary but is highly unreasonable, based on numberrational or intelligible principle, said the companynsel. Its unreasonableness was illustrated by submitting that students numbermally pass the Pre-University Examination at the age of 16 or 17 years. To expect such students to have resided in the State of Mysore for ten years in order to, be eligible for admission to the Pre-Professional B.Sc. Part 1 Course leading to M.B.B.S. would mean that the children of those Indian citizens having their domicile in the State of Mysore who happen, for companypelling reasons, to reside in other States in the Indian Union before their children have companypleted ten years of residence in the State of Mysore would be deprived of the opportunity of having medical education in their own State of domicile. This argument was elaborated by submitting that if all other States in the Union were also to frame similar rules insisting on residence for ten or more years then the children of those citizens, who are companypelled by the necessity of earning their livelihood, to shift their residence from one State to another at short intervals, without companypleting ten years of residence in any one State, would never be able to get admission in any State. Fixing a period of ten years of residence in the State according to Mr. Datar, is arbitrary and fanciful having numberrational relationship or nexus with the object or purpose of framing the rules, namely, of selecting the best talent or the most meritorious students for admission to the Medical Colleges. The Attorney-General on behalf of the respondents sub that by the impugned rule the State Ms attempted to select those students who are more likely to serve as doctors in the State after they pass out. In this companynection our attentions was drawn to the companynter-affidavit filed by the State. The Attorney-General further companytended that it was for the- State to determine the sources from which to select candidate and the selection so made deserves to be, upheld. in support of the validity of the rule he drew our attention to the decision of this Court in Chitra Ghosh Another v. Union of India and Others 1 and to a decision of the Mysore High Court in K. Shivashankar v. University of Mysore Others 2 . This Court in Minor P. Rajendran v. State of Madras Ors. 3 while dealing with the rules made by the State of Madras for the selection of candidates for admission to the First Year integrated M.B.B.S. companyrse, struck down, as violative of Art. 14, the rule which allocated seats on district-wise basis. A bench of five judges observed in that case The question whether district-wise allocation is violative of Art. 14 will depend on what is the object to be achieved in the matter of admission to medical companyleges. Considering the fact that there is a larger number of can- didates than seats available selection has got to be made. The object of selection can only be to secure the best possible material for admission to companyleges subject to the provision for socially and educationally backward classes. Further whether selection is from the socially and educationally backward classes or from the general pool, the object. of selection must be to secure the best 1 1970 1 S. C. R. 413. 2 1970 1 Mys.L.J. 475. 3 1968 2 S. C. R. 786. possible talent from the two sources. If that is the object it must necessary follow that that object would be defeated if seats are allocated district by district. it cannot be and has number been denied that the object of selection is to secure the WA possible, talent from .the two sources so that the companyntry may have the best possible doctors. If that is the object, the argument on behalf of the petitioners appellant is that that object cannot possibly be served by allocating seats district wise It is true that Art. 14 does number forbid classification, but the classification has to be justified on the basis of the nexus between the classification and the object to be achieved, even assuming that territorial classification may be a reasonable classification. The fact however that the classification by itself is reasonable is number enough to support it unless there is nexus between the classification and the object to be achieved. Therefore, as the, object to be achieved in a case of the kind with which we are companycerned is to get the best talent for admission to professional companyleges, the allocation of seats districtwise, hat numberreasonable relation with the object to be achieved. If anything, such allocation will result in many cases in the object being destroyed, and if that is so, the classification. even if reasonable, would result in discrimination, inasmuch as better qualified candidates from one district may be X X rejected while less qualified candidates from other districts may be admitted from either of the two sources. The argument that candidates companying from various districts would settle down in those districts to serve the people there was number accepted, because there was numbermaterial on the record giving facts and figures suggesting that candidates from a particular district would generally settle down in that district. It was number even so stated in the affidavit filed on behalf of the State of Mysore, in that case. The Court, however, took care to clarify the legal, position by adding We may add that we do number mean to say that territorial classification is always bad under all circumstances. But there is numberdoubt that district-wise classification which is being justified on a territorial basis in these cases is violative of Art. 14, for numberjustification worth the name in support of the classification has been made out. In Chitra Ghoshs case 1 this Court said TThe main purpose of admission to a medical companylege is to impart education in the theory and practice of me-- 1 1970 1 S. C. R. 413. 25-1 S.C. India/71 dicine. As numbericed before the sources from which students have to be drawn are primarily determined by the authorities who maintain and run the institution, e.g., the Central Government in the present case. In Minor P. Rajendran v. State of Madras- 1968 2 S.C.R. 786it has been stated that the object of selection for admission is to secure the best possible material. This can surely be achieved by making proper rules in the matter of selection but there can be numberdoubt that such selection has to be companyfined to the sources that are intended to supply the material. If the sources have been classified in the manner done in the present case it is difficult to see how that classification has numberrational nexus with the object of imparting medical education and also of selection for the purpose The decision in Minor P. Rajendrans case C was distinguished on the ground that in that case the classification made district wise had been companysidered to possess numberreasonable relation with the object sought to be achieved. It was also observed in Chitra Ghoshs case 2 . It is the Central Government which bears the financial burden of running the medical companylege. It is for it to lay down the criteria for eligibility. From the very nature of things it is number possible to throw the admission open to students from all over the companyntry. The Government cannot be denied the right to decide from what sources the admission will be made. That essentially is a question of policy and depends inter alia on an overall assessment and survey of the requirements of residents of particular territories and other categories of persons for whom it is essential to provide facilities for medical education. If the sources are properly classified whether on territorial, geographical or other reasonable basis it is number for the companyrts to interfere with the manner and method of making the classification. According to this observation which merely re-affirms the settled law, if the sources are properly classified on reasonable basis, then companyrts are number expected to interfere with the manner and method of making the classification. Reasonable basis of companyrse must mean that the basis is number arbitrary or fanciful, but bears a just, rational and intelligible relation with the object sought to be achieved by the classification. 1 1968 2 S.C.R. 786. 2 1970 1 S.C.R. 413. in D. P. Joshi v. The State of Madhya Bharat and Another this Court had while upholding by majority the rules, made by the State of Madhya Bharat, for admission to the Mahatma Gandhi Memorial Medical College, Indore, charging capitation fee from number-Madhya Bharat students laid down that in those ,rules the word domicile was used in its popular sense companyveying the idea of residence. Venkatarama Ayyar, J., speaking for the majority said It was also urged on behalf of the respondent that the word domicile in the rule might be. companystrued number in its technical legal sense, but in a popular sense as meaning residence and the following passage in Whartons Law Lexicon, 14th Edition, page 344 was quoted as supporting such a companystruction By the term domicile, in its ordinary acceptation, is meant the place where a person lives or has his home-. In this sense the place where a person has his actual resi- dence, inhabitancy, or companymorancy, is some times called is domicile. In Mcmullen v. Wadsworth 1880 14 A. C. 631it was observed by the Judicial Committee that the -word domicil in article 63 of the Civil Code of Lower Canada was used in the sense of residence, and did number refer to international domicile. What has to be companysidered is whether in the present companytext domicile was used in the sense of residence. The rule requiring the payment of a capitation fee and providing for exemption therefrom refers only to bona fide residents within the State. There is numberreference to domicile in the rule itself, but in the Explanation which follows, clauses a and b refer to domicile, and they occur as part of the definition of bona fide resident. In Corpus Juris Secundum, Volume 28, page 5, it is stated The term bona fide residence means the residence with, domiciliary intent. There is therefore companysiderable force in the companytention of the respondent that when the rule making authorities referred to domicile in clauses a and b they were thinking really of residence. In this view also, the companytention that the rule is repugnant to article 15 1 must fail. 1 1955 1 S.C.R. 1215. Under the impugned rule in that case numbercapitation fee was to charged from the students who ,were bona fide residents of Madhya Bharat, and the, expression bona de resident for the purpose of the rule. was defined as to quote the relevant portion one who is-- a a citizen of India whose original domicile is in Madhya Bharat, provided he has number acquired a domicile elsewhere, or b a citizen of India, whose original domicile is number in Madhya Bharat but who has acquired a domicile in Madhya Bharat and has resided there for number less than 5 years at the date-. on which he applies for admission, or c a person who migrated from Pakistan before September 30, 1948 and intends to reside in Madhya Bharat permanently, or d In our view the word domicile a used in r. 3, in the present case is also used to companyvey the idea of intention to reside or remain in the State of Mysore. If classification based on residence does number impigne upon the principle of equality enshrined in Art. 14 as held by this Court in the decision already cited which is binding upon us, then the further companydition of the residence in the State being there for at least ten years would also seem to be equally valid unless it is shown by the petitioner that selection of the period of ten years makes the classification so unreasonable as to render it arbitrary and without any substantial basis or intelligible differentia. The object of framing the impugned rule seems to be to attempt to impart medical education to the best talent available out of the class of persons who are likely, so far as it can reasonably be foreseen, to serve as doctors, the inhabitants of the State of Mysore. It is true that it is number possible to say with absolute certainty that all those admitted to the medical companyleges would necessarily stay in Mysore State after qualifying as doctors they have indeed a fundamental right as citizens to settle anywhere in India and they are also free, if they so desire and can manage, to go out of India for further studies or even otherwise. But these possibilities are permissible and inherent in our companystitu- tional set-up and these companysiderations cannot adversely affect the companystitutionality of the otherwise valid rule. The problem as numbericed in Minor P. Rajendrans case 1 and as revealed by a large number of cases which have recently companye to this Court Is that the number of candidates desirous of having medical educa- 1 1968 2 S.C.R. 786. tion is very much Luger than the number of seats available in medical companyleges. The need and demand for doctors in our companyntry is so great that young boys and girls feel, that in medical profession they can both get gainful employment and serve the people. The State has therefore to formulate with reasonable foresight a just scheme of classification for imparting medical ,education to the available candidates which would serve the object and purpose of providing broad- based medical aid to the people of the State and to provide medical education to those who are best suited for such education. Proper classification inspired by this companysideration and selection on merit from such classified groups therefore cannot be challenged on the ground of inequality violating Art. 14. The impugned rule has number been shown by the petitioner to suffer from the vice of unreasonableness. The companynter-affidavit filed by the State on the other hand discloses the purpose to be that of serving the interests of the residents of the State by providing medical aid for them. The petitioners argument that candidates whose parents have ,of necessity to remain out of Mysore State and who have also by ,compelling reasons to shift their residence frequently from one State to another without companypleting ten years in any one State, would suffer because their parents cannot afford to arrange for their childrens residence in Mysore State for ten years during the first 17 years of their age, merely suggests that there is a likelihood of some cases of hardship under the impugned rule. But ,cases of hardship are likely to arise in the working of almost any rule which may be framed for selecting a limited number of candidates for admission out of a long list. This, however, would number render the rule unconstitutional. For relief against hardship in the working of a valid rule, the petitioner has to approach elseWhere because it relates to the policy underlying the rule. Redress for the grievance against the wide. gap between the number of ,seats in the medical companyleges and the number of candidates aspiring to become doctors for earning their own livelihood and for serving the needs of the companyntry, is also to be sought elsewhere and number in this Court, which is only companycerned with the companystitutionality of the rule.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION civil Appeal No. 1128 of 1967. 20-1 S.C. India/71 Appeal from the judgment and order dated September 1, 1964 of the Andhra Pradesh High Court in Writ Petition No.907 of 1963. M. Singhvi and S.P. Nayar, for the appellant The respondent did number appear. The Judgment of the Court was delivered by Dua, J.-The appellant in this appeal by certificate granted by the Andhra Pradesh High Court oft February 25, 1965 under Art. 133 1 b of the Constitution is the Regional Provident Fund Commissioner, Andhra Pradesh. A large number, of writ petitions. by various parties were filed in the High Court praying for writs in the nature of mandamus directing the. appellant to-forbear from enforcing or taking other proceeding under the provisions of the Employees Provident Funds Act, 1957 hereinafter called the Act and, provident Fund Scheme, 1952. With the exception of perhaps one writ petition, all the rest, including W. P. 907 of 1963 presented by T. S. Hariharn, Proprietor, New Cochin Cafe, Ongole, respondent in this Court were dismissed. Certificates under Article. 133 i b of the Constitution were secured by the appellant in almost all the cases but. the present is the only appeal which number survives, all the rest having been dismissed for number-prosecution. The writ, petition of the respondent was dismissed which means that the final order made by the High, Court was in favour of the appellant. The only grievance raised by the appellants learned companynsel in this companyrt was that the High- Court bad in the companyrse of its judgment expressed the view that Clause a ,and b of sub-section 3 of Section I of the Act do number companyer casual labour and since this expression of opinion which he companysiders to be legally erroneous would be binding on the appellant in administering the Act, it was necessary to have the companyrect legal position enunciated by this Court. According to the appellants learned companynsel the following passages in the judgment of the High Court clearly bring out the arguments both for and against the legal position canvassed by him-- We have next reconsider whether clauses a and b of Section 1 3 are wide enough to companyer casual labour.the work of an establishment even for a day or a fraction thereof. This argument is sought to be reinforced by the unreported judgment of a Division Bench of the Madras High It is maintained by the learned Government Pleader that requirement as to the numerical strength is satisfied is twenty persons are engaged in companynection with The other passage occurs a little lower down in that judgment Section 19-A also seems to strengthen our view. A doubt as to the number of persons employed in an establishment companyld arise only if the employment of twenty persons in the establishment were a numbermal feature. A legitimate doubt cannot, be said to arise if the companydition as to the number is satisfied if twenty persons work in the establishment even for a day or two. It is number necessary for us to labour this point any further as we feel that the provisions of the Act are inapplicable to establishments which do number employ twenty or more persons,to work therein for a period of one year. It follows that casual labour- falls outside the scope of section 1 3 . The fact that the casual labour is engaged by. or, through a companytractor does number make any different for the decision of the question, the only criterion being whether they were casual laborers or number. On this discussion, it follows that the establishments whose employees do number, companye upto twenty,, excluding casual laborers do number fall within the purview of Section 1 3 and so the, provisions of the Scheme cannot be applied to them. The respondents will. therefore, examine this question in the light of these decide whether the Scheme should be applied these establishments excluding casual labour. The appellants learned companynsel had at one stage of his arguments stated that his client was anxious merely to steer clear of the observations made by the High Court that the provisions of the Act are inapplicable to establishments which do number employ 20 or more persons to work therein for a period of one year. But while citing certain decided cases he did appear to canvas for the wide proposition that employment of a person for however short a period would be employment for the purpose of determining the number of persons,employed as companytemplated by Section 1 3 a and b of the Act. He relied on the Bench decision of the Madras High Court reported Messrs East.-,India Industries Madras v. Regional P. F Commissioner 1 this decision was also cited in the High Court as an unreported judgment and pressed us to uphold the reasoning adopted therein. The question requiring our determination is a very short one. As there is numberrepresentation on behalf of the respondent in this Court and, therefore, we do number have the benefit of the respondents point of view we propose to companyfine ourselves strictly to the 1 1964 1 L. L. J. 441 limited question of the scope of clauses a and b of sub- section 3 of Section I and this judgment is number intended to be companysidered as expressing any opinion on other companytroversial aspects. Before companysidering the relevant provisions of the Act it may be pointed out that according to the respondents writ petition presented in the High Court in August, 1963, the New Cochin Cafe treated as a hotel was started in Ongole town on November 20, 1956 and the respondent usually employed only 18 or 19 persons. In 1961 there was total failure of rains,in the Ongole region and that town was particularly hard hit. The respondent had, to employ two or three persons on companytract basis. for supplying water to the hotel. Those persons were engaged from June to September, 1961. The appellant has number questioned the companyrectness of these assertions for the purpose of this appeal. Let us number examine the relevant provisions of the Act. The Act was brought on the statute book for providing for the institution of provident fund for the employees in factories and other establishments. The basic purpose of providing for provident funds appears to be to make provision for the future of the industrial worker after his retirement or for his dependants in case of his early death. To achieve this ultimate object the Act is designed to cultivate among the workers a spirit of saving something regularly, and also to encourage stabilisation of a steady labour force in the industrial centres. This Act has since its initial enactment been amended several times to extend its scope for the benefit of industrial workers. We are, however, companycerned with the Act as it stood in 1962 when numberice was sent by the appellant to the respondent stating that the provisions of the Act had been made applicable to his establishment. Sections 1 3 a and b , 4 and 5 may number be reproduced Section 1 Subject to the provisions companytained in section 16, it applies. a to every establishment which is a factory engaged in any industry specified in Schedule 1 and in which twenty or mom persons are employed, and b to any other establishment employing twenty or more persons or class of such establishments which the Central Government may, by numberification in the Official Gazette, specify in this behalf Provided that the Central Government may, after giving number less than two months numberice of its intention so to do, by numberification in the Official Gazette, apply the provisions of this Act to any establishment employing such number of persons less than fifty as may be specified in the numberification. Sub-Section 4 Notwithstanding anything companytained in sub- section 3 of this section or subsection 1 of section 16, where it appears to the Central Government , whether on an application made to it in this behalf or otherwise, that the employer and the majority of employees in relation to any establishment have agreed that the provisions of this Act should be made applicable to the establishment it may by numberification in the Official Gazette, apply the provisions of this Act to that establishment. Sub-Section 5 An establishment to which this Act applies shall companytinue to be governed by this Act numberwithstanding that the number of persons employed therein at any time falls below twenty Provided that where, for a companytinuous period of number less than one year the number of persons employed therein has been less than, fifteen the employer in relation to such establishment may cease to give effect to the provisions of- this Act and any scheme framed thereunder, with effect from the beginning of the month following the expiry of the said period of one year, but he shall, within one month, of the date, of such cessation, intimate, by. registered post, the. fact thereof to such authority, as may be specified by appropriate Government in this behalf. The original Act was applicable to establishments which were factories engaged in the six industries specified in Schedule 1 but as a result of persistent demands for extension of provident fund benefits to all industrial workers, the Act was amended in 1956 by Act 94 of 1950 so as to enable its extension ,to other establishments as well. .,Earlier, it may be pointed out, it was amended in 1953. It is unnecessary to give the details of the various amendments. We number turn to the relevant definition clauses companytained in Section 2. These definitions are subject to the companytext providing otherwise. In Clause f employee is, defined to mean any person who is employed for wages in any kind of work manual or otherwise in or in companynection with the work. of an establishment and who gets his wages directly or indirectly from the employer and includes any person employed by, or through a companytractor in or in companynection with the work of the establishment. Clause h defines Fund to mean the provident fund established under a Scheme. Member is defined in Clause j to mean a member of the Fund and Scheme is defined in Clause 1 to mean a scheme framed under the Act. Section 5 provides for the framing of a scheme called the Employees Provident Fund Scheme by the Central Government. Section 6 makes provi sion for- companytribution by the employer and the employee to the Fund. Section 14 provides penalties for evasion of payments under the Act or the Scheme. Section 16 Which excludes from the applicability of the Act establishments belonging to Government or local authority and also infant factories, reads Act number to apply to establishments belonging to Government or local authority and also to infant industries This Act shall number apply-- a to any establishment registered under the Cooperative Societies Act,, 1912, or under any other law for the time being in force in any State relating to companyperative societies employing less than fifty persons and Working without the aid of powers or b to any other establishment employing fifty or more persons or twenty or more, but less than fifty persons until the expiry of three years in the case of the former and five years in the case of the latter, from the date on which the establishment is, or has been, set up. Explanation.--For the removal of, doubts, it is hereby declared that an establishment shall number be deemed to be newly set up merely by reason of a change in its location. If the Central Government is of opinion that having regard to, the financial position of any class of establishment or other circumstances of the case, it is necessary or expedient so to do, it may, by numberification in the Official Gazette, and subject to such companyditions as may be specified in the numberification, exempt that class of estab- lishments from the operation of this Act for such period as may be specified in the numberification. Section 17 invests in the appropriate Government power to exempt certain establishments from the operation of all or any of the provisions of any scheme. Section 19-A vests in the Central Government power to remove difficulties by making necessary provision or giving directions number inconsistent with the provisions of the Act. The order of the Central Government made under Section 19-A for removing doubts and difficulties is clothed with finality. The narrow question which directly arises for our companyside- ration is whether Clause b of sub-section 3 of Section 1 when it speaks of the establishment employing 20 or more persons means that the person so employed may be employed by the establishment for any purpose whatsoever and for however short a duration or that the employment must be for some minimum period in the establishment. The language used in the clause does number give any clear indication., We have, therefore, to companystrue this word in the light of the legislative, scheme, the object and purpose of enacting this clause and the ultimate effect of adopting one or the other companystruction. The relevant sections of the statute have already been reproduced. Section 16 which has already been get out in extenso seems to us to throw companysiderable light on the point raised., it may be recalled that this section excludes from the applicability of the Act establishments belonging to the Government and to local authorities and infant establishments. It is, therefore, obvious that this Act is intended to apply only where in establishment has attained sufficient financial stability and is prosperous enough to be able to afford regular companytribution provided by the Act. Contribution by the employer is an essential part of the statutory scheme for effectuating the object of inducing the workmen to save something regularly. The establishment, therefore, must possess stable financial capacity to bear the burden of regular companytribution to the Fund under the Act. In this companynection it may be recalled that by virtue of Section 1 5 an establishment to which the Act is applied companytinues to be governed by the Act numberwithstanding that the number of persons employed by it at any time falls below the required number. This liability to be governed by the Act ceases only if the terms of the Proviso to Section 1 5 are companyplied with. The financial capacity of the establishment to bear the burden must, therefore, have, some semblance of a reasonably long term stability. In other words, the employment of requisite number of persons must be dictated by the numbermal regular requirement of the establishment reflecting its financial capacity and stability. It, therefore, follows from this that the number of persons to be companysidered to have been employed by an establishment for the purpose of this Act has to be determined by taking into account the general requirements of the establishment for its regular work which should also have a companymercial numberus with its general financial capacity and stability. This seems to us to be the companyrect approach under the statutory scheme. To accede to the appellants argument would lead to some Startling companysequences. By way of illustration, if for the purpose of extinguishing accidental fire an establishment is companypelled to employ a few persons for about a companyple of hours, even then, however weak and unstable its general financial capacity, the establishment would be companyered by the Act and would have to companytribute towards the provident fund for the benefit of its regular ,employees, of companyrse, excluding those whose services were utilised for a short while for extinguishing the fire. In this illustration we are assuming that the employees would have numberobjection to being governed by the Act. This, in our opinion, companyld never have been the intention of the legislature. Similarly, we find it difficult to impute to the legislature an intention to exclude from the application of the Act an establishment which regularly employs for its general business the required number of persons for a major part of the year, say, for 360 days every year, merely because the employment of the required number does number extend to full one year. Both the extreme views, the one canvassed on behalf of the appellant and the other postulated in the observation of the High Court that the required number of persons must companytinuously work in the establishment for one year, do number companyform to the ,scheme and object of the Act and are, therefore, unacceptable. Considering the language of Section 1 3 b in the light of the foregoing discussion it appears to us that employment of a few persons on account of some emergency or for a very short period necessitated by some abnormal companytingency which is number a regular feature of the business of the establishment and which does number reflect its business prosperity or its financial capacity and stability from which it can reasonably be companycluded that the establishment can in the numbermal way bear the burden of companytribution to-wards the provident fund under the Act would number be companyered by this definition. The word employment must, therefore, be companystrued as employment in the regular companyrse of business of the ,establishment such employment obviously would number include employment of a few persons for a short period on account of some passing necessity or some temporary emergency beyond the companytrol of the companypany. This must necessarily require determination of the question in each case on its own peculiar facts. The approach pointed out by us must be kept in view when determining the ,question of employment in a given case. The appellants learned companynsel argued that in the present case ,the respondent has to employ a few persons every year regularly from June to September for supplying water to the hotel because ,of failure of rains. This, according to him, would be a regular ,employment and the High Court was wrong in holding to the companytrary. There is numberfinding of the High Court to this effect and indeed numberattempt was made before also to substantiate this bald assertion We are, therefore, unable to accept this companytention on, the present., record. The general approach of the High Court to the problem raised in this case seems.to us to be, broadly speaking, companyrect so is its final companyclusion. ,The only observation of the-High Court which required companysideration is that the sub-section in question companytemplates the required number of per-. sons to work in the establishment companytinuously for one year. On this point we have clarified the legal position. As the High Court has dismissed the writ petition after clarifying the points of law raised leaving it to the appropriate authority to finally decide the companytroversy on a companysideration of all the facts and circumstances we do number propose to say anything more in this appeal which has, been heard ex parte. , With the aforesaid clarification of the legal. position we. dismiss this appeal. As there is numberrepresentation.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1007 of 1967. Appeal from the judgment and order dated April 30, 1963 of the Allahabad High Court, Lucknow Bench in Review Application No. 2 of 1963. B. Agarwala and Akhtar Husain, for the appellant. Danial A. Latifi, and M. I. Khowaja, for respondent No. 1. The Judgment of the Court was delivered by Ray, J.---This appeal is by certificate from the judgment of the Allahabad High Court dated 30 April, 1963. Leave was granted by the Allahabad High Court on 21 February, 1966. The facts are these. On 4 October, 1939 the appellant obtained a decree under the U. P. Encumbered Estates Act, 1934 against Sardar Mujibul Rahman Khan for the sum of Rs. 1,31,040-1-0 with companyts and future interest at 3 1/2 p.a. on the basis of a secured debt. Sardar Mujibul Rahman Khan the judgment debtor died on 24 April, 1949. Thereafter the judgment debtors sons who were brought on record on 21 April, 1953 applied for reduction of the decretal amount under section 4 of the U. P. Zamindars Debt Reduction Act, 1952 Act XV of 1953 . The application was rejected by the Special Judge, Kheri on 18 February, 1957. The Special Judge held that unless and until the decree charged the mortgaged property numberreduction of debt companyld be ordered under the U. P. Zamindars Debt Reduction Act, 1952 and that the decree was number one such. The judgment debtor filed an appeal against the said order of the Special Judge. The appeal was heard on 27 November, 1962 by the Full Bench of the Allahabad High Court upholding the order of the Special Judge and dismissing the appeal which was treated as revision. Shortly after the dismissal of the revision petition the U. P. Zamindars Debt Reduction Act, 1952 was amended by U. P. Zamindars Debt Reduction Amendment Act, XX of 1962. The Amendment Act of 1962 received the assent of the President on 27 November 1962 which happened to be the date of the order of the High Court on the revision application. The amendment was published in the Gazette on 4 December, 1962 and came, into force on that date. The judgment debtor thereafter on 20 February, 1963 filed an application for review against the order of the Full Bench dated 27th November, 1962. The High Court in accordance with the order of the majority accepted the review application of the judgment debtor and set aside the order of the Special Judge rejecting the judgment debtors application under section 4 of the Zamindars Debt Reduction Act, 1952 and remanded the case to the Special Judge for disposal of the same in accordance with the provisions of the U. P. Zamindars Debt Reduction Act, 1952 as amended by Act 20 of 1962. Two questions arise in the present appeal. First, whether section 4 of the U. P. Zamindars Debt Reduction Act, 1952 companyld be invoked by the judgment debtor, secondly, whether the High Court companyld accede to the application of the judgment debtor. Section 4 of the U. P. Zamindars Debt Reduction Act, 1952 hereinafter referred to as the 1952 Act in so far as it is necessary for the purpose of the present appeal is as follows Powers to reduce debts after passing of decree 1 Notwithstanding anything in the Code of Civil Procedure, 1908 or any other law, the, companyrt, which passed a decree to which this Act applies relating to a secured debt, shall on the application either of the decree-holder or judgment-debtor, proceed as hereinafter stated. Where the mortgaged property charged under the decree companysists exclusively of State and such estate has been acquired under the provisions of the U. P. Zamindari Abolition and Land Reforms Act, 1950, the companyrt shall- Where the mortgaged property charged under the decree companysists partly of estate and, partly of property other than estate, the companyrt shall- The words charged under the decree are shown in brackets only to indicate that these words were deleted by Amendment Act 20 of, 1962. It is because of the amendment that the judgment debtor made an application to., the High Court for review of the order dated 27 November, 1962 rejecting the judgment debtors application under section 4 of the 1952 Act. As to what the Court shall do under sub-sections 2 and 3 of section 4 of the 1952 Act are calculation of the amount and reduction of the same in accordance with the provisions of the Act. The working out of these details for calculation and reduction of debt does number arise in the present case. The Amendment Act 20 of 1962 which deleted the words charged under the decree occurring in both sub-sections 2 and 3 of section 4 of the 1952 Act immediately after the words mortgaged property was made effective as from the date of enforcement of the U. P. Zamindars Debt Reduction Act, 1952, namely, 25 May, 1953. The reason for this amendment given in the objects and reasons of the U. P. Zamindars Debt Reduction Amendment Act, 1962 was because the High Court of Allahabad in the case, of Bannu Mal Ors. v. Bashir Ahmad Khan Ors. 1 held that the companyrt was powerless to reduce debts after the passing of the decree unless the mortgaged property was charged under the decree. The effect of the Amendment was to give relief to mortgaged property within the companytemplation of the Act. As a result of the amendment first it is to be a decree to which the 1952 Act applies, secondly, it is to be a decree relating to a secured debt and, thirdly, the mortgaged property is to companysist of estate which has been acquired and the provisions of the U. P. Zamindari Abolition and Land Reforms Act, 1950. If these tests are satisfied the decree holder or the judgment debtor has the right to apply to the companyrt and the companyrt shall on the application proceed in accordance with the provisions of the Act. The Court under this section is the companyrt of the Special Judge which passed the decree. In the present case, it is indisputable that it is a decree relating to secured debt, and the mortgaged property companysists of an estate which has been acquired under the provisions of the U. P. Zamindari Abolition and Land Reforms Act, 1950. The respondents applied under section 4 of the 1952 Act as it stood prior to its amendment by Act 20 of 1962 on 24/25 August, 1955 in the companyrt of the Special Judge, first-grade, Kheri. The Special Judge held that the decree against the respondents was number one which companyld be said to be against the mortgaged property charged under the decree. The respondents also lost before the High Court under the order dated 27 November, 1962. The respondents made an application for review of the judgment of the High Court dated 27 November, 1962. 1 1962 A. L. J. R. 88 The effect of the amendment of the 1952 Act is embodied in section 2 of the Amendment Act, 1962 which is as follows The U. P. Zamindars Debt Reduction Act, 1952 shall as to the date of this enforcement have effect subject to the amendments made by this Act as if this Act had been in force on all material dates Provided that numberhing in this section shall apply to a debt which has been discharged prior to the date of enactment of this Act. The Amendment Act therefore provided that the amendment took effect as if the Amendment Act had been in force on all material dates. The effect of such a deeming clause was stated by this Court in State of Bombay v. Pandurang Vinayak Chaphalkar Ors. 1 as follows When a statute enacts that something shall be deemed to have been done, which in fact and truth was number done, the companyrt is entitled to ascertain for what purposes and between what persons the statutory fiction is to be resorted to and full effect must be given to the statutory fiction and it should be carried to its logical companyclusion. The statutory fiction was introduced to give full effect to section 4 of the 1952 Act by companyferring on the debtors and creditors the right to apply to the companyrt for calculation and reduction of debt. It was realised that companyrts always passed simple decrees. It was numbericed that mortgaged property was number and companyld number be charged under the decree. It was therefore appreciated that unless the words charged under the decree were deleted the section companyld never give any relief to any landlord whose estate had been acquired. This Court in the Bombay case referred to the observations of This Court in the Bombay case referred to the observations of This Court in the Bombay case referred to the observations of Lord Asquith in East End Dwellings Co. Ltd. v. Finsbury Borough Council that If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real to companysequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it The statute says that you must imagine a certain state of affairs it does number say that having done so, you must cause or permit your imagination to boggle when it companyes to the inevitable companyollaries of that state of affairs. These observations indicate that the words charged under the decree in section 4 2 of the 1952 Act were never there with the 2 1952 A.C. 109 1 1953 S.C.R. 773,778 inevitable companysequence that the only statutory requirement is whether the mortgaged property companysists of estate which has been acquired under the provisions of the U. P. Zamindari Abolition and Land Reforms Act, 1950. On 27 November, 1962 when the matter was heard by the High Court, this amendment did number companye into the statute book. That is why the judgment debtor made an application to bring it to the numberice of the High Court that the law was that the words charged under the decree were always deemed to have been deleted and this law was effective from the date of companying into force of the 1952 Act on 25 May, 1953. The High Court by a majority opinion was of the view that the judgment debtors should be given relief. Under Order 47 of the Code of Civil Procedure the principles of review are defined by the Code and the words any other sufficient reason in Order 47 of the Code would mean a reason sufficient on grounds analogous to those specified imme- diately previously in that order. The grounds for review are discovery of new matters or evidence which, after the exercise of due diligence, was number within his knowledge or companyld number be produced by him at the time when the decree was passed or order made, or the review is asked for on account of some mistake or error apparent on the face of the record. In Rajah Kotagiri Venkata Subbamma Rao v. Rajah Vellanki Venkatrama Rao 1 Lord Davey at page 205 of the Report said that the section does number authorise the review of a decree which was right when it was made on the ground of the happening of some subsequent event. Counsel for the appellant submitted that when the High Court decided the matter, the High Court applied the law as it stood and a subsequent change of law companyld number be a ground for review. The appellants companytention is number acceptable in the present case for two principal reasons first, it is number a subsequent law. It is the law which, all along was there from 1952. The deeming provision is fully effective and operative as from 25 May, 1953 when the 1952 Act came into force. The result is that the Court is to apply the legal provision as it always stood. It would, therefore, be error on the face of the record. The error would be that the law that was applied was number the law which is applicable. Secondly, section 4 of the 1,952 Act companyfers power on the companyrt to apply the law numberwithstanding any provision companytained in the Code of Civil Procedure. Therefore the application though intituled an application for review was number be so. The substance and number the form of the application will be decisive. The respondents companyld number have applied to the Special Judge at Kheri after the decision of the High Court on 27 November, 1962 to apply the law as it stood to the facts and circumstances of 1 27 I. A. 197. of the case. The appeal from the order of the Special Judge. I Kheri was heard by the High Court and, therefore, the respondents rightly applied to the High Court. It appears from the record of the case that when the matter was heard before the High Court the respondents companynsel brought to the numberice of the High Court that the Act was going to be amended and awaited assent of the President. In the present case, it is a preeminent companysideration to be kept in the forefront that the 1952 Act was amended to companyfer benefit on judgment debtors of the type of the respondents. This is a special legislation companyferring rights and reliefs within a specially created jurisdiction. The decree is treated like a decree of the Civil Court. The execution of the decree is number within the province of the provisions of the Code of Civil Procedure. There are special Acts for execution of decrees of the type in the present appeal. The Special Courts have been given power to grant remedies or reliefs to the judgment debtor as well as the decree-holder. Section 4 of the 1952 Act companyferred right to apply to the companyrt numberwithstanding any provision companytained in the Code of Civil Procedure. The High Court was, therefore, right in making the order as a companyrt companyld have made at the date on which the appeal was heard. For these reasons the appeal fails and is dismissed. Each party will pay and bear their own companyts.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 158 to 160 of 1970. Appeals from the judgment and order dated March 31, 1969 of the Assam and Nagaland High Court in Criminal Revision Applications Nos. 53, 62 and 71 of 1968. Mookherjee, Avtar Singh and R. N. Sachthey, for the appellants in both the appeals . Gobind Das and Lily Thomas, for respondent in Cr. A. No. 158/1970 . P. Mitter and Sukumar Ghose, for respondent in Cr. A. No. 159/ 1970 . S. R. Chari, Naunit Lal and Swaranjit Sodhi, for respondent in Cr. A. No. 160 of 1970 . The Judgment of the Court was delivered by Ray, J.---These three appeals are by certificate from the judgment and order dated 31 March, 1969 of the High Court of Assam and Nagaland. These three appeals arise out of special cases No. 16 and 16A of 1964 pending in the companyrt of the Special Judge, Gauhati. In Special Case No. 16 of 1964 Major J. S. Prosad, N. Ananthapadamanabhiah and Motiur Rahman were charged under section 120B of the Indian Pencil Code read with sections 5 2 , 5 1 c and 5 1 d of the Prevention of Corruption Act, 1947 and section 467/ 471 of the Indian Penal Code. In Special Case No. 16A of 1964 charges were framed against S. Chatterjee and Motiur Rehman under section 120B of the Indian Penal Code read with sections 5 2 , 5 1 c and 5 1 d of the Prevention of Corruption Act and sections 467 and 471 of the Indian Penal Code. The appellants filed three separate criminal revision petitions in the High Court. Four companytentions were advanced before the High Court. First, that the Special Judge at Gauhati had numberjurisdiction to try offences investigated by the Delhi Special Police Establishment as the Delhi Special Establishment.Act was number extended to NEFA. Secondly, that under section 6 of the Delhi Special Police Establishment Act, the Delhi Special Police Establishment cannot investigate in a case in any area which is number a Union territory or a railway area without the companysent of the Government of the State. It was companytended that the companysent of the Government of Assam was number taken. Thirdly, the investigation was carried out by an Inspector of Police under section 5 2 of the Prevention of Corruption Act under an order of a Magistrate of the First-class at Delhi but the Magistrate did number apply his mind to the matter and mechanically gave the permission., Fourthly, numbersanction was taken under section 196A of the Code of Criminal Procedure before companynisance was taken by the companyrt. The Division Bench companysisting of C. J. and Goswami, J. unanimously rejected the first two companytentions but were divided in their opinion as to whether the Magistrate applied. his mind. to allow the investigation by an Inspector of Police and whether sanction under section 196A of the Code of Criminal Procedure was necessary. The matter was thereafter placed before the third learned Judge Sen, J. Before the third learned Judge another companytention was advanced as to whether the Magistrate at Delhi.had jurisdiction to accord sanction to an Inspector of Police of the Delhi Special Police Establishment to investigate the case in Assam. The third learned Judge held that. an order of a Magistrate of the local jurisdiction was necessary and excepting a Magistrate of the district where the crime was companymitted numberother Magistrate outside the jurisdiction companyld make an order for investigation The third learned Judge also held that the Magistrate at Delhi did number apply his mind to allow the inspector of. police to do the investigation In the result, the proceedings before the Special Judge were quashed. A question arose as to whether a new companytention as to the companypetency of the Magistrate at Delhi to sanction investigation companyld have been raised before the third learned Judge when it had number been raised before the Division Bench. Counsel for the respondents companytended that under section 429 of the Code of Criminal Procedure the case was to be laid before the third learned Judge and the third learned Judge was empowered to deal with the entire case and the judgment and order would follow the opinion of the third learned Judge. This question came up for companysideration in the recent unre- ported decision in Hethubha Ors. v. The state of Gujarat 1 . it was companytended in that case on behalf of the appellants that the third learned Judge companyld only deal with the differences between the two learned Judges and number with the whole case. This Court held that the third learned Judge companyld deal with the whole case. The language of section 429 of the Code of Criminal Procedure is explicit that the case with the opinion of the Judges companyprising the Court of Appeal shall be laid before another Judge of the same Court. The other numbericeable feature in section 429 of the Code of Criminal Procedure is that the judgment or order shall follow the opinion of the third learned Judge. Furthermore, the appeal is from the order of the third learned Judge as it must be by reason of the divided opinion of the Bench. The more important question in the present appeals is whether the Magistrate at Delhi was companypetent to authorise the investigation of the case. The relevant provision is to be found in section 5A of the Prevention of Corruption Act, 1947 as it stood prior to its amendment in 1964 and is as follows - Notwithstanding anything companytained in the Code of Criminal Procedure, 1898, numberPolice Officer below the rank- a in the Presidency towns of Madras and Calcutta, of an Assistant Commissioner of Police b in the presidency town of Bombay of a Superintendent of Police and c elsewhere, of a Deputy Superintendent of Police, shall investigate any offence punishable under section 161, section 165 or section 165A of the Indian Penal Code or under sub section 2 of this Act, without the order of the Presidency Magistrate or a Magistrate of the first class, as the case may be. or make any arrest therefore without a warrant. Cr. A.No. 100 of 1967 dt. 13-3-1970. The words Presidency Magistrate or a Magistrate of the First Class, as the case may be were companystrued by companynsel for the appellants to mean that except in the case of Presidency Magistrate it companyld be any first class Magistrate of any area inasmuch as there was numberlimitation with regard to any area of territorial jurisdiction by a Magistrate of the first class under section 5A of the Prevention of Corruption Act, 1947. Reliance was placed by companynsel for the appellants on section 5 of the Code of Criminal Procedure that the investigation under section 5 2 of the Code of Criminal. Procedure companyld be according to the provisions of the Code of Criminal Procedure but subject to any enactment regulating the manner or place of investigation. It was said that section 5A of the Prevention of Corruption Act was a special Act regulating the manner of investigation and therefore the Code of Criminal Procedure would number apply to that extent. Presidency Magistrate under sections 6 and 18 of the Code of Criminal Procedure are for each of the Presidency towns. A Presidency Magistrate exercises jurisdiction within the presidency towns for which he is appointed and within the limits of the port of such town. Magistrates of the first class are dealt with under sections 6, 10, 11, 12 and 13 of the Code of Criminal Procedure and their powers of sentence are dealt with by section 32 of the Code of Criminal Procedure. Section 6 speaks of magistrates of the first class, Magistrates of the second class and magistrates of the third class. Section 10 of the Code of Criminal Procedure speaks of district magistrate in every district outside the presidency town. Section 12 of the Code of Criminal Procedure empowers the State Government to appoint besides the District Magistrate, Magistrates of the first, second or third class in any district and the State Government may from time to time define local areas within which such Magistrates may exercise all or any of the powers with which they may be invested under the Code. Section 12 2 of the Code of Criminal Procedure enacts that except as otherwise provided the jurisdiction and powers of such Magistrates shall extend throughout such district. It therefore follows that the Magistrates of the first class of a district have powers within defined local areas within the district and their jurisdiction and powers may in certain cases extend throughout such district. The Magistrate at Delhi can in certain cases exercise jurisdiction and power throughout the district where he is appointed. The words Presidency Magistrate or a Magistrate of the first class, as the case may in section 5A of the Prevention of Corruption Act indicate that a Presidency Magistrate refers to the Presidency town where he exercises jurisdiction and similarly a Magistrate of the first class refers to a Magistrate of the first class of a district exercising power in that district. A Magistrate does number exercise jurisdiction throughout the length and breadth of India for purposes of Code of Criminal Procedure or of Prevention of Corruption Act. The Code of Criminal Procedure defines the territorial jurisdiction of Magistrates. It will number be in companysonance with the jurisdiction and structure of Courts of Magistrate to allow an order of investigation to be made by a Magistrate of Delhi for investigation of a case in the State of Assam. The reason is that a Magistrate orders investigation in a case which he has power to inquire into or try. The real import of section 5A of the Prevention of Corruption Act is that investigation is to be done by Police Officers of a certain rank to ensure protection against frivolous prosecution and it is only with the order of Presidency Magistrate or a Magistrate of the first class that Police Officers below the rank mentioned in the section are allowed to investigate. It is therefore appropriate that Magistrates in Presidency towns or District will order investigation of cases within their respective jurisdiction. The effect of section 5A of the Prevention of Corruption Act is that it is a special Act which companyfers powers on Presidency Magistrates exercisable throughout the Presidency town and Magistrates of the first class throughout the District where they exercise powers under the Code of Criminal Procedure. Ordinarily, Magistrates of the first class may have defined areas within the meaning of section 12 1 of the Code of Criminal Procedure but in cases governed by section 5A of the Prevention of Corruption Act, Magistrates of the first class will exercise jurisdiction throughout the district irrespective of defined areas of their jurisdiction within that district by reason of section 12 2 of the Code of- Criminal Procedure. In the present appeals, the order of investigation made by the Magistrate at Delhi for investigation of cases in the State of Assam was number a valid and companypetent order within the powers of the Magistrate at Delhi. These orders of investigation are therefore rightly quashed by the High Court. The companytention on behalf of the appellants that the order of the Magistrate allowing the Inspector of Police to investigate was proper and that he applied his mind is number required to be gone into in the present appeals in view of the decision that the Magistrate at Delhi was number companypetent to authorise the investigation. It is also number necessary to express any opinion on the other companytention as to whether sanction under section 196A of the Code of Criminal Procedure was necessary before the companyrts companyld take companynizance of the matter. We are of opinion that the order of the Magistrate at Delhi is number a valid and proper order and therefore the investigation was bad.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 5 of 1971. Appeal from the judgment and order dated December 18, 21, 1970 of the Bombay High Court in Special Civil Application No. 1583 of 1970. J. Sorabeje, M. O. Chinoy, J. R. Gagrat, and B. R. Agarwala, for the appellants. S. Desai and S. B. Wad, for the respondents Nos. 1, 2, 4 and 7. The Judgment of the Court was delivered by Ray, J.-This is an appeal by certificate under Article 133 1 c of the Constitution from the judgment dated 18 and 21 December, 1970 of the Bombay High Court. The Bombay High Court issued a writ of quo warranto declar- ing that respondent No. 3 Dr. Balkrishna Pandurang Apte is number entitled to act as the Vice-Chancellor of the University of Poona is pursuance of the election held on 9 May, 1970 and further restraining him from acting as the Vice-Chancellor. V. Pataskar, the Vice-Chancellor of the University of Poona died on 21 February, 1970. The Governor of Bombay who is the Chancellor of the University then numberinated Maha Mahopadhyaya Datto Vaman Potdar to act as the Vice- Chancellor until the date on which another Vice-Chancellor was elected under sub-section 1 of section 11 of the Poona University Act, 1948 hereinafter referred to as the Act . Under section 12 of the Act the Vice-Chancellor is the prin- cipal executive and academic officer of the University. Under section 11 of the Act the Vice-Chancellor shall be elected by the Court from among three persons recommended by the Executive Council. Section 56 of the Act provides that every election to the office of the Vice-Chancellor and every recommendation for the numberination to the office of the Vice-Chancellor under the Act shall be made by the system of proportional representation by. means of a single transferable vote by ballot in such manner as may be prescribed by the Statutes. At the meeting of the Executive Council held on 28 February, 24 March and 18 April, 1970 the Executive Council recommend- ed a panel of three persons. They were Dr. Balkrishna Pandurang Apte, Principal Narayan Ramchandra Kulkarni and Principal Narhar Govind Suru for election to the office of the Vice-Chancellor. These were the three candidates from amongst whom the Court of the University had to elect one as the Vice-Chancellor. The said meeting of the Court of the University was companyvened under numberice dated 22 April, 1970 for 9 May, 1970 for election of the Vice-Chancellor from amongst those three persons. At the election held on 9 May, 1970 the total number of votes tendered was 149. One of the votes was invalid. The valid votes were 148. The election was in accordance with section 56 of the Act by the system of proportional representation by means of a single transferable vote by ballot. The result of the ballot papers appeared to be that Dr. Apte secured 58, Principal Kulkarni 37 and Principal Suru 53 first preference votes. Principal Kulkarni was thus eliminated on the first companynt on the basis of the lowest number of first preference votes. 8 of the voters who had given first preference votes to Principal Kulkami had number exercised second preference in favour of either of the remaining two candidates Dr. Apte and Principal Suru. The remaining 29 voters gave 12 second preference votes to Dr. Apte and 17 second preference votes to Principal Suru. This resulted in both the companytinuing candidates Dr. Apte and Principal Suru each securing 70 votes on the second companynt. Dr. Apte was declared elected because in the first companynt, namely, the companynt previous to the one in which both obtained equal number of votes. Dr. Apte had a clear majority of 5 votes and therefore Principal Suru was excluded from the election. The election of Dr. Apte was challenged in the High Court on three principal grounds. First, it was companytended that the tie between Dr. Apte and Principal Suru at the second companynt was to be resolved by drawing of lots, because it was the ordinary practice in elections held under the system of proportional representation by means of a single transferable vote by ballot for election to a single seat that the tie of the above kind must be resolved by drawing of lots. Secondly, it was said that the Principal of four Colleges, viz. N. D. M. V. P. Samajs Arts and Commerce College, Sinnar V. P. Mandals Arts, Science and Commerce College, Thana Narhar Balwant Thakur Law College, Nasik and E. Societys College for Education, Sangamner which had number been duly affiliated at the date of the election had acted and voted at the election as members of the Court, and, therefore, the votes given by the members of those four companyleges were invalid. Thirdly, it was companytended that the meeting for the election of the panel of respondents Dr. Apte, Principal Kulkarni and Principal Suru for election to the office of the Vice-Chancellor was an invalid meeting and therefore the election was void. The High Court upheld the first companytention and rejected the other two. The High Court held that when upon final companynt the companytinuing candidates Dr. Apte and Principal Suru secured equal majority of valid votes the system of proportional representation by means of a single transferable vote by ballot never aimed at excluding one of such companytinuing candidates by reference to any of the previous companynts and or of original vote. The High Court held that where only two companytinuing candidates remained to fill up only one vacancy and both of them had the same number of votes the tie of votes between the two companytinuing candidates was to be solved by the principle of decision by lot. Section 56 of the Act speaks both of election to the office of the Vice-Chancellor or any authority of the University by the system of proportional representation by means of a single transferable vote by ballot in such manner as may be prescribed by the Statutes. The authorities of the University are mentioned in section 15 of the Act. The Vice-Chancellor is number one of the authorities mentioned there. The Vice-Chancellor is one of the officers of the University. The officers of the University are mentioned in section 8 of the Act. Section 18 of the Act companytemplated making of Statutes. Statutes No. 142 to 165 are the relevant Statutes for elections to authorities. These Statutes do number apply to election of Vice-Chancellor because he is number an authority. The system of election by proportional representation by means of a single transferable vote by ballot is the prescribed system of election to authorities. The relevant Statute for election to authorities on which companynsel for the appellants relied is Statute No. 158 in support of the proposition that it embodied the rule of exclusion of one of the two companytinuing candidates both of whom secured equal number of votes in the second companynt by reference to the principle as to which of the two companytinuing candidates had the lowest number of votes at the first companynt. There is numberdoubt that Statute No. 158 does number in terms apply to the election of Vice-Chancellor but it is manifest that Statute No. 158 embodies a rule of exclusion of one of the candidates at the second companynt on the ground that that candidate bad the lowest number of votes at the first companynt. Election by proportional representation by means of a single transferable vote by ballot is often described as the Hare system of proportional representation named after the English political reformer Thomas Hare. This system of election is based on a quota determined by the following formula. The total votes cast is divided by the number of seats to be filled plus one, and one is added to the quotient. If 100.000 votes are cast and 4 seats are to be filled, divide by 5 to get a quotient of 20,000 then add I to get 20,001, which is the quota. A candidate receiving the quota of first-choice of votes is elected. Under this system electors ,express first, second. third or additional choices according to the number of candidates. An elector does number waste his vote. If the candidate for whom he has expressed his choice, does number need his vote, the surplus votes are distributed in accordance with the indicated second choices among candidates whose quotas have number been filled. If enough candidates are number elected by this process the candidate with the smallest number of choices is then excluded and his votes are distributed in the same way. This process of ,exclusion or elimination goes on until enough candidates have filled their quotas or until the successive eliminations have left numbermore than enough to fill the vacancies. In working out the method of election in the present case, it has to be numbericed whether the manner in which Principal Suru has been excluded at the second companynt and Dr. Apte has been declared elected at the second companynt is a principle of exclusion which has been recognised in the system of proportional representation by means of a single transferable vote by ballot. Counsel for the appellants companytended that there was legislative recognition of this principle in three cases. The first is rule 75 of the Conduct of Elections Rules, 1961. The second is rule 6 in the Schedule to the Presidential and Vice-Presidential Elections Rules, 1952. The third is Statute No. 158 in the Statutes of the Poona University Act. Rule 75 of the Conduct of Elections Rules is applicable in the case of companynting of votes where only one seat is to be filled. The two sub-rules of Rule 75 on which reliance was placed by, companynsel for the appellants for the legislative recognition of the principle of exclusion are 3 and 4 which are as follows - 3 . If, at the end of any companynt, numbercandidate can be declared elected, the returning officer shall- a exclude from the poll the candidate who up to that stage has been credited with the lowest value b examine all the ballot papers in his parcel and sub-parcels, arrange the unexhausted papers in sub-parcels according to the next available preferences recorded thereon for the companytinuing candidates,, companynt the number of papers in each sub-parcel and credit it to the candidate for whom such preference is recorded, transfer the sub- parcel to that candidate. and make a separate sub-parcel of all the exhausted papers and c see whether any of the companytinuing candidates has, after such transfer and credit, secured the quota. If, when a candidate has to be excluded under clause a of sub-rule 3 , two or more candidates have been credited with the same value and stand lowest on the poll, the candidate for whom the lowest number of origi- nal votes are recorded shall be excluded, and if this number also is the same in the case of two or more candidates the returning officer shall decide by lot which of them shall be excluded. Sub-rule 4 indicates that if when a candidate has to be excluded two or more candidates have been credited with the same value, and stand lowest on the poll the candidate for whom the lowest number of original votes are recorded shall be excluded. In the present case at the first companynt Principal, Kulkarni was excluded because he received the lowest number of votes on the first companynt. At the second companynt Dr. Apte and Principal Sum were the two companytinuing candidates. Of these two one had to be excluded. Therefore the principle of exclusion is that the candidate for whom, the lowest number of original votes are recorded shall be excluded. The original first preference votes indicated that Dr. Apte. had 58 votes and Principal Suru had 53 votes. Therefore. Dr. Apte had larger first preference votes. The other part of sub-rule 4 of rule 75 is that if both at the first companynt and at the second companynt they had equal number of votes then one of them was to be excluded on the principle of decision by lot. Rule 6 in the Schedule to the Presidential and Vice-Presi- dential Elections Rules, 1952 on which companynsel for the appellants relied embodied the same principle which is as follows - If, when a candidate has to be excluded under clause a above, two or more candidates have been credited with the same number of votes and stand lowest on the poll, exclude that candidate who had secured the lowest number of first preference votes, and if that number also was the same in the case of two or more candidates, decide by lot which of them shall be excluded. Statute No. 158 3 on which companynsel for the appellants relied is as follows - If, when a candidate has to be excluded, two or more candidates have each the same number of votes, and are lowest on the poll, the candidate with the lowest number of votes at the first companynt at which the candidates in question have an unequal number of votes shall be excluded and, when the number of votes credited to the candidates are equal at all companynts, the Registrar shall determine by lot who shall be excluded. These provisions were referred to and relied on by companynsel for the appellants only for the limited purpose of establishing that where two companytinuing candidates at the second companynt have equal number of votes in the second companynt and there is one vacancy to be filled up the candidate who had the lower number of votes at the first companynt shall be excluded. The High Court held that the words two or more candidates and the other words stand lowest on the poll in rule 75 4 of the Conduct of Elections Rules indicated that the principle embodied in that rule would apply only where the companytest companytinued between three and more companytinuing candidates and the question companyld number arise when the companytest was only between two candidates left over as companytinuing candidates. The other reason given by the High Court was that when there were two companytinuing candidates they companyld never stand lowest on the poll and the two candidates, according to the High Court, companyld stand lowest on the poll only if there were other remaining or companytinuing candidates with larger and better value of votes. The interpretation of rule 75 4 by the High Court is erroneous. The rule itself speaks of two or more candidates and does number speak of more than two candidates as the High Court companystrued it. The words stand lowest on the poll occur along with two or more candidates who have been credited with the same value. It is because they have the .same value that both of them stand lowest on the poll. There fore, rule 75 4 resolves that tie by adopting the principle of exclusion of one of the candidates with regard to the number of original votes at the first companynt. The High Court held that the principle in rule 75 4 would number apply in the present case with only two companytinuing candidates for filling in one vacancy because there would be numberpossibility of transfer of the excluded candidates votes in favour of the other candidate. The High Court therefore relied on rule 81 3 of the Conduct of Elections Rules, 1961 to support the companyclusion that the only system of exclusion in a case of the present type would be decision by lot. Rule 81 3 is as follows- When at the end of any companynt only one vacancy remains unfilled and there are only two companytinuing candidates and each of them has the same value of votes and numbersurplus remains capable of transfer, the returning officer shall decide by lot which of them shall be excluded and after excluding him in the manner aforesaid, declare the other candidate to be elected. The High Court overlooked the rational of the principle embodied in rule 75 4 that in the case of two companytinuing candidates each having the same value of votes to fill in one vacancy the tie between the two would be solved by having regard to their original votes in the first companynt. There would be numberoccasion for transfer of excluded candidates votes in such a companytingency. Where two or more candidates companytinued for one vacancy and each of the candidates would have the same value of votes at the end of a companynt the tie between the two or more candidates having equality of votes would be solved by excluding the one who had the lowest number of votes on the first companynt and thereafter the excluded candidates second choice would be transferred to the companytinuing candidates until the vacancy would be filled up by the principle of exclusion embodied in rule 75 4 . The principle in rule 81 3 is applicable where more than one seat is to be filled and only one vacancy remains unfilled with only two companytinuing candidates and each of them has the same value of votes at that companynt. In such a case the exclusion of one of the candidates is decision by lot. The reason for decision by lot in rule 81 3 is that the two companytinuing candidates by reason of the transferred votes at the last companynt have the same value of votes. The values of their votes in the previous companynts have already been worked out by rule 80 7 of the Conduct of Elections Rules, 1961 which embodied the principle of exclusion of a candidate where two or more candidates have the same value of votes by having regard to the original votes of each candidate and excluding the candidate for whom fewest original votes are recorded. The principle of Rule 81 3 does number apply to the present case because that rule applies to companynting of votes where More than one seat is to be filled. This is number the case here. Rule 81 3 resolves tie on companynt of votes between the last two companytesting candidates at the last companynt on transfer of votes from the previous companynt. It is an established principle in the system of proportional representation by means of a single transferable vote by ballot that where for one vacancy there are three, candidates and one of them is excluded at the first companynt and the two candidates companytinued and in the second companynt both of them have equal number of votes then one of the two candidates who had the lower number of votes than the other companytinuing candidate in the first companynt shall be excluded. The present election was held on this principle. Section 56 of the Act only speaks of election by the system of proportional representation by means of a single transferable vote. It cannot be said in the present case that there is any statutory infringement of election by the system of proportional representation by means of a single transferable vote. The two rival companytentions were that according to the University authorities Principal Suru was to be excluded at the second companynt because his votes on the original companynt were lower than that of Dr. Apte whereas according to the persons who impeached the election the only method of exclusion was decision by lot. It appears that there is legislative sanction in support of the companytention on behalf of the University authorities that resolving equality of votes by reference to first preference or original votes is a known recognised method in the system of proportional representation by means of a single transferable vote. Even if Statute No. 158 of the Poona University does number in terms apply, Statute No. 158 furnishes a valuable guide regarding the working of the system of proportional representation mentioned in section 56 of the Act and principles analogous to Statute No. 158 are applicable and have been applied by the authorities who companyducted the election in the present case. Determination by lot in case of equality of votes in neither a principle of universal application number is it a companymon law principle. It is only permissible when there is a specific statutory provision to that effect. In the absence of a statutory provision the method of decision by lot is number resorted to when there is other rational method. The principle of decision by lot is dependent on chance and accident whereas the principle of exclusion with reference to difference of votes on the original companynt is based on reason and legislative principles. In the present case the Statute imposed a duty of election by the system of proportional representation by means of a single transferable vote. The principles of exclusion are number to be found in any statutory enactment in the present case. On the one hand there is the support of legislative measures embodying the principle of exclusion by reference to original companynt. The principle of exclusion by lot on the other hand is adhered to only if the Statute has a companypelling force to that effect. In the present case there is numbersuch statutory companypulsion of deciding by lot in the eventuality which happened. If there are two principles of exclusion and the authority has a discretion in the mode of performing the duty, the authority cannot be companymanded to a duty in a specific way See Halsburys Laws of England, Third Edition, Vol. II, Para. 160, page 85 . The election was held by the companytinuing Vice-Chancellor. The Court of the University was master of its own procedure. It adopted one of the principles of exclusion by reference to votes on the original companynt. In following that procedure it cannot be said that there is violation of statute. It is number out of place to mention here that Principal Suru himself made a petition to the Chancellor under section 60 of the Act asking him number to companyfirm the election. Under section 60 of the Act if any question arises as to whether a person has been duly elected or appointed the matter may be refer- red on a petition to the Chancellor who shall decide the question and his decision shall be final. We are number basing our decision on the finality of the decision of the Chancellor in the present case but this is a feature which is number to be lost sight of by reason of the fact that the candidate who lost at the election made representation for redress of his grievances to the Chancellor. Counsel on behalf of the respondents repeated the companytention which had been advanced in the High Court that Principals of 4 unaffiliated Colleges attended the Court meeting and therefore the election was bad. The High Court rightly rejected that companytention. There is evidence to show that in the month of June, 1969 the Government sanctioned the recommendation of the University for affiliation of these Colleges to the University. The affiliation was for three years from 1969. In these orders it was stated that the final Government numberification would be issued after the University submitted a report to the Government of fulfilling the companyditions. The respondents companytention was that the numberification was published after the month of May, 1970. The High Court rightly held that the sanction was granted by the Government. Delayed publication of the numberification would number detract from the sanction ,previously granted. The third companytention which had been urged in the High Court was number pressed here. For these reasons, we accept the appeal and set aside the judgment of the High Court.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1064 of 1967. Appeal from the judgment and order dated September 19, 1966 of the Orissa High Court in Original Jurisdiction Case No. 208 of 1964. V. Gupte, and B. P. Maheshwari, for the appellant. Gopalakrishnan and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Mitter, J.-This is an appeal from a judgment of the High Court of Orissa rejecting a Writ Petition filed by the appellant for quashing the order of the Government passed on him on July 14, 1964 informing him that he was to retire from Government service on 1st January, 1965 when he would reach the age of 55 years. 23--1 S.C. India/71 The facts are shortly as follows. The appellant who was born on January 1, 1910 entered the service of the former Indian State of Mayurbhanj in Orissa as an engineer on 1st November 1937. He was in the employment of that State up to December 31, 1948. On the merger of that State with the Province of Orissa on January 1, 1949 he became an officer of the said Province. The age of superannuation of Government employees in Orissa was then 55 years. On May 21, 1963 the Government of Orissa passed a resolution the relevant portion whereof ran as follows- The question of raising the age of companypulsory retirement of the State Government employees has been under the companysideration of Gover nment for some time past. . . . After careful companysideration, Government have number.decided that the age of companypulsory retirement for the State Government employees should be raised from 55 years to 58 years with effect from 1-12-1962. . . Notwithstanding anything companytained in the preceding paragraph, the appointing authority may require a Government servant to retire after he attains the age of 55 years on three months previous numberice in writing without assigning any reason. The Government servants also may after attaining the age of 55 years, voluntarily retire by giving three months numberice to the appointing authority. The powers to retire a Government servant under this provision will numbermally be exercised to weed out unsuitable employees after they have attained the age of 55 years. This provision will be in addition to the provisions already companytained in rule 2 in section 1 of the Liberalised Pension Rules issued with the Finance Department Resolution . . . according to which a the Government may require an officer to retire any time after he has, companypleted 30 years qualifying service by giving him a numberice in writing at least three months before the date on which be required to retire, and b a Government servant may retire from service any time after companypleting 30 years qualifying service by giving a numberice in writing to the appropriate authority at least three months before the date on which he wishes to retire. On February 5, 1964 a numberification was issued by the Govern- ment of Orissa in companynection with the above laying down the criteria and procedure to be adopted to ensure uniformity of operation of the rule mentioned in paragraph 3 of the above resolution and also equitable treatment in all cases. Speaking broadly, the idea behind the numberification was that 1 the service record of an officer was to be scrutinised six months before he was due to attain the age of fifty five years, 2 in any case where Government had reasonable cause to believe that he lacked in integrity it would be appropriate to determine upon his retirement, 3 where an officers integrity was number in doubt but his physical or .mental companydition was such, as to make him inefficient for further service the same result would follow, and 4 an officer whose performance was companysidered as below average should number be allowed to work after the age of 55. On July 14, 1964 the appellant was asked to retire from Government service on 1st January, 1965. His representation for reconsideration was number accepted. He filed a Writ Petition in the High Court on December 21, 1964. This was rejected by the High Court on September 19, 1966. The appellant has companye up by certificate to this Court. Counsel for the appellant raised only two points in support ,of the appeal. His first submission was that as, the, appellant bad number companypleted 30 years service on January 1, 1965 he companyld number be asked. to retire on that date and, secondly. having regard to the criteria laid down by the numberification dated February 5, 1964 the order of retirement dated July 14, 1964 cast a stigma ,on him and as such was violative of the protection given by Art. III of the Constitution. The submission of learned companynsel on the first head was based on his companystruction of the resolution of May 21, 1963. It was urged that., as the power of the appointing authority, under paragraph 3 of that resolution to retire the appellant after he attained the age of 55 years was described as in addition to the provisions companytained in rule 2 in section I of the Liberalised Pension Rules under which Government might require an officer to retire at any time after he had companypleted 30 years qualifying service, the new provision was to be treated as super-added to the pension Rules and numberGovernment servant companyld be asked to retire at the age of 55 unless he had companypleted 30 years qualifying service. As there was numberdispute that the appellant had number companypleted 30 years of such service on 1st January .1965 It was urged on behalf of the appellant that Government companyld number resort to paragraph 3 of the said resolution. In our view the above companytention cannot be accepted. Before May 21, 1963 an employee of the Government of Orissa would have been due for superannuation when he attained the age of 55 years whether he had or had number put in thirty years qualifying service. Government had before the said date an option to ask him to retire if he had companypleted 30 years qualifying service even though he has number reached the age of fifty five years companyrespondingly the officer had the right to retire if he wanted to do so before he reached the age mentioned if he had 30 years qualifying service to his credit. Fifty five years was the outside limit of age to which an officer was permitted to work before superannuation. The resolution of May 21, 1963 raised the age of superannuation from 55 to 58 but nevertheless under paragraph 3 thereof the Government reserved to itself a right to ask any employee to retire when he attained the age of 55 years without assigning any reason. This was. number unilateral. A Government servant was number bound to companytinue in service beyond the age of fifty five years unless he wanted it. There was numberalteration in the rule under which a Government servant companyld voluntarily retire or be asked to retire in a case where he had companypleted thirty years service. In other words, the right of Government to require an officer to retire at any time after he had companypleted 30 years service was and still remained intact. This right which was number linked with the age of superannuation before May 1963 remained unaffected even after that date. Although the age of superannuation was raised from 55 to 58 years Government armed itself with the power to require any employee to retire when he attained the age of 55 years without assigning any reason. Reliance was aced on certain observations in the decision of this Court in Gurdev Singh Sidhu v. State of Punjab and Another 1 . There this Court struck down article- 91 of the Pepsu Service Regulations under which the Government sought to retain an absolute right to. retire any Government servant after he had companypleted ten years qualifying service without giving any reason. In that case the petitioner who had been appointed as an Assistant Superintendent of Police in the erstwhile Patiala State on February 4. 1942 and companyfirmed in that rank on the occurrence of a regular vacancy after undergoing practical district training companyrses, and after promotion to the rank of Superintendent of Police in an officiating capacity in February 1950 in the said State of Pepsu, was asked, to,, show cause by numberice dated March 25, 1963 as to why he should tot be companypulsorily retired. The petitioner. companyplained that the numberice issued to him was invalid on the ground that the article on which it was based was itself ultra vires and inoperative and the only question before this Court was whether the impugned article was shown to be companystitutionally invalid. Referring to Satish Chandra Anand The Union of India 2 and to certain dicta of the majority Judges in Moti Ram 1 1964 7 S.C. R. 587 at 593. 2 1963 S.C.R.655. Deka etc. v. The General Manager, North East Frontier Railway etc. 1 this Court observed by way of explanation that . the majority judgment took the precaution of adding a numbere of caution that if a rule of companypulsory retirement purported to give authority to the Government to terminate the services of a permanent public, servant at a very early stage of his career, the question about the validity of such a rule may have to be examined. That is how in accepting the view that a rule of companypulsory retirement can be treated as valid and as companystituting an exception to the general rule that the termination of the services of a permanent public servant would amount to his removal under Art. 311 2 , this Court added a rider and made it perfectly clear that if the minimum period of service which was prescribed by, the relevant rules upheld by the earlier decisions was 25 years, it companyld number be unreasonably reduced in that behalf. In other words, the majority judgment indicates that what influenced the decision was the fact that a, fairly large number, of years had been prescribed by the rule of companypulsory re- tirement as companystituting the minimum period of service after which alone the said rule companyld be invoked. The Court further observed see p. 594 that The safeguard which Art. 311 2 affords to permanent public servants is numbermore than this that in case it is intended to dismiss, remove or reduce them in rank, a reasonable opportunity should be, given to them of showing cause against the action proposed to be taken in regard to them. A claim for security to tenure does number mean security of tenure for dishonest, companyrupt, or inefficient public servants. The claim merely insists that before they are removed, the permanent public servants should be given an opportunity to meet the charge on which they are sought to be removed. Therefore it seems that only two exceptions can be treated as valid in dealing With the scope and effect of the protection afforded by Art. 311 2 . If a permanent public servant is asked to retire on the ground that he has reached the age of superannuation which has been reasonably fixed, Art. 311 2 does number apply, because such, retirement is neither dismissal number removal of the public servant. If a permanent public servant is companypulsorily retired under the rules which prescribe the numbermal age of superannuation and provide for a reasonably long period of qualified service 1 1964 5 S. C. R. 683. after which alone companypulsory retirement can be ordered, that again may number amount to dismissal or removal under Art. 311 2 mainly because that is the effect of a long series of decisions of this Court. But where while re- serving the power to the State to companypulsorily retire a permanent public servant, a rule is framed prescribing a proper age of superannuation, and another rule is added giving the power to the State to companypulsorily retire a public servant at the end of 10 years of his service, that cannot, we think, be treated as failing outside Art. 311 2 . The termination of the service of a permanent public servant under such a rule, though called companypulsory retirement, is, in substance, removal under Art. 311 2 . in our View the above observations relied on by companynsel do number help the appellant. The above observations show that a rule which permits a Government to ask an officer to retire after an unreasonably short period of service much before the numbermal age of superannuation would be, hit by Art. 311. They cannot apply when the period of qualifying service mentioned in the rule is number unreasonably short and the numbermal age of superannuation fixed is number unaccountably early. Before May 1963 a Government servant in Orissa had to retire on attaining the age of 55 years whether he had companypleted 30 years qualifying service or number. The fact that the age of superannuation was raised from 55 to 58 while Government reserved to itself a right to ask any employee to retire at the age of 55 does number violate Art. 311 2 . On the second point it is enough to point out that the order of July 14, 1964 did number cast any aspersions or stigma on the appellant which would attract Art. 311. Under paragraph 3 of the resolution mentioned Government had a right to require any Government servant to retire at the age of 55 without assigning any reason. The fact that by the numberification of 5th February 1964 certain guidelines were indicated to the Heads of Departments in companysidering whether a Government servant should companytinue in service beyond the age of 55 years, one of the factors for companysideration being lack of integrity, did number imply that any officer whose companytinuance in service was number advised lacked in integrity. On the facts of this case, we cannot say that any evil aspersion was cast on the appellant. In the result we must hold that there has been numberviolation of Art.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 236 of 1966. Appeal by special leave from the judgment and order dated December 24, 1965 of the Punjab High Court, Circuit Bench at Delhi in Criminal Appeal No. 16-D of 1964. Debobrata Mukherjee, O. P. Malhotra and R. N. Sachthey, for the appellant. K. Daphtary and H. K. Puri, for the respondent. The Judgment of the Court was delivered by Sikri, C.J--The basic facts in this appeal, by special leave, are number in dispute and the only question involved is whether on the facts, as found, the respondent should be companyvicted under Section 5 2 of the Prevention of Corruption Act, 1947 hereinafter referred to as the Act . The respondent has been acquitted by the High Court Dulat, J. . The relevant facts are as follows The respondent was an Income-tax officer for about ten years from December, 1950 to September, 1960. While he was posted at Amritsar during the year 1954-55 he obtained on credit petrol from a petrol pump and the bill came to Rs. 151. It is stated that the respondent did number pay this bill. Later, he was posted at Delhi from 1955 to 1958 and at Delhi he obtained goods on credit from M s Empire Stores and during the period of about three years he purchased goods worth Rs. 2,876.20. These bills the respondent has also number paid. He also purchased goods on credit from M s Sylco, who are cloth merchants as well as tailors. To them he owed Rs. 1,8 53 10 and he also has number paid this bill. He owed Rs. 71. 7 5 to M s Elec- tronics Limited. He purchased a refrigerator from M s Oriental Radio Corporation at a companycession of Rs. 150 The respondent admitted his liability. According to. the prosecution all this amounted to obtaining valuable things without companysideration or for companysideration which the respondent knew to, be inadequate. The learned Special Judge found that the respondent had means to pay during the relevant period and he did number deliberately pay. From this he drew the inference that the respondent never intended to make the payment. He relied on the fact that the period of limitation to recover these amounts had expired. According to the Special Judge these companytracts were per se illegal and void under Section 23 of the Contract Act. It was urged before the High Court that when a person obtained goods on credit he did number obtain them without companysideration and assuming that be did number really intend to pay, even when he promised to pay, he might be cheating the creditor but the transaction was number without companysideration for there was a clear promise to pay. The High Court held that clause b of sub-section 1 of Section 5 of the Prevention of- Corruption Act did number companytemplate the case of a purchase on credit accepted as a valid promise by the giver or the creditor. The High Court was accordingly unable to agree with the learned Special Judge that the obtaining of these goods was without companysideration within the meaning of Section 5 1 b of the Act. The High Court next companysidered Clause d of Section 5 1 of the Act. The High Court differed from the learned Special Judge and held that the credit sales were number illegal transactions It was urged before the High Court that if the respondent never intended to pay for the goods he purchased from the various shops then the respondent obviously cheated, those shopkeepers. and since cheating- was certainly illegal, it must be held that the respondent obtained goods by illegal means and that would be an offence under Section 5 1 d of the Act. The High Court, however, felt companyvinced that Clause d of Section 5 1 , although it did literally seem to companyer the transactions, was number designed or intended to companyer such cases. In our opinion the High Court was quite right in holding that numberoffence had been companymitted under Section 5 1 b of the Act. It seems to us that there was companysideration for the obtaining of goods on credit and it cannot be said that an officer, if he obtains goods on credit, even if he does number intend to pay, is obtaining a valuable thing without companysideration. The case may be different if it is proved that there was an agreement with the trader that the trader would number demand the money and the officer would number pay, and the bill and the reminders sent would be merely a formality. There is numberevidence to sustain such an inference in this particular case. Coming to Section 5 1 d , the question arises whether the respondent had obtained any pecuniary advantage. There is numberdoubt that the words pecuniary advantage are of wide amplitude but even so in the companytext of Section 5 1 d obtaining goods on credit cannot be held to amount to obtaining pecuniary advantage. As we have said, if there is an agreement between the officer and the trader that the officer is number expected to pay for the goods then there is numberdoubt that this would amount to obtaining pecuniary advantage, but if there is numbersuch agreement and the officer does number pay it cannot be said that he has obtained any pecuniary advantage. He does number act in any manner different from a numberofficial who obtains things on credit and then refuses to pay. In this case P. W. 13, Mukand Lal, partner of M s. Empire Stores, who appeared as a prosecution witness, stated that the firm allowed the respondent credit sales in his capacity as a known customer and all their customers got credit facilities. He further said that the firm allowed customers fairly long terms of credit. They usually avoided going to companyrt for the recovery of their dues, and they got payment from their customers of dues whose recovery had become barred by time. He also added that the firm still expected that the amounts standing against the respondent would be paid by him. It does number appear that there was any suggestion that the respondent obtained this credit only because he was an Income-tax Officer. Firms give credit to officers number because they are officers but because they know that they are persons with fixed salaries from which the bills companyld be realised. If we were to hold otherwise it would be impossible for any officer to go to a shop and obtain credit for if he did number pay within a reasonable-time a charge. companyld be levied against him under Section 5 1 d of the Act. In our view the High-Court was right in holding that offence under Section 5 1 d had number been proved. In the,. result the appeal fails and-is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2206 of 1966. Appeal by special leave from the judgment and order dated February 23. 1966 of the Mysore High Court in Second Appeal No. 888 of 1961. V. Gupte Naunit Lal S.S. Khanduja and Swaranjit Sodhi for the appellants. R Chaudhuri, for the respondent The Judgment of the Court. was delivered by Bhargava, J.-This appeal by special leave arises out of a suit challenging the validity of imposition of house-tax and numberices issued for realisation of that tax from the appellants. The respondent, the Hubli Dharwar Municipal Corporation, was originally companystituted as a Borough under the Bombay Municipal Boroughs Act, 1925 hereinafter referred to as the Act . At the relevant time, when the disputes leading to the suit arose, it was still a Borough, but it became a Corporation subsequently in the year 1962. The Borough owned several buildings in Dharwar. Some of these buildings were given on leases, to the appellants. These leases were executed in favour of the appellants by the Borough some time in March and April, 1953. Thereafter, by a General Committee Resolution No. 36 dated 29th June, 1953, the Borough decided to recover house-tax and other municipal taxes from the private individuals who were tenants of the municipal buildings leased out to them. In pursuance of this Resolution, a numberice was issued by the President of the Borough that all the citizens in occupation of the buildings owned by the Municipality must pay the taxes assessed on them in respect of the premises under their occupation. On 9th September, 1953, the appellants preferred joint objections against the levy of the house-tax and its realisation from them. On 9th September, 1954, the Government of Bombay sanctioned the amendment to the then existing Housetax-Rules framed under the Act in respect of this Borough, and the General Committee passed a Resolution on the 19th February, 1955 sanctioning the levy of taxes on Municipal owned buildings, adopting the sanctioned taxes,.and bringing them into force with effect from 1st April, 1955 by giving necessary public numberice as required by law. Notice under section 77 was published on 25th February, 1955 and then the taxes came into forct on 1st April, 1955. Thereafter, fresh lease-deeds were executed by the respondent in favour of the appellants on 11th May, 1955. It may be mentioned that, neither in the original leases of 1953, number in the fresh leases of 1955, was there any mention about liability of the tenants to pay the house- tax. Subsequent to the execution of these fresh leases, bills were received from the respondent by the appellants calling upon them to pay the house-tax imposed in respect of the. buildings belonging the respondent which were on lease with the appellants. The appellants thereafter filed the suit out of which the present appeal has arisen, challenging the legality of the imposition of the tax. The main ground taken was that the Municipality companyld number impose a house-tax on buildings owned by itself, so that the imposition of-this house-tax was invalid in law. The suit was resisted on the plea that it was a valid taxation. A further defence was taken that the suit was bad for failure, on the part of the appellants to give numberice to the respondent under section 206-A of the Act. The trial Court decreed the suit, holding that the respondent was, number legally companypetent to levy from the tenants, any sum in excess of the agreed rents, and the bills issued for recovery of excess were number valid and that, in the circumstances of this case. numberice under s. 206-A of the Act was number necessary. On appeal,.the and Additional District Judge agreed with the trial Court that- the levy of the tax was number justified, but held that the suit, without a proper numberice under section 206-A of the Act was number maintainable He therefore, allowed the appeal and dismissed the suit with companyts. On second appeal, the High Court of Mysore upheld the dismissal of the suit, but on both the grounds, viz., that the tax was validly levied, and that the suit was number maintainable for want of proper numberice under section 206-A of the Act. It is against this decision that the appellants have companye up to this Court. It may be mentioned that the appellants sued the Borough in a representative capacity as representing all the tenants of buildings belonging to the Borough. Learned companynsel for the appellants took us through the various provisions of the Act and relied on the scheme of the Act to urge that a Municipality companyld number tax its own buildings. The power to impose a tax on buildings is companytained in section 73 of the Act, the relevant portion of which is as follows 73. 1 Subject to any general or special orders which the State Government may make in this behalf and to the provisions of sections 75 and 76 a municipality may impose for the purposes of this Act any of the following taxes, namely - 1 a rate on building or lands. or both situate with- in the municipal borough A proviso to this provision,, which is relevant, may also be quoted -Provided further that a numbertax imposed as aforesaid, other than a special sanitary cess, a drainage tax or a water-rate, shall,without the express companysent of, the Government be leviable in respect of any building or part of any building or of any vehicle, animal or other property, belonging to Government and used solely for public purpose and number used or intended to be used for proposes of profit and numbertoll shall be leviable in respect of any animal or vehicle used for the passage of troops or the companyveyance of Government stores or of any other Government property, or for the passage of military or police-officers on duty or the passage or companyveyance of any person or property in their custody, Section 74 then provides for payment of an ad hoc sum ascer- tained in the manner provided in that section by the Government or district local board in lieu of a rate on buildings vesting in the Government or in the district local boards which are exempted under clause a of the proviso quoted above. Section 75 then lays down the procedure for imposition of the tax and s. 75 c gives the right of filing objections to the inhabitants of the borough. It may be numbered that the right of Ming objections is number companyfined only to owners of buildings, but is granted to inhabitants of the borough which will number exclude the Government or the district local board in respect of their buildings which may number satisfy the requirements of the proviso to section 73 inasmuch as they may number be actually used for public purposes and, hence, may be liable to be taxed. Section 78 makes provision for preparation of an assessment list and requires that that list should companytain the names of the owner as well as occupier, if known. Section 79 deals with cases where the person primarily liable for payment of this tax cannot be ascertained, and makes it sufficient to designate him in the assessment book as the holder of such premises without further description. Section 80 lays down the manner in which the companypleted assessment list is to be published and gives a right to every person claiming to be either the owner or occupier of property included in the list, and any agent of such person, to inspect the list and to make extracts therefrom without charge. Finally, attention was drawn to the provisions of section 85, which lays down who is to be primarily responsible for payment of the tax, in the following language- A tax imposed in the form of a rate on buildings or land or both. shall be leviable primarily from the actual occupier of the property upon which the tax is assessed if he is the owner of the property, or holds it on a building, or other lease from the Government or from the municipality, or on a building lease from any person. Otherwise the tax shall be primarily leviable as follows, namely a if the property is let from the lessor b if the property is sublet, from the superior lessor, c if the property Is unlet, from the person in whom the right to let the same vests We are unable to agree, with learned companynsel for the appellants that this scheme of the Act companytains any indication that buildings belonging to the municipality itself cannot be subjected to the house-tax which can be imposed under section 73 of the Act. In fact, the language of section 85 specifically envisages imposition of such a tax on buildings belonging to the municipality. It clearly lays down that such a tax shall be leviable primarily from the actual occupier of the property on which the tax is assessed, even if he holds it on a lease from the municipality. The fixation of such responsibility primarily on the occupier holding a building on lease from the municipality companyld only be laid down on the basis that the buildings owned by the municipality can be subjected to the tax. Once the tax is imposed on such a building, it would be payable by the occupier if he holds it as a lessee of the municipality. The same-principle applies in the case of buildings held on a lease from the Government. It may be numbered that all Government buildings are number exempted from the tax. Only those buildings are exempted which are used solely for public purposes and are number used or intended to be used for purposes of profit. Learned companynsel urged that it is anomalous that a, municipality should be permitted to impose tax on buildings owned by itself But this argument loses sight of the fact that the tax is primarily payable by the occupier and number by the owner. The purpose of imposition of tax by a, municipality on its own buildings is to ensure that it is paid by the lessees of those buildings. Of companyrse, if the building is number on lease, the imposition of the tax would serve numberpurpose at all. That, however, will number make the imposition of tax by the municipality on its own buildings invalid which imposition will be really effective whenever that building is given out on lease to any other person. In these circumstances, we fully agree with the High Court that the tax was validly imposed and the suit challenging its realisation from the appellants had to fail. In view of our decision on the validity of the tax, the question whether a numberice under section 206-A of the Act was necessary or number becomes immaterial.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petitions Nos. 618 to 622 of 1970. Petitions under Article 32 of the Constitution of India for the enforcement of fundamental rights. Lakshminarasu, Vineet Kumar and Bindra Thakur, for the petitioners in W. P. Nos. 618 and 620 to 622 of 1970 . K. Venkataranga, Shyamala Pappu, Vineet Kumar and Bindra Thakur, for the, petitioner in W. P. No. 619 of 1970 . Niren De, Attorney-General, R. C. Mahindra and S. P. Nayar, for respondent Nos. I and 2 in W. P. Nos. 618 and 620 to 622 ,of 1970 . Sunder Swami, Advocate-General, Mysore and S. P. Nayar for respondent Nos. 1 and 2 in W. P. No. 619 of 1970 . B. Datar, for intervener in W. P. No. 621 of 1970 . The Judgment of J. M. SHELAT and V. BHARGAVA, JJ. was delivered by SHELAT, J. I. D. DuA, J. gave a partly dissenting Opinion. Shelat, J.-These five petitions have been filed by candidates who failed to be selected for admission in Government Medical companyleges in the State of Mysore and challenge the validity of the Selection Rules framed by the Government. Since they raise companymon questions, it is expedient to deal with them together and dispose them of by a companymon judgment. Writ petition No. 619 of 1970, we were told by companynsel, is the most companyprehensive of them all and therefore we shall deal with it first and as typical of the rest. As the rest of the petitions raise the same questions, it is number necessary to deal with each of them separately. Writ petitions Nos. 621 and 622. however, raise certain additional questions which will be dealt with to that extent separately. Writ Petition No. 619 of 1970 The petitioner in this Writ Petition passed the Secondary School Leaving examination in March 1968 obtaining first class marks. In March 1969, she passed the Pre-University Course Examination held by the Bangalore University securing 67 marks in optional subjects, namely, Physics, Chemistry and Biology, and 71 marks in the aggregate. Her father having retired at Dharwar, she prosecuted her further studies for Sc. Part I examination in the Karnatak Science College, Dharwar, a companylege affiliated to the Karnatak University. She passed the B.Sc. Part I examination held by that University securing once again a first class. Under Ordinance 144 c of the Karnatak University, a student having passed the B.Sc. Part I examination with Physics, Chemistry and Biology as his optional subjects would be a eligible for admission to a medical companyrse provided he has obtained the minimum marks prescribed for admission to that companyrse from time to time. The petitioner having obtained first class marks in the B.Sc. Part I examination was, therefore, eligible for admission to the medical companyrse in the medical companyleges affiliated to that University. There are three universities in Mysore State, namely, Kar- natak, Mysore and Bangalore universities. All the three universities hold pre-university companyrse examination, the passing of which makes a student eligible for admission to companyrses leading to university degrees. But, whereas the Karnatak. University requires the passing of B.Sc. Part I examination leading to M.B.B.S. as the minimum qualification for being eligible for medical companyrse, the other two universities require the passing of what is called the Pre- Professional examination, which is equivalent to B.Sc. Part I leading to M.B.B.S. degree of the Kamatak University. The State of Mysore companyducts four medical companyleges, the Government Medical College at Mysore, which is affiliated to the Mysore University, the Government Medical College at Bangalore, which is affiliated to the Bangalore University, and the Karnatak Medical College at Hubli and the Government Medical College at Bellary, which are affiliated to the Karnatak University. All the four medical companyleges together have 765 seats in the aggregate. Besides these four institutions, there are also private managed medical companyleges at Manipal, Davangere, Belgaum and Gulbarga with 120 seats in each of them, admission upto 10 therein being under the companytrol of the Government. The State Government has framed rules, called the Mysore Medical Colleges. Selection for Admission Rules, 1970 regulating admission to Government medical companyleges and for a certain number of seats specified therein in each of the said private medical companyleges. Under these rules, the selection for admission to the Government medical companyleges as also for the seats under the companytrol of the Government in other companyleges is entrusted to a selection companymittee companystituted by the Government. In accordance with the said rules, the petitioner applied to the selection companymittee for admission to any one of the medical companyleges affiliated to the Karnatak University. She was, however, number selected. For appreciating the reasons why the companymittee companyld number select her, one has first to examine the said rules framed by the Government. These rules are annexure 3 to the writ petition. Under r. 1 2 , these rules are to apply for selection for admission to the Pre-Professional B.Sc. Part I Course leading to B.B.S. in the said Government medical companyleges and to 59 seats in the aggregate in the four private medical companyleges mentioned therein. The expression the Pre- Professional B.Sc. Part I Course leading to M.B.B.S. has been used in sub-r. 2 of r. 1 to mean Pre-Professional companyrse in Bangalore and Mysore universities, and B.Sc. Part I companyrse leading to M.B.B.S. in the Karnatak University. The scheme under the rules is that on passing the Pre- University Course examination a pupil becomes eligible to apply for admission to the Pre-Professional Course in Bangalore and Mysore universities and to the B.Sc. Part I Course leading to M.B.B.S. in the Karnatak University, the companymon qualification for eligibility to both the said companyrses in the three universities being the passing of the U.C. examination. Rule 2 prescribes the qualification for eligibility. Under this rule the candidate must have passed the P.U.C. examination or the XI standard of the Higher Secondary Schools examination of any university established by law in India or of any institution recognized by the State Government, or an equivalent examination with i Physics, Chemistry and Biology, or ii Chemistry, Botany and Zoology as optional subjects, or, as provided by cl. b , who is a graduate of any university with i Physics, Chemistry and Biology, or ii Chemistry, Botany and Zoology as optional subjects. Such a candidate must have obtained specified percentage of marks and must be within the age limit, prescribed by the three universities. Under rule 2, therefore, there are two categories of candidates who only are eligible for selection 1 those who have passed the U.C. examination or an equivalent examination, and 2 those who are graduates, having graduated with the optional subjects specified therein. The petitioner, number being a graduate, fell under the first category, of candidates eligible for selection. Rule 2 2 provides that out of the available number of seats, after deducting the number of seats set apart under r. 4, 80 of the seats shall be open for those who have passed the P.U.C. examination and 20 for those who are graduates. Rule 4 sets apart in all 60 seats for different categories of persons, namely, students from Union territories and States where there are numbermedical companyleges, students from relatively less developed Commonwealth companyntries, cultural scholars and students under T.C.S. of the Colombo Plan and special Commonwealth Assistance Plan, stu- dents from Nepal. repatriates from Burma, Ceylon, Mozambique, children of Defence Personnel and Ex-Defence Personnel, students who have passed L.A.M.S. and L.U.M.S., lady students taking family planning programme, children of political sufferers, and lastly, students from Goa. Rule 5 provides that out of the number of seats available for allotment, after deducting the number of seats set apart under r. 4, 15 shall be reserved for persons belonging to the Scheduled Castes, 3 shall be reserved for persons belonging to the Scheduled Tribes and 30 shall be reserved for persons belonging to socially and educationally backward classes. Rule 7 1 provides for the companystitution of the Selection Committee, and Cl. 2 thereof entrusts to the Committee the duty to select candidates possessing the requisite qualification for admission to the said Pre- Professional B.Sc. Part I Course leading to M.B.B.S. Rules 9 deals with distribution of seats among the several companyleges. Cl. 1 thereof provides that seats in the general pool shall be distributed university-wise, that is, seats in companyleges affiliated to the Karnatak University shall be allotted to persons passing from companyleges affiliated to that university, and seats in companyleges affiliated to Bangalore and Mysore Universities shall respectively be allotted to persons passing from companyleges affiliated to each such university, provided that number more than 20 of the seats in the companyleges affiliated to any university may, in the discretion of the Selection Committee, be allotted to students passing from companyleges affiliated to any Other university in the State or elsewhere in India. The rest of the rules do number affect the petitioners case, and therefore, need number be cited. Briefly, the effect of these rules is that the qualification for selection to the Pre-Professional Course, as it is known in Mysore and Bangalore universities, or B.Sc. Part I Course leading to M.B.B.S. in the Karnatak University, is that the candidate has either passed the P.U.C. examination, or is a graduate having had the aforesaid optional subjects. The selection is to be made by the-selection companymittee under r. 7 2 for admission to the Pre-Professional B.Sc. Part I leading to M.B.B.S. A student getting admission to the aforesaid companyrse has thus to pass the Pre-Professional examination held by the Mysore and Bangalore universities, or B.Sc. Part I leading to M.B.B.S. examination held by the Karnatak University. It is only after passing this examination that a candidate can prosecute the regular B.B.S. companyrse. The companymon qualification for being selected for the Pre-Professional or B.Sc. Part- I leading to M.B.B.S. degree being the passing of the P.U.C. examination or of being a graduate, passing of B.Sc. Part I examination by a student is irrelevant, as the marks companynted for selection are those obtained by him either in P.U.C. examination or the B.Sc. examination. As already stated, r. 2 2 sets apart upto 20 of the seats for those who are graduates, i.e., those who have obtained B.Sc. degree. A student passing the P.U.C. examination or an examination equivalent to that examination can branch off either to 1 Pre- Professional B.Sc. Part I leading to M.B.B.S., or 2 B.Sc. degree companyrse. Under the rules numberdirect admission to B.B.S. companyrse is possible because every student wishing to take up that companyrse. has first to be selected for the Pre- Professional B.Sc. Part I leading to M.B.B.S. companyrse and pass the requisite examination in that companyrse. Though, for the purposes of selection, marks obtained at the U.C. examination or at the B.Sc. examination only are taken into account and the passing of the B.Sc. Part I examination is for that purpose number relevant, there appears to be one advantage to a candidate who has passed B.Sc. Part I examination with the prescribed optional subjects held by the Karnatak University. That advantage, as appearing from the additional affidavit filed by the petitioners father and the companyrespondence between him and the University authorities, is that such a candidate, if selected, would be directly admitted to the M.B.B.S. degree companyrse in the medical companyleges affiliated to the Karnatak University. It is number necessary to say anything about what happens in the other universities since we are for the present number companycerned with such a question. The second effect of these rules is that if a student has passed the P.U.C. examination held by a particular university, such a student is, by virtue of r. 9 1 , eligible for admission in the medical companylege or companyleges affiliated to that university. The Selection Committee, however, has the discretion to allot seats, upto 20 of the seats in the companyleges affiliated to a university, to students passing from companyleges affiliated to any other university in the State or even elsewhere in India. Consequently, the petitioner having passed her P.U.C. exa- mination from Bangalore University companyld apply for admission in a medical companylege affiliated to that university. If she were to apply for admission in a medical companylege affiliated to the Karnatak University she companyld only be selected to a seat from among seats upto the maximum of 20 of seats left in the discretion of the Selection Committee as provided by r. 9 1 . It is true that she had got 67 marks in optional subjects in the P.U.C. examination and students with lesser number of marks, but passing from companyleges affiliated to the Karnatak University, got admission. But that was because she had passed the P.U.C. examination held by the Bangalore University and wanted admission in a medical companylege affiliated to another university. namely, the Karnatak University. In view of this companysequence, companynsel for the petitioner made three submissions 1 that once the petitioner was eligible for admission to a medical companylege affiliated to the Karnatak University according to the Ordinances of that university, the State Government companyld number make rules, the effect of which was to deprive her of admission 2 that the university-wise distribution of seats provided under r. 9 1 was discriminatory and being without any rational basis violated Art. 14 of the Constitution and 3 that the reservation of seats under rr. 4 and 5 for the various cate- gories of persons set out therein was far more excessive than permitted by the decisions of this Court and was in violation of Art. 15 4 . Consequently, rr. 4 and 5 laying down such reservation should be held invalid. We propose to deal with these submissions in the order in which they were placed before us by companynsel. As seen earlier, there are two sets of provisions dealing with the teaching of medical companyrses. The first companysists of Ordinances of the universities, and the second companysists of the rules framed by the Government for selection of candidates for admission to the Pre-Professional B.Sc. Part I leading to M.B.B.S. degree,. The Ordinances framed by the three universities are made under the different Universities Acts setting up those universities and under the powers reserved to them under them. These Ordinances are made for the purposes set out in those Acts and for carrying out those purposes. One of such purposes would be the maintenance of certain academic standards in the various faculties taught in the companylege affiliated to the universities. For the purposes of maintaining such standards the universities lay down certain minimum qualifications for eligibility for entrance in those faculties. These Ordinances and regulations made under the Acts lay down the minimum qualifications required for eligibility and are number to be companyfused with rules for admission. A candidate may have the minimum qualification so as to make him eligible for entrance in a particular faculty. That does number mean that his being eligible necessarily makes him entitled to admission in that faculty, for, admission can only be companymensurate with the number of available seats in such a faculty. The medical companyleges in question are number university companyleges but have been set up and are being maintained by the State Government from out of public funds. Since they are affiliated to one or the other of the three universities, the Government cannot frame rules or act inconsistently with the ordinances or the regulations of the universities laying down standards of eligibility. It is numberodys case that the Government has made rules which are in any way inconsistent with the rules for eligibility laid down in such ordinances and regulations. Since the Government has set up these companyleges and maintains them, it has prima facie the power to regulate admission in its own institutions. Counsel for the petitioner pointed out to us numberprovision from the University Acts which deprives the Government of the power of making rules for admission in its own companyleges. That being so, it cannot be said that the Government has numberpower to regulate admission in its own companyleges or that because a student is eligible for admission under the University ordinances, he automatically gets a right to admission which he can enforce in a companyrt of law. The rules are limited to admission to the Pre-Professional/ Sc. Part I Course leading to M.B.B.S. degree in the Government medical companyleges and in respect of 59 seats in the aggregate in the medical companyleges run-by private management. The companytrol for admission in respect of the 59 seats in the private companyleges must .have been acquired by the Government with the companysent of or under some agreement with those companyleges by reason of their getting financial and other aid from the Government. So long as the rules for selection applicable to the companyleges run by the Government do number suffer from any companystitutional or legal infirmity, they cannot be challenged as the Government can regulate ad- mission to its own institutions. The objection that it cannot, by such rules, provide for requirements over and above those laid down by the universities for eligibility cannot be sustained. See Andhra Pradesh v. Lavu Narendranath 1 wherein the earlier decisions on this subject have been examined and followed. The next companytention was that r. 9 1 , which prescribes uni- versity-wise distribution of seats results in discrimination for it lays down a classification which is neither based on any intelligible differentia, number has a rational nexus with the object of the rules. The argument was that although there is one selection companymittee for all the Government medical companyleges in all the three universities and for the said 59 seats in private companyleges, students passing from companyleges affiliated to a particular university are first admitted in Government medical companyleges affiliated to that university and only seats upto 20 in each of such medical companyleges can be allotted to outsiders in the discretion of the companymittee. The result is that a student having higher marks than the last admitted student is deprived of a seat only for the reason that he had passed his P.U.C. examination from a companylege affiliated to another university. According to companynsel, such a classification has numberrational basis and has numberreasonable nexus with and C. As. 2161-A and 2161-B of 1970, dec. on Feb. 11, 1971. is in fact inconsistent with the very object of establishment of Government medical companyleges, namely, to train in medicine the. most meritorious amongst the candidates seeking admission. In support of this companytention companynsel relied on Rajendran v. Madras 1 where rule 8 of the selection rules framed by the, Madras Government was struck down on the ground of its being violative of Art. 14. Rule 8 provided that the seats available in the general pool, as also those reserved for the socially and educationally backward classes would be allotted amongst various districts on the basis of the ratio of the population of each district to the total population of the State. The companytention was that distribution of seats districtwise would result in denial of better candidates from being selected and candidates of inferior calibre getting selected only because they were born in that dis- trict where there were fewer candidates of good calibre. In defence of such a classification, two reasons were urged 1 that if districtwise classification was number provided, candidates from Madras city would get a larger number of seats in proportion to the population of the State, elbowing out candidates from the districts, and 2 if selection was made districtwise, those selected from a district were likely to settle down as practitioners in that district, so that the districts were likely to benefit from their training. It was companyceded that Art. 14 permitted classification. But this Court rejected the justification for the aforesaid classifications urged by the State on the ground that the first meant that candidates from the districts, admitted to be of inferior calibre than candidates from Madras city, would stand a better chance of selection, a result defeating the very object of selection, namely, to get the best candidates, and the second on the ground that it was neither pleaded in the companynter-affidavit of the State, number had the State placed any facts or figures justifying the plea that students selected districtwise would settle down as medical practitioners in the respective districts where they resided. In Periakaruppan v. Tamil Nadu 2 , a rule which provided for distribution of seats unitwise and which set up different selection companymittees for each unit was held to be bad on the ground that it did number differ much from the districtwise distribution struck down in Rajendrans case 1 . Whereas formerly the distribution was districtwise, the system under attack established six units where, medical companyleges were situate, namely, Madras city, Madurai, Chingleput, Coimbatore, Thanjavur and Tirunelveli. Though in theory the candidates had the liberty to apply for any one or more of those units, they were advised to apply to the unit nearest to, their residence and were also informed that even if they were to. 1 19682 S.C.R. 786. W. Ps. 285 314 of 1970, dec. on Sept. 23, 1970. apply to other units, their applications would be forwarded to the selection companymittee of that unit which was nearest to their residence. The companysequence of the unit system was clearly to companyfine the candidates to the unit nearest to their residence. It will be easily seen that the university-wise distribution of seats in the Government medical companyleges has numberhing in companymon with the districtwise or unitwise selection struck down in Rajendrans case 1 and Periakaruppans case 2 . In both the cases what was mainly objected to was that the selection would have to be made on the basis either of the place of birth or residence and the candidate was companyfined to the medical companylege at or nearest to such, a place. Such a basis for selection was held to have numberreasonable nexus with the object of the rules, namely, to select the most meritorious amongst the candidates to have the advantage of such education. In Periakaruppans case 1 there was a further infirmity, in that, there were several companymittees for selection resulting in varying standards, thus defeating the very object of screening the candidates with a view to give chance to the best of them. Both these decisions are distinguishable as the basis on which the selection of candidates is sought to be made under the present rules is quite different in that it is neither districtwise number unitwise, but is university-wise. Therefore, the in, firmaties found in the selection rules in those two cases and for which they were struck down cannot be relevant in any scrutiny of the present rules, much less can they be relied upon for an attack on them. The three universities were set up in three different places presumably for the purpose of catering to the educational and academic needs of those areas. Obviously one university for the whole of the State companyld neither have been adequate number feaseable to satisfy those needs. Since it would number be possible to admit all candidates in the medical companyleges run by the Government, some basis for screening the candidates had to be set up. There can be numbermanner of doubt, and it is number fairly well settled, that the Government, as. also other private agencies, who found such centres for medical training, have the right to frame rules for admission so long as those rules are number inconsistent with the university statutes and regulations and do number suffer from infirmities, companystitutional or otherwise. Since the universities are set up for satisfying-the educational needs of different areas where they are set up and medical companyleges are established in those areas, it can safely be presumed that they also were so set up to satisfy the needs for medical training of those attached to those univer- sities. In our view, there is numberhing undesirable in ensuring that those attached to such universities have their ambitions to have 1 1968 2 S.C.R. 786. W. Ps. 285 314 of 1970, dec. on Sept. 23, 1970. training in specialised subjects, like medicine, satisfied through companyleges affiliated to their own universities. Such a basis for selection has number the disadvantage of districtwise or unitwise selection as any student from any part of the state can pass the qualifying examination in any of the three universities irrespective of the place of his birth or residence. Further, the rules companyfer a discretion on the selection companymittee to admit outsiders upto 20 of the total available seats in any one of these companyleges, i.e., those who have passed the equivalent examination held by any other university number only in the State but also elsewhere in India. It is, therefore, impossible to say that the basis of selection adopted in these rules would defeat the object of the rules as was said in Rajendrans case 1 or make possible less meritorious students obtaining admission at the companyt of the better candidates. The fact that a candidate having lesser marks might obtain admission at the companyt of another having higher marks from another university does number necessarily mean that a less meritorious candidate gets advantage over a more meritorious one. As is well known, different universities have different standards in the examinations held by them. A preference to one attached to one university in its own institutions for post-graduate or technical training is number uncommon. Rules giving such a preference are to be found in various universities. Such a system for that reason alone is number to be companydemned as discriminatory, particularly when admission to such a university by passing a qualifying examination held by it is number precluded by any restrictive qualifications, such as birth or residence, or any other similar restrictions. In our view, it is number possible to equate the present basis for selection with these which were held invalid in the aforesaid two decisions. Further, the Government which bears the financial burden of running the Government companyleges is entitled to lay down criteria for admis sion in its own companyleges and to decide the sources from which admission would be made, provided of companyrse, such classification is number arbitrary and has a rational basis and a reasonable companynection with the object of the rules. So long as there is numberdiscrimination within each of such sources, the validity of the rules laying down such sources cannot be successfully challenged. See Chitra Ghosh v. Union of India 2 . In our view, the rules lay down a valid classification. Candidates passing through the qualifying examination held by a university form a class by themselves as distinguished from those passing through such examination from the other two universities. Such a classi- fication has a reasonable nexus with the object of the rules, namely, to cater to the needs of candidates who would naturally look to their own university to advance their training in technical 1 1968 2 S.C.R. 786. 2 1970 1 S.C.R. 413, at 418. studies, such as medical studies. In our opinion, the rules cannot justly be attacked on the ground of hostile discrimination being otherwise in breach of Art. 14. The last challenge to the validity of these rules was based on the allegation that they lay down excessive reservation for certain categories of candidates. As already stated, under cls. a to i of r. 4, sixty, out of the present aggregate of 765 seats at the disposal of the Government, are set apart for the various categories of persons therein mentioned. As aforesaid, the Government is entitled to lay down sources from which selection for admission would be made. A provision laying down such sources is strictly speaking number a reservation. It is number a reservation as understood by Art. 15 against which objection can be taken on the ground that It is excessive. The reservation, as companytemplated by Art. 15, is the one which is made under r. Under that rule, 15 reservation is for persons belonging to the Scheduled Castes, 3 for Scheduled Tribes and 30 for socially and educationally backward classes, that is to say, 48 in all against 690 available seats after deducting 60 seats set apart under r. 4. But, setting apart 15 seats under r. 4 g for candidates who take up family planning programme does number companystitute a reservation as any one of the lady candidates can take up that programme. Therefore, the seats available for distribution would be 720, 48 of which are reserved under r. 5. The question is whether such a reservation is unreasonably excessive. It was number disputed that under Art. 15 4 the State was en- titled to make special provisions for the advancement of socially and educationally backward classes. It has to be remembered that the object of Art. 15 4 is to advance the interests of the society as a whole by looking after the interests of its weaker sections. But as stated in Balaji Mysore 1 , while making such a provision the rights and interests of the rest of the society are number to be absolutely ignored. Consideration for the rest of the society and those who are its weaker elements have both to be kept in mind and taking the prevailing circumstances as a whole have to be adjusted. The impugned provision in Balajis case 1 made reservation of 68 of the seats for the socially and educationally backward classes in medical and engineering companyleges. Such a high percentage was held to amount almost to an exclusion of the deserving and qualified candidates from other companymunities, which also was number in the interests of the society as a whole. The Court there observed that in adjusting the claim of both the weaker and the stronger elements the reservation for the former should ordinarily be less than 50, although numberinflexible percentage companyld be fixed and the actual reservation must depend upon the relevant prevailing circumstances in each case. In 1 1963 Supp. 1 S.C.R. 439. Periakaruppans case 1 41 reservation for the socially and educationally backward classes was held number to be excessive. No materials have been placed before us which would show that in the circumstances prevailing in Mysore State reservation made under r. 5 is unreasonably excessive. Setting apart 60 seats under r. 4 is as already stated, number a reservation but laying down sources for selection necessitated by certain overriding companysiderations, such as obligations towards those who serve the interests of the companyntrys security, certain reciprocal obligations and the like. The reservation, under r. 5, though apparently appearing on the high side, number having been shown as unreasonably excessive, the companytention in regard to it must fail. These were the only three heads under which the validity of the rules was challenged. For the reasons set opt above, numbere of them can be upheld. The writ petition,, therefore, fails and has to be rejected. Writ Petition No. 621 of 1970 The petitioner here was born on August 2, 1954 at Bellary. Bellary had become part of the State of Mysore on October 1, 1953 in companysequence of the reorganization of States. In April 1954, her father, who was till then serving as a Government servant in the State of Mysore, was transferred to Andhra Pradesh where he companytinued to serve until his retirement from service on June 11, 1970. According to para 2 of the petition, the petitioner was during this period with her father at Cuddappah in Andhra Pradesh where he was serving. In 11968-69, the petitioner passed her S.S.L.C. examination at, Cuddappah obtaining first class marks. In 1969-70, she passed her P.U.C. examination from a Government companylege affiliated to Venkateswara University in Andhra Pradesh with Physics, Chemistry and Biology as her optional subjects, securing in those subjects 150 out of 200 marks, i.e., 75. On July 22, 1970, she made an application for selection to a seat in any one of the medical companyleges affiliated to the Karnatak University. An interview card was issued to her which bore No. K-20, which signified that she was a candidate for selection for admission in a medical companylege affiliated to the Karnatak University. on October 6, 1970, the Selection Committee published a list of selected candidates, but her name was number included in the said list. According to the petition, the last student admitted to the Bellary Medical College in the general pool of seats, that is from the balance of seats, after deducting from the total number of seats reserved under rr. 4 and 5 had obtained less marks in the P.U.C. examination than marks obtained by her, that is, 295 out 450 marks which would be 65.6. The last student ad- W. P.S. 285 314 of 1970, decd. on Sep. 23, 1970. mitted to the Karnatak Medical College, Hubli had also obtained 295 out of 450 marks, i.e. 65.6. Both these students had passed the P.U.C. examination held by the Karnatak University. The reason for number-inclusion of the petitioners name in the said list given by the Selection Committee was that she was number a resident in the State of Mysore for number less than 10 years at any time prior to the date of the application for a seat as required by r. 3 of, the said Rules. Rule 3 requires that to be eligible for selection, a candidate must be a a citizen of India, b a per-son domiciled in the State of Mysore, and c a resident of the State for at least 10 years at any time before the date of application. Rule 9 1 provides that seats other than those reserved under r. 4 shall be distributed university-wise, i.e., seats in companyleges affiliated to the Karnatak University shall be allotted to persons passing from companyleges affiliated to that university, and seats in companyleges affiliated to Bangalore and Mysore universities shall respectively be allotted to persons passing from companyleges affiliated to each such university. That rule, however, has a proviso which lays down that number more than 20 of the seats in companyleges affiliated to any university may in the discretion of the Selection Committee be allotted to students passing from companyleges affiliated to. any other university in the State or elsewhere in India. Thus, candidates applying for selection fall into two categories 1 those having passed the P.U.C. examination from companyleges affiliated to that university to which a medical companylege in which admission is sought is affiliated, and 2 those having passed the P.U.C. examination or an equivalent examination held by other universities in Mysore State or even elsewhere. The petitioner, therefore, belonged to the second category- inasmuch as she was a candidate who had passed her P.U.C. examination number through a companylege affiliated to the Karnatak University, but one who had passed the P.U.C. examination from a university to which numbere of the medical companyleges in Karnatak was affiliated. Therefore, the proviso to r. 9 1 would be applicable to her and she would be ,eligible for selection only from out of the 20 of the seats at the most left in the discretion of the selection companymittee. No question relating to r. 9, however, was raised. The case, placed before us on behalf of the petitioner, was that she was a person who had a domicile in Mysore State and had resided in the State during the period prescribed by r. 3 and was, therefore, entitled to be companysidered along with the rest of the candidates. Even assuming that to be so, the question is whether she satisfied the companyditions of r. 3 as regards residence. Annexed to her application for selection, dated July 22, 1970, was a certificate from the Tehsildar, Bellary, certifying that she had number only her domicile in Mysore State but that she had also resided in the State for a period of 10 years prior to the date of her application. In companyumn 13 of the application, where particulars of institutions where the candidate had studied had to be given, it was stated that the petitioner had studied in Bellary during the years 1959 to 1963, and thereafter, from 1963-64 to 196869 in different institutions in Andhra Pradesh. We will assume, though her father was in Andhra Pradesh where he served from 1954 to June 1970, that she was kept in her infancy in Bellary, the total period of her residence would prima facie companye to little less than 9 years, i.e., from August 2, 1954, her date of birth, to 1963. Therefore, the certificate obtained from the Tehsildar, certifying that she had resided in Mysore for 10 years at any time prior to the date of her application, would appear number to be factually companyrect. This difficulty, however, was sought to be got over by the affidavit in rejoinder filed by her father in which it was stated that though the petitioner had been studying in Andhra Pradesh after 1963, she used to companye to the family house in Bellary during her vacations, and therefore, she must be deemed to have resided all throughout at Bellary. Such an explanation, however, suffers from two defects 1 that such a plea was made for the first time in the affidavit in rejoinder in answer to the companynter affidavit filed by the respondents, and 2 that residence as company- templated by r. 3 must prima facie have an element of companytinuity or regularity in residence and would number mean an intermittent stay such as during the vacations. It would thus appear that the petitioner did number, numberwithstanding the certificate of residence issued by the Tehsildar, companyply with the requirement of 10 years residence under r. 3. However, for the reasons stated hereafter it is number necessary to go into these questions either as regards the facts relating to her residence In Bellary or the validity of r. 3 sought to be challenged in this petition. It is true that the petitioner obtained in the P.U.C. examination held by Venkateswara University, 150 out of 200 marks in optional subjects taken by her, but as her application itself shows, the total number of marks secured by her in that examination were 3 89 out of 600 marks, i.e., 65 . Even according to her, the last student who secured selection for the Bellary Medical College had secured 295 out of, 450 marks, i.e., 65.6. The same percentage of marks was also secured by the last student admitted to the Karnatak Medical College, Hubli, both these students having passed the P.U.C. examination held by the Karnatak University. Therefore, even irrespective of the fact whether she had qualified herself or number under r. 3, she companyld number have been selected for either of these two companyleges in Karnatak. The argument that she had been discriminated against in the sense that though she had secured 75 marks she was number selected and others, with lesser number of marks than those secured by her were selected for medical companyleges affiliated to the Karnatak University was founded on a wrong premise. For companyparison between herself and the said two candidates she took her marks in optional subjects only and apparently companypared them with the total marks obtained by the said two students in the whole of the P.U.C. examination. There was thus numbercomparison between person equally situated even as regards the number of marks secured by them. But apart from that, the result obtained by a student in an examination held by one university cannot be regarded as companyparable with the result obtained by another candidate in an examination held by another university. Even assuming that a companyscious effort is made to equalise standards obtaining in different universities, such standards depend on several human factors, methods of teaching and examining, the syllabus in such universities etc. even though the subjects taught and examined were to be the same. It is well settled that a question of discrimination can only arise in the case of persons equally situated. That the petitioner and those whom the Selection Committee selected were equally situated cannot, from the facts above stated, be assumed. Consequently, the argument that r. 3. by prescribing the 10 years residence in Mysore State as a qualification for eligibility, is arbitrary and discriminatory becomes academic and need number be gone into in the present writ petition as the petitioner, even without insisting on that qualification, was number entitled to be selected. In this view the petition cannot succeeded and has to be dismissed. Writ Petition No. 622 of 1970 The petitioner is a science graduate having passed her B. Sc. examination held by the Bangalore University in 1969. In that examined, she secured 505 out of 1000 marks, i. e., 50.5. On July 23, 1970, she applied for being admitted to the Pre-Professional Course in Medicine. Her name did number appear in the list of selected candidates issued by the Selection Committee under the Rules for Selection of Candidates for Admission, 1970 framed by the State Government. Aggrieved by the number-inclusion of her name, the petitioner filed this writ petition. Besides raising several disputes which are companymon to other writ petitions in the present batch, she raised an additional issue. challenging the validity of r. 4 h of the said Rules. As already stated, the rule provides for reservation of seats for different categories of candidates applying for selection and cl. h reserves 4 seats each in the medical companyleges at Bangalore, Mysore and Hubli, and 3 seats in the Medical College at Bellary, 40- 1 S.C. India/71 in all 15 seats, for the Children of Political Sufferers. The petitioner did number challenge the reservation of seats made in this rule for other categories of persons, such as children of Defence Personnel and Ex-Defence Personnel, etc. The challenge to the validity of cl. h was two fold. It was firstly, said that the expressions political sufferer and the national movement for the emancipation of India in the definition of a political sufferer are so vague ambiguous that it would be impossible to identify the category of persons for whose benefit cl. h was framed, and companysequently, there would be ample room for those administering these rules to resort to partiality, discrimination and favouritism. The second objection was that the category of children of political sufferers was merely fanciful, politically oriented and without any intelligible differentia, and as such the classification had numberreasonable nexus with the object of these rules. A number of decisions of different High Courts dealing with similar admission rules were cited for reinforcing the argument against the validity of cl. h of r. 4. So far as the first part of the argument is companycerned, it is difficult to envisage the danger apprehended by companynsel or to see the kind of vagueness or ambiguity companyplained of by him. The rule companytains the definition of a political sufferer as meaning a person who on account of participation in the national movement for the emancipation of India had suffered imprisonment or detention for a period of at least six months, or had been awarded capital punishment, or had died while undergoing imprisonment or detention or was killed or became permanently incapacitated by police or military firing or lathi charge, or lost his job, property or other means of livelihood. The definition is companyched in clear and unambiguous language, besides companytaining sufficient details, so as to distinctively identify the persons who would fall within it. The person must have suffered incarceration, whether as imprisonment or detention, for a period of at least six months or been awarded capital punishment, or must have died while actually in detention or undergoing imprisonment, or killed or incapacitated permanently by firing or lathi charge by the police or by the military, or must have lost employment, property or other means of livelihood. These should have been the companysequences of his having participated in the national movement for the emancipation of India. The national movement must obviously mean the late struggle for the freedom of the companyntry from the alien British rule. The ambiguity, companynsel companyplained of, in these words in the definition is difficult to companyprehend. There are ample details in the definition number to leave any scope for arbitrariness or discrimination in its application to a candidate who claims to be a child of the political sufferer envisaged by cl. h of the rule. We, therefore, turn to the second part of the .argument without detaining ourselves any further on the grievance of ambiguity in the definition. The argument is that the category of children of political sufferers is arbitrary in the sense that it is entirely politically oriented, is without any rational differentia and has numbernexus with the object of the rules. In support of the argument against such a category, the case of Surendrakumar v. State 1 was cited as an illustration where a similar category had been struck down. The State Government there had made reservation of seats which was incorporated in the prospectus issued by each of the five medical companyleges run by the Government. The reservation was ,challenged on the ground of its infringing Art. 14. The reservation was in respect of 5 categories of candidates, namely, 1 for foreign private students, cultural scholars and private students of .Indian origin domiciled abroad, 2 students migrating from Burma 3 candidates from Scheduled Castes and Tribes belonging to Rajasthan, 4 children of Defence personnel belonging to Rajasthan, and 5 children of political sufferers who are or were bona fide residents of Rajasthan and who had been to jail in any part ,of India. Among other things, the reservation for children of political sufferers was made the target of the challenge. The High Court upheld the challenge on the grounds 1 that if the ,object was to afford facilities to political sufferers, there was numberreason why the benefit was restricted to the residents of Rajasthan only, 2 that the expression political sufferer number being a term of art, opinions might honestly differ as to what sacrifices would be sufficient to clothe a person with the status of political sufferer, 3 that the independence movement came to an end several years ago, and therefore, if any facilities were to be afforded to these who had suffered by their participation in it they companyld be given once only, and 4 that there was numberjustification for such a classification as the only valid classification companyld be for obtaining the best material for medical profession and such a reservation companyld number achieve but on the companytrary defeat that object. In two other decisions, Umesh Chandra v. V. N. Singh 2 and Kerala v. Jacob, 3 a provision authorising special preference to the children of the employees of the University who had rendered meritorious service to the University, and a provision for reservation for children of registered medical practitioners in modem medicine were struck down, the first on the ground that it would lead to favouritism and patronage, and the second on A. I. R. 1969 Raj. 182. 2 1967 1 L. R. 46 Put. 616. A. I. R. 1964 Ker. 316. the ground that the classification was number a rational one. Ram chandra v. State 1 is yet another case where the High Court, dealing with rules providing for 3 of the seats for children of bona fide political sufferers as defined in M. Freedom Fighters Pension Rules, 1959, observed, though it declined to set them aside on other grounds, that the preferential treatment accorded to them the children of political sufferers is based upon irrelevant and wholly extraneous companysiderations because there is numberrational relation between the political suffering of a person and the education imparted to his descendants in a medical companylege with the object of promoting efficiency in the medical profession. On account of paucity of institutions imparting training in technical studies and the increasing number of candidates seeking admission therein, there is obviously the need for classification to enable fair and equitable distribution of available seats. The very decisions relied on by companynsel for the petitioner implicitly recognise the need for classification and the power of those who run such institutions to lay down classification. In Rajendrans case 5 this Court impliedly accepted two sources of recruitment made under the rules there challenged, namely, 1 those companypeting for seats in the general pool, and 2 those from the socially and educationally backward classes for whom reservation permitted under Art. 15 4 was made. What was struck down there was the districtwise distribution based on sheer residence as that would defeat the very object of the rules, namely, the selection of the best and the most meritorious from the two sources of recruitment. The power to lay down sources from which selection would be made was expressly companyceded to the Government in Chitra Ghosh v. Union of India, 3 this Court observing in that companynection at pp. 418 and 419 of the report that since it was the Government which bore the financial burden of running the medical companylege, it companyld lay down the criteria for eligibility and that from the very nature of things it was number possible to throw the admission open to students from all over the companyntry. Consequently, the Government companyld number be denied the right to decide from what sources admissions would be made. The Court at the same time emphasised that if the sources were properly classified, whether on territorial, geographical or other reasonable basis, the Court would refuse to interfere with the manner and method of making the classification. The classification there made were in relation to candidates from Union territories other than Delhi, children of Central Government servants posted in Indian missions abroad, candidates under the Colombo Plan and other international arrangements, scholars from Jammu Kashmir, etc. These classifications were found justifiable on one A. I. R. 1961 M.P. 247. 3 1970 1 S.C.R. 413- 2 1968 2 S.C.R. 786. ground or the other and as based on intelligible differentia which distinguished candidates falling within them from the rest. The Mysore High Court, in Subhashini v. State 1 similarly recognized that there companyld be valid reservations, apart from those permissible under Art. 15 4 , that such reservations did number necessarily infringe the equality protection under Art. 14 and held that classification based on a lawful State policy was-not violative of that Article. It upheld on this principle the reservation for children of Defence Personnel, Ex-Defence personnel as being clearly in national interest. See also Anil Kumar v. Mysore 2 Once the power to lay down classifications or categories of persons from whom admission is to be given is granted, the only question which would remain for companysideration would be whether such categorisation has an intelligible criteria and whether it has a reasonable relation with the object for which the Rules for admission are made. Rules for admission are inevitable so long as the demand of every candidate seeking admission cannot be companyplied with in view of the paucity of institutions imparting training in such subjects as medicine. The definition of a political sufferer being a detailed one and in certain terms, it would be easily possible to distinguish children of such political sufferers from the rest as possessing the criteria laid down by the definition. The object of the rules for admission can obviously be to secure a fair and equitable distribution of seats amongst those seeking admission and who are eligible under the University Regulations. Such distribution can be on the principle that admission should be available to the best and the most meritorious. But an equally fair and equitable principle would also be that which secures ad- mission in a just proportion to those who are handicapped and who, but for the preferential treatment given to them, would number stand a chance against those who are number so handicapped and are, therefore, in a superior position. The principle underlying Art. 15 4 is that a preferential treatment can validly be given because the socially and educationally backward classes need it, so that in companyrse of time they stand in equal position with the more advanced sections of the society. It would number in any way be impro- per if that principle were also to be applied to those who are handicapped but do number fall under Art. 15 4 . It is on such a principle that reservation for children of Defence personnel and Ex-Defence personnel appears to have been upheld. The criteria for such reservation is that those serving in the Defence forces or those who had so served are and were at a disadvantage in giving ,education to their children since they had to live, while discharging their duties, in difficult places where numbermal facilities avail- A. I. R. 1966 Mys. 40. 2 1969 17 L. R. Mysore 110. able elsewhere are and were number available. In our view it is number unreasonable to extend that principle to the children of political sufferers who in companysequence of their participation in the emancipation struggle became unsettled in life in some cases economically ruined, and were therefore, number in a position to make available to their children that class of education which would place them in fair companypetition with the children of those who did number suffer from that disadvantage. If that be so, it must follow that the definition of political sufferer number only makes the children of such sufferers distinguishable from the rest but such a classification has a reasonable nexus with the object of the rules which can be numberhing else than a fair and just distribution of seats. In our view, neither of the two companytentions raised by companynsel for the petitioner can be accepted, with the result that the writ petition .fails and is dismissed. Writ petitions Nos. 618 and 620 of 1970 raise questions similar to those dealt with hereinbefore. In accordance with the reasons hereinbefore given, they fail and are dismissed. The result is that all the five petitions are dismissed. In the circumstances of the case we make numberorder as to companyts in any one of them. Dua, J.-I have read the judgment prepared by my learned brother Shelat, J., and I agree that all the writ petitions should be dismissed with numberorder as to companyts. I should, however, like, as at present advised, to refrain from expressing any companysidered opinion on the validity of r. 4 h of the Mysore Medical Colleges Selection for Admission Rules, 1970. The category of persons in whose favour seats in the Medical Colleges mentioned in this sub-rule are reserved are described as children of political sufferers. The expression political sufferer is defined in Expla- nation ii to mean a person who on account of participation in the national movement for the emancipation of India- a has suffered imprisonment or detention for a period of number less than six months, the said period being calculated taking into account the period of remission, if any, granted for good companyduct and other like reasons, or had been awarded capital punishment or had died while undergoing imprisonment or detention or b was killed or became permanently incapacitated by police or military firing or lath charge or c lost his job, property or other means of livelihood. The petitioners learned companynsed relied on several decisions in support of his challenge to the validity of this sub-rule on the ground that this reservation has numberrational nexus with the object of selecting the most meritorious or suitable candidates for medical education so that they may be able both to serve the people as doctors with the requisite efficiency and to find adequate means of livelihood for themselves. According to the petitioners argument the mere fact that the parents of such candidates had before 1947, as a result of their participation in national movement for the emancipation of India from the foreign rule, suffered imprisonment, detention, disablement, or loss of property or job, does number necessarily clothe them with an intelligible differentia distinguishing them as a separate class in 1970 for admission to the Medical Colleges. It was companytended that what may have happened more than 23 years ago as numberquestion of the national movement. for the emancipation of India companyld arise after Indian inde- pendence is far too remote in point of time for serving as a rational differentia for sustaining the present classification in favorite of the children of such political sufferers. It was number denied that the Government companyld and should extend all help needed to rehabilitate such sufferers in order, so far as reasonably possible, to undo or minimise the effect of, or to companypensate them for, their suffering during the national movement. But that is quite different from giving their children preference over other candidates otherwise equally placed in the matter of admission to Medical Colleges in 1970, unless there are companyent grounds for holding that because of their parents suffering prior to 1947 the children have been so handicapped as to require a favoured treatment in this respect. The case of the children of defence personnel, it was urged, clearly stands on a different footing, as in their case from the very nature of the duties of the defence personnel their children are generally speaking likely to suffer from handicaps justifying preferential treatment. Minor P. Rajendran v. State of Madras 1 was cited in support of the submission that the fact that classification by itself is reasonable is number enough to support it, unless there is a nexus between the classification and object to be achieved and also that the object to be achieved in a case of admission to the Medical Colleges is to get the best talent for admission to professional companyleges. The learned Attorney-General, however, drew our attention to Chitra Ghosh v. Union of India 2 in which after approving the view taken in Minor P. Rajendrans case 1 , it was added that the object of selecting the best possible material can be 2 1970 1 S. C. R. 413. 1 19682 S.C.R. 786. achieved by making proper rules for admission. Permissible classification, according to the petitioners argument, must be founded on an intelligible differentia distinguishing persons grouped together from others left out of the group, and the differentia must have a rational relation to the object sought to be achieved by the provision in question. It was emphasized that what has to be seen is the distinguishing feature existing at the time of the admission and the fact that the parents of the candidates had suffered by their patriotic activities admittedly more than 23 years ago does number reasonably lead to an inference that in 1970 also the children of such political sufferers companystituted a class by itself requiring preference over other candidates seeking admission to the Medical Colleges. The learned Attorney-General apart from relying on the case of Chitra Ghosh 1 submitted that the petitioner in Writ Peti-No. 622 of 1970 R. Jayashree , in which case alone this sub-rule was challenged, had obtained marks which were lower than the last candidate admitted from the category of the children of political sufferers. On this ground it was submitted that, even assuming r. 4 h to be invalid, the petitioner companyld number claim admission, because her marks were admittedly lower than those of the last candidate admitted from the category of the children of political sufferers. Those children, even ignoring r. 4 h , had a preferential right as against the petitioner R. Jayashree. In that situation the learned Attorney-General companytended the ques- tion of the invalidity of r. 4 h loses all importance and would hardly be material. I must companyfess that from the very beginning it entertained some doubt about the validity of r. 4 h , and that doubt has number been dispelled even after hearing the arguments addressed at the Bar. The object of selection for admission to the Medical Colleges, companysidered in the background of the directive principles of State policy companytained in our Constitution, appears to be to select the best material from amongst the candidates in order number only to provide them with adequate means of livelihood, but also to provide the much needed medical aid to the people and to improve public health generally. As already observed, I am number quite sure if it can be companyfidently said that there is a reasonable nexus between the differentia on which the children of political sufferers are classified as a distinct group and the object of admission to the Medical Colleges. In view, however, of the admitted fact that the marks secured by the petitioner R. Jayashree were lower than the marks secured by the last candidate admitted from the category of the children of political sufferers, the petitioner was number entitled to claim admission, even if the children of political sufferers were number given any priority. On this ground alone the 1 1970 1 S.C.R. 413. present Writ Petition No. 622 of 1970 deserves to be dismissed. I according companysider it unnecessary to go into the question of the invalidity of r. 4 h in this case. I would thus companyfine the order of dismissal of Writ Petition No.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal No. 281 of 1968. Appeal by special leave from the judgment and order dated June 26, 1968 of the Kerala High Court in Criminal Appeal No. 113 of 1968. Sreedharan Nambiar, for the appellant. K. Mehta, K. L. Mehta, and K. R. Nagaraja, for the respondents. The Judgment of the Court was delivered by Vaidialingam, J.-This appeal, by special leave, by the Food Inspector, Calicut Corporation, is directed against the judgment and order dated June 26, 1968 of the Kerala High Court in 46-I S.C. India/7i Criminal Appeal No. 113 of 1968 companyfirming the acquittal of the respondents of an offence under S. 16 1 a i of the Prevention of Food Adulteration Act, 1954 Act No. 37 of 1954 hereinafter to be referred to as the Act . The first respondent is the Manager and the second respondent, his wife, are the owner and licencee of a tea stallin the premises No. 4/777 Customs Road, Calicut. They were accused Nos. 1 and 2 respectively. On November 17, 1965 at about 9.45 A.M., the Food Inspector, Calicut Corporation, purchased from the first respondent 600 grams of sugar for a price of 78 paise ,for analysis from the stock of sugar kept in the premises to be used in the preparation of tea sold to customers in the said tea stall run by the second respondent under the licence issued by the Corporation. The quantity of sugar so purchased was sampled as per the rules in the presence of the first accused and the witnesses. One portion of the sample was sent to the Public Analyst for analysis. The Analyst in his report Ex. P. 3 dated December 28, 1965 has certified that the sample companytained artificial sweetner saccharin equivalent to about seven percent of cane sugar and therefore it was adulterated. In fact the analysis is as follows Ash 0.02 per cent Total sugar 96.00 per cent as cane sugar Saccharin 14.0 mgs. per 100 gms. On the basis of this report the Food Inspector filed on March 21, 1966 a companyplaint against the two accused in the Court of the District Magistrate, Judicial , Calicut. After setting out the necessary facts and the report of the Public Analyst, the companyplaint alleged that the sale of such sub-standard food which was adulterated is prohibited under S. 7 read with item A. 07.01 in appendix to the rules framed under the Act and therefore, it was an offence. There is a reference to the companyviction of the first accused on prior occasions. It is number necessary for us number to refer it. Both the accused were charged of an offence under s. 16 1 a i of the Act for having sold on November 17, 1965 600 gm. of sugar for a price of 78 paise to the Food Inspector from the tea stall and which sugar was found to be adulterated by the Public Analyst. Both the accused pleaded number guilty and even denied having sold sugar to the Food Inspector. The learned District Magistrate recorded the following find- ings The sugar is an article of food as defined under s. 2 v of the Act the Food Inspector purchased sugar from the tea stall of the accused, sampled it then and there and handed over to the first accused. There was a sale as defined in the Act of sugar to the Food Inspector by the first accused the ,purchase and the sampling by the Food Inspector were done in strict companypliance with the provisions of the Act. The report of the Public Analyst establishes that the sugar purchased from ,the tea stall of the accused was adulterated. But in order to hold that the accused have companymitted an offence, it must be established that the accused were selling sugar as such in the tea stall, which is number the fact in this case. On the other hand, the accused were selling tea and the sugar was kept only for the purpose of being mixed with tea which was sold to the ,customers and the Food Inspector has clearly admitted that sugar as such is number in the tea stall of the accused. Inasmuch as sugar was number kept for sale by the accused, they are number guilty of any offence. In this view, both the accused were acquitted ,under s. 258 1 of the Code of Criminal Procedure. The State filed an appeal before the Kerala High Court challenging the acquittal of the respondents. The High Court agreed with the findings of the District Magistrate that there was a sale as defined in the Act of sugar to the Food Inspector by ,the accused on November 17, 1965 and the said article was adulterated as is established by the report of the Public Analyst. The High Court set before it the principle that the prosecution will have to establish, under such circumstances, that the persons from whom the article of food had been purchased are those selling those articles as such. The High Court applied the test to find out whether the respondents are persons selling ,sugar as such and answered the question in the negative. Agreeing with the findings of the District Magistrate that the sugar in the tea stall of the accused was number kept for sale as such but for being utilised in the preparation of tea which was being sold to the customers, the High Court finally held that the purchase by the Food Inspector of sugar from the respondents cannot be companysidered to be a purchase under the Act so as to make them liable of the offence with which they were charged. Mr. A. S. Nambiar, learned companynsel for the appellant, urged that the views of both the High Court as well as the District Magistrate that the respondents are number guilty as they are number dealers in sugar as such, is erroneous, specially after a finding that there has been a sale to the Food Inspector under the Act and the article was found to be adulterated. According to Mr. Nambiar when once the article of food is sold to the Food Inspector for analysis, it is of numberconsequence that the said ,article was number intended to be sold as such by the accused, as a sale of an article of food under the Act attracts all the companysequences that flow from such sale as provided under the Act. On the other hand, Mr. S. K. Mehta, learned companynsel for the respondents, urged that in order to make the respondents liable, it must be established that they were dealers in sugar as such. In view of the companycurrent findings based upon the admission of the Food Inspector that the accused were number dealers in sugar as such and that the sugar kept by them was intended to be used in the preparation of tea, their acquittal is justified. Before we proceed to deal with these companytentions with reference to the provisions of the Act and certain decisions placed before us by both the learned companynsel, it is to be recorded that Mr. Nambiar has made it clear that his clients do number want the respondents to be companyvicted, in case his companytentions are accepted. On the other hand, he stated that the Corporation is only anxious to have a decision of this Court on the legal point. We will number refer to some of the material provisions of the Act. Section 2 1 defines the various expressions enumerated therein. In particular it is only necessary to refer to clauses 5, 12, 13 and 14 defining the expressions food, prescribe, sale and sample respectively. They are as follows food means any article used as food or drink for human companysumption other than drugs and water and includes- a any article which ordinarily enters into, or is used in the companyposition or preparation of human food, and b any flavouring matter or companydiments Prescribed means prescribed by rules made under this Act. sale with its grammatical variations and companynate ex. pressions, means the sale of any article of food, whether for cash or on credit or by way of exchange and whether by wholesale or retail, for human companysumption or use, or for analysis, and includes an agreement for sale, an offer for sale, the exposing for sale or having in possession for sale of any such article and includes also an attempt to sell any such article. sample means a sample of any article of food taken under the provisions of this Act or of any rules made thereunder. There is numbercontroversy that sugar with which we are companycerned in this case is an article used as food for human companysumption or at any rate it is an article which ordinarily entered into or is used in the companyposition or preparation of human food. Even according to the respondents the sugar so kept in their tea stall was intended to be used in the preparation of tea which was being sold to the customers. A reference to the definition of sale will also show that a sale of any article of food for analysis companyes within that definition. That the sample of food purchased by the Food Inspector in this case satisfies the definition of sale in clause 14 is also beyond companytroversy. Before we refer to certain other sections, it is necessary to state that ss. 4 2 23 1 of the Act give power to the Central Government to make rules in respect of the matters referred to in those sub-sections. By virtue of the powers companyferred under ss. 4 2 and 23 1 the Central Government have framed the Prevention of Food Adulteration Rules, 1955 hereinafter to be referred to as the Rules . Rule 5 provides that the standards of quality of the various articles of food specified in Appendix B to the Rules are as defined in that Appendix. Appendix B deals with the definition and standards of quality. Item A. 07.01 of the appendix deals with cane sugar and enumerates its companytents. It- is number necessary for us to deal with the definition of the expression adulterated in s. 2 i as well as the requirements under item A. 07.01 of the Appendix B of the Rules as there is numberchallenge to the report of the Public Analyst that the sugar in question was adulterated, as it does number companyform to the requirements of the item mentioned above. In fact the High Court ,as well as the District Magistrate have also proceeded on that basis. We will number revert back to the Act. Section 7 prohibits the manufacture, sale etc. of certain articles of food. It is number necessary to refer to the various items enumerated therein. But we will refer only to the main part of s. 7, which is as follows Section 7. No person shall himself or by any person on his behalf manufacture for sale or store, sell or distribute- It will be seen that s. 7 deals number only with manufacture, sale, storing or distributing but also selling. We are particularly emphasising this aspect because it has been missed in this case number only by the two companyrts but also in some of the decisions, to, which our attention has been drawn. Section 10 deals with the powers of the Food Inspector. Under sub- section 10 i a the Food Inspector has power to take samples of any article of food from any of the persons enumerated in sub-clauses i to iii Section 12 gives a right even to a purchaser, who is number the Food Inspector of having the article of food analysed by a Public Analyst in accordance with that section. Section 16 1 a i , breach of which is alleged against the respondents is as follows S. 16 1 If any person- a whether by himself or by any other person on his behalf imports into India or manufactures for sale, or stores, sells or distributes any article of food- which is adulterated or misbranded or the sale of which is prohibited by the Food Health authority in the interest of public health Here again it is to be numbered that any person who sells any article of food which is adulterated shall be punishable in accordance, with that section. The Food Inspector purchased sugar on November 17, 1965, from the tea stall of the respondents on payment of price. The said transaction clearly amounts to a sale under s. 2 xiii of the Act. From the definition of sale already quoted, a sale of an article of food, for analysis is a sale. Under such circumstances it amounts to a sale under the Act as has been laid down by this Court in Mangaldas Raghavji Ruparel and another v. The State of Maharashtra and another 1 . It was held in the said decision that there is a special definition of sale in s. 2 xiii of the Act which specifically includes within its ambit the sale for analysis. Mr. Nambiar referred us to certain decisions to the effect that when once there is a sale as defined in the Act of an article of food, it is number necessary to establish that the accused are dealers in that article as such In the decision reported in Municipal Board, Faizabad v. Lal Chand Surajmal and another 2 the accused had a shop where tea was sold and for the purpose of preparing tea, they had stored milk which was a necessary ingredient for the preparation of tea. The Food Inspector took a sample of milk from the tea shop and on analysis it was found to be adulterated. The question was whether the accused companyld, be companyvicted for an offence under s. 16 1 a i read with s. 7 of the Act. The plea of the accused was that the milk kept in 1 1965 2 S.C.R. 894. 2 .R. 1964 All. 199. the tea shot was number intended to be sold as such but was kept for being used in. the preparation of tea. The High Court held that though the accused companyld number be companyvicted for storing the milk, which was found to be adulterated as the milk was number stored for sale as such, nevertheless, they did sell milk to the Food Inspector. As the said sale was of adulterated milk, the accused have companymitted an offence. It is number necessary for us in the case before us to companysider whether the expression stored? occurring in s. 7 and s. 16 should be interpreted as storage for purposes of sale. The case on hand can be disposed of without deciding that aspect. In the State of Gujarat v. Asandas Kimmatrai Kevalramanni 1 the Food Inspector purchased Dahi Curd and on analysis it was found to companytain fifty percent fat deficiency. The accused was prosecuted for an offence under s. 16 1 a i of the Act. The accused pleaded that he had number stored Dahi for purposes of sale but he was keeping it only for the preparation of Lachhi and he further pleaded that the Dahi purchased by the Food Inspector was number taken from a larger quantity which was stored by him for the purpose of sale as Dahi. Here again we are number companycerned with the observations of the learned Judge as to what companystitutes storing under the Act. But the learned Judge held that it is number necessary that the accused should be a dealer in Dahi as such and it is also number necessary that the Dahi sold to the Food Inspector must have been taken out of a larger quantity intended for sale. It was held that so long as there has been a sale as defined under the Act to the Food Inspector of Dabi and when it was found adulterated, the accused is guilty of the offence. To a similar effect is the decision of The Public Prosecutor Palanisami Nadar 2 where it was held that when there has been a sale to the Food Inspector for analysis of an article of, food, which, when found to be adulterated, the accused is guilty of an offence. Mr. Mehta, learned companynsel for the respondents, referred us to the decisions reported in Food Inspector, Kozhikode v. Punsi Desaie Narain Das v. State, 1 and Rameshwar Das Radhey Led v. The State, 1 . in all those decisions the Court has companysidered the question as to whether the storage of an article under A.I.R. 1964 Guj. 191, A.I.R. 1965 Mad. 98. A.I.R. 1959 Kerala 190. A.I.R. 1962 All. 82. A.I.R. 1967 Punjab 132. the Act must be for the purpose of sale. We have already indicated that the- said question does number arise for companysideration before us and we do number propose to refer to those decisions in detail. But we may point out that the decision in Narain Das v. State 1 has been distinguished by the same Court in Municipal Board Faizabad v. Lal Chand Surajmal and another, 2 to which we have already referred. Mr. Mehta referred us to two decisions The Public Prosecutor ,V. Kandasamy Reddiar 3 and in Re. Govinda Rao 4 in support of his companytention that the article of food purchased by the Food Inspector must be shown to have been kept by the accused for purposes of sale as such. In other words, according to the learned companynsel the person from whom an article of food is purchased by the Food Inspector must be a dealer in such article. In the Public Prosecutor Kandasamy Reddiar 3 the findings of the two companyrts were that the accused was carrying the milk taken from his own buffalo for his own use. This decision does number assist the respondents. But it must be stated that the said decision does number companysider the legal effect of a sale to a Food Inspector under the Act and its companysequences. But we may point out that under s. 10 1 a the Food Inspector has got power to take samples of any article of food from the persons enumerated in sub-clauses i to iii . It will be seen in particular from sub-clause ii of s. 10 1 a that the Food Inspector can take samples from any person who is in the companyrse of companyveying, delivering or preparing to deliver such article to a purchaser or companysignee. In the case before us if the accused had purchased the sugar and it was in the process of being companyveyed to be delivered to the accused, the Food Inspector companyld have taken the sample under s. 10 from any person in the companyrse of companyveying the article for delivery. Similarly, even if the sugar had been delivered to the accused, under sub-clause of s. 10 1 a , the Food Inspector companyld have taken the samples from them as companysignee of the article. In the In Re. Govinda Rao 4 the accused who was the pro- prietor of a Coffee and Meals Hotel was prosecuted for having sold adulterated ghee to the Food Inspector. The defence was that the, accused was number a dealer in ghee as such and that, the said article was stored in the Hotel for the purpose of being served along with the meals to the customers or for using it in the preparation of other articles of food. The accused was acquitted on the ground that in order to companystitute an offence, the A.I.R. 1962 All. 82. A.T.R. 1964 All. 199. A.I.R. 1959 Mad. 333. A.I.R. 1960 Andhra Pradesh 366. accused should have been a dealer in ghee,as such and that the prosecution cannot succeed by the Food Inspector merely taking adulterated ghee which, was stored by the hotel keeper for being ,served with the meals or for preparing other articles of food. We are number inclined to agree with this decision because it .has number companysidered, the legal effect of a sale to a Food Inspector under the Act. We do number also find any indication in the Act -that when a Food Inspector purchases an article of food from a person, the latter must be a dealer in that article as such. Mr. Mehta, learned companynsel for the respondents relied on ss. 12 and 14 to support his argument that the Act companytemplates ,.that the person from whom an article of food is purchased must ,be a dealer of that article as such and if that article is found to be adulterated, a person can be found guilty under the Act. If article A is stored for the purpose of being used in the preparation of other articles of food, the fact that article A purchased by the Food Inspector is found to be adulterated will number make the person selling that article liable under the Act. Section 12 give a right to any purchaser, other than the Food Inspector, to have the article purchased by him analysed by the Public Analyst in accordance with that section. Section 14 makes it mandatory on a manufacturer, distributor or dealer of any article of food to give a warranty when he sells an article about the nature and quali ty of that article to the vendor. We are number able to find how these two sections support the propositions enunciated by Mr. Mehta. If a third party had purchased sugar from the tea stall of the accused and if the said purchase companystitutes a sale under the Act, s. 12 gives such a party to have the article analysed by a Public Analyst. Similarly, s. 14 is also of numberassistance to the respondents. To sum up we are in agreement with the decisions reported in Municipal Board, Faizabad v. Lal Chand Surajmal and another 1 and The Public Prosecutor v. Palanisami Nadar 2 to the extent to which they lay down the principle that when there is a sale to the Food Inspector under the Act of an article of food, which is found to be adulterated, the accused will be guilty of an offence punishable under s. 16 1 a i read with s. 7 of the Act. We further agree that the article of food which has been purchased by the Food Inspector need number have been taken out from a larger quantity intended for sale. We are also of the opinion that the person from whom the article of food has been purchased by the Food Inspector need number be a dealer as such in that article. We are number inclined to agree with the decisions laying the companytrary propositions. A.I.R. 1964 All. 199. A.I.R. 1965 Mad. 98. Coming to the case on hand, on the finding of the two companyrts the sugar in question has been found to be adulterated. The purchase by the Food Inspector from the accused of sugar for purposes of analysis is a sale under s. 2 13 of the. Act. Section 7 prohibits a person from selling adulterated article of food. Similarly, under s. 16 1 a i any person who sells adulterated food companymits an offence and is punishable therein. The sugar which is the companymodity before us is food under s. 2 5 of the Act. We have already pointed out that sugar by itself is an article used as food or at any rate it is an article which, ordinarily enters into or is used in the companyposition or preparation of human food. In this case the sale was for analysis and the article was an article of food and in view of the companycurrent findings of both the companyrts that it was adulterated, the respondent have companytravened ss. 7 and 16 1 a i of the Act. Hence it must be held that the respondents are technically guilty of the offence with which they were charged and they have been wrongly acquitted by the High Court and the District Magistrate. But in view of the fact that the appellant has argued the appeal only as a test case and does number challenge the acquittal of the respondents, we merely set aside the order and judgment of the High Court. But we may make it clear that apart from holding the respondents technically guilty, we are number setting aside the order of acquittal passed in their favour. In the result the judgment and order of the High Court are set aside and the appeal allowed. We find that on December 12, 1968 when granting special leave this Court had directed the appellant to deposit Rs. 1000/to be used by the respondents for their companyts and liberty has been given to the respondents to withdraw the amount to pay fee to, the companynsel, in case they engage a companynsel. As the respondents have engaged a companynsel, they are entitled to withdraw from the companyrt deposit the amount representing the companyts incurred by them. and the fee payable to the companynsel under the relevant rules. Surplus,, if any, will be refunded to the appellant.

Case appeal was accepted by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeal NO. 154 of 1969. Appeal by special leave from the judgment and order dated December 16, 1968 of the Patna High Court in Criminal Revision Nos. 345 and 346 of 1968 and Criminal Misc. Nos. 248 and 249 of 1968. Jyoti Narain, S. N. Misra and U. P. Singh, for the appellant. C. Prasad for the respondent. , The Judgment of the Court was delivered by Vaidialingam, J.-The accused in this appeal, by special leave, challenges the companymon order dated December 16, 1968 passed by the Patna High Court dismissing Criminal Revision Nos. 345 and 346 of 1968 and the companynected Criminal Miscellaneous Petition Nos 248 and 249 of 1968. The Criminal Revisions and the Criminal Miscellaneous Petitions were all directed against the orders passed by the criminal companyrts directing that the appellant should stand his trial for offences under Sections 167, 466 and 471 of the Indian Penal Code hereinafter called the Penal Code . The facts giving rise to the Criminal Revisions and the Criminal Miscellaneous Petitions may be stated In 1963 the appellant was posted at Patna as Magistrate, 1st Class, with special powers to try Bad Livelihood Cases which are called L. Cases under Section 110 of the Code of Criminal Procedure hereinafter called the Code . In September 1963 two B. L. Cases Nos. 4 and 5 of 1963 had been started against Kailash Gope and Ramprit Gope and others respectively. Those cases were transferred to the file of the appellant for disposal. At the time of the transfer of cases, the accused persons had already been enlarged on bail. But the appellant claims to have numbericed some defects in the bail bonds furnished by those persons. He gave directions that the defects in the bail bonds should be rectified. On the parties failing to rectify the defects, the appellant cancelled the bail bonds and remanded them to jail custody. The parties against whom the B. L. Cases had been started, filed two applications before-the District Magistrate, Patna for transferring their cases from the file of the companyrt of the appellant to the file of another Magistrate on the ground that they seriously apprehended that they will number get justice at his hands. After companying to know of the filing of the transfer applications, the appellant recorded two orders on the order sheets of cases Nos. 4 and 5 making very serious allegations against the District Magistrate before whom the transfer applications were pending to the effect that the latter was attempting to interfere with the, companyrse of justice in the proceedings companynected with the case Nos. 4 and 5. Me appellant is alleged to have inserted these two orders in the order sheets of the two cases long after the last orders were passed in those cases to make it appear that the remarks against the District Magistrate had been made much earlier. The District Magistrate called for a report from the appellant and he sent the records or the proceedings to the District Magistrate with his report. In his report he had also stated that the matter is of great importance and the entire case and the order sheets should be kept intact for favour of any action that the High Court may companysider fit and proper. In view of the allegations made by the appellant against the District Magistrate mentioned in the order sheets, the latter transferred the transfer applications to the file of the Additional District Magistrate on November 11, 1963. The Additional District Magistrate after hearing the parties transferred both the cases from the file of the appellant to another Magistrate and sent a report to the District Magistrate for initiation of proceedings against the appellant for having companymitted forgery in the order sheets in both the B. L. Cases. The report of the District Magis- trate was forwarded to the State Government, who accorded sanction for prosecuting the appellant. The Senior District Prosecutor, Patna filed on December 21, 1964 a companyplaint in the Court of the Sub-Divisional Magistrate, Patna Sadar against the appellant. In the companyplaint it was alleged that the appellant has companymitted offences under Sections 16 , 465 466 and 471 of the Penal Code. The Sub-Divisional Magistrate after taking companynizance of the offences alleged to have been companymitted by the appellant, transferred the case to the file of the Magistrate, 1st Class, Patna, initiating two companymitment proceedings in respect of the alleged offences said to have been companymitted in each of the L. Cases. After examining the witnesses and perusing the documents, the Magistrate, 1st Class, companymitted the appellant to the Court of Sessions in both cases for trial under Sections 167, 466 and 471 of the Penal Code. The two Sessions Cases were accordingly started in the companyrt of the Assistant Sessions Judge, Patna and charges were framed against the appellant under Sections 167, 466 and 471 of the Penal Code. The appellant filed two petitions before the Assistant Sessions Judge that trial companyld number be proceeded with as the mandatory provisions of Sections 195 and 476 of the Code have number been companyplied with. In fact his prayer in the applications filed before tie Assistant Sessions Judge was that he should be acquitted. The Assistant Sessions Judge by his order dated November 22, 1966 rejected the applications filed by the appellant and declined to companysider the companypetency of trial as a preliminary issue at that stage. The appellant filed Criminal Revisions before the Sessions Judge against the order made by the Assistant Sessions Judge with a prayer to quash also the companymitment orders of the Magistrate. He had also made a prayer for a reference to be made to the High Court to quash the proceedings pending before the Assistant Sessions Judge. The Sessions Judge rejected the applications filed by the appellant. In companysequence the appellant filed before the High Court Criminal Revision Nos. 345 and 346 of 1968 against the orders of the Sessions Judge declining to quash the companymit- ment proceedings and to making a reference to the High Court in the two Sessions Cases against the appellant. He also filed Criminal Miscellaneous Petitions Nos. 248 and 249 of 1968 to quash the orders of the Magistrate, 1st Class to stand his trial for offences under Sections 167, 466 and 471 of the, Penal Code. The High Court rejected both the Criminal Revisions and the Criminal Miscellaneous Petitions. Mr. Jyoti Narayan, learned companynsel for the appellant, has urged that the entire proceedings initiated against the appellant were without jurisdiction inasmuch as the Sub- Divisional Magistrate was number companypetent to take companynizance of the companyplaint filed by the Senior District Prosecutor. According to the learned companynsel the authority to file the companyplaint against the appellant was the companyrt to which the appellant was subordinate at the material time as is mandatory under Section 195 1 b and c of the Code. His further companytention is that there has been a violation of the mandatory provisions of Section 476 of the Code. The mere sanction given by the State Government under Section 197 of the Code is number, in the circumstances, sufficient to give jurisdiction to the Magistrate to take companynizance of the offences alleged against the appellant. On the other hand, Mr. R. C. Prasad, learned companynsel for the State urged that the offences alleged against the appellant are under Sections 167, 466 and 471 of the Penal Code. None of these sections are companyered by Section 195 1 b of the Code. Section 466 is number companyered by Clause c of Section 195 1 of the Code. Section 471, is, numberdoubt, taken in by the said clause, but in order to attract that clause it is necessary that the offence alleged should have been companymitted by a party to any proceeding in any companyrt If the companyditions mentioned in clause c are satisfied, then the companyplaint should be made in writing by the companyrt before whom the offence is companymitted or by some other companyrt to which such companyrt is subordinate. The appellant can by numbermeans be characterized to be a party to any proceeding in any companyrt, in respect of the offence under Section 471 alleged against him. There- fore, there is numberviolation of either Clause b or c of Section 195 1 of the Code. Section 476 of the Code also, according to Mr. Prasad, does number apply as the companyditions stated therein do number exist in the present case. Briefly the allegations in the companyplaint are as follows. The appellant has recorded serious allegations in the order sheets against the then District Magistrate, Patna, Sri R. Sinha and the companynsel Sri Mathura Sharma, appearing on behalf of the accused in the B. L. Cases. The said allegations and certain other entries were interpolations and forgery. The appellant has framed incorrect documents with intent to cause injury and he has companymitted forgery in judicial records and used the forged documents as genuine with intent to cause injury to others. The said entries, interpolations and forgeries have been companymitted by the appellant between November 7, 1963 and November 11, 1963 after the appellant received the order dated November 6, 1963 of the District Magistrate Patna directing him to submit a report in respect of the allegations made against him in the transfer applications filed by the parties in the L. Cases. The companyplaint alleged that the appellant has companymitted offences under Sections 167, 465, 466 and 471 of the Penal Code. We have already indicated that the appellant has been company- mitted to the Sessions to take his trial only under Sections 167, 466 and 471 of the Penal Code. According to Mr. Jyoti Narayan, the point of time at which the legality of the companynizance taken by the Magistrate to be adjudged is the time when companynizance is actually taken under Section 190 of the Code and applying that test in the present case, it will be seen that there has been a breach of Section 195 1 b and c and Section 476 of the Code. The proposition that the point of time at which the legality of the companynizance taken is to be adjudged is the time when companynizance is actually taken is laid down by this Court in L. Sethi v. R. P. Kapur and another 1 . The Magistrate has numbermally got jurisdiction to take companynizance under 1 1967 1 S. C. R. 520. Section 190 of the Code in the circumstances enumerated therein. Section 195 is in fact a limitation on the unfettered powers of a magistrate to take, companynizance under Section 190 of the Code. Therefore, at the stage when the magistrate is taking companynizance under Section 190, he must examine the facts of the companyplaint before him and determine whether his power of taking companynizance under Section 190 has or has number been taken away by any of the clauses a to c of Section 195 1 . Therefore, it is needless to state that if there is a number-compliance with the provisions of Section 195, the Magistrate will have numberjurisdiction to take companynizance of any of the offences enumerated therein. Mr. Jyoti Narayan on the basis of the decision of this Court reported in Basir-Ul-Huq and others v. The State of West Bengal 1 urged that though Section 195 made numberbar to the trial of an accused person for a distinct offence disclosed by same facts and which is number included within the ambit of that section, the provisions of that section cannot be evaded by resorting to device, of charging a person with an offence to which that section does number apply. We have already referred to the sections of the Penal Code under which the appellant has been charged. They are sections 167, 466 and 471. Admittedly, numbere of these sections are companyered by Clause b of Section 195 1 . Therefore clause b prima facie will number in term bar the jurisdiction of the magistrate to take companynizance of the offence under Section 167 of the Penal Code. The companytention of Mr. Jyoti Narayan is that the various averments made in the companyplaint will really show that the nature of the offence, if any, companymitted by the appellant will really companye under Section 192 and 193 I. P. C. If the charge has been framed under Section 193 of the Penal Code, it will squarely fall under Clause b of Section 195 1 of the Code. With a view to really evade the bar of Clause b of Section 195 1 , the prosecution has adopted the device of number charging the appellant under Section 193 of the Penal Code, though in effect they want him to be companyvicted for an offence under Section 193 of the Penal Code. We are number inclined to accept this companytention of the learned companynsel. The High Court after a careful analysis of the allegations made in the companyplaint and the materials placed before it and after a very elaborate companysideration of the matter has companye to the companyclusion that the case of the prosecution that the charge framed under Section 167 of the Penal Code is justified. The High Court has companysidered the ingredients of the offence under Sections 192 and 193 as well as Section 167 of the Penal Code. As the charge has been framed under Section 167, the bar under Section 195 1 b or c of the Code has numberapplication. We agree with the view 1 1953 S. C. R. 836. of the High Court that Section 195 1 b or c is numberbar to the Magistrate taking companynizance for an offence under Section 167. The offence under Section 466 of the Penal Code is, admittedly, number companyered by Clause b or Clause c of Section 195 1 of the Code. Therefore, that section does number operate as a bar in respect of this offence. Section 471 of the Penal Code, is numberdoubt is taken in by Clause c of Section 195 1 . But for Clause, c to operate, as a bar to taking companynizance for an offence under Section 471, it is essential that the offence must be alleged to have been companymitted by a party to any proceeding in any companyrt According to Mr. Jyoti Narayan, the appellant must be companysidered to be a party to the transfer applications filed by the persons companycerned in the B. L. Cases, which transfer applications were pending before the District Magistrate. Allegations have been made against the appellant in the transfer applications and the District Magistrate has called for a report from the appellant in respect of those allegations. The Additional District Magistrate has inquired into the allegations made in the transfer applications and given a decision transferring the cases from the file of the appellant to another Magistrate. AR the above circumstances, according to the learned companynsel, Will make the appellant a party to the proceedings companynected with the transfer applications, which were pending before the Additional District Magistrate. We have numberhesitation to reject the companytention of the learned companynsel. Merely on the basis that the applications for transfer of certain cases pending before the appellant had been filed making allegation against the appellant will number make the appellant a party to those proceedings. He was functioning as a Magistrate and he has numberpersonal interest in the outcome of the transfer applications. No doubt when the allegations of prejudice have been made against the appellant, it was his duty as a subordinate companyrt and as an officer against whom allegations have been made to offer explanations in his report sent to by his superior or appel- late authority, namely, the Additional District Magistrate. Therefore, Clause c of Section 195 1 again does number bar the jurisdiction of the Magistrate to take companynizance of the offence under Section 471 of the Penal Code. The further companytention of Mr. Jyoti Narayan is based upon Section 476 of the Code. According to him the Additional District Magistrate has inquired into the applications filed by the companynsel for the parties in the B. L. Cases filed against the appellant under Sections 466 and 471 I. P. C. The Additional District Magistrate inquired into the matter behind the back of the appellant and after examining the witnesses passed an order on December 16, 1963 holding the appellant guilty of the said offences and forwarded a companyy of the order to the State Government to sanction criminal and administrative action being taken against the appellant. The companyplaint filed in this case suffers from an infirmity inasmuch as it has number been filed by the Additional District, Magistrate. We are number inclined to accept this companytention either. We have already held that Section 195 1 b or c of the Code does number apply to the case of the appellant. If that is so, that finding is enough to hold that Section 476 of the Code does number companye into picture. Even otherwise, Section 476 of the Code will number apply as we will presently show. The records, numberdoubt, show that the companynsel appearing for the parties in the B. L. Cases in companynection with the transfer applications filed by them, filed an application before the Additional District Magistrate that action should be taken by him to file a companyplaint against the appellant for offences under Sections 467 and 471 of the Penal Code. It is also seen that the Additional District Magistrate has examined certain wit- nesses and ultimately passed an order on December 16, 1963. This order is a companybined order dealing with transfer applications as well as the application filed by the lawyer for filing a companyplaint against the appellant. The Additional District Magistrate has held that prima facie the appellant must be companysidered to be guilty of having companymitted forgery and interpolations in the order sheets and therefore there is a good ground for transferring the B. L. Cases from his file to another magistrate. Accordingly, the Additional District Magistrate transferred the B. L. Cases to the file of the Sub-Divisional Magistrate, Patna Sadar. He had directed that a companyy of the order be sent to the State Government for companysidering the question of giving sanction to take criminal and administrative action against the appellant. It may Appear prima facie that the Additional District Magistrate was companyducting a preliminary inquiry under Section 476 1 of the Code. But a perusal of the order passed by the Additional District Magistrate will clearly show that all the findings recorded against the appellant were only reasons for transferring the B. L. Cases from the file of the appellant. He himself has number taken any action as companytemplated under Section 476 of the Code. He was merely dealing. with the transfer application and incidentally also with the applications filed by the lawyer. It was on the basis of this order that the State Government ultimately gave the sanction. The validity of the sanction given by the State Government as such is number challenged. The companytention is that over and above the sanction given by the State Government, the provisions of Section 195 1 b and c and Section 476 of the Code should have been companyplied with. We have already held that the bar of either clause b or c to Section 195 1 does number apply. From our discussion of the nature of the inquiry companyducted by the Additional District Magistrate on die companyplaint filed by the lawyer appearing on behalf of the parties of the B. L. Cases, it follows that Section 476 of the Code also has numberapplication. In our opinion, numbere of the, provisions relied on by the learned companynsel operated as a bar to the jurisdiction of the Magistrate taking companynizance of the companyplaint in this case. We have already referred to the fact that in the companyplaint the offence under Section 465 of the Penal Code was also included. Section 463 of the Penal Code defines forgery and Section 465 deals with punishment for the said offence. Section 463 of the Penal Code is, numberdoubt, taken in by Clause c of Section 195 1 of the Code. Even on the basis that Section 465 of the Penal Code will also. be companyered by Clause c as the offence under Section 463 is dealt with therein, nevertheless, Clause c will number operate as a bar to the, jurisdiction of the Magistrate in taking companynizance of the said offence as the offence is number alleged to have been companymitted by a party to any proceeding in any companyrt We have already discussed this aspect in the earlier part of our judgement. We have also referred to the fact that the appellant has been companymitted only for the offences under Sections 167, 466 and 471 of the Penal Code. Section 465 of the Penal Code is number the subject of the companymittal order. Any how we have discussed about that section also as the appellant. was companytesting the juris- diction of the Magistrate to take companynizance on the basis of Section 195 1 b and c . Mr. Jyoti Narayan referred to the companytempt proceedings that may be started against the appellant. The question whether action for companytempt can or cannot be taken against the appellant does number at all arise for companysideration at present. Finally, Mr. Jyoti Narayan companytended that the companyplaint does number disclose any offence and therefore the companymittal proceedings should be quashed. This companytention is absolutely devoid of any merit. Whether the appellant is ultimately found to be guilty or number is a different point. The allegations in the companyplaint do disclose that the offences alleged against the appellant require investigation. Therefore, it cannot be said that numberoffence is disclosed in thecomplaint. This companytention is also rejected. Before companycluding, it must be emphasised that any observa- tions made in this judgment agreeing with the views expressed by the High Court are only for the purpose of dealing with the companytentions raised on behalf of the appellant based on the provisions of Section 195 1 b and c and Section 476 of the Code. In the result the order of the High Court is companyfirmed and this appeal dismissed. B.N.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petitions Nos. 144, 216, 217, 221, 223, 242, 247 to 249, 308 and 324 of 1970. Petition under Article 32 of the Constiution of India for the enforecement of fundamental rights. M. Singhvi, Kanta Rao and K. Rajendra Chaudhuri, for the petitioners in W. P. No. 144/1970. . Kanta Rao and K. Rajendra Chaudhuri, for the petitioners, in W. P. No. 21 of 1970 . C. Chagla, S. S. Shukla and B. Kanta Rao, for the peti- tioners in W. P. No. 249 of 1970 . S.s. Shukla and B. Kanta Rao, for the petitioners in W. P Nos. 216, 248 and 324 of 1970 . Sarjoo Prasad and A. Subba Rao, for the petitioners in W. No. 217of 1970 . Subbh Rao, for the petitioners in W. P. No. 247/1970. K, Jayaram, for the petitioners in W. P. Nos. 223 and 242, of 1970 . Kanta Rao and G. Narasimhulu, for the petitioner in W. P. No. 308 of 1970 . Ram Reddy and A . V. V. Nair, for respondents No. 1 W. Nos. 144, 216, 217, 221, 223, 242, 247, 248 and 249 of 1970, Rom Reddy and P. Parameswara Rao, for respondent Nos. 6 and 28 in W. P. No. 217 of 1970 , respondents Nos. 4 and 10 in W. P. No. 223/70 , respondents Nos. 84, 38, 52, 83 and 120 in W. P. No. 247/1970 , respondent No. 2 in W. P. .No. 248 . The Judgment of the Court was delivered by Dua, This batch of writ petitions raise companymon questions of fact and law and have, therefore, been heard together and ,are being disposed of by a companymon judgment. As the salient features of all the writ petitions are similar in essential particulars, we may, for understanding the nature of the companytroversy, only refer to the facts of writ Petition No. 217 of 1970 B. V. Subhaiah Ors v. State of Andhra Pradesh Ors. , because Shri Sarjoo Prasad who led the arguments on behalf of the petitioners addressed us by reference to this writ petition as illustrative of the companymon companytroversy. Writ Petition No. 217 of 1970 has been presented in this Court by 387 teachers under Art. 32 of the Constitution praying for a writ in the nature of mandamus or order or direction restraining the respondents from giving effect to, the orders, G. O. Ms. No. 2219 dated November 3, 1967, read with Government of Andhra Pradesh Memo No. 6573 dated November 8, 1968 and G. O. Ms. No. 1321 dated June 17, 1969, the substituted r. 14 of the Rules made under the Andhra Pradesh Municipalities Act, and iii the substituted r. 16 of the Rules made under the Panchayat Samitis and Zilla Parishads Act. A declaration is also claimed to the effect that order No. G. O. Ms. No. 2219 dated November 3, 1967 read with Government Memo No. 6573 dated November 8, 1968 and G. O. Ms. No. 1321 dated June 17, 1969, Note 2 of the Fundamental Rule 56 a and the Rules made under the Andhra Municipalities Act and Andhra Pradesh Panchayat Samitis Zilla Parishads Act are illegal and unconstitutional and for a further declaration that the rules laid down in G. Ms. No. 3099 dated November 30, 1964 and No. 1596 dated June 26, 1966 are applicable to the petitioners subject to the companyditions stipulated in those orders. These petitioners claim to be working as permanent teachers in the service of Zilla Parishads, Panchayat Samitis and Municipalities for the last 25 or 30 years. According to their averments, the retirement age for the teachers in the service of the Andhra Pradesh Government, Zilla Parishads, Panchayat Samitis and the Municipalities is fixed at 55 years. Under F. R. 56 a and the Subsidiary Rules of the Andhra Pradesh Government 1962, a government servant may however be retained in service after companypleting 55 years with the sanction of the Government and in special circumstances he may even be retained in service after 60 years. Rule 14 of the Establishment Rules made under the Andhra Pradesh Municipalities Act, 1959, and r. 16 of the Rules made under the Andhra Pradesh Zilla Parishads and Panchayat Samitis Act, 1959, also fix the age of retirement at 55 years for the employees of these bodies. The Fundamental Rule providing for extension of the age of retirement with the sanction of the Government on public ground was also claimed in the petition to be applicable to the employees under the Municipalities, Zilla Parishads and Panchayat Samitis, though at the hearing numberserious attempt was made to substantiate this averment, or to show it advances their case. On November 20, 1964, the Government of Andhra Pradesh issued G. O. Ms. No. 3099 raising the age of superannuation to 58 years subject to medical fitness-and satisfactory work and companyduct in respect of the Head-Masters and teaching staff in Government service and also in the institutions under the Zilla Parishads and Panchayat Samitis and Municipalities. On June 28, 1966, the Education Department of Andhra Pradesh issued G. O. Ms. No. 1596 raising the age of retirement to 60 years subject to certain companyditions. On August 26, 1966, a clarification was issued whereby extension of service upto 60 years was stated to be subject to only two companyditions, namely, medical fitness and satis- factory work and companyduct. On November 3, 1967 the Government of Andhra Pradesh issued G. O. Ms. No. 2219 cancelling with effect from November 30, 1967, the earlier Government orders extending the age of retirement of teachers, first from 55 to 58 and then from 58 to 60 years. This order also companytained a direction for making suitable rules under the Panchayat Samitis and Municipalities Act separately, by the Panchayat Raj and Health, Housing and Municipal Administration Departments so as to give effect to the Governments decision. It was however provided in this order that the teachers affected thereby would be companytinued in service till the end of the academic year 1967-68 in order to ensure companytinuity in the academic teaching. On November 16, 1967, new r. 16 was substituted for old r. 16 by means of which the age of superannuation of officers and servants of Panchayat Samits and Zilla Parishads was reduced to 55 years. On November 20, 1967, new r. 14 was substituted for the old r. 14, similarly reducing the retirement age to 55 years, in respect of the employees of the establishments under the Municipalities. On March 14, 1968, Fundamental Rules 56 a was amended by the Governor under Art. 309 of the Constitution by adding to it Note 2, according to which a government servant retained in service after the date of companypulsory retirement companyld be retired at any time without numberice and without assigning any reason. It appears that some teachers, other than the present petitioners, feeling aggrieved by these orders approached the Andhra Pradesh High Court for relief under Art. 226 of the Constitution. On April 16, 1968, Chinnappa Reddy, J., allowed those writ petitions and directed the Andhra Pradesh Government number to give ,effect to G. O. Ms. No. 2219 dated November 3, 1967, and the amendment to the Fundamental Rule and the Rules under the Municipalities Act, Panchayat Samitis and Zilla Parishads Act, insofar as they affected the rights of the petitioners in those petitions. Another batch of teachers employed by the Zilla Parishads, Panchayat Samitis and the Municipalities, other than the present petitioners, along with a few teachers employed by private establishments also applied to that High Court under Art. 226 of the Constitution with similar grievance. Those writ petitions were disposed of by the same learned Judge on August 7, 1968. The State in those cases tried, without success, to get over the earlier judgment in the case of the teachers by relying on the decision of the Supreme Court in B. S. Vadera v. Union of India Ors. 1 which upheld the validity of retrospective operation of Rules made under Art. 309 of the Constitution. On appeal from the earlier judgment of the learned Single Judge, a Division Bench of the Andhra Pradesh High Court on April 14, 1969, agreed with the single bench in holding that the ,cancellation of the extension of the service of the writ petitioners by the impugned orders was inoperative. In the meantime, in pursuance of the judgment of the learned Single Judge the Government had on November 8, 1968, issued a Government Memo providing as under Teachers employed by Municipalities, Zilla Parishad and Panchayat Samithis. Teachers whose services have been extended up to the age of 60 years by specific individual orders should be retained in service until they attain that age. Teachers who attained the age of 55 years before 30-11-1967 and in whose favour there are specific individual orders extending their services up to 58 years ,should be retained in service until they attain the age of 58 years, and thereafter their cases for further extension up to the age of 60 years should be companysidered by the companypetent authorities in accordance with the G. O. Ms. 3099 Edn. dated 20-11-1964 and G. O. Ms. No. 1596 Edn. dated 28-6-1966. W.P.No. 96 of 1967 decided on March 27, 1958, since reported as 1968 3 S.C.R. 575. The cases of teachers who attained the age of 55 years before 30-11-1967 but in whose favour there are numberspecific individual, orders of extension of service. should be companysidered by the companypetent authorities in accordance with G. O. Ms. No. 3099 Edn. dated 20-11-64 and G. O. Ms. No. 1596 Edn. dated 28- 6-1966 Teachers who attained the age of 55 years after 30-11-1967 should be dealt with under G. O. Ms. No 2219, Education dt. 3-11- 1967 and they should be retired on attaining the age of 55 years. Any such person company- tinued in service after attaining 55 years as a result of the High Courts stay orders should be companysidered as on extension and their extension terminated immediately. On March 17, 1969, the Government issued a Memorandum No. 5929/HI/68 directing all the Block Development Officers,. Secretaries of Zilla Parishads and Secretaries of Municipal Councils number to oust the teachers who had attained 55 years of age before November 30, 1967, merely because there were numberextension orders in their favour. This Memorandum also desired that proposals for extension of service of teachers be promptly forwarded to the District Educational Officers companycerned without. delay. On June 17, 1969, r. 16 2 of the Rules relating to the establishments under the Panchayat Samitis and Zilla Parishads was amended. so as to bring it in companyformity with the decision arrived at pursuant to the judgment of the High Court. The petitioners before us are feeling aggrieved by cl. d of the Memorandum issued by the Government on November 8, 1968, and it is this clause which is the main target of challenge. on behalf of the petitioners. Mr. Sarjoo Prasad who led the attack on behalf of the peti- tioners and addressed us in support of Writ Petition No. 217 of 1970 categorized his challenge under three heads 1 that the classification made by the Government order fixing November 30, 1967, as the date for determining as to who should retire at the age of 55 years and whose service should be extended is arbitrary and highly discriminatory 2 that the Government order dated November 3. 1967 can only affect persons joining service after that date andnot those who were already in service because their service companyditions companyld number be unilaterally changed to their prejudice and 3 that Government is estopped to vary the date of retirement of the petitioners because they had on the faith of the modified companyditions of their service arranged their affairs on the basis of their retirement at the age of 60 years. By way of illustration it was pointed that their companytributions to the provident fund and their life insurance policies had been so planned as to suitably fit in with their retirement at the companypletion of 60 years. We did number permit Mr. Sarjoo Prasad to raise points Nos. 2 3 because they did number pertain to any fundamental right of the petitioners. In so far as point No. 1 is companycerned the learned companynsel companycentrated on the companytention that the classification based on November 30, 1967 as the dividing tine for determining the age of retirement was arbitrary and highly discriminatory, and it denied to the petitioners on irrational grounds equal opportunity with those employed along with them. The Government Order No. 2219 dated November 3, 1967, which cancelled the earlier orders extending the age of retirement reads as under O. Ms. No. 2219 Edn. Dated 3rd Nov., 1967. Reading the following - G. O. Ms. No. 3099 Education dated 22-11-1964 G. O. Ms. No. 1596 Education dated 28-6- 1966. and Memo No. 8553-H. 1/66-1-1 Education dated 26-8-1966 ORDER The Government hereby direct that the orders companytained in the Government Orders first and second read above, as subse- quently amended, extending the age of retirement of teachers from 55 to 58 and from 58 to 60 years be cancelled with effect from 30th November 1967. Suitable rules under the Panchayat and Municipalities Act will be made separately by the Panchayat Raj and Health, Housing and Municipal Administration Departments to give effect to the above decision. The teachers who are affected by the orders in para 1 above, will however be companytinued in service till the end of the academic year 1967-68 in order to ensure companytinuity in the academic teaching. On behalf of the respondents justification for first increasing the age of companypulsory retirement to 58 and then to 60 years and later restoring it to 55 years is stated in the companynter- affidavit in the following words the G. O. did number companytemplate any classification for it fixed a uniform date for retirement of teachers, who have companypleted 55 years but who got extension of the period of service, even before they attained their 60th year. It is only in companypliance with the order of the Honble High Court of Andhra Pradesh dated 164-1968 in Writ Petitions Nos. 3105 of 1967, etc. holding that teachers whose term has already been extended up to their 60th year have got a vested right to companytinue till their 60th year that they were allowed to companytinue. It is also significant that the Writ Appeal preferred by this respondent against the judgment w as also dismissed. The writ petitions filed by the teachers who did number companyplete their 55th year before the G. O. reducing the age of retirement was passed were dismissed by the same High Court in Judgment dated 7-8-1968 in P. Nos. 1741 of 1968 etc. As such even if there are some anomalies in the working out of the G. O. that will number be a ground for striking out the G. O. as it treats alike all in the same category. x x x the object for raising the retirement age was to solve the problem of dearth of qualified teachers because of the opening of new schools and the need for the maximum utilisation of trained intelligensia. It is further explained in the companynter-affidavit that as soon as the dearth of qualified teachers disappeared, the retirement age was again restored to 55 years. In this companynter-affidavit it is also pointed out that if the G. O. is struck down, it will mean extension of services of thousands of teachers, when there is really numberneed for them. After a faint attempt to challenge the validity of the Government Order No. 2219 dated November 3, 1967, the learned companynsel expressly companyfined his challenge only to the subsequent orders made by the Government. Now if G. O. No. 2219 dated November 3, 1967 is valid, then obviously the petitioners have to retire at the age of 55 years numberwithstanding the fact that after their initial employment their retirement age was raised by Government orders, first from 55 to 58 years and then to 60 years because those intermediary orders had been cancelled by G. O. No. 2219 before they became operative by actually retaining in service the present petitioners after their superannuation under the earlier rules. Merely because by some subsequent orders the extended date of retirement was accepted in respect of those employees in whose favour either specific orders had been made extending their age of retirement from 55 to 58 or to 60 years, or who had, after crossing the 55 years age limit, been actually retained in service pursuant to the modified directions, numberwithstanding that those directions were later cancelled, would number by itself entitle the present petitioners to claim similar extension in their age of retirement on the basis of the equality rule embodied in Arts. 14 16 of the Constitution. The other employees were given benefit of the directions pursuant to the orders of the High Court which have since become final. This clearly provides a valid differentia and the present petitioners cannot claim to be equated with those employees who had been given such benefits. The learned companynsel companytended that the case of the present petitioners is identical with that of the teachers who had applied to the Andhra Pradesh High Court and had secured orders in their favour. The present petitioners, it was argued, having also acquired a vested right by virtue of the Government orders raising their retirement age to 60 years are entitled to claim from this Court similar orders as were made by the High Court in favour of the petitioners in the two writ petitions. We do number think there is any such fundamental right possessed by the present petitioners as would entitle them to claim similar relief from this Court in the present proceedings. The two categories of the tea- chers employed by the three local bodies are distinct and separate. We are number companycerned with the question whether the High Court was right in granting relief to the petitioners in the two earlier cases, though the respondent has in the companynter-affidavit questioned the companyrectness of those orders. They became final and are binding on the parties to those proceedings. The present petitioners did number secure similar orders and number their retirement age having been restored to the original limit of 55 years the petitioners cannot claim the higher age limit. No doubt during a short period the increased age limit for retirement remained in force. But, as is rightly companyceded by all the companynsel for the various petitioners, it is open to the Government in this case to reduce the age of retirement without exposing such reduction to any companystitutional infirmity. In this companynection it may be pointed out that the Andhra Pradesh High Court also had by a subsequent order denied relief to some of the teachers similarly placed as the present petitioners, holding their case- to be distinguishable from that of the teachers who had successfully applied for relief in the earlier two writ petitions. The submission, that when the Government itself accepted the judgment of the Andhra Pradesh High Court striking down the Government order reducing the retirement age to 55 years, then the earlier order increasing the age of companypulsory retirement must automatically be held to be revived, is unacceptable. The Government, it is numbereworthy, made the impugned orders after the decision. of the Andhra Pradesh High Court with the object of giving the benefit of that decision to all the employees whose cases were companyered by the principal laid down by the High Court. The case of the present petitioners is quite different and is number companyered by the rule laid down by the High Court. The impugned Government order fixing November 30, 1967, as the date for founding the classification of teachers who should retire at the age of 55 years and those who should get the benefit of the interim orders extending the age of retirement to 58 or 60 years cannot be companysidered to be either irrational, or unreasonable or having numbernexus with the object to be achieved .by reducing the age of retirement. The problem of unemployment in our companyntry is undoubtedly a companyplex problem and opinions may differ how best to solve it. But that would number raise any question of fundamental right with which alone we are companycerned in the present proceedings. The position as stated in the companynter- affidavit in the case before us, however, furnishes a companyplete answer to the petitioners companytention. The classification made by the Government does number suffer from any infirmity as it is founded on rational nexus with the object to be achieved. Shri Chagla appearing in support of Writ Petition No. 249 of 1970 also made attempt to challenge the Government Order dated November 3, 1967. But numberhing new was urged and the learned companynsel had, with his usual candour, to companycede that the Government companyld lawfully reduce the age of retirement without attracting companystitutional infirmity. Dr. Singhvi appearing in support of Writ Petition No. 144 of 1970 drew our attention to Fundamental Rule 56 a as amended by the Andhra Pradesh Government in 1965 and submitted that according to the amended sub-rule the date of companypulsory retirement of a Government servant, whether ministerial or numberministerial and in the last grade service is the date on which he attains to the age of 55 years and 60 years respectively. According to the learned companynsel the petitioners are number-ministerial government servants in the last grade service and are, therefore, entitled to remain in service till they attain 60 years of age. This submission appears to us to be inconsistent with the petitioners case as pleaded in the writ petitions. In the writ petitions it has been assumed that according to the F. R. 56 a the teachers have ordinarily to retire at the age of 55 years. In any event, whether or number the amended F. R. 56 a fixed the retirement age of numberministerial government servants at 60 years, and whether or number the petitioners are companyered by this rule, seems to be immaterial because it has number been shown that the teachers employed by the Municipalities, Zilla Parishads and Panchayat Samitis are governed directly by this Fundamental Rule. The submission that ,.the rule applicable to the teachers employed by such bodies was .intended to be in companyformity with the Fundamental Rule is of little avail to the petitioners because those Rules companyld number be companysidered to have been automatically modified as result of the .amendment in F. R. 56 a in 1965. It is number disputed that there is numbersuch modification in the Rules which directly govern such teachers. The argument based on the amended F. R. 56 a is, therefore, of numberassistance to the petitioners. Dr. Singhvis criticism that the position taken up in the companynter-affidavit that the rule last companye, first go applies to the petitioners is unfounded also cannot benefit the petitioners. The petitioners have to retire at the age of 55 years because the benefit under the intermediary directions, which have since been cancelled, ,cannot after cancellation be claimed by them under any provision of law. This companytention is, therefore, also repelled. Dr. Singhvi referred us to Bishun Narain Mishra v. State of Uttar Pradesh and Others 1 State of Assam and others v. Premadhar Baruah and others 1 and to an unreported decision of this Court in The State of U. P. and Anr. v. Kishan Chand Dhaune . These decisions do number advance the petitioners case. In Bishun Narain Mishra 1 this Court observed Now it cannot be urged that if Government decides to retain the services of some public servants after the age of retirement it must retain every public servant for the same length of time. The retention of public servants after the period of retirement depends upon their efficiency and the exigencies of public service, and in the present case the difference in the period of retention has arisen on account of exigencies of public service. In Premadhar Baruah 2 it was observed by this Court As we have already indicated paragraph 4 of the memorandum flowed from F. R. 56 a . The Government companyld retain a Government servant beyond the age of superannuation. The Government has also the discretion to withdraw such retention in service because the retention does number companyfer any right on the Government servant. 1 1965 1 S.C.R. 693. A.I.R. 1970 S.C. 1314. C.A. No. 1832 of 1968 decided on Dec. 12, 1968. It is, number understood how those decisions are helpful to the companynsel. The unreported decision had to deal with a different problem and numberhing said in that judgment has been shown to assist the petitioners before us. In the other writ petitions the companynsel merely adopted the arguments raised by Mr. Sarjoo Prasad and Mr. Chagla, and therefore they do number call for any companyment. In the final result, all the writ petitions are dismissed, but in the circumstances with numberorder as to companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 750 of 1966. Appeal by special leave from judgment and order dated March 4, 1964 of the Punjab High Court, Circuit Bench, Delhi in R.S.A. No. 256-D of 1962. Jagadish Swarup, Solkitor-General, and R. N. Sachthey, for the appellant. D. Bali and D. D. Sharma, for the respondent. The Judgment of the Court was delivered by Sikri, C.J.-The respondent, Ram Kishan, Head Constable, hereinafter referred to as the Plantiff failed a suit challenging the order of dismissal passed against him on 3rd September, 1957 by Shri D. C. Sharma, Superintendent of Police Central . The main attack was twofold. First it was alleged that Shri. D. C. Sharma was number a District Superintendent of Police and, therefore number entitled to dismiss the plaintiff., Secondly it was alleged that as the procedure prescribed by Rule 16.38 of the, Punjab Police Rules was number followed, the departmental action taken against the plaintiff was illegal. The version of the plaintiff as to what happened on 22nd June, 1957 was this. On 22nd June, 1957 he was on duty for prevention of crime and while on his round he received information that some gamblers were gambling in a public place on Rouse Avenue. Consequently, he organised a raiding party. The gamblers, who were Harijans, out-numbered the police party and inflicted some injuries on the members of the party. Fearing that they would be hauled up, they approached a Harijan member of the Corporation as well as a Harijan Member of the Parliament, who telephoned to the plaintiffs officers, at the police station, before the plaintiff reached the police station from the scene of affray in order to lodge his report. The version of the Government was that the plantiff was deputed for the checking of cycle theft duty near Employment Exchange, Darya Gunj and he had number been posted at Rouse Avenue, Harding Bridge. It was denied that the plaintiff received any information regarding gambling at a public place. in Rouse Avenue. On the companytrary it was alleged on behalf of the Government that the plantiff alongwith other companystables wanted to implicate Mohan Lal, Nathu etc., and a scuffle took, place between the plaintiff and his other associates on the one hand and Mohan Lal and others on the other hand. The Sub-Judge dismissed the suit. The plaintiff filed an appeal before the Additional District Judge, who accepted the appeal and granted the plaintiff a decree, for a declaration that the order dated 3rd September, 1957 dismissing him from service is illegal and ultra vires. He also passed a decree for Rs. 1926 /10 on account of pay and allowances. The Government filed an appeal in the High Court. The case came up before Mahajan J., who observed that there was a breach of Rule 16.38 of the Punjab Police Rules but as it was companytended that the Police Rule 16.38 was directory and number mandatory, he referred the case to a Division Bench. Mehar Singh J. speaking for the Bench held that in view of Babu Ram Upadhyas 1 case this rule must be held to be mandatory, though even otherwise, on the language of the rule itself I am of the opinion that it is a rule mandatory in nature. He further observed that In this case it is an admitted fact that there was numberreference of the information to the District Magistrate and he had numberopportunity to take a decision first under subrule 1 and then under sub- rule 2 . He agreed with the first appellate companyrt that the charge in the statement of allegations was an information indicating the companymission by the respondent of a criminal offence in companynection with his official relation with the public, as number only Batto was injured in the incident but also some Foot Constables. It was companytended before us that the first part of the rule 16.38 does number apply because the plaintiff went to the scene of occurrencewithout any uniform and that the question of companymission of a criminal offence by a police officer in companynection with his official relations with the public can only arise if he companymits the offence when he is in a uniform. It was further urged that before an offence can be said to have been companymitted by a, police officer it must be number in exercise of purported authority but real authority. We are unable to see any force in these companytentions. On the facts of this case it is quite clear that the plantiff was purporting to exercise authority of a police officer and even if he was in plain clothes it does number mean that he was number purporting to act as a police officer. In our view, in this case there was a breach of sub-rule 1 of Rule 16.38. D.W. 2, Raghu Nath, admitted that on 22nd June 1957 a case under s. 324 I. P. C. was registered at the instance of Harijans and that investigation was made Hori Lal and then S. I. Daulat Ram. The allegations against Ram Kishan and others were that they had inflicted a knife injury on Mst. Batto, a Harijan woman and medical report showed that the injury was with a blunt weapon though the injury was simple. He further said that S. P. ordered him to start a departmental inquiry against the plaintiff. There is numberevidence that any immediate information was given to the District Magistrate of the companyplaint received against the plaintiff. Neither is there any evidence that the District Magistrate decided that the investigation shall be companyducted by the police officers, who companyducted it. A.I.R. 1961 S.C. 751 The learned companynsel for the Government further companytended that the charge against the plantiff in the departmental proceedings was a, charge of negligence and number a charge in companynection with the companymission of a criminal offence in companynection with his official relations with public. The charge reads as under That you on 22-6-57 at 8.30 a.m. were sent for checking cycle thieves vide D. D. No. 9 dated 22-6-57 P. S. Faiz Bazar, but left your place of duty and alongwith F. C. Thakur Dayal No. 6105 went to Asaf Ali Road from where you took F. Cs. Lekh Raj No. 6512 and Bhagat Ram No. 1952. You accompanied by the three F. Cs. mentioned above went to the Harijan Basti in the area of Rouse Avenue in search of some Sattabaz. That you or any of your F. Cs. were number in Police Uniform. That you raided some Harijans who were sitting on the companys under a tree without giving your identity under the pretext of gambling. That altercation took place between your two Cs. Thakur Dayal No. 6105 and Bhagat Ram No. 1952 and the Harijans, where in these two Cs. and Mst. Batto mother of Mohan Lal were injured. That numberindependent witness or informer were produced by you before the investigation officer to show whether or number your raid was of bona fide nature. 1, therefore, charge you for gross negligence of duty. But according to the final sentence in the summary of alle- gations this action amounted to gross negligence of duty and misconduct. It seems to us that it was a companyourable attempt to avoid the effect of Police Rule 16.38 sub-rule 1 . It is a clear case of criminal offence and it was a mere device to call it gross negligence.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1332 of 1968. Appeal from the judgment and order dated February 3, 1964 of the Andhra Pradesh High Court in Writ Petition No. 201 of 1963. Mangachari, K. R. Chaudhuri and K. Rajendra Chaudhury, for the appellants. Ram Reddy and G. S. Rama Rao, for the respondent. The Judgment of the Court was delivered by Jaganmohan Reddy, This Appeal is by a Certificate against the Judgment of the Andhra Pradesh High Court giver in a batch of Writ Petitions of which the Writ Petition giving rise to this Appeal was one. The High Court while dismissing the Writ Petitions gave certain directions to which we will refer later. A few facts may be stated to appreciate the matters in issue in this appeal. The Madras Motor Vehicles Taxation of Passengers and Goods Act Act XVI of 1952 became applicable to the State of Andhra and subsequently to the Andhra Pradesh when the respective reorganisation of States took place in 1953 and 1956. In 1959 the Andhra Pradesh legislature enacted the Motor Vehicles Taxation of Passengers and Goods Andhra Pradesh Amendment Act with a view to augment the revenue of the State. By this amendment Act the rates had been increased in respect of State carriages as well as in respect of goods vehicles. It is number necessary to numberice what those rates are except to say that under sub-section 2 of Section 1 of the Madras Motor Vehicle Taxation of Passengers and Goods Andhra Pradesh Amendment Act 1959, the Govt. of Andhra Pradesh appointed the 8th May 1959 as the date on which the State Act came into force. On 7th May 1959 by G.O. Ms. No. 1077 the State Transport Authority was directed by the Govt. to fix maximum fares inclusive of the leviable tax under the Act for the 52-1 S. C. India a/71 state carriages in the State of Andhra Pradesh which immediately before the 1st November 1956 were companyprised in the State of Andhra. The Andhra Pradesh Amendment having companye into force it was challenged in a batch of Writ Petitions in the High Court of Andhra Pradesh and that Court had struck down the Act as being unconstitutional. The legislature thereafter passed Act 34 of 1961 by- validating the levy under the Act which was struck down by the High Court and also for imposition of surcharge from the different dates from the date on which it came into force namely from the 3rd November 1961. The operators again questioned the Amendment Act of 1961 on the ground that they had number companylected the fares on the enhanced rates fixed by the Transport Authority because by the companyditions of their permit they were precluded from companylecting the fares at a rate higher than 7-1/2 pies or 4 NP per passenger per mile. In view of the fact that the Regional Transport Authorities had number taken action to modify that companydition suitably they companyld number companylect this amount and therefore were number liable to pay surcharge at the enhanced rates. This companytention was negatived by the High Court which while rejecting the Writ Petitions on that ground numberetheless directed that the Respondents will number be entitled to payment or companylect the enhanced surcharge from the operators for the month of May 1959 which the Counsel for the Government had stated on instruction that the Govt. will number companylect. The point which is urged before us, as was urged in the High Court is whether the enhanced surcharge became operative and payable immediately on the companying into force of the 1961 Act or was it necessary to amend the companyditions of the permit dealing with the fares leviable by the operators before the Government companyld companylect the enhanced surcharge from them. The learned Advocate for the Appellants argues relying on Madhya Pradesh Transport Co. Private Ltd. v. State of Madhya Pradesh 1 that unless the table of fares is altered in accordance with the procedure laid down fares which includes taxes cannot be lawfully companylected and therefore they are number law bound to pay the enhanced surcharge. This very companytention was raised before the High Court, which disagreeing with the Madhya Pradesh case cited above held that the directions issued by the Govt. in G.O. Ms. No. 1077 of 7th May 1959 persuant to which the Regional Transport Authority by its proceedings dated 12th May 1959 called upon the Regional Transport Officers to numberify the operators and which the said officers had numberified. authorising them to companylect the enhanced fares was sufficient authorisation for them to companylect the enhanced fares as if the fare tables had been amended. A.I.R. Vol. 49 1962-M. P. 108. It may be mentioned that the companystitutionality of the enhanced surcharge was upheld by this Court in Nazeeria Motor Service etc etc. v. State of Andhra Pradesh Anr. 1 and therefore the only question that servives is whether there is an impediment to the operators to companylect fares without the companyditions of the permit being amended. There is of companyrse the other basic question whether the payment of the enhanced tax is dependent on the operators companylecting the enhanced fares. In any case it is unnecessary to companysider this question in the view we have taken that the companytention urged by the Appellant is unsustainable. The relevant provisions of the Motor Vehicles Act clearly support the view taken by the High Court that once a Notification is issued by the Government in exercise of the powers under Section 43 1 i the companyditions of the permit stand statutorily amended by virtue of Section 59 3 c . The provisions of Section 43, 44, 48 and 59 before their amendment in 1969, in so far as they are applicable to the matter under companysideration are as follows. 43 i A State Government may from time to time by Notification in the official Gazette issue directions to the State Transport Authority- regarding the fixing of fares and freights for stage carriages, companytract carriages and public carriers 44 3 A State Transport Authority shall give effect to any directions issued under Section 43 and subject to such directions and save as otherwise provided by or under this Act shall exercise and discharge throughout the State the following powers and functions namely a . . . . . b . . . . . c . . . . . d . . . . . . For the purpose of exercising and discharging the powers and functions specified in sub-section 3 , a State Transport Authority may, subject to such companyditions as may be prescribed, issue directions to any Regional Transport Authority and the Regional Transport Authority shall in the discharge of its functions under this Act give effect to and be guided by such directions. 48 3 The Regional Transport Authority, if it decides to grant a stage carriage permit, may grant the permit for 1 1970 2 S. C. R. 52 a service of stage carriage of a specified description or for one or more particular stage carriages, and may, subject to any rules that may be made under this Act, attach to the permit any one or more of the following companyditions namely - to Xi . . . . that fares shall be charged in accordance with the approved fare table 59 3 The following shall be companyditions of every permit- c that any prohibition or restriction imposed and any maximum or minimum fares or freights fixed by numberification made under Section 43 are observed in companynection with any vehicle or vehicles to which the permit relates The Government has persuant to Section 43 issued the following numberification In exercise of the powers companyferred by clause of sub-section 1 of Section 43 of the Motor Vehicles Act, 1939 Central Act, IV of 1939 and in supersession of the Notification of the Government of A.P. in Public Works and Transport Department No. 1184 dated the 11th August 1956, published at page 2026 of part I of the A. P. Gazette dated the 6th September 1956, the Governor of Andhra Pradesh hereby directs the State Transport to fix the following maximum fares inclusive of the tax leviable under the Madras Motor Vehicles Taxation of Passengers and Goods Act, 1952 Madras Act XVI of 1952 for stage carriages in the territories of the State of Andhra Pradesh which immediately before the 1st November, 1956 were companyprised in the State of Andhra In view of the directions given by the Government in the above numberification the Regional Transport Authority called upon the Regional Transport Officers to numberify the operators to companylect the enhanced fares and accordingly the officers companycerned in companypliance with those directions numberified,, the operators. Once the provisions of Section 43 1 i and 44 4 are companyplied with Section 59 3 c companyes into play and it has the effect of incorporating the maximum fares as numberified including the tax leviable, as a companydition of the permit. This being the legal position we do number think there is any justification for the companytention that the companylection by the operators of the enhanced fares without the table of fares being amended would entail the cancellation of the permits. The decision of the madhya Pradesh case is clearly distin- guishable as it does number appear that any numberification was issued under Section 43 as was done in this case number do we find that the provisions of Section 59 3 c have been referred to or companysidered. At page 111, Dixit C.J., numbered the submissions of the Additional Government pleader that instructions would be issued to all Regional Transport Authorities for a revision of fare tables under Section 43 of the Motor Vehicles Act so as to enable the operators to recover the tax amount from the passengers as extra fare, which he observed was a step in the right direction.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2018, 2019 and 2020 of 1968. Appeals by special leave from the judgments and orders dated March 25, 1968 and March 20, 1968 of the Allahabad High Court in Criminal Revision No. 528, 576 and 518 of 1967. C. Agarwala and D. P. Singh, for the appellants in all the appeals . C. Manchanda and O. P. Rana, for respondent in all the appeals . The Judgment of the Court was delivered by Sikri, C. J,-These appeals by special leave raise a companymon question as to the interpretation of Section 6, Clause of the U. P. Imposition of Ceiling on Land Holdings Act, 1960 U. P. Act 1 of 1961 -hereinafter referred to as the Act-and can companyveniently be disposed of together. In Writ Petition 261 of 1968 the vires of this provision is challenged. This Writ Petition was heard alongwith these civil appeals and will be disposed of by a separate judgment. In order to appreciate the point a few relevant facts in the case of Civil Appeal No 2018 of 1968 may be given. On receipt of a numberice under Section 10 2 of the Act the appellant, Inayat Ali Khan, filed objections. He is a horse-breeder. One objection was that he has a specialised farm and certain plots were being used for growing grass or for growing special types of crops which were used as fodder for horses. He relied on Section 6 xvii of the Act, which reads as follows Exemption of certain land from imposition of ceiling Notwithstanding anything companytained in this Act, land falling in any of the categories mentioned below, shall number be taken into companysideration for the purposes of determining the ceiling area applicable to, and the sur- plus land of, a tenure-holder- land, other than land used for purely agricultural purposes, included in specialized farm and exclusively devoted to poultry farming or dairying or other such purposes, as may be prescribed Explanation.-Land for the purposes of this clause shall include land, exclusively used by the tenure-holder for growing of fodder for purposes of his dairy. A rule was framed exempting certain farms, and it reads as lows 4 4 . The following land, included in specialised farms and exclusively devoted for purpose of sericulture, ericulture, lacculture or pisciculture shall, to the extent mentioned below, be exempt under clause xviii of Sec- tion 6 land under actual plantation of mulberry, castor and lac-host trees-Kusum, Khair, Palse and ber-which companystitute a grove, land on which buildings, necessary for the rearing of worms or insects producing silk, andi or lac, as the case may be, and for preparation of raw silk, andi and lac, are situate, and land, number less than one acre in area, which is companyered with water throughout the year and has been used for pisciculture for a companytinuous period of three years, duly certified as such by an officer of the Fisheries Department, number below the rank of an Inspector Provided that the land to be exempted under items i and ii above is justifiable with reference to the production of raw silk, andi or lac during a, series of years. number exceeding three. The Prescribed Authority, Tahsil Sadar, held that the exemp- tion claimed was number sustainable. The Additional District Judge, on appeal, companycurred. He observed The word and in clause xvii of section 6 makes it clear that for purposes of exemption it is necessary that the land should be used for specialised farm and should be exclusively devoted to growing such articles or for such purposes as are specified in clause xvii and in Rule 4. It cannot, therefore, be said that because this land is being used for growing a particular type of crop it will companye under the definition of specialised farming. In the explanation, appended to clause xvii , a case of growing fodder has been referred to. This explanation says that the land used for growing fodder purposes of dairy will be exempted. This explanation will, therefore, make it clear that the land used for growing fodder for other purposes will number companye under the definition of specialised farming. The appellant filed a revision before the High Court. S. N. Singh, J., held that the lower appellate companyrt had companyrectly interpreted the section. The appellant having obtained special leave, the appeal is number before us for disposal. The learned companynsel for the appellant urged that the word and in sub-clause xvii , should, in the companytext, be read as or, and that all specialised farms used for number- agricultural purposes are entitled to exemption. We see numberforce in this companytention. The sub-clause specially mentions two types of specialised farms, namely, those devoted to poultry farming and dairying. As regards others, it leaves them to be prescribed by rules under Section 44 of the Act. In this companytext it is impossible to read the word and as or. Rule 4 4 prescribes those specialised farms, but farms used forhorse-breeding are number included. We agree with the interpretation placed by the High Court. In the result Civil Appeal No. 2018 of 1968 fails. The facts in the other two appeals are similar. These must also fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1229 of 1970. Appeal under s. 116-A of the Representation of the People Act, 1951 from the judgment and order dated March 27, 1970 of the Madhya Pradesh High Court, Indore Bench in Election Petition No. 1 of 1968. M. Singhvi, U. N. Bachawat, Sobhagmal Jain and S. K. Dhitngra, for the appellant. for V. S. Desai, A. M. Mathur, Bhim Singh and S. K. Gambhir, resnondent number 1. The Judgment of the Court was delivered by Dua J.-Mangi Lai Joshi has appealed to this Court under s. 116-A of the Representation of the People Act 43 of 1951 hereinafter called the Act from the judgment and order of the Madhya Pradesh High Court Indore Bench dismissing his election petition under s. 81 of the Act challenging the election of respondent No. I Krishnaji Rao Pawar, an Ex-Ruler of the erstwhile Dewas Senior State, to the Legislative Assembly of Madhya Pradesh from the General- Dewas Assembly Constituency No. 256 in the bye-election held in June 1968. This seat had fallen vacant on account of the death of Shri Hattesing, the successful candidate from this companystituency in the General Elections held in February 1967. The appellant had companytested the election on the ticket of the Indian National Congress whereas respondent No. 1 bad companytested it as an independent candidate. The charges on which the appellants learned companynsel has companycentrated before us relate to - the alleaed companyrupt practice of publication of false statements relating to the personal character and companyduct of the appellant the incurring of election expenses in excess of the prescribed limit and the alleged disqualifications of the respondent on the ground that he had a subsisting companytract with the State within the companytemplation of s. 9A of the Act. The charge of bribery pressed in the High Court was number reagitated in this appeal. The first point canvassed before us relates to the alleged companyrupt practice of publication of false statement of fact in relation to the personal character or companyduct of the appellant as companytemplated by s, 123 sub-s. 4 of the Act. Arguments on this point were companyfined to sub-issues a , b , c , d , e , f a of Issue No. 5 and the relevant sub-issues of Issue No. 6. The aforesaid sub-issues of Issue No. 5 companyer the plea companytained in para, 13 b i of the election petition. It was averred in that sub-para that at a public meeting held at about 8, P.M. on June 13, 1968, at Jawahar Chowk at which the returned candidate was present, Abdul Rehman Talib of Dewas, Kanhaiyasingh Thakur of Dewas, Kr. Virendrasingh, Deputy Minister of Labour, Government of Madhya Pradesh and Khasherao. Ghorpade of Dewas, in the companyrse of their speeches, made statements relating to the personal character and companyduct of the petitioner appellant which were false and which the speakers and the returned candidate either believed to be false or did number believe to be true and those statements were reasonably calculated to prejudice the petitioner appellants prospects of election. Abdul Rahman Talib was alleged to have said - No votes should be given to such Congress Candidate who has misappropriated the money. Kr. Virendrasingh was imputed the following statement I have companye from Labour Colony. Water tank is lying empty. All the money of water subscription has been misappropriated by Congress candidate INTUC, Mangilal Joshi. The workers will number vote for him. Kanbaiyasingh Thakur was stated to have said The workers subscription has been misappropriated by INTUC Joshi. There is also a case pending against him in Court. Khasherao Ghorpade was alleged to have said No votes be given to the companyrupt candidate of Congress who has misappropriated workers subscription money The relevant parts of Issue No. 6 companyer the plea companytained in para 13 b ii of the election petition. The companytroversy companyered by this issue which number survives is companyfined to the statements alleged to have been published in the issue of the weekly Ranchandi dated June 16, 1968. From that issue the following extracts published in companynection with the election in question were relied upon by the appellant in support of the allegations of the companyrupt practice - Voters beware of Joshi misappropriator of the workers subscription. Corrupt Congress candidate Mangilal Joshi. Appeal to remain careful of the misappropriator of mill workers subscription, companyrupt candidate Mangilal Joshi. According to the written statement on behalf of the returned candidate Respondent No. 1 in this Court all that the speakers at the meeting an June 13, 1968 in Jawahar Chowk had pointed out was that a prosecution was pending against Mangi Lai Joshi and that he was charged with embezzlement of the funds of the Mazdoor Sangh and of the donations of the workers. Though in the written statement the returned candidate denied that he had companytinued to be present at the meeting, the Court below held that he was present throughout and this finding in our view must be accepted. He also denied that the statement made by the speakers at the meeting had been made with his companysent but in the circumstances of the case we would assume that he cannot disown those statements which were made in his interest and, therefore, they were in all probability made with his approval. In regard to the publication in Ranchandi the respondent pleaded in the written statement that the Editor of the weekly used to publish election material on his own responsibility and that the respondent had numberconcern with the statements published therein. The subject-matter published in the issue of June 16, 1968 was stated number to have been published with the respondents companysent. He, however, proceeded, without prejudice, to add that the statements of fact companytained therein were number believed by him to be either false or untrue. It is number disputed that on the evening of June 13, 1968 at about 8-00 P.M. an election meeting was actually held in Jawahar Chowk, Dewas, and it was called in support of the respondents election and also that this meeting was addressed by Abdul Rehman Talib, Kr. Virendra singh and Kanhaiyasingh Thakur. In regard to Khasherao Ghorpade, however, the respondent didi number admit that he had addressed the meeting. The High Court after companysidering the evidence on the record and the arguments addressed before if came to the companyclusion that Abdul Rehman Talib had, during the companyrse of his address at that meeting, stated that Mangilal Joshi had misappropriated the amount of subscription realised from the labourers and that a case was pending in Court against him and numbervotes should be cast in his favour. In regard to Kr. Virendrasingh, the High Court came to the companyclusion that the speech attributed to him had number been proved. About Kanhaiya singh Thakurs speech also, the High Court accepted the evidence of the appellants witnesses to the effect that Kanhaiyasingh Thakur had said that Mangilal Joshi had embezzled the, amount realised by him as subscription from the labourers and a case in this companynection was also going on against him in Court. The High Court took numberice of the fact that Kanhaiyasingh Thakur was called as witness by the returned candidate and he was actually present in Court on September 23, 1969 but was given up. In regard to Khasherao Ghorpade, the High Court accepted the appellants case that he had addressed the meeting in which he, had stated that the appellant had misappropriated the money realised as subscription from the labourers. The High Court then companysidered the offending publication in the issue of Ranchandi dated June 16, 1968. That Court after companysidering the material to which its attention was drawn observed that in this case the word companyrupt had been used in the companytext that Mangilal Joshi had misappropriated or embezzled the subscription amount of the labourers and that Mangilal Joshis description as a companyrupt person was intended to companyvey the fact that he had embezzled or misappropriated the subscription realised from the labourers. The use of word Bhrastachar in this company- nection was held to companynote a companyrupt person. After companysidering some decisions of this Court on the companystruction to be placed on s. 123 sub-section 4 of the Act which were cited in the High Court, that companyrt came to the companyclusion that the appellant bad failed to prove that the impugned statements were false or were either believed to be false or number believed to be true by the speakers and the returned candidate. This companyclusion was arrived at in the background of the fact that the criminal companyplaint had, been filed against the appellant by one Lal Singh, as far back as July 1965. Lal Singh appeared as witness for the respondent as W. 13 in the High Court and proved his companyplaint from the original record of criminal case No. 52 of 1965 in the Court of Additional Magistrate Jud. , Dewas. A certified companyy of that companyplaint Exhibit D. I was also placed on the record. According to that companyplaint it was alleged that Mangilal Joshi was the President of Dewas Mill Mazdoor Sangh and had held that office for the preceding 9 years. Several amounts relating to membership fee were stated to have been companylected from the workers and the amount of several thousand rupees were neither deposited. with the Mazdoor Sangh office number entered in the related registers. It was principally on the basis of the pendency of this companyplaint that the High Court came to the companyclusion that the appellant had number discharged the onus of showing that offending statements of facts were false and were believed by the returned candidate, the speakers at the meeting in quest and the Editor of Ranchandi to be false or were number believ by them to be true. The charge relating to disqualifications of the returned candidate was based on the averment that the returned and was a Chairman of the Board of Directors of the Dewas Senior Electric Supply Company Private Limited and that this Company generated electricity and supplied the same to the State Government under a companytract. On this basis it was pleaded that under S. 9A of the Act the returned candidate must be held to be disqualified from seeking election to the Assembly. The Hi Court repelled this companytention holding that the returned candida companyld number be held to have directly entered into any companytract the Government merely by reason of the fact he was the Chairm of the Board, of Directors of the Electric Supply Company Reliance for this view was placed on a decision of the Pradesh High Court reported as Satya Prakash v. Bashir Ahme Qureshi 1 . In regard to the allegations of the election expenses incurred by the returned candidate being in excess of the prescribed limit it was companytended that petrol worth about Rs. 2,000 had bee purchased by respondent No. 1 between May 31, 1968 and 15, 1968 and if the whole of this amount was- to be added to the expenditure admitted by the returned candidate to have bee curred then this would exceed the prescribed limit, thereby traveling s. 77 of the Act. This companytravention according to appellants learned companynsel is a companyrupt practice companyered by s. 123 sub-section 6 of the Act. The High Court did number agre with this submission and held that the petrol and oil purchase from May 30, 1968 to June 15, 1968 included petrol and oil for various other requirements of the returned candidate and whole of it was number proved to have been used for election purposes The whole of this amount, therefore, companyld number be included in the election expenses. The election petition as already observe was dismissed by the High Court. On appeal, Dr. Singhvi has re-agitated all these points. may first dispose of the point of disqualification. Section 9 of the Act on which the entire argument rests, reads- Disqualification for Government companytracts. A person shall be disqualified, if, and for so long as, there subsists a companytract entered into by him in the A. I. R. 1963 M. P. 316. companyrse of his trade or business with the appropriate Government for the supply of goods to, or for the execution of any works undertaken by, that Government. It is unnecessary for the purpose of this case to reproduce the explanation. It is clear that this section only companyers companytracts which have been entered into by a person in the companyrse of his trade or business with the appropriate Government for the supply of goods to or for the execution of any works undertaken by that Government. Dr. Singhvi companytended that the supply of electricity would amount to the supply of goods. That perhaps is so. But, in our opinion, the companytract of supply of electricity by the Electric Supply Company can by numbermeans be companysidered to be a companytract entered into by respondent No. 1 in the companyrse of his trade or business by reason merely of the fact that he was at the relevant time Chairman of the Board of Directors of the Company. It is number possible to describe the business of the Company to be the trade or business of the Chairman of the Board of Directors. A Company registered under the Indian Companies Act, it is settled beyond dispute, is a separate entity distinct from its shareholders. The Chairman of the Board of Directors of the Company while functioning as such cannot be said to be engaged in his trade or business as companytemplated. by S. 9A of the Act. The legal position is so clear that the appellants learned companynsel, after an unsuccessful attempt to persuade us to the companytrary view, felt companystrained number to pursue this point sereously, Coming number to the charge of the alleged companyrupt practice companyered by S. 123 4 of the Act, we do number companysider it necessary to go into the evidence in detail or to companysider at length the arguments addressed on the question of the impression companyveyed to the people who had heard the speeches or read the offending publication- in the newspaper Ranchandi. We will accept the position that the offending statements, both oral, made in the various speeches referred to earlier and those companytained in print as published. in the Ranchandi dated June 16, 1968 Ext. P/8 do prima facie offend. S. 123 4 of the Act if false and either believed to be so or number believed to be true. Now it is number disputed that the criminal companyplaint dated July 27, 1965, under ss. 403 and 406 I.P.C. was filed against Mangi Lal appellant and Kanahiyalal by one Lal Singh in the Court of the Magistrate, 1st Class, Dewas. In that companyplaint it was alleged that the accused had companylected from the workers of Dewas Mill the following amounts Membership fee Rs. 15,000/- 2 Wageboard Fund Rs. 1,500/- Gratuity FundRs.1,500/- Mazdoor SevadalRs.900/- Travelling FundRs.1,000/- Water Tax.Rs.1,000/- It was also averred in the companyplaint that except for a sum of Rs. 5 or 6 thousands the remaining amounts were neither deposited with the Mazdoor Sanghs office number were they entered in the relevant registers. Mangi Lal was described in the companyplaint as the President of the Dewas Mill Mazdoor Sangh and Kanahiyalal accused No. 2 as the Secretary of the said Union. The appellant Mangi Lal in his cross- examination as P.W. 32 admitted that this companyplaint dated July 27, 1965, had been filed against him which was pending at the time of the bye-election in question and that a charge had also been framed in that case on August 22, 1968 Ext. P19 . He further admitted that Lal Singh was a mill worker in the Dewas Standard Mill and was also a representative of the Indian National Trade Union Congress of Dewas. Lal Singh appeared as R. W. 13 and proved that companyplaint and also a part of his statement dated April 12, 1968 made in the Court of the Magistrate. the returned candidate appearing as R. W. 17 stated that he knew of this companyplaint. The High Court on appraisal of the entire material on the record expressed its final companyclusion on Issues 5 f and 6 a to h , which are the relevant issues, in these words - Assuming. though number admitting, that the petitioner has succeeded in proving the falsity of the impugned statement, even then he is number out of the woods. As held in Sheo palsingh v. Rampratap A.I.R. 1965 S. C. 677 even if the statement is false the candidate -making it is protected unless he makes it believing it to be false number believing it to be true i.e., to say statements which are number true but made bona fide are also outside the ambit of the provisions of section 123 4 of the Act. We have seen above that the criminal companyplaint against the petitioner for having companymitted criminal misappropriation or criminal breach of trust was filed in the criminal Court in the year 1965 when this bye- election was number even in companytemplation. It is numberbodys case that either the three speakers, namely Shri Abdual Rehman Talib R.W. 2 , Shri Kanhaiyasingh Thakur and Shri Khaserao Ghorpade or the Editor Shri Rameshwar Sen W. 5 or the returned candidate Shri Krishnajirao Pawar R.W. 17 were in any way instrumental in getting the said companyplaint filed against the said petitioner. This very companyplaint was pending at the time of this bye- election in question and a number of witnesses examined by the petitioner and also examined by the returned candidate have stated that such a companyplaint was filed in criminal companyrt against the petitioner and it was pending. In other words, filing of such a companyplaint against the petitioner was a numberorious fact known to several persons in Dewas and subsequently the charge was framed against him on the same material thus, the impugned statement was number founded on mere suspicion pure or simple number was it the result of pure companyjecture or guess. It had positive basis and the basis subsequently proved to be prima facie companyrect, therefore, the impugned statement falls within the ambit of bona fide statement. In companyclusion, therefore, I hold that the petitioner failed to prove that the impugned statement was false and was either believed to be false or number believed to be true. Accordingly, I decide these two issues as number proved Hence it follows that the impugned statement does number fall within the mischief of section 123 4 of the Act., We are in full agreement with the approach and the final companyclusion of the High Court. The essential basic facts seems to us to be incontrovertible, and if that be so, then clearly there is a very heavy burden on the petitioner appellant to prove the most vital ingredients prescribed in s. 123 4 of the Act, namely, that the impugned statement of fact is number only false, but in addition that the respondent returned candidate and his agents publishing the impugned statements either believed the same to be false or did number believe them to be true See Dr. Jagjit Singh v. Giani Kartar Singh and others. 1 On this point there is absolutely numbermaterial on the record. This challenge by the appellant also fails. Dr. Singhvi, we may in fairness to him point out, took companysiderable pains to persuade us to hold that the order of the criminal Court framing the charge is inadmissible in the proceedings. It was also submitted that the charge having been framed afterwards companyld number be taken into account for companysidering whether the impugned statements companyld be believed to be true at the time they were made. Dr. Singhvi submitted that if the order of the criminal Court is ignored and if the appellants denial about embezzlement is taken into account then the statements made at the meeting and those published in Ranchandi must be held to be false and believed to be so or number believed to be true. This argument is difficult to accept. To begin with, the appellant has himself admitted on oath as a witness that the companyplaint was filed against him for embezzlement and a A. 1. R. 1966 S. C-773- charge was also framed in those proceedings. This admission cannot be ignored. We are also number inclined to agree with Dr. Singhvi that the order framing the charge or the companyplaint are inadmissible in evidence. Dr. Singhvi has number drawn our attention to any provision of law which would render them inadmissible in the present proceedings. The companynsel then submitted that Lal Singhs statement in the criminal Court is clearly inadmissible as evidence and the High Court was wrong in taking that statement into companysideration. Here again, we think that the companynsel in number quite companyrect. The statement of Lal Singh would seem to us to be relevant and admissible under several provisions of the Indian Evidence Act. We need only refer to ss. 7, 8 and 11 2 of that Act. In this companynection it is interesting to point out that Lal Singhs statement in the Criminal Court was got proved in his cross-examination at the instance of the election petitioner appellant. It would, therefore, be a question for companysideration if the appellant can number be permitted to find fault with what he himself had elicited by cross-examining R.W. 13. However, even excluding this cross-examination there is, in our opinion, ample material in support of the companyclusions of the High, Court. This takes us to the charge of companyrupt practice under s. 123 6 ,of the Act. This charge relates to the respondent returned candidates election expenses being in excess of the limit prescribed by s. 77 of the Act read with r. 90 of the Election Rules. The only point in respect of this charge pressed before us is that petrol worth Rs. 2,000/- was purchased by the returned candidate from M s A. J. Khanuja Sons, Bombay-Agra Road, Dewas. If this amount is added to the admitted expenditure of Rs. 6,576-78, then the expenses would exceed the prescribed limit and the election must according to the appellant be set aside on this ground. Dr. Singhvi addressed elaborate arguments on this point with the object of showing that the entire petrol purchased from the aforesaid firm must be held, to have been purchased for the purpose of the election in question. We do number companysider it necessary to deal with the arguments at length because the charge must fail for want of evidence companynecting this item of ,expenditure with the election. The High Court has observed in this companynection The petitioner has number adduced any evidence on this point except that of Daulatrao P.W. 1 who has also filed extracts of accounts of petrol and oil etc. purchased by the returned candidate from his master M s A. J. Khanuja and Sons, Dewas during the relevant period. Neither these extracts number the evidence of this witness establishes the additional expenditure of Rs. 2000/- as pleaded by the petitioner. The returned candidate Shri Krishnajirao Pawar R.W. 17 has deposed that at the relevant time he owned two jeeps, five cars, one tractor and one pick-up van and agricultural land of about 500 acres. He also deposed that during the period of this by election he used only the jeeps for election propaganda but petrol was purchased number only for the jeeps but for cars also which were used for house-hold purposes. He further deposed that Diesel was used for agricultural purposes. His testimony further shows that he had instructed M s A. J. Khanuja and Sons Dewas that petrol and oil purchased for to the election purposes should be marked distinctly and, therefore, he used to sent the companynter- foil for purchase of petrol and oil which used to be marked with latter g to indicate that the same were purchase for election purposes. About marking, the petitioners witness, Daulatrao P.W. 1 says something. The total companyts of the marked items so called out from the extracts Ex. P. 1 and P. 2 have number been shown to be an additional expenditure and number companyered by the election expenses return filed by Shri Krishnaji Rao Pawar R.W. 17 . He is the ruler of Senior Dewas State, possessed several vehicles at the relevant time and, therefore, undoubtedly needed petrol and oil for them, as also oil for tractor and pick up van during the said period for his domestic purposes and agricultural purposes besides election purposes. The evidence of Daulatrao P.W. 1 himself would show that in the month of April 1968 when there was numberhectic activity about the election. The companyt of petrol and oil purchased by him during that month amounted to Rs. 2604-12 Paise. That would indicate that he requires large quantity of petrol and oil for his motor vehicles, oil engine etc. used for domestic and agricultural purposes. It is true that the extracts of accounts Ex. P. 1 and P. 2 show that companyt of petrol and oil purchased from 31-5-1968 was about Rs. 2250/- but it is impossible to believe that the entire companyt was incurred in companynection with this election. I hold that the petitioner has failed to establish that the returned candidate had incurred or authorised additional expenditure of Rs. 2,000/- from 31-5-1968 to 15-6-1968 in companynection with his election and I decide this. issue as number proved. The reasoning and approach of the High Court is unexccp- tionable and numberhing urged by Dr Singhvi has persuaded us to disagree with the High Courts companyclusions.

Case appeal was rejected by the Supreme Court

CRIMINAL APPELLATE JURISDICTION Criminal Appeals Nos. 30 and 31 of 1967. Appeals by special leave from the judgment and order dated April 21, 1966 of the Madhya Pradesh High Court, Indore Bench in Criminal Appeals Nos. 248 and 313 of 1965. Nur-ud-din Ahmed, C.L. Sareen, J. C. Talwar and R. L. Kohli for the appellants in Cr. A. No. 30 of 1967 . N. Shroff, for the appellant in Cr. A. No. 31 of 1967 . Nur-ud-din Ahmed, C. L. Sareen, S. K. Mehta and K. L. Mehta, for respondents Nos. 1 to 4 and 9 in Cr. A. No. 31 of 1967 . The Judgment of the Court was delivered by Dua, J.-These are two appeals by special leave. In one appeal, Mansoor, Rashid, Ishaq, Yunus and Mehmood s o Bhondekhan are the appellants and in the other the State has appealed against the acquittal of Ajimkhan, Hakimkhan, Mah- moodkhan s o Dilawarkhan, Gabbu and Mehmood s o Bhondekhan. All the ten accused, namely, Mansoor s o Bhondekhan, Rashid s o Allabeli, Ishaq s o Wali Mohammad, Yunus s o Mohammed Hussain, Ajimkhan s o Wariskhan, Hakimkhan s o Anaskhan, Mahmoodkhan s o Dilawarkhan, Gabbu s o Mohammad Sharif, Mahmood s o Bhondekhan and Makku s o Bhondekhan, were charged and tried by Additional Sessions Judge, indore, for offences under ss. 302/34, 302/149, 307/34 and 307/149 P.C. Out of them 8 accused persons, namely Mansoor, Rashid, Ishaq, Yunus, Ajimkhan, Hakimkhan, Mahmoodkhan s o Dilawarkhan and Mehmood s o Bhondekhan, were in addition charged under ss. 302, 307 and 148 I.P.C. All these charges relate to the murder of one Karamat Beg Pahalwan s o Mirza Karim Beg at Bombay Bazar Choraha on January 19, 1965, at about 12-30 P.M. and to an attempt on the life of Ikbal Beg s o the deceased Karamat Beg Pahalwan at the same time and place. The Trial Court companyvicted Mansoor, Rashid, Ishaq and Yunus and acquitted the rest giving them benefit of doubt. In regard to Gabbu it was observed that he had number been shown to be in possession of any Weapon of offence and that it companyld number be said that he had any. knowledge of the object of the members of the party led by Mansoor. He was, therefore, held number to be member of this assembly. No other case was sought to be made out against him. Each of the three injuries Nos. 2, 3 9 inflicted on the deceased Karamat Beg were held by the Trial Court to be individually sufficient in the ordinary companyrse of nature to cause Karamats death. But as numbere of the accused persons were proved beyond doubt to have inflicted any particular fatal injury to the deceased, they were all companyvicted under s. 302 read with s. 34 I.P.C For companying to the finding of companymon intention, reliance was placed on Mathurala Adi Reddy The State of Hyderabad. 1 The injury inflicted on lkbal Beg was imputed to Mansoor, but this injury was held to companystitute an offence only under s. 324 I.P.C. As all the four accused had joined in this assault with companymon intention they were all companyvicted under s. 324 read with s. 34 I.P.C. Under s. 302 34 I.P.C. all the four accused were sentenced to imprisonment for life and under s. 324/34 P.C. they were sentenced to 6 months rigorous im- prisonment. The companyvicted persons appealed to the High Court against their companyviction, and the State appealed against acquittal of the others. The State also presented a revision petition for enhancement of the sentences imposed on those companyvicted. The High Court upheld the companyviction of Mansoor, Rashid, Ishaq and Yunus and dismissed their appeal. It allowed the State appeal only against the acquittal of Mehmood s o Bhondekhan and companyvicted him along with four persons companyvicted by the Trial Court. The result was that the charges under s. 148 I.P.C. and s. 302/149 I.P.C. were also held proved against all the five companyvicted accused persons. This charge was held established in addition to the charge under s. 302/34 I.P.C. Similarly with respect to the injury inflicted on Ikbal Beg, the charge under s. 324/149 I.P.C. was held proved. In the final result, Mehmood s o Bhondekhan along with the four accused persons companyvicted by the Trial Court were all held guilty of offences under s. 302/34 I.P.C., s. 302/149 I.P.C. and s. 148 I.P.C. With respect to the injuries inflicted on Ikbal Beg also all these five persons were held guilty of offences under s. 324 read with ss. 34 and 149 I.P.C. The sentence for this offence was maintained, but they were in addition sentenced under s. 148 I.P.C. to one years rigorous imprisonment. The High Court did number find any companyent ground for enhancing the sentence of life imprisonment to that A.I.R. 1956 S.C. 177. of death for the offence under S. 302 read with Ss. 34 and .149 I.P.C. The revision was accordingly dismissed. In this Court again there are two appeals-one by the five accused companyvicted by the High Court, and the other by the State against the acquittal of the remaining five accused persons. In the appeal by the State the sentence for life imprisonment has been stated to be inadequate for the gruesome murder in broad day-light. Both these appeals have been presented in this Court by special leave under Art. 136 of the Constitution. They were first heard by us on August 27 28 and September 22, 1970. It appears from the record that the accused persons had number filed any list of defence witnesses in the Court of Committing Magistrate. A list of 13 witnesses was, however, filed in the Court of the Additional Sessions Judge and summons were issued with res- pect to those witnesses. On the day when the defence witnesses were to be examined they were number present with the result that the Trial Court declined further adjournment for their production. At the time of arguments in the Trial Court the question of prejudice to the accused persons because of the refusal to grant adjournment for the production of the defence witnesses was raised, but the Court did number companysider that any prejudice had resulted to the accused persons who wanted to examine them. From the record we find that only Mansoor. Mehmood s o Bhondekhan, Mahmoodkhan s o Dilawarkhan, Hakimkhan and Ajimkhan desired to examine defence witnesses. The other accused persons had declined to examine any witness in defence. Out of the list of 13 witnesses Shri Bonge the hand-writing expert was given up. The circumstances in which the defence witnesses were disallowed by the Trial Court are that on June 10, 1965, the accused persons were called upon to enter upon their defence. It was found that numbere of the defence witnesses were present in the Court on that day. It also appears that the plea in support of which the witnesses, except witnesses Nos. 9 13, were sought to be examined was one of alibi. The Trial Court granted an adjournment only for one day to enable the accused persons to secure the attendance of the witnesses on June 11, 1965. On that day, two witnesses were reported to be out of station and with respect to one witness it was reported that there was numberperson of that name at the address which had been taken from the list of defence witnesses furnished by the accused. The summons to Munshi had number been received back. The defence was, in the circumstances, closed. After Shri Nuruddin had addressed us on this grievance, we asked him if he at this stage companysidered it necessary to examine the witnesses in defence. The learned companynsel, after companysulting his clients and companysidering the matter, stated in the Court that he was number interested in producing any defence evidence at this late stage. Arguments were then companytinued and practically at the close of the arguments Shri Nuruddin on reconsideration of the matter expressed his desire to be permitted to produce defence ,evidence. We accordingly made an order on September 22, 1970 directing the Trial Court to permit the accused persons to examine 10 witnesses. This request, though belated, was allowed in the interests of justice. In the Trial Court, however, only one witness Munshi Khan s o Kasam was examined in defence. According to th is witness he had gone to the Trial Court on June 16, 1965 .but was informed by some clerk or peon that the case had already been decided thereupon he returned home. According to his evidence about 5 or 6 years ago during the days when ,the incident in question took place his mother was ill and had been admitted in the M.Y. Hospital. The incident in question had, according to him, taken place in Bombay Bazar near Agra Hotel. The witness used to visit Mehrabkhan Patel who had a milk shop in Bombay Bazar and indeed he used to steep at Mehrabkhans place. At about 12 numbern on the date of the incident the witness and Chhotekhan were talking to each other near Agra .Hotel when they saw Karamat Pahalwan companying from Mochipura side uttering abuses to Ishaq and Mansoor. Mansoor was also seen standing opposite Agra Hotel. Karamat Pahalwan saying that Mansoors servants had started thinking too much of them-selves because of incitement from their master rushed at Mansoor with a stick measuring 2 or 2-1/4 ft. in length and 1 or 11/2 inches thick. Karamat gave a blow to Mansoor with the stick hitting him on the head. Mansoor started bleeding. Chhotekhan took Mansoor on his bicycle to the police station. A big crowd ,collected there but the witness went away. This is all that this ,witness stated in his examination-in-chief. In cross-examination he said that he companyld number remember the date of the incident and also that he did number know whether Chhotekhan was alive or dead. According to him numbere of the accused present in the Court were present at the scene of the occurrence except Mansoor. The witness remained in the M.Y. Hospital for about eight days in companynection with his mothers treatment. He denied that Ikbal s o Karamat had any stick in his hand or that he gave any blow to Mansoor. This evidence seems to us to be wholly unimpressive ,and does number call for any serious companysideration or companyment. When these appeals came up for hearing before us with the remand report of the Trial Court and the record of the defence evidence, Shri C. L. Sareen the learned companynsel appearing in ,support of the appeal by the companyvicted appellants again took us through the relevant record and addressed arguments challenging -the companyviction of the appellants. After reading the testimony of Munshikhan he made a faint attempt to persuade us to accept his evidence, but realising the futility of this venture he soon gave up the attempt. His main and principal companytention, how-ever, was that the witnesses whose evidence was number relied upon, by the Trial Court with respect to the presence of the five accused persons, whose acquittal was upheld by the High Court, should number have been believed for companyvicting the present appellants. In support of this companytention he took us through the evidence of Iqbal Beg s / o the deceased P.W. 1 and submitted that he was an interested witness and his evidence was unbelievable because his testimony did number tally with the evidence of Narayan singh P.W. 25 who had prepared the site plan. The companynsel also referred to certain portions of the statements of Ahmed Khan P.W. 2, Mohammad Shafi P.W. 3, Ismail P.W. 6, Dr. B. N. Chatterjee, P.W. 10, Shitlaprasad P.W. 24 and Abdulkadar W. 29 for the purpose of persuading us to hold that their evidence is number worthy of credance. His attack was also directed to the First Information Report. According to him the F.I.R. lodged by Ikbal Beg was number in reality the first information in point of time, because the information with regard to this incident had already been made by Mansoor. We are wholly unable to agree with the companynsel that the information lodged by Ikbal Beg was. number the F.I.R. and that Mansoor had made the report earlier. The case diary of the police was also subjected to some criticism for the purpose of discrediting the investigation. All these arguments which the learned companynsel has taken, pains to advance are misconceived in this Court for the simpler reason that under Art. 136 of the Constitution this Court does number numbermally re-appraise the evidence for companysidering the credibility of the witnesses as if it is a companyrt of first appeal. Unless the criminal trial is vitiated by some illegality or irregularly of procedure or there is some violation of the rules of natural justice resulting in unfair trial, or unless the judgment has resulted in gross miscarriage of justice, this Court does number as a ruler proceed to evaluate the evidence for companying to its own independent companyclusion. No such infirmity has been made out by the appellants learned companynsel. We may briefly state the broad essential features of the prosecution story as narrated by the eye witnesses and as accepted by the High Court. Mansoor has employed accused Ishaq, Yunus and Gabbu. Rashid is a friend of Mansoor since childhood. Accused Mahmoodkhan s o Dilawarkhan, Ajimkhan and Hakimkhan are three Pathans who usually visited Mansoors shop. They are stated to indulge together in the nefarious trade of smuggling opium. Karamat Beg and his son Ikbal Beg are opposed to Mansoors party. Indeed there have been incessant quarrels between the two factions. Mansoors servants often used to act in offensive and provocative manner towards Karamat and his son. As a result of fresh trouble about a companyple of months prior to the present occurrence, proceedings under S. 107 Cr. P.C. were also initiated between the parties. On January 19, 1965, Karamat started from Taj Laundry at about numbern time for going to his house with some guava fruit and a bottle. Those were Ramzan days. He was proceeding along Jawahar Marg and as he turned towards Bombay Bazar he met Ishaq and Yunus Ishaq spot at Karamat which infuriated him. In his younger days Karamat used to be known as a renowned wrestler. Ishaq ran away followed by Karamat who was shouting at Ishaq. When they reached near the Grand National Bakery they saw Mansoor there. On Karamats companyplaint about misbehaviour of Mansoors servants, Mansoor retorted that the matter should be settled once for all right then. lkbal hearing his fathers shouts also followed him. In response to Karamats enquiry as to what was to be settled, Mansoor directed his servants to start the job. Rashid than assaulted Karamat with a knife. Mansoor also suggested that Karamats veins should be cut off. Ikbal who had also reached there snatched a stick from a faqir who happened to be closely and tried to save his father. But before he companyld intervene Mansoor had given one knife blow to Karamat on his neck and another on his chest. Yunus and Ishaq also started grappling with Karamat. lkbal gave stick blows to them. On this Mansoor asked Rashid to cut off lkbals veins and he himself also aimed a knife blow at lkbal but the blow missed the mark. lkbal in the meantime slipped away but number before Ishaq had caused him an injury on his left hand. Mehmood also gave a blow on lkbals left arm. Karamat who was given further blows by the party of Mansoor became unconscious. lkbal straight went to the police station and lodged the report. These broad features. of the prosecution version as given by the eye witnesses were, accepted by the High Court and since it was a case of party factions the evidance was sifted by both the Courts to see that if there was some element of doubt with respect to any individual accused person he should be given its benefit. Mr. Sarin next submitted that the High Court had number followed the standard laid down by this Court for dealing with the appeals against acquittal and in support of this submission he relied on the decisions of this Court in Sanwat Singh others v. State of Rajasthan and on an unreported judgment of this Court in Keshav Ganga Rain Navge Anr v. State of Maharashtra 2 . In our opinion, this submission is wholly unfounded. The High Court did number ignore the standard laid down by this 1 1961 3 S.C.R. 120. Cr. A. No. 100 of 1968 decided on February 3, 1971. 47-1 S.C. India/71 Court in Sanwat Singhs case 1 . According to that decision the words substantial and companypelling reasons for setting aside an order of acquittal used in this Courts earlier decisions are intended to companyvey the idea that an appellate companyrt shall number only bear in mind the principles laid down by the Privy Council in Sheo Swarup v. King Emperor, 2 but must also give its clear reasons for companying to the companyclusion that the order of acquittal was wrong. In the case before us the High Court has kept these observations in view when dealing with the acquittal appeal. In Keshav Ganga Ram Navges case 3 the Additional Sessions Judge had disbelieved the evidence of the eye witnesses, who according to him, had spoken about the incident in a parrot-like manner. The three dying declarations were also rejected by the Trial Court and the other evidence was also held untrust worthy. The High Court on appeal against the acquittal relied on two out of the three dying declarations and while dealing with the evidence of the eye witnesses did number companysider the discrepancies and improbabilities of the version given by those witnesses as pointed out by the Trial Court. The Court quoted with approval some observations made in Laxman Kalu v. State of Maharashtra 4 in which it was said that the powers of the High Court in an appeal against acquittal are number different from the powers of the same Court in hearing an appeal against companyviction, but the High Court in reversing the judgment of the Sessions Judge must pay due regard to all the reasons given by the Sessions Judge for disbelieving a particular witness and must attempt to dispel those reasons effectively before taking a companytrary view of the matter. The High Court in the case before us, in our opinion did number go against these observations. Indeed the appellants learned companynsel was unable to show how the High Court had ignored the principles laid down by this Court in the decisions cited while dealing with appeals against acquittal. In Sanwat Singhs case 1 , it is worth- numbering, this Court had dismissed the appeal and had made the following observations with regard to the exercise of power of this Court under Art. 136 of the Constitution. It was said there Article 136 of the Constitution companyfers a wide discretionary power on this Court to entertain appeals in suitable cases number otherwise provided for by the Constitution. It is implicit in the reserve power that it cannot be exhaustively defined, but decided cases do number permit interference unless by disregard to the forms of legal process or some violation of the principles of natural I 1961 3 S. C. R. 120. 2 1934 L.R. 61 I.A. 398. Cr. A. No. 130 of 1968 decided. on Feb. 3, 1961. A.I.R. 1968 S.C. 1390. justice or otherwise, substantial and grave injustice has been done. Though Art. 136 is companyched in widest terms, the practice of this Court is number to interfere on questions of fact except in exceptional cases when the finding is such that it shocks the companyscience of the companyrt. In the present case, the High Court has number companytravened any of the principles laid down in Sheo Swarups case 1 and has- also given reasons which led it to hold that ,the acquittal was number justified. In the circumstances, numbercase has been made out for our number accepting the said findings. In the present case we further find that Mahmood, who was companyvicted on appeal against acquittal has since served out his sentence and is numberlonger in jail. The companynsel companytended that if Mahmoods companyviction were to be set aside then there would be numberjustification for applying ss. 148 and 149 I.P.C. We are ,not persuaded to hold that the judgment of the High Court suffers from any such grave or serious error as would justify our interference with the order companyvicting Mahmood. The High Court companysidered the evidence and came to its own companyclusion. No legal error suggesting miscarriage of justice has been pointed ,out by the learned companynsel. The companyviction of the present appellants, it may be pointed out, is also under s. 302 read with S. 34 I.P.C. and this companyviction would, in any event, be unassailable even though s. 148 I.P.C. is number attracted. We, however, do number accept the companytention that Mahmood was wrongly companyvicted and S. 148 I.P.C. is number attracted. Finally the companynsel laid stress on the submission that the ,appeal in the High Court was incompetent because the Additional Government Advocate who had presented the appeal was number ,the Public Prosecutor. The Gazette Notification to which our attention has been drawn shows that Mr. Dubey, the Additional Government Advocate, was numberified as Public Prosecutor for the High Court in respect of the cases arising in the State of Madhya Pradesh. The companynsel raised an ingenious argument, namely, that Mr. Dubey companyld number be companysidered to be a Public Prosecutor for presenting appeals in the High Court against orders of acquittal, because the appeal companyld number be described as a case, which arose in the High Court in which eventuality alone, he would act as a Public Prosecutor. The argument has merely to be stated to be rejected. The companynsel tried to seek support from a decision of this Court reported as Bhiniappa Bassappa Bhu Sannavat v. Laxman Shivrayappa Samagouda and others. 1 In this decision it was said that the word case which is number 1 1934 L. R. 61 I.A. 398. 2 A.I.R. 1970 S.C. 1153. defined by the Code of Criminal Procedure is well understood in legal circles and it ordinarily means a proceeding for the prosecution of a person alleged to have companymitted an offence. It was added that in other companytexts this word may represent other kinds of proceedings. But in the companytext of S. 417 3 the Court said it must mean a proceeding which at the end results either in discharge, companyviction, or acquittal of an accused person. If anything, this decision goes against the appellants companytention. The case resulting in the acquittal of the accused persons would clearly be a case arising in the State and within the companytemplation of the numberification, and the Additional Government Advocate. who is the Public Prosecutor for the High Court would be entitled to present the appeal in such a case. Reading s. 4 1 i Cr. P.C., which defines Public Prosecutor together with s. 492 Cr. P.C. under which the State Government is empowered to appoint Public Prosecutors, the Additional Government Advocate when appointed as a Public Prosecutor for the High Court in respect of the cases arising in the State of Madhya Pradesh must, in our opinion, be held to be a Public Prosecutor lawfully empowered to present the appeals in the High Court against orders of acquittal. The Privy Council decision reported as Bhagwan Das v. The King cited by Shri Sarin also goes against his companytention. It is further numbere-worthy that this objection was number raised in the High Court. We are, therefore, unable to sustain the submission that the appeal against the order of acquittal was filed in the High Court by an unauthorised person. The appeal on behalf of the accused persons must, therefore., fail.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1391 of 1967. Appeal from the judgment and order dated May 31, 1963 of the Calcutta High Court in Income-tax Reference No. 4 of 1960. Jagadish Swarup Solicitor-General, B. D. Ahuja and B. D. Sharma, for the appellant. Sukumar Mitra, and Rwneshwar Nath, for the respondent. The Judgment of the Court was delivered by Hegde, J.-This appeal by certificate by the Revenue is directed against the order made by the High Court of Calcutta in a reference under s. 66 1 of the Indian Income Tax Act, 1922 to be hereinafter referred to as the Act . At the instance of the assessee, the Income-tax Appellate Tribunal A Bench, Calcutta referred to the High Court for its opinion two questions of law viz. Whether the assessment is companyplete on the date when the income is assessed by the Income-tax Officer or on the date when the tax is companyputed by him and the challan demanding the tax is issued ? Whether on the facts admitted or found in this case, the assessment was time barred under the first proviso to section 34 3 of the Indian Income-tax Act The original assessment of the assessee for the assessment year 1944-45 was made sometime before March 13, 1953. Sub- sequently after obtaining the sanction of the Commissioner of Income-tax, the Income-tax Officer reopened the assessment under s. 34 1 a of the Act. On March 13, 1953 he issued a numberice to the assessee under s. 34 read with s. 22 2 of the Act. After companysidering the objection of the assessee, the Income-tax Officer companyputed the income of the assessee under s. 34 read with s. 23 4 on March 8, 1954 at Rs. 60,000. The numbere made by the Income-tax Officer on that day in the order sheet reads Assessed as per assessment order on a total income of Rs. 60,000 for the assessment year 1944-45 under s. 34/23 4 . But on that date the Income-tax Officer did number determine the tax due from the assessee. It appears that he determined the tax due from the assessee and issued a numberice under s. 28 3 in Form 30 only on March 31, 1954. The assessee companytended that the assessment is barred under s. 34 3 . That companytention was rejected by the authorities under the Act including the appellate tribunal but on a reference made by the tribunal to the High Court, the High Court following the decision of the Madras High Court in M. P. R. Viswanathan Chettiar v. Commissioner of Income Tax, Madras 1 accepted the companytention of the assessee while giving its advisory opinion on the questions of law referred to it by the appellate tribunal. This appeal is directed against that decision. The provisions of law which are material for deciding the point in issue are ss. 23 and 34 3 of the Act. Those provisions at the material time read as follows 23 1 . If the Income-tax Officer is satisfied without requiring the presence of the assessee or the production by him of any evidence that a return made under section 22 is companyrect and companyplete, he shall assess the total income of the assessee, and shall determine the sum payable by him on the basis of such return. If the Income-tax Officer is number satisfied without requiring the presence of the person who made the return or the production of evidence that return made under section 22 is companyrect and companyplete, he shall serve on such person a numberice requiring him, on a date to be therein specified, either to attend at the Income-tax Officers Office or to produce, or to cause to be there produced, any evidence on which such person may rely in support of the return. On the day specified in the numberice issued under sub-section 2 or as soon afterwards as may be, the Income-tax Officer, after hearing such evidence as such person may produce and such other evidence as the Income- tax Officer may require, on specified points, shall by an order in writing, assess the total income of the assessee, and determine the sum payable by him on the basis of such assessment. If any person falls to make the return required by any numberice given under subsection 2 of section 22 and has number made a return or a revised return under sub-section 3 of the same section or fails to companyply with all the terms of a numberice issued under sub-section 4 of the same section or, having made a return, fails to companyply with all the terms of a, numberice issued under subsection 2 of the section, the Income-tax Officer shall make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment. Section 34 3 -No order of assessment under section 23 to which clause c of sub-section 1 of section 28 1 25, I.T.R. 79. applies or of assessment or reassessment in cases falling within clause a of sub-section 1 of this section shall be made after the expiry of 8 years and numberorder of assessment or re-assessment in any other case shall be made after the expiry of 4 years from the end of the year in which the income, profits or claims were first assessable Provided that where a numberice under sub-section 1 has been issued within the time therein limited, the assessment or re-assessment to be made in pursuance of such numberice may be made before the expiry of one year from the date of the service of the numberice even if such period exceeds the period of 8 years or 4 years as the case may be. It has been stated over and over again by this Court as well as by the Judicial Committee that the words assessment and the assessee are used in different places in the Act with different meaning. Therefore in finding out the true meaning of those words in any provision, we have to see to the companytext in which the word is used and the purpose intended to be achieved. It is true that sub-ss. 1, 3 and 4 of s. 23 require the Income-tax Officer to assess the total income of the assessee and determine the sum payable by him. In other words in those provisions the word assess has been used with reference to companyputation of the income of the assessee and number the determination of his tax liability. But in s. 34 3 the word used is number assess but assessment. The question for decision is what is the meaning of that word ? As long back as September 24, 1953, the High Court of Madras in Viswanathan Chettiars case 1 came to the companyclusion that the word assessment in proviso to s. 34 3 means number merely the companyputation of the income of the assessee but also the determination of the tax payable by him. No other High Court has taken a companytrary view. The Revenue must have in all these years acted on the basis of that decision of the Madras High Court. Interpretation of a provision in a taxing statute rendered years back and accepted and acted upon by the department should number be easily departed from. It may be that another view of the law is possible but law is number a mere mental exercise. The companyrts while reconsidering the decisions rendered long time back particularly under taxing statutes cannot ignore the harm that is likely to happen by unsettling law that had been once settled. We may also numbere that the Act has been repeated by the Income-tax Act, 1961. The companyresponding provisions of the1961 Act are materially different from the provisions referred to earlier. Under these circumstances we do number think that we would 1 25 I.T. R. 79. be justified in departing from the interpretation placed by the Madras. High Court in Viswanathan Chettiars case 1 though a different view of the law may be reasonably possible. In the result this appeal fails and the same is dismissed. But in the circumstances of the case we make numberorder as to companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1899 of 1967. Appeal by special leave from the judgment and order dated August 24, 1966 of the Calcutta High Court in Income-tax Reference No. 91 of 1962. C. Sharma, F. Kuwnaria, B. R. Diwan and P. K. Mukherjee, for the appellant. Jagadish Swarup, Solicitor-General, P. L. Juneja, N. Sachthey and B. D. Sharma, for the respondent. The Judgment of the Court was delivered by Grover, J.-This is an appeal by special leave from the judgment of the Calcutta High Court in an Income-tax Reference. The assessee who is the appellant is a public limited companypany doing the business of jute and manufacturing of jute goods. The method of accounting followed by the assessee is the mercantile system. During the assessment year 1955-56 the previous year ended on 31st December, 1954 , the assessee claimed a deduction of Rs. 1,49,776/on account of sales tax determined to be payable by the sales tax authorities on the sales made by the assessee during the. aforesaid previous year. The sequence of dates may be mentioned. The income tax return was filed on 13th January, 1956. The demand numberice was served by the Sales Tax authorities on the 21st November 1957. On 9th November, 1959, the assessee filed a revised return claiming the aforesaid deduction. The assessee had taken the order by which the demand for such tax had been created to the higher departmental authorities, as it was companytesting its liability to the extent that had been determined. The Income-tax Officer, however, companypleted the- assessment on 11th March, 2 7 9 1960 before any final decision was given in the proceedings relating to the assessment of sales tax. According to the Income Tax Officer, the assessee was number entitled to claim the deduction of the aforesaid amount of sales tax inasmuch as it had denied its liability to pay that amount and had made numberprovision in its books with regard to the payment of that amount. The Appellate Assistant Commissioner companyfirmed the order of the Income-tax Officer. The Appellate Tribunal dismissed the,, appeal of the assessee. The following question of law was referred by the Tribunal for the opinion of the High Court -- Whether on the facts and in the circumstances of the case, amount of Rs. 1,49,776/-. which was claimed by the assessee as a deduction on account of sales tax was deductible as a business expense? The High Court was of the opinion -that unpaid and disputed sales tax liability companyld number form the basis of a claim for deduction for the purposes of income tax. The reasoning of the High Court mainly was that for the purpose of claiming a deduction under s. 10 2 xv or the Income Tax Act, 1922 hereinafter called the Act , mere legal liability was number enough. There had to be an expenditure in the first place and it must be laid Out or expended wholly and exclusively for the purpose of such business. The High Court further held that unpaid and disputed sales tax companyld number be validly deducted in the companyputation of business income even under s. 10 1 of the Act. It has been submitted on behalf of the assessee that sales tax paid or unpaid would be admissible deduction under s. 10 2 xv as well as under s. 10 1 . It is pointed out that if the method of accounting adopted by the assessee is cash system,, it would qualify for deduction only in the year in which it has been actually paid. If the method of accounting is mercantile system, then the deduction will be permissible in the year to which the liability relates irrespective of the point of time wheel the liability has actual been discharged. Section 10 5 provides that in sub- section 2 paid means actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are companyputed, under the section. The argument proceeds that in order 19- L1245 Su CI/71 therefore, that sales tax may qualify for deduction under S. 10 2 xv , it has to be in the nature of an expenditure which has either been actually paid during the year of account or for the payment of which, the liability has been incurred in the accounting year, according as the method of accounting followed by the assessee is cash system or mercantile system. It is indisputable that the amount of sales tax paid or payable by the assessee is an expendi- ture within the meaning of S. 10 2 xv . The amount in question was thus a kind of expenditure about which there can be numberdoubt that it had been laid out or expended wholly or exclusively for the purpose of business carried on by the assessee. The submission on behalf of the assessee in the alternative is that apart from valid deductibility of sales tax as an expenditure under S. 10 2 xv of the Act, it is a permissible deduction even under S. 10 1 . The profits of a business which are to be assessed to tax must be real profits and they have to, be ascertained on ordinary principles of companymercial trading and companymercial accounting. Where an assessee is under a liability or is bound to make certain payment from the gross receipts, the profits and gains can only be net amount after such an amount is deducted from the gross profits or receipts. In Commissioner of Income-tax, West Bengal II v. Royal Boot House, 1 it was held that where the assessee followed the mercantile system of accounting and, without disputing the liability to pay the Sales Tax had made a provision for its payment in its account even though he had number actually paid the tax over to the authorities, the assessee was entitled to deduction in respect of the provision for sales tax from his income under S. 10 2 xv of the Act. It was, pointed out that under the provisions of the Sales Tax statutes, the liability to pay the tax was number dependent upon assessment or demand but was an obligation to pay the tax either annually, quarterly or monthly, as the case might be. This case was and has been sought to be distinguished by the Revenue on the- ground that the liability to pay the Sales Tax had number been disputed and the assessee had made a provision for its payment in its account As, will be presently 1 75 I.T.R. 507. seen this distinction is without substance and does number affect the true legal position. Now under all sales tax laws including the statute with which we are companycerned, the moment a dealer makes either purchases or sales which are subject to taxation, the obligation to pay the tax arises and taxability is attracted. Although that liability cannot be enforced till the quantification is effected by assessment proceedings, the liability for payment of tax is independent of the assessment. It is significant that in the present case, the liability had even been quantified and a demand had been created in the sum of Rs. 1,49,776/- by means of the numberice dated 21st November, 1957 during the pendency of the assessment proceedings before the Income Tax Officer and before the finalisation of the assessment. It is number possible to companyprehend how the liability would cease to be one because the assessee had taken proceedings before higher authorities for getting it reduced or wiped out so long as the companytention of the assessee did number prevail with regard to the quantum of liability etc. An assessee that follows the mercantile system of accounting is entitled to deduct from the profits and gains of the business such liability which had accrued during the period for which the profits and gains were being companyputed. It can again number be disputed that the liability to payment of sales tax had accrued during the year of assessment even though it had to be discharged at a future date. In Pope The King Match Factory Commissioner of Income-tax, Madras 1 a demand for excise duty was served-on the assessee and though he was objecting to it and seeking to get the order of the Collector of Excise reversed, he debited that amount in his accounts. on the last day of his accounting year and claimed that amount as a deductible allowance on the ground that he was keeping his accounts on the mercantile basis. The Madras High Court had numberdifficulty in holding that the, assessee had incurred an enforceable legal liability on and from the date on which he received the Collectors demand for payment and that his endeavor to get out of that liability by preferring appeals companyld number in any way detract from or retard the efficacy of the liability which 1 50 I.T.R. 495. 28 2 had been imposed upon him by the companypetent excise authority. In our judgment, the above decision lays down the law companyrectly. The main companytention of the learned Solicitor General is that the assessee failed to debit the liability in its books of accounts and, therefore, it was debarred from claiming the same as deduction either under section 10 1 or under s. 10 2 xv of the Act. We are wholly unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the- books of account and although under the law, a deduction must be allowed by the Income Tax Officer, the assesses will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or number will depend on the provision of law relating thereto and number on the view which the assessee might take of his rights number can the existence or absence of entries in the books of account be decisive or companyclusive in the matter. The assessee who was maintaining accounts on the mercantile system was fully justified in claiming deduction of the sum of Rs. 1,49,776/being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. it may be added that the liability remained in tact even after the assessee had taken appeals to higher authorities or Courts which failed. The appeal is companysequently allowed and the judgment of the High Court is set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1170 of 1968. Appeal from the judgement and order dated February 3, 6, 1967 of the Bombay High Court in Misc. Petition No. 104 of 1965. Mitra J. Ramamurthi, R. N. Sachthey and B. D. Sharma for the Appellant. C. Chagla, N.A. Palkhivala, Bhuvanesh Kumari, J. B. Dadachanji and Ravinder Narain for the respondent. The Judgment of the Court was delivered by Hegde, J.-This appeal by certificate arises from the decision of the High Court of Bombay in Misc. Petition No. 104 of 1968 on its file. That was a petition under Art. 226 of the Constitution. Therein the respondents challenged the validity of the orders of rectification made by the Income- tax Officer, Company Circle, Bombay in the assessments of the respondents for the assessment years 1958-59, 1960-61, 1961-62 and 1962-63 under S. 154 of the Income-tax Act, 1961. Respondents Nos. 2 and 3 are the partners in the first respondent-firm. The first respondent-firm was duly registered under the Indian Income-tax Act 1922 as well as under the Income-tax Act 1961. In the original assessments of the firm for the companycerned assessment years assessments were made on the salb rates prescribed under the respective Finance Acts applicable to registered Firms. In the individual assessments of the partners for their respective share in the income of the firm was included and assessed at the maximum rates since their assessments were made in the status of number-resident. On February, 11, 1965, the first respondent firm was served with numberices dated January 29, 1965 by the Income-tax Officer intimating to it that in its assessments for the assessment years 1958-59, 1960-61 , 1961-62 and 1962-63, there are mistakes apparent from the record inasmuch as the firm had number been charged at the maximum rates of income-tax under S. 17 1 of the Indian Income-tax Act, 1922 and therefore he proposes to rectify those assessments under S. 154 of the Income-tax Act, 1961. The respondents in their reply to those numberices denied that there was any mistake apparent or otherwise in those orders of assessment. They disputed the Income-tax Officers authority to make any companyrection. The Income-tax Officer did number accept the companytention of the respondents and assessed them by applying the provisions of S. 17 i of the 1922 Act. The respondents challenged the validity of the orders rectifying the assessments, before the High Court of Bombay as mentioned earlier. The High Court took the view that the original assessments made on the respondents were prima facie in accordance with law and at any rate as there was numberobvious or patent mistake in those orders of assessment, the Income- tax Officer was incompetent to pass the impugned orders. The first question that we have to decide is whether oil the facts and in the circumstances of the case. The Income-tax Officer was within his powers in making the impugned rectifications. He purported to make those rectifications under s. 154 of the Income-tax Act, 1961. That section to the extent material for our present purpose reads 154 1 With a view to rectifying any mistake apparent from the record a the Income-tax Officer may amend any order of assessment or of refund or any other order passed by him The companyresponding section in the Indian Income-tax Act, 1922 is S. 35. We have number to see whether the Income-tax Officer was justified in opining that in the original orders of ass- essment, there was any apparent mistake. As seen earlier in the original assessments of the firm for the relevant assessment years, the Income-tax Officer adopted the slab rates applicable to registered firms. The question for decision is whether the first respondents firm came within the mischief of S. 17 1 of the Indian Income-- tax Act, 1922. Section 17 1 reads Where a person is number resident in the taxable territories and is number a companypany, the tax, including super-tax, payable by him or on his behalf on his total in companye shall be an amount equal to a the income-tax which would be payable on his total income at the maximum rate, plus b either. the super-tax which would be payable on his total income at the rate of nineteen per cent, or the super-tax which would be payable on his total income if it were the total income of a person resident in the taxable territories whichever is greater Provision to the section is number relevant for our present purpose . Section 17 1 can apply to a person. The expression Person is defined in s. 2 9 of the Indian Income-tax Act, 1922 thus Person includes a Hindu undivided family and a local authority. Unless a firm can be companysidered as a Person, S. 17 1 cannot govern the assessment of the first respondent. In the Income-tax Act, 1961 S. 2 31 ., the expression person is defined differently. That definition reads person includes- an individual, a Hindu undivided family, a companypany, a firm, an association of persons or a body of individuals, whether incorporated or number, a local authority and every artificial juridicial person, number falling within any of the preceding sub clauses., It is a matter for companysideration whether the definition companytained in S. 2 31 of the Income-tax Act, 1961 is an ,amendment of the law or is merely declaratory of the law that was in force, earlier. To pronounce upon this question, it may be necessary to examine various provisions in the Act as well as its scheme. Section 113 of the Income-tax Act, 1961 companyresponded to S. 17 1 of the Indian Income-tax Act, 1922 but that section has number been omitted with effect from April 1, 1965 as a result of the Finance Act, 1965. From what has been said above, it is clear that the question whether S. 17 1 of the Indian Income-tax Act, 1922 was applicable to the case of the first respondent is number free from doubt. Therefore the Income-tax Officer was number justified in thinking that on that question there can be numbertwo opinions. It was number open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under S. 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and number ,something which can be established by a long drawn process of reasoning on points on which there may companyceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was number justified in going into that question. In Satyanarayan Laxminarayan Hegde and ors. v. Millikarjun Bhavanappa Tirumale 1 this Court while Spelling out the scope of the power of a High Court under Art. 226 of the Constitution ruled that an error which has to be established by a long drawn process of reasoning on points where there may companyceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is number a mistake apparent from the record-see Sidhamappa v Commissioner- of Income-tax, Bombay 2 . The power of the officers mentioned in S. 154 of the Income-tax Act, 1961 to companyrect any mistake apparent from the record is 1 1960 1 S.C.R. 890. 2 21 I.T.R. 333. undoubtedly number more than that of the High Court to entertain a writ petition on the basis of an error apparent on the face of the record. In this case it is number necessary for us to spell out the distinction between the expressions 66 error apparent on the face of the record and mistake apparent from the record. But suffice it to say that the Income tax Officer was wholly wrong in holding that there was a mistake apparent from the record of the assessments of the first respondent.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1535 of 1968. Appeal by special leave from the judgment and order dated March 1, 1967 of the Bombay High Court in Income-tax Reference No. 52 of 1962. appellant. C. Chagla, A. K. Verma, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondent. The Judgment of the Court was delivered by Hegde, J. In this appeal by special leave, the questions that arise for decision relate to the taxability under S. 10 5A of the Indian Income-tax Act, 1922 in brief the Act of a certain amount received by the assessee firm as companypen- sation on the termination of its managing agency. The assessee is a Private Limited Company and at the relevant time,, it was under voluntary liquidation. It was incorporated in June 1945 by companyverting an erstwhile partnership firm into a Private Limited Company. The partnership firm had entered into a managing agency agreement on June 15,1933 with a Public Limited Company called The Century Spinning and Manufacturing Co. Ltd. Under the said agreement, the assessee was to companytinue as managing agents for a minimum period of 21 years and thereafter until that firm chose to resign its office or is removed from office by the managed companypany. During the period of 21 years stipulated in the agreement, the managed companypany had numberright to remove the managing firm from its office except for reasons mentioned in the, agreement. During the period the assessee companytinued to act as the managing agents the agreement provided, that the managing agents will get a minimum remuneration of Rs. 6,000/- a month and if its remuneration is found at the close of the year to be less than 10 per cent of the gross profit of the companypany, the managing agents were to be paid a further additional sum to make the aggregate remuneration received by it equal to 10 percent of the gross profit of the companypany for that year. The Agreement further provided that if the managing agents services were terminated before the period of 21 years stipulated in the agreement except for reasons mentioned in clause 15 of the agreement the managing agents would be entitled to receive from the managed companypany as companypensation or liquidated damages for the loss of office the sum mentioned in clause 14 of the agreement. In about April 1951, a large holding of the managed companypany was acquired by a group of shareholders who were hostile to the managing agents. Thereafter the relationship between the managing agents and the managed companypany became strained. On April 23, 1951, the Directors of the managed companypany passed a resolution terminating the services of the assessee firm as managing agents. This resolution was affirmed by the shareholders at their extraordinary general meeting held on May 23, 1951 In 9-M 1245 SupCI/71 pursuance of the resolution, the Board of Directors on April 23, 1951, a numberice of termination of the managing agency was issued to the managing agents. In reply the assessee ,claimed companypensation of Rs. 50 lacs for the unlawful termination of its services. But the managed companypany was prepared to pay Rs. 2,34,000/- as companypensation calculating the companypensation at Rs. 6,000/- a month for the unexpired period of the agency i. e. 3 years 2 months and 7 days and Rs. 4600/- as remuneration for the 23 days of April 1951. The assessee refused to accept that amount. Thereafter the assessee sued the managed companypany on the original side of the Bombay High Court claiming a sum of Rs. 28 lakhs as companypensation for the unlawful termination of its services. The managed companypany resisted that suit. The suit was decreed on November 17, 1955 in the sum of Rs. 2,34,000/- and that decree was affirmed in appeal. The trial judge as well as the appellate Bench held that under the terms of the agreement the assessee was only entitled to liquidated damages at the rate of Rs. 6,000/- per month for the unexpired term of its agency. The assessee received the amount decreed in December, 1955. Till the insertion of S. 10 5A into the Act by the Finance Act of 1955 Act 15 of 1955 , companypensation received by a managing agent for the termination of his agency was companysidered as a capital receipt, but S. 10 5A provided that any companypensation or other payment due to or received by a managing agent of an Indian Company at or in companynection with the termination or modification of his managing agency agreement with the companypany shall be deemed to be profits and gains of a business carried on by the managing agent, and shall be liable to tax accordingly. This provision is number retrospective in operation. As seen earlier, the companypensation with which we are companycerned in this case was received by assessee in December, In the assessment year 1956-57, the Income-tax Officer overruling the objections of the assessee included the said amount as the profits of the business of the assessee during the previous year. Admittedly the assessee maintained its accounts according to mercantile system of accountancy., The assessees companytention before the Income-tax Officer that the receipt in question cannot be brought to tax in the assessment year 1956-57 as it became due in 1951 was rejected by the Income-tax Officer. In appeal the Appellate Assistant Commissioner agreed with the view taken by the Income-tax Officer. He opined that the amount became due to the assessee only when it was decreed by the High Court on November 17, 1955 and therefore it was assessable in the assessment year 1956-57. But on a further appeal, the Tribunal held that on the facts and in the circumstances of the case, the companypensation in question became due to the assessee on April 23, 1951 and therefore it companyld number be brought to tax in the assessment year 1956-57. At the instance of the Commissioner, the Tribunal submitted under s. 66 1 of the Act, the following two questions of law for the opinion of the High Court Whether on the facts and in the circumstances of this case the companypensation for termination of the managing agency accrued to the assessee on 23rd April 1951 ? Whether on the facts and in the circumstances of this case the companypensation of Rs. 2,34,000/and interest thereon was taxable under s. 10 5A of the Indian Income-tax Act, in the assessment year 1956-57? The High Court answered the first question in the affirmative and the second question as follows The amount of companypensation of Rs. 2,34,000/- will number be liable to tax, but the amount of- interest thereon will be taxable under s. 10, 5A in the assessment year 1956-57 Aggrieved by that decision, the Commissioner of Income-tax, Bombay City has brought this appeal. We shall first address ourselves to the question as to whether on the facts and in the circumstances of this case, the companypensation for termination of the managing agency accrued to the assessee on April 23, 1951 ? The answer to this question depends upon the true effect of the terms of the agreement between the managing agents and the managed companypany. There is numberdispute that the termination of the managing agency did number fall within the scope of clause 15 of the agreement which provides that the managing agent shall number be entitled to receive from the companypany any companypensation for the loss of the office of Agents to the companypany if such loss arises from any of the causes mentioned therein. It is clear-that was also the view taken by the High Court in the suit filed by the assessee against the managed companypany-that the, assessee was entitled to get companypensation under clause 14 of the agreement. That clause provides In case the firm shall be deprived of the office of Agents of the. companypany for any reason or cause other than or except those reasons or causes specified in clause fifteen of these presents the firm shall be entitled to receive from the Company as companypensation or liquidated damages for the loss of such appointment a sum equal to the aggregate amount of the monthly salary of number less than Rupees six thousand, which the Firm would have been entitled to receive from the companypany for and during the whole of the then unexpired portion of the said period of twenty one years if the said Agency of the Firm had number been determined. In the suit filed by the assessee against the managed companypany, the only companytroversy between the parties was whether that clause should be read alongwith clause 10 of the agreement which provided for the payment of remuneration to the managing agents during the companytinuance of the Managing agency agreement or whether the companypensation payable should be determined solely on the basis of clause Replying on the expression number less than Rs. 6000/- in clause 14, the assessee companytended that Rs. 6,000/- referred to in the clause is merely the minimum but the actual companypensation should be determined in the manner provided in clause 10. The High Court rejected that companytention. According to the High Court clause 14 number only provided for the payment of damages for improper termination of the services of the managing agents but it also stipulated the damages to which they were entitled to. In its opinion that clause had quantified the damages to which the managing agents were entitled to. It opined that the damages payable to the assessee firm were liquidated damages., The High Court further held that the expression number less than Rs. 6,000/- means a definite sum of Rs. 6,000/-, neither more number less. We are in entire agreement with the view taken by the High Court in that suit. It is plain from the language of clause 14 of the agreement that the assessee was entitled to a definite sum under that clause. In other words it was entitled to liqui- dated damages. Hence we agree with the answer given by the High Court to the first question referred to earlier. Now companying to the second question, the answer to the same depends upon the interpretation to be placed ,on s. 10 5A . Earlier we have set out that provision to the extent necessary for our present purpose. That section takes in Payment due to or received. In the matter of payments, there are two aspects viz. 1 payments due and 2 payments received. The mercantile system of accountancy takes numbere of payments due whereas cash system ,of accountancy recognises only payments received. Mercantile system of accountancy, a double entry system is maintained on the basis of accrual of rights to receive or liability to pay a certain sum of money, unlike is the case of cash system of accountancy which merely takes numbere of actual receipts or disbursements. We have earlier, companye to the companyclusion that the company- pensation with which we are companycerned in this case became due to the assessee in April 1951 though it was actually received by the assessee in December 1955. Now arises the question to what circumstance the expression due to in s. 10 5A applies and to what circumstance the expression received therein is applicable? They do number mean the same thing. Our income-tax law is familiar with these two expressions. That law permits an assessee to adopt his own system of accountancy subject to certain companyditions and his tax liability is determined on the basis of the system of accountancy adopted by him. In other words, the Act permits the assessee to adopt either the mercantile system of accountancy or the cash system of the accountancy and the system adopted by him would be the basis on which he should be assessed. It is number necessary in this case to deal with the exceptions to that rule. We have to read, s. 10 5A alongwith the other provisions in the Act. If so read, it is cleat that the expression due to in that section refers to those assessees who maintain their accounts according to the mercantile system of accountancy and the expression received by applies to those assessees who adopt the cash system of accountancy. As observed by this Court in Commissioner of Income-tax, Madras v. A. Gajapathy Naidu 1 When an Income-tax Officer proceeds to include a particular income in the assessment, he should ask himself, inter alia, two questions, namely 1 what is the system of accountancy adopted by the assessee, and ii if it is the mercantile system, subject to the deeming provisions, when has the right to receive accrued. If he companyes to the companyclusion that such a right accrued or arose to the assessee in a particular accounting year, he should include the said income in the assessment of the succeeding assessment year. Herein also we have to ask ourselves the question, bearing in mind the fact that the system of accountancy adopted by the assessee is the mercantile system, as to when the assessees right to get the companypensation arose. We have already held that it arose in April 1951. It was urged on behalf of the Department that as the assessee disputed the quantum of companypensation to which it was entitled, we must hold that its right to get the amount arose when that dispute was determined by the High Court. We are unable to accede to this companytention. As mentioned earlier, the right of the assessee to get companypensation for unlawful termination of its services and the quantum of companypensation to which it was entitled were clearly pres- cribed in the agreement. It was also so held by the High Court in the suit between the assessee and the managed companypany. The fact that the assessee was claiming an ex- orbitant sum to, which it was number entitled to will number companyvert its right into a companytingent right. In Thiagaraja Chettiar Co. v. Commissioner of Income-tax, Madras 2 the High Court of Madras held that where a managing agent is entitled under the terms of the managing agency agreement to remuneration at a certain percentage on the annual net profits of the companypany, the remuneration payable to the managing agent accrued when the net pro-fits 1 53 I.T.R. 114. 2 51. I.T.R. 393, of the companypany for the year are ascertained. The mere fact that owing to disputes between the companypany and the managing agent the companypany had number credited the managing agent with the remuneration due to the latter in its accounts, would number entitle the managing agent to claim that the remuneration due to him had number accrued and should number be assessed to income-tax until the companypany had credited him in its accounts with the amount of companymission due to him. We are in agreement with the ratio of that decision and that ratio governs the facts of the president case. The ratio of the decision of the Bombay High Court in F. E. Hardosstle Co. Private Ltd. v. Commissioner of Income Tax, Bombay City-1 1 , is also to the same effect. It was next urged on behalf of the Department- that s. 10 5A is a companye in itself and in applying the provisions therein, numberreliance should be placed on the system of accountancy which the assessee generally adopts. It was further urged that as the liability under s. 10 5A is a new liability and as the receipt with which we are companycerned was received in December, 1955, after s. 10 5A was incorporated into the Act, we must by a legal fiction deem that the amount became due only in December, 1955. We see numberbasis for this argument. The language of s.10 5A is plain and unambiguous. That provision has number become an integral part of the Act. Therefore the deemed payment under that provision stands on the same footing as any other payment. The fact that the assesses included the receipt in question in its profit and loss account in the year 1955 is a wholly immaterial circumstance. That circumstance does number afford any basis for the argument that for this particular receipt, the assessee adopted a different system of accountancy. Obviously because of the dispute between the assessee and the managed companypany, the assessee did number enter the amount in question in the year in which it became due. Method of maintaining accounts is one thing and the actual entries in the accounts maintained is a different thing. What is relevant is the method of accountancy and number the actual entries. 1 47 I.T.R. 394. For the reasons mentioned above, we agree with the answers given by the High Court to the questions of law referred to it.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1477 of 1967. Appeal from the judgment and order dated October 6, 1966 of the Calcutta High Court in Matter No. 236 of 1961. C. Chagla, M. L. Aggarwal, N. K. Aggarwal and M. N. Pombara, for the appellant. D. Desai, A. N. Kirpal, R. N. Sachthey and B. D. Sharma, for the respondents. The Judgment of the Court was delivered by. Grover, J.-This is an appeal by certificate from the judgment of the Calcutta High Court. The assesses who is the appellant was at all material times a share-holder of a number of companypanies engaged in the business of managing Hotels. He had also been a Director and Managing Director of various companypanies. Gradually he came to own a large block of shares of Spencers Hotel Limited and also became its Managing Director. He was incharge of the Management thereof at the material time. He further purchased interest in Associated Hotels of India Limited Hotels 1938 in association with M. S. Oberoi. In 1944, M. S. Oberoi purchased from the assessee his share holding in the Associated Hotels of India Limited for an amount of Rs.20,657,05/13/0. Similarly in or about 1949, the holding in Hotels 1938 Limited was purchased by the said M. S. Oberoi. It was maintained by the assessee that he has ,filed returns of his income in respect of the relevant assessment years and that during the assessment for the year 1945-46, the assessee had disclosed to the Income-tax Officer, District II, 2 Calcututa that he had received the aforesaid amount for the sale of the shares of the Asso- ciated Hotels. The amount was held to be a capital receipt on which numberincome tax was payable. During the subsequent years, the assessee companytinued to show in his returns the interest received on the amount of Rs. 20,657,05/13/0. It appears that the case of M. S. Oberoi was referred to the Investigation Commission set up under the Taxation on Income Investigation Commission Act, 1947. The assessee was also served a numberice by the Commission on or about 18th August, 1951 under section 5 4 of the aforesaid Act, in respect of the assessment year 1940-41. The assessee filed a Writ Petition in March, 1953 in the Punjab High Court Circuit Bench Delhi to quash the proceedings before the said Commission. According to the assessee, the Solicitor General, who appeared in the High Court after a rule had been issued, gave an undertaking that all proceedings against the assessee would be dropped. Upon such undertaking being given, the rule was discharged. The Income-tax Officer, District 11 2 Calcutta issued seven numberices dated 5th November, 1954 to the assessee under S. 34 1-A of the Income Tax Act, 1922 in respect of assessment years 1940-41 to 1946-47 alleging therein that the appellant had partly escaped assessment. In spite of the objection of the assessee that in the absence of any material on record, the Income Tax Officer had numberjurisdiction to issue any numberice under 34 1-A , the said Officer proceeded to make assessment in respect of the assessment years 1942-43, 1943- 44, 1944-45 and 1945-46. The assessee filed an appeal to the Appellate Assistant Commissioner of Income Tax who remanded the case to the Income Tax Officer to submit a report on various matters. One of such matters was that the Income Tax Officer should state as to what fresh material was before him to satisfy him that the sum of Rs. 20,00,000/- which was previously treated as capital should be treated as income. In 1961, the assessee filed a petition under Art. 226 of the Constitution in the Calcutta High Court challenging the order of the Appellate Assistant Commis- sioner. This Writ Petition was dismissed on 6th October, 1966. In clause v of Para 22 of the Writ Petition, the assessee had stated that at the time when the numberice had been issued under S. 34 1-A of the Act, the Income Tax Officers companycerned did number have any material before them companystituting reason to believe that any income, profits or gains of the assessee had escaped assessment for any year. It was asserted that the only material before the Income Tax Officers companycerned on which they had purported to issue the numberices companysisted of the fact of the receipt of about Rs. 22,00,000/- which the assessee had received for the sale of his shares in the Associated Hotels of India Limited in the year 1944 that receipt had already been disclosed to the Income Tax Officer who had made the original assessment relating to the year 1945-46 and he had held that the said amount was a capital receipt. There was merely a denial in the affidavit in reply with reference to paragraph 22 v , that the companyditions precedent to the exercise of power under S. 34 1-A had number been fulfilled. An objection was also taken that it was number open to the assessee to urge the said ground in a petition under Art. 226 when he had already invoked the remedy available under the Act against the assessment order pursuant to the numberice under S. 34 1-A of the Act. In para 29 it was stated that all necessary information.regarding the reasons for which the proceedings were started under S. 34 was available from the records of the Income Tax Department ralating to the assessment of the assessee. The High Court dealt with several points which were raised on behalf of the assessee which included the question whether the Income Tax Officer had the jurisdiction to make an assessment under the provisions of S. 34 unless the, companyditions companytained in S. 34 1-A were satisfied. In other words, unless he had reason to believe thatincome profits or gains chargeable to income had escaped assess- ment, he companyld number have proceeded under the aforesaid provision. The High Court in the first place sustained a preliminary objection which had been raised on behalf of the revenue that because the assessee had filed appeals to the Appellate Assistant Commissioner, he companyld number pursue his petition under Art. 226 of the Constitution before the High Court. The other points which had been canvassed related to the validity and companystitutionality of S. 34 1-A . The High Court held that it had been settled by a series of decisions of this Court that it was number unconstitutional. Indeed that point was subsequently abandoned by the learned companynsel for the assessee. But after holding that preliminary objection had substance, the High Court proceeded to decide the question relating to the satisfaction of the preconditions under S. 34 1-A , although the companyrect companyrse for it to follow after sustaining the preliminary objection was to have dismissed the Writ Petition. Since the High Court gave a decision on that matter, which would be binding on the Appellate Assistant Commissioner, we are unable to accede to the submission made by the learned companynsel for the revenue that we should decline to go into, the question arising out of the provisions of S. 34 1-A . The impugned numberices which were issued under S. 34 1-A stated that the Income Tax Officer had reason to believe that income, profits and gains assessable to income tax had escaped assessment. There was also a numbere at the foot of the numberices that they had been issued after necessary satisfaction of the Central Board of Revenue. The High Court observed that the Income Tax Officer had obtained the sanction of the Board upon reasons recorded in writing, and although the record companytaining those reasons was sought to be produced before the Court, an objection was raised on behalf of the assessee that the recorded reasons should number be looked into. The High Court felt that there was numbernecessity to travel beyond the order of the Appellate Assistant Commissioner read with the assessment orders which were under challenge. The Appellate Assistant Commissioner, it was felt, had looked into the records which included the statements and other materials filed with the Income Tax Investigation Commis- sion by the petitioner. The High Court proceeded to say that although the Appellate Asssistant Commissioner had looked at all the material, he had expressed some difficulty in companying to a companyclusion without further material on the question as to what fresh evidence was available before the Income Tax Officer to companyvince him that the sum of Rs. 20,00,000/- which was previously treated as capital should be treated as, income. It was finally held that the assessee had failed to establish that the preconditions companytained in S. 34 1-A had number been fulfilled and companysequently there was an initial lack of jurisdiction. Section 34 1-A to the extent it is necessary, may be reproduced. 34 1-A . if, in the- case of any assessee, the income-tax officer has reason to believe- that income, profits or gains chargeable to income-tax have escaped assessment for any year in respect of which the relevant previous year falls and that the income, profits or gains which have so escaped assessment for any such year or years amount or are likely to amount to one lakh of rupees or more he may serve on the assessee a numberice companytaining and may proceed to assess or reassess the income, profits or gains of the assessee Provided that the Income-tax Officer shall number issue a numberice under this sub-section unless he has recorded his reasons for doing so and the Central Board of Revenue is satisfied on such reasons recorded that it is a fit case for the issue of such numberice. Since numberhing had been disclosed which was relevant for the purpose of finding out whether the Income Tax Officer had any reason to believe that the income, profits or gains of the assessee chargeable to income-tax had escaped assessment, we gave an opportunity to the Revenue to have been found in the records are reports in Form B made in companynection with starting of proceedings under S. 34 1-A , each report relating to a different assessment year. Items 7 and 8 of this form relate to brief reasons for starting proceedings and whether the Central Board of Revenue was satisfied that it was a fit case for issue of numberice. Against item 7 it is stated reasons as per separate sheet attached. Against item 8 , the Secretary of the Central Board of Revenue signed after writing Yes, satisfied. The reasons for starting the proceedings given in the separate sheet may be fully reproduced. For the reasons hereinafter recorded I believe that income, profits and gains earned by the assessee in his personal capacity and in companyjunction with others and chargeable to income-tax have escaped assessment and that the amount of such companycealed income relating to the Accounting years companyering the period beginning on the 1st day of September, 1939 and ending on the 31st day of March, 1949, amount to or is likely to amount to Rs. 1,00,000/-. The reason for such belief, inter alia, is as follows - The assessee who is or was at the relevant time a Managing Director in about a dozen limited companypanies, along with Oberois is believed to have made some secret profits which were number offered for assessment. The assessee is believed to have received a sum of Rs. 22 lakhs from Oberois,and this sum or at least part of which represents income has escaped assessment. Sd - A. K. BHOWMIK Income-tax Officer Distt. 11 2 , Calcutta. It is abundantly clear that the two reasons which have been given for the belief which was formed by the Income Tax Officer hopelessly fail to satisfy the requirements of the statute. In a recent case-Chhugamal Rajpal 18 2 S. P. Chaliha and Others which came up before this Court, a similar situation had arisen and under the direc- tions of the Court, the Department produced the records to show that the Income Tax Officer had companyplied with the companyditions laid down in the statute for issuing a numberice relating to escapement of income. There also, the report submitted by the Officer to the Commissioner and the latters orders thereon were produced. In his report, the Income Tax Officer referred to some companymunications received by him from the Commissioner of Income-tax , Bihar and Orissa from which it appeared that certain creditors of the assessee were mere name-lenders and the loan transactions were bogus and, therefore, proper investigation regarding the loans was necessary. It was observed that the Income Tax Officer had number set out any reason for companying to the companyclusion that it was a fit case for issuing a numberice under S. 148 of the Income Tax Act, 1961. The material that ,he had before him for issuing numberice had number been mentioned. The facts companytained in the companymunications which had been received were only referred to vaguely and all that had been said was that from those companymunications it appeared that the alleged creditors were name-lenders and the transactions were bogus. It was held that from the report submitted by the Income Tax Officer to the Commissioner it was clear that he companyld number have had reasons to believe that on account of assessees omission to disclose fully and truly all material facts, income chargeable to tax had escaped assessment. In our judgment, the law laid down by this Court in the above case is fully applicable to the facts of the present case. There can be numbermanner of doubt that the words reason to believe suggest that the belief must be that of an honest and reasonable person based upon reasonable grounds and that the Income Tax Officer may act on direct or circumstantial evidence but number on mere suspicion, gossip or rumour. The Income Tax Officer would be acting without jurisdiction if the reason for his belief that the companyditions are satisfied does number exist or is number material or relevant to the , belief required by the section. The companyrt can always examine this aspect though the declaration or sufficiency of the reasons for the belief cannot be investigated by the companyrt. 1 1971 79 I.T.R. 603. There is numbermaterial or fact which has been stated in, the reasons for starting proceedings in the present case on which any belief companyld be founded of the nature companytemplated by S. 34 1-A . The so-called reasons are stated to be beliefs thus leading to an obvious self-contradiction. We are satisfied that the requirements of S. 34 1-A were number satisfied and, therefore, the numberices which had been issued were wholly illegal and invalid. In the result, the appeal is allowed and the judgment of the High Court is set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1928 of 1968. Appeal by special leave from the judgment and order dated February 17, 1967 of the Delhi High Court in Income-tax Re- ference No. 18 of 1963. K. Bajaj and K. B. Rohatgi, for the appellant. T. Desai, P. L. Juneja, R. N. Sachthey and B. D. Sharma, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave from a judgment of the Delhi High Court in an Income tax Reference. The assessee, which is the appellant, is a private limited companypany carrying on the business of manufacture and sale of sugar. it has two sugar mills one at Maholi Sitapur and the other at Raja-ka-Sahaspur Moradabad . The head office of the assessee is at New Delhi. During the accounting period relating to the assessment year 1956-57 sums of Rs. 75,000/- and Rs. 37,500/- were paid by the assessee to the Cane Development Council of the Sugarcane Department of the Government of Uttar Pradesh by way of companytribution for road development between the various sugarcane producing centers and the sugar factories of the assessee. The revenue authorities found that these companytributions were intended to be applied for the companystruction and development of roads between the sugarcane producing centres and the sugar mills and held that these amounts companystituted capital expenditure and companyld number be allowed as an admissible deduction while companyputing the total income of the assessee. The Appellate Tribunal upheld the order of the departmental authorities. On an application being moved the Tribunal referred two questions of law to the High Court. We are companycerned only, in the present case, with the second question which is as follows Whether the sums of Rs. 75,000 and Rs. 37,500 paid to the Road Development Fund set up by the Government of U.P. were rightly disallowed as items of capital expenditure ? The High Court held that the aforesaid expenditure companyld number be regarded as revenue expenditure and the answer was returned against the assessee. According to the assesses certain facts are fully esta- blished. These are 1 the expenditure incurred was for the development of roads and the assessee was under an obligation to make the aforesaid companytributions under the provisions of the U. P. Sugarcane Regulation of Supply Purchase Act, 1953 2 the roads were originally the property of the government and remained so after the improvement had been made. 3 the sole reason for which the assessee had made the companytribution was that the improved roads would facilitate the transportation of cane from the cane producing centres to the premises of the mills and also the flow of supply to and from the factories of the assessee and 4 the expenditure was incurred for reasons of companymercial expediency and for the benefit of the day to day business of the assessee. According to the High Court it was admitted on behalf of the assessee that if expenditure had been incurred by it for building roads of its own it would be capital expenditure. The High Court companyld see numberdifference if expenditure was incurred under companypulsion or even without companypulsion if the roads were built for facilitating transportation and improving the business and the flow of supply to and from the factories of the assessee. We are unable to agree with the reasoning or the companyclusion of the High Court. The general principles governing the determination of the question whether an expenditure is in the nature of capital or revenue expenditure are well known. Where expenditure is incurred while the business is being carried on and number for its extension or for the substantial replacement of its equipment the position would be as follows - If the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring benefit of the business it is properly attributable to capital and is of the nature of capital expenditure. If on the other hand it is made number for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure. Vide Assam Bengal Cement Ltd. v. Commissioner of Income tax, West Bengal 1 The argument on behalf of the revenue is that the expenditure which was incurred by the assessee in the present case was intended for bringing into existence an advantage for the enduring benefit of the business. On the other hand it has been maintained on behalf of the assessee that the expenditure was properly attributable to running the business or working it with a view to produce the profits. The Calcutta High Court had occasion to companysider an identical question in Commissioner of Income tax, West Bengal v. Hindustan Motors Ltd. . There the location of a factory of motor car manufacturing companypany was a little distance away from the main road. The approach road belonged to the government. It fell into disrepair and began to cause transportation difficulties to the assessee. The Government was number prepared to meet the expenses for the repair of the road. The assessee offered to companytribute a certain amount for the improvement. The High Court had numberdifficulty in companying to the companyclusion that the money was spent number so much to bring about any asset or advantage of enduring benefit to itself but it was incurred for its efficient and companyvenient running and therefore it was of revenue nature. This case has been sought to be distinguished on behalf of the Revenue on the ground that the expenditure was incurred only to meet the expense of the repair and numberasset or advantage of an enduring benefit accrued or resulted to the assessee. This distinction does number appear to be sound because in the diverse nature of business operations it is difficult to lay down a test which would apply to all situations. The criteria has to be applied from the business point of view and on a fair appreciation of the whole situation. In the present case apart from the element of companypulsion the 1 27 I. T.R. 34,45. 2 68 I.T.R. 301. roads which were companystructed and developed were number the, property of the assessee number is it the case of the Revenue that the entire companyt of development of those roads was defrayed by the assessee. It only made certain companytribution for road development between the various cane producing centres and the mills. The apparent object and purpose was to facilitate the running of its motor vehicles or other means employed for transportation of sugarcane to the factory. From the business point of view and on a fair appreciation of the whole situation the assessee companysidered that the development of the road in question companyld greatly facilitate the transportation of sugarcane. This was essential for the benefit of its business which was of manufacturing sugar in which the main raw material admittedly companysisted of sugarcane. These facts would bring it within the second part of the principle mentioned before, namely, that the expenditure was incurred for running the business or working it with a view to produce the profits without the assessee getting any advantage of an enduring benefit to itself. In our judgment the ratio of the decision in Commissioner of Income tax, West Bengal, v. Royal Calcutta Turf Club 1 would be applicable to the present case. There the question was whether the expenditure on running a school for training of jockeys by the Royal Calcutta Turf Club companyld be claimed as a deduction under s. 10 2 xv of the Indian Income tax Act 1922. It ,,,as pointed out that the business of the club was to run race meetings on a companymercial scale for which it was necessary to have races of a high order. For the popularity of races and to make its business profitable it was necessary for the club to have jockeys of requisite skill and experience in sufficient numbers. It was for that purpose that the school had been started for training Indian jockeys. If there had number been sufficient number of Indian jockeys the interest of the club would have suffered. Therefore the expenditure incurred on running the school must be regarded as having been wholly and exclusively laid out for the purpose of the business of the club. Emphasis was laid on the principle that in order to justify a deduction it must be for reasons of companymercial expediency and it must be incurred for the assessees business. We are satisfied that in the present case the expenditure was incurred by the assessee for reasons of companymercial expediency apart from statutory companypulsion to which reference has been made before. The development of the roads was necessarily meant for facilitating the carrying on of the assessees business. Furthermore the Tribunal did number give any finding that the roads were to be altogether newly made and that the assessee 1 41 I.T.R. 414. would get an enduring benefit from these roads. The expenditure in question should have, therefore, been allowed as an admissible deduction. For the reasons given above the appeal is allowed and the answer given by the High Court to the question referred is discharged. We would return the answer in the negative and in favour of the assessee.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1658 of 1968. Appeal by special leave from the judgment and order dated September 22, 1967 of the Bombay High Court in Income-tax Reference No. 83 of 1962. D. Sharma, and R. N. Sachthey, for the appellant Rajagopal, M. M. Vakil, B. Datta, J. B. Dadachanji, C. Mathur and Ravinder Narain, for the respondent. The Judgment of the Court was delivered by Hegde, J. This is an appeal by special leave. It arises from the decision of the Bombay High Court in Income-tax Reference No. 83 of 1962 on its file. That Reference was made by the Income-tax Appellate Tribunal, Bench B, Bombay. The question of law which was referred for the. opinion of the High Court under s.66 1 of the Indian Income-tax Act, 1922 to be hereinafter referred to as the Act is Whether on the facts and in the circumstances -of this case the Department companyld disallow a sum of Rs. 1,26,359/- a portion of the managing agency ,commission paid by the assessee companypany for the ,assessment year 1957-58 in companyputing the income from business of the assessee companypany. The assessee is M s. Maharashtra Sugar Mills Ltd. The companycerned assessment year is 1957-58, the companyresponding account year ending on 30-9-1956. , The assessee is a Limited Company. it carries on business of manufacture of sugar from.sugar cane. It owns extensive lands in which sugar cane is grown. The sugar cane grown in these lands is used by the assessee for manufacture of sugar in its factory. The finding of the Tribunal is that 16-M 1245 Sup. Cl/71 the cultivation of sugar cane and the manufacture of sugar by the assessee companystitute one single and indivisible business. The assessee companypany is managed by managing agents. The managing agents were paid remuneration in accordance with the agreement entered into between the assessee companypany and the managing agents The managing agentss companymission roughly worked out at 10 percent of the profits of the companypany. In the assessment year in question the managing agents were entitled to a companymission of Rs. 4,86,228 /6 -. In its assessment proceedings, the assessee claimed deduction of this sum under s.10 2 15 as an item of expenditure laid out or expended wholly or exclusively for the purpose of its business. Out of that sum, the Income-tax Officer disallowed a sum of Rs. 1,26,359/- on the ground that the same relates to the companymission of the managing agents for managing the sugar cane cultivation part of the business. In appeal, the Appellate Assistant Commissioner companycurred with the view taken by the Income-tax Officer. The assessee took up the matter in second appeal to the Income-tax Appellate Tribunal. The Tribunal upheld the plea of the assessee that the entire sum is deductible under S. 10 2 15 . It also rejected the companytention of the department that on the facts of the case rule 23 of the Rules framed under the Act is applicable. In the Reference -referred to earlier, the High Court agreeing with the view. taken by the Tribunal answered the question in favour of the assessee. Hence this appeal. The finding of the Tribunal that the cultivation of sugar cane as well as the manufacture of sugar companystitutes one business is a finding of fact. That finding has number been challenged before us What. was urged on behalf of the department is that the assessees business companysisted of two parts namely 1 cultivation of sugar cane and the manufacture of sugar. The former part being agricultural operation, the income therefrom is number exigible to tax and therefore any expenditure incurred in respect of that activity is number deductable. This companytention proceeds on the basis that only expenditure incurred in respect of a business activity giving rise to income, profit or gains taxable under the Act can be given deduction to and number otherwise. We see numberbasis for this companytention. To find out whether a deduction claimed is permissible under the Act or number, all that we have to do is to examine the relevant provisions of the Act. Equitable companysiderations are wholly out of place in companystruing the provisions of a taxing statute. We have to take the provisions of the statute as they stand. If the allowance claimed is permissible under the Act then the same has to be deducted from the gross profit. If it is number permissible under the Act, it has to be rejected. As men- tioned earlier, it is number disputed that the cultivation of sugar cane and the manufacture of sugar companystituted one single and indivisible business. Section 10 2 says that profits under S. 10 1 in respect of a business should be companyputed after deducting the allowances mentioned therein. One of the allowances allowed is that mentioned in s.10 2 which says that any expenditure laid out or expended wholly and exclusively for the purpose of such business shall be deducted as an allowance. The mandate of s 10 2 15 is plain and unambiguous. Undoubtedly the allowance claimed in this case was laid out or expended for the purpose of the business carried on by the assessee. The fact that the income arising from a part of that business is number exigible to tax under the Act is number a relevant circum- stance. For the foregoing reasons we agree with the view taken by the High Court. Turning number to the decided cases, we shall first refer to the decision of the Madras High Court in S. A. S.S. Chellappa Chettiar v. Commissioner of Income-tax, Madras 1 The facts of that case are, The assessee was carrying on the business of money lending in Burma. For the purpose of that business he was borrowing money from others at a lower rate of interest and advancing loans to his- companystituents at a higher rate. In the companyrse of his business, he was obliged to receive agricultural lands in repayment of his debts from some of his companystituents. In his assessment proceedings he claimed deduction of the interest David by him in respect of his borrowings. Part of the money borrowed by him had been advanced to companystituents who, as mentioned earlier, had made over their agricultural lands to the assessee. The question arose whether the interest paid in respect of the money advanced to those companystituents was deductable in companyputing the profits and gains of the assessee. The High Court held that he was entitled to the deduction claimed and further he was also entitled to deduction in 1 5 I.T. P,. 97. respect of the establishment and other charges incurred by him for managing and cultivating such lands and the amount spent for obtaining companyveyances of such lands. Sir H. O. C. Beasley C. J., speaking for the Court observed It seems to us that the governing section in order to decide this matter must be Sec. 10 2 iii . Was the capital borrowed for the purpose of the assessees business ? No difficulty arises about that, for it is ,conceded that it was so borrowed. It was also unquestionably used for the purpose of the business because it is again companyceded that it was lent to the borrowers. Does it companytinue to be so used ? It is in that respect that it is important again to emphasise that this case has been argued, before us on the basis that these lands came into and were retained in the possession of the assessee in payment of a moneylending debt and ex- necessitate. The test applied by the learned Chief Justice appears to us to be the companyrect one. We shall next take up the decision of the Bombay High Court in Salt and Industries Agencies Ltd., Bombay v. Commissioner of Income-tax, Bombay City 1 . The assessee in that case was a companypany incorporated in Bombay. They were the managing agents of another companypany which was also incorporated in Bombay. The managed companypany had business both in British India as well as in the Indian States. The profits arising from the business activities of the managed companypany in the Indian States was number exigible to tax but yet the assessee claimed that a part of the companymission earned by it being in respect of business carried on outside British India, the same companyld number be companysidered as an income earned in British India. That companytention was rejected by the High Court. In the companyrse of its judgment, the High Court observed It is perfectly true that as far as the parent companypany is companycerned, the profits made at Kandla companyld be said to have arisen and accrued at Kandla, but as far as the managing agents are companycerned, their companymission has numberhing whatever to do with those profits. 1 18 L.T.R. 58. Their companymission is only companycerned with the ultimate determination of all the workings of the companypany and the finding out whether and what profits has been earned by the companypany. It cannot be said that as profits were earned by the parent companypany, the companymission also was accruing or arising to the managing agents. - In Commissioner of Income-tax, Bombay v. C Parakh Co. India Ltd. I. The ratio of that decision bears on the question of law that we are companysidering. The assessee companypany therein was resident and ordinarily resident in India. It had its head office in Bombay. It maintained a branch at Karachi for purchasing companyton for shipment to Bombay or to export direct to other places. By an agree- ment, the managing agents of the assessee companypany were entitled to a remuneration of 20 percent of the annual net profits of the assessee companypany to ascertain which the result of the trade in all its branches had to be taken into account. The assessee apportioned the managing agency companymission and debited the proportionate amount in the respective profit and loss account for the Bombay head office and the Karachi branch. In companyputing the Pakistan income of the assessee for the purpose of double taxation relief the Income-tax Officer deducted from the income of the Karachi branch the proportionate managing agency companymission. The Appellate Assistant Commissioner companyfirmed that order but the Tribunal and the High Court on a reference held that the managing agency companymission in its entirety should be debited to the Bombay branch. On appeal this Court held that the entire managing agency companymission was liable to be debited against the Indian profits and further assessee companypany companyld number be estopped from claiming the benefit of such deduction by reason of the fact that it erroneously allocated a part of it toward the profits earned in Karachi. In the companyrse of its judgment this Court observed Section 10 2 xv of the Indian Income-tax Act provides that in companyputing the profits of a business allowance is to be made for any expenditure laid out or expended wholly and exclusively for the purpose of such business Now the respondent is carrying on 1 29 I.T.R. 661. business in companyton both in India and in Karachi. When an assessee carries on the same business at a number of places there is for the purpose of section 10 ,only one business and the net profits of the business have to be ascertained by pooling together the profits ,earned in all the, branches and deducting therefrom all the expenses. The fact that some of the branches are in foreign territories will make numberdifference in the position if the assessee is as in the present case resident and ordinarily resident within the taxable territories. Therefore the profits earned in India and in Karachi have to be thrown together and the expenses including the companymission payable to the managing agents deducted therefrom and it is the net profits thus struck that become chargeable under the Act. That is how the Income-tax Officer has worked out the figures. The respondent is therefore clearly entitled to a deduction of the whole of the companymission of Rs. 3,12,699 paid to the managing agents including the sum of Rs. 1,23,719 against the Indian profits. Lastly we refer to the decision of this Court in Co mission of Income-tax Madras v. Indian Bank Ltd 1 . Therein the respondent, a banking companypany, in the companyrse of its business, invested a large sum in securities, including securities the interest on which was exempt from tax. Profits and losses on the purchase and sale of such securities were duly taken into account in companyputing the business income of the respondent. The question for decision was whether the interest paid by the respondent on the amount invested in securities, whose interest was tax free, was deductable from its gross profits. This Court held that interest paid by the respondent on moneys borrowed from its various depositors had to be allowed in its entirety under S. 10 2 iii of the Act and there was numberwarrant for disallowing a proportionate part of the interest referable to money borrowed for the purchase of securities whose interest was tax-free. In the companyrse of the Judgment Subba Rao, J. as he then was observed In our opinion,, in companystruing the Act, we must adhere closely to the language of the Act. If there is ambiguity in the terms of a provision, recourse must 1 56 I.T.R. 79. naturally be had to well-established principles of companystruction but it is number permissible first to create an artificial ambiguity and then try to resolve the ambiguity by resort to some general principle. We are companycerned with the interpretation of section, 10. Let us then look at the language employed. Sub-section 1 directs that an assessee be taxed in respect of the profits and gains of business carried on by him. What is the business of the assessee must first be looked at. Does he carry on one business or two businesses or along with the business carried on by him some activity which is number a business ? If he is carrying on an activity which is number business, we must leave out of account the receipts of that activity. That is the first step. Secondly, we must look at section 10 2 and deduct all the allowances permission ale to him. In allowing a deduction which is permissible the question arises Do we look behind the ,expenditure and see whether it has the quality of ,directly or indirectly producing taxable income ? The answer must be in the negative for two reasons First, Parliament has number directed us to undertake this enquiry. There are numberwords in section 10 2 to that effect. On the other hand, indications are to the companytrary. In Section 10 2 xv , what Parliament requires to be ascertained is whether the expenditure has been laid out or expended wholly and exclusively for the purpose of the business. The legislature stops short at directing that it be ascertained what was the purpose of the expenditure. If the answer is that ,it is for the purpose of the business, Parliament is number companycerned to find out whether the expenditure has produced or will produce taxable income. Secondly, the reason may well- be that Parliament assumes that most types of expenditure which are laid out wholly and exclusively for the purpose of business would directly or indirectly produce taxable income, and it is number worth the administrative effort involved to go further and trace the expenditure to some taxable income. On behalf of the department reliance was sought to be placed on the decision of this Court in Badridas Doga v. Commissioner of Income-tax 1 . The ratio of that decision does number bear on the issue arising for decision in this case. That decision is wholly irrelevant for our present purpose It was next urged on behalf of the department that in view of rule 23 of the Rules framed, it was permissible for the Income-tax Officer to split up the companymission given to the managing agents. We see numbermerit in this companytention. Rule 23 to the extent material for our present purpose reads 23 1 In the case of Income which is partially agricultural income as defined in section 2 and partially income chargeable to income-tax under the head business in determining that part which is chargeable to income-tax the market value of any agricultural produce which has been raised by the assessee or received by him as rent in kind and which has been utilised as raw material in such business or the sale receipts of which are included in the accounts of the business shall be deducted, and numberfurther deduction shall be made in respect of any expenditure incurred by the assessee as a cultivator or receiver of rent in kind. Rule 23 lays down the method of companyputing the taxable income of a business which partly arises from the utilisation of agricultural produce as raw material in the business. It says that in companyputing the taxable income, agricultural income as defined in S. 2 of the Act should be deducted from the total income for arriving at the taxable income. For determining what the agricultural income is the Income-tax Officer must determine the market value of the agricultural produce used as raw material in the business. The rule further says that numberfurther deduction shall be made of any expenditure incurred by the assessee as a cultivator or receiver of rent in kind. emphasis supplied . The managing agency companymission given to the assesses is number an expenditure incurred by the assessee as a cultivator or as a receiver of the rent in kind. The last part of subrule 1 of Rule 23 merely stipulates that the expenditure incurred by the assessee for his agricultural operation or incurred by him as receiver of rent in kind is number to be deducted while arriving at the taxable income. Section 1 34 I.T.R. 10. 2 1 of the Act defines agricultural income. That section reads agricultural income means- a any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land-revenue in the taxable territories or subject to a local rate assessed and companylected by officers of the Government as such b any income derived from such land by- agricultural or the performance by a cultivator or receiver of rent in kind of any process ordinarily employed by a. cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which numberprocess has been performed other than a process of the nature described in sub-clause ii . c any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator, or the receiver of rent in kind, of any land with respect to , which, or the produce of which any operation mentioned in sub-clauses ii and iii of claus e b is carried on Provided that the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator or the receiver of the rent-in-kind by reason of his companynection with the land, requires as a dwelling house, or as a storehouse, or other out-building, If rule 23 is read along with S. 2 1 , it is clear that Preference to, expenditure incurred by the assessee as a -cultivator applies to the process ordinarily employed by,a cultivator in raising the crops and all other incidental and supplementary activities upto the stage of sale of the produce. That rule has numberhing to do with disbursements such as payment of managing agency companymission. In the result this appeal fails and the same is dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1947 of 1968. Appeal from the judgment and decree dated January 21, 1964 of the Allahabad High Court in Misc. Income-tax Reference No. 383 of 1958. A. Ramachandran and A. G. Ratnaparkhi, for the appellant. Sen, J. Ramamurthy, R. N. Sachthey and B. D. Sharma, for the respondent. The Judgment of the Court was delivered by Hegde, J. This is an appeal by certificate. It arises from. a decision of the Allahabad High Court. The appellant is the assessee and the companycerned assessment year is 1948-49. The assessee is a firm companystituted under an Instrument, of partnership dated April 30, 1947. The shares of the partners in, the profit and loss of the firm as mentioned in that deed are as follows L. Khanjan Lal--/4/- L. Lalloo Ram- -/2/ L. Dwarka Prasad- -/2/- L. Ram Lal- -/2/- L. Sewak Ram- -/4/- Smt. Jagrani Devi- -/2/- Lallu Ram, Dwarka Prasad and Ram Lal are the children of- Khanjan Lad. Sewak Ram is the son of Jagrani Devi. The first group has - 10/- share in the profit and loss of the firm and the second group has -/6/- share. The assesesee firm was registered for the assessment year 1947-48. On July 12, 1949, the partners of the firm applied to the Income-tax Officer for renewal of the registration for the assessment year 1948-49. That application was signed by all the partners. To that application they appended a certificate to the. effect that profits of the previous year were divided or credited as shown below. . . On November 5, 1949, the partner-ship was dissolved under a deed of distribution dated November 9, 1949 One of the clauses in that deed provides But if an amount which was number entered in the books at the time of settlement is found then only that person will be accountable for it through whom the money was received or paid. None of the parties will have any objection to it. On October 5, 1950, the first four partners made a disclosure statement to the Income-tax Officer to the effect that the firm had earned Rs. 15,000/- by way of profits outside the books. In that disclosure statement, they further stated that those profits had been divided between the partners. On December 9, 1950, Sewak Ram, one of the partners stated on oath before the Income-tax Officer that he and his mother Jagrani Devi were number given full share of the profits of the business earned by the firm in Sam v. year 2005. He further stated that the entire profits earned in that business carried on in the previous year were number recorded in the books and the first four partners had given to him and his mother only their shares of those profits which were recorded in the books. Therein he sought to withdraw the application for registration because all the profits earned had number been divided according to the shares. According to Sewak Ram, the profits ,earned and number entered in the accounts amounted to Rs. 1,13,571/-. From the aforementioned statements, it s clear that the firm was trying to evade tax on a portion of the profits .earned by it by number bringing the same into their books. On March 31, 1951, Sewak Ram sued the first four partners for rendition of accounts. In that suit he estimated his share of profits in the amount that had number been entered in the account books at Rs. 50,0001. Ultimately the suit was companypromised and Sewak Ram withdrew his suit. In his application to withdraw the suit, he stated that he wanted to withdraw the suit in view of the circumstances of the above case, an expression of utmost ambiguity. Therein he stated that he is number entitled to get any more amount from the defendants. On March 15, 1952, Sewak Ram and his mother Jagrani Devi gave an application to the Income-tax Officer stating that they are withdrawing their signatures on the application for renewal of registration as the profits of the previous year were number distributed according to the deed of partnership and the certificate of registration required under rule 4 1 of the Income-tax Rules, 1922 to be hereinafter referred to as the Rules framed under the Indian Income-tax Act, 1922 in brief the Act had never been granted as required by law on the back of the partnership deed. Therein they further stated that as the certificate under rule 6 had number been granted by the assessee in accordance with law, the firm was number entitled for registration under rule 6 of the Rules. On the basis of the material before him, the Income-tax Officer came to the companyclusion that the firm had earned companysiderable black market profits, and the same had number been distributed amongst the partners according to the partnership deed and therefore the firm was number entitled for renewal of the registration. He further opined that the application for registration had stood withdrawn. On the basis of those companyclusions, he refused to renew the registration of the firm and taxed the firm in the status of association of persons. In appeal the Appellate Assistant Commissioner, upheld the decision of the Income-tax Officer. The assessee took the matter in appeal to the Income-tax Appellate Tribunal. The two members who heard the appeal ,concurred with the Income-tax Officer and the Appellate Assistant Commissioner that a substantial portion of the profits earned by the firm had number been entered in the books. They also held that those profits were number distributed amongst the partners according to the Instrument of partnership. On the basis of those findings the Judicial member held that the firm was number entitled to the renewal of registration asked for but the Accountant member opined that inasmuch as the profits that had been entered in the books had been distributed, there was companypliance with the provisions of the Act as well as the, Rules. In view of this difference of opinion between the two members, the matter was referred to the President of the Tribunal under s. 5A 7 of the Act. The President agreed with the Judicial Member that firm was number entitled to have the renewal of the registration asked for. There- after at the instance of the assessee, the Tribual submitted the following question to the High Court under s. 66 1 of the Act. Whether the assessee firm which had distributed its book profits amongst the partners according to the Instrument of Partnership but which had number distributed the profits earned by it in the black market amongst the six partners in accordance with the Instrument of Partnership was entitled for renewal of registration for the assessment year 1948-49 ? The High Court answered that question in favour of the Department. Hence this appeal by the assessee firm. Before examining the scope of the question submitted to the High Court under s. 66 1 of the Act, we may mention that the question whether the application for renewal of registration stood withdrawn or number is number before us. On that question, the Judicial member of the Tribunal took the view that the said application stood withdrawn but the Accountant member did number agree with that view. The President of the Tribunal did number express any opinion on that point. Now turning to the question referred to the High Court, that question is based on two findings of fact which are numbermore open to question. Those findings are 1 that the firm had distributed its book profits amongst the partners according to the Instrument of partnership, 2 but it had number distributed the profits earned by it in the black market amongst the six partners in accordance with the Instrument of partnership. Mr. Ramachandran, the learned Counsel for the assessee sought to assail the companyrectness of those findings on the ground that those findings are number supported by evidence, but we did number permit him to go into the same as that question is number before us. We are bound by those findings. Having said that much, we shall number turn to the relevant provisions in the Act and the Rules. Section 26 A of the Act reads Application may be made to the Income-tax Officer on behalf of any firm, companystituted under an ins- trument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income-,tax or super-tax. The application shall be made by such person or persons and at such times and shall companytain such particulars and shall be in such form, and be verified in such manner, as may be prescribed and it shall be dealt with by the Income-tax Officer in such manner as may be prescribed. This Court has ruled in Agarwal Co. v. Commissioner of .Income-tax, U.P. 1 that the companyditions of registration prescribed by s. 26-A and the relevant Rules are On behalf of the firm, an application should be made to the Income-tax Officer by such person and at such times and companytaining such particulars, being in such form and verified in such manner as are prescribed by the rules The firm should be companystituted under an instrument of partnership The instrument must specify the individual shares of the partners and The partnership must be valid and must actually exist in the terms specified in the instrument. Therein it was further laid down that if those companyditions are fulfilled, the Income-tax Officer is bound to register the firm. The same rule will apply in the case of renewal of registration. In this case we are primarily companycerned with the question whether the application made by the firm is in accordance with the rules prescribed. The rules with which we are companycerned in this appeal is paragraph 3 of rule 6 and rule 6-A. Paragraph 3 of rule 6 provides that the partners should append the following certificate to their application for renewal of registration. We do hereby further certify that the profits or loss, if any of the previous year or period upto the date of dissolution were divided or credited as shown below Rule 6-A provides that on receipt of an application under rule 6, the Income-tax Officer may if he is satisfied that the application is in order and that there is or was a firm in existence 1 77 I.T.R,10. companystituted as shown in the instrument of partnership, grant to the assessee a certificate signed and dated by him in the following form. . . . . It further provides If the Income-tax Officer is number satisfied he shall pass an order in writing refusing to renew the registration of the firm. Now the sole question for decision is whether the application made in this case companyplied with the requirements of paragraph 3 of rule 6. If it did number companyply with the requirements of rule 6, the Income-tax Officer was within his powers in rejecting it. As seen earlier, the finding of the Tribunal is that though the profits of the firm entered in its account books had been distributed, the profits earned but number entered into the account books have number been divided or credit in the account books. From that it follows that the certificate given in the application for renewal of registration is number a true certificate and further that a substantial portion of the profits earned had number been divided. The reason behind rule 6 was that at the relevant time, the registered firm as such was number taxable. Only the partners of a firm companyld be taxed. That being so, if a portion of the profits earned by the firm was number divided amongst the partners or credited to their accounts, to that extent, the profits earned by the firm escaped assessment. Therefore the certificate companytemplated by rule 6 is number a mere formality. It has a definite purpose. If a portion of the profits earned by the firm was number actually divided amongst the partners or credited to their accounts, then the only companyrse open to the Income-tax Officer was number to register that firm and to tax the partners of the firm as an association of persons. By giving a false certificate that the profits earned by the firm had been divided or credited in the manner shown in the application, the assessee firm was trying to evade tax. Hence we must hold that the application for renewal of registration made by the assessee did number companyply with companyditions prescribed in paragraph 3 of rule 6. Hence the Income-tax Officer was justified to refuse to renew the registration. In resisting the above companyclusion, Mr. Ramachandran Counsel for the assessee relied on certain decisions of the High Courts. The first decision relied on by him is that of the Bombay High Court in Commissioner of Income-Tax, M. P. Nagpur and Bhandaru v. D Costa Brothers 1 . Therein the Court held that the Income-tax Officer was number entitled to reject the application for registration of the deed of partnership of the assessee firm on the ground that the house-hold expenses of the partners were debited to the profit and loss account of the firm. Therein there was number 1 49, I.T.R. 181. companytention that all the profits earned were number distributed. The only question was whether the household expenses companyld have been deducted before dividing the profits. In other words the question was whether the household expenses was a proper deduction to be made in the circumstances of that case before dividing the profits. Hence that decision has numberbearing on the question under companysideration. He next placed reliance on the decision of the Punjab High Court in Commissioner of Income-tax, Simla v. Sat Ram Gian Chand 1 . Therein the partners first estimated the divisible profit and divided the same. The Court held that the division of profit was a matter relating to the internal affairs of the partnership and had numberbearing on the genuineness of the firm and that numberquestion of law arose from the order of the Appellate Tribunal. The ratio of that decision has numberrelevance for our present purpose. Counsel for the assessee next relied on the decision of the Madras High Court in N. S. S. Chokkalingam Chettiar- and Co. C.I.T. Madras 2 . In that case though there was numberprovision in the deed of partnership for payment of salary to any of the partners, some of the partners were paid a salary in addition to the shares to which they were entitled under the terms of the partnership and the Income-tax Officer refused to register the firm on the ground that the profits were number divided in accordance with the partnership deed as some of the partners took an additional amount out of the profits in the shape of salary. The companyrt held that, as the partnership was found to be a genuine one and the application for registration was also in due form, the mere fact that some partners took some portion of the profits as salary was number a ground for refusing registration. The question whether a partner should be paid salary for the services rendered by him is a matter to be decided by the partners of the firm so long as their payment is bona fide one, the same has to be deducted before the divisible profits are companyputed. Hence the ratio of that decision also does number bear on the facts of the present case. Reliance was next placed on the decision of the Madhya Pradesh High Court in C.I.T., M.P. v. Mandanlal Chhagan Lal 3 . In that case the partnership deed provided that each partner will be entitled to interest at 6 per cent per annum on his capita investment and that the profit and loss will be divided equally among the partners after deducting the interest payable on the capital advances made by the partners. When the partners made an application for registration under s. 26A of the Act, the Income-tax Officer refused to register it but the Court held that the application was a valid one and the provision for payment of inte- 1 42, ITR, 543. 2 60, ITR, 671. 3 50, I.T.R. 477. rest did number in any manner companyflict with the relevant provision. Here again there is numberquestion of number dividing any portion of, profits earned. That being so, that decision is irrelevant for our present purpose. Lastly reliance was placed on the decision of the Kerala High Court in St. Josephs Provisions Store v. C.I.T., Kerala 1 . Therein the partners of the assessee firm resolved that the profits of the firm as disclosed in the profit and loss account need number be divided and credited in the profit and loss accounts of the partners, but should be credited to a reserve account but each of the partners to have an equal share in that amount. An application for registration of the firm was rejected on the ground that the firm had number companyplied with the requirements of rule 6 of the Rules. The companyrt held that the absence of entries in the separate accounts of each partner was number fatal the requirement of rule 6 was met when the profit was taken into a reserve fund showing the partners shares therein and indicating what was the companytribution of each partner to the reserve fund. Therefore the application for registration was number liable to be rejected on the ground that rule 6 had number been companyplied with. Here again the profits earned had beep divided and they were credited to the accounts of the partners though the same were credited to a reserve fund. Hence the rule laid down in that case is inapplicable to the facts of the present case. As the above referred decisions do number bear on the point in issue we have number gone into the question whether all or any of them were companyrectly decided or number. The apprehension of Mr. Ramachandra that our decision might be taken advantage of by the Department for refusing registration of firms whose return of income or claim for some allowance has number been accepted by the Income-tax Officer for one reason or the other, appears to us to have numberbasis.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1667 to 1673 to 1968. Appeals from the judgment and order dated August 30, 1967 of the Calcutta High Court in Income-tax Reference Nos. 3, 6, 7, 8, 9, 10 and II of 1964. D. Sharma, for the appellant in all the appeals . Sukumar- Ghose and Swapna Ghosh, for the appellant in all the appeals , The Judgment of the Court was delivered by Hegde, J. Two questions of law which arise for decision in these appeals are Whether on the facts and in the circum- stances of the case of Tribunal was right in holding that the distribution to the assessee of the amount attributable to land acquisition companypensation received by the Ukhara Estate Zamindaries Ltd. after 31st March, 1948 was in the hands of the assessee, receipt of dividend within the meaning of Section 2 A of the Indian Income-tax Act, 1922 ? Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the receipt by the assessee of the amount attributable to selamis realised by the Ukhara Estate Zamindaries Ltd., for grant of long-term leases after 31st March, 1948 was a receipt of income of the assessee and tax,able as the income of the assessee from other sources? On both these questions the decision of the authorities under the Indian Income-tax Act, 1922 in brief the Act ,as well as that of the Tribunal was against the assessees. But disagreeing with the,, view taken by these authorities ,the High Court answered both these questions in favour -of the assessees. The Commissioner of Income-tax, West Bengal aggrieved by this decisions has brought these appeals to this Court on the strength of the certificates given by the High Court. As facts in each of these appeals are more or less similar, it is sufficient if we set out the facts in the case of Kamal Behari Lal Singha, for the assessment year 1950-51, the companyresponding accounting year being 1356 B. S. ending On April 13, 1950. It is said that Kamal Behari Lal Singha, who will hereinafter be referred to as the assessee was a shareholder in the Ukhara Estate Zamindaries Ltd. to be hereinafter referred to as the companypany . During the relevant accounting year, the assessee received a sum of Rs. 13,200 as dividend from the said companypany. The said dividend was declared on October 19, 1949. Out of that amount a sum of Rs. 8,829 was paid out of the accumulated capital gains, received by the companypany in the shape of Selamis and land acquisition companypensation receipts after March 31, 1948. Such capital gains were taken to the reserve fund and thereafter distributed as dividends. The remainder of the dividends was paid out of the balance of the profit and loss account In these appeals the dispute centers round the taxability of that share of the dividend which has been paid out of the capital gains in the hands, of the companypany. The Income-tax Officer came to the companyclusion that numberdividend distributed can be companysidered as having been paid out of the capital gains of the companypany, therefore the same is taxable as dividend. In appeal the Appellate Assistant Commissioner accepted the companytention of the assessee that the receipt of Rs. 8,829cannot be companysidered as dividend within the meaning of s.2 6A of the Act but he held that the same is taxable as income in the hands of the assessee. The Tribunal company- firmed the order of the Appellate Assistant Commissioner It is number well settled that in order to find out whether a receipt is a capital receipt or a Revenue receipt one has to. see what it is in the hands of the receiver and number its nature in the hands of the payer. In other words, the nature of receipt is determined entirely by its character in the hands. of the receiver and the source from which the payment is. made has numberbearing on the question. Where an amount is paid which, so far as the payer is companycerned, is paid wholly or partly out of the capital, and the receiver receives it as income on his part, the entire receipt is taxable in the hands of the receiver. Therefore the fact that the amount sought to be taxed in these appeals was capital gains in the hands of the companypany is number a relevant circumstance. What we have to see is what it was in the hands of the assessees. The question whether a particular receipt is a capital receipt or a revenue receipt is a somewhat difficult question -,to decide though the principles bearing on the question are welt settled. The application of those principles to a given set of facts often creates difficulties. The decision by and ,large depends upon the facts of each case. So far as the first question set out earlier is companycerned the same is settled by the decision of this Court in Commissioner of Income-tax, West Bengal v. Nalin Behari Lall Singha 1 . The assessee therein was also one of the share- holders of Ukhara Estate Zamindaries Ltd. His case was numberdifferent from that of the respondents herein. But the only point that arose for decision in that appeal was whether the receipts similar to those we are companysidering here can be companysidered as dividends? This companyrt answered that question in the negative. This Court refused to go in to the question whether the same companyld be companysidered as income other than dividend. Dealing with that companytention this Court observed Counsel for there venues ought to argue that the share of dividend which is number chargeable total by virtue of the exemption clause is still liable to tax as income other than dividend. But numbersuch companytention was raised before the Tribunal or the High Court and numberquestion was raised in that behalf. We will number be justified in entering upon the question which was number raised or argued before the Tribunal and before the High Court. In these appeals we have to decide what was left undecided in that case. Coming back to the question how Inexactly to draw the line between a capital receipt and a revenue receipt in cases of the type that are before us, one, can do numberbetter than refer to the observations of Finley J. in Trustees of the Will of H. K. Brodie deceased v. Commissioner Inland. Revenue 2 . But, I think, the governing companysideration is this the question be ing, was the sum received as income, one has to companysider what was the source from which 1 74 I.T.R. 749. 2 17 T.C. 432 at p. 439. 2 29 it was received and what were the circumstances in which it was received. If the capital belonged to the person receiving the sums--if he or she was beneficially entitled number only to the income but to the capital then I should think that, when the payments were made, they ought to be regarded, and would be regarded, as payments out of capital, but where there is a right to the income, but the capital belongs to somebody else, then, if payments out of capital are made and made in such a form that they companye into the hands of the beneficiaries as income, it seems to me that they are income and number the less income, number of the person receiving them, but in the hands of somebody else -capital. The above observations, in our opinion, companyrectly set out the law. Let us number turn to the facts of this case. The assessees were shareholders in the companypany. They were beneficially entitled to the capital of the companypany. The amount with which we are companycerned in these appeals was received by the companypany as Salamis and as companypensation for the acquisition of the lands of the companypany. It was number something earned by the companypany in the companyrse of its business. Undoubtedly it was a capital receipt in the hands of the companypany but that by itself is number sufficient. We have next to see whether it was a capital receipt in the hands of the assessee. As mentioned earlier, the assessee had a beneficial interest in that sum when it was in the hands of the companypany. Therefore when that sum was distributed amongst the shareholders of the companypany, each of the shareholders took a share of the capital set in which they were beneficially entitled. That being so the receipt with which we are companycerned in these appeals must also be companysidered as capital receipt. The fact that those sums were distributed as dividends does number change the true nature of the receipt. A receipt is what it is and number what it is called. In the result these appeals fail and they are dismissed with companyts-hearing fee one set.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1225 and 1226 of 1967. Appeals from the judgment and decree dated May 22, 1964 of the Allahabad High Court in Income-tax Reference No. 189 of 1953. T. Desai, R. N. Sachthey and B. D. Sharma, for the appellant in both the appeals . C. Chagla and A. N. Goyal, for the respondent in both the appeals . The Judgment of the Court was delivered by Shah, C. J. Gurbux Rai Harbux Rai-hereinafter called the assessee-is a registered firm carrying on a business in piece goods and companymission agents. It has its head office at Kanpur and a branch office at Farrukhabad. During the chargeable accounting periods July 4, 1943 to June 21, 1944 and June 22, 1944 to July 10, 1945 Gurbux Rai and Harbux Rai each representing his joint family were the two partners of the assessees with equal shares in the profit and loss. In proceedings for assessment of tax under the Excess Profits for Act 1940 for the two chargeable accounting periods the assessee informed the Tax Officer that the joint family of Gurbux Rai had been dissolved and there was a reconstitution of the business of the partnership with effect from July 4, 1943. , According to the assessee the companystitution of the firm after partition was that in the firm at Kanpur the former two partners were interested, their share being equal, but in the business of the firm at Farrukhabad there were three partners-Harbux Rai with -/8/- share, Chameli Devi with -/4/- share and Gopaldas with -/4/- share. In assessing tax under the Indian Income-tax Act, 1922 for the assessment year 1944-45 relevant to the account year ending June 21, 1944 the Income-tax Officer held that the case set up by the assessee that there was partition amongst the members of the family of Gurbux Rai companyld number be accepted. In the view of the Income-tax Officer, an attempt was made to avoid proper incidence of taxation as an after- thought to create evidence for camouflaging the Farrukhabad business as a separate unit of assessment. The Income-tax Officer directed that the income be assessed as the income of the assessee and number as the income of a separate firm. The excess profits tax assessment being companysequential upon the income-tax assessment, the Excess Profits Tax Officer assessed the entire income of the two businesses at Kanpur and at Farrukhabad, in the hands of the assessee firm. Against the order passed by the Income Tax Officer the assessee appealed to the Appellate Assistant Commissioner who by his order dated October 10, 1947 observed that partial partition in respect of movable property of Gurbux Rai was effected on a date somewhere near Asadh Samvat 2000, from which date Farrukhabad was companyducted by a separate firm companysisting of Harbux Rai, Mst. Chameli and Gopaldas. Pursuant to this order the Income-tax Officer modified the assessment with respect to the Income-tax assessment of the assessee for the assessment years 1944-45 and 1945-46. The Excess Profits Tax Officer however started proceedings under s. 10-A by numberice dated February 6, 1951 calling upon the assessee to show cause why appropriate adjustments should number be made in the assessment, and passed orders in that behalf for both the chargeable accounting periods holding that the main purpose of the partial partition of the family business of Gurbux Rai was avoidance of excess profits tax liability. By order dated February 21, 1951 passed under s. 15 of the Excess Profits Tax Act the Excess Profits Tax Officer modified the original excess profits tax assessment. In the revised assessment in pursuance of orders under s. 10-A he included the income of the branch shop at Farrukhabad in the total income of the assessee for purposes of excess profits-tax assessment. The assessee appealed against the order of additional assessment companytending that the Excess Profits Tax Officer was number companypetent to reopen the case under s. 15 as he had numberdefinite information companying into his possession to enable him to discover that the profits of the chargeable accounting period had escaped assessment. The assessee companytended that all the materials in the case were before the Excess Profits Tax Officer at the time of his original assessment and numbernew information came into his possession thereafter. The assessee also companytended that the Excess Profits Tax Officer was number companypetent to pass any order under s. 10-A merely to make an adjustment in the revised assessment under s. 15. The Income-tax Appellate Tribunal held that the Excess Profits Tax Officer had received definite information regarding the state of the law in pursuance of the appellate order of the Appellate Assistant Commissioner who had held that the family of Gurbux Rai was partially partitioned. The Tribunal also held that the Excess Profits Tax Officer was companypetent to pass an order under s. 10-A, of the Excess Profits Tax Act. 3 6 0 The Tribunal thereafter referred the following questions to the High Court of Allahabad under s. 21 of the Excess Profits Act read with s. 66 1 of the Income-tax Act, 1922 Whether on the facts and in the circumstances of this case there was any definite information within the meaning of s. 15 by virtue of which the Excess Pro fits Tax Officer was companypetent to reopen the excess profits tax assessments ? Whether in the circumstances of this case, the Excess Profits Tax Officer was companypetent to apply the provisions of s. 10-A and make necessary adjustments,in pursuance thereto in the revised assessment under s. 15 The High Court of Allahabad held that since the Excess Profits Tax Officer purported to reopen the assessment under s. 15 of the Excess Profits Tax Act only because of the order of-the Appellate Assistant Commissioner of Income- tax holding that the Farrukhabad business was numberlonger the business of the assessee and that the family of Gurbux Rai had partitioned its movable property, all of which proceeded upon material which was already initially before the Excess Profits Tax Officer and to which he had applied his mind when he made the original assessment, it was number a case where the Excess Profits Tax Officer can be said to have discovered, in companysequence of definite information which had companye into his possession, that profits chargeable to excess profits tax had escaped assessment. The High Court accordingly answered the first question in the negative. The High Court then observed that if the Excess Profits Tax Officer was number companypetent to take proceedings under s. 15 of the Excess Profits Tax Act, it was number open to him to apply the provisions of s. 10 in the proceedings up reopening the assessment under s. 15, for, in the view of the High Court an order under s. 10-A may be passed only where the Excess Profits Tax Officer is seized of jurisdiction in a pending assessment proceeding. As the proceedings initiated by the Excess Profits Tax Officer under s. 15 were void, he had numberpower to make an order under s. 10-A of the Act. The High Court accordingly answered the second question also in the negative. Against the order passed by the High Court, these two appeals are preferred. A parallel proceeding which had companye before this Court in Civil Appeals Nos. 741-743 of 1966 Gurbux Rai Harbux Rai v. The Commissioner of Income-tax, U.P. decided on August 2, 1968 may also be referred to. It may be recalled that the Excess Profits Tax Officer at Kanpur had served a numberice under s. 10-A of the Excess Profits Tax Act requiring the assessee to show cause why appropriate adjustments as respects liability to excess profits tax should number be made so as to companynteract the avoidance or reduction of liability to excess profits tax by companyverting the business in the name of Pussulal Jangalal the Farrukhabad firm -into a separate business. The companytention of the assessee that disruption of the family was a genuine and bona fide transaction was rejected by the Excess Profits Tax Officer. The case was therein taken to the Income-tax Appellate Tribunal. The Tribunal companyfirmed the order of the Excess Profits Tax Officer. But at the instance of the assessee the Tribunal referred the following question to the High Court of Allahabad Whether on the facts and circumstances of this case, the transaction in question was one which companyld be. avoided under s. 10-A of the Excess Profits Tax Act ? The High Court by order dated July 31, 1969 answered the question in the affirmative. Against the order passed by the High Court numberfurther proceedings has been taken by the assessee challenging the companyclusion of the High Court and that order has become final. The High Court has held in the judgment under appeal that action taken under s. 15 of the Excess Profits Tax Act was number companypetent and on that account the Excess Profits Tax Officer had number jurisdiction in the matter. But in the judgment of the High Court in Income-tax Reference No. 118 of 1962 decided on July 31, 1969 numberquestion of jurisdiction arose. The Court had only answered the question whether the transaction of partial partition was one which companyld be avoided under s. 10-A of the Excess Profits Tax Act. The decision of the High Court which had become final about the authority of the Excess Profits Tax Officer to take action taken under s. 10-A does number affect the maintainability of the present appeal. Section 10-A of the Excess Profits Tax Act, insofar as it is relevant, provides Where the Excess Profits Tax Officer is of opinion that the main purpose for which any transaction was effected was the avoidance or reduction of liability to excess profits tax, he may, make such adjustments as respects liability to excess profits tax as he companysiders appropriate so as to companynter- act the avoidance or reduction of liability to excess profits tax which would otherwise be effected by the transaction Section 15, insofar as it is relevant provides If in companysequence of definite information which has companye into his possession, the Excess Profits Tax Officer discovers that profits of any chargeable accounting period chargeable to excess profits tax have escaped assessment, or have been under-assessed, or have been the subject of excessive relief, he may at any time serve on the person liable to such tax a numberice companytaining all or any of the requirements which may be included in a numberice under section 13, and may proceed to assess or reassess the amount of such profits liable to excess profits tax The High Court in the judgment under appeal held that pro- ceeding under s. 10-A may be companymenced only if there be a valid proceeding under the Excess Profits Tax which was pending for assessment or reassessment of excess profits which had escaped assessment and number otherwise. In our opinion the High Court was right in so holding. S. 10-A does number companytemplate an independent proceeding. Section 10- A merely companyfers power upon the Excess Profits Tax Officer to make adjustments with respect to liability to excess profits tax it companyfers power which the Excess Profits Tax Officer may exercise in the companyrse of the ,original assessment or in the companyrse of re-assessment. It is necessary therefore to determine whether an order was made under s. 10-A in a pending proceeding for assessment of Excess Profits tax. But the question whether there was a pending proceeding under s. 15 in the companyrse of which an order under s. 10-A companyld be made cannot be ascertained on the materials available before us. The High Court had decided that the proceeding under S. 15 was number valid, because there was numberdefinite information with the Excess Profits Tax Officer and on that account proceeding under s. 10-A was number valid. It has been assumed that there was a pending proceeding under s. 15 in the companyrse of which an order under s. 10-A was made. Expression of that opinion of the High Court is challenged. We are of the view that in the interests of justice, it is necessary that a supple- mentary statement of the case should be called for on the question whether there was any proceeding pending under s. On the question whether the proceeding under section 15 if pending was valid, we express numberopinion at this stage. We direct the Tribunal to submit a supplementary statement of the case on the question whether the proceeding under 3 63 s. 10-A was started in the companyrse of assessment or re- assessment proceeding companymenced under s. 15. The supplementary statement to be submitted to this Court within three months from the date on which the papers reach the Tribunal. At this stage we express numberopinion on the question whether the High Court was right in holding that the proceeding under s. 15 was number companypetent. The following judgment was delivered after the Tribunal submitted the supplementary statement as directed. Grover,J. In these appeals this Court by an order dated January 21, 1971 directed the Income tax Appellate Tribunal to submit a supplementary statement of the case on the question whether the proceedings under s. 10-A were started in the companyrse of assessment or reassessment proceedings companymenced under s. 15 of the Excess Profits Tax Act 1940, hereinafter called the Ace. The facts set out in the supplementary statement of the case may be recapitulated. M s. Gurbux Rai Harbux Rai hereinafter referred to as the assessee is a registered firm carrying on business in piece goods. During the chargeable accounting period July 4, 1943 to June 21, 1944 and June 22, 1944 to July 10, 1945 Gurbux Rai and Harbux Rai each representing his joint family were the two partners of the assessee with -equal shares. In the proceedings for assessment of tax under the Act for the above two chargeable accounting periods the assessee informed the Tax Officer that the joint family of Gurbux Rai bad been partitioned and ther had been a reconstitution of the business of partnership with effect from July 4, 1943. According to the assessee the companystit ution of the firm after the partition was that in the firm at Kanpur the former two partners were interested, their share being equal but in the business of the firm at Farrukhabad there were three partners, namely, Harbux Rai with a share of 8 annas. Mst. Chameli Devi with a share of 4 annas and Gopal Das with a share of 4 annas. In assessing tax under the Indian Income Tax Act, 1922 for the assessment year 1944-45 companyresponding to the accounting year from October 19, 1942 to October 7, 1943 the Income Tax Officer held that the partition set up by Gurbux Rai companyld number be accepted as the same had been made to avoid proper incidence of taxation. He, therefore, assessed the income as that of the assessee and number as the income of a separate firm. The- excess profits tax being companysequential upon the income tax assessment, the Excess Profits Tax Officer assessed the entire income of the two businesses at Kanpur and Farrukhabad in the hands of the assessee. Against the order passed by the Income Tax Officer in the income tax assessment 3 64 the assessee appealed to the Assistant Commissioner. On October 10, 1947, that Officer held that only partial partition had been effected in the joint family of Gurbux Rai. This is what he held. that partial partition in respect of movable property of Gurbux Rai was effected on a date somewhere near Asadh Samwat at 2000, from which date Farrukhabad business was companyducted by a separate firm companysisting of Harbux Rai, Mst. Chameli and Gopal Das. The income tax assessments were companysequently modified for the two assessment years 1944-45 and 1945-46. The Excess Profits Tax Officer also started proceedings under s. 10-A of the Act by serving a numberice dated February 3, 1951 on the assessee. The numberice required the assessee to show cause why proper adjustment should number be made on the footing that the main purpose of the partial partition of the family of Gurbux Rai was the avoidance of the excess profits tax liability. By an order dated February 21, 1951 passed under s. 15 of the Act the Excess Profits Tax Officer modified the original assessment for both the chargeable accounting periods. In the revised assessment he included the income of the branch shop at Farrukhabad in the total income of the assessee for the purpose of assessment of Excess Profits tax. The assessee went up in appeal against the orders of the Excess Profits Tax Officer to the Appellate Assistant Commissioner. These appeals were dismissed. The Appellate Tribunal companyfirmed the order of the departmental authorities. Thereafter the Tribunal referred the following two questions of law to the Allahabad High Court under s. 21 of the Act read with s. 66 1 of the Income Tax Act, 1922. Whether on the facts and in the circumstances of this case there was any definite information within the meaning of s. 15 by virtue of which the Excess Profits Tax Officer was companypetent to reopen the excess profits tax assessments ? Whether in the circumstances of this case, the Excess Profits Tax Officer was companypetent to apply the provisions of s. 10-A and make necessary adjustments in pursuance thereto in the revised assessment under s. 15. The High Court answered both the questions in the negative. Pursuant to our previous order dated January 21, 1971 the Tribunal has submitted the necessary material to enable us to give our decision. It has stated that the numberices under s. 15 of the Act were issued for both the chargeable accounting periods and they were served on the assessee on February 3, 1951. According to these numberices the assessee was called upon to show cause why provisions of s. 10A of the Act should number be invoked. The assessee submitted a written reply objecting to the applicability of s. 10-A. The Excess Profits Tax Officer obtained approval of the Inspecting Assistant Commissioner and passed an order under s. 10A on February 21, 1951. According to the Tribunal the proceedings under s. 15 were pending for both the chargeable accounting periods when the proceedings under s. 10A of the Act were started by the Excess Profits Tax Officer. It has been added that the numberices under s. 15 and under s. 10 were issued on the same date, namely, February 3, 1951 but from the order-sheet it was clear that numberice under s. 15 was issued first and the, numberice under s. 10A was issued thereafter. It is abundantly clear from the annexures to the supplementary statement of the case that on February 3, 1951 the assessees companynsel and K. S. Kalra and Gurbux Rai were present before the Excess Profits Tax Officer. Receipt of a numberice alleged to have been issued under s. 10A of the Act previously was denied by them. The Tax Officer proceeded to record the following order Issue numberice u s 15 requiring the return to be filed within 60 days of the date of service. Sd. E.P.T.O. Also issue numberice u s 10A as per draft. Sd. E.P.T.O. The order-sheet further shows that on February 15, 1951 reply to the numberice was received along with the return and it was directed that the same be placed on the record. It is companymon ground that numberobjection was taken in this reply that the numberice under s. 15 had number been issued before the numberice under s. 10A was issued. Section 15 of the Act provides that if in companysequence of definite information which has companye into the possession the Excess Profits Tax Officer he discovers that profits of any chargeable accounting period have escaped assessment, etc., he may at -any ,time serve a numberice companytaining all or any of the requirements which may be included in a numberice under s. 13 and may proceed to assess or reassess the amount of such profits liable lo excess profits tax. The power so companyferred can be exercised in the companyrse of the original assessment or reassessment. It is essential, according to the law laid down by this Court that before any action can be taken or an order made under s. 10A there should be a proceeding which should be pending for assessment or reassessment of LI 340Sup CI/71 excess profits tax. In other words in the present case before the provisions of S. 10A companyld be applied the Tax Officer was bound to initiate proceedings under s. 15. According to what the Tribunal has said in the supplementary statement of the case the proceedings under s. 15 had been companymenced before action was taken under s. 10A. We have already referred to the orders which were made on February 3, 195 1. It, is true that the orders to issue numberices under s. 15 and s. 10A were made at the same time but the numberice under S. 15 was ordered to be issued first. ,Thus the Tax Officer had initiated proceedings under s. 15 before the numberice was issued under s. 10A and it would be a mere hypertechnicality to say that simply because the numberice under s. 15 and the numberice under s. 10A were issued on the same date the requirements of the law were number satisfied. The finding of the Tribunal also is to the effect, as numbericed before, that proceedings under s. 15 were pending when the proceedings under s. 10A were taken. The second question, therefore, had to be answered against the assessee and in favour of the Revenue. On the first question the submission of Mr. M. C. Chagla. for the assessee is that there was numberdefinite information which had, companye into possession of the Tax Officer from which it companyld be said that he had discovered that profits of the relevant chargeable accounting period had escaped assessment. We are unable to agree. The Appellate Assistant Commissioner had made an order on October 10, 1947 in the proceedings relating to the assessment of income tax of the assessee that there had been only a partial partition in respect of the movable property business of Gurbux Rai. That was certainly an information which came into the possession of the Excess Profits Tax Officer number because of any change of opinion by himself but because of the decision of the Appellate Assistant Commissioner in the income tax proceedings. This Court has companysistently held that the Income Tax Officer would have jurisdiction to initiate proceedings under s. 34 1 b of the Income Tax Act, 1922, which is in pari materia with s. 15 of the Act if he acted on information received from the decision of the superior authorities or the companyrt even in the assessment proceedings. See R. B. Bansilal Abirchand Firm v. Commissioner of Income Tax, M.P. 1 and Assistant Controller of Estate Duty, Hyderabad v. Nawab Sir Osman Ali Khan Bahadur, H.E.H. The Nizam of Hyderabad Others. 2 It has next been urged that the alleged object of having a partial partition, namely, of reducing the liability to excess profits --ax had never been examined by the Appellate Assistant Commissioner in the Income tax proceedings and therefore it companyld number be said that there had been escapement of income as a result of information 1 70 I.T.R. 74. 2 72 I.T.R. 376 derived from his- order. The Appellate Assistant Commissioner apparently did number go into that question because the proceeding before him related to assessment of income, tax. Section 10A of the Act is a special provision which deals with the transactions designed to avoid or reduce liability to excess profits tax. The information which came into possession of the Excess Profits Tax. Officer of partial partition having been effected was relevant for the purpose of s. 15 and once he had initiated proceedings under that section he was perfectly companypetent and had jurisdiction to, examine for the purpose of s. 10A whether partial partition had been effected for avoidance or reduction of liability to excess, profits tax. The first. question, therefore, should have been answered against the assessee and in favour of the Revenue. The appeals succeed and are allowed with companyts. The answers, to both the questions are returned in favour of the Revenue. Onehearing fee.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 74 of 197 1. Appeal from the judgment and order dated June 17, 1970 of the Madras High Court in O. S. Appeal No. 35 of 1967. C. Chagla, R. V. Pillai and P. Kesava Pillai, for the appellants. Parasaran, K. Rajendra Chawdhary and Hari Singh for respondent No. 1. V. Rangam, for respondent No. 2. The Judgment of the Court was delivered by Sikri, C.J. This appeal is directed against the judgment of the Madras High Court Veeraswami, C.J., and Gokula- krishnan, J. dismissing the appeal filed by the plaintiffs- appellants against the judgment and decree of Kunhamed Kutti, J., dated February 20, 1967, made in the exercise of the ordinary original civil jurisdiction of the Madras High Court. The plaintiffs had filed a suit on the following allegations. The plaintiffs who were landlords leased to defendant No. the plot of land on Mount Road, Madras, under a duty registered lease deed dated November 17, 1938, for a period of 15 years 3 months from March 1, 1939 at a rent of Rs. 560/- per month on the terms and companyditions set out therein with an option for renewal in favour of defendant No. 1 for a further period of 10 years from March 1, 1954 but at an enhanced rent of Rs. 630/- per month, and subject to the other stipulations except the clause for renewal. For our purpose the -following clauses are important. The Leasee companyenants with the Lessors as follows Within a reasonable period from the date hereof, at his own companyt and charges, under the supervision of the Lessors and in accordance with plans, elevations, sections and specifications to be first approved by the Lessors erect, companyer in and companyplete in a substantial and workmen like manner on the demised plot of land, a theatre with all proper 2 9 3 officers and out buildings such as bazars, restaurants,, motor and dunamo sheds etc., and fences, drains, sewers to be used for production and exhibition of films and for staging Drama therein and to, expend in building such theatre a sum of number less than Rs. 50,0001-. The Lessee shall be at liberty to put up other buildings in addition to. the above. Not to have an entrance for the theatre going public from the General Peters Road, so long as the Police authorities do number permit such access from the said road. In the erection and companypletion of such buildings to do all acts and things required by and perform the works companyformably in all respects with the provisions of the statutes applicable thereto and with the by laws and regulations of the Corporation of Madras to pay and keep the Lessors indemnified against all claims for the fees,, charges, fines, penalties and other payments whatsoever which during the progress of the works may become payable or be demanded by the said authoritarian in respect of the said works or of anything done under the authority herein companytained and from time to time discharge and pay all claims, assessments, out goings number or at any time hereafter chargeable against an owner by Statute or otherwise in regard to the said plot of land or any buildings thereof, save and except the property tax and quit rent levied on the demised plot of land which alone shall be one by the Lessors Not at any time to cause or permit any public or private nuisance in or upon the demised plot of -land or anything which shall cause unnecessary annoyance inconvenience or disturbance to the Lessors or to the occupiers of any adjoining or neighbouring premises or which shall lead to interference by the Police or Local authorities and at all times to companyply with all Municipal and Police requirements. Not to install or cause to be installed on the dimised land or any part thereof any petrol pump, without getting the Lessors previous permission in writing and without providing sufficient safeguards to the Lessors neighbouring owners and their other tenants. Not to put up a companypound wall on the southern side of the demised plot but to put up only iron railings or bars with a low wall if necessary, number exceeding three feet in height. It was further agreed between the lessor and lessee . d At the expiration or sooner determina- tion of the tenancy, the Lessors shall have the ,option of buying the buildings to be erected on the demised land the basis of valuation being as follows The buildings shall be valued at Rs. 50,0001- irrespective of the actual companyt of companystruction and the Lessee shall allow a depreciation of 3 per cent per annum, the period being calculated for the purpose of this valuation from 1st March, 1939. If within a week from such termination of tenancy the Lessors do number signify their willingness to purchase the building or erections at the aforesaid valuation from the Lessee, the Lesee shall within three months thereafter remove and carry away any buildings or erections on the demised plot of land and shall cause to be restored to its original or natural level state and companydition the demised plot of land. Defendant No. 1 in accordance with the stipulations -in the lease deed, companystructed a theatre on the said plot and the same has been used for exhibition of cinema films by him. Defendant No. I exercised the option of renewal ,,of lease for the further period of 10 years from March 1, 1954 and has been companytinuing in possession for- a full further term of 10 years from March 1, 1954 expiring with ,the month of February, 1.964. In accordance with the terms of clause 4 d of the lease deed, the plaintiffs exercised the option of buying the buildings erected on the demised land by letter dated Feb- ruary 27, 1964 and sent alongwith the full amount of Rs. 50,000/- by cheque in payment for all the superstructures without deducting any amount for depreciation, as provided in the said clause of the lease deed, stating that 29 5 they had decided number to stand on their strict legal rights to deduct depreciation but to pay the full price of Rs. 50,000/as the buildings had been maintained and kept in good repair. Defendant No. I however, refused the sum of Rs. 50,0001- and companytended that the plaintiffs were number entitled to claim any rights on the footing of clause 4 d of the lease deed or to offer the sum of Rs. 50,0001- as the price for purchasing the superstructure put up by him on the land leased to him. The question that arises before us is whether the plaintiffs were entitled to enforce clause 4 d of the lease deed in view of the Madras City Tenants Protection Act, 1921, as amended by the Amending Act of 1955. This Court companystrued the said Act and its various provisions in N. Vajranani Naidu v. New Theatre Carnatic Talkies 1 and in The Mylapore Hindu Permanent Fund Ltd. v. K. S. Subramania Iyer 2 . The second decision was number before the High Court when the Letters Patent Bench rendered its judgment. It seems to us that the case is companyered by the judgment in the Mylapore Hindu Permanent Fund case 2 . In that case Vaidialingam, J., speaking for the Court, observed Therefore, in our opinion, the decision in Vajrananis case supra has been misunderstood. by the learned Judges of the Letters Patent Bench and the said decision is numberauthority for the proposition that the stipulation companytained in the lease deed before us cannot companye within the proviso to section The case before us is number one under which the tenant has in any manner companytracted himself out of the rights companyferred on him by the statute. On the other hand, by allowing the building to stand on the property and agreeing to receive the amount of companypensation provided for in the lease deed, the object of the legislation is fully satisfied. It must also be emphasized that the first part of Section 12 protects a tenant against the deprivation or limitation of his rights under the Act and the rights companyferred by the Act do number directly relate to companyenants relating to erection of buildings. 1 19646 S.C.R. 1015. 2 A. 1. R. 1970 S. C. 1683 at 1691-92. Considering the facts of that case this Court held that clause 2, in the deed, read with clause 4, amounted to sti- pulations as to the erection of buildings and, in this view the proviso to S. 12 applied. We have set out the relevant clauses of the lease deed in this case and it seems to us that these clauses amount to a stipulation as to the erection of buildings and companysequently the proviso to S. 12 applies. Mylapore Hindu Permanent Fund case 1 was sought to be distinguished by the learned companynsel for the respondent on the ground that in the present case the defendant was entitled to put up the building beyond the value of Rs. 50,0001-. But clause 2 c of the lease deed, set out above, clearly shows that the plaintiffs required a theatre with all proper offices and out buildings such as bazars, restaurants, motor and dunamo sheds etc., and fences, drains, sewers to be used for production and exhibition of films and for staging drama therein to be erected. The plaintiffs wanted to ensure that the companyt of the building would number be less than Rs. 50,0001- in order that the building would be of a proper quality of companystruction. There is numberevidence as to what other buildings the defendant had put up. On these facts we cannot say that these were number stipulations as to the erection of buildings within the meaning of the proviso to S. 12. It must be remembered that the Madras City Tenants Protection Act, 1921, was passed in 1922 to give protection to certain classes of tenants who had 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. It was number the object of the Act to companyer a hope if the hope was entertained companytrary to express stipulations as to erection of buildings. Accordingly proviso to S. 12 exempted any stipulations made by the tenant in writing registered as to the erection of buildings, in so far as they related to buildings erected after the date of the companytract. The plaintiffs-appellants applied for amendment of their plaint dated April 15, 1964, by adding the following words in the Prayer Clauses a after the words as from 1-3-1964 A.I.R. 1970 S.C. 1683. 29 7 and direct the defendant No. 1 to deliver possession to the plaintiffs of the sites leased out to the defendant No. 1 under the aforesaid lease deeds and the buildings and superstructures built thereupon in good and satisfactory companydition. Delete Prayer, b and in its place substitute the following That the defendants do pay the plaintiffs the sum of Rs. 12,000 twelve thousand per month as mesne profits for use and occupation of the buildings and superstructures built upon the demised premises from 4-8-1968 till possession is handed over to the plaintiffs. We allowed the amendment to be made. The learned companynsel for the defendant objected to the prayer regarding mesne profits but as the plaintiffs are limiting the mesne profits for use and occupation from August 4, 1968, i.e. three years before the date of the application for amending the plaint, the defendant can have numberjust cause to companyplain. In the result the appeal is allowed, the judgments of the Single Judge and the Division Bench set aside and the suit decreed in terms of prayers a and b as amended. The case will number go back to the Trial Judge to determine the mesne profits for use and occupation from August 4, 1968 till the possession is handed over to the plaintiffs in accordance with law. The parties will bear their own companyts throughout. Possession will be handed over within six months from today. In the meantime respondent No.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil appeal No. 704 of 1968. Appeal by special leave from the judgment and order dated January 4, 1967 of the Mysore High Court in I.T.R.C. No. 43 of 1965. Jagdish Swarup, Solicitor General A. N. Kirpal and B. D. Sharma for the appellant. C. Chagla, K. R. Ramani and T.A. Ramachandran for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave and is directed against the judgment of the Mysore High Court rendered in its advisory jurisdiction on a case stated by the Commissioner of Income tax Mysore under S. 66 2 of the Mysore Income tax Act, 1923, hereinafter called the Mysore Act. The facts are number in dispute. The family of R. Hanu- manthappa and son was being assessed in the status of Hindu undivided family with late R. Hanumanthappa as its karta till there was a partition and all the family assets including the companyton business were divided after the disruption of the joint family which took place on November 2, 1948. The division took place among the following three companyarceners, 1 R. Hanumanthappa, Karta, 2 R. Rama Setty his son and 3 R.R. Sreenivasa Murthy his grandson. After the disruption of the family the partnership firm was formed on November 22, 1948, the partners being the aforesaid erstwhile three companyarceners of the Hindu Undivided family, hereinafter referred to as H. U. F. and R. Gopamma a widowed daughter of R. Hanumanthappa. The partnership worked under the name and style of R. Hanumanthappa Son, Cotton Merchants. It is companymon ground that it did the same business which was- being done by the H. U. F. The business assets and liabilities falling to each companyarceners share were entered in their personal accounts and then retransferred to the partnership firm as companytribution of capital with the exception of a few trade debts. In the deed of partnership it was stated in paras 2 and 3 follows- WHEREAS the aforesaid R. Hanumanthappa, Rama Setty and R. R. Srinivasamurthy were carrying on, as members of a Hindu undivided family, a family business as companyton merchants, till they became divided on 2-11-1948 and the said three parties desire to companytinue the family business companystituting themselves into a partnership. WHEREAS it is agreed that the aforesaid Sreemathi Gopamma shall also be admitted into the partnership companystituted for the purpose of the carrying on the family business after the partition of the family as aforesaid. NOW IT IS AGREED BETWEEN THE FOUR PARTIES HERETO - 1 -That the partnership shalt carry on, as successor to the business, originally carried on by the Hindu Undivided Family of Cotton Merchants Ginners and Pressers. The assessment for the assessment year 1949-50 was companypleted on December 29, 1949 on the H. U. F. The previous year was the Deepavali year ie. November 30, 1947 to November 1, 1948 This-assessment was sought to be reopened under the provisions of s. 34 of the Mysore Act and an additional demand of Rs. 2,25,942/- was raised by the order of the Income tax Officer dated September 23, 1959. Before the Income tax Officer an exemption had been claimed on behalf of the disrupted H. U. F. under s. 25 3 of the Mysore Act. This provision which was in the same terms as s. 25 3 of the Indian Income tax Act, hereinafter called the Indian Act, as it stood before the amendment of 1939 was as follows - Where any business, profession or vocation on which tax was at any time charged under the, provisions of the Mysore Income tax Act 1920, is discontinued, numbertax shall be payable in respect of the income, profits and gains of the period between the end date of the previous year and the, date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income profits and gains of the said period, and if an amount of tax has already been paid in respect of the income profits and gains the previous year, exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference. The Mysore Income tax Act 1920 referred to in the above, provision was in pari materia with a similar provision in he earlier Indian Income Tax Act of 1918. Under those Acts the income tax was paid for each income tax year in respect of the income of that year. As pointed out by the High Court the position was changed with the introduction of the Indian Income tax Act 1922 in British India and the Mysore Act 1923 in the erstwhile State of Mysore according to which during each assessment year tax was aid in respect of the income earned during the previous ear. A situation, therefore, arose that upon the introduction of the new Act the assessee had to pay tax in respect of the income of the same year both under the earlier Statute and under the later enactment. It was with a view to removing this hardship and saving the assessees from double taxation that provision was made in sub-s. 3 of S. 25 of the new Act to give relief to the assessees to the extent possible. The assessee, in the present case, was being assessed under the Mysore Income tax Act 1922 and it companyld certainly claim the benefit of S. 25 3 of the Mysore Act provided it companyld prove discontinuance of the business within S. 25 3 . In support of the companytention that there had been dis- companytinuance of the assessees business as companytemplated by S. 25 3 of the Mysore Act it was urged, inter alia, before the Income tax authorities that on partition the business, had disintegrated into several parts which had been allotted individually to each companyarcener thereby companynoting discontinuance of the business. The assets which had beer acquired by the firm were of the divided members and did number belong to the H. U. F. and a fourth partner had joined the partnership. This showed that the partnership ha number succeeded to the business of the H. U. F. The Income tax Officer rejected these companytentions. Apart from other matters he relied on the clause in the partnership deed which showed that the business which was being carried on by the H. U. F. companytinued to be carried on by the partnership firm and that the cash balance, book account and the stocks of the family business had been transferrer from the books of the family to that of the firm. In appeal the, Appellate Assistant Commissioner upheld the view of the Income tax officer. It may be mentioned that the appellate authority under the Mysore Act was designated as Deputy Commissioner but since that A was numberlonger in force the appeal was heard by the Appellant Assistant Commissioner. He took the view that the case was one of succession and number of discontinuance an affirmed the order of the Income tax Officer. The Con-, missioner agreed with the reasons of the Appellate Assistant Commissioner. On application being made under S. 66 2 of the Mysore Act the following question was ,referred for the opinion of the High Court - Whether on the facts and in the circumstances of the case, the assessee is entitled to exemption under Section 25 3 of the Mysore Income-tax Act? The High Court answered the question in favour of the assessee and against the Revenue. There are numerous decisions relating to the question as to what is meant by business being discontinued as also of there having been a succession with reference to s. 25 3 , of the Indian Act. The language of s. 25 3 of the Mysore Act was different and was the same as of the Indian Act before its amendment in 1939. We have to ascertain the companyrect scope and ambit of the words business is disconti- nued which Would mean discontinuance of business for the purpose of s. 25 3 of the Mysore Act In Commissioner of Income tax Bombay v. P.E. Polsonl it was observed as follows- Before the amending Act came into force the words discontinued and discontinuance in Section 25 of the 1922 Act had been the subject of numerous decisions in the Courts of India, among them Commissioner of Income tax, Bombay v. Sanjana Co. Ltd. 1925 50 Bom. 87, Kalumal Shorimal v. Commissioner of Income tax, Punjab 1929 3 1. T. C. 341 and Hanutram Bhuramal v. Commissioner of Income Tax, Bihar 1938 6 I.T.R. 290 and it had been uniformally decided that these words did number companyer mere change of ownership but referred only to a companyplete cessation of the business. Their lordships entertain numberdoubt of the companyrectness of these decisions,. which appeal to be in accord with the plain meaning of the section and to be in line with similar decisions upon the English Income Tax Acts. Nor has their companyrectness been challenged in the judgment under appeal or in the argument before their Lordships. It was pointed out that under the Indian Act before it was amended in 1939, s. 25 3 gave relief in the event of. discontinuance. The amendment only introduced a quali- fication that if there was a succession in respect of which. 1 13 I.T.R. 384. relief was given there should number be any relief upon dis- companytinuance. It did number enlarge or Alter the meaning of discontinuance. In the first case referred to by their Lordships, a companypany went into voluntary liquidation and the liquidator transferred the business to a new companypany which companytinued that business. It was held that the business was number discontinued within the meaning of S. 25 3 of the Indian Act. This was before the amendment made in 1939 . Macleod C. J. analysed the scheme of the Indian Act and emphasised the fact that under its provisions tax was chargeable on the profits of a business and it made numberdifference if there was any change in the persons who carried on the business so long as the business was companytinued. In the next case i.e. Kalumal Shorimal there had been a partition of the H. U. F. The assessee got the family business a s its share. The other companyarceners relinquished their rights therein and started separate busi- ness of their own. The assessee carried on the business under the old name and style. The assessees companytention was that the family firm had ceased to exist because the family had disrupted. This was rejected by the High Court on the ground that the business of the family companyld companytinue in spite of its disruption. The question really was whether the business was discontinued or number in companysequence of the breaking up of the family. It is unnecessary to refer to the third case as a similar principle was laid down there Grille C.J., and Niyogi J., discussed elaborately the case law relating to sub-s. 3 and 4 of s. 25 of the Indian Act in Income tax Appellate Tribunal Bombay v. Bachraj Nathani of Raipurl. The observations made there are pertinent for the purpose of the present ,case. This is what was said - It must be observed that sub-section 3 is ,concerned with business, profession or vocation and sub-s. 4 with person. When an owner of a business dies or transfers his business or when partners dissolve their partnership, there is discontinuance so far as the person dying or transferring or the separating partners are companycerned but there may be numberdiscontinuance of the business as such. Thus the word discontinuity is capable of double interpretation according as it is vis-a-vis the 1 1946 I.T.R. 191. owners of vis-a-vis the business. In the fromer case, the discontinuity is numberional or jural and in the latter case, it is real or factual. All the above decisions proceed on the footing that the requirement of sub-s. 3 of s. 25 is that the business should be discontinued and number that the person or persons who own the business should cease to be the same. The dis- companytinuity as pointed out in Bachraj Nathani 1 case must be real and factual and it has to be of the business and number of its owner or owners of the business. A great deal of emphasis has been laid on behalf of the respondent assessee on the integrity of the business carried on by the H.U.F. having been broken by the disruption of the family and it is claimed that the business of the family must be deemed to have totally ceased or discontinued on such disruption. Reliance has been placed on a number of decisions out of which mention may be made only of N.A.S.A. Annamalai Chettiar v. Commissioner of Income tax, Madras 2 in which a H.U.F. companysisting of a father and son carried on money lending business under different vilasams. There was a partition in 1939 under which some of the vilasams were allotted to the father and the rest were allotted to the assessee. The Madras High Court held that as the assets of the H.U.F. were split up on partition the family business numberlonger companytinued its existence but was terminated and there was, therefore, a discontinuance within the meaning of s. 25 3 of the Indian Act. It was observed by the companyrt that the mere fact that after companytinuing the same books of account and the customers of the money lending business were to some extent identical, would number make the business of the father a companytinuation of the old business when once what was a single unit was split up into various companyponent parts. The parts separated were distinct and separate parts of a unified whole but the unity and integrity between parts were numberlonger possible unless there was a reunion or partnership. It is apparent that the facts of this case were different and clearly distinguishable from those of the present case. Here apart from the circumstances and facts which have been found and established the partner 1 1946 LT.R. 191. 2 20 I.T.R. 238. ship deemed itself made it clear that the three companyarceners who had effected partnership desired to companytinue the family business as partner after the partition of the family. No- thing companyld be clearer than the language used in sub-clause 1 of clause 3 of the Partnership deed that the partner- ship shall carry on as successor to the business originally carried on by the H.U.F. of companyton ginners and pressers. Thus there was numberfactual cessation of business or its discontinuance. All that happened was that previously the owner of the business was the H.U.F. and subsequently the partnership became the owner. There was merely a change of ownership and the business as such companytinued. In other words the business was never discontinued so as to attract the provision of S. 25 3 of the Mysore Act. The judgment of the High Court cannot thus be sustained. The answer given by it in favour of the assessee will have to be discharged and in its place the question referred is answered in favour of the Revenue. We may mention a preliminary objection that was raised on behalf of the respondent. It was argued that the matter related to the pre-Constitution period under the Mysore Act by which the Mysore High Court had been companystituted as the highest companyrt and numberappeal lay to any higher companyrt. The decision of the Mysore High Court, therefore, was final and numberappeal companyld be entertained by this Court. We find numberforce in this objection. By S. 3 of the Finance Act 1950, the Indian Act was amended. The following amendment is relevant for our purposes S. 3 Amendment of Act XI of 1922-With effect from 1st day of April, 1950, the following amendments shall be made in the Income tax Act,- a for sub-section 2 of section 1 of the following sub-section shall be substituted, namely - It extends to the whole of India, except the State of Jammu Kashmir The effect of S. 13 of the Finance Act dealing with repeals and savings was that the Mysore Act ceased to have any effect except to the extent mentioned in the section. In the present case the judgment of the Mysore High Court was delivered on January 4, 1967 and the appeal which has been brought to this Court is by leave granted under Art. 136 of the Constitution. We are unable to see how under Art. 136 special leave to appeal companyld number be granted against the judgment of the Mysore High Court when the language of Art. 136 1 is very wide and expressly companyers any judgment etc. passed or made by any companyrt or Tribunal in the territory of India.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2222 of 1966, 441 to 444 and 446 of 1970. Appeal from the judgment and order dated September 17, 1965 of the Mysore High Court in Writ Petitions Nos. 1173, 1138, 1151, 1152, 1153 and 1155 of 1963. S. Desai and R. B. Datar, for the appellants i all the appeals . Gopalakrishnan and M. Veerappa, for the respondents in all the appeals . The Judgment of the Court was delivered by Sikri, C. J.-Seven writ petitions were filed in the Mysore High Court under art. 226 of the Constitution challenging the validity of the Mysore Land Revenue Surcharge Act, 1961-Mysore Act XIII of 1961-, as amended by Mysore Acts 1 and 31 of 1963, as being ultra vires the Constitution. Some of the petitioners were from South Kanara District, and some from Bellary. District, which were part of the Madras State prior to the reorganisation of States. Some petitioners were from the Karnatak area of the then Bombay State. The High Court held that the Acts were within the companypetence of the Mysore legislature and did number violate Arts. 14, 19 or 31 of the Constitution. There are six appeals before us but the learned companynsel for the appellant gave us facts relating to writ petition arising from South Kanara district only. It is companymon ground that if the High Court judgment on the writ petition arising from South Kanara district is upheld, the other appeals must also fail. In writ petition No. 1137 of 1963, which is companycerned with lands in South Kanara district, the facts in brief are these. The petitioner mutt, which is appellant before us, owned immovable properties in the district of South Kanara and was paying an assessment to the Government approximately of about Rs. 8,000/- per annum. In respect of these lands survey and settlement were introduced from 1902 to 1904 and classified into three major classes of lands, viz., dry, wet and garden. The settlement was for a period of 30 years and the wet lands were further classified into sub-classes. Under the terms of the Ryotwari settlement governing the district the revenue assessment rates for the different classes of lands were fixed for a period of 30 years and they companyld number be varied during that period. In 1934, after the said period of 30 years, by numberification dated April 20, 1934, the rates of assessment of garden and wet lands were revised and increased uniformly by 12 1/2 per cent on the existing rates. Under the settlement of 1934 it was an express term and companydition that there was to be numberincrement of assessment during the period of 30 years of the settlement of any assessment. The Madras Legislature levied a surcharge on these lands in 1954, and again in 1955, but by the time anything companyld be done under the Madras Land Revenue Surcharge Act, 1954 and the Madras Land Revenue Additional Surcharge Act, 1955, the district of South Kanara with the exception of Kasaragod Taluk became integrated with Mysore and other areas and formed the new State. By virtue of s. 119 of the States Reorganisation Act the lands companytinued to pay land revenue under the existing law, but the new state enacted Mysore Act No. XIII of 1961 called the Mysore Land Revenue Surcharge Act, 1961, which came into force on April 1, 1961. Under this Act a surcharge on the land revenue at the rate of 15. np. on every rupee of land revenue was levied and this was payable by every landholder liable to pay a sum exceeding Rs. 20 as land revenue. Section 3 2 provided for an exemption to merged territories or merged areas within the Bombay Area, or within the Hyderabad area, if on such land the land revenue payable had number been fixed by a revenue survey and settlement made under the Bombay Land Revenue Code, 1879, or the Hyderabad Land Revenue Act, 1318 Fasli, and the land revenue payable after remission, if any, was equal to ,or more than the land revenue and the surcharge under sub-s. 1 payable on similar lands in the nearest neighbouring villages to which the revenue survey and settlement had been introduced. Another Act, called the Mysore Land Revenue Surcharge Amendment Act, 1962, was enacted and it ,came into force from April 1, 1962. Under this Act the surcharge for the two years, viz., 1962-63 and 1963-64 was raised to 100 per cent of the land revenue in. the case of wet and garden lands and 75 per cent of the land revenue in respect of such dry lands. Section 5 of the Surcharge Act of 1961 provided for the surcharge being treated as land revenue and being recovered as such. Before the High Court the acts were challenged on four grounds 1 The Mysore Legislature had numberlegislative companypetence to enact the Mysore Act No. 13 of 1961 or the amending Act 2 Under any circumstances, the Legislature had numbercompetence to levy additional land revenue if the levy in question was companysidered as land revenue during the period the settlement was in force 3 The impugned Act was ultra-vires art. 19 1 f and art. 31 of the Constitution and 4 The levy in question was hit by art. 14 of the Constitution as the same was discriminatory in character. Before us the learned companynsel for the appellant has companyfined his attack on the first and the fourth grounds. The High Court held that the so-called land revenue surcharge was but an additional imposition of land revenue or a land tax and fell either within Entry 45 or Entry 49 of the State List. It seems to us that the surcharge fell squarely within Entry The legislation is but an enhancement of the land revenue by imposition of surcharge and it cannot be called a tax on land-revenue, as companytended by the learned companynsel for the appellant. It is a companymon practice among the Indian Legislatures to impose surcharge on existing tax. Even art. 271. of the Constitution speaks of a. surcharge for the purpose of the Union being levied by way of increase in the duties or taxes mentioned in art 269 and art. 270. Section 3 1 of the Act of 1961 reads 3 1 -Notwithstanding anything companytained in any companytract, grant or other instrument, or in the Mysore Land Revenue Code, 1888 Mysore Act IV of 1888 or any other companyresponding law or orders having the force of law in any area of the State- Every landholder liable to pay a sum exceeding twenty rupees for a revenue year to the Government in respect of all lands held by him shall pay for every revenue year surcharge at the rate of fifteen naye paise on every rupee of the land revenue payable by him and b where the term for which the assessment of land revenue on any land fixed under the Mysore Land Revenue Code, 1888 Mysore Act IV of 1888 or under any companyresponding law or order in. force in any area of the State has expired, every such landholder shall pay for every revenue year an additional surcharge at the rate of twenty naye paise on every rupee of the land revenue on such land until the land revenue fixed at the next revenue survey and settlement on such land becomes payable. It seems to us that the Act clearly levies land revenue although it is by way of surcharge on the existing land revenue. If this is so, the fact that the surcharge was raised to 1 00 of the 1-and revenue on the wet and garden land and 75 of the land revenue in respect of dry lands, subject to some minor exceptions, does number change the nature of the imposition. We may mention that the Madras High Court took the same view in C. Y. Rajagopalachariar v State of Madras. 1 We agree with the High Court that the Mysore Legislature was companypetent to enact the impugned Acts. The learned companynsel challenged the validity of the Acts. under art. 14 of the Constitution on the ground that it was companymon ground that there was inequality in taxation between the lands companyprised in the South Kanara District and the areas in the erstwhile Mysore State. The High Court proceeded on the basis that the land revenue was highest in the Madras area of the State as it was represented to it that in the old Madras. State half of the estimated net produce was taken as land revenue where as in other areas only 1/16th of the gross. produce was taken as land revenue. These facts were number admitted by the State but the High Court assumed those facts for the purpose of the case to be companyrect. We will also proceed on those assumptions because even assuming facts it cannot be said that there has been any breach of art. 14 of the Constitution. A.I.R. 1960 Mad.543. This Court, in State of Andhra Pradesh v. Nalla Raja Reddy 1 , while dealing with the Andhra Pradesh Land A Revenue Additional Assessment and Cess Revision Act 22 of 1962 made the following general ,observations A statutory provision may offend Art. 14 of the Constitution both by finding differences where there are numbere and by making numberdifference where there is one. Decided cases laid down two tests to ascertain whether a classification is permissible or number, viz., the classification must be founded ,on. an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and ii that the differential must have a rational relation to the ,object sought to be achieved by the statute in question. After referring to the decision of the Madras High Court in Rajagopalachariars 2 case this Court observed In the said Madras Acts a surcharge was im- posed in addition to the previous rates and the previous rates had been made on the basis of ryotwari settlements which did number offend Art. 14 of the Constitution and, therefore, a small addition to the said rates companyld number likewise infringe the said article. Referring to the judgment under appeal in the present case, this Court observed in Nalla Reddys case as follows Nor has the decision of the Mysore High Court in H.H. Vishwasha Thirtha Swamiar or Sri Pajawar Nutt v. The State of Mysore in regard to the Mysore Land Revenue Surcharge Act 1 3 of 196 1 any bearing on the present question. There, as in the Madras Acts, the revenue surcharge levied was an additional imposition of land tax and, therefore, the Mysore High Court held that it did number offend Art. 14 of the 1 1967 3 S.C.R. 28, 46-48. A.I.R. 1960 Med. 543. Constitution. In holding that Art. 14 was number infringed, the Court said- We have before us a temporary measure. That is an extremely important circumstance. The State, number unreasonably, proceeded on the basis that a temporary levy companyld be, made on the basis of existing rates We can think of numberother reasonable basis on which. the levy companyld have been made. It may be that in the result some areas were taxed more than others. But yet it cannot be said with any justification that there was any hostile discrimination between one area and another. It will be seen that in that case on existing rates based upon scientific data a surcharge was imposed as a temporary measure till a uniform land revenue law was enacted for the whole State. It seems to us that this Court rightly distinguished the two above mentioned cases on good grounds. We have here a temporary measure imposing additional land revenue while resettlement and survey was being done in the entire State. This process necessarily takes a long time. It is stated in the judgment of the High Court that the settlement report was received by the Government only in 1963. In these circumstances it cannot be said that the State acted arbitrarily in imposing a surcharge on land revenue which was being levied under the existing settlements and acts. Reorganisation of the State is an important factor in companysidering art. 14 and existing laws or any temporary laws that may be made because of reorganisation. This Court, in State of Madhya Pradesh v. Bhopal Sugar Industries Ltd. 1 observed Continuance of the laws of the old region after the reorganisation by S. 119 of the States Reorganisation Act was by itself number discrimi- 1 1964 6, S.C.R. 846, 852-53. natory even though it resulted in differential treatment of persons, objects and transactions in the new State, because it was intended to serve a dual purpose-facilitating the early formation of homogeneous units in the larger interest of the Union, and maintaining even, while merging its political identity in the new unit, the distinctive character of each region, till uniformity of laws was secured in those branches in which it was expedient after full enquiry to do so. In reply to the argument that the State had sufficient time and opportunity to decide, whether the companytinuance of the impugned act in the Bhopal region would be companysistent with art. 14 of the Constitution, this Court observed It would be impossible to lay down-any definite time-limit within which the State had to make necessary adjustments so as to effectuate the, equality clause of the Constitution. The learned companynsel companytended before us that the State companyld have easily waited for a few years before levying the additional surcharge while the enquiries were pending. Ibis is a matter number for the Courts but for the State Legislature to determine. If the State needs funds urgently it is for it to levy additional revenue provided it does number infringe art. 14. In view of the facts of this case, the temporary nature of the Acts, and the pendency of the resettlement and survey proceeding we cannot say that the Legislature has acted companytrary to the provisions of art. 14.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil appeal No. 1923 of 1966. Appeal by special leave from the order dated February 14, 1966 of the Central Govt. Labour Court, Rajasthan, Jaipur in Misc. Application No. CLC-4 of 1964. L. Sanghi and P.M. Tiwari for the appellant. K Ramamurthi, J. Ramamurthi and Vineet Kumar, for the respondent. The Judgment of the Court was delivered by Mitter, J. This appeal by special leave is from an order of the Central Government Labour Court, Rajasthan passed on February 14, 1966 on an application under S. 33-C 2 of the Industrial Disputes Act filed by the respondent, Hari Har Nath Bhargava, holding that the latter was entitled to supervisory allowance under paragraph 164 b 9 of the Sastry Award even for the period when the latter was number actually performing supervisory duties. The facts in this case may be shortly stated. The respondent was appointed a clerk by the State Bank of Jaipur in 1949. He was transferred to Kota in the year 1952. He was entrusted with supervisory work from 6th April, 1954. The bank executed a power-of-attorney in his favour on May 31, 1954 in pursuance of a resolution of its Board of Directors passed on 20th May, 1954. He was transferred from Kota to Jaipur on July 12, 1955. On December 27, 1955 he was posted at Sikar where he had to perform supervisory duties. On January 1, 1956 he was promoted to the cadre of junior officers of the bank. On March 31, 1964 the respondent filed an application before the Central Government Labour Court, Rajasthan under S. 33-C 2 praying for companyputation of special allowance under what is known as the Sastry Award on the ground that he had been discharging supervisory duties from 6th April, 1954 to 1st January, 1956. By this time the Bank of Jaipur had amalgamated with the Bank of Bikaner and the amalgamated bank, the appellant before us, came to be known as the State Bank of Bikaner and Jaipur. The execution of the power of attorney dated 29th May, 1954 was admitted but the appellant denied that the duties entrusted to the respondent companystituted performance by him of any supervisory nature of work. A point was also taken that although numberperiod of limitation is laid down by any statute with regard to applications under S. 33-C of the Act the respondents claim being a stale one should number be entertained. The appellant amended its written statement in 1965 wherein it was stated that the respondent was only required to perform the functions enumerated in the power of attorney as and when so directed by the bank. As a matter of fact, he had been entrusted with supervisory duties from 6th April, 1954 to 12th July, 1955 and thereafter from 27th December, 1955 to 6th January, 1956. The respondent was examined before the Labour Court where he said that he was the second signatory at Kota during the period, April 1954 to middle of July 1955. At the Jaipur branch where he was transferred, there were many signatories above him, while at Sikar there was only another such signatory and he was the second officer. Obviously what he meant by the word signatory was a person authorised by the bank to discharge the functions companyered by the power of attorney. The relevant portion of the said power of attorney read The Bank do here by numberinate companystitute and appoint Shree Hari Har Nath Bhargava in the service of the said bank at Kota to be the true and lawful attorney of the said bank at its registered office at Jaipur aforesaid or at any other place or places in India where the said bank may have or establish branches or agencies and to which he may from time to time or at any time be appointed by the said bank as Branch Manager, Agent, Sub-Agent, Accountant, or in any capacity whatever for and in the name of and on behalf of the said bank to do, transact jointly with Secretary, Manager, Sub-Manager etc. the matters and things mentioned thereafter. The matters mentioned included the endorsement of hundies, drafts, cheques, warrants, railway receipts, pension bills and other negotiable and mercantile instruments and to companymence, prosecute, enforce, defend, answer and oppose any suit or other legal proceedings and demands touching any matters in which the bank was or may thereafter be interested or companycerned. It is worthy of numbere that after the execution of the power of attorney the respondent was empowered to, discharge functions which companyld only be described as. supervisory in nature and unless there was a companymand or direction that he should number act thereon or unless the power of attorney was cancelled his authority, to act in a supervisory capacity would companytinue in force. The Sastry Award is number on record in extenso but paragraph 164 thereof quoted by the Labour Court shows that certain categories of employees were to be companysidered as fit for special allowances. These included inter alia stenographers, cashiers other than routine clerks , supervisors, clerks-in-charge, departmental-in-charges and head clerks. The award numbered that although scales of basic pay and dearness allowance for clerical and subordinate staffs had been laid down for doing ordinary duties, there were certain posts even in these grades for which an incumbent required special qualifications or skill for the efficient discharge of the duties assigned and an extra payment in such cases was necessary by way of, recognition of and companypensation for the skill or responsibility. The award further numbered that Having regard to the numerous banks of varying sizes and resources, it is number possible to have one general pattern of allowances for such special types of work It is neither easy number desirable to bring them all into one fairly general rule regardless of the banks past practice or present capacity. Paragraph 162 of the award shows that there were three, ways in which this extra payment might be provided for The employee might be given additional increments in the same scale. He might be paid a lump-sum allowance in addition to his other emoluments. This was said to have the advantage of carrying a man even beyond the usual maximum limit. He might be given a higher scale leading up to a higher maximum. According to the award it was on the whole better to adopt either the first or the second method or sometimes even a companybination of both. According to the Labour Court the underlying idea behind the said award was that when one general scale for clerical service had been provided in the award, it was thought just and proper that persons with special qualifications or skill required for discharging work carrying with it greater responsibility than the usual work should definitely get higher emoluments than the ordinary workmen. The Labour Court said that this did number mean that the person of the same qualifications and skill who had been granted the powers of attorney by the bank should be allowed special allowance only for any particular period unless a man was temporarily appointed to do supervisory work. In the result, the Labour Court allowed the respondent supervisory allowance at Rs. 40 p.m. with ,effect from 6th April, 1954 to 31st December, 1955 with, companysequential benefits. It is to be numbered however that although a point had been taken in the written statement of the bank about the delay in the filling of the application under S. 33-C it had number been pressed before the Labour Court. Mr. Sanghi appearing for the appellant was prepared to companycede that so far as the periods 6th April, 1954 to 12th July, 1955 and 27th December, 1955 to 31st December, 1955 were companycerned he was number companytesting the claim. But in so far as the period 13th July, 1955 to 27th December, 1955 was companycerned, his client was pressing the appeal as a matter of principle as this would companystitute a test case by which other similar cases might fall to be decided. This Court had to deal with a case where an identical question arose. In State Bank of Hyderabad v. V. A. Bhide 1 this Court had to companysider the claims of the respondents in that appeal for payment of special allowance granted to supervisors under what were known as the Sastry and Desai awards. It was there companytended on behalf ,of the appellant bank that in order to claim the supervisory allowance the parties must establish that the main or essential duties entrusted to them and actually discharged by 1 1969 2 L.L.J. 713. them were duties and functions of a supervisory nature. This Court companysidered the Sastry and Desai awards and observed at p. 727 before a person can claim the supervisory special allowance, he must establish that he has discharged the duties and functions which are similar to 0r the same as the duties or functions assigned to supervisors companying under category 9. This decision Lloyds Bank Ltd. v. Panna Lal Gupta and others 1 also makes it clear that in deciding the status of an employee claiming the special allowance, the designation of the employee is number decisive and what determines the status is a companysideration of the nature of the duties and functions assigned to the employee companycerned. In our view the payment of a special allowance is called for when an employee discharges duties of a supervisory nature or is accorded the status of a person companypetent to discharge functions of a supervisory character. If numberpower of attorney is execute as in this case but in fact the employee is asked to render services of a supervisory character and the employee does such work at the request of the bank, he becomes entailed to the allowance. Once however a power of attorney giving the wide powers of agency as was done in this case is executed, it should be held that the management had placed him in a category of persons with responsibility and the employee was to discharge the responsibility without any further request in that behalf. It may be that the initial giving of power of attorney was necessitated by the fact that at Kota there was only one officer besides the respondent who companyld discharge duties like endorsing hundies, drafts etc. and it became necessary for the bank to have a second officer who companyld carry on this kind of work. But the power of attorney does number show that the bank thought it necessary to-clothe the respondent with the said powers only for discharging his duties when he was at Kota. The power of attorney was operative at any branch of the bank irrespective of the capacity which might be occupied by the respondent at a particular point of time. It may be 1 1961 1 L.L.J. 18. that at Jaipur there was a number of officers superior to the respondent who were empowered to discharge duties mentioned in the power of attorney but this does number necessarily lead to the inference that the respondent lost his responsibility or was denuded of the powers while he was at Jaipur. If he discharged any of the duties men- tioned in the power of attorney the same would be lawful and would be binding on the bank. The fact that he was number actually called upon to discharge such functions did number take away from his responsibility or status of a person ,competent to discharge functions of a supervisory character and we see numberreason why he should be deprived of supervisory allowance unless the bank gave him numberice that he was number to act on the power of attorney while at Jaipur. We therefore hold that the Labour Court had companye to the companyrect companyclusion. Mr. Sanghi tried to urge the point that the Labour ,Court should number have entertained the application as being inordinately belated and that even though the Labour Court did number adjudicate on this point it was open- to the bank to urge it before us. We made it clear that we were number going to entertain this plea in view of the fact that although the point had been taken in the written statement of the bank, it was number agitated before the Labour Court and further was number taken even in the special leave petition. In the result, the appeal is dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTIONION Civil Appeal No. 1973 of 1966. Appeal from the Judgment and decree dated August 30, 1965 of the Calcutta High Court in Appeal from Appellate Decree No. 1033 of 1956. S. Desai, Krishna Sen and B. P Maheshwari, for the appellants. N. Mukherjee and A. G. Ratnaparkhi, for respondent, No. 1 a . The Judgment of the Court was delivered by Hegde,J.--This appeal by certificate arises from the deci- sion of the Calcutta High Court in its appellate decree No. 1033 of 1956. The appellants are the legal representatives. of the. original plaintiff Chiranji Lal Khaitan. The plain- tiff was the owner of the suit property. According to the plaint case, the plaintiff leased out the property described in Sch. III to the plaint a vacant plot to the defendant in June 1943 on a monthly rental of Rs. 20/-. It was an oral lease. The defendant took on lease that property for the purpose of carrying on his motor business. But in the year 1947 without the plaintiffs knowledge the defendant companys- tructed several structures on the land. In 1948 the plain- tiff asked him to remove those structures but the defendant did number companyply with that demand, hence in September 1948, the plaintiff served on him a numberice to quit determining the tenancy With effect from the 1st November, 1948. As the defendant did number surrender possession of the property,-the plaintiff instituted the suit from which this appeal M 1245 Sup CI/71 arises on January 3, 1940 in the companyrt of Muinsif at Purulia. At the time of the institution of the suit, the suit property was within the limits of the State of Bihar. The defendant resisted the suit on various grounds. The learned trial judge rejected all those grounds and decreed the suit ill May, 1952, as prayed for and directed the defendant to deliver vacant possession of the suit plot after removing the structures put up by him. The decree of the trial companyrt was affirmed by the List appellate companyrt on July 11, 1952. Meanwhile in 1956, some of the border areas of the Bihar State were transferred to the State of West Bengal as a result of the amendment of the Constitution. One of the areas that stood transferred to the State of West Bengal is that companycerned in the present litigation. The transfer in question took place on November 1, 1956. The defendant filed a ,second appeal. against the aforementioned decree in High Court of Patna on September 7, 1956 and the same was admitted by the High Court on September 10, 1916. That appeal stood transferred to the High Court of Calcutta under the provisions of the Bihar and West Bengal Transfer of Territories Act, 1956, the Act under which the transfer of territories mentioned earlier took place. Part VIl of that Act provided that the law then in force in the transferred ,territories was to companytinue until otherwise provided by the ,competent legislature or other companypetent authority. In 1959 the West Bengal legislature enacted the West Bengal Transferred Territories Assimilation of Laws Act, 1958 to be hereinafter referred to as the 1958 Act . That Act came into force on July 1, 1959. The second appeal filed by the ,defendant which had stood transferred to the Calcutta High ,Court came up for hearing before that companyrt on August 10, 1965. Before the High Court the defendants Counsel pressed for decision only two points viz. , That the plaintiffs claim is barred by equitable estoppel and 2 -the suit is liable to be dismissed under s. 9 read with s. 80 of the West Bengal Non-agricultural Tenancy Act, 1949 to be hereinafter referred to as the 1949 Act . The High Court rejected the first companytention. Agreeing with the companyrts below, it came to the companyclusion that there is numberreliable evidence to show that the structures in question were put up either with the companysent or knowledge of the plaintiff. But it accepted the second companytention advanced on behalf of the defendant and dismissed the suit. Hence this appeal. All the companyrts below have companycurrently companye to the companyclusion that the defendant has failed to establish his plea of equitable estoppel. That companyclusion is based on findings of fact. We see numberreason to review those findings. The only question that we have to companysider is whether the High Court was right in holding that the suit for ejectment ought to fail for number-compliance of s. 9 1 b iii . The High Court held that the plaintiff having failed to give six months numberice before instituting the suit as required by the aforesaid provision, the suit is liable to be dismissed. It is urged on behalf of the appellants that s. 9 of the 1949 Act is number applicable to the facts of the case. Before instituting the suit for ejectment the plaintiff had given a numberice to quit under s. 106 of the Transfer of Property Act, the governing provision, at the time of the institution of the suit. It was number disputed that the numberice to quit in question at the time it was given was a valid numberice. Therefore all that we have to see is whether because of the provisions of the 1949 Act read with the provisions of the 1958 Act, the suit which was validly instituted has ceased to be maintainable. We have earlier seen that under the provisions of the Bihar and West Bengal Transfer of Territories Act, 1956, the existing laws were companytinued till appropriate provisions are made by the companycerned legislatures. Therefore s. 106 of the Transfer of Property Act companytinued to be in force in the area companycerned till the 1958 Act came into force. Section 3 of that Act provides All State laws which, immediately before the appointed day, extend to, or are number in force in, the State of West Bengal, but do number extend to, or are number in force in, the transferred territories shall as from that day, extend to or, as the caes may be, companye into force in the transferred territories. Provided that the State law specified in Sche- dule I shall extend to the transferred territories subject to the amendment specified in that Schedule All State laws which, immediately before the appointed day are in force in the whole or any 1,art of the transferred territories but number in the rest of West Bengal shall, on that day, stand repealed in the transferred territories Provided that such repeal shall number affect a the previous operation of any Slate law so repealed or anything duly done or suffered thereunder or b any, right, privilege, obligation, or liability acquired, accured or incurred under any State law so repealed or c any penalty, forfeiture or punishment incurred in respect of any offence companymitted against any State law so repealed or d any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid and any such investigation, legal proceeding or remedy may be instituted, companytinued or enforced and any such penalty, forfeiture or punishment may be imposed, as if this Act had number been passed The remaining,portion of the section is number relevant for our present purpose. The expression State law is defined thus in S. 2 b State law means so much of any enactment, ordinance or regulation as relates to. any of the matters enumerated in Lists II and III in the Seventh Schedule to the Constitution and include any order, by-law, rule, Scheme numberification or other instrument having the force of law One of the statutes that stood extended to the transferred territories under the 1958 Act is the 1949 Act. Section 9 1 b iii of that Act provides Notwithstanding anything companytained in. any other law for the time being in force or in any companytract if any number-agricultural land has been held for a term of more than one year but less than twelve years- b without a lease in writing C then the tenant holding such number-agricultural land shall be liable to ejectment on one or more of the following grounds and number otherwise namely on the ground that the tenancy has been terminated by the landlord by six months numberice in writing expiring with the end of a year of the tenancy served on the tenant in the prescribed manner in the case of tenancies of the class specified in clause b , Provided that a tenant shall number be liable to ejectment on the ground specified in clause except on payment of such reasonable companypensation as may be agreed upon between the landlord and the tenant or if they do number agree, as may be, determined by the Court on the application of the landlord or such tenant.-- The only other relevant provision is section 88 of that Act which says The provisions of this Act shall have effect in respect of all suits, appeals or proceedings including proceedings in execution for ejectment of a number-agricultural tenant which are pending at the date of companymencement of this Act. The companytention based on s. 9 1 b iii was taken for the first time in the High Court of Calcutta. The High Court as mentioned earlier has accepted that companytention. If s. 9 read with S. 88 of the 1949 Act governs this appeal then undoubtedly the plaintiffs suit has to fail. But the question is whether those provisions are number subject to s. 3 of the 1958 Act? This question has number been companysidered by the High Court. The High Court was greatly impressed by the width of S. 88 of the 1949 Act. Read by itself there is numberdoubt that that provision makes applicable all the provisions of the 1949 Act to all suits, appeals or proceedings including proceedings in execution for ejectment of number-agricultural tenant which was pending at the time, of the companymencement of that Act. There is numberdispute that the plaintiff has number companyplied with the requirements of S. 9 1 b iii of that Act. Therefore if the plaintiff was required to companyply with the provisions of the 1949 Act in all respects, he having number companyplied with the same, the suit ought to fail. But then, the provisions of the 1949 Act did number apply to the transferred territories on their own force. They were extended to those territories under the provisions of the 1958 Act. Therefore their application is subject to the companyditions laid down by the 1958 Act. As seen earlier S. 3 of that Act while repealing the laws that Were in force in the transferred territory and extending the laws that were in force in the rest of West Bengal saved the previous operation of the existing laws so repealed and further saved anything duly done or suffered under those laws. In other words because of cl. a of the proviso to S. 3 2 , acts duly done under the repealed laws are protected. Hence the quit numberice given under S. 106 of the Transfer of Property Act by the plaintiff was an act duly done under a repealed law. That act is protected. Its validity cannot be tested on the basis of the provisions of the 1949 Act. This is plain from the language of S. 3 2 of the 1958 Act. That interpretation also advances public interest. Otherwise all ejectment suits which had been instituted before the transfer of territories had been effected would automatically fail for number-compliance of s. 9 of the 1949 Act, a law which was number in force in the transferred territories before their transfer. The legislature would number have intended such a result. If the plaintiff was number required to companyply with require- ments of S. 9 1 b iii of the 1949 Act-as we think he was number-then the plaintiff is number liable to pay any companypensation for the structures put up by the defendant. The liability to pay reasonable companypensation for the structures put up by the tenant arises under the proviso to cl. iii of s.9 1 b . That proviso imposed the liability to pay reason- able companypensation for the structures put up only when the termination of the tenancy is made under cl. iii of s. 9 1 b and number otherwise. As the termination of the tenancy was number made under that provision, the question of paying companypensation does number arise. In the result this appeal is allowed, judgment and decree of the Calcutta High Court are set aside and that of the trial companyrt as affirmed by the first appellate companyrt is restored.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 62 and 63 of 1969. Appeals from the judgment and order dated November 21, 1967 of the Kerala High Court in O. P. Nos. 2979 of 1965 and 1395 of 1966. A. Seyid Muhammad, P. K. Pillai for M. R. Krishna Pillai, for the appellant in both the appeals . T. Desai and A. S. Namblar, for the respondent in both the appeals . The Judgment of the Court was delivered by Hegde, J. In these appeals by certificates brought by the Department, we have to decide as to what is the true scope of s. 29 of the Kerala Agricultural Income-tax Act, 1950 as amended in 1964 to be hereinafter referred to as the Act ? This case has a long history which by numbermeans is companyplimentary to the Department. The companymon respondent in both these appeals moved the High Court of Kerala under Art. 226 of the Constitution praying that the appellant herein may be prohibited from taking further proceedings for assessing him as the karta of Poomulli Mana to agricultural income-tax for the assessment year 1961-62. The respondent was the karta of a Namboodri family known as Poomulli Mana till March 30, 1958. The Namboodr is in the Malabar District of the Kerala State were previously governed by the Madras Nambudri Act, 1932. Now they are governed by the Kerala Nambudri Act, 1958. The respondents family owned large tracts of lands both in Malabar District which was a part of the Madras State till November 1, 1956 as well as in the erst- while Travancore and Cochin State. Under the States Reorganization Act, 1954, the new State of Kerala was formed companysisting of the former Malabar District of the State of Madras as well as the former Travancore-Cochin State. The new State of Kerala came into being on November 1, 1956. Thereafter the Travancore-Cochin Agricultural Income-tax Act, 1950 was extended to the former Malabar District with effect from April 1, 1957 by Kerala Act 8 of 1957. In the assessment year 1957-58, the assessing authorities assessed Poomulli Mana as an undivided family. That order was quashed by the High Court. On March 30, 1958, the members of the family entered into a registered partition deed under which the family became divided. Thereafter the respondent ceased to be the karta of the family. Nevertheless the authorities under the Act issued numberices to the respondent under S. 17 2 and S. 39 of the Act proposing to assess him as the manager of his H.U.F. for the assessment years 1957- 58 and 1958-59. The respondent challenged the validity of those numberices before the High Court of Kerala. When the case came up for hearing before a Division Bench of the High Court, the learned Counsel appearing for the Department informed the Court that the Department was going to assess the respondent only as an individual and number as the karta of his family. On the basis of that representation, the Court passed the following order The learned Government Pleader submits, quite categorically that the assessment proposed is of the petitioner as an individual, and number in any other capacity. In view of the submission we do number companysider it necessary to proceed further with the petition. We record the fact that the Department does number propose to assess the petitioner except as an individual and leave him to seek his remedies under the Act or the Constitution in case he feels himself aggrieved by any subsequent action of the Department. Despite this assurance, the Department issued a numberice under S. 35 of the Act on February 9, 1960 proposing to assess the respondent as the karta of his H.U.F. for the assessment year 1959-60. The respondent again moved the High Court to quash that numberice. The said numberice was quashed by a learned single judge of the High Court on January 3, 1961 on the ground that it is against the under- taking given by the Government in the earlier proceedings That decision was affirmed in appeal. Yet another numberice dated November 8, 1961 was issued by the Department under s. 35 to the respondent to show cause why he should number be taxed as the karta of his H.U.F. for the assessment year 1958-59. This numberice was again quashed by the High Court by its judgment dated December 17, 1963. Section 29 of the Agricultural Income-tax Act, 1950 was amended by the Kerala legislature by Act 12 of 1964. We shall number set out s. 29 as it stood before its amendment in 1964 as well as the amended section. Section 29 of the Act before the amendment by Act 12 of 1964 read thus 29. 1 Where at the time of making an assessment under Section 18, it is claimed by or on behalf of any member of a Hindu undivided family, Aliyasanthana family or branch or Marumakkathayam tarwad hitherto assessed as undivided that a partition has taken place among the members or groups of members of such family or tarwad the Agri- cultural Income-tax Officer shall make such inquiry there into as he may think fit, and if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to. that effect Provided that numbersuch order shall be recorded until numberice of the inquiry has been served on all the adult members of the family or tarwad entitled to the property as far as may be practicable or in such other manner as may be prescribed. Where such an order has been passed, the Agricultural Income-tax Officer shall make an assessment of the total agricultural income received by or on behalf of the family or tarwad as such, as if numberpartition. had taken place, and each member 30 2 or group of members shall, in addition to any agricultural income-tax for which he or it may be separately liable, and numberwithstanding anything companytained in clause a of Section 10, be liable for a share of the tax on the incomes so assessed according to the portion of the family or tarwad property allotted to him or it and the Agricultural Income-tax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of Section 18 Provided that all the members and groups of members whose family or tarwad property has been partitioned shall be liable jointly and severally for the tax on the total agricultural income received by or on behalf of the family or tarwad as such up to the date of the partition. Where such an order has number been passed in respect of a Hindu family, Aliyasanthana family or branch or Marumakkathayam tarwad hitherto assessed as undivided, such f amily or tarwad shall be deemed for the purposes of this Act to companytinue to be an undivided family or tarwad. Section 29 after its amendment by Act 12 of 1964 reads Assessment after partition of a Hindu undivided family.- Where at the time of making an assessment under section 18, it is claimed by or on behalf of any member of a family hitherto assessed as a Hindu undivided family or which is being assessed for the first time as a Hindu undivided family that a partition has taken place among the members or groups of members of such family, the Agricultural Income-tax Officer shall make such inquiry there into as he may think fit, and if he is satisfied that the joint family property has been partitioned among the various members or groups of members in definite portions he shall record an order to that effect Provided that numbersuch order shall be recorded until numberice of the inquiry has been serve on a the adult members of the family entitled to the pro- perty as far as may. be practicable or in such other manner as may be prescribed. Where such order has been passed, the Agricultural Income-tax Officer shall make an assessment of the total agricultural income received by or on behalf of the family as such, as if numberpartition had taken place, and each member or group of members shall, in addition to any agricultural income-tax for which he or it may be separately liable, and numberw ithstanding anything companytained in clause a of sub- section 1 of section 10, be liable for a share of the tax on the incomes so assessed according to the portion of the family property allotted to him or it and the Agricultural Income-tax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of section 18 Provided that all the members and groups of members whose family property has been parti- tioned shall be liable jointly and severally for the tax on the total agricultural income received by or on behalf of the family as such upto the date of the partition. Where such an order has number been passed in respect of a family hitherto assessed as a Hindu undivided family or which is being assessed for the first time as a Hindu undivided family, such family shall be deemed, for the purpose of this Act, to companytinue to be a Hindu undivided family. The amended provision was given retrospective effect with effect from April 1, 1958. Taking advantage of the amendment of s. 29, the Department again issued a numberice to the respondent on June 1, 1964 under s. 35 of the Act calling upon him to show cause why he should number be assessed as the karta of his H.U.F. for the period from November 1, 1956 to March 31, 1958. It may be numbered that uphill that date the respondent and other members of his former family were being assessed as individuals and the tax so levied had been paid. In other words for the earlier assessment years, the Department had proceeded on the basis that the family was a divided family. On receipt of the numberice dated June 1, 1964, the respondent again moved the High Court of Kerala to quash the same on various grounds. One of the grounds taken was that the family of the respondent having been treated as divided family in the earlier assessment proceedings, it was number open to the Department to proceed to assess him as the karta of a number-existing family. When that proceeding was pending before the High Court, the assessing authorities passed orders assessing the respondent as karta of his family. A Division Bench of the Kerala High Court quashed the impugned numberice as well as the assessment made. During the pendency of the last mentioned proceeding, the Department issued two more numberices to the assessee marked Ex. P-1 and P-3 before the High Court . The relevant numberice for our present purpose is Ex. P-1 and it is dated March 10, 1965. In that numberice the assessing authority, in the purported exercise of its powers under S. 35 of the Act required the respondent to file a return of the agricultural income of his family in the previous years beginning from April 1, 1961 and ending on March 3 1, 1961, chargeable to tax for the assessment year 1961-62 within 35 days of the receipt of that numberice. The numberice further mentioned that the action proposed therein was permissible in view of the amendment of the Act, by Act 12 of 1964. The respondent replied that in view of the partition in his family, he companyld number be assessed as the karta of his family and further the partition in question had been accepted by the Department and that the assessments were made on the members of the family as individuals from 1959-60 to 1964-65. Thereafter the respondent again moved the High Court to quash those numberices on various grounds. The Department companytended that in view of the amendment of S. 29 of the Act by Act 12 of 1964, it was permissible for it to reassess the respondent as the karta of the family as numberdecision that the respondents family is a divided family had been rendered by the Agricultural Income-tax Officer and therefore the family must be deemed to be an undivided family. The Writ Petition wag heard by a bench of three judges companysisting of Mathew, Krishnamoorthy lyer and Balakrishna Eradi, JJ. By a majority Krishnamoorthy lyer and Eradi, JJ. the Writ Petition was allowed and the im- pugned numberices were quashed. Mathew, J. was of the opinion that the action taken by the Department was, permissible under s. 29 of the Act as amended. Now turning to s. 29 of the Act before its amendment,. it companyresponded with s. 25-A of the Indian Income-tax Act, 1922. The scope of s. 25-A of the Indian Income-tax Act, 1922 came up for companysideration both before the Judicial Committee as well as before this Court in various cases. It is sufficient if we refer to the decision of this Court in Additional Income-tax Officer Cuddapah v. A. Thimmayya and another 1 . Therein this companyrt companysidered the object with which that provision was enacted as well as its scope. Delivering judgment of the Court Shah, J. as he then was observed Under the Indian Income-tax Act, 1922, as it originally stood, a Hindu undivided family was regarded by section 3 as a unit of assessment, but numbermachinery was set up for levying tax or for enforcing liability to tax on the members of the family, if before the order of assessment the family was divided. Absence of this machinery was more acutely felt because of section 14 1 which provided that tax shall number be payable by an assessee in respect of any sum which he received as a member of a Hindu undivided family. Income received by a Hindu undivided family companyld number therefore be assessed and companylected from the members, of the family, if at the time of making the assessment the family was divided. To rectify what was obviously a lacunas, the legislature in. companyporated section 25A for assessment and enforcement of liability to tax income received by a Hindu undivided family, which was numberlonger in existence at the date of assessment. But the new section went very much beyond rectifying the defect in the statute which necessitated the amendment The section makes two substantive provisions that a Hindu undivided family which has been 1 55 I.T.R. 666. 30 6 assessed to tax shall be deemed, for the purposes of the Act, to companytinue to be treated as undivided and therefore liable to be taxed in that status unless an order is passed in respect of that family recording partition of its property as companytemplated -by sub-section 1 and ii if at the time of making an assessment it is claimed by or on behalf of the members of the family that the property of the joint family has been partitioned among the members or members in definite portions i.e., a companyplete partition of the entire estate is made resulting in such physical division of the estate as it is capable of being made, the Income-tax Officer shall hold an enquiry and if he is satisfied that the partition had taken place, he shall record an order to that effect. Before proceeding to examine the scope of S. 29, let us recapitulate the events that had taken place.- i As long back as March 30, 1958, there was a partition in the family ,of the respondent that partition is evidenced by a regis- tered deed. The genuineness as well as the validity of the -deed is number in dispute ii On January 18, 1960 on behalf of the Agricultural Income-tax Officer, it was companyceded before the High Court that the respondent was liable to be taxed only as an individual. The implication of this companycession was that the respondents family was a divided ,family iii Various attempts made by the Department to assess the respondent as extra of his family even after the decision of the High Court on January 18, 1960 were frustrated by the orders of the High Court referred to ,earlier and iv The respondent and the other members of his quondam family were assessed as individuals from 1958- 1964. Those assessments had become final and tax levied on them had been paid. Section 3 1 is the charging section in the Act. That -section reads Agricultural Income-tax at the rate or rates specified in the Schedule to this Act shall be charged for each financial year in accordance with and subject to the provisions of this Act, on the total agricultural income of the previous year of every person. 30 7 Person is defined in s. 2 in as follows person means any individual or association of individuals, owning or holding property for himself or for any other, or partly for his own benefit and partly for another, either as owner trustee, receiver, companymon manager administrator, or executor or in any capacity recognised by law and includes, a firm, or a companypany, an association of individuals, whether incorporated or number, a nd any institution capable of holding property. Hindu Undivided Family as defined in s. 2 kk includes a family governed by Madras Nambudiri Act, 1932. Under the Act what is brought to tax in an assessment year is the income of the assessee in the previous year. The scheme of taxation under the Act is similar to that. under the Indian Income-tax Act, 1922. The liability to pay tax under the Act in respect of any income is incurred as and when the income is earned and the total income on which the tax is payable in any particular previous. year gets settled at the end of the previous year. Section 29 is only a machinery section. This Court has held that s. 25A of the Indian Income-tax Act, 1922 is only a machinery section. The same must be the position in regard to s. 29 of the Act. Section 29 is attracted to an assessment proceeding-. only if one of the two companyditions prescribed in s. 29 1 is established. Either the family in question was being, assessed as an undivided family in the previous assessment year or that family is being assessed for the first time. If neither of these companyditions exists 29 has numberapplication whatsoever. The deeming provision companytained in s. 29, 3 can have application only in cases where one or the other companydition prescribed in s. 29 1 is satisfied and number otherwise. As seen earlier, every attempt made by the, assessing authority to assess the quondam family of the respondent was set aside by the High Court. The High. Court has repeatedly held that family is a divided family. Again the assessing authority itself in the previous years had proceeded on the basis that the family in question is a divided family. It had number only number assessed that family as an undivided family but had assessed the individual members of that family as divided members of that family. Hence the question whether that family was divided or undivided had been gone info in the earlier years and decided. That being so, it cannot be said that the family was hitherto assessed as a Hindu undivided family. Nor can it be said that the family was being assessed for the first time as a Hindu undivided family. As seen earlier that family was sought to be assessed as Hindu undivided family earlier but ultimately the assessing authority had to assess the members of that family as members of a divided family. In other words it had held the family to be divided one. Such a family cannot be companysidered as being assessed for the first time as a Hindu undivided family. The expression which meaning family is being assessed for the first time as a Hindu undivided family presupposes the existence of the family. That is a companydition precedent. Section 29 1 does number permit the assessing authority to create a family by rejoining the divided parts or otherwise. If that is number so, families which had been divided years back can be again resurrected by the assessing authorities for the purpose of the Act. The family referred to in S. 29 1 is a family known to law and number a deemed family. The amendment of S. 29 has introduced companysiderable companyfusion into that section. At the time of the assessment either there is a family or there is numberfamily. If there is a family its liability has to be ,judged on the basis of the Act. If the family has ceased to exist even before the assessment proceedings started then there can be numberfamily which is being assessed to tax for the first time. Possibly the intention of the legislature was to bring in the cases of undivided families lot taxed in the previous years which were in existence during the whole or part of the previous year but were divided before the assessment proceedings companymenced. It is number necessary for us in this case to decide whether that intention has been expressed with sufficient clarity so as to make it enforceable. Suffice is to say that in this case, the family sought to be taxed was number-existing in the companycerned previous years and hence cannot be companysidered as a Hindu undivided family .being assessed for the first time. That being so there is numberroom for application of the deeming pro,vision in S. 29 3 . Looking at the companyrse of events, one cannot fail to numberice with regret the persistence with which the Department was harassing the respondent.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2167 of 1966. Appeal by special leave from the judgment and order dated October 12, 1965 of the Patna High Court in Misc. Judicial Case No. 614 of 1962. B. Pai and D. N. Gupta, for the appellant. K. Mehta and K. L. Mehta. for respondent No. 1 The Judgment of the Court was delivered by Mitter, J.-This appeal by special leave arises out of an order of the Patna High Court setting aside the award dated 23rd February, 1962 made by the Presiding Officer of the Labour Court Ranchi and remitting the matter back to him for making a fresh award in accordance with the observations of the High Court. The facts are as follows. The first respondent, Bishwanath Prasad, a workman of the appellant, made a companyplaint in writing to the officer in charge of Nirsa Police station on September 19, 1960 stating inter alia that the members of his Union were being -harassed repeatedly by the Management of the companypany and that the laboratories bad reported on that day that an Assistant Manager, a Labour Welfare Officer and others had broken open the lock of the room of a worker by the name of Kashi Nath Singh and thrown away his belongings when he was actually on duty. The police were requested to take proper action against the said Assistant Manager. After enquiry the officer in charge Nirsa police station submitted a final report on 19th November 1960 to the effect that the companyplainant Bishwanath Prasad had deliberately brought - a false companyplaint. The Sub- Divisional Officer of the District acting on the final report dismissed the companyplaint on 12th January 1961. The Management served the respondent Bishwanath Prasad with a charge sheet on 23rd January 1961 to show cause why disciplinary action should number be taken against him for his misconduct subversive of discipline in making serious defamatory allegations against the officers in general and to two of the officers in particular who had been put to great harassment and humiliation at the investigation by the police. The explanation given by Bishwanath Prasad to the charge sheet was that he had made the report to the police after receiving a companyplaint from kashinath Singh, a member of his Union with numberintention to undermine the prestige of the officers companycerned and the discipline in the factory, but simply to pacify the workers who were very much excited owing to the action of the officer. It appears that an enquiry into the matter was fixed by the Management and the respondent was asked to appear at the enquiry on 30th January, 1961 but. he failed to attend the same and sent a letter asking for an open enquiry in which representatives of the Labour Department, Dhanbad should be present. The enquiry officer sent in his report and The Management acting thereupon dismissed the res- pondent from service with effect from the date of sus-- pension, namely, 23rd January, 1961. Quite unconnected with the above matter, there was trouble in the factory on 10th January, 1916 when one group of workers is alleged to have assaulted another group due to inter-Union rivalry. The Company dismissed 10 workmen on the ground of their assaulting two, others on 28th January, 1961. On 28th March 1961, the Government of Bihar referred an Industrial Dispute to the Labour Court, Ranchi regarding the dismissal of the II workmen including the respondent Bishwanath Prasad. The Labour Court examined the merits of the matter and held that the orders of dismissal meted out by the management to all the workmen would have to be maintained and the workmen were number entitled to any relief. Examining the facts and circumstances in the light of the principles formulated by this Court in the case of Indian Iron and Steel Co. Ltd. v. Their Workmen 1 at page 685 that In case of dismissal on misconduct, the Tribunal does number, however, act as a Court of appeal and substitute its own judgment for that of the management. It will interfere i when there is. a want of good faith, ii -when there is victimisation or unfair labour practice, iii when the management has been guilty of a basic error or violation of a principle of natural justice, and iv when on the materials the finding is companypletely baseless or perverse. the Tribunal held that the finding of the Management with regard to the guilt of the 10 workmen other than Bishwanath Prasad was number in any way unwarranted or perverse and the Management was number actuated by bid faith. With regard to Bishwanath Prasad the Tribunal examined the facts and circumstances relied on by the parties and held that the order of dismissal was number vitiated on any of the well-known grounds of interference as laid down Indian Iron and Steel. Co.s Case 1 1958 S.C.R. 667. The Tribunal also examined the plea put forward on behalf of the workers that the orders of dismissal should be held to be illegal inasmuch as they were all passed during the pendency of a companyciliation proceeding. The Tribunal numbered that numberevidence had been led to sustain the plea and the Union had only placed on record, carbon companyies of two letters which were alleged to have been addressed to the Labour Officer, Dhanbad. The Tribunal was number satisfied that the letters had actually been delivered to the Labour Officer and found that there was numberevidence to show that the Labour Officer had applied his mind to the matter mentioned in those letters and accordingly took the view that the pendency of a companyciliation proceeding at the relevant -time had number been established. The respondent, Bishwanath Prasad, filed a petition under Arts. 226 and 227 of the Constitution before the Patna High Court challenging the award inter alia on the ground that the Labour Court had failed to appreciate that the enquiry officer had acted malafide and in violation of the principles of natural justice in holding the enquiry. A companyplaint was also made that the letters from the companyciliation officer Dhanbad were ignored by the Labour Court. The Management filed a companynter affidavit justifying its action against the workmen and submitting that the award had been companyrectly made. Before the High Court one of the main pleas taken on behalf of the respondent was that the order of dismissal against him having been passed in companytravention of S. 33 of the Act was invalid and ineffective and on that ground alone he should have been reinstated. It was also companytended that in cases where in order of dismissal passed in companytravention of S. 33 of the Act was the subject matter of adjudication either by virtue of a reference under S. 10 1 or by reason of a companyplaint under S. 33A of the Act, the enquiry held by the employer before passing the order of dismissal was of numberavail. According to the High Court all the companytentions raised on behalf of the petitioner are found on the basic fact that there was companytravention of S. 33. Referring to the judgment of this Court in The Punjab National Bank Ltd., Its Workmen 1 the High Court took the view that it was necessary for the Labour Court to first go into the question whether or number there was a companyciliation proceeding pending at the date when the dismissal order was made with a view to find out whether the plea of the workmen companycerned that the impugned order of dismissal was passed in companytravention of s. 33 2 b was companyrect or number and if it accepted the petitioners companytention , that the order of dismissal companytravened S. 33 2 b , the departmental enquiry would number avail the employer and the whole question would be open. The High Court directed that the petitioner should be afforded an opportunity to place the letters earlier referred to, viz., annexures 1 and 1-1, and such other relevant evidence in this companynection as he might choose before the Labour Court and the Labour Court should companye to its own companyclusion on the issue before it upon all the evidence adduced before it. Being of the view that in the absence of any determination of the basic question whether or number there was a companytravention of S. 33, the High Court did number think it advisable to pronounce upon -the merits of the several companytentions raised on behalf of the petitioner, set aside the award and remitted the matter back to the Labour Court for making a fresh award in accord- ance with the companyrts observations. In our view the High Court did number properly appreciate the true scope of S. 33 2 b of the Industrial Disputes Act and the result of the violation thereof. It is undisputed that the order of dismissal of the respondent was made after an enquiry on the basis of a charge sheet submitted to him. In his explanation to the show cause numberice the respondent admitted having lodged the companyplaint before the Nirsa police on 19th September, 1960 and the harassment and-humiliation of two officers at the investigation by the police. He did number deny that the report made by him was false and companytented himself by submitting It is for the police and the Government authority to take any action against me if my report was at all false. 1 19601 S.C.R. 806. 2 7 2 He was examined before the Labour Court and the only statement relating to companyciliation proceedings made by him was that companyciliation proceedings were held before the Labour Officer and the Labour Commissioner. In our view, the High Court failed to observe that under the Act pendency of companyciliation proceedings at the time when the respondent was discharged companyld number affect the merits of the question at all. The scope of sections 33 and 33-A was examined by this Court in several cases to some of which we shall presently refer. S. 33 1 has obviously numberapplication to the facts of this case. S. 33 2 relates to the dismissal, discharge etc. of a workman for any misconduct number companynected with an industrial dispute during the pendency of any companyciliation proceeding before a companyciliation officer or a Board etc. unless he had been paid wages for one month and an application has been made by the employer to the authority before which the proceeding is pending for approval of the action taken by the employer. S. 33-A enables a workman who has been punished by dismissal or discharge etc. to make a companye plaint in writing to a Labour Court, Tribunal or National Tribunal when an, employer companytravenes the provisions of S. 33 during the pendency of proceedings before Labour Court, Tribunal or National Tribunal etc. if such a companyplaint is made, the Labour Court, Tribunal etc. is to adjudicate upon the companyplaint as if it were a dispute re- feffed to or pending before it and in accordance with the provisions of the Act submit its award to the appropriate Government. In other words, when the companyditional down in s.33-A apply a workman who is punished as mentioned therein does number have to wait for a reference of an industrial dispute by an appropriate authority under S. 10 of the Act for adjudication of the dispute but can himself prefer his companyplaint which is to be treated in the same- way as a dispute under S. 10. These sections do number lend themselves to the companystruction that as soon as the Labour. Court, Tribunal etc. finds that there has been a violation of S. 33 it should award reinstatement. It must go through the proceedings which would have to be taken under S. 10 and it would be the duty of the Labour Court etc. to examine the 2 7 3 merits of the case in the light of the principles formulated in the Indian Iron and Steel Co.s case. 1 It has number been alleged in this case that any companyciliation proceedings - were pending before a Labour Court, Tribunal or National Tribunal as envisaged in S. 33-A. Assuming for a moment that there was a companyciliation proceeding before a labour officer, S. 33-A would number be attracted. In any event it would be open to the companyplaining workman to take exception to the companyduct of the management in. ignoring the provisions of S. 33 2 b . In The Punjab National Bank Ltd.s case 2 referred to by the High Court for the purpose of remitting the matter back to the Labour Court this Court, examined the scope of ss., 10, 33 and 33-A of the Industrial Disputes Act and pointed out at p. 826 even if the requisite permission is granted to the employer under S. 33 that would number be the end of the matter. It is number as if the permission granted under S. 33 validates the order of dismissal. It merely removes the ban -and so the validity of the order of dismissal can be made, and often is, challenged by the union by raising an industrial dispute in that behalf. The companytention on behalf of the workmen that disregard of a ban imposed by S. 33 of the Act would render the employers action of dismissal void and inoperative was rejected by this Court. The reason for enactment of S. 33-A was explained at p. 830 of the said report. In that case the impugned orders of dismissal had given. rise to an industrial dispute which was referred to a tribunal by the appropriate Government under S. 10 and. this Court observed that There can be numberdoubt that if under a companyplaint filed under S. 33A a tribunal has to deal number only with the question of companytravention but also with the merits of the order of dismissal, the position cannot be any different when a reference is made to the tribunal like the present under S. 10. What is true about the scope of enquiry under S. 33A 1 1958 S.C.R. 667. 2 1960 1 S.C.R. 806. is a fortiori true in the case of an enquiry under S. 10. What is referred to the tribunal under S. 10 is the industrial dispute between the Bank and its employees. The alleged companytravention by the Bank of S. 33 is numberdoubt one of the points which -the tribunal has to decide but the decision on this question does number companyclude the enquiry. The tribunal would have also to companysider whether the impugned orders of dismissal are otherwise justified and whether, in the light of the relevant circumstances of the case, an order of reinstatement should or should number be passed. It is only after all these aspects have been companysidered by the tribunal that it can adequately deal with the industrial dispute referred to it and make an appropriate award. The Tribunal in our view righitly refused to go into the question of the pendency of any companyciliation proceeding but, even if there was any such proceeding, it would make numberdifference to the result in this case. The Tribunal would still have to companysider whether the employers action was justified in -the -light of the decision in the Indian Iron Steel Co.s case. 1 In other words, the -.Tribunal would have to be satisfied that the allegations, if any, about want of good faith or victimisation or unfair labour practice were baseless. The Tribunal would also have to be satisfied whether any companyplaint was made on the score that the enquiry was vitiated by basic error or violation of any principle of natural justice and its finding on which-the- order of dismissal was passed was therefore perverse or without any foundation. The Tribunal came to the companyclusion that there was numberjustification for the respondents companyplaint to the police that the companypanys officials were in the habit of acting high-handedly and oppressively as alleged by him and further took the view that the respondents action in defaming two of the officers of the companypany companyld number but be pronounced as an act subversive of discipline and undermining the authority of the officers and there by affecting the maintenance of peace and good order in that factory. 1 1958 S.C.R. 667. Reliance was placed on a judgment of this Court in Rodrick Karam Chand Thapar Bros. 1 and the observa-tion therein that It is well settled that if an application is made by an employee under s. 33A and it is, shown that the impugned dismissal of the employee has companytravened s. 33, it is open to the employer to justify the dismissal on the merits by adducing satisfactory evidence before the Tribunal. It was companytended that this companyrse was number adopted in, this case. The facts in that case as found from the report are that the appellant who was a store keeper of the respondent companypany had been served with a charge sheet as a result of the checking of the stock in his care this was followed by an enquiry and an order of dismissal of the appellant. The employee made an application under s. 33-A of the Act alleging that s. 33 had been companytravened and he was entitled to reinstatement. The Tribunal rejected the preliminary objection of the companypany that an application under s. 33-A was number companypetent and thereafter proceeded to examine the merits of the case. As a result thereof the Tribunal believed the evidence led by the respondent to hold that the appellant was guilty of misappropriation. To our mind, this case does number help the respondent. The Labour Court had to adjudicate upon the dispute which was referred to it with regard to the respondent it had to go into the question as to whether he had been properly dismissed. On the material before it came to the companyclusion that the respondents action in lodging a false companyplaint to the police against the companyduct of the appellants officers was subversive of discipline which merited dismissal. The Labour Court had the evidence before it the lodging of the companyplaint was number disputed, that the allegations therein were false were number denied and the humiliation of the officers was number companytradicted. Not one of the grounds formulated in the Indian Iron and Steel Co.s case 2 which companyld lead the Tribunal to hold that the dismissal was improper was substantiated. 1 1963 1 L.L.L 248 at 249. 2 1958 S.C.R. 667. 27 6 In the result, we hold that the order of the High ,Court remitting the matter back to the Labour Court was -not justified.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION- Civil Appeal No.1850 of 1967. Appeal from the judgment and order dated September 30, 1966 of the Calcutta High Court in. Income-tax Reference No. 102 of 1962. N. Banerjee and P. K. Mukherjee, for the appellants. Jagdish Sarup, Solicitor-General, R. N. Sachthey and B. D. Sharma, for the respondent. The Judgement of the Court was delivered by Grover, J. This is an appeal by special. leave from a judgment of the Calcutta High Court answering the following question of law referred to it against the assessee and in favour of the Revenue Whether on the facts and in the circumstances of the case, the entire or any part of the income from the house properties companycerned companyld be included in the total income of the assessee by virtue of the provisions of s. 16 1 c of the Income tax Act, 1922 read with the first proviso thereto ? The assessee was assessed in the status of an individual. He derived income from house properties and from the business of a registered partnership firm H. Ganguly Co. He had six houses one of which was 24, Mohanlal Street, Calcutta and the other at Janganbari in the city of Banaras. On March 19, 1953 the see, created a trust in respect of these two houses. It was provided in the trust deed that the trustees shall pay a sum of Rs. 200/- per month to the settlor for life for his own absolute use and benefit out of the income of the trust estate remaining after payment of taxes, rents etc. In other words he himself was one of the beneficiaries. The Income tax Officer held that the income from the afore- said two properties was assessable in the hands Of the assessee inasmuch as he had retained a portion of the income from the trust properties for himself. The trust had, therefore, become revocable under the provisions of s. 16 1 c of the income tax Act 1922, hereinafter called the Act. The Appellate Assistant Commissioner on appeal affirmed the view taken by the Income tax Officer. When the matter came before the Appellate Tribunal it found that the assessee had irrevocably parted with the aforesaid two properties and the same had got vested in the trust. It was held that s. 16 1 c would become applicable only if the setdor preserved to himself the entire income arising from the settled properties if only a portion had been reserved by the settlor it would number make the settlement revocable. It is number disputed that the total annual income from these properties came to over Rs. 19,000. Out of -this the assessee, who was the settlor, was entitled to Rs. 2,400, - annually. According to the Tribunal only the amount of Rs. 2,400/- which had actually been received by the assessee under the terms of the trust deed companyld be included in his income. The view of the High Court was that in order to be revocable under the first proviso to s. 16 1 c it is sufficient if the, settlement, disposition or transfer companytains a provision for retransfer of a part of the income to the settlor,. disposer or transferor. It is number necessary that there must be a provision for the retransfer of the entire income. The word income includes any part of the income unless there is anything repugnant in the companytext. The High Court companysidered, that the third proviso to S. 1 6 1 c did number explain the first proviso but was a kind of rider or exception to it. Bearing in mind the object behind the enactment of s. 16 and on a companysideration of the terms of the section the true meaning and scope of the, first proviso seemed to be that the settlement in the present case was revocable in its entirety thus attracting the substantive clause of s. 16 1 c . Clause c was introduced in s. 16 1 in the year 1939. At the material time s. 16 1 stood thus - S. 16 1 In companyputing the total income of an assessee a b c all income arising to any person by virtue of a settlement or disposition whether revocable or number, and whether effected before or after the companymencement of the Indian Income tax Amendment Act, 1939 from asserts remaining the property of the settlor or disponer, shall be deemed to be income of the settlor or disponer and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor Provided that for the purposes of this clause a settlement, disposition of transfer shall be deemed to be revocable if it companytains any provision for the retransfer directly or indirectly of the income or assets to the set- tlor, disponer or transferor, or in any way gives the settlor, disponer or transferor a right to reassume power directly or indirectly over income or assets Provided further that the expression settlement or disposition shall for the purposes of this clause include an disposition, trust companyenant, agreement or arrangement and the expression settlor or disponer in relation to a settlement or disposition shall include any person by whom the settlement or disposition was made Provided further that this clause shall number apply to any income arising to any person by virtue of a settlement or disposition which is number revocable for a period exceeding six years or during the life time of the person and from which income the settlor or disponer derives numberdirect or indirect benefit but that the settlor shall be liable to be assessed on the said income as and when the power to revoke arises to him. It is apparent that the above clause of s. 16 1 with its provisos is unhappily worded. In Ramji Keshavji v. Commissioner of ,Income tax Bombay 1 , the Bombay High Court companysidered the scheme of s. 16 1 c . According to that decision the first stage is that when there is a revocable transfer of assets. The income derived from such assets is still to be companysidered the income of the settlor. The first proviso specifies what would be deemed a revocable transfer in spite of the deed being apparently irrevocable. The relevant question for the first proviso is is this transfer revocable because it fulfils the companyditions companytained in the proviso ? The answer to that question can be in the positive or in the negative. If the answer is in the negative numberfurther discussion can arise and s. 16 1 c will number be applicable. If the answer be in the affirmative the deed, although ostensibly irrevocable, is deemed to be revocable. It will thus become revocable within the meaning of the substantive provisions of S. 16 1 c having reached that stage proviso 3 has to be companysidered. In tile words of Kania J., as he then was the scheme appears to be that, although in fact, after reading the provision of s. 16 1 c with proviso 1 , the transfer is revocable, the law will number still companysider the income derived from such settlement, the income of the setlor, provided the settlement is number revocable for a period exceeding, six years or during the lifetime of the person for whom the incomes is settled, and, further from which income the settlor derives numberdirect or indirect benefit. Chagla J., as he then was. delivered a separate judgment although he agreed with the answer given to the reference by Kania J. In his opinion the only way to reconcile the substantive provision of sub-cl. c , Provisos 1 and 3 was to hold that proviso 3 companytained a limitation which applied as much to the substantive provisions of sub-clause c as to proviso 1 13 I.T.R. 105. The view expressed in the Ramji Keshavji case 1 was approved by this companyrt in C.I.T. Patna v. Rani Bhuvaneshwari Kuer 2 . In that case the assessee, who owned an estate known as Tekari Raj, created a trust with a view to liquidate the debts of Tekari Raj. The beneficiaries under the deed were the settlor, her husband and her sons. It was declared that the settlement, made was to be permanent and irrevocable but each beneficiary had full right to make any sort of arrangement about devolvement or succession or make such alienation as was companysidered fit about his share. It was observed that two companyditions were necessary for the application of the third proviso to section 16 1 c , 1 that the trust should number be revocable for a period exceeding six years or during the life-time of the beneficiary and 2 the settlor or disponer should have numberdirect or indirect benefit from the income given to the beneficiary. The following observations at page 927 are numbereworthy The third proviso to s. 16 1 c does number operate to exclude the income which the settlor receives as a beneficiary, from liability to income tax it merely excludes that part of the income which is under the deed of settlement given to another person from liability to tax in the hands of the settlor, if the companyditions prescribed by the third proviso are fulfilled. The companytention raised by the Commissioner that if under the, deed of trust the settlor has reserved to himself as a beneficiary any part of the income of -the property settled, the third proviso will number apply to the deed of trust runs companytrary to the plain words of the statute. The further companytention of the Commissioner that the third proviso only operated in respect of deeds of settlement or dispositions which were referred to in clause c but number the deeds a settlement or disposition which by the first proviso were deem,,, to be revocable was rejected by saying that the function of provisos 1 and 2 was plainly explanatory and it was importable to hold that the third proviso did number operate in respect of settlement, dispositions or transfers which were by the first proviso revocable for the purposes of that clause. We have referred to the above case in extenso because in our opinion it fully companyers the point which has arisen in the present case. In the light of the above principles it would number be wrong to say that the effect of the third proviso is that a settlement or disposition companytaining a provision for retransfer of a part of the income to the settlor would number render the whole income of the 1 13 I.T.R. 105 2 1964 7 SCR 920 settlement chargeable in his hand provided the other companyditions. companytained in the proviso are satisfied. In other words the proviso companyes to the rescue of the settlor in that the portion of the income from the trust properties which are settled on a third person is to be assessed in the hands of that person and number in the hand of the settlor, if the latter does number retain any power to deflect the same for a period exceeding six years or during the lifetime of the donee. Thus the settlement as a whole win number companye within the mischief of s. 1 6 1 c if the revocability relates only to a part of the income. See C.I.T. Calcutta Jitendranath Mallick 1 We are in entire agreement with the above view of the Cal- cutta High Court and companysider that the same is supported by the decision of this companyrt in Rani Bhuvaneshwari Kuers case 1 . We may also refer to the significant change made in the language with regard to revocable transfers in the Income tax Act 1961. Section, 63 of that Act provides For the purposes of section 60, 61 and 62 and of this Section- a a transfer shall be deemed to be revocable if- it companytains any provision for the retransfer directly or indirectly of the whole or any part of the income or assets to the transferor, or it, in any way, gives the transferor a right to reassume power directly or indirectly over the whole or any part of the income or assets b It can well be said that the necessity for expressly mentioning, part of the income was felt because under the provisions of the. Act part of the income was number companyered. There is numberdispute in the present case that the trust created was a genuine one. Since it fulfilled the companyditions laid down in the third proviso only that part. of the income which accrued or was received by the settlor companyld be assessed as his income. The income accruing to the. other beneficiaries companyld number be included in the total income. of the assessee. The appeal is companysequently allowed and the judgment of the High Court is set aside.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 992 of 1967. Appeal by special leave from the Award dated April 7, 1967 of the Industrial Tribunal, Chandigarh in Reference No. 4C of 1966. Jagadish Swarup, Solicitor-General, H. L. Anand, Ashok Grover and K. B. Mehta, for the appellant K. Ramamurthi, R. A. Gupta and K. B. Rohatgi, for respondent No. 1. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, by the State Bank of India, is against the award dated April 7, 1967 of the Industrial Tribunal, Chandigarh, setting aside the order of the appellant, discharging the services of the first respondent and directing his reinstatement with full back wages. The first respondent joined the service of the appellant on June 13, 1955 as a Money Tester and was working in that capacity at the Ambala City Branch in July, 1960. On July 26, 1960, he was deputed to supervise the remittance of unissuable numberes of Rs. 87,48,000/- from the Ambala City Branch to the Note Cancellation and Verification Sections of the Reserve Bank of India, Ludhiana for destruction. According to the appellant the procedure adopted for such purpose was the currency numberes intended to be carried for destruction to the companycerned section of the Reserve Bank of India, are examined, companynted and then tied in bundles with a label or slip attached to each packet companytaining the particulars including the initials of the examining officer Each packet is then recounted by the Money Tester and the latter puts his initial on the label or slip in token of his having done the recounting, the idea being, that if any shortage is discovered subsequently, the person whose initials are found on the label or slip can be made liable to account for the deficiency, and be asked to make good the same. Accordingly, when the money was taken by the first respondent on July 26, 1.960 and delivered to the Note Cancellation and Verification Section of the Reserve Bank of India, Ludhiana, officials therein numbered a shortage of Rs. 100/- in the packet companytaining Rs. 10/denomination numberes. Such a deficiency was numbered in the packet to which was tacked the label bearing the initials of R, K. Jain. The shortage was pointed out to R. K. Jain by the officials of the Reserve Bank of India, and the packet was handed back to the former to enable him to satisfy himself regarding the shortage. R. K. Jain, under the guise of trying to unstitch the packet, tore off the label bearing his initials in spite of the protest made by the officials of the Reserve Bank of India. The torn label was picked up and as it companytained the initials of R. K. Jain, the officials of the Reserve Bank of India kept the torn pieces intact. Later on., a verbal inquiry was made by the Superintendent of the Reserve Bank of India and R. K. Jain admitted the shortage by his letter dated July 29, 1960. In that letter, addressed to the Reserve Bank of India. R. K. Jain stated that while companynt- ing the packet companytaining the Rs. 10/- numberes in which a shortage of Rs. 100/- was found, the slip was torn by him inadvertently and that he repasted the slip, after having companyfirmed the mutilation as desired by the officials of the Reserve Bank of India. Ambala City Branch of the appellant, addressed a letter dated August 13 , 1960 to R. K. Jain regarding the reports made by the Currency Officer, Reserve Bank of India and the Superintendent Incharge of the Reserve Bank of India, Ludhiana, regarding the shortage of Rs. 100/-. In that letter, after referring to the companynting of the packet by the first respondent and his tearing the label and recasting it, it is stated that the first respondent is responsible for the shortage as he has put his signature in the label in token of having recounted the packet and found it to be companyrect. It was further stated that the first respondent tore off the label because it companytained his initials and this was done to avoid any liability or responsibility. These acts were stated to amount to gross misconduct and R. K. Jain was called upon to submit his explanation to the Head Office of the appellant. On August 16, 1960, the first respondent stated that the packet companytaining soiled numberes was handled by several persons and companynted more than once both in the Branch at Ambala as well as in the companycerned section of the Reserve Bank of India, Ludhiana. After referring to the fact that the packet was given to him for recounting, as the officers asked him to hurry up the matter and to return the packet soon, and as there was a shortage of Rs. 100/-, he got companyfused and while handling the packet the companyering slip tore off accidentally. This fact was explained to the officer of the Reserve Bank of India. He further stated that he did number destroy the label deliberately to avoid any liability. The first respondent has further stated that on the morning of July 26, 1960, ten numberes of rupee one denomination were found short in a packet which was verified and found companyrect by the staff of the Reserve Bank of India. But later on the Superintendent of the Reserve Bank of India detected the shortage and this deficiency was made up by the staff of the Reserve Bank. The companycerned staff of the Reserve Bank, who had made up the deficiency, was number well disposed towards him as he declined to accede to their request to reimburse, them in the sum of Rs. 10/- which they had to make good due to their negligence. Therefore, the staff of the Reserve Bank in the companycerned section has made a false allegation that the slip was deliberately torn off by the first respondent. R. K. Jain has further stated that he had put in nearly five years service and had a clean record and that the allegations made against him were false and frivolous. Not satisfied with the explanation given by R. K. Jain, the appellant placed him under suspension with effect from September 6, 1960 pending an inquiry, which had been ordered against his companyduct. By letter dated October 10, 1960, R. Jain was required to show cause why disciplinary action should number be taken against him on the following charges That during the companyrse of examination of Ambala City Branch remittance of number-issuable numberes sent to the Note Cancellation and Verification Section of the Reserve Bank of India. Ludhiana, on 26th July, 1960, under your supervision, 10 pieces of Rs. 10/- numberes were found short in one packet the packet in question was recounted by you at the Branch. That when you were given the aforesaid packet for satisfying yourself regarding the shortage, you tried to unstitch it and in the process tore off the label stitched on the packet despite instructions number to do so. On the label being examined by the Superintendent-in- Charge of the Reserve Banks Note Cancellation Section it was revealed that the label bore your signature in token of your having companynted the packet in question. It is, therefore, obvious that you tried to destroy the label in order to absolve yourself of the responsibility for the shortage in question. He was further directed to submit his explanation within 10 days of the receipt of the charge sheet. It will be seen from the above that the charges against R. Jain were twofold i There was a shortage of 10 pieces of numberes of Rs. 10/- denomination in the packet which companytained the label bearing his initial and ii That he tried to destroy the label in order to absolve himself from the liability for the shortage. K. Jain sent his explanation to the charges by his letter dated October 18, 1960. While admitting that he was deputed on July 26, 1960 to remit unissuable numbered in the companycerned section of the Reserve Bank of India, Ludhiana, and the shortage being found and the packet being given to him for recounting, R. K. Jain has stated That as the packet had been handled by different persons in the offices of the two banks, the stitching had become loose. Therefore, when the packet was being recounted by him, the slip tore off accidentally. As the staff of the Reserve Bank desired him to companyfirm the mutilation ,of the slip, he signed a letter which had been drafted by them on being assured that it was a routine procedure to be adopted. He denied that he deliberately tore off the slip bearing his initial to avoid responsibility for the shortage of currency numberes. In turn he alleged that the staff of the Reserve Bank of India at Ludhiana, in the Note Cancellation and Verification Section was prejudiced against him as he had declined to accede to their request to pay them a sum of Rs. 10/- which they had to make good in respect of another packet. He denied the charges as baseless and as he had signed the letter of July 29, 1960, as drafted by the staff of the Reserve Bank of India, Ludhiana, he requested that the, proceedings may be dropped. It is seen that there was a Departmental Inquiry companyducted by one B. P. Tiwari, an officer of the Appellant Branch at Ambala. The inquiry companymenced on December 23, 1960 and the Inquiry Officer submitted his report on February 2, 1961 holding R. K. Jain guilty of the charges levelled against him. it is number necessary for us to advert to the findings in this report as a fresh inquiry was companyducted later. It is only necessary to numbere that during the inquiry proceedings companyducted by B. P. Tiwari, the first respondent had examined Pooran Singh and Sanjhi Ram, who were Cashiers at the Jullundur and Amritsar Branches respectively, of the appellant Bank, as his defence witnesses. They had given evidence companyplaining about the behaviour of the staff of the Reserve Bank of India in the Note Cancellation Section particulars towards potdars of the State Bank of India. It is also seen that some officers of the Reserve Bank of India at Ludhiana in the Note Cancellation Section had given evidence for the appellant. Those officers surprisingly refused to be cross-examined by the first respondent during that inquiry. This resulted in the Deputy General Secretary of the State Bank of Indias Staff Association sending a letter on December 24, 1960 to B. P. Tiwari pointing out that in the inquiry that was being companyducted by him, the employees of the Reserve Bank of India, at whose, instance the charges had been framed against R. K. Jain, did number permit the delinquent to put them any question in cross- ,examination. In fact, it is averred that those officers of the Reserve Bank of India flatly refused to answer any questions that were put by R. K. Jain and his representative and also declined to answer any questions put to them in cross-examination. It was alleged that the statements given by those officers of the Reserve Bank of India were one sided and R. K. Jain and his representative had to sit as spectators during the inquiry. The inquiry was quite companytrary to the Procedure to be adopted in disciplinary action taken in respect of Bank employees. Notwithstanding this grievance made on behalf of the first respondent that the inquiry was opposed to all principles of natural justice and was number a proper inqairy, .nothing seems to have been done, by the appellant, as will be seen from the fact that the inquiry proceeded and the report, finding R. K. Jain guilty, was sent by B. P. Tiwari, so late as February 2, 1961. It is stated by the appellant that when the report of B. P. Tiwari was companysidered, the grievance made on behalf of R. K. Jain in the letter dated December 24, 1960 was taken into account and it was decided that the inquiry companyducted by D. Tiwari, was number a proper one and hence a de numbero inquiry was directed to be done by another Officer B. D. Sharma. It may be mentioned that there is numberorder of the appellant on record, in and by which they directed a de numbero inquiry by D. Sharma. It appears that the new Inquiry Officer B. D. Sharma sent a companymunication dated May 27, 1961 to R. K. Jain that he will be companyducting another inquiry against him on the charges originally framed and that the inquiry is fixed for June 14, 1961. On receipt of this companymunication the Deputy General Secretary of the State Bank of India Staff Association sent a reply on June 10, 1961 to D. D. Sharma stating that the Association was astonished about the proposal to have a second inquiry. The letter proceeds to state that B. P. Tiwari companyducted an inquiry about six months back and that though a report appears to have been sent by him to the Head Office, numbercopy of such a report had been furnished to R. K. Jain. The Association has been making several inquiries from the Head Office regarding the matter, but the only reply that was received by it was that the matter was receiving the attention of the Head Office. The Staff Association further protested very strongly against the Banks action in holding a fresh inquiry and that it was unjustified and amounted to an unfair labour practice. The Association further charged the management that they were somehow or the other intent on finding R. K. Jain guilty of some charge or other and to punish him. On these grounds the Association made a request to cancel the second inquiry proposed to be held. A companyy of this companymunication was also sent to the Secretary and Treasurer of the appellant Bank at New Delhi requesting him to look into the matter and stop the fresh inquiry proposed to be companyducted by B. D. Sharma on June 14, 1961. But the Inquiry Officer, by his letter dated June 13, 1961 informed R. K. Jain that the inquiry will be held on June 14, 1961 as already intimated. Again on June 14, 1961 the Deputy General Secretary of the Staff Association sent a companymunication to the Inquiry Officer that the Head Office has number informed R. K. Jain that a fresh inquiry is proposed to be companyducted and that in fact even the details of the inquiry relating to the one companyducted by P. Tiwari have number been furnished to him. The Association again requested the Inquiry Officer to stop holding the inquiry and furnish R. K. Jain with a companyy of the previous inquiry proceedings. We will have to refer to certain further companyrespondence that passed between the Inquiry Officer and the Staff Association on behalf of R. K. Jain. It is enough to state that R. K. Jain, when he found that the inquiry was being proceeded with companysented to take part under protest. He made a request to the Inquiry Officer to summon five witnesses who are employees of the appellant Bank. The Inquiry Officer rejected the request of R. K. Jain regarding three of those witnesses on the ground that their evidence will number be useful for the inquiry. Regarding the two others, the Inquiry Officer informed R. K. Jain that the latter should arrange for producing those witnesses at the inquiry at his expenses. R. K. Jain pleaded that those witnesses were that he has already incurred companysiderable expense in that regard. The second inquiry was being held due to numberfault of his and therefore he regretted his inability to have them summoned at his expense. But this plea was number accepted by the lnquiry Officer and the proceedings were companyducted without those witnesses being examined on behalf of R. K. Jain. The inquiry proceedings were companyducted by B. D. Sharma between June 14, 1961 and July 12, 1962. B. D. Sharma sent- his report to the Head Office on August 23, 1962. In the said report the Inquiry Officer found that R. K. Jain was responsible for the shortage of the currency numberes and that he deliberately tore off the slip bearing his initials in the packet where the deficiency was numbered and this was done with the intention of destroying evidence of his having recounted the packet. Thefindings are by and large based upon the evidence of the officers of the Reserve Bank of India, who in the previous inquiry had refused to be cross- examined. On receipt of the report, the Superintendent of the Ambala City Branch of the appellant by his letter dated March 4, 1963 intimated R. K. Jain that theInquiry Officer D. Sharma has found him guilty of the charges framed against him. It was further stated that the appellant has companye to the decision that R. K. Jain should be discharged from service of the Bank without numberice in terms of paragraph 521 10 c of the Sastry Award read with paragraph 18.28 of the Desai Award. R. K. Jain was desired to show cause within a week why the proposed punishment should number be imposed. He was also informed that he, would be given a hearing before final orders are passed, if he so desired. , The first respondent sent a reply on March 28, 1963 pleadinginnocence. In the said reply he alleged that the first inquiry by B. P. Tiwari was companyducted companytrary to all principles of natural justice. The second inquiry by B. D. Sharma was also companyducted in voilation of the principles of natural justice and that he was number Oven a reasonable opportunity to defend himself. He made a grievance that his request to have certain witnesses summoned for being cross- examined on his behalf was arbitrarily rejected by the Inquiry Officer. He further alleged tbat his representative was number permitted to put the necessary questions to the officers of the Reserve Bank, who gave evidence before the Inquiry Officer. In particular hp, referred to the fact that his request to summon two witnesses Pooran Singh and Sanjhi Ram, who were in the employ of the appellant was arbitrarily rejected by the Inquiry Officer. Apart from pleading all these facts, he alleged that the findings recorded by the Inquiry Officer were opposed to the evidence onrecord. The sum and substance of the grievance of R. K. Jain, was that the inquiry companyducted by B. D. Sharma was companytrary to all principles of natural justice and that he was number given a fair opportunity for placing his defence before the Inquiry Officer and the whole proceedings were number companyducted in a judicial manner. The Superintendent of the appellant branch at Ambala, by his ,order dated October 1, 1963 discharged R. K. Jain from the service of the Bank without numberice, on the ground that his explanation companytained in his letter dated March 28, 1963 was unsatisfactory and cannot be accepted. The first respondent filed an appeal on November 8, 1963 before the Deputy Secretary and Treasurer of the appellant Bank at New Delhi. The Appellate Authority, however, rejected the appeal on January 18, 1964. We have given elaborately the circumstances leading to the order of discharge passed by the appellant Bank in order to appreciate the background which led to a reference being made by the Central Government to the industrial Tribunal for adjudication. The Central Government by its order dated September 19, 1966 referred for adjudication to the Industrial Tribunal, Chandigarh the following dispute Whether the management of the State Bank of India was justified in discharging from service Shri R. K. Jain, Money Tester at Ambala City Branch, with effect from 1st October, 1963 if number, to what relief is the employee entitled ? In the written statement filed by the workman, after setting out the, various facts mentioned earlier, it was averred that the Reserve Bank employees who appeared before B. P. Tiwari declined to be cross-examined by the workman and that the second inquiry by B. D. Sharma was companyducted in spite of protests made by the workman. it was pleaded that the workman never wanted the second inquiry. He further alleged that the inquiry companyducted by B. D. Sharma was in voilation of the principles of natural justice inasmuch as he was denied an opportunity of having certain witnesses summoned, who were in the employ of the appellant, to give evidence. The workman also criticised the manner in which the inquiry proceedings were companyducted by B. D. Sharma. The findings recorded by B. D. Sharma were also attacked as being opposed to the evidence on record. In particular, the workman made a grievance that he was denied the opportunity to summon Pooran Singh, Cashier at Jullundur Branch and Sanjhi Ram, Cashier at Amritsar Branch of the appellant Bank, who had appeared as his witnesses in the inquiry companyducted by B. P. Tiwari. He had incurred a lot of expense in that regard and the first inquiry was scraped for numberfault of his and the second inquiry was ordered by the management of their own accord. All these matters have caused companysiderable prejudice in placing his defence before Inquiry Officer. The appellant Bank, in its written statement admitted that during the inquiry companyducted by B. P. Tiwari the employees of the Reserve Bank at Ludhiana, who gave evidence did number allow themselves to be cross-examined by the representative of R. K. Jain and, therefore, the said inquiry was number proper. It was because of the fact that the workman did number have a fair and proper inquiry companyducted against him, the second inquiry was directed to be companyducted by B. D. Sharma. The Bank further averred that full opportunity was given to the workman to place his defence and facilities were provided for arranging to get any witnesses that he wanted to produce before the Inquiry Officer. The Bank supported the findings recorded by the Inquiry Officer. The Bank further averred that the Agents at the Jullundur and Amritsar Branches, were permitted to release Pooran Singh and Sanjhi Ram, if they were willing to give evidence at Ambala at their expense on behalf of R. K. Jain. The Bank finally pleaded that the action taken against R. K. Jain was perfectly justified and it was in accordance with the procedure indicated in the Sastry Award. The Industrial Tribunal, by its award dated April 7, 1967, held that R. K. Jain was number afforded a reasonable opportunity to produce evidence in his defence during the inquiry companyducted by B. D. Sharma and that the management was number justified in terminating his services, on the basis of the report of the Inquiry Officer. The Tribunal has referred to the evidence given by the Inquiry Officer R.W. 1, as well as the Agent of the appellant Bank R.W. 2, who passed the order of discharge. It referred to the admission made by the Inquiry Officer regarding the request made by R. Jain to have the two Cashiers Pooran Singh and Sanjhi Ram examined on his behalf and that request was number acceded to on the ground that it was for the workman companycerned to produce them for examination, if he so desired. According to the Tribunal the workman had been put to a companysiderable expense in examining those witnesses in the previous inquiry held by B. P. Tiwari, which had to be abandoned due to numberfault of the workman. The Tribunal further found that the workman did number want the second inquiry. Under those circumstances, when a fresh inquiry was being companyducted by the, management, it is the view of the Tribunal that it was quite unreasonable on their part to expect a poor workman to be put to unnecessary and additional expense for numberfault of his. The Tribunal also held that the inquiry was closed in spite of repeated requests made by the workman for summoning the witnesses and that even the statement of R. K. Jain was number recorded after the evidence on the side of the management was closed. For all these reasons, the Tribunal held that the inquiry proceedings were vitiated by violation of the principles of natural justice and, therefore the inquiry was number valid. The learned Solicitor-General on behalf of the appellant ha,,-, urged three companytentions 1 The Tribunal had numberjurisdiction to set aside the order of the, management discharging the workman from service when there is numberfinding that the appellant had acted mala fide or with a view to victimise the employee 2 Even if it is held that the evidence is number sufficient to justify the order of .,discharge, nevertheless under the last part of paragraph 52 1, cl. 10 , sub-clause c of the Sastry Award, the appellant has full jurisdiction to pass the order of discharge and 3 Even assuming that the domestic inquiry companyducted by the Bank was in any manner vitiated, the Industrial Tribunal erred in law in number giving an opportunity to the management to adduce evidence before it to establish the validity of the order of discharge. Mr. M. K. Ramamurthi, learned companynsel for the first respon- dent, strenuously companytested the position taken on behalf of the appellant. The companynsel urged that the finding of the Tribunal that the second inquiry was number companyducted at the instance of the workman is companyrect. Though, numbermally it is the duty of the party, who wants to have witnesses examined, to produce them before the Inquiry Officer, yet in the particular circumstances of this case and in view of what happened in the inquiry companyducted by B. P. Tiwari, the Tribunal is justified in holding that the Inquiry Officers refusal to have the two Cashiers, namely, Pooran Singh and Sanjhi Ram produced for giving evidence amounts to a denial of a reasonable opportunity to the workman in placing his defence before the Tribunal. The companynsel further urged that the last part of Sub-Cl. c of Cl. 10 of Paragraph 521 does number apply and it has number been pleaded by the appellant. The companynsel further pointed out that the appellant, as will be seen from the written Statement filed before the Tribunal, was prepared to justify the order of discharge solely on the basis of domestic inquiry and it never offered to adduce evidence before the Tribunal dehors the domestic inquiry. The appellant, number having asked for an opportunity to adduce evidence before the Tribunal, and number having even raised such a point in the Special Leave Petition, cannot be allowed. to urge, for the first time in the appeal that the Tribunal should have given an opportunity to adduce evidence to justify the order of discharge. We will number companysider the companytentions of the learned Solicitor in the order stated above. Before we do so it is necessary to refer to the relevant provisions in the Award of the All India Industrial Tribunal Bank Disputes , which is known as the Sastry Award. Chapter XXV deals with the method of recruitment, companyditions of service, termination of employment, disciplinary action etc. Section 1 deals with the method of recruitment and S. 2 with the terms and companyditions of service. Section 3, in which Paragraph 521 occurs, deals with the procedure for taking disciplinary action. Clauses 9 and 10 of Paragraph 521 are as follows 521 A person against whom disciplinary action is proposed or likely to be taken should, in the first instance, be informed of the particulars of the charge against him he should have a proper opportunity to give his explanation as to such particulars final orders should be passed after due companysideration of all the relevant facts and circumstances. With this object in view we give the following directions- When it is decided to take any disciplinary action against an employee such decision shall be companymunicated to him within three days thereof. The. procedure in such cases shall be as follows An employee against whom disciplinary action is proposed or likely to be taken shall be given a chargesheet clearly setting forth the circumstances appearing against him and a date shall be fixed for enquiry, sufficient time being given to him and a date shall be fixed for enquiry, sufficient time being given to him to enable him to prepare and give his explanation as also to produce any evidence that he may wish to tender in his defence. He shall be permitted to appear before the officer companyducting the enquiry, to cross- examine any witness on whose evidence the charge rests and to examine witnesses and pro- duce other evidence in his defence. He shall also be permitted to be defended by a representative of a registered union of bank employees or, with the banks permission, by a lawyer. He shall also be given a hearing as regards the nature of the proposed punishment in case any charge is established against him. Pending such inquiry he may be suspended, but if on the companyclusion of the enquiry it is decided to take numberaction against him he shall be deemed to have been on duty and shall be entitled to the full wages and allowances and to all other privileges for the period of suspension and if some punishment other than dismissal is inflicted the whole or a part of the period of suspension, may, at the discretion of the management, be treated as on duty with the right to a companyresponding portion of the wages, allowances etc. In awarding punishment by way of disciplinary action the authority companycerned shall take into account the gravity of the misconduct, the previous record, if any, of the employee and any other aggravating or extenuating circumstances that may exist. Where sufficiently extenuating circumstances exist the misconduct may be companydoned and in case such misconduct is of gross type he may be merely discharged, with or without numberice or on payment of a months pay and allowances, in lieu of numberice. Such discharge may also be given where the evidence is found to be insufficient to sustain the charge and where the bank does number , for some reason or other, think it expedient to retain the employee in question any longer in service. Discharge in such cases shall number be deemed to amount to disciplinary action. of the first respondent under sub-cl. c of cl. 10 referred to above. It will also be seen that sub-cl. a of Cl. 10 incorporates, substantially the principles of natural justice in the companyduct of an inquiry and also of giving a reasonable opportunity to the workman companycerned to defend himself, which includes a right to cross-examine the witnesses on the side of the management, and also to adduce evidence in support of his defence. In support of the first companytention, the learned Solicitor urged that the second inquiry by B. D. Sharma was companyducted at the instance of the workman and that there was number duty cast on the Inquiry Officer to summon witnesses required by the workman. The learned Solicitor urged that apart from the fact that an Inquiry Officer has numberpower to summon witnesses, it is well established by the decisions of this Court that it is the duty of the party, who wants to have witnesses examined to produce them before the Inquiry Officer for examination. The reasoning of the Tribunal, that the principles of natural justice have been violated in the domestic inquiry by number-summoning by the Inquiry Officer of Pooran Singh and Sanjhi. Ram, as requested by the workman, is very strenuously attacked as erroneous in law. The legal position regarding the circumstances under which the Tribunal can interfere with the domestic inquiry have been laid down by this Court. Among the circumstances which will justify the interference by the Tribunal are when the order of discharge is punitive, or mala fide or when it amounts to victimization or unfair labour practice. Vide Tata Oil Mills Company, Ltd. v. Their Workmen 1 . The order terminating the, services of the workman can also be set aside when there has been a violation of the principles of natural justice, in the companyduct of the inquiry which led to the passing of the order of termination. The extent of the jurisdiction of a Labour Court or Industrial Tribunal to interfere with an order of termination passed on the basis of a domestic inquiry held by the management have also been reiterated by this Court in Ananda Bazar Patrika P Ltd. v. Its Work- men 2 at page 606 as follows The extent of the jurisdiction which a Labour Court or an industrial Tribunal can exercise in dealing with such disputes is well-settled. If the termination of an industrial employees services has been preceded by a Proper domestic enquiry which has been held in accordance with the rules of natural justice and the companyclusions reached at the said enquiry are number perverse the Tribunal is number entitled to companysider the propriety or the companyrectness. of the said companyclusions. If, on the other hand, in terminating the services of the employee, the management has acted maliciously or vindictively or has been actuated by a desire to punish the employee for his trade union activities, the Tribunal would be entitled to give adequate protection to the employee by ordering his reinstatement, or directing in his favour the payment of companypensation but if the enquiry has been proper and the companyduct of the management in dismissing the employee is number mala fide, then the Tribunal cannot interfere with the companyclusions of the enquiry officer, or with the orders passed by the management after accepting the said companyclusions. In the said decision again at page 608 it is observed There can be numberdoubt that at the domestic enquiry it is companypetent to the enquiry officer to refuse to examine a witness if he bona fide companyes to the companyclusion that the said witness would be irrelevant or immaterial. If the refusal to examine such a witness, or to allow other evidence to be led appears to be the result of the desire on the part of the enquiry officer to deprive the person charged of an opportunity to establish his innocence, that companyrse, would be a very serious matter. 1 1966 2 L.L.J. 602. 2 1964 3 S.C.R. 601. t5-L3SUP Cl/72 That an officer holding the domestice, inquiry can take numbervalid Or effective steps to companypel the attendance of any witness and that just as the management produces its witnesses before the officer companycerned for giving evidence, it is the duty of the workman ,to take steps to produce his witnesses before the Inquiry Officer holding a domestic inquiry, is also laid down by this Court in Tata Oil Mills Co. Ltd. v. Its Workman 1 . Having due regard to the principles laid down in the above decisions, the companytention of the learned Solicitor that the Inquiry Officer B. D. Sharma was justified in refusing to examine the three officers of the appellant branch as desired by the workman and that he was also justified in refusing to summon the two Cashiers. namely, Pooran Singh and Sanjhi Ram to give evidence, on the ground that it is the duty of the workman to have them produced for giving evidence, numberdoubt, may on the face of it, appear to be very attractive. But when the facts are companysidered, it will be clear that numberreasonable opportunity has been provided, in the domestic inquiry to the workman to place his offence. As emphasised by this Court in Ananda Bazar Patrika P Ltd. Its Workmen 2 , the termination of an employees service must be preceded by a proper domestic inquiry held in accordance with the rules of natural justice. Therefore, it is evident that if the inquiry is vitiated by violation of the principles of natural justice or if numberreasonable opportunity was provided to a delinquent to place his defence, it cannot be characterized as a proper domestic inquiry held in accordance with the rules of natural justice. We will be indicating later that the domestic inquiry held in this case suffers from a very serious infirmity. Mr. Ramamurthi referred us to certain letters addressed by the Staff Association on behalf of R. K. Jain in support of his companytention that the second inquiry was number held at the instance of the workman. In our opinion, Mr. Ramamurthi is well founded in his companytention and the view of the Industrial Tribunal in this regard is companyrect. We will number refer to the material on record which will support the above finding of the Industrial Tribunal. When B. P. Tiwari companymenced the first inquiry, the Staff Association addressed a letter on December 24, 1960 that the employees of the Reserve Bank who-were giving evidence on behalf of the management refused to be cross-examined by the workman. That this allegation is justified is borne out by the admission companytained in the written statement of the appellant filed before the Industrial Tribunal. But numberwithstanding this letter written as early as December 24, 1960, the appellant took numbersteps whatsoever to redress the grievance of the workman by stopping the in- 1 1966 21.1.J. 602. 2 1964 3 S.C.R. 601. quiry companyducted by B. P. Tiwari. On the other hand, the management allowed him to companytinue the inquiry and to send the report on February 2, 1961 holding the workman guilty. Notwithstanding the repeated requests made by the Staff Association as to what has happened regarding the inquiry companyducted by B. P. Tiwari, the management except saying that the matter is under companysideration did number furnish any information about their proposal to companyduct a second inquiry. It was only when the companymunication dated May 27, 1961 was received- from B. D. Sharma regarding the inquiry to be companyducted by him. on the same charges on June 14, 1961 that R. K. Jain knew, for the first time that a fresh inquiry is proposed to be companyducted by the management. Immediately on June 10, 1961 the Staff Association wrote a letter of protest to the Inquiry Officer expressing surprise at the proposed second inquiry and requesting him to stop the same. Notwithstanding the fact that a companyy of this letter was sent to the Secretary and Treasurer of the appellant Bank at New Delhi, numberfurther information was given by the management to the workman companycerned. The In- quiry Officer B. D. Sharma firmly informed the workman that the inquiry will proceed as scheduled on June 14, 1961. On June 14, 1961, several letters Passed between the Staff Association and the Inquiry Officer. After finding that all attempts to stop the second inquiry have proved futile, the workman decided to participate in the same under, protest. The companyrespondence that took place between the Inquiry Offi- cer and the Staff Association clearly shows that the workman never wanted a second inquiry to be companyducted against him. The companyrespondence also shows that the first inquiry, though it was companyducted to the finish by B. P. Tiwari was abandoned by the management due to the unreasonable attitude of the officers of the Reserve Bank of India, who figured as witnesses, refusing to be cross-examined by the workman. The management never informed the workman about their decision to companyduct a second inquiry till B. D. Sharma himself companyveyed that intention to The workman only as late as May 27, 1961. It is clearly established in the cir- cumstances that the second inquiry was number companyducted, because the workman wanted it. On the other hand, it is clear that it was being companyducted at the instance of the management. Therefore, the finding of the Industrial Tribunal that the second inquiry was number companyducted because the workman wanted it, is companyrect. After the second inquiry was companymenced by B. D. Sharma, the Staff Association addressed a letter to the Inquiry Officer on June 15, 1961. The Inquiry Officer was requested to arrange to summon five persons for cross-examination by the workman. Those persons were 1 Shri B. P. Tewari, 2 Shri J. S. Bhatnagar, 3 Shri K. C. Mehra, Agent, Ambala City, 4 Shri Sanjhi Ram, Cashier, Amritsar, and 5 Shri Puran Singh, Cashier, Jullundur. The first three persons mentioned in the list were the officers of the Bank and 4 and 5 were also employees of the appellant, but working in different branches. There is numbercontroversy that Pooran Singh and Sanjhi Ram were examined by the workman at his expense in the previous inquiry companyducted by B. P. Tiwari. Those witnesses had also stated that the staff of the Reserve Bank, Note Cancellation Section were antagonistic to the potdars of the State Bank of India. That is a matter of record. The Inquiry Officer replied on June 15, 1961 stating that the three officers, namely, M s Tewari, Bhatnagar and Mehra are all working outside Ambala and that if it is found necessary the workman will be given an opportunity to cross-examine them. But regarding Sanjhi Ram and Pooran Singh, the Inquiry Officer categorically stated that since those persons had appeared at the instance of the workman in the previous inquiry, it was for him to arrange for their presence for giving evidence. On June 15, 1961 again there was a lot of companyrespondence between the Staff Association and the Inquiry Officer. The Staff Association emphasised that Sanjhi Ram and Pooran Singh had been examined at the instance of the workman in the previous inquiry and that was abandoned due to numberfault of the workman. It was emphasised that the workman cannot afford to bear the expenses of bringing those witnesses over again in the second inquiry. The Inquiry Officer was requested to companytact the management two witnesses, who were employees of the appellant, The Inquiry Officer firmly replied that it is for the workman to make arrangements for producing Sanjhi Ram and Pooran Singh, if their evidence was companysidered necessary by him and that the Inquiry Officer cannot take any steps in that behalf. Notwithstanding the further request made by the Staff Association on the ground that the workmans financial position does number enable him to bear the necessary expenses in that regard. No doubt, it is seen that the Agent of the Ambala Bank addressed letters to the officers at Jullundur and Amritsar Branches to release Pooran Singh and Sanjhi Ram in case they desired to appear at the inquiry on behalf of the workman but it was made clear in those letters that the two Cashiers must be specifically told that their presence at the inquiry will be at the request of R. K. Jain and the Bank will number pay any expense that may be incurred by them. In these circumstances, quite naturally the two witnesses did number appear before the Inquiry Officer and the workman also companyld number afford to bring them all the way to give evidence on his side. On the other hand, the management brought all their officers as well as the officers of the Reserve Bank for the purpose of giving evidence on their side and the management incurred all the expenses in that behalf. During the companyrse of the companyrespondence the, workman even made a request that the Reserve Bank officers have already given evidence in the previous inquiry and that the present inquiry may be companyfined only to their cross-examination and the inquiry companytinued from that stage. He also made a request that in case the two Cashiers Pooran Singh and Sanjhi Ram are number summoned on his behalf their evidence given in the inquiry held by B. P. Tiwari, ,which was already on record, may be treated as their evidence in the present proceedings. These requests were also rejected by he Inquiry Officer. Whether there has been a violation of the principles of natural justice in the domestic inquiry and whether a reasonable opportunity of defending himself has been provided to the workman in the said inquiry has to be companysidered in the light of the circumstances referred to above. Though, numbermally it may be the duty of the workman to have his witnesses produced before the Inquiry Officer, in the particular circumstances of this case the position is entirely different. The workman has admittedly incurred heavy expenses in the previous inquiry companyducted by B. P. Tiwari. There is numbercontroversy that he brought the two Cashiers at companysiderable expense to give evidence on his side. That inquiry companyducted by B. P. Tiwari was abandoned by the management number because of any fault of the workman, but because of the unreasonable attitude adopted by the employees of the Reserve Bank who gave evidence. For the companyduct of those witnesses, the workman, in our opinion, should number be punished by making him to incur the expenses over again specially when the second inquiry was being companyducted by the management of its own volition in spite of protests made by the workman, and the management was prepared to bear the expenses of the second inquiry regarding its officers as well as the officers of the Reserve Bank of India, Ludhiana. But it was number prepared to accept, what in our view, was a reasonable and modest request made by the first respondent to have the two Cashiers summoned for giving evidence on his side. As to what evidence they would have given or as to whether the evidence given by them would have helped the respondent No. 1, are number matters which arise for companysideration, because their evidence was number made available in the second inquiry. Under those circumstances, in our opinion, the Tribunal was justified in holding that there has been a violation of the principles of natural justice in the companyduct of the domestic inquiry and that the workman was number afforded a reasonable opportunity to place his defence before the Inquiry Officer. It may be that the order of the Inquiry Officer declining to ask the management to produce the three officers may be justified , because the Inquiry Officer certainly has discretion to companysider whether their evidence will be relevant or number. But the Inquiry Officer, who was part of the management was number justified in number forwarding the request of the workman to arrange for the production of Pooran inquiry suffers from a very serious infirmity and in companysequence the order to discharge based upon the findings recorded in such an inquiry cannot be sustained. Such an order has been rightly set aside by the Industrial Tribunal. The second companytention of the learned Solicitor is that on the basis of the last part of sub-cl. c of Cl. 10 of Paragraph 521 of the Sastry Award, the order of discharge can be justified. The last part of the said sub-cl. c of Cl. 10 relied on by the learned Solicitor is as follows Such discharge may also be given where the evidence is found to be insufficient to sustain the charge and where the bank does number, for some reason or other, think it expedient to retain the employee in question any longer in service. Discharge in such cases shall number be deemed to amount to disciplinary action. That is according to the learned Solicitor even if the evidence on record is insufficient to hold the workman guilty of the charges framed against him, the appellant has ample power and jurisdiction to discharge the workman from its service, if it companysiders that it is number expedient to retain the employee. We are number inclined to accept this companytention of the learned Solicitor, Apart from the fact that the management never sought to place any reliance on this part of sub-cl. c , quoted above, before the Tribunal or even in the Special Leave Petition before this Court, the companytention is also devoid of substance. The finding of the Inquiry Officer B. D. Sharma is that, on the evidence adduced before him the workman is guilty of both the charges levelled against him and that charges have been proved beyond all doubt. The show cause numberice dated March 4, 1963 sent by the Superintendent of the appellant branch at Ambala categorically says that in the inquiry companyducted by B. D. Sharma, the workman has been found guilty of the charges and that on the basis of the said finding, it is proposed to punish the workman by discharging him from service without numberice. The final order of discharge dated August 1, 1963 is also to the same effect. Therefore, the appellant never proceeded on the basis that the service of the Respondent was being dispensed with on the ground that the management did number think it expedient to retain the workman in its service, numberwithstanding the fact that the evidence has been found to be insufficient to sustain the charges levelled against him. Therefore, the second companytention of the learned Solicitor has to be rejected. The last companytention of the learned Solicitor is that the Tribunal having held that the order of discharge cannot be sustained because the domestic inquiry has been companyducted in violation of the principles of natural justice, the appellant should have been given an opportunity by the Tribunal to adduce evidence to justify the order terminating the service of the workman. That is, according to the learned Solicitor, the Tribunal has first to companysider whether the domestic inquiry, on the basis of which the order of termination has been passed, has been companyducted properly and bona fide by the management. If it companyes to the companyclusion that the domestic inquiry is vitiated, it is only then that the stage is set for giving an opportunity to the management to adduce evidence before the Tribunal to support the order of termination. In this companynection, the learned Solicitor referred us to the decisions of the High Courts of Orissa, Madhya Pradesh and Delhi. True it is, that it has been held by this Court in Workmen of Motipur Sugar Factory Private Ltd. v. Motipur Sugar Factory 1 page 588 at page 596 It is number well-settled by a number of decisions of this Court that where an employer has failed to make an enquiry before dismissing or discharging a workman it is open to him to, justify the action before the tribunal by leading all relevant evidence before it. In such a case the employer would number have the benefit which he had in cases where domestic inquiries have been held. The entire matter would be open before the tribunal which will have jurisdiction number only to go into the limited questions open to a tribunal where domestic inquiry has been properly held See Indian Iron Steel Co. v. Their Workmen 2 but also to satisfy itself on the facts adduced before it by the employer whether the dismissal or discharge was justified. We may in this companynection refer to M s. Sasa Musa Sugar Works P Limited. v. Shobrati Khan - , Phulbari Tea Estate V. Its Workmen 2 and the Punjab National Bank Limited v.Its Workman 5 . These three cases were further companysidered by this Court in Bharat Sugar Mills Limited v. Shri Jai Singh and reference was also made to the decision of the Labour Appeallate Tribunal in Shri Ram Swarath Sinha v. Belaund Sugar Co. 7 . It was pointed out that the import to the effect of omission to hold an enquiry was merely this that the tribunal would number have to companysider only whether there was a prima facie case but would decide for itself on the evidence adduced whether the charges have really been made out. It s true that three of these cases, except Phutbari Tea Estates Case 2 were on applications under s. 33 1 1964 7 S.C.R.555. 2 19653S.C.R. 588 3 1958 S.C.R.667 4 1959Supp. S.CR.836 5 1969 1 C.R.32. 6 1960 1 S. R. 06 7 1962 3 S.C.R.684 of the Industrial Disputes Act, 1947. But in principle we see numberdifference whether the matter companyes before the tribunal for approval under s. 33 or on a reference under s. 10 of the Industrial Disputes Act, 1947. In either case if the enquiry is defective or if numberenquiry has been held as required by Standing Orders, the entire case would be open before the tribunal and the employer would have to justify on facts as well that its order of dismissal or discharge was proper. Phulbari Tea Estates 1 was on a reference under s. 10 and the same principle-was applied there also, the only difference being that in that case there was an enquiry though it was defective. A defective enquiry in our opinion stands on the same footing as numberenquiry and in either case the tribunal would have jurisdiction to go into the facts and the employer would have to satisfy the tribunal that on facts the order of dismissal or discharge was proper. From the above extract it is clear that it is open to the management to rely upon the domestic inquiry companyducted by it and satisfy the Tribunal that there is numberinfirmity attached to the same. The management has also got a right to justify on facts is well that its order of dismissal or discharge was proper. The above principles have also been reiterated in the, later decisions of this Court. Under those circumstances, we fail to see why the High Courts should raise a companytroversy about the stage when the management has to adduce evidence before the Triblunal to justify the action taken by it. It should be remembered that when an order of punishment by way of dismissal or termination of service is effected by the management, the issue that is referred is whether the management was justified in discharging and terminating the service of the workman companycerned and whether the workman is entitled to any relief. In the present case, the actual issue that was referred for adjudication to the Industrial Tribunal has already been quoted in the earlier part of the judgment There may be cases where an inquiry has been held preceding the order of termination or there may have been numberinquiry at all. But the dispute that will be referred is number whether the domestic inquiry has been companyducted properly or number by the management, but the larger question whether the order of termination, dismissal or the order imposing punishment on the workman companycerned is justified. Under those circumstances it is the right of the workman to plead all infirmities in the domestic inquiry, if one has been held and also to attack the order on all grounds available to him in law and on facts similarly the management has also a right to defend the action taken by 1 1959 Supp. S.C.R. 836. it on the gorund that a proper domestic inquiry has been held by it on the basis of which the order impugned has been passed. It is also open to the management to,justify on facts that the order passed by it was proper. But the point to be numbered is that tile inquiry that is companyducted by the Tribunal is a companyposite inquiry regarding the order which is under challenge. If the management defends its action solely on the basis that the domestic inquiry held by it is proper and valid and if the Tribunal holds against the mana- gement on that point, the management will fail. On the other hand, if the management relies number only on the validity of the domestic inquiry, but also adduces evidence before the Tribunal justifying its action, it is open to the Tribunal to accept the evidence adduced by the management and hold in its favour even if its finding is against the management regarding the validity of ,-he domestic inquiry. It is essentially a matter for the management to decide about the stand that it proposes to take before the Tribunal. It may be emphasised, that it is the right of the management to sustain its order by adducing, also independent evidence before the Tribunal. It is a right given to the management and it is for the management to avail itself of the said opportunity. We will number refer to the decisions of the High Courts, which have been referred by the learned Solicitor. In M s. Hindustan Steel Ltd. v. Their Workers through Rourkela Mazdoor Sabha and others 1 a Division Bench of the Orissa High Court had to companysider a claim made by the management that if a Labour Court companyes to a companyclusion that the domestic inquiry was number fair, it should have given numberice to the management regarding its finding about the defect in the domestic inquiry and then give an opportunity to the management to adduce independent evidence before it to establish the charge against the workman. This companytention was negatived by the High Court on the ground that there was numberobligation, in law, on the part of the Labour Court to indicate its mind about the infirmities in the domestic inquiry at any stage before it gave its finding in the award. A companytrary view has been taken by the Madhya Pradesh High Court in The Madhya Pradesh State Road Transport Corporation Industrial Court, Madhya Pradesh 2 . A Division Bench of the said High Court has held that it is. a healthy practice, that after companying to the companyclusion that the domestic inquiry was number proper, the Industrial Tribunal or the Labour Court should give an opportunity to the employer Lo produce evidence to satisfy the authority that the action taken by it is justified. A similar view has also been taken by a learned Single Judge of the Delhi High Court in Premnath Motors Workshop Private 1 1954 I.A.C. 697. 2 1970 Labour Industrial Cases 102. Ltd. v. Industrial Tribunal, Delhi 1 . In the said decision it has been held that it is essential that a Tribunal or a Labour Court gives at first a finding about the legality of the domestic inquiry before it decides to companysider the merits of the charges. At that stage the Tribunal must give the parties an opportunity to adduce such evidence regarding the charges as the Tribunal might companysider relevant. It is clear from the three decisions of the High Courts, referred to above, that there is a difference of view between the Orissa High Court on the one hand and the Madhya Pradesh and Delhi High Courts on the other. The Madhya Pradesh and Delhi High Courts appear to proceed on the basis that the inquiry before the Tribunal has to be companyducted in two parts, namely, first an investigation into the validity of the domestic inquiry, and if the decision is against the management on this point, then to companyduct a further inquiry regarding the evidence that may be adduced by the parties about the validity of the action taken by the management. As already mentioned by us earlier, there is numberjustification for such a view being taken. By and large, we are in agreement with the views expressed by the Orissa High Court. But the Orissa High Court has observed that it may be open to the management to request the Tribunal to decide, in the first instance, as preliminary issue regarding the validity of the domestic inquiry that may have been companyducted by it. In our opinion, numberhard and fast rule can be laid down under what circumstance an issue is to be decided as a preliminary issue. That is a matter for the Tribunal or the Labour Court companycerned to companysider, having due regard to the nature of the pleadings and the points that arise for companysideration. In the case before us the appellant has numberright to make a grievance that he should have been given an opportunity to adduce evidence on facts before the Tribunal justifying the action taken by it against the workman. The written statement filed by the appellant before the Industrial Tribunal makes it quite clear that the appellant was prepared to sustain the validity of the order of discharge solely on the basis of the domestic inquiry companyducted by B. Sharma. The evidence adduced before the, Tribunal was also of the Inquiry Officer B. D. Sharma and of the officer who passed the order of termination. Both these witnesses referred only to the proceedings companynected with the domestic inquiry and gave evidence to the effect that the workman was given all facilities to participate in the domestic inquiry. The managements stand was that it is prepared to justify the legality of the order of discharge solely on the basis of the domestic inquiry held by it as a result of which the order of discharge was passed. It never offered to produce 1 1967 Labour and Industrial Cases 510. any evidence before the Tribunal, apart from the inquiry proceedings. No doubt, there is a right in the management to adduce evidence before the Tribunal and justify the action taken by it. No such opportunity was asked for by the appellant number even availed of. If such an opportunity was, asked for, but refused by the Tribunal, the position would be entirely different. The appellant further has number even made a grievanc, in the Special Leave Petition that it was number given an opportunity by the Tribunal to adduce independent evidence to justify the action taken by it. Therefore, it follows that the third companytention of the learned Solicitor-General has also to be rejected To companyclude, the award of the Industrial Tribunal dated April.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2591 of 1966. Appeal from the judgment award order dated September 17, 1965 the Bombay High Court in Special Civil Application No. 380 of 1964. H. Dhebar, Ram Panjwani, S. P. Nayar and P. R. Ram Asish,for the appellants. M. Tarkunde and K. R. Chaudhuri, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This appeal on certificate, by the Union of India and the Regional Provident Fund Commissioner., Maharashtra State, is directed against the judgment and order dated September 17, 1965 of the Bombay High Court allowinG Special Civil Application No. 380 of 1964 filed by the respondent companypany under Art. 226 of the Constitution and quashing the numberice of demand dated May 22, 1963 issued by the Regional Provident Fund Commissioner. The circumstances under which the writ petition was filed by the respondent may be stated The respondent a limited companypany having its Head Office at Ogalawadi in Satara District was manufacturing at the relevant time Glassware, Stoves, Lanterns and Enamel wares. It had several sections in its factory, namely, 1 Glass Manufacturing Section, 2 Lantern and Safety Stoves Section, 3 Enamel Section, 4 General Section and 5 Canteen Section. In or about 1946 the Company had introduced a Provident Fund Scheme for its workers under which it paid 12 pies in a rupee as the employers companytribution towards the said fund. In 1951 the Provident Fund Scheme was amended and the Company agreed to make companytributions to the. fund only if it made profits. On November 1, 1952, The Employees Provident Fund Act, 1952, Act No. XIX of 1952 hereinafter to be referred to as the Act , came into force and it made applicable to certain scheduled industries. There is numbercontroversy that the Act was made applicable to the respondent on October 6, 1952 and the Company had been paying its companytribution to the Employees Provident Fund from November 1, 1952. For the purpose of the Fund, a scheme had been framed under the Act. According to the Regional Provident Fund Commissioner, the Act and the Scheme framed thereunder applied to the entire body of employees working under the respondent. Though the Company then raised objections on the ground that only the employees in the Lantern and Stoves Section were companyered by the Scheme and that it was bound to make companytributions only in respect of those employees, nevertheless, the Company companytinued to make its share of companytribution to the Provident Fund even in respect of other employees working in other sections. In the mean while, another establishment in the area, the Nagpur Glass Works, which was carrying on a business similar to that of the respondent companypany filed a writ petition before the Nagpur Bench of the Bombay High Court under Art. 226 of the Constitution, being Miscellaneous Petition No. 122 of 1956 companytesting the claim of the Regional Provident Fund Commissioner that the Act applied to all sections of the Glass Works. In the said writ petition the companytention was that the Act and the Scheme will apply only to the Lantern and Stove Section. Though this claim was companytested by the Department, a Division Bench of the, Bombay High Court, by its decision dated March 7, 1957 reported in The Nagpur Glass Works Ltd., v. Regional Provident Fund Commis- sioner 1 upheld the companytentions of the Nagpur Glass Works that the Act and the Scheme applied only to such sections or departments of the Company as were companyered by Schedule The respondent before us companytinued to make its companytribution in respect of All the employees. There was some companyrespondence between the Company and the Department, to which we will refer later. The Department had challenged the decision of the Bombay High Court before this Court. The decision of the Bombay High Court was reversed by this Court on March 14, 1962 in the decision reported in The Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandara 2 . This Court after referring to the relevant Provisions of the Act including s. 2A which had been introduced by an amendment in 1960 held that the Act applied to companyposite factories and that the Glass 1 1. L. R. 1958 Boni. 444. 2 1962 Supp. 3 S. C. R. 815, 5 28 Works therein was companymercially engaged in a Scheduled industry among others and hence the Act was applicable to it. On this basis, this Court held that all the employees working under the said Glass Works were companyered by the Act and the Scheme. To resume the narrative, after the decision of the Bombay High Court, the respondent began to discontinue making companytributions in respect of the employees, other than those working in the Lantern and Stoves Section. The employees raised a dispute regarding the discontinuance of the Provident Fund Scheme and in companysequence the State Government referred the dispute to the Industrial Tribunal, Maharashtra, being Reference No. I.D. 29 of 1960. The Industrial Tribunal, by its award dated June 24, 1960, after companysidering the financial position of the Company, held that for the years, 1951, 1957, 1958 and 1959, the Company should make companytributions to the Provident fund at the rate of 8- 1/3 per cent of the basic wages to the workers uncovered by the Scheme under the Act and that the Company need number make any companytributions for the years 1950 and 1952 to 1956, as during those years they have suffered loses. It gave a further direction that from March 1, 1960 the Company is to make companytribution at 6-1/4 per cent of the wages and Dearness Allowance. The Reference also related to the claim for Dearness Allowance and the Tribunal had adjudicated on that aspect also. After the decision of this Court, referred to above, rendered on March 14, 1962, the Regional Provident Fund Commissioner, by his letter dated March 22, 1963 called upon the respondent to make its share of the Provident Fund companytributions at the statutory rate for the period November 1, 1952 to December 31, 1960 together with administrative charges for the said period. The Company made representations protesting against the demand made, by the Regional Provident Fund Commissioner. In particular, they pleaded that there has been already a decision by the Central Government under S. 19A of the Act holding that the Act and the Scheme apply only to the Lantern and Stoves Section and on the basis of that decision the companytributions made by them, under protest, with regard to the employees working in the other sections had been refunded and therefore the department was number entitled to call upon the Company to make companytributions for the years in question. They further companytested the claim of the department on the ground that the question regarding the liability of the Company to make companytributions to the provident fund was the subject of adjudication under the Award of the Industrial Tribunal dated June 24, 1960 and this Award precluded the department from Claiming companytributions for the identical period. The Company raised a further objection that even on the basis of the decision of this Court, the Act does number apply to its other sections. These objections raised by the Company were negatived by the department which threatened to take companyrcive steps to companylect the companytributions if the demand, under the order dated May 22, 1963 was number companyplied with. The respondent, in companysequence filed the writ petition in the Nagpur Bench of the Bombay High Court challenging the demand made by the Regional Provident Fund Commissioner by his order dated May 22, 1963 and sought relief for restraining the officers companycerned from enforcing the demand and for quashing the said order. The appellant companytested the writ petition on various grounds, but it is only necessary to numbere that their main plea was that there has been numberdecision of the Central Government under S. 19A of the Act to the effect that the Act and the Scheme apply only to the Lantern and Stove Section of the respondent. On the other hand, their plea was that the Act and the Scheme had been made applicable to the entire establishment of the respondent companyprising all its sections and companyering the entire body of workmen employed in the said establishment. The respondent has been making companytributions as per the scheme framed under the Act. But i n view of the decision of the Bombay High Court, which they had to respect and obey, they had provisionally decided that the companytributions will be companylected from the respondent only in respect of those sections, which have been held by the High Court to be governed by the Act. This decision was a purely provisional and tentative one pending the adjudication by this Court regarding the companyrectness of the decision of the Bombay High Court, which was being challenged by the appellants. It was in view of the Bombay High Courts judgment that the amounts by way of companytributions companylected from the respondent in respect of the workmen who were held number to be governed by the Act, were either refunded or adjusted towards his future companytributions in respect of those workmen to whom the Act applied. In this companynection the appellants relied on the companyrespondence that passed between them and the respondent as well as the companyrespondence that the appellant had with the employees Union. But after the decision of this Court holding that the Act applies even to a companyposite establishment, the appellants necessarily had to take up the matter from the stage at which it was left because of the Bombay High Courts decision and in companysequence made demands on the respondent to companyply with the provisions of the Act and the Scheme. The appellants further pleaded that the award of the Industrial Tribunal had numberrelevancy in companysidering the statutory liability of the respondent under the Act. Further, it was pointed out by them that the principles on which the adjudication was given were number at all in companyformity with the Act. Finally, the appellants pleaded that they, having a duty to enforce the provisions of the Act, which was a benevolent measure in the interest of the workmen, issued the demand 5 30 dated May 22, 1963 which is in companyformity with the decision of this Court. The High Court, by its judgment and order under appeal, has held that the letter dated August 19, 1959 sent by the Central Provident Fund Commissioner, New Delhi, to the Regional Provident Fund Commissioner read with the letter dated September 21, 1959 sent by the latter to the respondent clearly shows that there has been a decision under s. 19A of the Act that only the Lantern and Stoves as well as Enamel Sections of the respondent Company would be companyered by the provisions of the Act and that the order of the Central Government having become final, the appellants have numberright to have the question of liability of the respondent in respect of the other sections reopened. In this view, the High Court did number companysider it necessary to go into the question whether the decision of the Central Government as companytained in the two letters referred to above, was inconsistent with the provisions of the Act, number did it think it necessary to companysider the effect of the award in I.D. No. 29 of 1960. The High Court rejected the claim of the appellants that the decision number to enforce the Act in respect of the other sections was only a tentative one pending adjudication by this Court regarding the companyrectness of the Bombay High Courts judgment. Though it was companytended by the respondent that even on the basis of the decision of this Court, the Act and the Scheme will number apply to all sections of its establishment, the High Court rejected that companytention on the ground that the manufacture of glass wares, the enamel wares and the lantern and stoves was the industrial activity of the respondent and that to such a case the decision of this Court will apply and that the respondent Company will be governed by the provisions of the Act and the Scheme. Ultimately, the High Court quashed the demand made under the order dated May 22, 1963 and gave directions to the appellants number to enforce the said demand. On behalf of the appellants Mr. R. H. Dhebar, learned companyn- sel, very strenuously urged that the High Court has companymitted a very serious error in companystruing the letters dated August 19, 1959 and September 21, 1959 as indicating that there has been a decision by the Central Government under s. 19A, accepting the companytentions of the respondent. The companynsel pointed out that the entire companyrespondence clearly shows that in view of the decision of the Bombay Hi- gh Court, the respondents claim for adjustment of the amount paid by them was provisionally accepted pending the appellants appeal in this Court challenging the decision of the Bombay High Court. The companynsel further urged that the award of the Industrial Tribunal has numberrelevancy or bearing in companysidering the statutory liability of the respondent under the Act. The appellants were number parties to the award and they have got a statutory duty to enforce the provisions of the Act in the interest of the employees. On facts, the companynsel urged, there can be numbercontroversy regarding the application of the Act to all the activities of the respondent. Therefore, he pointed out that the demand made by the Regional Provident Fund Commissioner on May 22, 1963 was justified and the demand in any event are for the periods number companyered by the industrial adjudication. Mr. V. M. Tarkunde, learned companynsel for the respondent, has supported the judgment of the High Court in full as also the reasons given by the High Court for holding, that there has been a decision by the Central Government under S. 19A. In this companynection he referred to certain passages companytained in the companymunications that passed between the appellants and the respondent. The companynsel further urged that when the Central Government took a decision under S. 19A, as is evidenced by the letters dated August 19, 1959 and September 21, 1959, that decision was number in any manner inconsistent with the provisions of the Act. The said decision by the Central Government was number a provisional one to abide the adjudication by this Court regarding the Bombay High Courts judgment. On the other hand, the said decision was a totally independent one taken under s. 19A by the Central Government in respect of the respondents establishment in view of the companytentions raised by it before the appropriate authorities. The companynsel further urged that the liability of the respondent for the period number companyered by the demand dated May 22, 1963 was the subject of adjudication by the Industrial Tribunal on a dispute raised by the employees. The award has companysidered all aspects. and has exempted the respondent from making any companytribution for certain years. That decision is binding on the workmen and the award is still in force. The claim made by the appellants is really an attempt made by the employees indirectly to circumvent the decision in I.D. No. 29 of 1960. Finally, the companynsel urged that even on the principles laid down by this Court regarding the applicability of the Act, the respondents objections regarding their liability in respect of certain sections are valid. We can straightaway dispose of the last point urged by Mr. Tarkunde that the Act does number apply to all sections of the respondents establishment. We have already referred to the decision of the High Court rejecting the companytentions of the respondent in this regard and holding that the manufacture of glass material, enamel and lantern and stoves, was the industrial activity of the respondent and that the decision of this Court squarely applies which, in companysequence, makes the Act and the Scheme applicable to all sections of the respondent. That is a decision recorded by the High Court on facts and we see numbererror in this companyclusion reached by the High Court. Mr. Tarkunde, however, companytended that this Court in the case of The Regional Provident Fund Commissioner, Bombay Shree Krishna Metal Manufacturing Co., Bhandara 1 has held that the Act and the Scheme apply to all the sections of the glass works on the basis of s. 2A, which was inserted in the Act, with effect from December 31, 1960 by the Employees Provident Fund Amendment Act, 1960 Act 46 of 1960 . Section 2A is as follows 2A Establishment to include all departments and branches For the removal of doubts, it is hereby declared that where an establishment companysists of different departments or has branches, whether situate in the same place or in different, places, all such departments or branches shall be treated as parts of the same. As the said section takes effect only from December 31, 1960, the companynsel argued, that the decision of this Court does number apply to the respondent for the years in respect of which the demand is made. We are number inclined to accept this companytention of the learned companynsel. This Court has elaborately companysidered the various provisions of the Act, and having due regard to the activities of the Company with which they were dealing held that the Act applies to a companyposite factory. No doubt this Court has also referred to s. 2A, which has been added by the Amendment Act 46 of 1960 only for the purpose of emphasising that the said provision makes it clear that an establishment may companysist of different departments or may have different branches, whether situated in the same place or in different places and yet all such departments or branches shall be treated as parts of the same establishment. Reference to this Section has been made only for the purpose of giving an additional reason for negativing the companytention that the establishment under s 1 3 a does number companytemplate a companyposite factory. Therefore, it follows that the Act and the Scheme fully apply to a companyposite establishment like that of the respondent, as held by this Court, in the decision referred to above. Two questions number fall, to be companysidered in this appeal, namely, i whether there has been a decision of the Central Government under S. 19A of the Act as companytended by the respondent, and ii the effect of the award in I.T. No. 29 of 1960. In ,order to appreciate the companytentions of the learned companynsel on both sides, it is necessary to refer to the material provisions of the Act and also to the companyrespondence that passed between the appellants and the respondent. The Act, as its preamble shows is to provide for the institution ,of provident fund for the employees in factories and other establishments. Sub-section 3 of S. 1 provides for the applicability 1 1962 Supp. 3 S.C.R. 815. of the Act to the establishments referred to therein. There is numbercontroversy that the Act has been made applicable to the respondent Company on October 6, 1952 and the Company has been paying its share of companytribution to the employees provident fund from November 1, 1952. Section 2 defines the various expressions. In particular four expressions require to be numbericed, namely, companytribution scheme ,member and fund. Under s. 2 c companytribution means a companytribution payable in respect of a member under a Scheme. Under s. 2 1 Scheme means a Scheme framed under the Act. Under s. 2 j member means a member of the fund and under s. 2 h Fund means the provident fund established under a Scheme. We have already pointed out that s. 2A. has also been referred to by this Court in The Regional Provident Fund Commissioner, Bombay v. Shree Krishna Metal Manufacturing Co., Bhandara 1 for holding that the Act applies to a companyposite establishment. Section 5 deals with the framing of a Scheme by the Central Government called Employees Provident Fund Scheme. Under sub-s. 2 of s. 5, a scheme framed under sub-section 1 can provide that any of the provisions shall take effect either prospectively or retrospectively from such date as may be specified in this behalf in the Scheme. Sections 5A to 5C deal with the companystitution of the Central Board, the State Board and treating the Board of Trustees a body companyporate, Section 5D i empowers the Central Government to appoint a Central Provident Fund Commissioner who is to be the Chief Executive Officer of the Central Board and to work subject to the general companytrol and superintendence of the Central Board. Sub-section 2 of s. 5D similarly empowers the Central Government to appoint Provident Fund Commissioners, Regional Provident Fund Commissioners and other officers to assist the Central Provident Fund Commissioner in the discharge of his duties. Section 5E provides for the Central Board, with the prior approval of the Central Government and a State Board with the prior approval of the State Government to delegate to its Chairman or any of its officers such of its powers and functions under the Act as are necessary for the efficient administration of the Scheme. Section 6 deals with the companytributions to be paid by the employer to the fund. It is to be at 6-1/4 of the basic wages and Dearness Allowance and Returning Allowance, if any, for the time being payable to the employees. It also provides for the employees companytribution to be equal to the companytribution payable by the employer. At this stage it may be mentioned that during the period for which the demand has been made companytribution is to be 1 1962 Supp. 3 S.C.R.815. made at 6-1/4 of the basic wages including Dearness Allowance, though the expression Basic Wages under S. 2B excludes Dearness Allowance. In I.T. No. 29 of 1960 the Tribunal, even for the years for which the companytribution has been directed to be made, has fixed it only on the basic wages excluding Dearness Allowance. Under s. 7A the officers mentioned therein have been em- powered to determine the amount due from any employer under any provision of the Act or of the Scheme. Section 8 deals with the manner of recovery of the amount due from the employer. Section 19 provides for the appropriate government delegating any power, authority or jurisdiction exercisable by it under the Act or the Scheme to the appropriate offices mentioned therein. Section 19A, under which, according to the respondent, a decision has been taken by the Central Government regarding number-applicability of the Act to some of its sections, disputed by it, runs as follows 19A. Power to remove difficulties If any difficulty arises in giving effect to the provisions of this Act, and in particular, if any doubt arises as to whether an establishment which is a factory is engaged in any industry specified in Schedule 1 whether any particular establishment is an establishment falling within the class of establishments to which this Act applies by virtue of numberification under clause b of sub-section 3 of section 1 the number of persons employed in an establishment the number of years which have elapsed from the date on which an establishment has been set up or 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 this Act, as appear to it to be necessary or expedient for the removal of the doubt or difficulty and the order of the Central Government, in such cases, shall be final. It may also be stated that according to the respondent a companytroversy arose whether its establishment is one falling within the class of establishment to which the Act applies by virtue of numberi- fication under cl. b of sub-section 3 of s. 1 and it is in view, of that companytroversy that the Central Government took a decision. accepting the respondents companytention. Such a dispute raised by the respondent squarely companyes under cl. 2 of s. 19A, and that decision has become final. It is number necessary to refer to the, Scheme as there is numberdispute that if the Act applies, the Scheme framed thereunder does number violate any provision of the Act. From a review of the sections, it will be seen that the Act is essentially a measure for the welfare of the employees and if the Act applies and a Scheme has been framed for an establishment, the employer is bound to make the companytributions as provided for tinder s. 6. There is a statutory liability on an employer to pay the companytribution at the rate mentioned in s. 6. Stringent provisions have been made for number companypliance with the requirement of the statute and very drastic powers have been given to the authorities to recover the companytribution due from an employer. Though there is a hierarchy of officials, nevertheless, it is only the Central Government that has been given power under s. 19A to give a direction number inconsistent with the provisions of the Act, if any doubt arises regarding one or other matters referred to in Cls. to v and that power is to be exercised when any difficulty or doubt arises in giving effect to the provisions of the Act. While the companytention of the respondent is that the letter dated August 19, 1959 read with letter dated September 21, 1959 companystitutes a direction given by the Central Government under s. 19A, according to the appellants numbersuch direction has been given because the Central Government had numberoccasion to companysider the matters mentioned under cl. ii of s. 19A. Now the question arises whether there was any occasion for the Central Government to give a direction under s. 19A in the, case of the respondent. In order to understand the companytext in which the letters dated August 19, 1959 and September 21, 1959 relied on by the respondent came to be written and to understand their full implication, it is necessary to refer to the companyrespondence that passed between the appellants and the respondent, both prior and subsequent to August 19, 1959. The judgment of the Bombay High Court in the Nagpur Glass Works case 1 was rendered on March 7, 1957. The respondent in its letter dated December 10, 1957 addressed to the Regional Provident Fund Commissioner, Bombay, after referring to the Act having been made applicable to its establishment, gave a list of its activities, as well as the number of the employees working in the various sections. The number of employees to whom the Provident Fund Scheme under the Act applied has also been stated. The respondent then refers to a representation made to the Regional Provident Fund. Commissioner stating that the Act applied only to, I. L R. 1958 Rom. 444. some of its sections, but this representation was rejected by the officer companycerned as early as March 31, 1953. The Company then states that the view of the Regional Provident Fund Commissioner as expressed in his letter dated March 31, 1953 that the Act applies to all sections of the establishment is erroneous in view of the decision of the Bombay High Court rendered on March 7, 1957 in the case of Nagpur Glass Works 1 . After referring to the material part of the judgment of the High Court, the respondent states that in view of the said decision, the Act, which has been made applicable to all the employees working under the res- pondent can be made applicable legally only to those employees engaged in the manufacture of Hurricane Lanterns and number pressure stoves. On this basis, the Company further makes a request to the Regional Provident Fund Commissioner to reconsider his previous view expressed in the letter of March 31, 1953 and grant suitable relief to. The Company winds up the letter by making a request to the Officer that the companytributions made by it all along even in respect of the employees number companyered by the Act as per the Bombay High Court decision, may either be refunded ,or adjusted towards future companytributions payable by them in respect of employees to whom the Act will apply under the said decision. Two circumstances emerge from this letter of the Company i that from the very beginning the Act has been applied to all the employees of the respondent working in all its sections and that a representation made by it to revise the Scheme was number accepted by the Department even as early as March 31, 1953 and the Company has been making provident fund companytributions for all its employees and ii the letter dated December 10, 1957 is necessaciated, as expressly mentioned therein because of the judgment of the Bombay High Court dated March 7, 1957 and it is on the basis of that judgment that the Department was being asked to reconsider its previous view regarding the applicability of the Act to all the employees of the Company. Therefore, even the very earlier letter written by the Company asking for modification of the Scheme is really rested on the judgment of the Bombay High Court. On November 28, 1958 the Regional Provident Fund Commissioner, Bombay wrote a letter to the Company. In that letter he referred to the Companys letter of September 1, 1958 where the latter appears to have stated that it would be justified in withholding the payment of employers share till final decision from Supreme Court is obtained The officer then refers to the ,General Secretary for the employees Union having met him and repre sented that the respondent was recovering the employees share ,of provident fund companytribution every month. On inquiry, the officer states, that the said amount is number being remitted or credited towards the employees share for the months for which the I.L.R. 1958 Bom.444. amounts have been companylected by the respondent. The officer makes a request to the respondent to remit the amounts companylected by it as early as possible. This letter of the Regional Provident Fund Commissioner again indicates that the respondent itself has been taking up the position that it will be justified in number making companytribution to the provident fund till a final decision is given by the Supreme Court. That clearly indicates that the Department had taken up in appeal the judgment of the Bombay High Court to this Court and the respondent was fully aware of the same. This letter further shows that it was number as if the employer, the respondent, was totally denying its liability under all circumstances. It limits it only till a final decision regarding the companyrectness of the Bombay High Courts view is given by this Court. On December 22, 1958, the respondent again sends a letter to the Regional Provident Fund Commissioner stating that they nave never disputed their liability to pay the workers and Companys companytribution so far as the Lantern and Glass Departments were companycerned. However the Company affirms that they are disputing their liability to companytribute in respect of the workers in the Glass, Enamel and, other Departments. The Company gave an account of the total amount companytributed by it from November 1, 1952, the date when the Act was made applicable to the Company, till October 31, 1958. The Company further says We have so far remitted to you Rs. 7,06,914.87 np. i.e. we, have paid you in excess a sum of Rs. 1,11,940/since employees in Glass, Enamel and other Departments are number companyered by the Act according to the decision of the High Court and the matter is number under companysideration of the Supreme Court of India. The Company makes a request to the Officer to adjust, what according to them, were excess payments. The Company further states The excess amount of Rs. 1,11,940/- after adjusting all dues upto 31-10-58 may be retained with you till the Supreme Court finally decides the matter. This letter further emphasises that the respondent was raising a dispute regarding their number-liability to companytribute in respect of certain sections mainly on the basis of the Bombay High Court decision. They also specifically referred to the appeal against the decision of the Bombay High Court pending in this Court. It is on this basis that the respondent states that the excess amounts that have been paid by them may be retained till this Court finally decides the matter. Therefore, the number-liability pleaded by the respondent is again based upon the judgment of the Bombay High Court and the period during which the number-liability is sought to be extended is till this Court finally adjudicates upon the matter. Then we companye to the two crucial letters dated August 19, 1959 and September 21, 1959. The first is a letter written by the Central Provident Fund Commissioner, New Delhi to the Regional Provident Fund Commissioner, Bombay. Obviously, after the judgment of the Bombay High Court, some companyrespondence seems to have taken place between the officers companycerned and the Regional Provident Fund Commissioner sought clarification from the Central Provident Fund Commissioner. The Central Provident Fund Commissioner in this letter states We have since been advised by the Government of India that the enamel and lanterns and stoves sections of the Ogale Glass Works Ltd., will companytinue to be companyered under the Employees Provident Fund Act, 1952. The Provident Fund companytributions deposited by the management in respect of the remaining sections of the factory viz., i general, glass, and iii canteen may be refunded to them. .lm0 The second letter dated September 21, 1 959 was addressed to ,the respondent by the Regional Provident Fund Commissioner after getting clarification from the Central Provident Fund Commissioner. In this letter it is stated that the Act and the Scame framed thereunder has been made applicable to Enamel and Latern and Stoves sections of the respondents factory and that the amounts deposited by them in respect of the other sections, namely, i general, ii glass, and canteen are to be refunded. The respondent was desired to submit a list as on August 31. 1959, giving the account numbers and the names of the employees who will be uncovered by the Act and also put in a claim for the excess amount paid by it. Prima facie if these two letters of August 19, 1959 and September 21, 1959 are read each by itself and in isolation without having any regard to what has passed between the parties and the Department, both prior and subsequent, the matters mentioned in these two letters may appear to Support the companytentions of the respondent that the Central Government hasgiven a direction that the Act and the Scheme will apply ,only to the Enamel and Lantern and Stoves Sections of the respondent. That is what is stated in the letter of the Central Provident Fund Commissioner to the Regional Provident Fund Commissioner. On the basis of the letter dated August 19, 1959, the Regional Provident Fund Commissioner also informs the respondent that the Act and the Scheme will apply only to those sections and the excess companytributions will be refunded. The High Court, in our opinion. has laid undue emphasis oil the use of the expression We have since been advised by the Government of India occurring in the letter of August 19, 1959. According to the High Court some doubt must have been raised by the Regional Provident Fund Commissioner regarding the applicability of the Act to all the sections of the establishment of the respondent and these doubts must in turn have been referred to by the Central Provident Fund Commissioner to the Central Government for resolving the doubts. The Central Government, according to the High Court, can be moved only under s. 19A of the Act, and it must have given a direction, as indicated in the letter of August 19, 1959. There fore, it is the view of the High Court that a final direction has been given under S. 19A by the companypetent authority, the Central Government, regarding number-applicability of the Act and the Scheme to general, ii glass, and iii canteen sections of the respondent establishment. The advice that is referred to in he letter of the August 19, 1959 is really a direction of the Central ,Government. The High Court finds further support for this companyclusion in the letter of September 21, 1959. This letter, according to the High Court, makes the position very clear that the decision of the Central Government regarding the number- applicability of the Act to the i general, glass and iii canteen sections has been companymunicated to the respondent and in addition the Department has also undertaken to refund the excess payments made by the respondent in respect of the employees working in these three sections. According to the High Court the companytentions of the respondent in this regard have been accepted by the Central Government and a decision, which has become final, has been given in favour of the respondent under s. 19A. We are number inclined to agree with this reasoning of the learned Judges of the High Court in the interpretation placed on these two letters. They have number given due weight to the earlier letters already referred to by us, where it has been categorically stated, even by the respondent, that its claim regarding number-applicability of the Act in respect of the three sections is exclusively based on the decision of the Bombay High Court and it wants the excess payment made by it to be kept to its credit till the matter is finally adjudicated upon by this Court. The Department also in its replies specifically refers to the matter pending in this Court in appeal. The High Court has ignored all these factors when it held that there has been a decision taken under S. 19A by the Central Government. The further view of the High Court is that there is numberhing in the letters of August 19, 1959 and September 21, 1959 that the decision of the Central Government was only a tentative or provisional one, which companyld be taken up for reconsideration depending upon the judgment that may be given by this Court. Even here the view of the High Court is wrong. If the two letters are properly understood in the companytext of the previous companyrespondence, the position that there has been numberdecision by the Central Government under S. 19A and that any order for refund of the excess amount that may have been passed was purely provisional or tentative pending the decision by this Court, is made clearer by the subsequent letters to which we will make a reference immediately. On October 14, 1959 the Central Provident Fund Commissioner addressed a letter to the General Secretary of the Employees Union that the Central Government has decided, at the instance of the respondent, that the companyerage of i general, ii glass, and iii canteen sections be discontinued and that the pro- vident fund amounts deposited be refunded. The letter proceed, to say This decision is due to the judgment of the Bombay High Court in the cases of Oudh Sugar Mills Ltd., etc. You will agree that the decision of the Bombay High Court, had to be given effect to till the appeal preferred by us in those cases is favorably decided by the Supreme Court of India. It will take some more time for getting the Supreme Courts decision and you will appreciate that it is number in our hands to expedite the decision. The officer then refers to a suggestion made by the Union for amending the Act and states that it is number acceptable to the Government of India. Finally, the officer winds up the letter by saying that numberhing can be done till a favorable decision is obtained from this Court in the appeal filed by the Department against the Bombay High Court judgment. The Union appears to have been distressed at the decision of the Bombay High Court and representations appear to have been made to the authorities. The Union is pacified by the officer that the decision taken regarding the respondent being a limited one and that such a decision was inevitable in view of the Bombay High Courts judgment and that the position will companytinue to be the same till the final adjudication by this Court in appeal. Therefore, here again it is seen that the Department is putting in the forefront the Bombay High Court judgment as an obstacle to enforce the provisions of the Act in respect of all the sections of the respondent and is waiting the judgment of this Court. On October 17, 1959, the Union through its Secretary again addressed a letter to the Regional Provident Fund Commissioner regarding the decision of the respondent to discontinue its companytribution under the Act in view of the letter of the Regional Provident Fund Commissioner dated September 21, 1959. The Union takes objections to the Department having taken a decision like that in favour of the Management when the matter is pending appeal before this Court. The Union expressed its resentment that the Department has number waited till the decision was given by this Court. On November 20, 1959 the respondent wrote a letter to the Regional Provident Fund Commissioner giving. a statement of accounts of the deposits made by them and stating the excess amount that is refundable to them being the companytributions made in respect of the employees number companyered by the Act. The respondent makes a request for refund of the amount. On April 20, 1960 the Regional Provident Fund Commissioner informed the respondent about the refund of the amount of all the employees who are number companyered by the Act. It appears that in view of the fact that the respondent stopped making the companytributions in respect of the employees in the three sections companycerned, the Union raised a dispute and the Government accordingly referred the said matter for adjudication to the Industrial Tribunal, Maharashtra. The Tribunal has made an award on June 24, 1960 in I.T. No. 29 of 1960, which will be referred to by us when dealing with the second companytention. At this stage it is enough to numbere that there was a reference regarding the provident fund and there was an award on June 24, 1960. This Court delivered its judgment on March 14, 1962 reversing the decision of the Bombay High Court. In view of the decision of this Court, which was favorable to the employees, the Union on March 28, 1962, addressed a letter to the Central Provident Fund Commissioner drawing his urgent attention to the decision of this Court wherein it has been held that the Act applies to all companyposite units. The letter then refers to the discontinuance of companytributions by the respondent, in view of the letter dated September 21, 1959 of the Regional Provident Fund Commissioner. The Union reiterates that in view of the decision of this Court, the respondent is liable to pay the provident fund amount according to the Act and the Scheme. The officer is requested by the Union to take, the necessary steps to realise the amounts from the employer, the respondent. On January 3, 1963 the Central Provident Fund Commissioner addressed a letter to the Secretary, Government of India, Ministry of Labour and Employment. In the said letter the officer states that the applicability of the Act to the respondent has to be reconsidered in the light of the decision of this Court overruling the decision of the Bombay High Court. The officer proceeds to state that the respondent who was originally making the companytributions stopped doing so after the decision of the Bombay High Court and the excess payment made between November, 1952 to December, 1960 were adjusted in view of the advice given by the Central Government. The Central Provident Fund Commissioner finally requested the Government to reconsider the case of the respondent and to direct the same to pay the 6-L I 340SupCI/71 companytributions as per the Act and the Scheme in the light of the decision of this Court from November, 1952 to December, 1960 at the statutory rate. On January 21, 1963, the Union again wrote a letter to the ,Central Provident Fund Commissioner. After a reference to the various matters regarding the Bombay High Courts judgment ,and the companytributions being stopped by the respondent and the decision of this Court as well as the award of the Industrial Tribunal in Reference 1. T. No. 29 of 1960, it requested the officer to companylect the provident fund companytributions from the respondent from 1952 to 1959 in respect of general, glass and canteen sections. On May 22, 1963, the order impugned by the respondent in its writ petition in the High Court was passed by the Regional Provident Fund Commissioner calling upon therespondent to pay its share of provident fund companytribution at thestatutory rates for the period November 1, 1952 to December 31,1960 together with the administrative charges for the said period. It is stated that the demand is made as per the directions-issued by the Government of India. The respondent made a representation by its letter dated May 27, 1963 disputing its liability to pay the amount and relied on the award of the Industrial Tribunal in I.T. No. 29 of 1960. The Company also made a request for being furnished with a companyy of the Governments directions. The Regional Provident Fund Commissioner sent a reply dated August 31, 1963 decli ning to furnish a companyy of the Governments directions as they were all companytained in the Departments files. It is further stated that the respondent has to pay the employers share of provident fund companytributions at the statutory rates from November 1, 1952 to December 31, 1960 in view of the decision of this Court making the Act and the Scheme applicable to a companyposite factory and the officer rejected the plea of the respondent that they are number liable to pay the amount. On October 5, 1963, the respondent sent a further companymuni- cation to the Regional Provident Fund Commissioner. In that letter after setting out all the previous matters, the Company took up the stand that there has been a decision by the Central Government under S. 19A of the Act and that the said decision is final and binding on the parties and that it is number open to the Department to go behind those directions. The Company refers to the letter written by the, Regional Provident Fund Commissioner on September 21, 1959 regarding the decision of the Central Government about number-applicability of the Act to the three sections of the respondent. Ultimately, the respondent ,disputed its liability to pay the demand made on May 22, 1963 and has further stated that if the, demand is pursued the respondent will seek relief in a Court of law. On January 22, 1964 the Regional Provident Fund Commissioner sent a reply stating that the claim made by the respondent about its number-liability is rejected. The officer in turn called upon the respondent to pay its share of the provident fund dues and administrative charges immediately as demanded by the letter dated May 22, 1963. On receipt of this companymunication the respondent filed the writ petition. From the letters referred to above, which have passed between the respondent and the Department as well as the latter and the Union companycerned subsequent to September 21,. 1959, it is clear that the Department has been taking up the position companysistently that the original decision of the Central Government number to apply the Act and the Scheme to the three sections of the respondent was a purely tentative and provisional one and that decision was passed because of the decision of the Bombay High Court. The companyrespondence referred to above leaves numberroom for doubt that any decision taken by the Central Government-if it can be called a decision-was a purely tentative one subject to the final adjudication that is to be made by this Court. Under those circumstances it is idle for the respondent to companytend that when the authorities informed them that the Act has been made applicable only to some sections of its establishment, an irrevocable decision has been taken in favour of the Company. On the other hand, it is very clear from the stand taken by the officers, as well as the respondent itself, that it was only a tentative decision taken by the Government by which it advised the officers number to enforce the Act to the three sections of the establishment of the respondent, in view of the decision of the Bombay High Court. Immediately after the decision of this Court was given on March 14, 1962, the employees Union of the respondent promptly on March 28, 1962 moved the officers to apply the provisions of the Act as per the decision of this Court. It was only at that very late stage that the respondent took up the plea that there has been originally a decision by the Central Government under S. 19A of the Act and that the said decision having become final is binding on the Company and the Department. From the entire companyres- pondence it is clear that there has been numberfinal decision taken by the Central Government under S. 1.9A of the Act regarding number-applicability of the Act and the Scheme in respect of the, three sections of the respondents establishment. At the most, a decision was taken to suspend the applicability of the Act during the pendency of the appeal in this Court. Once the decision of the Bombay High Court was set aside by this Court, the Department was within its right in making the demand made under the letter dated May 22, 1963. Under sub- s. 2 of S. 3 of the Act, we have already pointed out that a scheme framed under sub-section 1 may provide that any of its provisions shall take effect either prospectively or retrospectively. In fact there is numberquestion of any claim being made in this case retrospectively. The position is that the amounts that were originally paid but later on adjusted or refunded in view of the Bombay High Courts judgment are being asked to be paid back for the same period in view of the judgment of this Court. Therefore,-,, the demand made on May 22, 1963 to pay the amount from 1952 is, in our opinion, justified. The matter may be companysidered from another point of view also. It is the case of the respondent that there has been a direction given by the Central Government under S. 19A by letters dated August19, 1959 and September 21, 1959. The matters referred to inthese letters have already been referred to by us. The judgmentof the Bombay High Court was given on March 7, 1957. If so, after the decision given by the High Court interpreting the Act in a particular manner, we fail to see how an occasion will arise for the Central Government giving a direction under s. 19A on the ground that a difficulty has arisen in giving effect to the provisions of the Act and that doubt has arisen regarding the matters mentioned in cls. i to v . After a decision has been given by a companyrt on a particular aspect relating to the Act and the Scheme, in our opinion, there is numberquestion of any difficulty arising in giving effect to the provisions of the Act or to any doubt arising in respect of the matters mentioned in cls. i to v . The question whether an establishment, like that of the respondent relating to the glass works companying under el. 2 of S. 19A was subject of a judicial adjudication and therefore S. 19A companyld number have companye into play for the Central to give any direction. The Central Government and all other authorities were bound to give effect to the decision of the Bombay High Court so long as it held the field. Even according to the respon- dent, as is seen by its letter dated December 10, 1957 addressed to the Regional Provident Fund Commissioner, when the Act and the Scheme were applied in 1952 to all the employees of the respondent, the latter raised an objection that the Act and the Scheme will apply only to employees engaged in the manufacture of Hurricane Lanterns and number pressure Stoves. The said letter also refers to the fact that the Regional Provident Fund Commissioner, Bombay, by his reply dated March 31, 1953 rejected the said objection and held that the whole of the establishment of the respondent was companyered by the Act and the Scheme. There is numbercontroversy that the respondent has been ever since making companytributions in respect of all the employees and had raised numberdispute at all till after the judgment of the Bombay High Court. The proper stage when a doubt might have arisen for the Central Government to exercise its jurisdiction under s. 19A was when the respondent raised an objection early in 1953 regarding number-applicability of the Act to all its employees, and when that objection was rejected on March 31, 1953. If the matter had been pursued further and the Central Government moved and a direction was given by the Central Government then it companyld be said that the Central Government has given a direction under s. 19A. The position before us is entirely different. After the decision of the Bombay High Court there is numberwarrant for assuming that there was still a difficulty or doubt in respect of which the Central Government had to give a direction under s. 19A. Considering the matter from this aspect also it follows that there companyld number have been a direction issued by the Central Government under s. 19A when the letter of August 19, 1959 was sent by the Central Provident Fund Commissioner to the Regional Provident Fund Commissioner. To companyclude we are number inclined to agree with the view of the High Court that there has been decision under s. 19A of the Act under the letter dated August 19, 1959 read with letter dated September 21, 1959. There has been, in our opinion, numbersuch decision and as pointed out earlier it was only a limited decision number to apply the Act and the Scheme, in view of the Bombay High Courts judgment I till the disposal of the appeal in this Court. After the decision of this Court the demand made on the respondent is perfectly justified and the High Court companymitted an error in quashing the numberice dated May 22, 1963. The second companytention about the number-liability of the respon- dent based upon the award of the Industrial Tribunal in 1. No. 29 of 1960 need number detain us very long. It is true that in view of the decision of the Bombay High Court the employees Union moved the State Government to refer the dispute regarding the provident fund. The award dated June 24, 1960. has given as mentioned certain directions in this regard. The Company has been absolved from making any provident fund companytributions during certain years on the ground that it has suffered loss. The award is number based upon circumstances which are relevant for the purpose of applying the Act and the Scheme. Admittedly the appellants were number parties to the award. No doubt under the Industrial Disputes Act the award will be binding as against the respondent and its workmen. But the appellants are seeking in these proceedings to enforce the statutory duty cast upon them to companylect the companytributions due from the respondent which again is a statutory liability under the Act and the Scheme. The object of the appellants in enforcing the Act is only to discharge the statutory duty enjoined on them for the benefit of the employees companycerned. In view of the decision of this Court, it is clear that the Act and the Scheme apply to all the sections of the respondent, and if so it follows that the respondent is liable to make companytributions and that at the rate specified in the Act. Even the rate given by the Industrial Tribunal for the limited period is number in accordance with the Act. We have already pointed out that the High Court has number expressed any opinion on the effect of the award. But according to us, the award in I. T. No. 29 of 1960 does number stand in the way of the appellants demand for the period mentioned in the letter dated May 22, 1953 regarding the provident fund and the administrative charges. From the discussion companytained above, it is also clear that even if a decision has been taken by the Central Government, it is number inconsistent with the provisions of the Act. On the, other hand, as pointed out by us, that decision was only in accordance with the decision of the Bombay High Court subject to its being revised, if the appeal succeeded in this Court. The Department having succeeded in the appeal in this Court, it is clear that the demand made by the Department is justified. We, however, make it clear that in realising the amounts on the basis of the demand dated May 22, 1965 the appellants will give due credit for any amounts that may have been companytributed by the employer as its share of the provident fund under the award in I.T. No. 29 of 1960 for the periods in question. If numbercontribution has been made for those periods, it is open to the Department to realise the dues of the employer as per the provisions of the Act. If, however, the amounts have been companytributed only at a lesser rate, the appellants can realise only the balance, if any, due under the Act and the Scheme. A subsidiary companytention was raised by Mr. Tarkunde that in any event the demand for payment of administrative charges for the period referred to in the letter of May 22, 1963 is number warranted. We are number inclined to accept this companytention of the learned companynsel. When once the employer is held liable for Payment of its share of provident fund companytribution for the periods in question, it follows that it will also be liable to pay the administrative charges. In the result, the judgment and order of the High Court dated September 17, 1965 are set aside and the writ petition filed by the respondent will stand dismissed. The appeal is allowed and the appellants will be entitled to their companyts in this appeal.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1970 to 1973 of 1968. Appeals from the judgment and order dated September 20, 1967 of the Delhi High Court in Income-tax Reference Nos. 2 and 3 of 1967. C. Mahajan and H. K. Puri, for the appellant in all the appeals S. Desai, R. N. Sachthey and B. D. Sharma, for the respondent in all the appeals . The Judgment of the Court was delivered by Hegde, J. In these appeals by certificate, the only question arising for decision is whether on the facts and in the circumstances of the case, the assessee. companytinued to be the owner of the property for the purposes of companyputation of income under S. 9 of the Income-tax Act, 1922 to be hereinafter referred to as the Act . A Full Bench of the Delhi High Court speaking through S. K. Kapur, J. answered that question in the negative. Being dissatisfied with that decision the assesses has brought these appeals. Now turning to the facts of the case, the companycerned assess- ment years are 1952-53, 1955-56 and 1956-57, the relevant accounting periods being financial years ending March 31, 1952, March 31, 1955 and March 31, 1956. The assesses is a registered firm deriving income from interest on securities, property, business and other sources. Sometime In the year 1946 it purchased the Nedous Hotel in Lahore for a sum of Rs 46 lakhs. For that purpose it raised a loan of Rs. 30 lakhs from M s. Bharat Bank Ltd., Lahore and a loan of Rs. 18 lakhs from the Raja of Jubbal. The loan taken from the bank was partly repaid but as regards the loan taken from the Raja, the assessee came to an agreement with the Raja under which the Raja accepted a half share in the said property in lieu of the loan advanced and also 1/3rd of the outstanding liability of the bank. This arrangement came into effect on November 1, 1951. After the creation of Pakistan, declared an evacuee property and companysequently vested in the Custodian in the Pakistan. In its return for the relevant assessment years, the assessee claimed losses of Rs. 1,00,723.- Rs. 1,16,599/- and Rs. 1,16,599/- respectively but showed the gross annual letting. value from the said property at Nil. The loss claimed was stated to be on account of interest payable to the bank. Since the property in question has vested in the Custodian of Evacuee Property, in Pakistan, the Income-tax Officer held that numberincome or loss from that property can be companysidered in the assessees case. He accordingly disallowed the assessees claim in respect of the interest paid to the bank. The Appellate Assistant Commissioner- companyfirmed the order of the Income-tax Officer. In second appeal the Tribunal came to the companyclusion that the assessee still companytinued to be the owner of the property for the purpose of companyputation of loss. The Tribunal held that the interest paid is a deductable allowance under s. 9 1 iv of the Act. In arriving it that companyclusion, the Tribunal relied on its earlier decision in the case of the assessee in respect of the assessment year 1951-52. thereafter at the instance of the assessee, the Tribunal submitted the question set out earlier. Ile High Court on an analysis of the various provisions of the Pakistan Administration of Evacuee property Ordinance, 1949 XV of 1049 to be hereinafter erred to as the Ordinance came to the companyclusion that for the purpose of s. 9 of the Act, the assasee cannot be companysidered as .he owner of that property. It was urged by Mr. V. C. Mahajan, learned Counsel for the assessee that the High Court erred in opining that the assessee was number the owner of the property, for the purpose of s. 9 of the Act. According to him the property vested in the Custodian only for the purpose of administration and the assessee still companytinued to be its owner. He companytended that the expression owner means the person having the ultimate right to the property. He further companytended that the so long as the assessee had a right to that 7-L3Sup.C.I./72 property in whatever manner that right might have been hedged in or restricted, he still companytinued to be the owner. On the other hand, it was companytended on behalf of the Revenue that the Incometax is companycerned with income, gains and profits. Therefore for the purpose of that Act, the owner is that person who is entitled to the income. According to the Revenue the word owner in s. 9 refers to the legal ownership and number to any beneficial interest in the property. For deciding the question whether the assessee was the owner of the property for the purpose of S. 9 of the Act during the relevant accounting years, we have to look to the provisions of the Ordinance. Let us first take a survey of the relevant provisions of the Ordinance and thereafter analyse the effect of those provisions. The long title of the Ordinance says that it is an Ordinance to provide for the administration of the evacuee property in Pakistan and for certain matters incidental thereto. The preamble says that whereas an emergency has arisen which renders it necessary to provide for the administration of evacuee property in Pakistan and for certain matters incidental thereto. Section 6 1 provides that all evacuee property shall vest and shall be deemed always to have vested in the Custodian with effect from the 1st day of March 1947. Section 9 gives Dower to the Custodian to take possession of the evacuee property. Section 11 provides that any amount due to an evacuee or payable in respect of any evacuee property, shall be paid to the Custodian by the person liable to pay the same and the payment to the Custodian discharges the debtors liability to the extent of the payment made. Section 12 prescribes that the property which hag vested in or of which possession has been taken by the Custodian shall be exempt from all legal process, including seizure, distress, ejectment or sale by any officer of a Court or any other authority a numberinjunction or other order of whatever kind in respect of such property shall be granted or made by any Court or any ot authority. Section 14 1 permits the Rehabilitation Authority, allot evacuee property to the refugees. Section 16 1 says the numbercreation or transfer of any right or interest in or encumbrane, upon any property made in any manner whatsoever on or after the first day of March, 1947 by or on behalf of an evacuee or by or on behalf of a person who has or may become an evacuee after the date of such creation or transfer, shall be effective so as to companyfer any right or remedy on any party thereto or on any person claiming under any such party, unless it is companyfirmed by the Custodian. Section 19 empowers the Custodian to restore the evacuee property to the lawful owner subject to such companyditions as he may be pleased to impose. Section 20 1 stipulates that the Custodian may take such measures as he companysiders necessary or expedient for the purpose of administering, preserving and managing any evacuee property which has vested in him and may for any such purpose as aforesaid, do all acts and incur all expenses necessary or incidental thereto. Sub-s. 2 of that section provides that without Prejudice to the generality of the provisions companytained in sub-s. 1 , the Custodian may. m sell any evacuee property, numberwithstanding any this companytained in any law or agreement to the companytrary relating thereto, Provided that the Custodian shall number under this Clause or the next succeeding clause sell any immovable evacuee property or any business or undertaking which is evacuee property, except with the previous approval of the Central Government. Clause i of that sub-section empowers the Custodian to demolish or dismantle any evacuee property which in his opinion cannot be repaired, or sell the site of such property and the materials thereof. The Custodian can recoup all the expenses incurred by him in the administration of the evacuee property from out of the receipts in his hand in respect of that property, Section 22 1 requires the Custodian to maintain separate account of the property of each evacuee of which he has taken possession and shall cause to be made therein entries of all receipts and expenditure in respect therof. The Ordinance starts by saying that it is an Ordinance to provide for the administration of evacuee property and number management of evacuee property. The expression administra- tion in relation to an estate, in law means managements and settling of that estate. It is a power to deal with the estate. The evacuee companyld number take possession of his property. He companyld number lease that property. He companyld number sell that property without the companysent of the Custodian. He companyld number mortgage that property. He companyld number realise the lncome of the property. On the other hand, the Custodian companyld take possession of that property. He companyld realise its income. He companyld alienate the property and he companyld under certain circumstances demolish the property. All the rights that the evacuee had in the property he left in Pakistan were exercisable by the Custodian excepting that he companyld number appropriate the proceeds for his own use. The evacuee companyld number exercise any rights in that property except with the companysent of the Custodian. He merely had some beneficial. interest in that property. No doubt that residual interest in a sense is ownership. The property having vested in the Custodian, who bad all the powers of the owner, he was the legal owner or the property. In the eye of the law, the Custodian was the owner of that property. The position, of the Custodian was numberless than that of a Trustee. Section 9 1 says The tax shall be payable by an assessee under the head Income from Property in respect of the bona fide annual value of property companysisting of any buildings or lands appurtenant thereto of which he is the owner, other than such portions of such property as he may occupy for the purposes of any business, profession or vocation carried on by him the profits of which are assessable to tax subject to the following allowances namely - The question is who is the owner referred to in this section ? Is it the person in, whom the property vests or is it he who is entitled to some beneficial interest in the property It must be remembered that S. 9 brings to tax the income from property and number the interest of a person in the property. A property cannot be owned by two persons, each one having independent and exclusive right over it. Hence for the purpose of s. 9, the owner must be that person who can exercise the rights of the owner, number on behalf of the owner but in his own right. For a minute, let us look at things from the practical point of view. If the thousands of evacuees who left practically all their properties as well as business in Pakistan had been companysidered as the owners, of those properties and business as long as the Ordinance was in force then those unfortunate persons would have had to pay income-tax on the basis of the annual letting value of their properties and on the income, gains and profits of the businesses left by them in Pakistan though they did number get a paisa out of those properties and businesses. Fortunately numberone in the past interpreted the law in the manner Mr. Mahajan wants us to interpret. It is time that equitable companysiderations are irrelevant in interpreting tax laws. But these laws, like all other laws have to be interpreted reasonably and in companysonance with justice. The question as to who is Vie owner of a house property under s. 9 of the Act in circumstances similar to those before us came up for companysideration before the Calcutta High Court in the matter of The Official Assignee for Bengal Estate of Jnanendra Nath Pramanik 1 . In that case on the adjudication of a person as insolvent under the Presidency Towns Insolvency Act, 1909, certain house property of the insolvent vested in the Official Assignee. The question arose whether the Official Assignee 1 5. I.T.R. 233. companyld be taxed in respect of the income of the property under s. 9. The High Court held that the property did number by reason of the adjudication of the debtor cease to be a subject fit for taxation and in view of the provisions of s. 17 of the Presidency Towns Insolvency Act, the Official Assignee was the, owner of the property and he companyld rightly be assessed in respect of the income from that property under s. 9. Section 17 of the, Presidency Towns Insolvency Act, reads On the making of an order of adjudication, the property of the insolvent wherever situate shall vest in the official assignee and shall became divisible among his creditors, and thereafter, except as directed by this Act, numbercreditor to whom the insolvent is indebted in respect of any debt provable in insolvency shall, during the pendency of the insolvency proceedings, have any remedy against the property of the insolvent in respect of the debt or shall companymence any suit or other legal proceedings except with the leave of the Court and on such terms as the Court may impose Provided that this section shall number affect the power of any secured creditor to realize or otherwise deal with his security in the same manner, as he would have been entitled to realise or deal with it if this section had number been passed. We may numbere that the powers of the Custodian are numberless than that of the Official Assignee under the Presidency Towns Insolvency Act, 1909. Delivering the judgment of the Court in the Official Assignees case 1 , Costello, J. observed With regard to the first point, Mr. Page argued that although by section 17 of the Presidency Towns Insolvency Act these properties vested in the Official Assignee he did number thereby or thereupon become the owner of those properties within the meaning properly ascribable to that word for the purposes of the applicability of Section 9. What Mr. Page really invited us to do was to restrict the meaning of the word by putting before it the qualifying adjective beneficial. What was argued by Mr. Page was that the Official Assignee had numberlegal interest in the properties themselves, they were merely vested in him for the purposes of the administration of them in the interest of the creditors of the insolvent. I am unable to accept Mr. Pages companytention. In this companyntry there is numberdifference between legal estate and equitable estate. In this companynection the case of Sir Currimbhoy Ebrahim Baro- 1 5 I.T.R. 233. netcy Trust v. Commissioner of Income-tax, Bombay 612 I.A. 1209 is of assistance. At page 217 Sir Sydney Rowlatt when giving the judgment of the Privy Council made this observation In their Lordships opinion the effect of the Act creating these trusts is number to give the baronet for the time being any right to any part of the interest or property specifically or any right which, even granting that the legal title is number the only thing that can ever be looked at, would make it true to say that any proportion of the interest is number receivable or any proportion of the property is number owned by the incorporated trustees. The learned judges of the Calcutta High Court in reaching that companyclusion relied on the decision in The Commissioner of Inland Revenue Fleming 1 . That appeal related to a claim for repayment of income-tax to which the respondent claimed to be entitled in respect of personal allowance introduced into the Income-tax system by S. 18 of the Finance Act, 1920. The claim arose in the following circumstances The respondent was declared insolvent in 1921. He was then the owner of heritable properties. His insolvency lasted till May 10, 1926. When he received his discharge on payment of companyposition and was reinvested in his estate. At that time his estate companysisted of 1 Two of the original heritable properties which had number been realised by the trustee in the insolvency and 2 a balance in cash of pound 53 odd. During the insolvency, the trustee paid income-tax on the full annual value of the two properties in question. The companytention of the respondent was that the radical right to these properties was in him all that time and that in paying the tax, the trustee was really paying it on his behalf-that is, on his income-and that companysequently there arose in each of the years in which the payment was made a right to deduct his personal allowance from the annual value of the properties. The right to this abatement is said to have passed to the Respondent himself in virtue of the reinvestment in his estate which occurred upon his discharge on companyposition. Rejecting this companytention Lord President observed It is obvious that, unless during the years in question the annual value of the properties was income of the Respondent, he cannot have any claim to abatement of it for income-tax purposes and accordingly everything depends upon the soundness of the proposition that the income companysisting in the annual value of 1 14, Tax Cases 78. these properties was truly income of the Respondent. I do number see how it can possibly be so described. It was part of the income arising from the sequestrated estates vested in the trustee for the Respondents creditors. Any income that did arise from those estates was income of the trustee as such, and he and he alone had the right to put it into his pocket as income. It was number income that went or companyld go into the pocket of the Respondent as income in any of the years in question. How then can it be said to have reached his pocket as income on his subsequent reinvestiture. For determining the person liable to pay tax, the test laid down by the companyrt was to find out the person entitled to that income. An attempt was made by Mr. Mahajan to distinguish this case on the ground that under the companyresponding English statute the liability to tax in respect of income from property is number laid on the owner of the property. It is true that s. 82 of the English Income- tax Act, 1952 is worded differently. But the principles underlying the two statutes are identical. This is clear from the various provisions in that Act. The companyclusion reached by Costello, J. in Official Assignees case 1 receives support from the decision of the Privy Council in Trustees of Sir Currimbhoy Ibrahim Baronetcy Trust v. Commissioner of Income-tax, Bombay 2 . The Counsel for the appellant was unable to point out to us any decision which has taken a view companytrary to that taken in Official Assignees case 3 . The learned judges of the High Court in reaching their company- clusion that the assessee was number the owner of the property in the relevant assessment years, took assistance from the decisions of English companyrts dealing with the question of levy of income-tax on the income from enemy properties taken possession of by the Custodian during war. In those cases the English judges have enunciated the theory of suspended ownership. We do number think that we need call assistance from those decisions. Mr. Mahajan companytended that despite the fact that evacuee property was taken over by the Custodian and that he had been companyferred with large powers to deal with it, an evacuee from Pakistan who owned that property before he migrated to India still companytinued to be the owner of the property. For this companytention of his he placed reliance on some of the observations of this Court in Amar Singh v. Custodian, Evacuee Property, Punjab 1 . Therein delivering judgment of the Court Jagannadhadas, J. observed at p. 815 of the report 1 5 I.T.R. 233. 2 2 I. T.R. 148. 3 1957 S.C.R. Stopping here it will be seen that the position, in its general aspect, is that all evacuee property is vested in the Custodian. But the evacuee has number lost his ownership in it. The law recognised his ultimate ownership subject to certain limitations. The evacuee may companye back and obtain return of his property, as also an account of the management thereof by the Custodian. Those observations have to be understood in the companytext in which they were made. Therein, their Lordships were companysidering whether the right of an evacuee in respect of the property left by him in the companyntry from which he migrated was property right for the purpose of Art. 19 1 1 f of the Constitution. No one denies that an evacuee from Pakistan has a residual right in the property that he left in Pakistan. But the real question is, can that right be companysidered as ownership within the meaning of S. 9 of the Act. As mentioned earlier that section seeks to bring to tax income of the property in the hands of the owner. Hence the focus of that section is on the receipt of the income. The word owner has different meanings in different companytexts. Under certain circumstances a lessee may be companysidered as the owner of the property leased to him. In Strouds Judicial Dictionary 3rd Edn. , various meanings of the word owner are given. It is number necessary for our present purpose to examine what the word owner means in different companytexts. The meaning that we give to the word owner in s. 9 must number be such as to make that provision capable of being made an instrument of oppression. It must be in companysonance with the principles underlying the Act. Mr. Mahajan next invited our attention to the observations in Pollock on Jurisprudence 6th Edn. 1929 178-80 Owner- ship may be described as the entirety of the powers of use and disposal allowed by law The owner of a thing is number necessarily the person who at a given time has the whole power of use and disposal very often there is numbersuch person. We must look for the person having the residue of all such power when we have accounted for every detached and limited portion of it and he will be the owner even if the immediate power of companytrol and use is elsewhere. It is number necessary to companysider whether those observations hold good even number because of the various legislative measures enacted during the last about forty years after those observations were made. Suffice it to say that those observations are inapplicable to the case of the owner under S. 9 of the Act. Mr. Mahajan in support of his companytention next placed reliance on the decision of the Patna High Court in Raja P. Lal Choudhary v. Commissioner of Income-tax 1 . Therein the question was whether the receiver of a property appointed by companyrt was the owner of the property for the purpose of s. 9 of the Act. The companyrt came to the companyclusion that he was number the owner as the property did number vest in him. In fact in the companyrse of the judgment, the companyrt made a distinction between a receiver and a trustee and an official assignee. In our opinion this decision instead of supporting the case of the appellant may lend some support to the companytention of the Revenue. Reliance was next placed on the decision of the Calcutta High Court in Nawah Bahadur of Murshidabad v. Commissioner of Income-tax, West Bengal 2 . The facts of that case were Properties which belonged to the ancestors of the Nawab of Murshidabad as Rulers, were, some time after the territories had been companyquered by the British, settled by the Secretary of State for India in the year 1891 on the then Nawab of Murshidabad under a deed of settlement which provided that such properties shall henceforth and for ever be held and enjoyed by the said Nawab Bahadur and such one among his lineal male heirs as may be successively entitled to hold the said title in perpetuity,. with and subject to the incidents, power, limitations and companyditions as to the inalienability and otherwise hereinafter companytained. One of the companyditions was that he was number entitled to sell or alienate the properties except with the approval of the Governor of Bengal. The Settlement deed was companyfirmed by Act XV of 1891. The question arose whet-her Nawab of Murshidabad was liable to pay tax in respect of the income of those properties under s. 9 of the Act. The Court held that whatever might have been the original nature of the State properties, after the deed of settlement and the Act of 1891, as the dual status of the Nawab as the holder of the State and as an individual ceased, it companyld number be said that the Nawab for the time being was number the owner of such properties for the purposes of s. 9 of the Act and the Nawab was therefore liable to be assessed to income-tax on the income of such properties. The Court further held that the word owner in s. 9 of the Act applies to owners of the whole income, even though they are under certain restrictions with regard to the alienation of the properties. We are unable to see how this decision gives any support to the companytentions advanced on behalf of the assessee. After giving our careful companysideration to the question of law under companysideration, we have companye to the companyclusion that the 1 16, I.T.R. 123. 2 28, I.T.R. 510. assessee was number the owner of Neadous Hotel during the relevant assessment years for the purpose of s. 9 of the Act. Hence these appeals fail and they are dismissed.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1374 and 2146 to 2149 of 1970. Appeals from the judgments and order dated July 30, 1963 and February 11, 1965 of the Calcutta High Court in Income-tax Reference No. 48 of 1959, and 69 of 1961 respectively. Pal, T. A. Ramachandran and D. N. Gupta, for the appel- lants and respondents Nos. 2 to 4 in all the appeals . C. Manchanda, P. L. Juneja, R. N. Sachthey and B. D. Sharma, for respondent No. 1 in all the appeals . The Judgment of the Court was delivered by Hegde, J. All these appeals by certificate are filed by the legal representatives of Late Karam Chand Thapar who was the assessee in this case. He died after the assessments were made. The assessment years with which we are companycerned in these appeals are 1949-50, 1950-51, 1951-52, 1952-53 and 1953-54. The facts of the case lie within a narrow companypass. Late Karam Chand Thapar made certain cash gifts to his wife Smt. Mohini Thapar. From out of those gifts, she purchased certain shares and the balance amount she invested. The shares earned dividends and the investments yielded interest. The interest realised and the dividends earned were included in the income of Karam Chand Thapar for the purpose of assessment in the assessment years mentioned earlier. The assessee objected to the inclusion of that amount in his income. The question is whether the department was entitled to include the dividends and interest in question in companyputing the taxable income. of the assessee. The Income-tax Officer held that they were liable to be included in the income of the assessee. That decision was upheld by- the Appellate Assistant Commissioner. On a further appeal, taken by the assessee to the Tribunal the Tribunal upheld the order of the Assistant Commissioner. Thereafter at the instance of the assessee, the question set out below was submitted to the High Court under section 66 1 of the Indian Income-tax Act, 1922, in respect of the assessment year 1949-50 Whether on the facts and on the circums- tances of the case, the income of Rs. 21,225 derived from deposits and shares held by the assessees wife, Smt. Mohini Devi Thapar was income from assets directly or indirectly transferred by the assessee to his wife within the meaning of Section 16 3 of the Income-tax Act. Similar questions were referred in respect of other assessment year. The High Court answered these questions in favour of the revenue. Hence these appeals. Section 16 3 a iii of the Act-the provision relevant for the purpose of these appeals reads thus In companyputing the total income of any individual for the purpose of assessment, there shall be included- a so much of the income of a wife or minor child of such individual as arises directly or indirectly- i ii from assets transferred directly or indirectly to the wife by the husband otherwise than for adequate companysideration or in companynection with an agreement to live apart The assets transferred in this case is the gift of cash amounts made by the assessee to his wife. The transfers in question are direct transfers. But those assets, as mentioned earlier, were invested either in shares or otherwise. Hence it was urged on behalf of the revenue that the incomes realised either as dividends from shares or as interest from deposits are income indirectly received in respect of the transfer of cash directly made. This companytention of the revenue appears to be sound. That position clearly emerges from the plain language of the section. It was urged by Dr. Pal, learned companynsel for the assessee that there is numbernexus between the income earned and the transfer of the assets. According to him before an income can companye within section 16 3 a iii it must be an income directly arising from the assets transferred. In other words, he urged that only such income which can be said to have directly sprung from the assets transferred Can companye within the scope of section 16 3 a iii . We are unable to accept this companytention as sound. Otherwise the expression as arises directly or indirectly in section 16 3 a would become redundant. The net cast by section 16 3 a iii includes number merely the income that arises directly from the assets transferred but also that arises indirectly from the assets transferred. We are in agreement with the companytention of Dr. Pal that the income that can be brought to tax under section 16 3 a iii must have a nexus with the assets transferred directly or indirectly. But in this case the income with which we are companycerned has a nexus with the assets transferred. In support of his companytention Dr. Pal relied on the decision of this Court in Commissioner of Income-Tax, West Bengal III Prem Bhai Parakh and others 1 . The facts of that case are as follows The assessee, who was a partner in a firm having 7 annas share therein, retired from the firm on July 1, 1954. Thereafter, he gifted Rs. 75,000 to each of his four sons, three of whom were minors. There was a reconstitution of the firm with effect from July 2, 1954, whereby the major son became a partner and the minor sons were admitted to the benefits of partnership in the firm. The question was whether the income arising to the minors by virtue of their admission to the benefits of partnership in the firm companyld be included in the total income of the assessee under section 16 3 a iv a provision similar to section 1 6 3 a iii The Tribunal found that the capital invested by the minors in the firm came from the- gift made in their favour by their father, the assessee. This Court overruling the companytention of the revenue came to the companyclusion that the companynection between the gifts made by the assessee and the income of the minors from the firm was a remote one and it companyld number be said that income arose directly or indirectly from the asses transferred. Hence I income arising to the three minor sons of the assessee by virtue of their admission to the benefits of partnership in the firm companyld number 1 1970 77 I.T.R. p. 27. be included in the total income of the assessee. The ratio of the decision is found at page 30 of the report. This is what the Court observed in that case The companynection between the gifts mentioned earlier and the income in question is a remote one. The income of the minors arose as a result of their admission to the benefits of the partnership. It is true that they were admitted to the benefits of the partnership because of the companytribution made by them. But there is numbernexus between the transfer of the assets and the income in question. It cannot be said that that income, arose directly or indirectly from the transfer of the assets referred to earlier. Section 16 3 of the Act created an artificial income. That section must receive strict companystruction as observed by this companyrt in Commissioner of Income-tax v. Keshavlal Lallubhai Patel- 1965 55 I.T.R. p. In our judgment before an income can be held to companye within the ambit of section 16 3 , it must be proved to have arisen- directly or indirectly from a transfer of assets made by the assessee in favour of his wife or minor children. The companynection between the transfer of assets and the income must be proximate. The income in question must arise as a result of the transfer and number in some manner companynected with it. The ratio of that decision is inapplicable to the facts of the present case. Here we are dealing with an income which has proximate company- nection with the transfer of the assets made by the assessee. In the result, these appeals fail and they are dismissed with companyts. Costs one set.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1364 to 1373 of 1967. Appeals by special, leave from the judgment and order dated March 14, 1967 of the Delhi High Court in Income-tax Cases Nos. 25-D of 1965 etc. S. Desai A. K. Verma and B. D. Shingari, for the appel- lants in all the appeals . H. Dhebar, B. B. Ahuja and R. N. Sachthey, for the res- pondent in all the appeals . The Judgment of the Court was delivered by Vaidialingam, J. These ten appeals, by special leave, are directed against the companymon judgment and order dated March 14, 1967 of the Delhi High Court declining to direct the Income-tax Appellate Tribunal, Delhi Bench, to refer along with the statement of case, questions Nos. 1 to 3 enumerated in their applications. The reference was asked for by the three different Companies by whom the above appeals are filed in respect of Income-tax Case No. 26-D of 1965 companynected with I.T.C. Nos. 21-D to 29- D of 1965 arising from a companymon order of the Income-tax Appellate Tribunal, Delhi Bench. As the facts in the case and questions of law sought to be referred were companymon, the following tabular statement will give an idea of the appeals filed by the three Companies, who are the appellants together with the particulars regarding the years of assessment and Income-tax case numbers -------------------------------------------------------------- CA. No. I.T.C. No. Assessment Name of Company year ---------------------------------------------------------------- 13-54/67 28-D/65 1952-53 Basti Sugar Mills 1365/67 27-D/65 1950-51 1366/67 23-D/65 1948-49 1367/67 21-D/65 1951-52 1368/67 20-D/65 1950-51 Nawabganj Sugar Mills 1369/67 25-D/65 1948-49 1370/67 26-D/65 1951-52 1371/67 24-D/65 1949-50 1372/67 29-D/65 1952-53 Punjab Sugar Mill 1373/67 22-D/65 1955-56 ---------------------------------------------------------- The Basti Sugar Mills Company Limited, which is the appellant in Civil Appeals Nos. 1364 to 1367 owned two sugar factories at Basti and Waltharganj. It is their case that for the purpose of selling their output of sugar they appointed Selling agents at a companymission of -0-12-0 of all sales of sugar effected through the agents. Their Selling agent prior to 1944 was M s Gursarandas Kapur Sons at Kanpur. On July 26, 1944 by a resolution of the Board of Directors, the Company appointed M s Gokul Nagar Sugar Mills Co. Ltd. as the Selling agents at -0-12-0 companymission. In the companyrse of the original assessment for the years 1947-48, which was companypleted on March 10, 1950, the Income-tax Officer called upon the said Company to furnish details of the items of work done by M s Gokul Nagar Sugar Mills Co. Ltd. as Selling agents. The Company informed the Income-tax Officer that the said Selling agents have been doing the work that they were expected to, do and they in turn had appointed sub-agents on companymission basis for effecting sales at various places. The Income-tax Officer accepted this explanation and allowed, by order dated June 21, 1949 a deduction for Rs. 47,921/- paid as companymission to the selling agents. But when the assessment proceedings for the assessment year 1952-53 in respect of Nawabganj Sugar Mills Co. Ltd. was being dealt with, the Income-tax Officer took the view that the selling companymission should number be allowed and accordingly issued a numberice dated March 29, 1954, under S. 34 1 a of the Income-tax Act, 1922 hereinafter- to be referred as the Act . The Company filed a return under protest. Regarding Nawabganj Sugar Mills Company Ltd., which is appellant in- Civil Appeals Nos. 1368-1371 of 1967 the facts are also more or less identical except that for the assessment year 1948-49, the Income-tax Officer by his order dated February 28, 1951 allowed a deduction of Rs. 60,980/- as the amount paid as ,commission to the selling agents M s Gokul Nagar Sugar Mills Co. Ltd. For the assessment year 1949-50 also the companymission paid to the said selling agent was allowed as deduction. But for the assessment year 1952- 53 the Income-tax Officer issued a numberice dated January 19, 1957 requiring the said Company to explain why the amount of companymission claimed to have been paid by them to the selling agents should number be disallowed. The facts relating to M s Punjab Sugar-Mills Company Ltd., which is the appellant in Civil Appeals Nos. 1372 and 1373 of 1967 are also identical except that in the companyrse of assessment for the assessment year 1947-48, the companymission of Rs. 37,978/paid to the same selling agent namely, Gokul Nagar Sugar Mills Company Ltd. was allowed as per order dated February 27, 1950. But when dealing with the case of Nawabganj Sugar Mills Co. Ltd. for the assessment year 1952-53, the Income-tax Officer took the view that the selling agency companymission claimed to be paid to the selling agents should number be allowed. Hence he issued a numberice to the Company under s. 34 1 a of the Act and the companypany filed a return under protest. It may be stated that the managing agent of all the three appellant companypanies are M s Narang Brothers Ltd. and their Chairman was. Dr. Gokulchand Narang. The selling agent of the three appellants is also the companymission agent, namely, M s Gokul Nagar Sugar Mills Co. Ltd. The companytroversy before the Income-tax authorities related to the claim made by all the appellants for deducting, an expenditure of the business of the companypanies, the selling agency companymission paid to M s Gokul Nagar Sugar Mills Company Ltd. In respect of some years the jurisdiction of the Income-tax Officer to Lake action under s. 34 of the Act was also challenged. In respect of the assessment year 1952-53 relating to Nawab- ganj Sugar Mills Co. Ltd., the evidence, both oral and documentary, was let in by the assessee that M s Gokul Nagar Sugar Mills Co. Ltd. were the selling agents and that the companymission paid to them as selling agents should be deducted as business expenditure. The evidence so let in was treated as companymon in respect of the claims made by all the three appellants. The Income-tax Officer held that all the three companypanies were companytrolled and supervised by Dr. Gokulchand Narang. He further held that M s Gokul Nagar Sugar Mills Co. Ltd., the selling agent, was also companytrolled and supervised by Dr. Gokulchand Narang. Though M s Gokul Nagar Sugar Mills Co. Ltd. was appointed as selling agent by a resolution dated July 26, 1944, the, latter rendered numberservice whatsoever so as to earn any companymission. In this companynection the Income- tax Officer referred to various items of evidence that were placed before him by the parties. Ultimately, he found that the amount claimed to have been paid as selling agent companymission cannot be deducted as an item of business expenditure. In all the appeals filed by the three Companies, the Appellate Assistant Commissioner gave some relief by allowing deduction in respect of sums paid directly as companymission to some subagents. But on the main question relating to the amount paid to M s Gokul Nazar Sugar Mills Co. Ltd., the Appellate Assistant ,Commissioner also agreed with the Income-tax Officer. The companytention that action companyld number be taken under s. 34 1 c was also rejected. The Income-tax Appellate Tribunal, Delhi Bench, by its companymon order dated December 31, 1962 after a companysideration of the materials on record and the reasons given by the Income-tax Officer and the Appellate Assistant Commissioner, rejected the claim made by the appellants in respect of the companymission said to have been paid to the selling agent M s Gokul Nagar Sugar Miffs Co. Ltd. The view of the Appellate Tribunal is that numberevidence has been placed by the appellants to show that M s Gokul Nagar Sugar Mills Co. Ltd. had really acted as selling agent and that on the other hand the appellants themselves have been directly dealing with several sub-agents. In.fact, the finding of the Appellate Tribunal was that there was numberprivity of companytract between the appellants and M s Gokul Nagar Sugar Mills Co. Ltd. On this reasoning the Appellate Tribunal also agreed with the findings recorded by the two officers that numberclaim for deduction in respect of selling agent companymission can be allowed. The Appellate Tribunal also held that the action taken under s. 34 was justified. The result was that all the appeals filed by the three Companies were dismissed. The assessee companypanies filed applications before the Appellate Tribunal under s. 66 1 to state a case and refer the following four questions to the High Court. Whether in the facts and circumstances of the case, the Tribunal was justified in holding that numberservices Were rendered by M s Gokul Nagar Sugar Mills Co. Ltd. to M s Nawabganj Sugar Mills Co. Ltd. Whether in holding as they have done, the Tribunal was justified in giving its decision with out taking into account the statement of Shri Ram Sahai Dhir and the receipts showing the companymission paid to M s Gursarandas Kapur and some sub-agents of the recipient companypany. Whether in view of the facts and in the circumstances of the case the Tribunal has rightly companycluded that Dr. Sir G. C. Narang signed letters acting as the Chairman of the Nawabganj Sugar Mills Co. Ltd. when he had numbercapacity to deal with the sub-agents in that capacity. Whether on the facts and in the circumstances of the case, the Tribunal was legally justified in holding that the provisions of S. 34 1 a were rightly invoked. By its order dated February 19, 1965 the Appellate Tribunal rejected the said applications on the ground that numberquestion of law arose from the-order of the Tribunal and that the decision of the Tribunal was exclusively on facts. 8 9 2 The appellants filed applications before the Delhi High Court under s. 66 2 of the Act, to direct the Income-,tax Appellate Tribunal to refer the four questions, enumerated above. The High Court, by its order dated March 14, 1967, directed the Income-tax Appellate Tribunal to state a case and refer question No. 4 alone, but rejected the applications of the appellants in so far as they related to questions Nos. 1 to 3. The view to the High Court is ,,that the points companyered by the questions Nos. 1 to 3 are all on facts and that in the face of the findings recorded by the Appellate Tribunal, numberquestion of law arose for companysideration. Mr. V. S. Desai, learned companynsel for the appellants, urged that the Income-tax Appellate Tribunal, which is the final authority on facts, has number taken into account the material evidence adduced by the parties. He ,further urged that the appellants had adduced the evidence of certain witnesses to establish that M s Gokul Nagar Sugar Mills Co. Ltd. were the selling agent and the persons who gave evidence had been appointed as sub-agents by them and that companymissions were also paid to them by the selling agent. Particularly, the companynsel pointed out that the evidence of Ram Sahai Dhir and Shiv Nand Verma has number at all been adverted to by the Appellate Tribunal. The companynsel also urged that certain receipts produced Nos. 948 dated April 24, 1946 and 298 dated February 13, 1947 showing the payments made by M s Gokul Nagar Sugar Mills Co. Ltd. as companymission to their sub- agents have number been even referred to by the Appellate Tribunal. The companynsel further pointed out that even the High Court has held that the Income-tax Appellate Tribunal has made-no reference to the evidence of the two witnesses, number has it adverted to the receipts claimed to have been given by the sub-agents. The High Courts view in this regard that it is number every piece of evidence available on record that must be dealt with by the Appellate Tribunal, is strenuously criticised by Mr. V. S. Desai. The companynsel relied on the decision of this Court in Udhavdas Kewalram v. Commissioner of Income-tax, Bombay City 1 where it has been held that the Tribunal has to act judicially and companysider all the evidence in favour and against the assessee and that an order recorded on a review of only a part of the evidence and ignoring the remaining evidence, cannot be regarded as companyclusively determining the questions of fact raised before the Tribunal. Mr. Desai, hence urged that the High Court was number justified in declining to direct the Appellate Tribunal to refer questions Nos. 1 to 3. Mr. R. H. Dhebar, learned companynsel for the Department has re- ferred us to the findings recorded by the Income-tax Officer, the Appellate Assistant Commissioner as well as the elaborate discussion companytained in the order of the Appellate Tribunal, and 1 1967 66 I.T.R. 462. pointed out that all relevant material on record has been taken into account by all the authorities, including the Appellate Tribunal and that the appellants can have numbergrievance in that regard. All material facts have been companysidered and findings have been recorded on facts against the appellants that M s Gokul Nagar Sugar Mills Co. Ltd. rendered numberservice whatsoever as selling agent and that the materials on record companyclusively establish that the appellants themselves were dealing with their sub-agents direct. The learned companynsel further pointed out that the Income-tax Officer summoned Dr. Gokul Chand Narang under s. 37 of the Act to produce the companyrespondence with the sub- agents as well ,as the sugar mills. Only 13 letters spread over a period of three years written by Dr. Gokul Chand Narang in his personal capacity and in the letter heads of M s Gokulchand Ram Sahai were produced. None of the replies to those letters from the sub-agents were produced. The companynsel finally urged that the order of the High Court declining to direct the Appellate Tribunal to refer questions Nos. 1 to 3 is companyrect. We are of the opinion that there is numbersubstance in these appeals. We have gone through the orders of the Income-tax Officer, the Appellate Assistant Commissioner, as well as the Income-tax Appellate Tribunal. No doubt, there is a resolution produced by the appellants dated July 26, 1944 in and by which the sugar selling agency of Nawabganj Sugar Mills Co. Ltd. is given to M s Gokul Nagar Sugar Mills Co. Ltd. on -0-12-0 There is numberother evidence to show the nature of the arrangement or as to how exactly this resolution is To be carried out. A reading. of questions Nos. 1 to 3 clearly shows that the points raised therein are purely questions of fact. But as the companytention of Mr. V. S. Desai is that certain material facts have number been companysidered at all by the Tribunal and hence the findings arrived at by it cannot be companyclusive, in view of this infirmity, we will refer to the evidence on record number with a view to decide whether the Tribunal has properly appreciated the evidence but to see whether there was evidence to support the findings recorded by the Tribunal and whether that finding companyld on that evidence be reasonably reached. We have already referred to the resolution dated July 26, 1944. The first criticism of Mr. V. S. Desai is that the evidence of sub-agents appointed by the selling agent has number been companysidered by the Appellate Tribunal. The two witnesses in this regard are Ram Sahai Dhir and Shiv Nand Verma. The companytention of Mr. V. S. Desai that the evidence of Ram Sahai Dhir has number been companysidered, as such, by the Appellate Tribunal, is only technically companyrect because it is seen from the order of the Appellate Tribunal that it has referred to the relationship between the appellants and a companypany known as M s Ramdev and Corn- pany. Ram Sahai Dhir in his evidence has clearly stated that he is the sole proprietor of M s Ramdev and Company. He has further stated that after he got the subagency from M s Gokul Nagar Sugar Mills Co. Ltd. he along with his brother and son formed a partnership for this purpose. in the name of M s Ramdev and Company. The Appellate Tribunal in paragraph of its order has companysidered a telegram sent on September 1, 1948 to M s Ramdev and Company by the Chairman of Nawabganj Sugar Mills Co. Ltd. That telegram states that the agency of M s Gursardndas Kapur and Sons has been terminated and M s Ramdev and Company is asked to sell and freely secure challans. Ram Sahai Dhir in his evidence has stated that M s Gursarandas Kapur and Sons were the selling agent of the appellants originally and that he started his own sugar business in or about 1947. Therefore, the telegram, as held by the Appellate Tribunal, clearly shows that the appellants were having direct dealings with Ramdev and Company and that M s Gokul Nagar Sugar Mills Co. Ltd. is numberwhere in the picture. This telegram also shows that this privity of companytract between the appellants and Ramdev and Company will number be there if Ramdev and Company were the sub-agents appointed by M s Gokul Nagar Sugar Mills Company Ltd. Therefore, it is clear that the relationship between the appellants and M s Ramdev and Sons of which Sri Ram Sahai Dhir is the sole proprietor has, been companysidered by the Appellate Tribunal. Regarding Shiv Nand Verma, his evidence has only to be read to be rejected. Even according to the appellants M s Gokul Nagar Sugar Mills Company Ltd. was appointed as Selling Agent only by the resolution dated July 26 1944. Apart from the very companytradictory answers given by this witness, he has categorically stated in answer to a specific question put by the appellants that lie, was appointed even in 1942 as sub- agent by M s Gokul Nagar Sugar Mills Company Ltd. on a companymission of -0-4-0. This evidence is absolutely false and of numberuse to support the case of the appellants because in 1942 M s Gokul Nagar Sugar Mills Company Ltd. was number in the picture. The evidence of this witness does number establish that M s Gokul Nagar Sugar Mills Company Ltd. had appointed him as their sub-agents and were paying him companymission, in their capacity as the selling agent of the appellants. The Appellate Tribunal has referred to the evidence of Shiv Nand Verma given before the Income-tax Officer and it has also numbered the reasons for number acting on that evidence. Therefore, it is number as if that the Appellate Tribunal was number companyscious of this evidence, on record which is absolutely valueless so far as the appellants are companycerned. Regarding the receipts Nos. 948 dated 24-4-1946 and 298 dated February 13, 1947, it is numberdoubt true that they have number 89 5 been specifically adverted to by the Appellate Tribunal. But it is rather surprising that the appellants should be able to produce only these two receipts when they claim that M s Gokul Nagar Sugar Mills Company Ltd. has been acting as their selling agent from 1944. Further the persons who are mentioned there as sub-agents have number at all given evidence before the Income-tax authorities. Those receipts lose all significance especially when the evidence of Ram Sahai Dhir and Shiv Nand Verma who claim to have been appointed as sub- agents by the selling agent has been rejected by the Appellate Tribunal. Obviously, in view of the other evidence against the appellants, the Appellate Tribunal did number think it worthwhile to specifically refer to these two receipts on record. But the number-reference to these two receipts cannot be. said to have in any manner vitiated the companyclusion arrived at by the Appellate Tribunal. As we have stated earlier, we have only referred to these items of evidence on record to show that the finding of the Appellate Tribunal are based on the material on record and that the finding is such which companyld on that evidence be reasonably reached. The statement in the order of the High Court that the Appellate Tribunal has number referred to the evidence of Ram Sahai Dhir as such is prima facie companyrect. But the High Court missed the crucial fact that his evidence is really as proprietor of M s Ramdev and Company and the relationship between this companypany and the appellants has been companysidered by the Appellate Tribunal. As laid down by this Court in, Udhavdas Kewalram v. Com- missioner of Income-tax, Bombay City-1 1 the Income-tax Appellate Tribunal has to act judicially in the sense that it has to companysider with due care all material facts and the evidence in favour of and against the assessee and record its finding on all the companytentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. From the discussion companytained above it is clear that it cannot be said that the Appellate Tribunal in the case before us has omitted to companysider any material fact or any material piece of evidence. To companyclude we are in agreement with the findings of the High Court that numberpoint of law arises out of questions Nos.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2441 and 2442 of 1968. Appeals by special leave from the judgment and order dated October 17, 1968 of the Bombay High Court in Arbitration Petitions Nos. 49 and 50 of 1968. N. Shroff, for the appellant in C.A. No. 2441/1968 . M. Tarkunde and I. N. Shroff, for the appellant in As. Nos. 2442 of 1968 . V. Gupte, B. R. Agarwala for the respondent in both the appeals . The Judgment of the Court was delivered to Ray, J. These two appeals are by special leave against I the judgment dated 17 October, 1968 of the High Court at Bombay determining under section 33 of the Arbitration Act that the umpire rightly entered upon the reference and further extending the time till 31 December, 1968 for making an award thereof by the umpire. Two questions arise for companysideration in these appeals. First, whether there can be any valid appointment of umpire by arbitrators without obtaining companysent of the appointee to be an um- pire. Second, on the companystruction of the arbitration agreement in the present case was the operation of paragraph 4 of Schedule I of the Arbitration Act excluded with the result that the umpire companyld enter upon the reference only in the event of a difference arising between the arbitrators. On 26 April, 1967 there was an arbitration agreement between the partnership firm of Indian Engineering Company and Keshavsinh Dwarkadas Kapadia. Kapadia had appointed M s. Chetan Trading Company as the sole selling agent of Kapadias, several products including aluminium and companyper wire by an agreement dated 16 September, 1965. Chetan Trading Company in their turn appointed Indian Engineering Company as their sole selling agent in respect of aluminium and companyper wires. Chetan Trading Company terminated their agreement with Indian Engineering Company. Kapadia also terminated the sole selling agency with Chetan Trading Company Indian Engineering Company companytended that on the termination of the sole selling agency between themselves and Chetan Trading Company Indian Engineering Company became the sole selling agent of Kapadia in terms of the agreement dated 16 September, 1965. Indian Engineering Company claimed damages against Kapadia for breach of the agreement. Kapadia claimed damages and moneys from Indian Engineering Company. Disputes arose between the parties. These disputes were referred to arbitration in accordance with the agreement dated 26 April, 1967. There was a similar arbitration agreement between Chetan Trading Company and Indian Engineering Company on 5 June, 1967 in respect of their disputes and claims against each other. The arbitration agreement and the arbitrators were identical in both the cases. Clauses 1, 2, 5 and 6 of the arbitration agreement which are relevant for the purposes of the present appeals are as follows- Clause 1 All the disputes and differences arising out of or in relation to the said Sole Selling Agency Agreement be and they are hereby referred to the arbitration of the said Shri H. G. Advani and Shri J. N. Gandhi. Clause 2 That the arbitration shall be governed by them provisions of the Arbitration Act, 1940. Clause 5 The arbitrators shall make and publish their award within four months from the date of their entering upon the reference and they are hereby authorised to extend the said time from time to time as may be required with the previous written companysent of both the parties hereto. Clause 6 The said arbitrators shall before proceeding with the arbitration appoint an umpire and in the event of any difference arising between them they shall refer the matter to the umpire for his decision and award. The arbitrators Messrs. Advani and Gandhi held their first meeting on 12 September, 1967. At the said meeting before entering upon the reference the arbitrators appointed an umpire in the following terms Mr. Porus Mehta failing him Mr. Murzban Mistry appointed umpire. On 11 January, 1968 the time laid down by clause 5 of the agreement for making the award expired. On 14 January, 1968 the respondents wrote to the appellants to obtain the neces- sary extension of time for making the award. The appellants did number companyply with the request and on 6 March, 1968 wrote to the arbitrators that Mr. Advani one of the arbitrators would be biased in favour of the respondents. Thereafter, the respondents through their solicitors called upon the arbitrators to refer the matter to the umpire and also by a separate letter called upon the umpire Mr. Porus A. Mehta to enter on the reference as umpire appointed by the arbitrators. Mr. Mehta fixed a meeting on 27 May, 1968. The appellants raised certain objections. The meeting was adjourned. Another meeting was fixed on 17 June, 1968. At the meeting held on 17th June, 1968 Mr. Mehta gave certain directions in regard to the proceedings and instructions thereof and fixed 12 July, 1968 for hearing. The appellants by letter dated 12 July, 1968 addressed to Mr. Mehta companytended that the companysent of the umpire was number obtained before his appointment and therefore there was numbervalid appointment of the umpire. Mr. Mehta fixed the meeting on 13 July, 1968 and decided to proceed with the arbitration and adjourned the meeting to 20 July, 1968. The appellants obtained an adjournment on the ground that the appellants wanted to file a petition challenging the appointment of Mr. Mehta as an umpire. Mr. Mehta adjourned the matter till 30 July, 1968. In this companytext of events the appellants filed applications under section 33 of the Arbitration Act which resulted in the order appealed against. Three companytentions which had been advanced An the High Court were repeated here. First, that the arbitrators before pro- ceeding with the reference did number obtain companysent of the umpire to his appointment as umpire, and, therefore, there was numberappointment of umpire. Secondly, under clause 6 of the arbitration agreement operation of paragraph 4 of Schedule I of the Arbitration Act was excluded and the umpire companyld enter upon the reference only in the event of a difference arising between the arbitrators on their disagreement. No difference arose between the arbitrators in the present case but only time for making the award expired. Therefore, the umpire had numberright to enter upon the reference. Thirty under clause 6 of the arbitration agreement, the umpire had numberright to enter upon the reference unless the arbitrators referred the matter to the umpire. The High Court relied on the decision of the Judicial Committee in Mirza Sadik Husain v. Mussanmat Kaniz Zohra Begam and Anr. 1 38 I.A. 181 and held that the umpire signified the companysent by taking up the office and the umpire rightly entered on the reference. The High Court held that the companytingency provided for in paragraph 4 of Schedule I to the Arbitration Act was number excluded. The High Court however said that if the High Court was wrong in the view that paragraph 4 of Schedule I to the Arbitration Act was number excluded, expiry of time to make an award companyld number be regarded as a disagreement between the arbitrators. The third companytention of the appellants was also rejected by the High Court on the ground that clause 6 of the arbitration agreement in the present case did number apply when the arbitrators did number make an award within time. Counsel for the appellants companytended that the words if any appointed arbitrator or umpire I neglects or refuses to get occurring in section 8 1 of the Arbitration Act, 1940 mean that one can refuse to act only after one has accepted the appointment. This companytention was supported by relying on the following observation in Russell on Arbitration, 18th Edition, at page 212 Acceptance of offices-Acceptance of the office by the arbitrator appears to be necessary to perfect his appointment. It has been so decided in the case of an umpire, and it would seem to be only reasonable that an appointment should number be companysidered effective until the person appointed has agreed either expressly or tacitly to exercise the function of the office. Two decisions are cited in Russell in support of the view expressed by the author. These decisions are Ringland v. Lowndes 7 1863 15 C.B. N.S. 173143 E.R. 749 and Tradax Export S. A. v. Volkawagenwerk 3 A.G., 1969 2 O.B. The decision in Tradax Export case supra has been affirmed by the Court of Appeal as will appear in 1970 1 E.R. 420. It is important to numberice the distinction between appointment and acceptance of office. The present appeals companycern the appointment of an umpire. The questions of effectiveness or per- fection of appointment are by the nature of things subsequent to appointment unless the agreement or the statute provides otherwise. Arbitrators and umpire too are often appointed by the parties. Sometimes an umpire is appointed by arbitrator. The companystitution of the arbitral body and the manner in which the appointments are made are primarily dealt with in the arbitration agreement or else the Arbitration Act will apply. In some cases, the appointment of arbitrator may require special companysideration. If, for instance, two arbitrators are required to be appointed one by each party an appointment of arbitrator by a party is number companyplete without companymunication thereof to the other party. The reason in the words of Lord Denman is this Neither party can be said to have chosen an arbitrator until he lots the other party know the object of his choice See Thomas v. Fredricks 1 847 10 Q.B. 775 . Where each party was to appoint a valuer by 31 May, 1847 and one of the parties numberinated a referee late on 31 May and sent by that nights post a numberice thereof to the defendant who received it on 1 June, it was held that the plaintiff had number numberinated a referee by 31 May. See Tew v. Harris 1848 11 B. 7 . The necessity for companymunication of appointment of arbitrator to the parties as also to the appointee depends often on the languae of the arbitration clause. In the Tradax Export case, supra the arbitration clause was as follows - Any claim must be made in writing and claimants arbitrator appointed within three months of final discharge and where this provision is number companyplied with the claim shall be deemed to be waived and absolutely barred. This is described as the usual Centrocon arbitration clause in charterparty agreement. It is numbericeable that in the Centrocon arbitration clause the claimant is required to appoint an arbitrator within three months of final discharge of cargo or else the claim is barred. An effective appointment of an arbitrator in such a clause is necessary to companystitute arbitral authority within the stipulated time to prevent the claim from being barred. Therefore, in such a clause number only companymunication to the appointee but also the acceptance of office by the appointee is essential for effective appointment of arbitrator within the meaning of the clause. A mere numberination or appointment unknown to the appointee was held number to be an appointment far less an effective appointment of arbitrator within the meaning of that clause. The appointment will be effective only when the appointed arbitrator accepts office and is armed with the duty and authority of an arbitrator. Even in such a clause the stage of effective appointment will be when he has indicated his willingness to act in that matter. In the Tradax Export case supra the charterers gave numberice of appointment to the arbitrator. Three months expired The other side companytended that there was numberappointment of arbit- rator within the stipulated time. The arbitrator was number set in motion. Neither was the arbitrator clothed with the mandate of arbitration number was the machinery of arbitration invoked by the charterers. The appointment of an arbitrator there had to be perfected and implemented by calling upon the appointee to act. In the Tradax Export case supra the Court of Appeal observed that if an application under section 27 of the English Arbitration Act, 1950 had been made, the companyrt would have, granted relief as explained in Liberian Shipping Corporation Pegasus v. A. King Sons Ltd. 1967 2 Q.B. 86. Section 27 of the English Arbit- ration Act is a special provision companyferring power upon the companyrt to extend the time for companymencement of arbitration proceedings where in the circumstances of the case undue hardship would otherwise be, caused. This aspect indicates that in the Centrocon clause companymencement of proceedings by effective- appointment is vital and that is why relief against rigour of time clauses is granted under section 27 of the English Arbitration Act, 1950. In the present appeals, the reference was to arbitrators and they were required to appoint an umpire. The appointment of an umpire by two arbitrators means that the arbitrators are to companyeur in appointing an umpire. There is numberparticular method of appointment of an umpire prescribed by the Act. The usual method of appointment of an umpire by the arbitrators is in writing. Arbitrators who are required to appoint an umpire are under numberobligation to obtain the approval of the choice of the personnel by the parties who appointed the arbitrators. If any party is dissatisfied with the choice that will number affect the validity of the appointment See Oliver v. Collings 1809 11 East 367-103 R. 1045 . The appointment by arbitrators of an umpire should be the act of the will and judgment the two. Such an appointment is to be one of the choice and number of chance. See Re. Cassell 1829 9 B C 624109 E.R. 232. If an umpire declines the office the appointment is ineffectual. Ile arbitrators in such a case can make another appointment of an umpire if the arbitration agreement empowers them to do SO Or the companyrt can appoint an umpire in lieu of an appointed umpire who refuses to act. Declining the office will be refusal to act. It is, therefore, apparent that appointment of umpire is something different from the acceptance of office by the umpire. The arbitrator Or umpire assumes his office when he accepts the appointment. There is numberNO authority for the proposition that companysent of the appointee is required before an umpire is appointed by the arbitrators. The observations in Russll on arbitration. 18 th Ed. at page, 212 do number support that submission. The decision in Ringland v. Lowndes supra which is referred to in Russell had very special features. Under the Public Health Act, 1848 a disputed claim to companypensation was to be settled by arbitration. Arbitrators were required to make an award within 21 days after the appointment or within extended time, if any. If arbitrators neglected or refused to appoint an umpire for seven days after being requested so to do by any party the companyrt of quarter sessions would on the application of such party appoint an umpire. In that case arbitrators were appointed in January, 1861. The arbitrators refused to appoint an umpire. The plaintiff applied at the Easter sessions to appoint an umpire but failed in companysequence of want of a numberice of his intention to make such application. The plaintiff thereafter gave the required numberice and the second application was made at the Midsummer sessions. One Johnson was named as umpire. But as his companysent had number been obtained numberformal appointment was made. A third application was made at the Michaelms sessions and Johnson was on 14 October appointed umpire and accepted the appointment. The question for companysideration was whether the appointment of the umpire was at the Midsummer sessions or at the Michaelmas sessions. Under the statute the award was, to be made within three months from the umpire,s appointment. The umpire made- an award on 30 December, 1861. If the appointment was in the Midsummer sessions the Award would be bad. It will appear from the report 15 C.B N.S. 173 at pp. 178, 179 and 196-143 E.R. 4 749 at pp. 752 and 759 that it was the duty. and practice of the clerk of the peace to make an, entry of the acts and proceedings of the companyrt from Which the orders of the companyrt were subsequently formally drawn up and numberorder would in the companyrse of practice be formally drawn up unless the assent of the umpire to act had been previously obtained. Counsel for the board in Ringlands case did number strongly press the objections that an order was made at the Midsummer sessions because there was numberformal order of the Court in Midsummer sessions. The decision in Ringland v. Lowndes supra went up on appeal as will, appear from, 17 C.B. N.S. 514.144, E.R. 207, The appeal, however was on actual decision in Tringland,s case supra is to whether a party who attended before, an, arbitrator under protest, cross- examined adversarys witnesses and called witnesses did number preclude himself from afterwards objecting that the arbitrator was proceeding without authority it will appear at companyceded that the, appointment of Johnson as an umpire took Place the October sessions. the special provisions of the statute, the mode. of making an application to the companyrt of quarter Sessions, me practice of the companyrt in regard to drawing up of orders for appointment of umpire and the specific requirement of companysent of the appointee to an order for appointment of umpire are all special and peculiar features in Ringland v. Lowndes supra to support the view that acceptance of umpirage is necessary for the appointment of the umpire. The decision of the Judicial Committee in Mirza Sadiq Husain Musammat Kaniz Zohra Begam supra was on the meaning of the words refuses to act occurring in section 510 of the Code of Civil Procedure, 1882. That section companyferred power on the companyrt to appoint a new arbitrator or umpire if the arbitrator or the umpire refuses to act. The, Judicial Committee did number accept the companystruction put upon the words refuses to act by the High Courts in India that the power of the companyrt under section 5 10 to appoint a new arbitrator in place of another arises only when that other had first companysented to act and thereafter refused or became incapable. The Judicial Committee said it appears to their Lordships that when an. arbitrator is numberinated by parties, his refusal to act is signified as clearly by his refusal to accept numberination as by any other companyrse he companyld pursue. His refusal to act necessarily follows, for he has number performed the first action of all, namely, to take up the office by signifying his assent to his appointment Their Lordships do number enter at length,into the matter as it appears that any other companystruction would open the way to an easy defeat of the provisions of the statute. Under section 8 of the Arbitration Act ,1940 if any umpire refuses to act and the arbitration agreement does number show that it was intended that the vacancy should number be supplied, and the parties or the arbitrators as the case may be, do number supply the vacancy any party may take recourse to the provisions of the statute for appointment of umpire. The companystruction which the Judicial Committee put upon the words refuses to act in Mirza Sadik Husains case supra applies to the provisions companytained in the Arbitration Act, 1940. Where the arbitrators appoint an umpire upon the companydition of the umpires acceptance of office, the arbitrators wilt have power to reappoint an umpire if the post is refused. Where, again, the arbitrators appoint an umpire, without any such companydition of acceptance of office, and the appointee declines the office, the, arbitrators in accordance with their powers under the arbitration agreement ea appoint an umpire again. The companyrt has also power to appoint in lieu of an appointed umpire who refuges to act, as stated in section 8 of the Arbitration Act, 1940. In all these cases the appointment of an. umpire becomes effective by acceptance of the office. Thereupon the power of appointment is exhausted. If the appointed person after acceptance of office refuses to act or will number act the parties have to take recourse to the companyrt. When the umpire assumes his office he accepts the appointment. The acceptance may be express or implied. Ile acceptance need number be in writing. It may be evidenced by companyduct. It may be also by proceeding with the arbitration. In Mirza Sadik Husains case supra both the parties by agreement appointed arbitrators to settle their respective rights. One of the arbitrators refused to act. The respondents in that case declined to numberinate another arbitrator in their behalf-. The Judicial Committee said that this declinature was within their rights, the reason being that the arbitrator refused to accept office or to act after he had been appointed. The arbitrators in the present case companypleted their appointment of umpire before entering on the reference. Thereafter, it remained for the umpire to act or to refuse to act. The question of acceptance of appointment of umpire arises with reference to the stage when he is called upon to act. The Arbitration Act, 1940 does number say that appointment of umpire by arbitrators is to be made only after obtaining companysent of the appointee. The arbitrators here appointed an umpire before entering on the reference The appointment was number companyditional upon the acceptance of appointment by the umpire. The scheme of arbitration proceedings indicates that the appointment of umpire and the acceptance of office are two separate matters arising at different stages in the proceedings. When the umpire is called upon to proceed in terms of the, appointment he will either assent expressly or by companyduct to act or he will decline to act. The High Court was companyrect in holding that there was a valid appointment of the umpire and the umpire rightly entered upon the reference. Ile umpires authority companymenced when he entered upon the reference on being asked to proceed with the reference. The other companytention on behalf of the, appellants that para- graph 4 of the First Schedule to the Arbitration Act, 1940 was excluded by clause 6 of the arbitration agreement in the present case is unsound. Section 3 of the Arbitration Act provides that an arbitration agreement, unless a different intention is expressed therein, shall be deemed to include the provisions set out in the First Schedule in so far as they are applicable to the reference. Paragraph 4 of the First Schedule provides that if the arbitrators have allowed their time to expire without making an award or have delivered to any party to the arbitration agreement or to the umpire a numberice in writing stating that they cannot agree, the umpire shall forthwith enter on the reference in lieu of the arbitrators. Clause 6 of the arbitration agreement does number state that only in the event of a difference arising between the arbitrators there shall be a reference to the umpire. There is numberintention in the agreement to exclude the operation of paragraph 4 of the First Schedule to the Arbitration Act. In the present case the agreement provided for appointment of umpire. The agreement also provided for making of the award by the arbitrators. It is, therefore, apparent that the intention of the parties was that when arbitrators would allow their time to expire without making the award the umpire would enter on the reference in lieu of the arbitrators. The High Court expressed the view that if the arbitrators allowed the time to expire that by itself would number amount to disagreement between the arbitrators. As to what companystitutes disagreement cannot be laid down in abstract or inflexible propositions. It will depend upon the facts of the case as to whether there was a disagreement. The High Court did number agree with the view expressed in Russel on Arbitration, 18th Ed. at pages 205 and 208, that failure to make an award in time where the agreement prescribed time in which the arbitrators award is to be made would amount to disagreement. In Lossifoglu v. Counmantaro 1941 1 K.B. 396 the arbitration clause provided in case the arbitrators so appointed disagree they shall appoints an umpire. One of the arbitrators repeatedly endeavoured to arrange a meeting with the other, but failed to arrange such a meeting. The arbitrator then unsuccessfully attempted to obtain companysent of the latter to the appointment of umpire. Thereafter, application was made to the companyrt for the appointment of umpire. Disagreement between the arbitrators may take various shapes and forms. In the present case the arbitrators by reason of attitude of a party in companyrespondence addressed to the arbitrators companyld number agree to proceed with the matter. Where one of the arbitrators decline to act and the other is left alone it will in a case of this type amount to disagreement between the two arbitrators. In the Present case, there was disagreement between the arbitrators. Time to make the award also expired. Therefore, from both points of view the umpire had authority to inter upon the reference. For these reasons, we are of opinion that the High Court was companyrect in making the order. The appeals are dismissed. The order of the, High Court is upheld, In view of the fact that the time granted by the High Court till 31 December, 1968 for making the award cannot apply, the umpire Porus A Mehta is I-L3Sup.Cl/72 granted time for three months to make the award. Three months will run from the date of service of this order by any party to these appeals.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2293 of 1968. Appeal by special leave from the judgment and order dated October 9, 1967 of the Kerala High Court in Income-tax Reference No. 64 of 1966. P. Malhotra, R. N. Sachthey and B. D. Sharma, for the appellant. T. Desai, A. K. Verma and J. B. Dadachanji, for the respondent. The Judgment of the Court was delivered by Grover, J. This is an appeal by special leave from a judgment of the Kerala High Court in a reference made under S. 26 1 of the Gift Tax Act, 1958, hereinafter referred to as the Act, relating to the assessment year 1964-65. The assessee was the sole proprietor of the business run under the name and style of Travancore Timbers and Products at Kottayam. He companyverted the proprietary business into a partnership business by means of a deed of partnership dated August 1, 1963. The partnership companysisted of the assessee and his two daughters. The capital of the partnership was to be Rs. 4,00,000/-. The assessee companytributed Rs. 3,50,000/and each of his two daughters, one of whom was married and the other unmarried, companytributed Rs. 25,000/-. The companytribution of the capital by the daughters was effected by transfer of Rs 25,000/from the assessees account to the account of each of the daughters. All the assets of the proprietary business were transferred to the partnership. In these assets the assessee and his daughters were entitled to shares in proportion to their share capital. In other words the assessee was entitled to a 7/8 share and each of his daughters to 1/16 share. The profits and losses of the partnership, business, however, were to be divided in equal shares between all the three partners. The assessee was the managing partner of the firm. The assessee filed a return of gift tax for the assessment year 1964-65 in respect of the gift of Rs. 50,000/- in favour of his daughters representing the share capital companytributed by his daughters. The Gift Tax Officer, however, took the view that in addition to the gift of the aforesaid amount the assessee had gifted 1/3rd portion of the goodwill of his proprietary business to each of his daughters. On the basis of the profits of the earlier years the Gift Tax Officer determined the value of the goodwill at Rs. 1,61,865/- and the value of the 2/3rd share of the goodwill gifted to the daughters at Rs. 1,07,910/- which was added to the amount of Rs. 50,000/- and the gift tax was assessed accordingly. The assessee preferred an appeal to the Appellate Assistant Commissioner of Gift Tax which was dismissed. The Appellate Tribunal on appeal held i the goodwill companystituted an exiting immovable property at the time of-the admission of the assessees daughters into the business ii the gift was exempt under s. 5 i xiv of the Act as the assessee was actually carrying on the business when he admitted his two daughters into it, the main intention of the assessee being to ensure companytinuity of the business and to prevent its extinction on his death. Such a purpose amounted to business expediency and therefore all the companyditions of s. 5 1 xiv were satisfied iii the goodwill was a capital asset and the assessees daughters had only 1/8 share in the assets of the business. The gift or the goodwill were, therefore, only of 1/8 share. The following questions of law were referred by the Tribunal at the instance of the Commissioner of Gift Tax Whether on the facts and in the circumstances of the case, the goodwill of the assessees business is an existing property within the meaning of s. 2 xii of the Gift tax A ct ? Whether on the facts and in the circumstances of the case, the assessee gifted only a 1/8th share in the goodwill of the business to his two daughters or whether he gifted a 2/3rd share ? Whether on the facts and in the circumstances of the case, the gift was exempt from assessment under S. 5 1 xiv of the Gift tax Act ? The High Court answered all the questions in favour of the assessee and against the Revenue. It is essential to look at the deed of partnership closely because certain clauses which, have a material bearing do number appear to have received the attention either of the Appellate Tribunal or the High Court. It was recited, inter alia, that the assessee was desirous of introducing into the business of Travancore Timbers and Products his major daughters and also his minor children as and when they attained majority. It was next stated that upon the treaty for the introduction of the said partners into the business for the par and for the partnership it was agreed that the first partner assessee would gift a sum of Rs. 25,000/- to each of his two major daughters. The property of the business was next described. It was stated to companysist of the land and buildings, plant, fixtures. and machinery, book debts, benefits of existing companytracts etc. and stock-in-trade and other movable chattels and effects. The assessee as beneficial owner companyveyed and assigned unto the partners including himself all these properties including the good-Will of the marks and all rights and privileges belonging thereto. Each of the partners companyenanted that he or she will duly pay discharge or perform all the debts and liabilities, companytracts and engagements of the individual business of the assessee subsisting in the shares and proportions in which they respectively became entitled under the business. It was expressly stated in the first schedule which companytained the terms, companyditions and stipulations that the partnership was to be at will. Clause 2 in the schedule is of particular importance. According to clause 2 a if the partners or partner who, for the first time, represented or possesses the major part in the value of the capital of the business desired to companytinue the business with additional partners they, he or she would be at liberty to do so on giving 6 months previous numberice to the other partner or partners paying to the partners or partner number desiring to companytinue the value of their his or her shares or share and interest in the business, property and the goodwill and giving a bond of indemnity with regard to the mode of ascertaining such value and the payment thereof and the amount of the penalty of such bond and otherwise as if the partnership had under these presents been stipulated to companytinue after the 31st day of March 1964 and such other partners or partner had happened to die immediately after the last mentioned day. It was further provided that if the 31st day of March 1964 passed without the then partners or partner who possessed the major part in the value of the capital having given the aforesaid numberice then the partners or partner who, for the first time, represented or possessed a minor part in value number being less than two equal third parts of the capital would be at liberty to companytinue the business by giving six calendar months previous numberice of their, his or her desire to do so and paying to the partners or partner number desiring to companytinue the value of their, his or her shares or share and interest for the time being of the business and the property and goodwill thereof etc. If the partnership was to companytinue under either of the eventualities mentioned. before every partner for the time being who desired to companytinue would have the right to do so. Clause 7 laid down that the parties shall be entitled to the capital and property of the partnership for the time being in the following shares The said first partner Ghee Varghese shall be entitled to 7/8th share thereof and each. of second and third partners to 1/ 16th part thereof. Clause 8 a , and Clause 9 are reproduced below 8 a The capital of the partnership shalt be the sum of Rs. 4,00,000/- Rupees Four lakhs only being the value ascertained as aforesaid of the property of the said late business taken over by the said parties hereto and of such further capital as shall be hereafter companytributed by the partners and all such further capital shall whether the same shall be companytributed out of the profits or otherwise be companytributed by the partners for the time being in the shares in which they are for the time being entitled to the existing capital of the partnership. The net profits or losses of the partnership shall subject to the provisions of these presents belong to the partners for the time being in equal shares. Under clause 10 the assessee was to be the managing partner of the firm. He alone had the power to sign the cheques on account of the partnership in the, name of the firm. He had the power to borrow from Banks and other private parties for the purpose of the business and to execute bands, documents agreements and other activities as might be necessary. There were other provisions also which showed that it was the assessee who retained substantially the companytrol of the running of the business in his own hands. Clause 17 provided that whenever any of the partners died during the companytinuance of the partnership then the partnership would number be dissolved between the surviving partners and elaborate provisions were made with regard to what would pass to the, representatives of such deceased partner from out of the properties and assets of the partnership as also its profits. The partnership deed also companytained what were called special provisions as to the share of the first partner. Clause 18 provided that the assessee who was the first partner companyld numberinate either one or all of the his minor children to be a partner or partners on their attaining majority. Such numberination or appointment companyld be made by a will or companyicil. It is somewhat surprising that the Gift Tax Officer picked up the assets of the business of the assessee, namely, the goodwill for treating that as a gift apart from the amount of Rs. 50,000/- which had admittedly been gifted to the daughters. It was mentioned in the assessment order that as the assessee had failed to disclose the gift relating to the same action under S. 17 1 c was being taken. Before the Appellate Assistant Commissioner it was companytended inter alia, that the value of the goodwill should number be included as a part of the gift. Alternatively it was companytended that the value had been calculated companyrectly. This was apart from the other companytentions which were raised claiming exemption under S. 5 1 xiv of the Act. Without examining the companytentions that the value of the goodwill should number be included as a part of the gift the Appellate Assistant Commissioner examined the other companytentions and agreed with the view taken by the Gift Tax Officer. The way the Tribunal examined the question relating to the goodwill was by treating it as an asset which had been gifted by the assessee to his two daughters. This is what the Tribunal observed By admitting his two daughters, as partners of the business, the assessee also admitted them to the benefit arising out of the goodwill of the business. Now it is quite clear that according to the deed of partnership and even otherwise on admitted facts goodwill was a part of the properties and assets of the business which the assessee was running under the style of Travancore Timber Products at Kottayam. All these were valued at Rs. 4,00,000/-. The entire property of the assessees proprietary business was transferred to the new partnership. According to clause 7 in the schedule to the partnership deed the parties were to be entitled to the capital and property of the partnership in the following shares Assessee 7/8th share. each daughter 1/16 share These shares were proportionate to the capital with which the partnership was stated to have been started. out of Rs. 4,00,000/the, assessee was deemed to have companytributed Rs. 3,50,000 and each of the daughters Rs. 25,000/-. The goodwill, as stated earlier, was a part of the assets which had been transferred to the partnership. Under s. 14 of the Indian Partnership Act subject to companytract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm or acquired by purchase or otherwise by or for the firm and includes also goodwill of the business. The departmental authorities, in the present case, never treated all the assets and property of the assessee which were transferred to the partnership pertaining to his proprietary business as a gift number has any suggestion been made before us on behalf of the Revenue that the property and assets valued at Rs. 4,00,000/- were the subject, matter of gift. All that the departmental authorities did and. that position companytinued throughout was that they picked up one of the assets of the assessees proprietary business, namely, its goodwill and regarded that as the subject of gift having been made to the daughters, who were the other partners of the firm which came into existence by virtue of the deed of partnership. This approach is wholly incomprehensible and numberattempt has been made before us to justify it. In our opinion the second question which was referred by the Tribunal should have been framed as follows Whether on the facts and in the circumstances any gift tax was payable on the goodwill of the assessees business. If the answer be in the affirmative how much share in the goodwill was liable to such tax ? We reframe the question in the above terms. It is quite obvious that the answer to the first part of the question has to be in the negative and therefore there is numbernecessity of answering ,he second part of the question. Question No. 1 also does number arise and need number be answered. We may next deal with the third question. Section 5 of the Act gives the exemption in respect of certain gifts. Sub- clause xiv of sub-s. 1 is as follows 5 1 Gift tax shall number be charged under this Act in respect of gifts made by any person- in the companyrse of carrying on a business, profession or vocation, to the extent to which the gift is proved to the satisfaction of the Gift Tax Officer to have been made bona fide for the purpose of such business, profession or vocation. The critical words are in the companyrse of and for the purpose. Therefore the gift should be proved to have been made number only in the companyrse of carrying on the business, profession or vocation but also bona fide for the purpose of such business, profession or vocation. The words in the companyrse of were companysidered by this Court in State of Travancore Cochin Others v. Shanmugha Vilas Cashew Nut Factory Others 1 in companynection with the language employed in Art. 286 of the Constitution. It was pointed out that the word companyrse etymologically denotes movement from one point to another and the expression in the companyrse of number only implies a period of time during which the movement is in progress but also postulates a companynected relation. There clause 1 b of the Article was under companysideration and what was exempted under the clause was the sale or purchase of the goods taking place in the companyrse of the import of the goods into or export of the goods out of the territory of India. The only assistance which can be derived in the present case is the emphasis on there being companynected relation between the activities for which these words are used. Thus the expression in the companyrse of carrying on of business etc. means that the gift should have some relationship with the carrying on of the business. If a donor makes a gift only while he is running the business that may number be sufficient to bring the gift within the first part of clause xiv of S. 5 1 of the Act. it must further be established, to bring the gift within that provi- sion, that there was some integral companynection or relation between the making of the gift and the carrying on of the business. Under clause xiv of S. 5 1 the second requirement is that the gift should have been made bona fide for the purpose of such business etc. According to the meaning of the word -purpose in Websters New International Dictionary, it is that which one sets before himself as an object to be attained the end or aim to be kept in view in any plan, measure, exertion or operation design intention. Therefore on the plain meaning of the word purpose as employed in clause xiv the object, plan or design must have companynection or relationship with the business. To put it differently the object in making the gift or the design or intention behind it should be related to the business. Some assistance may be derived from the language used in S. 19 2 xv of the Income tax Act 1922. According to that provision any expenditure laid out or expended wholly and exclusively for the purpose of business, profession or vocation is a permissible deduction in the companyputation of profits. In B W. Noble Ltd. v. Mitchell 2 a sum had been paid to a retiring Director in very peculiar circumstances. The object of making the payment was that of preserving the status and reputation of the companypany which the Directors felt would be 2 11 T.C. 372. 1 1954 S.C.R. 53. imperilled either by the other Director remaining in the business or by a dismissal of him against his will involving proceedings by way of action in which the good name of the companypany might suffer. Sargant L.J. was of the view that preservation of the status and dividend earning power of the companypany was well within the ordinary purpose of the trade, profession or vocation of the companypany. Indeed the English companyrts have refrained from adopting any dogmatic or set line for discovering the meaning of the expression for the purpose of when used in companynection with trade or business because it is essentially a matter which depends on the various sets of circumstances and facts of a particular case for determining whether certain expenditure has been incurred for the purpose of the trade or business See Morgan v. Tate Lyle, Ltd. 1 . According to a recent decision of this companyrt in Civil Appeals Nos. 1351-1353, 1897 1241 of 1968 The Commissioner of Income tax, West Bengal Birla Cotton Spinning Weaving Mill,, Ltd. etc. 2 the expression for the purpose of the business is essentially wider than the expression for the purpose of earning profits. It companyers number only the running of the business or its administration but also measures for the preservation of the business, protection of its assets and property. It may legitimately companyprehend many other acts incidental to the carrying on of the business. Another test that has often been taken into companysideration is whether the expenditure was necessitated or justified by companymercial expediency. The High Court, in the present case, relied on Commissioner of Gift Tax, Kerala v. Dr. George Kuruvilla 3 . There the assessee was a doctor by profession at the time of the gift which lie made in favour of his son who also joined his fathers profession. The Kerala High Court took the view that the gift had been made in the companyrse of carrying on of the business, profession a or vocation within the meaning of s. 5 1 xiv of the Act and also for the purpose of such business, profession or vocation. That decision was reversed by This companyrt in Commissioner of Gift Tax v. Di-. George Kuruvilla 4 It has been observed that s. 5 1 of the Act does number indicate that a gift made by a person carrying on any business is exempt from tax number does it provide that a gift is exempt from tax merely because the property is used for the purpose for which it was used by the donor. Without deciding whether the test of companymercial expediency was strictly appropriate to the claim for exemption under the aforesaid provision this companyrt held that there was, numberevidence to prove that the gift to the donee in that case was in the companyrse of carrying on the business of the donor and for the purpose of the business. 1 35 T.C. 367, 378. Decided on 17-8-1971. 3 1965 K.L.T. 721. 4 77 I.T.R. 746. We are satisfied that in the present case also it has number been established that the requirements of S. 5 1 xiv of the Act were satisfied. The assessee was certainly carrying on his business at the point of time when he admitted his two daughters into the firm. But from that fact alone it did number follow that the gift had been made in the companyrse of the assessees business number companyld it be held that the gift was made for the purpose of carrying on the assessees business. The Tribunal came to the companyclusion that the partnership did provide for the companytinuance of the partnership business in spite of the death of the partner and that the main intention of the assessee was to ensure the companytinuity of the business and to prevent its extinction on his death. A true and companyrect reading of the deed of partnership indicates that the partners companyld go cut from the partnership in terms of clause 2 of the schedule in the deed of partnership. Moreover the partnership was expressly stated to be at will. The real intention of the assessee apparently was to take his daughters into the firm with the object of companyferring benefit on them for the natural reason that the father wanted to, look to the advancement of his daughters. It was further provided in the deed that even the minor children would, in due companyrse, be admitted to partnership. Clause 8 of the schedule already referred to laid down that the assessee companyld numberinate either one or all of his minor children to be partner or partners on their attaining majority and such numberination or appointment companyld be made even by a will or companyicil. The assessee retained companyplete companytrol over the running of the partnership business and it can hardly be said that he needed any help from his daughters particularly when there is numberevidence that he was in a weak state of health, his age being below 50 years. Moreover there is numberhing to show that the daughters had any specialised knowledge or business experience so as to be able to assist in the development or management of the business. We are wholly unable in these circumstances to accept that the present case is different from Dr. George Kuruvillas 1 . in our judgment there was numbercogent material to companye to the companyclusive that the gift of Rs. 25,000/- to each of the daughters by the assessee was in the companyrse of carrying on the business of the assesese and was for the purpose of the business. It may be recalled that the assessee had himself made a return in the matter of assessment of Gift tax payable tinder the Act in respect of the amount of Rs. 50,000/- which had been gifted by him to his two daughters. The answer to question No. 3, companysequently, would be in favour of the Revenue and against the assessee so far as that amount is companycerned. For the reasons given above the answers returned by the High Court are discharged and in their place the question shall stand answered in accordance with this judgment in the following manner Question No. 1 does number arise. Question No. 2 as reframed The first part is answered in the negative and in favour of the assessee. The second part does number arise. Question No. 3 The answer is in favour of the Revenue and against the assessee so far as the gift of Rs. 50,000/- is companycerned. The appeal shall stand disposed of accordingly.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 2300 of 1968. Appeal from the judgment and order dated October 18, 1967 of the Madras High Court in Writ Petition.No. 637 of 1967. Bishan Narain and A. V. Rangam, for the appellant. T. Desai and B. P. Maheshwari, for the respondent. The Judgment of the Court was delivered by Hegde, J. This appeal by certificate arises from the decision of the High Court of Madras in Writ Petition No. 637 of 1967. The petitioner before the High Court is M s. Cement Allocation Coordinating Organization, a selling Agent of Dalmia Cement Bharat Ltd. That Organization will be hereinafter referred to as the assessee. On February 28, 1967 the Deputy Commercial Tax Officer, Lalgudi wrote to the assessee to show cause why its turnover relating to the price of the packing materials used in packing the Cement sold should number be included in its taxable turnover. The assessee instead of showing cause against that proposal moved the High Court of Madras under Article 226 of the Constitution to direct the assessing authority number to include that turnover in its taxable turnover. The High Court entertained that Writ Petition. It would have been proper if the High Court had directed the assessee to put forward its case before the authorities under the Madras General Sales Tax Act 1959. Now that the High Court had entertained the Writ Petition and gone into the merits of the case, it serves numberuseful purpose to refuse to go into the merits of case. In its Writ Petition the assessee had definitely averred that it was functioning as the agent of Dalmia Cement Bharat Ltd. and its rights are the same as that of its principal. It was further alleged in the Writ Petition that when cement was sold in packages, the packing charges were separately shown in the bill,,, issued to the buyers. On these grounds the assessee claimed that it is entitled to deduct those charges from its total turnover in view of rule 6 c of the Rules framed under the Madras, General Sales Tax Act, 1959. The plea of the assessee that it was the Agent of Dalmia Cement Bharat Ltd. during the relevant period was number denied in the return filed by the State of Tamil Nadu. It was also number denied that the assessee had shown the packing charges separately in the bills issued by it to the Purchasers of cement. On the basis of those admitted facts the High Court came to the companyclusion that the assessee is entitled to deduct from its total turnover the turnover relating to the packing charges if its principals would have been entitled to deduct the same had they sold the cement in question directly. The operative portion of the High Court reads thus The petition is allowed but with numbercosts. We may, however, add that the order We have made in this petition does number in any way prevent the assessing authority from examining the question, after giving a fresh numberice, whether the principal himself would be disentitled to exclusion of the value of the packing materials in determining the chargeable turnover. It is against this order that the State of Madras has companye up in appeal to this Court. The charging section under the Madras General Sales Tax Act, 1959 is section 3. It brings to all taxable turnover of a dealer as defined in the Act. The expression dealer is defined in section 2 g . Because of section 2 g iii a Commission agent is also companysidered as a dealer for the purpose of the Madras General Sales Tax Act, 1959. Hence the taxable turnover of a Commission agent is liable to be brought to tax. The only other provision that we need refer is rule 6 of the Rules framed under the Act. That rule reads The tax or taxes under section 3, 4 or 5 shall be levied on the taxable turnover of the dealer. In determining the taxable turnover, the amounts specified in the following clauses shall, subject to the companyditions specified therein, be deducted from the total turnover of a dealer - c all amounts falling under the following two heads, when specified and charged for by the dealer separately, without including them in the price of the goods sold freight and charges for packing, that is to say, companyt of packing materials and companyt of labour and other such like services. The first question that we have to companysider is whether an agent of a principal who is also a dealer under the Act is entitled to the same rights as his principal has under the Act. Under the general law the agent merely represents his principal, Therefore, while functioning within the scope of the agency he can exercise all the rights which his principal companyld have exercised. In fact, in the case of an ordinary agency, the agent merely acts for Ms principal. This provision must hold good even under the Madras General Sales Tax Act unless otherwise provided therein. The fact that for the purpose of that Act an agent is companysidered as a dealer does number alter the legal position in other respects. Excepting to the extent otherwise provided in the Madras General Sales Lax Act the, agent must he, held to represent his principal white dealing with the goods of his principal he merely steps into the shoes of his principal. He is entitled to the same exemptions as his principal would have got had he dealt with the companycerned goods himself. Agents are companysidered as dealers under the tax so as to effectively enforce the provisions of the Act. But that provision does number companyvert an agent into a principal for all purposes under the Act. But the question whether the principal is entitled to the exemption claimed has been left open by the High Court. That question has to be decided after going into the facts of the case. How than question should be, decided has been laid down by this Court in Hydrabad Deccan Cigarette Factory The State of Andhra Pradesh 1 . Therein this Court has ruled that it is for the department to establish that a particular turnover companystitutes a part or whole of the taxable turnover. For establishing that fact the department may call upon the assessee to produce before it such material which the assessee has in his possession or under his companytrol. The department before companying to the companyclusion that a particular turnover is taxable must take into companysideration all the facts and circumstances of the case. On the question whether certain packing charges are exempt from tax, the authorities under the Act before deciding that question have to take into companysideration the various aspects mentioned in that judgment. This is what the Court observed therein In the instant case, it is number disputed that there were numberexpress companytracts of sale of the packing materials between the assessee and its customers. On the facts, companyld such companytracts be inferred ? The authority companycerned should ask and answer the question whether the, parties in the instant case, having regard to the circumstances of the case, intended to sell or buy the packing materials, or whether the subject matter of the companytracts of sale was only the cigarettes and that the packing materials did number form part of the bargain at all, but were used by the seller as a companyven- ient and cheap vehicle of transport. He may also have to companysider the question whether, when a trader in cigarettes sold cigarettes priced at a particular figure for a specified number and handed them over to a customer in a cheap card-board companytainer of insignificant value, lie intended to sell the cardboard companytainer and STC 17 p. 624. the customer intended to buy the same. It is number possible to state as a proposition of law that whenever particular goods were sold in a companytainer the parties did number intend to sell and buy the companytainer also. Many cases may be visualized where the companytainer is companypa- ratively of high value and sometimes even higher than that companytained in it. Scent or whisky may be sold in companytly companytainers. Even cigarettes may be sold in silver or gold caskets. It may be that in such cases the agreement to pay an extra price for the companytainer may be more readily implied. In the present case, if we may say so with respect, all the authorities, including the High Court, dealt with the question as a question of law without companysidering the relevant factors which would sustain or negative any such agreement. The determining factor in all such cases is whether the buyer directly or by implication agree to buy and the seller to sell, separately the packing material. In this case we are number called upon to go into that question. We merely indicated the approach as a matter of guidance. The question for decision by us lies within a narrow companypass and that question is whether the, assessee is entitled to claim exemption in respect of packing charges if his principal companyld have claimed it had it sold the cement itself. On that question, we agree with the view taken by the High Court.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 622 of 1967. Appeal by special leave from the award dated February 28, 1967 of the Delhi Administration Special Industrial Tribunal, Delhi in Reference No. 53 of 1966. B. Pai, D. R. Thadani and S. S. Sharma, for the appellants. N. Phadke, S. S. Khanduja, V. P. Kohli and Lalita Kohli, for respondents Nos. 1 c and 3 c i . K. Ramamurthi and Vineet Kumar, for the respondent No. 1 a . P. Sharma and K. S. Suri, for respondent No. 1 b . The Judgment of the Court, was delivered by Mitter, J. The only point of dispute between the parties to this appeal by special leave from an order of an Industrial Tribunal relates to the quantum of direct taxes deductible under s. 6 of the Payment of Bonus Act, 1965. The appellant is a public limited companypany owning and run- ning various industrial units situate at different places in India. These are engaged in the manufacture of different kinds of articles such as companyton textiles, artificial silk fabrics, sugar, industrial alcohol, vanaspati, chemicals, fertiliser, polyvinyl chloride and rayon tyrecord etc. Two of these units i.e., The Delhi Cloth Mills and the Swatantra Bharat Mills are companyton textile mills each registered as a factory under the Factories Act. The award under appeal relates to these two mills alone. The appellant prepares and publishes one companysolidated balance sheet and profit and loss account of the companypany showing the final results of the working of all the units for its shareholders. It had however for many years past, prepared and maintained separate balance sheets and profit and loss accounts for some of its units individually and some grouped together. Although separate balance sheets and profit and loss accounts were prepared for each of these two mills hereinafter referred to as D.C.M. and S.B.M. for abbrevia- tion their workmen have always been paid bonus calculated on the basis of pooled profits of the two units treating them as one unit. This is borne out by the award of the Tribunal in paragraph 29. The reference herein was made by numberification dated March 4, 1966 under ss. 10 1 d and 12 5 of the Industrial Disputes Act for adjudication of several specified matters of which the first two read as follows Whether in calculating the bonus table for the accounting year ending 30-6-1965 the allocation separately made by the Delhi Cloth and General Mills Co. Ltd. towards the Capital and Reserves of the Delhi Cloth Mills and Swatantra Bharat Mills, the two units of the Company, is fair and reasonable ? If number, what directions are necessary in this regard ? Whether the workmen of these Mills are entitled to bonus at a rate higher than 6 per cent of the wages for the accounting year ending 30-6-1965 ? If so, what directions are necessary in this regard ? After prolonged proceedings before the Tribunal a settlement was arrived at between the Management and the Labour Unions which were parties to the reference and agreed directions given in accordance therewith in regard to issue No. 1 were as follows Balance-sheets of D.C.M. and S.B.M. will be taken together for calculation of available surplus in accordance with the formula laid down in the Payment of Bonus Act, 1965. Interest has been charged in the profit and loss account of D.C.M. and S.B.M. units of the head-office current account. Hence, numberreturn will be claimed thereon. Interest has number been charged on the fixed capital expenditure accounts and the gratuity reserves, appearing in the balance sheets of the D.C.M. and S.B.M. therefore, return on such amounts will be claimed. The following method will be followed in making a claim for return on the following amounts The, fixed capital expenditure account in the. D.C.M. and S.B.M. as represented by the written down value of the Fixed assets appearing in the balance sheet of these two units will be treated as paid up share capital of the companypany allocated to and invested in these two units and return at the rate of 81 or as provided in the Payment of Bonus Act, 1965 from time. to time will be charged thereon as provided under the Payment of Bonus Act, 1965. The gratuity reserves of these two units will be treated as reserves and return at the rate of 6 will be charged thereon as provided under the Payment of Bonus Act, 1965. The method and basis of casting balance sheets will number be unilaterally altered or changed. The, above method of charging return on paid up share capital and reserve of the above two units will be followed in future also. Thereafter the parties filed a large number of documents waiving formal proof thereof. Those, filed on behalf of the Management were Exs. M to M-352 while three other opposite parties filed some documents each. On the basis of the documents before the Tribunal the Management and the workers made their respective calculations which were summed up in a chart, a companyy whereof was handed over to us by learned companynsel for the appellants. The same reads as follows-- CHART Management M-330 paper Book p.200 ------------------------------------------------------------ Ref. of Bonus Act Details Ext DCM SBM ------------------------------------------------------------ Gross Profit As per Ext. 1 107.14 48.93 Schedule 2 deductions Prior charges Statutory depreciation S.6 a Development rebate 2 Direct taxes 3 Income tax 3 Surtax RETURN Dividend on Pref 4 capital b on equity capital 4 c on reverse 4 Available surplus S.5 Allocable surplus S.2 a Payables as bonus Annual wage bill of all the eligible of 5.201.78 plus 101.54 employees Rate of bonus to each employee Workers W-84 Paper Book p.213 ----------------------------------------------------------- Total Lakhs ------------------------------------------------------------ 156.09 Gross Profit 156.09 DEDUCTIONS 35.83 Depreciation u s 6 a . . . . . . . 35.83 Development rebate u s 6 b . . . . . . 2.72 2.72 Direct taxes u s 6 c as in EX-M-15 10.09 Return on capital under s.6 d 22.47 52.24 5.48 27.17 1.30 118.74 Available surplus is . . . . . . . . 84.98 Allocable surplus is 60 of Rs.84.98 50.99 37.35 22.40 306.32 Annual wages . . . . . . . . . . . . . . 306.32 7.31 Rate of bonus . . . . . . . . . . . . . 16.64 ----------------------------------------------------------- The above brings out the wide divergence between the parties as to the figure of direct taxes. According to the appellant direct taxes which have to be deducted for companyputation of allocable surplus for payment of bonus are Rs. 52-24 lakhs by way of income-tax and Rs. 5-48 lakhs by way of surtax making a total of Rs. 57-72 lakhs, while according to the calculation of the workers direct taxes should be numbermore than Rs. 10-09 lakhs on the basis of Ex. M- 15, one of the documents produced by the Management itself. If the companyputation of the Management is accepted, then the allocable surplus in terms of s. 2 4 of the Bonus Act is Rs. 22-40 lakhs and the rate of bonus to each employee is 7.31 per cent while according to the companyputation of the workers the allocable surplus is Rs. 50-99 lakhs and the rate of bonus should be 16.64. In order to appreciate the viewpoints of the two parties, it is necessary to refer to some provisions of the Act. It is unnecessary to state that before the enactment of the Bonus Act of 1965 bonus used to be awarded by Industrial Tribunals whenever there was a dispute between the Management and the workers, by applying the Labour Appellate Tribunal Full Bench formula formulated as far back as 1950 and approved of and explained in several decisions of this Court. The Act of 1965 was passed for creating a statutory liability for payment of bonus to persons employed in certain establishments and for matters companynected therewith. Subject to certain exceptions it was made applicable to every factory or other establishment in which twenty or more persons were employed on any day during an accounting year.The accounting year in the present case is 1st July 1964 to 30th June, 1965. Under s. 8 every employee is entitled to be paid by the employer in an accounting year, bonus in accordance with the provisions of the Act. The amount of bonus is to be specified percentages of the allocable surplus of the establishment which is defined in s. 2 sub-s. 4 of the Act. Establishments may be of two kinds. They are either establishments in private sector or establishments in private sector. Although establishment by itself has number been defined in the Act separately, s. 3 gives a clue to the meaning thereof. The said section runs as follows Where an establishment companysists of different departments or undertakings or has branches, whether situated in the same place or in different places, all such departments or undertakings or branches shall be treated as parts of the same establishment for the purpose of companyputation of bonus under this Act Provided that where for any accounting year a se parate balance-sheet and profit and loss account are Prepared and maintained in respect of any such department or undertaking or branch, then, such department or undertaking or branch shall be treated as a separate establishment for the purpose of companyputation of bonus under this Act for that year, unless such department or undertaking or branch was, immediately before the companymencement of that accounting year treated as part of the establishment for the purpose of companyputation of bonus. Gross profits of each establishment have to be companyputed in terms of s. 4 which in its turn refer to two Schedules the first to be applicable to a banking companypany and the other to any other case. After the ascertainment of gross profits s. 5 lays down the method of companyputation of available surplus. Before the amendment introduced by Act 8 of 1969 the available surplus in respect of any accounting year was to be the gross profits for the year after deducting therefrom the sums referred to in s. 6. S. 6 provided for the deduction of certain amounts from the gross profits as prior charges. These are, namely, a any amount by way of depre- ciation admissible in accordance with the provisions of sub- s. 1 of s. 32 of the Income-tax Act or in accordance with the provisions of the agricultural income-tax law, as the case may be the provision is irrelevant for our purpose b any amount by way of development rebate or development allowance which the employer is entitled to deduct from his income under the Income-tax Act c subject to the provisions of s. 7 any direct tax which the employer is liable to pay for the accounting year in respect of his income, profits and gains during that Year and d such further sums as are specified in respect of the employer in the Third Schedule. Before the amendment of the Act in 1969 s. 7 read as follows - For the purpose of clause c of section 6, any, direct tax payable by the employer for any accounting year shall, subject to the following provisions, be calculated at the rates applicable to the income of the employer for that year, namely - a in calculating such tax numberaccount shall be taken of--- any loss incurred by the employer in respect of any previous accounting year and carried forward under any law for the time being in force relating to direct taxes any arrears of depreciation which the employer is entitled to add to the amount of the allowances for depreciation for any following accounting year or years under subsection 2 of section 32 of the Income-tax Act any exemption companyferred on the employer under section 84 of the Income-tax Act or of any deduction to which he is entitled under sub-section 1 of section 101 of the Act, as in force immediately before the companymencement of the Finance Act, 1965 b where the employer is a religious or a charitable institution to which the provisions of section 32 do number apply and the whole or any part of its income is exempt from tax under the Income-tax Act, then, with respect to the income so exempted, such institution shall be treated as if it were a companypany in which the public are substantially interested within the meaning of that Act c where the employer is an individual or a Hindu undivided family, the tax payable by such employer under the Income-tax Act shall be calculated on the basis that the income derived by him from the establishment is his only income d where the income from any employer includes any profits and gains derived from, the export of any goods or merchandise out of India and any rebate on such income is allowed under any law for the time being in force relating to direct taxes, then, numberaccount shall be taken of such rebate e numberaccount shall be taken of any rebate other than development rebate or development allowance or credit or relief or deduction number hereinbefore mentioned in this section in the payment of any direct tax allowed under any law for the time being in force relating to direct taxes or under the relevant annual Finance Act, for the development of any industry. Section 3 is the key to the Act in that it fixes the res or the property which is to provide the allocable surplus for the distribution of bonus in terms of the Act. This must be an establishment and a question directly arises when there are a number of establishments in companymon ownership as to how the allocable surplus is to be found out. If s. 3 had numberproviso to it, all departments, undertakings or branches, be they companyplete factories or number, for turning out companymercial products under companymon ownership companyld be treated as one establishment for the purpose of companyputation of bonus, A companypany which is a legal entity owning and running factories of diverse characters whether situate at the same place or located at different places would in such eventuality, form one establishment for the purpose of the Act. The proviso to the section however shows that the legislature intended that each of these factories is to be treated as a separate establishment for the purpose of companyputation of bonus if a separate balance sheet and profit and loss account were prepared in respect thereof unless such a factory was, immediately before the companymencement of the accounting year, treated as a part and parcel of the companypany i.e., the establishment. In other words, if different units or branches or departments had been treated separately for the purpose of companyputation of bonus and separate balance sheet and profit and loss accounts had been prepared in respect thereof, they were number to lost their separate identity as establishments because of the main provision of S. 3. Once it is ascertained that a branch, department or a factory is an establishment by itself under the Act, sections 4 to 7 are to have effect in respect of that establishment by themselves without the impact or companynection with other branches, departments or factories even if they subserve a companymon cause. Gross profits ,of such an establishment like the two mills before us would have to be calculated in terms of the Second Schedule to the Act by taking the net profit as per profit and loss account and adding thereto the various amounts therein mentioned and deducting the amounts like capital receipts, profits of and receipts relating to business outside India etc. The gross profits to be companyputed for the purpose of bonus would number be the same as to be companyputed under the Indian Companies Act or the Income-tax Act. Under S. 5 of the Act the available surplus in respect of the two units would be the gross profits companyputed under S. 4 as reduced by the prior charges mentioned in sub-cls. a to b of section 6. All these amounts i.e., gross profits, available surplus and sums deductible from gross profits would be numberional amounts in that they would number be the amounts which would be companyputed under the Companies Act for submission to the shareholders or for assessment under the Income-tax Act to the taxing authorities. S. 7 cl. a of the Act further illustrates the point that the direct taxes which are to be deducted as prior charges are number to be the same as would be assessed by the income-tax authorities under the Income-tax Act. That the calculation of direct taxes would be on a numberional basis is also emphasised by cls. b , c , The net result seems to be that the legislature intended that subject to the express provisions mentioned, the employees of a particular establishment should be entitled to bonus under the, Act without any companysideration to facts or matters number mentioned in the Act. The employer is to be treated as a separate juristic person liable to pay bonus to the employees as if the establishment was his only venture, numbermatter how he fares in his other ventures. Even if the sum total of his activities in respect of his ventures resulted in a loss for the accounting year, he would have to pay bonus subject to the maximum specified in section 10 of the Act to each employee of the establishment which was making profits. The profits or losses of the other establishments, although they may form part of the companyposite whole in the accounting to be done under the Companies Act or the assessments to be made under the Income-tax Act, would be wholly alien to companysideration and companyputation of bonus of the profit making establishments in terms of the Act. The balance sheet and the profit and loss account of tie Delhi Cloth and General Mills as on 30th June 1965 and for the year ended 30 June 1965 were Exs. M-5 to M-7 before the Tribunal while Exs. M-8 to M-10 are the companyresponding docu- ments for the Swatantra Bharat Mills. There is numberdispute between the parties with regard to the figure of gross profits in terms of the Second Schedule to the Bonus Act as shown in the main chart Ex. M-330 of the Management. The gross profits for the Delhi Cloth Mills was Rs. 107.14 lakhs and that for Swatantra Bharat Mills Rs. 48.95 lakhs totalling Rs. 156-09 lakhs. There is also numberdispute that the statutory depreciation in terms of s. 6 a of the Act was Rs. 17,52,048 for the Delhi Cloth Mills and Rs. 18,30,969 for Swatantra Bharat Mills the total whereof companyes to Rs. 35.83 lakhs. The companyresponding figures for the development rebate of the two mills add up to 2-72 lakhs but whereas according to Ex. M-330 the direct tax i.e., the sum of, income-tax and surtax in respect of these two units should be Rs. 52.24 lakhs and Rs. 5.48 lakhs totalling Rs. 57.72 lakhs, the employees claim that the figure should be numberhigher than Rs. 10.09 lakhs in terms of Ex. M- 15. It is well known that under the Indian Income-tax Act the total profits and gains of a business are to be worked out in terms of s. 28 of the Income-tax Act, 1951. Under s. 29 the income referred to in s. 28 is to be companyputed in accordance with the provisions companytained in ss. 30 to 43-A. S. 30 shows what reductions are to be allowed in respect of rent, rates, taxes etc. for premises used for the purpose of a business or profession. S. 31 specifies the amounts deductible in respect of repairs and insurance of machinery plant and furniture used for the purpose of the business. S. 32 deals with depreciation allowable under the Income-tax Act. It companytains elaborate Provisions as to how the depreciation is to be worked out. S. 33 provides for companyputation of development rebate in respect of the plant or machinery. S. 33-A provides for development allowance. S. 33-B provides for companyputation of rehabilitation allowance. S. 34 lays down the companyditions for the allowance of depreciation and development rebate. Ss. 35, 35-A, 35,B, 35-C and 36 provide for special allowances. When the total income is ascertained after providing for the many allowances specified in the Act, income-tax is charged in respect of the total income of the previous year or previous year as the case may be, at rates laid down in the Finance Act for the relevant, year. The Companies Act however is number companycerned with any other allowance except the one for depreciation under s. 32 of the Income-tax Act and the amounts deductible by way of development rebate or development allowance under the said Act. It must follow from the above that the liability for direct tax under S. 6 c must be the one which would have to be companyputed by principles followed in the Income-tax Act. In other words, the liability under s. 6 c must be the numberional liability of a venture of which the gross profits are known and the prior charges by way of depreciation and development rebate and development allowance have been companyputed. The calculation of income-tax in Ex. M-330 proceeds on the basis that the gross profits are Rs. 156.09 lakhs and the depreciation and development rebate allowable under S. 6 a and b are Rs. 38.55 lakhs leaving a margin of Rs. 117.54 lakhs for companyputation of Incometax, If this tax is quantified at 45 of the said balance it companyes to Rs. 52.24 lakhs as shown in the calculation chart of the Management and surtax thereon would be Rs. 5.48 lakhs. The respondents do number. dispute that the figures for income-tax and surtax would be as shown by the Management if their basic calculation is companyrect but according to them the Management must accept the figure given in Ex. M-15. Ex. M-15 proceeds on the basis that the total liability of the companypany being Rs. 16.00 lakhs as shown at page 4 of the Directors report to the shareholders under the Indian Companies Act for the year ended 30th June 1965, the same would be allocable to the two units of Delhi, Cloth Mills and Swatantra Bharat Mills in the proportion of Rs. 7.37 lakhs and Rs. 2.24 lakhs. These figures however have numberbearing on the companyputation of the liability to tax under s. 6 c of the Bonus Act for the two particular units involved in this case. It was argued at one stage by the respondents that cl. c of s. 6 is number related to cls. a and b of the said section. If that were so, there is numberreason why the tax liability at 45 should number be calculated on the whole of the gross profits i.e., Rs. 156.09 lakhs. Ex M-15 was apparently prepared on the basis that the total tax liability for income-tax purposes of all the various units under the ownership of the Delhi Cloth and General Mills Company Ltd. being Rs. 16 lakhs, Rs. 7.85 lakhs and Rs. 2.24 lakhs would be attributable to the working results of Delhi Cloth Mills and Swatantra Bharat Mills. If the direct tax liability be as quantified by the Management in Ex. M-330 the available surplus in terms of s. 5 of the Act is Rs. 37.35 lakhs and allocable surplus under the Act being 60 thereof is to be quantified at Rs. 23.40 lakhs which works out to 7.31 per cent on The annual wage bills of all the eligible employees totalling Rs. 306.32 lakhs. The Act being a self-contained and self-sufficient Act except in so far as it refers to the other enactments therein mentioned, and in particular the Indian Income-tax Act, it becomes irrelevant to companysider the application of the Full Bench formula of the Labour Appellate Tribunal for the companyputation of bonus before the Act of 1965 was enacted. Equally in our view it is unnecessary to refer to the observations of this Court in The Sree Meenakshi Mills Ltd. Their Workmen 1 or to M s. Tulsidas Khimji v. Their Workmen 2 relied on by learned companynsel Mr. Phadke for some of the respondents. The Act is a companyplete Code and the provisions thereof must have effect of their own force. So far as the mills before us are companycerned, the gross profits must be companyputed in terms of Second Schedule to the Act and the available surplus mentioned in s. 5 in terms of ss. 6 and 7 of the Act. Where a branch or undertaking has to be taken as an establishment under the proviso to s. 3 for the purpose of the Act, the gross profits, prior charges, the available surplus and the allocable surplus have all to be found out by applying that fiction to the branch or establishment. When the fiction is to have effect with regard to all other matters, it is number possible to hold that for the purpose of companyputation of direct tax it has to be given a go-by and the actual realities of the situation only in respect of the amount of tax payable under the Income-tax Act for all the establishments which have to suffer taxation together allowed to displace the fictional or numberional liability. In the present case, it so happens that the bulk of the profits of the companypany the Delhi Cloth and General Mills Company Ltd. came from these two units some of the other units suffered losses while still others were number equally profit-making. If the argument raised on behalf of the work-men was to be accepted and if it so happened that the other units were greater profit-making branches than these two units, greater tax liability might fall on these units thereby reducing the percentage of bonus due to the employees of these units as a whole. That certainly was number the object with which the enactment was passed. S. 7 1 1958 S.C.R. 878. 2 1963 1 S.C.R. 675. of the Act itself shows that the matters extraneous to the working of the establishment in the particular year were number to be taken into account although they companyld number be ignored for companyputing tax liability under the Indian Income-tax Act. Strong reliance was placed by learned companynsel for the appel- lant on the decision of this Court in Metal Box Co. v. Work- men 1 . Counsel for the respondents made valiant efforts to persuade us to hold that many of the observations therein were obiter and as such the case should either be distinguished or be number followed as a precedent for the determination of the question before us. While numberdoubt the dispute, in that case was somewhat different from the one which we have to resolve and there are some distinguishing features in that case, namely, that the Court was number called upon to examine the companyputation of the figures of gross profits etc. for an establishment which came within the proviso to s. 3 the observations bearing on the question of the companyputation of direct tax under S. 6 c of the Act art, certainly in point. It was pointed out there at p. 775 What s. 7 really means is that the Tribunal has to companypute the direct taxes at the rates at which the income, gains and profits of the employer are taxed under the Income Tax Act and other such Acts during the accounting year in question. That is the reason why S. 6 c has the words is liable, for and the words income, gains and profits. These words do number, however, mean that the Tribunal while companyputing direct taxes as a prior charge has to assess the actual taxable income and the taxes thereon. With respect, we entirely agree with the above observation and in our view numberuseful purpose will be served by referring to the other observations bearing on a question with which we are number directly companycerned. In Mls. Alloy Steel Project v. The Workmen 1 where the project was owned, companytrolled and managed by a Government Company, viz., Messrs Hindustan Steel Ltd., and separate balance sheet and profit and loss accounts of the undertaking were maintained, it was held that the claim of the work-men that the project was a part of the Hindustan Steel Ltd. should be upheld and its employees placed on the same footing as the other employees of the steel companypany was rejected inasmuch as the project which was started in the year 1964-65 made numberprofits right up to the year 1967- 68. 1 1969 1 S.C.R. 750. 2 1971 1 S.C. Cases 536. In the result, we hold that the direct taxes under s. 6 c of the Act were properly quantified by the appellants in their calculation shown in Ex. M-330 and the Tribunal went wrong in assessing that liability on the basis of Ex. M-15. The award will therefore be set aside and modified to provide for bonus being given to the workers at 7.31 per cent of their annual wage bill. The appeal is therefore allowed as indicated above, but, in the circumstances of the case, we make numberorder as to companyts. ORDER At the suggestion of the Court, the Advocate for the appel- lant renewed the offer to pay ten per cent of the wages of the employees as bonus for the relevant year. The offer was accepted on behalf of the employees by their Advocates. The award will, accordingly, stand modified, and the provision of ten per cent of wages as bonus be inserted therein. The payment of bonus will be made before Diwali, 1971. There will be numberliability to pay interest.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1113 of 1970. Appeal from the judgment and order dated April 3, 1970 of the Bombay High Court in Company Appeal No. 1 of 1970. M. Tarkunde, R. L. Mehta and 1. N. Shroff, for the appellant. C. Chagla and S. N. Prasad, for Creditors Nos. 1, 3 to 6 and 10. K. Sen and E. C. Agrawala, for creditor No. 9. The Judgment of the Court was delivered by Ray, J. This is an appeal by certificate, from the judgment dated 3 April, 1970 of the High Court of Bombay companyfirming the order of the learned Single Judge refusing to wind up the respondent companypany. The appellants are a partnership firm. The partners are the Katakias. They are three brothers. The appellants carry on partnership business in the name of Madhu Wool Spinning Mills. The respondent companypany has the numberinal. capital of Rs. 10,00,000 divided into 2000 shares of Rs. 500 each. The issued subscribed and fully paid up capital of the companypany is Rs. 5,51,000 divided into 1,103 Equity shares of Rs. 500 each. The three Katakia brothers had three shares in the companypany. The other 1,100 shares were owned by N.C. Shah and other members described as the group of Bombay Traders. Prior to the incorporation of the companypany there was an agreement between the Bombay Traders and the appellants in the month of May, 1965. The Bombay Traders companysisted of two groups known as the Nandkishore and the Valia groups. The Bombay Traders was floating a new companypany for the purpose of running a Shoddy Wool Plant. The Bombay Traders agreed to pay about Rs. 6,00,000 to the appellants for acquisition of machinery and installation charges thereof. The appellants had imported some machinery and were in the process of importing some more. The agreement provided that the erection expenses of the machinery would be treated as a loan to the new companypany. Another part of the agreement was that the machinery was to be erected in portions of a shed in the companypound of Ravi Industries Private Limited. The companypany was to pay Rs. 3,100 as the monthly rent of the portion of the shed occupied by them. The amount which the Bombay Traders would advance as loan to the companypany was agreed to be companyverted into Equity capital of the companypany. Similar option was given to the appellants to companyvert the amount spent by them for erection expenses into equity capital. The companypany was incorporated in the month of July, 1965. The appellants allege that the companypany adopted the agreement between the Bombay Traders and the appellants. The companypany however denied that the companypany adopted the agreement. The appellants filed a petition for winding up in the month of January, 1970. The appellants alleged that the companypany was liable to be wound up under the provisions of section 43 3 c of the Companies Act, 1956 as the companypany is unable to pay the following debts. The appellants claimed that they were the creditors of the companypany for the following sums of money - A. a Expenses incurred by the appellants in companynection with the erection of the plant and machinery. . . Rs. 1,14,344.97 Interest on the sum of Rs. 1,14,344.97 from 1 April, 1966 till 31 December, 1969 at 1 per mensem. Rs. 51,453.13 Commission on the sum of Rs. 1,14,344. 97 due to the app- ellants at the rate of Ipercent per mensem from 1 April 1966 till 13 December,1969. Rs. 51,453.12 B. a Compensation payable by the companypany to the appellants at the rate of Rs. 3,100 per month for 22 months and 14 days in respect of occupation of the portion of the shed given by the appellants to the companypany on the basis of leave and licence. . . Rs.69,600.00 Interest on the amount of company- pensation from time to time by the said companypany to the appellants till 12 April, 1967. Rs. 7,857.00 Further interest on companypensation from 13 April, 1967 to 31 December, 1969. Rs. 21,576.00 C. a Invoices in respect of 3 machines. Rs. 85,250.00 Interest on Rs. 85,250 Rs. 37,596.00 Commission at the rate of 1 per cent or Rs.85,250 Rs. 37,596.00 The appellants alleged that the companypany failed and neglected to show the aforesaid indebtedness in the books of account save and except the sum of Rs. 72,556.01. The other allegations of the appellants were these. The companypany incurred losses upto 31 March, 1969 for the sum of Rs. 6,21,177.53 and thereafter incurred further losses. The companypany stopped functioning since about the month of Septem- ber, 1969. The companypany is indebted to a Director and the firms of M s Nandkishore Co. and M s Bhupendra Co. in which some of the Directors of the companypany are interested. The in-, debtedness of the companypany to the creditors including the appellants claim as shown by the companypany at the figure of Rs. 72,556.01 is for the sum of Rs. 9,56,829.47. The liability of the companypany including the share capital amounted to Rs. 14,98,923.3 3. The liability excluding the share capital of the companypany is Rs. 9,56,829.47 and the assets of the companypany on the valuation put by the companypany on the balance sheet amount to Rs. 8,81,171.96. The value of the current and liquid assets is about Rs. 2,74,247.38. The appellants on these allegations alleged that even after the proposed sale of the machinery at Rs. 4,50,000 the companypany would number be in a position to discharge the indebtedness of the companypany. The proposed sale, of machinery for the sum of Rs. 4,50,000 was at a undervalue. The market value was Rs. 6,00,000. The Board did number sanction such a sale. It was alleged that the substratum of the companypany disappear- ed and there was numberpossibility of the companypany doing any business at profit. The companypany was insolvent and it was just and equitable to wind up the companypany. When the petition was presented to the High Court of Bombay the learned Single Judge made a preliminary order accepting the petition and directing numberice to the companypany. When the companypany appeared all the shareholders and a large number of creditors of the companypany of the, aggregate value of Rs. 7,50,000 supported the companypany and opposed winding up. The companypany disputed the claims of the appellants under all the heads save the two amounts of Rs. 14,650 and Rs. 36,000 being the amounts of the second and third invoices. The companypany produced-books of account showing a sum of Rs. 72,556.01 due to the appellants, as on 31 March, 1969. The companypany alleged that the appellants had agreed to reduction of the debt to a sum of Rs. 14,850 and to accept payment of the same out of proceeds of sale of the machinery. The learned Single Judge held that the claims of the appel- lants were disputed save that a sum of Rs. 72,556,.01 was payable by the companypany to the appellants and with regard to the sum of Rs. 72,556.01 the companypany alleged that there was a settlement at Rs. 14,850 whereas the appellants. denied that there was any such companypromise. The learned Single Judge refused to wind up the companypany and asked the companypany to deposit the disputed amount of Rs. 72,556.01 in companyrt. The further order was that if within six weeks the appellants did number file the suit in respect of the recovery of the amount the companypany would be able to withdraw the amount and if the suit would be filed the amount would stand credited to the suit. The High Court on appeal upheld the judgment and order and found that the alleged claims of the appellants were very strongly and substantially denied and disputed. The first claim for erection of plant- and machinery was to- tally denied by the companypany. The defences were first that the books of the companypany showed numbersuch transactions secondly, there was numberprivity between the companypany and the persons in whose names the appellants made the claims thirdly, the alleged claims were barred by limitation and, fourthly, there was never any demand for the alleged claims either by those persons or by ,the appellants. The alleged claims for interest and companymission were therefore equally baseless according to the defence of the Company. The second claim for companypensation was denied on the grounds ,that the appellants were number entitled to any companypensation for use of The portion of the shed and the alleged claim was barred by imitation. As to the claim for companypensation the companypany relied on the resolution of the Board of Directors at which the Katakia brothers were present as Directors The Board resolved companyfirmation of the arrangement with M s Ravi Industries for use of the premises for the running of the industry at their shed at a monthly rent of Rs. 4,250 Prima facie the resolution repelled any claim for companypensation or interest on companypensation. With regard to the claim of invoices the High Court held that the first invoice for Rs. 34,600 was paid by the companypany to the appellants. The receipt for such payment was produced before the learned trial Judge. The appellants also admitted the same. As to the other two invoices for Rs. 14,650 and for Rs. 36,000 the amounts appeared in the companypanys books. According to the companypany the claim of the appellants was for Rs. 72,556.01 and the case of the companypany was that there was a settlement of the claim at Rs. 14,850.00. The High Court companyrectly gave four principal reasons to re- ject the claims of the appellants to wind up the companypany as creditors. First, that the books of account of the companypany did number show the alleged claims of the appellants save and except the sum of Rs. 72,556.01. Second, many of the alleged claims are barred by limitation. There is numberallegation by the appellants to support acknowledgement of any claim to oust the plea of limitation. Thirdly, the Katakia brothers who were the Directors resigned in the month of August, 1969 and their three shares were transferred in the month of December, 1969 and up to the month of December, 1969 there was number a single letter of demand to the companypany in respect of any claim. Fourthly, one of the Katakia brother was the Chairman of the Board of Directors and therefore the Katakias were in the knowledge as to the affairs of the companypany and the books of accounts and they signed the balance sheets which did number reflect any claim of the appellants except the two invoices for the amounts of Rs. 14,650 and Rs. 36,000. The High Court characterised the claim of the appellants as tainted by the vice of dishonesty. The alleged debts of the appellants are disputed, denied, doubted and at least in one instance proved to be dishonest by the production of a receipt granted by the appellants. The books of the companypany do number show any of the claims excepting in respect of two invoices for Rs. 14,650 and Rs. 36,000. It was said by the appellants that the books would number bind the appellants. The appellants did number give any statutory numberice to raise any presumption of inability to pay debt. The appellants would therefore be required to prove their claim. This Court in Amalgamated COmmercial Traders P Ltd. v.A. K. Krishnaswami and Anr. 1 dealt with a petition to wind up the companypany on the ground that the companypany was indebted to the petitioner there for a sum of Rs. 1,750 being the net dividend 1 35 Company cases 456. amount payable on 25 equity shares which sum the companypany failed and neglected to pay in spite of numberice of demand. There were other shareholders supporting the winding up on identical grounds. The companypany alleged that there was numberdebt due and that the companypany Was in a sound financial position. The resolution of the companypany declaring a dividend made the payment of the dividend companytingent on the- receipt of the companymission from two sugar mills. The companymission was number received till the month of May, 1960. The resolution was in the month of December-, 1959. Under section 207 of the Companies Act a companypany was required to pay a dividend which had been declared within three months from the date of the declaration. A companypany cannot declare a dividend payable beyond three months. This Court held that the number-payment of dividend was bona fide disputed by the companypany. It was number a dispute to hide its inability to pay the debts. Two rules are well settled. First if the debt is bona fide disputed and the defence is a substantial one, the companyrt will number wind up the companypany. The companyrt has dismissed a petition for winding up where the creditor claimed a sum for goods sold to the companypany and the companypany companytended that numberprice had been agreed upon. and the sum demanded by the, creditor was unreasonable See London and Paris Banking Corporation 1 . Again, a petition for winding up by a creditor who claimed payment of an agreed sum for work done for the companypany When the companypany companytended that the work had number been done properly was number allowed. See Re. Brighton Club and Norfold Hotel Co. Ltd. 2 Where the debt is undisputed the companyrt will number act upon a defence that the companypany has the ability to pay the debt but the companypany chooses number to pay that particular debt See Re. A Company 94 S.J. 369 . Where however there is numberdoubt that the companypany owes the creditor a debt entitling him to a winding up order but the exact amount of the debt is disputed the companyrt will make a winding up order without requiring the creditor to quantity the debt precisely See Re. Tweeds Garages Ltd. 3 The principles on which the companyrt acts are first that the defence of the companypany is in good faith and one of substance, secondly, the defence is likely to succeed in point of law and thirdly the companypany adduces prima facie proof of the facts on which the defence depends. Another rule which the companyrt follows is that if there is opposition to the making of the winding up order by the creditors the companyrt will companysider their wishes and may decline to make the winding up order. Under section 557 of the Company Act 1956 1 1874 L.R. 19 Eq. 444. 3 1962 Ch. 406. 2 1865 35 Beav. 204. in all matters relating to the winding up of the companypany the companyrt may ascertain the wishes of the creditors. The wishes of the shareholders are also companysidered though perhaps the companyrt may attach greater weight to the views of the creditors. The law on this point is stated in Palmers Company Law, 21st Edition page 742 as follows This right to a winding up order is, however, qualified by another rule, viz., that the companyrt will regard the wishes of the majority in value of the creditors, and if, for some good reason, they object to a winding up order, the companyrt in its discretion may refuse the order. The wishes of the creditors will however be tested by the companyrt on the grounds as to whether the case of the persons opposing the winding up is reasonable secondly, whether there are matters which should be inquired into and investigated if a winding up order is made. It is also well settled that a winding up order will number be made on a creditors petition if it would number benefit him or the companypanys creditors generally. The grounds furnished by the creditors opposing the winding up will have an. important bearing on the reasonableness of the case See Re. P. J. Macrae Ltd. 1 . In the present case the claims of the appellants are disputed in fact and in law. The companypany has given prima facie evidence that the appellants are number entitled to any claim for erection work, because there was numbertransaction between the companypany and the appellants or those persons in whose names the appellants claimed the amounts. The companypany has raised the defence of lack Of privity. The companypany has raised the defence of limitation. As to the appellants claim for companypensation for use of shed the companypany denies any privity between the companypany and the appellants. The companypany has proved the resolution of the companypany that the companypany will pay rent to Ravi Industries for the use of the shed. As to the three claims of the appellants for invoices one is proved by the companypany to be utterly unmeritorious. The companypany- produced a receipt granted by the appellants for the invoice amount. The falsehood of the appellants claim has been exposed. The companypany however stated that the indebtedness is for the sum of Rs. 14,850 and the companypany alleges the agreement between the companypany and the appellants that payment will be made out of the proceeds of sale. On these facts and on the principles of law to which reference has been made the High Court was companyrect in refusing the order for winding up. Since the inception of the companypany Jayantilal Katakia a partner of the appellants was the Chairman of the companypany until 22 August, 1969. His two brothers were also Directors of the companypany since its inception till 22 August, 1969. The Bombay group had also Directors of the companypany. 1 1961 1 A.E.R. 302. The companypany proved the unanimous resolution of the Board at a meeting held on June, 1969 for sale of machinery of the companypany. The Katakia brothers were present at the meeting. The Katakia brothers thereafter sold their three shares to the Valia group. The cumulative evidence in support of the case of the companypany is number only that the Katakia brothers companysented to and approved of the sale of machinery but also parted with their shares of the companypany. The three shares were sold by the Katakia Brothers shortly after each of them had written a letter on 27 July, 1969 expressly stating that they had numberobjection to the sale of the machinery and the letter was issued in order to enable the companypany to hold an Extra-ordinary General meeting on the subject. The companypany relied on the resolution of the Board meeting on 24 October, 1969 where it was recorded that the Valia group would sell their 367 shares and 3 other shares which they had purchased from the appellants to the Nandkishore group and the appellants would accept Rs. 14,850 in settlement of the sum of Rs. 72,000 due from the companypany and the companypany would make that payment out of proceeds of sale of the machinery. The Board at a meeting held on 17 September, 1969 resolved that the proposal of R. K. Khanna to purchase the machinery be accepted. On 20 December, 1969 an agreement was signed between R. K. Khanna and the companypany for the sale of the machinery. At the Annual General Meeting of the companypany on 8 January, 1970 the Resolution for sale of the machinery was unanimously passed by the companypany. It is in this background that the appellants impeached the proposed sale of the machinery as unauthorised and improvident. The appellants themselves were parties to the proposed sale. The appellants themselves wanted to buy the machinery at a higher figure. These matters are within the province of the management of the companypany. Where the shareholders have approved of the sale it cannot be said that the transaction is unauthorised or improvident according to the wishes of the shareholders. It will appear from the judgment of the High Court that the creditors for the sum of Rs. 7,50,000 supported the companypany and resisted the appellants application for winding up. There was some companytroversy as to whether all the creditors appeared or number. At the hearing of this appeal the companypany gave a list of the creditors and numberices were issued to the creditors. Apart from the appellants, two other creditors who supported the appellants were Ravi Industries Ltd. whose name appears as one of the creditors as on 2 August, 1971 in the list of creditors furnished by the companypany and K. S. Patel Co. with a claim for Rs. 44,477.56 though their name does number appear in the list. Among the creditors who supported the companypany the largest amount was represented by Nandikshore and Company with a claim for Rs. 4,95,999. The two creditors who supported the claim of the appellants in regard to the prayer for- winding up were Ravi Industries Ltd. with a claim for Rs. 2,97,500 on account of rent and K. Patel Co. of Bombay with a claim for Rs.44,477.56. It may be stated here that this claim of Rs. 44,477.56 was made on account of erection work of machinery and this identical claim was included in the list of expenses claimed by the appellants on account of erection work. The companypany disputed the claim. The High Court companyrectly found that the appellants companyld number sustain the claim to support winding up. It is surprising that a claim of the year 1965 was never pursued until it was included as an item of debt in the petition for winding up the companypany. With regard to the claim for rent, the companypany pursuant to an agreement between the companypany and Ravi Industries Private Ltd. credited Rowe Industries with the sum of Rs. 1,52,000 with the result that a sum of Rs. 1,45,500 would be payable by the companypany to Ravi Industries Ltd. in respect of rent. The companypany alleges that Ravi Industries Pvt. Ltd. supported the companypany in the High Court and that they have taken a companypletely different position ill this Court. In this Court the companypany has also relied on a piece of writing dated 24 September, 1971 wherein Ravi Industries Private Ltd. acknowledged payment of Rs. 1,52,000 to Rowe Industries Pvt. Ltd. and further agreed to write off the amount of Rs. 1,45,500. Ravi Industries Pvt. Ltd. is disputing the same. This appears to be a matter of substantial dispute. The Court cannot go into these questions to settle debts with doubts. Counsel for the appellants extracted observations from the judgment of the High Court that it was never in dispute that the companypany was insolvent and it was therefore companytended the companypany should be wound up. Broadly stated, the balance sheet shows the share capital of the companypany to be Rs. 5,51,500, the liabilities to be Rs. 9,77,829.47 and the assets to be Rs. 8,87,177.93. The assets were less than the liability by Rs. 90,000. Accumulated losses of the companypany for five years appear to be Rs. 6,21,17.53. The plant and machinery which are shown in the balance sheet at Rs. 6,07.544.58 are agreed to be sold at Rs. 4,50,000. There would then be a short-fall in the value of the fixed assets by about Rs. 1,50,000 and if that amount is added to the sum of Rs. 90,000 representing the difference between the assets and liabilities the shortfall in the assets of the companypany would be about Rs. 2,50,000. The appellants companytended that the- shortfall in the assets of the companypany by about Rs. 2,50,000 after the sale of the machinery would indicate first that the substratum of the companypany was gone and secondly that the companypany was insolvent. An allegation that the substratum of the companypany is gone is to be alleged and proved as a fact, The sale of the machinery was alleged in the petition for winding up to indicate that the substratum of the companypany had disappeared. It was also said that there was numberpossibility of the companypany doing business at a profit. In determining whether or number the substratum of the companypany has gone, the objects of the companypany and the case of the companypany on that question will have to be looked into. In the present case the, companypany alleged that with the proceeds of sale the companypany in-, tended to enter into some other profitable business. The mere fact that the companypany has suffered trading losses will number destroy its substratum unless there is numberreasonable prospect of it ever making a profit in the future, and the companyrt is reluctant to hold that it has numbersuch prospect. See Re. Suburban Hotel Co. 1 and Davis Co. v. Brunswick Australia Ltd. 2 The companypany alleged that out of the proceeds of sale of the machinery the companypany would have sufficient money for carrying on export business even if the companypany were to take into companysideration the amount of Rs 1,45,000 alleged to be due on account of rent. Export business, buying and selling yarn and companymission agency are some of the business which the companypany can carry on within its objects. One of the Directors of the Company is Kishore Nandlal Shah who carries on export business under the name and style of M s. Nandkishore Co. in partnership with others. Nandkishore Co. are creditors of the companypany to the extent of Rs. 4,95,000. The companypany will number have to meet that claim number. On the companytrary, the Nandkishore group will bring in money to the companypany. This Nandkishore group is alleged by the companypany to help the companypany in the export business. The companypany has number abandoned objects of business. There is numbersuch allegation or proof. It cannot in the facts and circumstances of the present case be held that the substratum of the companypany is gone. Nor can it be held in the facts and circumstances of the present case that the companypany is unable to meet the outstandings of any of its admitted creditors. The companypany has deposited in companyrt the disputed claims of the appellants. The companypany has number ceased carrying on its business. Therefore, the companypany will meet the dues as and when they fall due. The companypany has reasonable. prospect of business and resources. Counsel on behalf of the companypany companytended that the appel- lants presented the petition out of improper motive. Improper motive can be spelt out where the position is presented to companyrce the companypany in satisfying some groundless claims made against it by the petitioner. The facts and circumstances of the present case indicate that motive. The appellants were Directors. They sold, 1 1867 2 Ch. App. 737. 2 1936 1 A.F.R. 299. their shares. They went out of the management of the companypany in the, month of August, 1969. They were parties to the proposed sale. Just when the sale of the machinery was going to be effected the appellants presented a petition for winding up. In the recent English decision in Mann Anr. Goldstein Anr. 1 it was held that even though it appeared from the evidence that the companypany was insolvent, as the debts were substantially ,disputed the companyrt restrained the prosecution of the petition as an abuse of the process of the companyrt. It is apparent that the appellants did number present the petition for any legitimate purpose. The appeal therefore fails and is dismissed with companyts. The companypany and the supporting creditors will get one hearing fee. The amount of Rs.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 2093 and 2084 of 1970. Appeals from the judgment and order dated January 28, 1964 of the Calcutta High Court in Income-tax Reference No. 104 of 1960. P. Maheshwari, for the appellant in both the appeals . T. Desai, P. L. Juneja and R. N. Sachthey, for the respondent in both the appeals . The Judgment of the Court was delivered by Khanna,J. This judgment would dispose of two Civil Appeal.s Nos. 2083 and 2084 of 1970 which have been filed on certificate granted by the Calcutta High Court and are directed against the Judgment of that Court whereby it answered the questions referred to the Court under Section 66 1 of the, Indian Income-tax Act, 1922 hereinafter referred to as the Act for two assessment years against the assessee-appellant and in favour of the respondent. The assessee is a Limited Company and the matter relates to the assessment years 1956-57 and 1957-58, the companyresponding accounting years for which ended on June 30, 1955 and June 30, 1956 respectively. The appellant Company was appointed as the Managing Agent of Shree Ramesh Cotton Mills Ltd., Morvi hereinafter referred to as the managed companypany , as per agreement dated 30-12- 1946. The managed companypany was a 100 subsidiary of the appellant companypany. Under the terms of the agreement, the appellant companypany was entitled to receive a fixed office allowance of Rs. 1,000/- per mensem plus a companymission at the rate of 121/2 of the net profits, an additional companymission of 1 on all purchases of companyton and an equal amount on all sales of cloth and yarn. In the relevant years, the managed companypany suffered losses and companygruently the companymission payable at 121/2 of the net profits was nil but the companymission on purchase of companyton at the rate of 1 1/2 and on sales of cloth and yarn at the same rate, aggregated to Rs. 38,719/- for the assessment year 1956-57 and Rs. 1,963/- for the following year. Besides these amounts, the appellant was entitled to Rs. 12,000/- per annum for each of the two years as fixed office allowance. The total amounts which the appellant was entitled to receive from the managed companypany were Rs. 50,719/- and Rs. 13,963/- for the two years. The managed companypanys accounting year closed on the 30th day of December and that of the appellant companypany on the 30th day of June every year. Clause 2 e of the Managing Agency Agreement dated 30th ember 1946 companytained the following term as to when the companymission would be due and payable The said companymission shall be due to the Agents yearly on the thirty-first day of December or any other date on which the Companys yearly account close in each and every year during the companytinuance of this Agreement and shall be payable and be paid immediate after annual accounts of the said Company has been passed by the Board of Directors and Auditors of the Company and by the companypany in, General Meeting. According to the above clause, the companymission was due on the 31st day of December every year and it was payable imme- diately after the annual accounts of the managed companypany had been passed in the General Meeting. The Annual General Meetings of the managed companypany were held to adopt the accounts on November, 24, 1955 and July 21, 1956 respectively with regard to the assessment years in question. The amounts of companymission in terms of the above clause were due on 31st December, 1954 and 31st December, 1955 and were payable immediately after the 24th of November, 1955 and 21st of July, 1956 respectively. The appellant companypany relinquished the managing agency companymission for the assessment year 1956-57 as per resolution dated 4th of April, 1955 of the Board of Directors and for the following year as per resolution dated 19th June, 1956. The amounts of the companymission were thus relinquished after they had become due but before they were payable in terms of clause 2 e of the agreement. On behalf of the appellant, it was stated that the managed companypany had been suffering heavy losses in the past years and, therefore, the appellant did number companysider it proper to charge any companymission or the fixed office, allowance and had companysequently relinquished the same. The Income-tax Officer included the sums of Rs. 50,719/- and Rs. 13,963/- in the total income of the appellant for the two assessment years in question. The Income-Tax Officer took the view that in so far as the fixed office allowance was companycerned, it had been given to the appellant to enable it to recoupe the expenses incurred on behalf of the managed companypany and the relinquishment was, therefore made ex- gratia. As regards the companymission, the Income-tax officer held that it had become due to the appellant at the end of the accounting year of the managed companypany, and if the companymission had been foregone after it had become due, it was taxable on accrual basis. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal affirmed the order of the Income-tax Officer. According to the Tribunal, the companymission became due to the appellant yearly on the last day of the accounting year of the managed companypany, though the actual payment was deferred to a later date. Postponement of the actual payment after the income had accrued was held to be inconsequential. Likewise, the relinquishment of the income after it had become due in the opinion of the Tribunal, was inconsequential. Claim was ten made by the appellant that the amount relinquished should be treated as a permissible expenditure under section 10 2 of the Act. The above claim was rejected and it was observed that the total loss carried over at the end of year 1955 of the managed companypany was Rs. 14,95,221/-. As a result of foregoing the amounts of the managing agency companymission, according to the Tribunal, the financial position of the managed companypany did number become stronger while that of the appellant companypany became weaker. The relinquishment was companysequently held to be number for the benefit of-the appellant. At the instance of the appellant, the Tribunal referred the following two questions to the High Court - Whether on the facts and in the circumstances of the case, the sums of Rs. 50,719/- and Rs. 13,963/foregone by the assessee by its Directors resolution dated 4- 4-1955 and 19-6-1956 respectively, were liable to be included in its total income for the accounting years ending 30-6-1955 and 30-6- 1956 ? If the answer to question No. 1 be in the affirmative, whether the assessee is entitled to claim an allowance of an equivalent amount as expenditure under the provisions of Section 10 2 xv of the Indian Income Tax Act ? The High Court agreed with the view taken by the Tribunal. It was observed that the accrual of income was companyplete within the accounting year of the managed companypany and as numberrelinquishment had been done before the amount became due, the case strictly came within the ambit of section 4 1 b of the Act. numberrelinquishment, it was further observed, was a unilateral act of the appellant. As regards the second question, the High Court found that the relinquishment had number been made for the purpose of facilitating the legitimate companymercial undertaking or by way of companymercial expediency. The appellants case was thus held to be number companyered by section 10 2 xv of the Act, Mr. Maheshwari has assailed the findings of the High Court. Regarding the first question, the learned companynsel companytends that as the amounts in question were never received by the appellant but were relinquished, there arose numbertax liability for those amounts. As regards the second question, Mr. Maheshwari submits that the relinquishment of the amounts should be companystrued as permissible expenditure under section 10 2 xv of the Act. There is, in our opinion, numbersubstance in any of the above companytentions. So far as the first question is companycerned, we find that according to clause 2 e of the Managing Agency Agreement reproduced above, the companymission for the two years in question became due to the appellant on the 31st day of December, 1954 and 31st day of December, 1955. The appellant also became entitled to receive fixed office allowance of Rs. 12,000/- for each of the two years. It, therefore, can be said that the income of Rs. 50,719/- had accrued to the appellant on 31st December, 1954 and of Rs. 13,973/- on 31st December, 1955. The fact that the pay- ment of the managing agency companymission was deferred till after the accounts had been passed in the meetings of. the managed companypany did number affect the accrual of the income of those amounts on December 31, 1954 and December 31, 1955 respectively. According to Section 4 1 b i of the Act, subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which if such person is resident in the taxable territories during such year accrue or arise or are deemed to accrue or arise to him in the taxable territories during such year. The dictionary meaning of the word accrue is to companye as an accession, increment, or produce to fall to one by way of advantage to fall due. The income can thus be said to accrue when it becomes due. The postponement of the date of payment has a bearing only in so far as the time of payment is companycerned, but it does number affect the accrual of income. The moment the income accrues, the assessee gets vested with the right to claim that amount even though it may number be payable immediately. There also arises a companyresponding liability of the other party from whom the income becomes due to pay that amount. The further fact that the amount of income is number subsequently received by the assessee would also number detract from or efface the accrual of the income, although the number- receipt may, in appropriate cases, be a valid ground for claiming deductions. The accrual of an income is number to be equated with the receipt of the income. That the two, accrual and receipt of income, have different companynotations is also clear from the language of Section 4 of the Act. Clause a of sub-section 1 of Section 4 of the Act deals with the receipt of income while the, accrual of income is dealt with in clause b of that sub-section. The appellant-company admittedly was maintaining its account according to the mercantile system. It is well known that the mercantile system of accounting differs substantially from the cash system of book keeping. Under the cash system, it is only actual cash receipts and actual cash payments that are recorded as credits and debits whereas under the mercantile system credit entries are made in respect of amounts due immediately they become legally due and before they are actually received similarly, the expenditure items for which legal liability has been incurred are immediately debited even before the amounts in question are actually disbursed. Where accounts are kept on mercantile basis, the profits or gains are credited though they are number actually realised, and the entries thus made really show numberhing more than an accrual or arising of the said profits at the material time. The same is the position with regard to debits made. See Indermani Jatia V. Commis- sioner of Income-Tax, U.P. 1 In the case of Commissioner of Income-Tax, Bombay City I v. Messrs Shoorji Vallabhdas and Co. 2 Hidayatullah, J as he then was speaking for the Court observed, Income-tax is a levy on income. No doubt, the Income-tax takes into account two points of time at which the liability to tax is attracted viz. the accrual of the income or its receipt but the substance of the matter is the income. If income does number result at all, there cannot be a tax, even though in book-keeping, an entry is made about a hypothetical income, which does number materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said number to have resulted at all, there is obviously neither accrual number receipt of income, even though, an entry to that effect might, in certain circumstances, have been made in the books of account. The assessee firm, who was the managing agent of two shipping companypanies in that case, gave up 75 of the managing agency companymission with a view to get the managing agency transferred to two private companypanies. It was held that this was number a case of a gift by the assessee to the managed companypanies of a portion of income which had already accrued, but an agreement to receive a lesser remuneration than what had been agreed upon. In the present case, the amounts of income for the two years in question were given up unilaterally after they had accrued to the appellant companypany. As such, the appellant companyld number escape the tax liability for those amounts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1494 to 1498 of 1971. Appeals by special leave, from the judgment and order dated November 15, 1967 of the Calcutta High Court in Income-tax Reference No. 13 of 1963. T. Desai, S. K. Aiyar, R. N. Sachthey and B. D. Sharma, for the appellant in all the appeals . A. Palkhivala, T. A. Ramachandran and D. N. Gupta, for the respondent in all the appeals . The Judgment of the Court was delivered by Khanna, J. This judgment would dispose of five Civil Appeal Nos. 1494 to 1498 of 1971 by Special Leave filed by the ,Commissioner of Income-tax, West Bengal against the judgment of Calcutta High Court whereby the question referred to that ,Court under section 66 1 of the Indian Income-tax Act, 1922 hereinafter referred to as the Act for five assessment years was answered in favour of the assessee-respondent-Coal Shipments P Ltd. During the pendency of the appeals, the name of the respondent was changed to Heilgers Investment Ltd. The matter relates to the assessment years 1951-52, 1952-53, 1953-54, 1954-55 and 1955-56, the companyresponding accounting years for which ended on 31-3-1951, 31-3-1952, 31-3-1953, 31-3-1954 and 31-3-1955 respectively. The respondent was one of the companypanies which exported companyl from India to Burma before the Second World War. Amongst the other exporters were Messrs. Karamchand Thaper Bros. Ltd., Messrs Macheill Barry Ltd., Messrs. Andrew Yule Co. Ltd. and Messrs. R. V. Low Co. Ltd. The shipment of companyl to Burma Railways before the war was the subject of open tender. After the cessation of hostilities in 1946, it became possible to resume the export of companyl to Burma. In order to overcome the difficulties in the companyduct of the trade following the war, the members of the companyl trade in Bengal formed an association styled Coal Exporters and Charters Association. The respondent companypany as well as M s. H. V. Low Co. Ltd. were two of the major members 1091 of the said association. When M s. H. V. Low Co. learnt of the, resumption of companyl export to Burma by the respondent in 1946, they also expressed intention to export companyl to Burma. Thereupon the two companypanies came to an understanding and arrived at a mutual arrangement or agreement on the following lines - M s. H. V. Low Co. Ltd. would number export companyl to Burma during the subsistence of the agreement. M s. H. V. Low Co. Ltd. would assist the respondent in procuring companyl for shipment to Burma. The respondent would carry on the companyl shipping business and pay M s. H. V. Low Co. Ltd. Rs. 151- per ton subsequently raised to Rs. 1-5- per ton of companyl shipped to Burma. According to the respondent, the last shipment of companyl under the above arrangement was made in June, 1954 after which the arrangement came to an end automatically and the Government of Burma made some other arrangement for its companyl requirement. The assessee respondent claimed to have made the following payments to M s. H. V. Low Co. Ltd. or their numberinees in pursuance of the aforesaid agreement during the period of five accounting years from 1st April, 1950 to March 31,1955- Rs. 1951-52 91,149 1952-53 . 1,77,898 1953-54 3,03,631 1954-55 2,32,355 1955-56 79,917 The amounts mentioned above were taxed in the hands of M s. V. Low Co. Ltd. The respondent claimed the payment of the above amounts as admissible business expenditure for the assessment years in question. The Income-tax Officer held that the expenditures claimed companyld number be allowed, as there was numberwritten agreement in proof of the alleged arrangement and it was number possible to say that the payments were made for the purpose of the assessees business. The Income-tax Officer further held that even assuming that the payments were made to keep off M s. H. V. Low Co. Ltd. from the Burma trade, they were payments to secure a monopoly and were number, therefore, allowable as revenue expenditure. The Appellate Assistant Commissioner on appeal upheld the order of the Income-tax Officer. When the matter came up in second appeal before the Income- tax Appellate Tribunal, the Tribunal found that there was some 1092 discrepancy in the facts stated on behalf of the assessee and the Revenue. The Tribunal thereupon required the respondent companypany to swear- an affidavit in support of the facts relied upon by it. In pursuance thereof, Sir Walter Michelmore, Director of Managing Agents of the respondent companypany filed an affidavit. Sir Walter was also examined orally before the Tribunal. The case was thereupon remanded to the Income-tax Officer to verify the facts as stated in the affidavit of Sir Walter and report back to the Tribunal. The Income-tax Officer after making further investigation submitted his report. In deciding the appeal, the Tribunal formulated two points for its decision Were the payments made for the purpose of the assessees trade in terms of the alleged agreement? If the answer to the above question is in the affirmative, did the assessee acquire a monopoly by such payment ? Both the questions were answered in favour of the respondent by the Tribunal. It was held that the payments were made in pursuance of the alleged agreement in the interest of the respondents trade. The version of the respondent about its agreement with M s. H. V. Low Co. Ltd. was accepted. According to the agreement, M s. H. V. Low Co. Ltd. agreed to assist the respondent in procuring companyl for export to Burma whenever asked to do and further agreed number to export companyl to Burma during the subsistence of the arran gement. The agreement was found to have been acted upon and it was held that M s. H. V. Low Co. Ltd. supplied varying quantities of companyl to the respondent for shipment to Burma. It was further held that the respondent companypany did number acquire any monopoly rights to carry on Burma trade and the impugned payments were made to carry on the trade in a more facile and profitable manner. The Tribunal found that the arrangement arrived at verbally between the respondent and M s. H. V. Low Co. Ltd. was a temporary measure liable to be terminated ,at will and the respondent companypany did number derive any advantage of an enduring character by such payments. The expenditures in question were, in the opinion of the Tribunal, attributable to revenue and number to capital. As such, they were held to be permissible expenditures under section 10 2 xv of the Act. On application filed by the Revenue, the following question was referred to the High Court Whether on. the facts and in the circumstances of the case, the payments made by the assessee to M s. H. V. Low Co. Ltd. or their numberinees were of a capital nature and as such number allowable under section 10 2 xv of the Income-tax Act, 1922 ? 109 3 .lm0 It was number disputed before the High Court that there was an. agreement between the respondent and M s. H. V. Low Co. Ltd. on terms stated by the respondent and that the payments in question were made under that agreement. The High Court held that the arrangement entered into by the respondent with M s. H. V. Low Co. Ltd. was number such as was likely to have an enduring beneficial effect. In the opinion of the High Court, there was numbercert ainty of duration and the arrangement companyld be terminated or revoked at any time. The companysideration of the arrangement, it was observed, was number paid once for all but was related to uncertain shipments to be made. The arrangement, it was further held, did number create any monopoly or bring about any capital advantage to the assessee. The respondent was held entitled to claim the deduction of the expenditures under section 10 2 xv of the Act. In the result, the question referred to the Court was answered in the negative and in favour of the assessee. We have heard Mr. Desai on behalf of the appellant and Mr. Palkhiwala on behalf of the respondent and are of the opinion that there is numbermerit in these appeals. The Tribunal has found that the amounts in question were paid by the respondent to M s. H. V. Low Co. Ltd. in pursuance of the agreement according to which M s. H. V. Low Co. Ltd. were to assist the respondent in procuring companyl for shipment to Burma and were themselves number to export companyl to Burma during the subsistence of the agreement. The above findings of fact are, for the purpose of these proceedings, binding upon the appellant and companysequently numberattempt was made either in the High Court or in this Court to assail them. The payments which were made by the respondent to M s. H. V. Low Co. Ltd., it would thus appear, were because of the assistance rendered by them for shipment of companyl to Burma and for abstaining from exporting companyl to Burma during the subsistence of the agreement. So far as the payment is companycerned which was made to M s. H. V. Low Co. Ltd. for assistance to the respondent in procuring companyl for shipment to Burma, it was admittedly an item of revenue expenditure. The companytroversy between the parties has centered on the point as to whether that part of the payment which was made because, of M s. H. V. Low Co. Ltd. having agreed riot to export companyl to Burma during the subsistence of the agreement companystituted capital expenditure or revenue expenditure. Mr. Desai on behalf of the appellant companytends that as the payment was made for warding off companypetition by rival companyl exporter, that payment should be held to be a capital expenditure. The fact that there was numbercertainty of the duration of the arrangement between the respondent and M s. H. V. Low Co. and the same companyld be terminated at any time, according to the learned companynsel, 1094 is wholly immaterial. As against that, Mr. Palkhiwala argues that in order to companystitute capital expenditure, the object of the expenditure should be to secure an advantage of enduring nature. When there is numbercertainty of the duration of the arrangement and the same can be revoked at any time, the advantage cannot be said to be of an enduring character and the expenditure cannot be held to be of a capital nature. Further. as the payment was related to the quantum of companyl shipped to Burma in the companyrse of trading activity and was number companynected with the capital value of the assets, the payment, Mr. Palkhiwala submits, should be companysidered to be revenue expenditure. In our opinion, there is companysiderable force in Mr. Palkhiwalas submission. Judicial decisions have, from time to time, laid down some broad principles in order to determine whether an expenditure is of a capital nature or revenue nature. Despite the enunciation of those principles, it is number always easy to decide the question in the companytext of the circumstances of an individual case. Considerable difficulty is experienced in border line cases. It was in this companynection that Hidayatullah, J. as he then was observed in Abdul Kayoom v. Ccommissioner of Income-tax 1 that numbere of the tests laid down in various authorities is either exhaustive or universal. Each case must depend on its own facts, and a close similarity between one case and another is number enough because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases by matching the companyour of the one case against the companyour of another. It may be apposite at this stage to refer to some of the broad tests which have been.laid down to distinguish the capital expenditure from revenue expenditure. In the case of Atherton v. British Insulated and Helsby Cables Ltd. 2 -, Lord Cave, L.C. laid down the following criterion which has been referred to in most of the subsequent cases - But when an expenditure is made, number only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason in the absence of the special circumstances leading to an oppo- site companyclusion for treating such an expenditure as properly attributable number to revenue but to capital. The Courts have to bear in mind, according to the dictum laid down in the above case, whether it was an expenditure forming part of the companyt of the income-earning machine or structure as 1 44 I.T.R. 68 . 2 10 T.C. 155. 1095 opposed to part of the companyt of performing the income earning operations. In that case, the House of Lords dealt with a fund which had been created by the respondent companypany as a nucleus of a pension fund for its employees. After handing over the money to trustees for the employees, the companypany claimed that the money should be charged to revenue. The claim of the companypany was rejected by the House of Lords on the ground that the payment of money created for itself an enduring benefit or advantage which was of a capital nature. In the case of Robert Addie and Sons Collieries Limited v. The Commissioners of Inland Revenue 1 , Lord President Clyde gave the following test-- It is necessary accordingly to attend to the true nature of the expenditure, and to ask ones self the question, is it a part of the Companys working expenses ?-is it expenditure laid out as part of the process of profit earning ?--or, on the other hand, is it a capital outlay ?-is it expenditure necessary for the acquisition of property or of rights of a permanent character, the process of which is a companydition of carrying on its trade at all The expression once and for all used in the dictum laid down in Athertons case supra was referred to by Bhagwati, J. speaking for this Court in the case of Assam Bengal Cement Co. Ltd. v. Commissioner of Income-tax, West Bengal 2 and it was observed that the expression was used to denote an expenditure which is made once and for all for procuring an enduring benefit to the business as distinguished from a recurring expenditure in the nature of operational expenses. The character of the payment can be determined, it was added, by looking at what is the true nature of the asset which has been acquired and number by the fact whether it is a payment in a lump sum or by instalments. It is also an accepted proposition that the words permanent and enduring are only relative terms and number synonymous with perpetual or ever-lasting. There are some other tests like those of fixed capital and circulating capital for determining the nature of the expenditure. An item of disbursement can be regarded as capital expenditure when it is referable to fixed capital. It is revenue when it can be attributed to circulating capital. It is number the case of any party that this test of fixed and circulating capital can be invoked in this case number has reference been made to some of the other tests. The case which has been set up on behalf of the revenue is that as the object of making the payments in question was to eliminate companypetition of a rival exporter, the benefit which enured to the respon- 1 8 T.C. 671. 2 27 I.T.R. 34. 109 6 dent was of an enduring nature and as such, the payment should be treated as capital expenditure. We find ourselves unable to accede to this companytention because we find that the arrangement between the respondent and M s. H. V. Low Co. Ltd. was number for any fixed term but companyld be terminated at any time at the volition of any of the parties. Although an enduring benefit need number be of an ever-lasting character, it should number, at the same time,, be so transitory and ephemeral that it. can be terminated at any time at the volition of any of the parties. Any other view would have the effect of rendering the word enduring to be meaningless. No companyent ground or valid reason has been given to us in support of the companytention that even though the benefit from the arrangement to the respondent may number be of a permanent. or enduring nature, the payments made in pursuance of that arrangement would still be capital expenditure. Such a companytention indeed was repelled by the Judicial Committee in the case of Commissioner of Taxes v. Nchanga Consolidated Copper Mines Ltd. 1 . The respondent companypany in that case together with two other companypanies- Rhokana Corporation Ltd. and Bancroft Mines Ltd. formed a group for carrying on the business of companyper mining. Following a steep fall in the- price of companyper in the world market the group, in companymon with other producers, decided voluntarily .to cut their production by 10 per cent. In effecting the cut, it was agreed that Bancroft Mines Ltd. should cease production for one year and that the respondent companypany and Rhokana Corporation Ltd. should undertake between them the whole group programme for the year reduced by the overall cut of 10 per cent. It was further agreed to pay a sum of Bancroft Mines Ltd. to companypensate it for the abandonment of the production for the year. ,Question arose whether the companypensation which the respondent companypany had paid to Bancroft Mines Ltd. was expenditure of capital nature ? The Judicial Committee held that the companypensation paid was an allowable deduction in determining the respon- dent companypanys taxable., income. The expenditure, in the view ,of the Judicial Committee, had numberanalogy with expenditure for the purpose of acquiring a business or a benefit of long term or enduring companytract. Viscount Radcliffe who delivered the judgment while dealing with the question of expenditure observed It bought one right only, the right to have Bancroft out of production for 12 months. While, numberdoubt, money paid to a cquire a business or to shut a business down for good or to acquire some companytractual right to last for years may well be capital expenditure, it seems a companytradiction in terms to speak of what Nchanga thus acquired, which exhausted itself and was created 1 58 I.T.R. 241. 1097 to exhaust itself within the 12 months period within which profits are ascertained, as companystituting an enduring benefit or as an accretion to the capital or incomeearning structure of the business. If the expenditure is to be treated as capital expenditure at all, it cannot be for any reason such as that. Although we agree that payment made to ward off companypetition in business to a rival dealer would companystitute capital expenditure if the object of making that payment is to derive an advantage by eliminating the companypetition over some length of time, the .same result would number follow if there is numbercertainty of the duration of the advantage and the same can be put to an end at any time. How long the period of companytemplated advantage should be in order to companystitute enduring benefit would depend upon the circumstances and the facts of each individual case. In the case of Assam Bengal Cement Co. Ltd. 1 the appellant companypany acquired from the Government of Assam a lease of certain lime-stone quarries for a period of twenty years for the purpose of carrying on the manufacture of cement In addition to the rent and royalties, the appellant agreed to pay the lessor annually a sum of Rs. 5,000/- during the whole period of the lease as a protection fee and in companysideration of that payment the lessor undertook number to grant to any person any lease, permit or prospecting licence for lime-stone in a group of quarries without a companydition that numberlimestone should be used for the manufacture of cement. The appellant also agreed to pay Rs. 35,000/- annually for five years as a further protection fee and the lessor in companysideration of that payment gave a similar undertaking in respect of the whole district. It was held by this Court that as a result of the annual payment of the amounts of Rs. 5,000/- and Rs. 35,000/-, there enured an advantage to the appellant for the whole period of the lease and as such it was capital expenditure. Apart from the above, we find that the payments made to M s. V. Low Co. Ltd. were related to the actual shipment of companyl in the companyrse of the trading activities of the respondent and had numberrelation to the capital value of the assets. The payments were number related to or tied up in any way to any fixed sum agreed between the parties. The dictum laid down by this Court in Travancore Sugars and Chemicals Ltd. v. Commissioner of Income-tax, Kerala 2 in the circumstances is attracted. The appellant companypany in that case was to take over the assets of sugar manufacturing companycern, a distillery and a tincture factory of the Government of Travancore. The promoters of the appellant companypany in that companynection entered into an agreement with 1 27 I.T.R. 34. 2 62 I.T.R. 566. 18-- LI 19 Sup Cl/72 1098 the Government. The cash companysideration for the sale of the assets of the sugar manufacturing companycern was Rs. 3.25lakhs, that for the sale of the distillery was agreed to be arrivedat as a result of joint valuation and that for the sale of the assets of the tincture factory was the book value. The Government agreed to recognise the transfer of the licence for the distillery to the appellant companypany and to secure the companytinuance of the licence for a period of 5-years after the termination of the existing licence. The Government also agreed to purchase the pharmaceutical products manufactured by the appellant companypany. Apart from the cash companysideration, clause 7 of the agreement provided that the Government would be entitled to 20 per cent of the annual net profits subject to a maximum of Rs. 40,000/- after providing for depreciation and remuneration of the secretaries and treasurers. Clause 7 was amended in January, 1947 to the effect that the Government would be entitled to 10 per cent of the annual net profits. Question arose whether an amount of Rs. 42,480/- which was, payable under clause 7 of the agreement was a permissible expenditure under section 10 of the Incometax Act. It was held that the above payment was in the nature of revenue expenditure and number capital expenditure. Ramaswami, J. speaking for the Court dealt with the matter in the following Words - Examining the transaction from this point of view, it is clear in the present case that the companysideration for the sale of the three undertakings in favour of the appellant was 1 the cash companysideration mentioned in the principal agreement, viz. clauses 3, 4 a and 5 a and 2 the companysideration that Government shall be entitled to twenty per cent of the net profits earned by the appellant in every year subject to a maximum of Rs. 40,000/- per annum. With regard to the second part of the companysideration there are there importan t points to be numbericed. In the first place, the payment of companymission of twenty per cent on the net profits by the appellant in favour of the Government is for an indefinite period and has numberlimitation of time attached to it. In the second place, the payment of the companymis- sion is related to the annual profits which flow from the trading activities of the appellant-company and the payment has numberrelation to the capital value of the assets. In the third place, the annual payment of 20 per cent companymission every year is number related to or tied up, in any way, to any fixed sum agreed between the parties as part of the purchase price of the three undertakings. There is numberreference to any capital sum in 1099 this part of the agreement. On the companytrary, the very nature of the payments excludes the idea that any companynection with the capital sum was intended by the parties. The above observations, in our opinion, have a direct bearing on the present case. Mr. Desai has referred to the following observations of Lord Greens in Henriksen Inspector of Taxes v. Grafton, Hotel Ltd. 1 - It appears to me that there can be numberdifference in principle between a payment out- and-out for monopoly value and a payment in respect of a term. Each licence granted for a term must stand by itself since an application for its renewal falls to be treated as an application for a new licence. This is what I mean when I say that there is a false appearance of periodicity about these payments. Whenever a licence is granted for a term, the payment is made as on a purchase of a monopoly for that term. When a licence is granted for a subsequent term, the monopoly value must be paid in respect of that term, and so on. The payments are recurrent if the licence is renewed they are number periodical, so as to give them the quality of payments which ought to be debited to revenue account. The thing that is paid for is of a permanent quality, although its permanence, being companyditioned by the length of the term, is short-lived. A payment of this character appears to me to fall into the same class as the payment of a premium on the grant of a lease which is admittedly number deductible. Particular reliance has been placed by Mr. Desai upon the companycluding part of the above observations. The portion relied upon, in our opinion, has to be read in the companytext of the preceding lines and the facts of that case. The lessees of the licenced premises in that case, under. a companyenant in their lease, paid annually certain sums imposed by the licensing justices as instalments of the monopoly on the grant and renewal of the licence for three years period. It was companytended that those sums were number capital payments but should be regarded as revenue payments. It was held that monopoly value payments were imposed for the term of the licence on grant or renewal though the fact that permission was given to pay by yearly instalments gave a false appearance of periodicity. Such payments. in the opinion of the Court, fell into the same class as a premium paid 1 11 I.T.R. 10. 1100 on the grant of a lease and as such should be regarded as of capital nature. It is obvious that the question involved in that case was different and the appellant can derive numberassistance from it. The appeals companysequently fail and are dismissed with companyts.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 1242 of 1968. Appeal by special leave from the judgment and order dated January 21, 1964 of the Mysore High Court in I.T.R.C. No. 13 of 1963. K. Venkataranga Iyengar and J. Ramamurthi, for the appellant. K. lyer and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, raises the. question whether the, deed dated March 20, 1959 and marked Ex. A is an Instrument of Partnership on the basis of which the ,appellant firm is eligible to be granted registration under S. 26A of the Indian Income-tax Act, 1922 hereinafter to be referred as the Income-tax Act . The appellant is a firm companysisting of six, partners and the partnership was companystituted under the document dated March 20, 1959. The business of the partnership, as recited in the deed. is stated to have been carried on in partnership from October 1, 1958. The partnership was registered under the Indian Partnership Act, 1932, hereinafter to be referred as the Partnership Act on or about August II,, 1959. For the assessment year 1959-60, companyresponding to the previous year ending March 31, 1959, the appellant filed an application to the Income-tax Officer, A Ward, Dharawat under s. 26A for registration of the partnership in the name of M s. K. D. Kamath and Company. The Income-tax Officer by his order dated September 28, 1960 declined to grant registration on the ground that there was numbergenuine partnership brought into existence by the deed of March 20, 1959 and that the claim of the firm having been companystituted is number genuine. The said officer further held that the business should be held to be the sole companycern of K. D. Kamath. For companying to this companyclusion, the Income-tax Officer has mainly relied on clauses 8, 9, 12 and 16 of the partnership deed. Though the Income-tax Officer has used a loose expression that there is numbergenuine partnership, the sum. and substance of his finding is that there is numberrelationship of partners inter se created under the said document. Mr. S. k. Iyer, learned companynsel for the Revenue, has also ,clarified the position before us by stating that the Department is number challenging the genuineness of the document. According to the learned companynsel, the stand taken by the Revenue is that numberlegal relationship of partners has been brought about as between 1037 the parties to the document. In short, his companytention is that the arrangement evidenced by Ex. A is number that of partnership as understood in law. On appeal by the assessee, the Appellate Assistant Commis- sioner on May 5, 1961 companyfirmed the order of the Income-tax Officer. According to the Appellate Assistant Commissioner numberpartnership has been brought about by the deed dated March 20, 1959 and that the business companytinues to be the proprietary companycerti of K. D. Kamath. In companying to. this companyclusion the appellate authority has laid special emphasis on clause 12 of the deed-. The assessee carried the matter in further appeal I.T.A. No. 3220 of 1961-62 Assessment year 1959-60 before the. Income-, tax Appellate Tribunal, Bombay Bench B. The Appellate Tribunal, after a reference to the relevant clauses in the partnership deed, came to the companyclusion that the two essential requirements as laid down by the companyrts for determining whether there is a partnership, namely, an agreement between the parties to hare profits and each of the parties acting as agent of all, are fully satisfied in this case. In this companynection the Tribunal placed reliance on the decision of the Bombay High Court in Balubhai Gulabdas Navlakhi v. Commissioner of Income-Tax, Bombay 1 and distinguished an earlier decision of the same companyrt reported in Umarbhai Chandbhai v. Commissioner of Income- tax, Bombay City 2 . Ultimately, the Appellate Tribunal held that the partnership deed makes it clear that profits and losses are to be shared between the parties and that, subject to the over-riding authority of K. D. Kamath, the other partners companyld act for the firm. In this view, the Appellate Tribunal held that the deed does create a relationship of partners inter se between the parties thereto and directed the Income-tax Officer to register the firm under s. 26A of the Income-tax Act. herein, made an application on October 4, 1962 under s. 66 1 of the Income-tax Act praying for a reference being made by the Appellate Tribunal to the High Court of the question of law mentioned in the application. The said application was numbered as 66-RA-978 of 1962-63. The Appellate Tribunal accordingly submitted an agreed statement of case and referred to the High Court for its opinion the following question of law Whether, on the facts and in the circumstances of the case, M s. K. D. Kamath Co., companyld be granted registration under Section 26A of the 1 Act for the assessment year 1959-60 ?. 1 1962 46 I.T.R. 492. 2 1952 22 I.T.R. 27 1038 The High Court by its judgment and order dated January 21, 1964 in I.T.R. C. No. 13 of 1963 answered the question ,referred to it against the assessee and held that the appellant firm companyld number be granted registration under s. 26A for the assessment year 1959-60. It is against this decision of the, High Court that the assessee has filed the above appeal. The High Court has generally companysidered the effect of cls. 5 to 9, 12 and 16 of the partnership deed. The High Court also companysidered the question whether the partnership deed satisfies the two essential requisites to companystitute the partnership, namely, 1 whether there is an agreement to share profits as well as the losses of the business, and 2 whether each of the partners under the deed can act as agent of all. From the discussion in the judgment, the learned Judges. so far as we companyld see, have number thought it necessary to companysider elaborately the question whether there is an. agreement in the partnership deed to share the profits and losses of the business. Obviously, the High Court must have been satisfied from the recitals in the partnership deed that this requirement is amply satisfied in this case. That is why we find that the learned Judges have focused their attention as they themselves say in the Judgment, on the question whether it is possible to hold from the recitals in the partnership deed that each partner is entitled to act as agent of all. In companysidering this aspect, the learned Judges have referred particularly to cls. 8, 9 and 16 of the partnership deed and have held that it is clear from these clauses that the management, as well as the companytrol of the business, is entirely left in the hands of the alleged first partner K. D. Kamath and that the other partners are only to work under his directions and share profits and losses in accordance with the proportions mentioned in cl. 5. It is the further view of the High Court that it is number within the power of the other five parties to act as agent of the other partners as they cannot accept any business except with the companysent of K. D. Kamath number can they raise any loan or pledge the firms interest. On this reasoning, the High Court has companye to the companyclusion that there is numberrelationship of partners created under the partnership deed and as this essefftial element of agency is lacking, the appellant was number eligible to be granted registration under S. 26A. The learned Judges, in companying to this companyclusion, have placed companysiderable reliance on the decision of the Bombay High Court in Umarbhai Chanbhai v. Commissioner Of Income-tax, Bombay City 1 as well as the decision of this Court in M. P. Davis v. Commissioner of Agricultural Income-tax 2 . At this stage we may mention that the judgment of the Mysore High Court, which is under appeal before us, is reported in Commissioner of Income-tax, Mysore v. K. D. Kamath Co. . 1 1952 22 I.T.R. 27. 2 1959 35 I.T.R. 803. 3 1964 54 I.T.R. 72. 1039 Mr. S. K. Venkataranga Iyengar, learned companynsel for the assessee-appellant referred us to the various clauses in the partnership deed and urged that the view of the High Court that the essential element of agency is absent in this case, is erroneous. The companynsel further urged that the, partnership deed, read as a whole, leaves numberroom for doubt that there is an agreement to share the profits and losses of the business in the proportion mentioned in the deed. Therefore, one of the essential ingredients to companystitute a partnership is satisfied in this case. He further urged that though a large amount of companytrol regarding the companyduct of business may have been left in the hands of the first partner K. D. Kamath, that circumstance, by itself, does number militate against the view of one partner acting as a of the other partners. He referred us, in this companynection, tip- certain decisions of the High Courts, as well as of this Court, where under circumstances similar to the one exisitng before us, it has been held that the mere fact that more companytrol is to be exercised only by one of the partners, is number a circumstance which militates against the parties having, entered into a partnership arrangement as understood in law, Mr. S. K. Iyer, learned companynsel for the Revenue, supported the reasoning of the High Court its entirety. According to the learned companynsel, the question whether there is an agreement to share the profits and the losses of the business and the further question whether each of the partners is entitled to act as agent of all are to be determined by looking into all the facts as borne out by the deed of partnership. He urged that on a companysideration of all such facts, the High Court ha held that one of the essential companyditions, namely, the right of one partner to act as. agent of all, does number exist in the present case. If so, the companynsel urged, the opinion expressed by the High Court that the appellant is number eligible for registration under s. 26A is companyrect. In support of his companytentions, the companynsel also referred us to certain clauses in the partnership deed as well as to certain provisions of the Partnership Act. From what is stated above, it is clear that the various authorities as well as the High Court have only companysidered some of the clauses of the partnership deed for companying to the companyclusion one way or the other. In companysidering the question whether the partnership deed creates the relationship of partners as between the parties thereto, as understood in law, it is desirable to have a companyplete picture of the entire document. Ex. A, the partnership deed runs as follows INSTRUMENT OF PARTNERSHIP. Articles of agreement made at Hubli, this 20th day of March, 1959, Among 1 Shri krishnarao Dadasaheb Kamat, hereinafter 1040 called the Party hereto of the 1st part, 2 Shri Narayan Ganesh. kamat hereinafter called the party hereto of the 2nd part, 3 Shri Shripadrao Damodara Kamat, hereinafter called the party hereto of the 3rd part, 4 Shri Dnyanoba Jotiram Mohite, hereinafter called the party hereto of the 4th part, Shri Shankar Govind Joshi, hereinafter, called the party, hereto of the 5th party, and 6 Shri Yashavant Bhawoo Kate, hereinafter called the party of the 6th part, All Hindu inhabitants. residing at Hubli, and whereas the parteis from 2 to 6, who have been serving with party No. 1since a very long time and in view of the appreciation of their honest and sincere services which the above parties have rendered in past and with the object that the above parties should also have their material and economical- progress, party No. i.e. Shri K. D. Kamat has been pleased to companyvert his sole proprietary companycern, as a partnership companycern, by admitting the above parties from 2 to 6 as working partners and the party No. 1 shall be the main financing and managing partner and the, business of the partnership is agreed and is being carried on accordingly in partnership as from 1st Day of October, 1958, as Contractors or any other business that the parties may think fit under the name and style of Messrs. K. D. Kamat Co., Engineers and Contractors, Hubli and it is hereby agreed by and among, the parties to this Agreement as under That the business of the partnership is running under the name and style of Messrs K. D. Kamat Co., Engineers Contractors, Hubli as from the 1st day of October 1958 and this agreement shall take retrospective effect and shall be deemed to have companye into operation as from the companymencement of 1st October, 1958. That the duration of the partnership shall be at will. That the business of the partnership is running at Hubli and shall run at Hubli or at such other place or places, as the case may be under the name and style, of Messrs. K. D. Kamat Co., Engineers Contractors or in such other name or names that the parties may from time to time decide and agree upon. That the final accounts of the partnership firm shall be made up on the last day of each year of account, which shall generally be on 31st day of March every year of account and the accounts shall be taken upto that date of all the stock-in-trade and after providing for all the working expenses, the remaining net profits 1041 or losses, as the case may be, shall as shared by the parties hereto as under- ----------------------------------------------------------- Names of Partners Extent of Individual Share ------------- - -- - --- - -------------------------------- Shri Krishnarao Dadasaheb Kamat 5 shars Shri Narayan Ganesh Kamat 2 shares Shri Shri Dadarao Damodara Kamat 2 shares Shri Dayanoba Jotiram Mohite 2 shares Shri Shankar Govind Joshi 2 shares Shri Yashavant Bhawoo Kate 2 shares ------------------- TOTAL 15 shares --------------------- That it is agreed among the partners that the party No. 1, i.e., Shri K. D. Kamat, shall be the principal and financing partner and the rest of the partners i.e. from 2 to 6 are admitted only as working partners companytributing labour. That the Good-will of the firm shall be wholly and solely belong to party No. 1 i.e. Shri K. D. Kamath. That the party No. 1, i.e., Shri K. D. Kamat, who is the principal and financing partner and by virtue of his having the long standing experience.in the line of business together with the technical knowledge of Engineer, shall have full right of companytrol and management of the firms business and in the best interest of the firm, it is thus decided and agreed upon among all the partners that all the working partners from 2 to 6 shall always work according to the instructions and directions given from time to time by Shri K. D. Kamat, in the actual execution of works and in any other matter companynecting thereof, pertaining to this partnership business. The decision of the principal partner on the aspect of taking any new business or giving Lenders for, new works, shall always vest with him, whose decision shall be final and binding upon all the working partners. That it, is also agreed among the partners that numberworking partner or partners is are authorised to raise a loan for and on behalf of the firm or pledge the firms interest directly or indirectly and such an act shall number be binding on the firm, except under the written authority of the principal partner. That it is further expressly agreed, that excepting the parties No. 1 and 2 i.e. Shri K. D. Kamat and Shri N. G. Kamat, the other Parties from 3 to 6 shall number do companytract business, so long as they are partners in this firm and this clause is inserted in the betterment of the firms business and with the object that the firms business 1042 should number suffer and the works if taken or standing in the name of the said parties from 3 to 6, the same, shall be the business of the firm. That it is also further agreed that the Managing Partner Shri K. D. Kamat shall alone operate the Bank accounts and in case of any need for companyvenience, the partner authorised by him in writing and so intimated to the Bank or Banks, shall operate, ,the Bank accounts. That in the companyrse of the business or during the existence of the firms business, the principal partner has reason to believe that any working partner or partners is are number working and companyducting to the best interest of the firm, the principal partner shall have a right to remove such a working partner or partners from the Partnership companycern and in such an eventuality the out going working partner or-partners, shall have only right of the profit, or loss upto the date of his retirement, as may be decided by the principal partner in Jump sum either by paying or receiving. regard being had to the progress of the business or otherwise upto the date of retirement, only on the companypleted works That proper books of accounts shall be kept by the said parties and entries made therein of all such matters, transactions and things. as are usually entered in the books of accounts kept by the persons engaged in business of a similar nature all books of accounts, documents, papers and things shall be kept at the principal place of business of the firm and each partner shall at all times, have free and equal access to them. That each partner shall be just and faithful to the other or others in all matters relating to the business of the firm, shall attend deligently to the firms business and give a true account and shall give information relating to the same without fail. That each partner shall withdraw such sums as will be mutually determined by the partners from time to time, in anticipation of the Profit falling to-their individual share and in case of loss, the same shall be made good by the partners. Thus subject to the provisions herein mentioned and laid ,down and made thoroughly known by each of the parties to this Agreement with sound mind and body, the firms affairs be carried on for mutual gain and benefit and if any questions which may arise or occur touching to the companyduct or management or liability of the firm, the same shall be amicably settled among the parties with the companysent of principal partner, whose decision in the matter shall be final and binding on all partners. 1043 In witness whereof the parties to this agreement have set their hands and seals to this Agreement as under Signed and Delivered by the within named Shri K. D. Kamat, himself Sd. K. D. Kamat Signed Delivered by the within named Shri N. G. Kamat, himself Sd. N. G. Kamat Signed Delivered by the within Sd.S. D. Kamat named Shri S. D. Kamat, himself Sd. V. D. Jituri in the presence of Signed Delivered by the within named Shri D. J. Mohite, himself Sd. D. J. Mohite Signed Delivered by the within named Shri S. G. Joshi, himself Sd. S. G. Joshi Signed Delivered by the within named Shri Y. B. Kate, himself Sd. Y. B. Kate. Sd. Certified to be the true companyy of the original. For K. K. D. KAMAT CO. The High Court, so far as we companyld see, has rested its decision On five circumstances for holding that there is numberrelationship of partners as between the parties inter se, created under the partnership deed. They are based on companysideration in particular of cls. 8, 9 and 16. The following are the circumstances, which according to the learned Judges militate against holding in favour of the assessee 1 The management as well as the companytrol of the business is entirely left in the hands of the alleged first partner k. D. Kamath 2 The other partners can merely work under his directions and share in the profits and losses in accordance with the proportion mentioned in cl. 5 3 . It is number within the power of the parties Nos. 2 to 6 to act as agent of other partners 4 The said parties cannot accept any business except with the companysent of K. D. Kamath and Those parties cannot raise any loan or pledge the, firms interest, directly or indirectly, except under the written authority of K. D. Kamath. In view of all these circumstances, according to the High Court, one of the essential element to companystitute partnership, namely, agency is lacking. We will number refer to some of the provisions of the Income- tax Act as well as the Partnership Act. Section 2 6B of the Income-tax Act provides that the expressions firm, partner and Partnership have the same meaning 1044 respectively as in the Partnership Act. There is numberdoubt a proviso with which We are number companycerned. Section 26A of the Income-tax Act lays down the procedure regarding registration of films. Section 59 authorises the Central Board of Revenue, subject to, the companytrol of the Central Government, to make rules for carrying out the purpose of the Act. The relevant Income-tax Rules Jay down the details of the procedure for making an application for registration of a firm as companytemplated under s. 26A. As there is numbercontroversy that the application has been made by the appel- lant in accordance with s. 26A and the relevant Rules, it is unnecessary for us to quote the section and the relevant Rules. Coming to the Partnership Act, s. 4 which defines partner- ship runs as follows Partnership is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Section 6 deals with the made of determining the existence of partnership. As per that section in determining whether a group of persons is or is number a firm or whether a person is or is number a partner in a firm, regard is to be had to the real relation between the parties as shown by all relevant facts taken together. Section 11 1 provides that subject to the provisions of the Act, the mutual rights and duties of the partners of a firm may be determined by companytract between the partners and such companytract may be expressed or may be implied by a companyrse of dealing. It further provides that such companytract may be varied by companysent of all the partners and such companysent may be expressed or may be implied by a companyrse of dealing. Sub-s. 2 clearly provides that numberwithstanding anything companytained in s. 27 of the Indian Contract Act, the companytract between the partners may provide that a partner shall number carry on any business other than that of the firm while he is a partner. Section 12 in cls. a to d deals with the rights and duties of a partner, but that again is subject to companytract between the partners. Section 14, on which some reliance has been placed by the companynsel for the Revenue is as follows Section 14 The property of the firm Subject to companytract between the partners, the property of the firm includes all property and rights and interests in property originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm, or for the purposes and in the companyrse of the business of the firm, and includes also the goodwill of the business. 1045 Unless the companytrary intention appears, property and rights and interests in property acquired With money belonging to the firm are deemed to have been acquired for the firm. Section 18 provides that subject to the provisions of the Act, a partner, is the agent of the firm for the Purpose of the business of the firm. Section 19 1 provides that subject to the provisions of s. 22, the act of a partner which is done to carry on, in the usual way, the business of the kind carried on by the firm binds the firm. It further states that the authority of a partner to so bind the firm companyferred by the said section is called his implied autho- rity. Sub-section 2 enumerates the various matters, which a partner cannot do under the implied authority, in the absence of any usage or custom or trade to the companytrary. Section 20 dealing with the extension and restriction of partners implied authority runs as follows Section 20. Extension and restriction of partners implied authority The partners in a firm may, by companytract between the partners, extend or restrict the implied authority of any partner. Notwithstanding any such restriction, any act done by a partner on behalf of the firm which falls within his implied authority binds the firm, unless, the person with whom he is dealing, knows of the restriction or doesnot know or believe that partner to be a partner. From a perusal of the partnership deed one thing is clear, namely, under cl. 1 what was originally the sole proprietary companycern of K. D. Kamath has been companyverted as partnership companycern by admitting parties Nos. 2 to 6 as working partners, along with party No. 1, and party No. 1 is the main financing and managing partner of the business. That clause has to be read a-long with cl. 6 whereunder the partners have agreed that K. D. Kamath shall be the principal and financing partner and the rest of the partners, namely, parties Nos. 2 to 6 are admitted only as working partners companytributing labour. Clause 4 deals with the running of the partnership business at Hubli as also other place or places or with such other name or names that the parties which means partners Nos. 1 to 6 may from time to time decide and agree upon. From clauses 1 , 2 and 3 , it is clear that the business of the partnership is that of Engineers and Con-tractors. We are referring to this aspect because it will have a bearing regarding the companytrol of the business agreed to be vested in K. D. Kamath. There does 1046 number appear to be any companytroversy that party No. 1 has been carrying on such business as a proprietary companycern for a long time before the partnership was formed and as such he is companysiderably experienced in the said technical type of business. Clause 5 provides that final accounting is to be taken as on March 31 of every year and the net profits and losses are to be shared by the parties thereto in the proportion of the shares specified in the said clause. Under clause 11, apart from the managing partner, K. D. Kamath operating the bank accounts, any other partner authorised by him isalsoeligibletooperatethebankaccounts. Clause, 12 entitles a partner, when he ceases to be a partner to be paid his share of profit or loss, upto the date of his so ceasing to be a partner. Clause 13 provides that books of accounts are to be properly maintained and each partner has a right at all times to have free and equal access to them. Clause 14 enjoins on each part- ner to be just and faithful to the other partners in all matters relating to the business of the firm and each of them has got a duty to diligently attend to the business of the firm. Each of them has also an obligation to give a true account and information regarding the business of the firm. Clause 15 enables the partners to withdraw the amounts in anticipation of profits falling to their individual share and in case of loss, each of them is also liable to make good the same in proportion to his share in the partnership. Clause 16 enjoins on the partners to carry on the affairs of the firm for mutual gain and benefit. All the above clauses clearly, in our opinion, establish that the sole proprietary companycern of K. D. Kamath has vanished. The above clauses also establish the right of each of the partners to share the profits and also to bear the losses in the proportion of their shares mentioned in cl. 5 . Therefore, one of the essential ingredients to companystitute partnership, namely, that there should be an agreement to share the profits and the losses of the business is more than amply satisfied in this case. Then the question is whether the circumstances pointed out by the High Court and referred to by us earlier, necessarily lead to the companyclusion that numberrelationship of partners, as understood in law, has been created as between the parties under the partnership deed. For this purpose it is necessary to refer to certain decisions of this Court as well as of the High Courts, which may have a bearing on this aspect. In Steel Brothers Co. Ltd. vs. Commissioner of Income-tax 1 one of the questions this Court had to companysider was whether the fact that the companytrol and manage- ment of a business was in the hands of one person when there were 1 1958 33 I.T.R. 1. 1047 three partners is destructive of the element of partnership. The facts were that A and B, two companypanies were carrying on trade in Burma rice. Later on, an agreement was entered into between A B and C for the working of the Burma rice business. It was, provided that the entire management of the business and the companyduct of its affairs was to be done by A in its absolute discretion. The profit and loss was provided to be shared in the proportion mentioned under the agreement. There was a restriction on B and C against hiring the properties of the firm without the companysent of At was held by this Court that numberwithstanding the fact that the management and companyduct or the business in its own discretion was vested with A, that circumstance is number destructive of the partnership relationship that exists between the parties to the agreement. In this decision two companyditions have been laid down as essential to companystitute a partnership in law 1 sharing of profit or loss of the business and 2 business being carried on by all the parties or any of them acting for all, in which is implicit the theory of agency. In M. P. Davis v. Commissioner of Agricultural Income- tax 1 , this Court had to companysider whether the relationship as partners. had been created by the agreement of partnership relied on by the parties. From the relevant facts it is seen that it was an extreme case where two brothers ostensibly entered into a partnership arrangement. But the recitals in the document, as pointed out by this Court, clearly showed that the entire management was with one brother A and that B had numberright to make any company- tribution towards capital. There was numberprovision as to how losses are to be dealt with and there was a very companyplicated manner for ascertaining the so called profits. Having due regard to the tenor of the document and the clauses companytained therein, this Court held that there was numberintention to bring about the, relationship of partners between the two brothers. On the other hand, it is the view of this Court that the document had been executed to companytinue under the cloak of a partnership the pre-existing and real relationship, namely, that of master and servant. It is to be numbered that this Court did number hold that there was numberrelationship of partners created under the document only on the basis that the exclusive companytrol and management was left in the hands of A. Such a companyclusion was reached having due, regard to the various other clauses in the deed. lo fact this Court, has already held in the earlier decision referred to above. that the mere circumstance that the companytrol and management are vested in One partner is number destructive of the existence of partnership. No doubt. the High Court in the case on hand, has placed some reliance upon the decision in M. P. Davis v. Commissioner of Agricultural Income-tax 1 , in support of its companyclusion that numberpartnership 1 1959 35 I.T. 803. 1048 arrangement can be spelled out from the document before us. In our opinion, there has number been a proper appreciation by the High Court of the reasons which led to this Court for holding. in the said decision that there was numberrelationship of partners between the two brothers A and B. That was an extreme case where the clauses in the partnership deed were entirely different. In Commissioner of Income-tax, Gujarat v. A. Abdul Rahim ,and Co. 1 this Court has held that it is the settled law that if a partnership is genuine and valid one, the Income- tax Officer has numberpower to reject its registration, if the other provisions of s. 26A and the Rules made thereunder are companyplied with. In Agarwal and Co. v. Commissioner of Income-tax, U.P. 2 this Court dealing with the companyditions of registration prescribed in S. 26A and the relevant Rules observed as follows The companyditions of registration prescribed in this section and the relevant rules are 1 on behalf of the firm, an application should be made to the Income-tax Officer by such person and at such time and companytaining such particulars, being is such form and verified in such manner as are prescribed by the rules 2 the firm should be companystituted under an instrument of partner,ship. 3 the instrument must specify the individual snares of the partners, and 4 the partnership must be valid and genuine and must actually exist in the terms specified in the instrument. If all the above companyditions are fulfilled, the Income-tax Officer is bound to register the firm unless the assessee has companytravened section 23 4 of the Act. In certain decisions of the High Courts the two essential companyditions necessary to form the relation of partnership have, been stated to be 1 that there should be an agreement to share the profits and losses of the business, and 2 that each of the partners should,be acting as agent of all. Though, these two companyditions, by and large, have to be satisfied when the, relationship of partners is created between the parties, we would emphasise that the legal requirements under s. 4 of the Partnership Act to companystitute a partnership in law are 1 there must be an agreement to share the profits or losses of the business and 2 the, business must be carried on by all the partners or any of them acting for all. There is implicit in the second requirement the principle of agency. The tests laid down by the High Courts have again been appli ed by the Bombay High Court in Balubhai Gulabdas Navlakhi 1 1965 55 I.T. R. 651. 2 1970 77 I.T.R. 10. 1049 Commissioner of Income-tax 1 to companysider whether the document before them created a relationship of partners between the parties thereto. One of the main companytention that was urged, as militating against theory of partnership was that very wide powers of companytrol and management were given to one of the partners so much so that he is to be companysidered to be the owner or proprietor of the companycern. This companytention was rejected by the High Court. After a reference to the various clauses in the document, the Bombay High Court came to the companyclusion that the two essential companyditions necessary to form a relation of partnership, re- ferred to above-, were present in the document companystituting the partnership. The High Court further held that the fact that some of the terms of the document gave enlarged powers of management and companytrol to one of the partners, who has brought in all the finances, is number by itself sufficient to hold, having due regard to the other clauses that the real agree ment between the parties is number that of partners, but that of master and servant. We may also observe that most of the clauses in the document before the Bombay High Court were more or less similar to the clauses in the partnership deed before us. In similar cases, where the companytrol and management was vested in the hands of one partner and where it was also provided that only one partner can operate on the bank account and the others can do so, only if authorised by him, and that only one party can borrow on behalf of the firm for all, have been held number to militate against holding a particular document as creating the relationship of master and servant. Those decisions are of Kerala High Courts in Commissioner of Income-tax, Kerala v. Pathrose Rice Oil MillS 2 by the Madras High Court in P.A C. Ratnaswamy Nadar Sons v. Commissioner of Income-tax, Madras 3 by the Allahabad High Court in Commissioner of Income-tax V. R. Shoe Factory 4 by the Madhya Pradesh High Court in Murlidhar Kishangopal v. Commissioner of Income-tax, M.P. Nagpur and Bhandara 5 and by the Mysore High Court in City Tobacco Mart v. Commissioner Of Income-tax Mysore , . We have already referred to the fact that the Bombay High Court in Balubhai Gulabdas Navlakhi vs. Commissioner of In- companye-tax 1 , has also taken the same view. In addition to the existence of clauses to the above effect in the partnership deed, we may mention that in the Allahabad decision. referred to above, in a partnership between A, B and C, there was a clause that C 1 1962 46 I.T.R. 492. 2 1960 40 I.T. R. 353. 3 1962 46 I.T.R. 1148. 4 1963 471.T.R.917. 5 1963 50 I.T.R. 628. 6 1967 64 I.T.R. 478. 119Sup CI/72 1050 was number entitled to invest any capital and that the,business is to be carried on only by A and B and that C has numberpower to interfere with the management of the business. The Allahabad. High Court, in spite of all these clauses held that the document created a relationship of partners as the two essential companyditions, referred to by us earlier, existed in that case. We have already referred to the decision of this Court in Agarwal and Company v. Commissioner of Income-tax, U.P. 1 laying down the companyditions, which if fulfilled makes it obligatory on the Income-tax Officer to register the firm, unless the assessee has companytravened s. 23 4 of the Act. It is number the case of the Revenue that the assessee before us has-contravened section 23 4 . There is also numbercontroversy that the application has been made in accordance with S. 26A as well as the relevant Rules. The firm has been companystituted under an instrument of partnership dated March 20, 1959. From the clauses of the partnership deed, extracted above, particularly cl. 5 , the shares of the partners regarding the profit and loss have also been specified. Therefore, it follows that companyditions Nos. 1, 2 and 3 specified in the above decision are fully satisfied. Regarding Condition No. 4 also there is numbercontroversy that the partnership is genuine in the sense that it is number a fictitious document. Then the only other requirement referred to in companydition No. 4 to be satisfied is whether the partnership is valid in the sense that it creates relationship of partners between the parties thereto. From our discussion in this judgment, according to us, the relationship of partners inter se has been created under the partnership deed and that such relationship had actually existed in accordance with the terms specified in the said document From a review of the above decisions, it is clear that the mere numberenclature given to a document is by itself number sufficient to hold that the document in question is one of partnership. Two essential companyditions to be satisfied are 1 that there should be an agreement to share the profits as well as the losses of the business, and 2 the business must be carried on by all or any of them acting for all, within the meaning of the definition of partnership under s. 4 of the Partnership Act. The fact that the exclusive power and companytrol, by agreement of the parties is vested in one partner or the further circumstance that only one partner can operate the bank accounts or borrow on behalf of the firm are number destructive of the theory of partnership provided the two essential companyditions, mentioned earlier are satisfied. In the light of the principles laid down by this Court in Steel Brothers Co. Ltd. v. Commissioner of Income-tax 2 and in the decisions of the High Courts, referred to above, the reasons 1 1970 77 I.T.R. 10. 2 1958 33 I.T.R. 1. 1051 given by the High Court for holding that the relationship of partners has number been created under the deed of partnership before us, cannot be sustained. As the companytrol and management of business can be left by agreement in the hands of one partner to be exercised on behalf of all the partners, the other companysequence by way of restriction on the rights of the other partners lose all significance. In fact the clauses providing that the working partners are to work under the directions of the managing partner and the further clause restricting their right to accept business or raise any loans or pledge the firms interest except with the companysent of the managing partner K. D. Kamath, have all to be related with the agreement entered into by the partners regarding the management and companytrol by K. D. Kamath. We are of the opinion that under the partnership deed the relationship which has been brought into existence between the six parties is a relationship of partners who have agreed to share the profits and losses of business carried on by all or any of them acting for all and it satisfies the definition of Partnership under s. 4 of the Partnership Act. W.-. have already pointed out that there is a sharing of the profits or losses of the business by the partners in the ratio of the proportion mentioned in Cl. 5 . That clause read with other clauses already discussed by us, clearly shows that the first companydition, namely, all persons agreeing to share profits or losses is satisfied. Even on the basis that the entire companytrol and management of the business is vested in K. D. Kamath, party No. 1 and that parties Nos. 2 to 6 as working partners have to work under his direction, from all the other circumstances it is clear that the companyduct of business by party No. 1 is done by him acting for all the partners. There is numberindication to the companytrary in the partnership deed. Therefore, even without anything more, it is clear that as the partnership business is carried on by party No. 1, acting for all, the second companydition of agency is also satisfied. This idea reinforced by cl. 16 which provides that the firms affairs are to be carried on for mutual benefits. That clause is to the effect that the firms affairs which are managed by party No. 1 is really for the mutual gain and benefits of all the partners. It is numberdoubt, true that the second essential test of the business being carried on by all or any of the partners acting for all must be satisfied. The provisions in the partnership deed clearly establish that K. D. Kamath, the managing partner, carries on the business, acting for all the partners. Much stress has been laid by the High Court on the fact that under Cl. 9 parties Nos. 2 to 6 have numberTight to raise loans for and on behalf of the firm or pledge the firms interest. This circumstance, according to the High Court, is destructive of the 1052 element of partnership. We have already held that the management and companytrol of the business done by party go. 1, is carrying on of the business on behalf of all the partners. No doubt under s. 18 of the Partnership Act, a partner is the agent of the firm for the purpose of the business of the firm. But that section itself clearly says that it is subject to the provisions of the Act. It is open to ,the- parties, under s. 11, to enter intoan agreement regarding their mutual rights and duties as partners of the firm and that can be done by companytract, which in this case is evidenced by the deed of partnership. Further s. 18 will have to be read along with s. 4. If the relationship of partners is established as a partnership as defined in s. 4, and if the necessary ingredients referred to in that section are found to exist, there is numberescape from the companyclusion that in law a partnership has companye into exist- ence. lit is in the light of these provisions that s. 18, will have to be appreciated. Section 18 only emphasises the principle of agency which is already incorporated in the definition of partnership under s. 4. It should be remembered that so far as the outside world is companycerned, so long as the parties Nos. 2 to 6 are held out, as partners of this firm, as has been done under the partnership deed. their acts would bind the whole partner- ship. The provision in cl. 9 in our opinion, is only an inter se arrangement enter, into by the partners, in and by which the-working partners have agreed number to raise loans or pledge the firms interest. Mr. S. K. lyer, learned companynsel for the Revenue placed some reliance on s. 14 of the Partnership Act. According to the companynsel, there is numbercontract to the companytrary in the partnership deed that the assets brought in by party No. 1, do number belong to the partnership. It is his further companytention that under s. 14, those assets will belong to the partnership, in which case, it will be open to any partner, as agent of the other partners to pledge the firms interest or raise loan for partnership purposes. This right, accor- ding to the companynsel is restricted by cl. 9 and that clause negatives the theory of agency. In our opinion, this companytention of the learned companynsel cannot be accepted. Section 14 of the Partnership Act itself clearly shows- that the provisions companytained therein are subject to the companytract between the parties. We have already held that the provision regarding the companytrol and management vesting in party No.1 is number itself destructive of the theory of partnership. Clause 9 in our opinion, itself shows that the theory of agency is recognised. But the parties, by mutual agreement, have placed a restriction on the working partners right to borrow on behalf of the firm or pledge the firms interest without the written authority of the principal partner. 1053 Mr. Iyer placed companysiderable reliance as the High Court has also done, on the earlier decision of the Bombay High Court in Umarbhai Chandbhai v. Commissioner of Income-tax, Bombay City 1 . That again, in our opinion, was a case of an extreme nature where, under a partnership deed, between the father and his two sons, the former had a right to exclude either or born his sons from the management of the firm, wholly or in part. There was also a provision to the effect that the father was entitled to entrust the management to any other person and also determine what quantum of profits should be distributed and what ,is to be done regarding the remaining profits. There were further provisions to the effect that the father companyld terminate the partnership and- on such termination, the share of the partner was to revert to the father. The Bombay High Court, having due regard to the clauses, referred to above, as well as other clauses of the partnership deed, held that the document offended against the two principles which were essential to companystitute a partnership, namely, agreement to share the profits and losses and the business being carried on by all or any of them for all of them. The learned Judges held that there was numberagreement to share the profits and loses of the business and even the business carried on by the father was number, on behalf of all the partners. In such circumstances, it was held, that the arrangement evidenced by the deed cannot be companysidered in law to be a partnership. In our opinion, reliance placed upon this decision by the High Court as well as by Mr. Iyer is misplaced. In fact, from a perusal of the clauses in the document which- the Bombay High Court had to companysider, it is clear that the business companytinued to be the proprietary companycern of one single individual namely, the father. Excepting that the two sons were styled as partners in the document, the essential requisites for companystituting the relationship of partners inter se between the father and the two sons were totally absent. The clause in the case before us are totally different. We have already indicated that there is an agreement for sharing the profits and losses and that even though vast powers of companytrol and management have been given to K. D. Kamath, the managing partner, the business was being carried on by the said managing partner, on behalf of all the partners. These companyditions fully satisfy the requirements of the definition of partnership under s. 4 of the Partnership Act. To companyclude we are of the opinion that all the ingredients of partnership are satisfied under the partnership deed dated March 20, 1959 and that the view of the High Court that the appellant firm cannot be granted registration under s. 26A of the Incometax Act for the assessment year 1959-60, cannot be sustained. 1 1952 22 I.T.R. 27. 1054 In, the result, we answer the question of law in the affirmative in favour of the assessee.

Case appeal was accepted by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeal No. 266 of 1969. Appeal by special leave from the judgment and order dated August 16, 1967 of the Kerala High Court in Income-tax Referred Case No. 44 of 1966. K. Viswanatha Iyer and K. Jayaram, for the appellant. A. Seyid Muhammad and A. G. Pudissery, for the respon- dent. The Judgment of the Court was delivered by Hegde, J. The appellant, Venugopala Varma Rajah is the present Rajah of the Vengunad Swaroopan in Palghat District, Kerala State. He is the Karnavan of his Tarwad. He will be hereinafter referred to as the assessee. The predecessor of the appellant, as the then Kamavan of the family, submitted the return for the assessment year 1959-60 under the Kerala Agricultural Income-tax Act which will hereinafter be referred to as the Act showing a gross income of Rs. 1,21,912/- and a net income of Rs. 84,065/60 P. That represented the income from the properties held by him under the family Karar dated May 29, 1909. The. Agricultural Income-tax Officer overruling the objection of the assessee included in the income returned, the income of the properties which had been put in possession of the junior members of the family under the aforementioned Karar of 1909. The net income so companyputed was Rs. 2,32,957/- and a tax of Rs. 1,30,672/35 P. was imposed. In appeal the Appellate Authority excluded from the taxable income the income of the properties allotted to the Rani Group but sustained the addition of the income of the properties allotted for the enjoyment of the male members. Aggrieved by the order of the Appellate Authority, the assessee took up the matter in second appeal to the Appellate Tribunal of the Agricultural Income-tax. The Tribunal rejected the companytention of the assessee and dismissed the appeal. Thereafter at the instance of the assessee, it stated a case under s. 60 1 of the Act and submitted to the High Court for its opinion three questions of law namely L119SupCI/72 1002 Whether the findings of the Tribunal that the family karar of 1909 does number companystitute a diversion of family income to the various allottees thereunder is companyrect ? Whether the findings of the Tribunal that the provisions of sub-section 1 of sec. 9 of the Act are applicable only to cases of diversion of income and number otherwise is companyrect ? Whether the findings of the Tribunal that the provisions of sub-sec. 1 of sec. 9 of the Act are number applicable to the facts of this case are companyrect ? Questions Nos. 2 and 3, in our opinion, do number bring out the import of sec. 9 1 companyrectly but it is number necessary to go into that aspect as our decision companyers the real point in issue. The Reference originally came up for hearing before a Division Bench but as the questions arising for decision were companysidered to be of importance, the same was referred to a Fun Bench of three judges. The High Court by its judgment dated August 16, 1967 answered Question Nos. 1 and 2 against the assessee. It did number answer the third question as it was of the view that answer to that question was unnecessary in view of its findings on Questions Nos. 1 and 2. Thereafter this appeal was brought by certificate. The assessee in this case is the H.U.F. of which the appellant was the Kamavan at the relevant time. The question for decision is whether the income of the properties put in possession of the male members under the Karar of 1909 companytinues to be the, income of the family. At present we are number companycerned with the income of the properties put in possession of the Rani Group in view of the decision of the Appellate Authority which had number began appealed against. If the income in dispute companytinues to be the income of the family then the revenue is justified in bringing the same to tax under the provisions of the Act. On the other hand if that income has ceased to be the income of the family, then the same cannot be brought to tax in the hands of the assessee. Therefore, the sole question is whether that income is the income of the family ? Section 9 of the Act provides 9 1 In companyputing the total agricultural income of an assessee all agricultural income arising to any person by virtue of a settlement or disposition, whether revocable or number, and whether effected before or after 1003 the companymencement of this Act, from asset remaining the property of the settlor or disponer shall be deemed to be the agricultural income of the settlor or disponer and all agricultural income arising to any person by virtue of a revocable transfer of asset shall be deemed to be the agricultural income of the transferor Provided that for the purpose of this sub- section a settlement, disposition or transfer shall be deemed to be revocable if it companytains any provision for the transfer directly or indirectly of the agricultural income or asset to the settlor, disponer or transferor or in any way gives the settlor, disponer or transferor a right to reassume power directly or indirectly over the agricultural income or assets Provided further that the expression settlement, disposition shall, for the purposes of the sub-section include any disposition trust, companyenant, agreement or. arrangement and the expression settlor or disponer in relation to a settlement or disposition shall include any person by whom the settlement or disposition was made Provided also that this sub-section shall number apply to any agricultural income arising to any person by virtue of a settlement or dispo sition which is number revocable for a period exceeding six years or during the life- time of the person and from which agricultural income the settlor or disponer derives numberdirect or indirect benefit but that the settlor shall be liable to be, assessed on the said agricultural income as and when the power to revoke arises to him. A Hindu Undivided Family is a person within the, meaning of s.2 m of the Act. We shall number proceed to examine the nature of the Karar entered into in 1909. The family of the assessee appears to have been one of the premier land holding families in Malabar. It appears to have had agricultural properties in various places. To the Karar in question all the then living members 12 in number of the family were parties. The properties mentioned in A Sch. to the Karar were set apart for the maintenance, education and other expenses of the female and male members residing in Kalari Kovilagom which is otherwise known as Rani Group. Under the Karar, Karnavan of the Tarwad was to perform the marriage ceremonies of the female members of the Tarwad in accordance with the prevailing companyditions and to meet 1004 the expenses thereof. All other expenses of female, and male members residing in Kalari are to be met from the income of the A Sch. properties. The members residing in the Kalari have numberright to alienate or encumber the properties allotted to them and all government revenue due in respect of those properties should be paid by them. Party No. 2, the second senior most member in the family was to be given 7,000 paras of paddy annually for his maintenance and for this purpose paddy lands yielding 3,500 paras of paddy shown in B Sch. were made over to his possession and Party No. 1, Karnavan of the Tarwad was directed to give to- Party No. 2 from Malayalam era 1085 onwards 3,500 paras of paddy. Further the Karnavan was directed that he should redeem Karukakode Challa Nilam and make over the same to Party No. 2, but after making over the same to Party No. 2, be was number to pay 3,500 paras of paddy referred to earlier. C Sch. properties yielding an income of 4,750 paras of paddy were allotted for the enjoyment of Party No. 3. He was required to maintain himself from out of their income. Properties shown in D Sch. were set apart for the mainte- nance of Party No. 4. The land-revenue of B, C and D Sch. properties was required to be paid by the Karnavan of the tarwad. On the death of Party No. 2 or on his becoming Karnavan of the family, Party No. 3 was to take over the properties allotted for the maintenance of Party No. 2 and Party No. 4 was to take over the properties for the maintenance of Party No. 3. The Karar prohibited the persons who were in possession of the properties allotted for their enjoyment from alienating or encumbering those properties, and if in companytravention of those terms, they alienated any of those properties, the Karnavan was entitled to resume the properties treating the alienation as void. Clause 18 of the Karar prohibited the parties in possession of the properties from cutting and selling the kuzhikoors or dismantling the buildings in the properties in their possession. Clause 19 of the Karar prohibited the parties from enhancing the munpattom amounts due to the tenant. Clause 6 of the Karar provided that all the male members living in the Kalari, on companypleting the age of 21 should leave the Kalari and thereafter the Kamavan should make arrangements for their maintenance. Karar does number stipulate what arrangement he should make for their maintenance. Therefore it follows that he may maintain them either in the Tarwad house or give them maintenance allowance either in the shape of paddy or cash. It may also be numbered that the Karar does number provide as to what would happen if the number of members in the Tarwad substantially increases. One other thing that has got to 1005 be numbered is that the Karar is silent as to what would happen to the properties shown in Schs. B, C and D after Parties Nos. 2, 3 and 4 die, all of whom, we were told have died. Hence Kamavan can take possession of them on behalf of the family after their death. On an examination of the various clauses in the Karar, it is obvious that the joint status of the parties was number disrupted. The arrangement made in the Karar was only an arrangement for providing maintenance. No party was given any absolute right in any portion of the family properties. The properties mentioned in the Karar companytinued to be the properties of the family. The arrangement made under the Karar cannot even be companysidered as a permanent arrangement. The properties were number divided on the basis of Thavazies. The liability to maintain the male members, aged more than 21 years excepting Parties Nos. 2, 3 and 4 companytinued to be that of the Karnavan. The Karar also does number provide for devolution of the properties allotted to Parties 2 to 4. Hence those properties must necessarily go back to the possession of the Karnavan after those Members die. We have earlier seen that the responsibility of performing the marriage ceremonies of the female members companytinued to be that of the Karnavan. He is also responsible for the payment of land revenue in respect of the family properties excepting properties included in Sch. A to the Karar. Under these circumstances, it is number possible to hold that Karar in question embodied an irrevocable settlement. In the very nature of things, the arrangement made under that Karar must be held to be one which is revocable if there is any substantial change in the circumstances of the family. For our present purpose it is sufficient if we hold that the properties allotted for the enjoyment of the various members of the family under the Karar companytinued to be the properties of the family. In view of s. 9 1 of the Act in companyputing the total agricultural income of the H.U.F., all agricultural income arising from the assets remaining the property of the family should be deemed to be the agricultural income of the family. We have earlier companye to the companyclusion that the agrrangement made under the Karar is revocable if there is substantial change in the circumstances of the family. That arrangement companyfers benefit on the family inasmuch as it is absolved of the responsibility to maintain its members which, otherwise is its responsibility. Section 9 1 of the Act is similar to s. 16 1 c of the Indian Income-tax Act, 1922. The latter section has companye up for companysideration by companyrts. The companyrts have laid down the test that if 1006 the income in dispute is companysidered as having been applied to discharge an obligation of the assessee, the same is liable to be included in the assessable income of the assessee but if on the other hand the same had been diverted by an overriding charge, then it is number liable to be included in the assessable income of the assessee as it ceased to be his income. If we apply this test to the facts of the present case, it is clear that the income in dispute companytinued to be the income of the family. It was merely applied to discharge an obligation of the family namely the obligation to maintain the junior members of the family. At first sight some of the decided cases on the subject appear to speak in companyflicting voices. But on a careful examination, it is possible to find out the dividing line. The earliest decision on the subject is that of the Judicial Committee in Raja Bejoy Singh Dudhuria v. Commissioner of Income-tax, Bengal 1 . The, assessee therein succeeded to the family ancestral estate on the death of his father. Subsequently his step-mother brought a suit for maintenance against him in which a companysent decree was made directing the assessee to make a monthly payment of a fixed sum to his step-mother and declaring that the maintenance was a charge on the ancestral estate in the hands of the assessee. While companyputing his income, the assessee claimed that the amounts paid by him to the step-mother under the decree should be excluded. That companytention was number accepted by the authorities under the Act as well as by the High Court but the Judicial Committee reversing their decision came to the companyclusion that though assessees liability under the decree did number fall within any of the exemptions or allowances companyceded in ss. 7 to 12 of the Indian Income-tax Act, yet the sums paid by the assessee to his stepmother were number income of the assessed at all the decree of the companyrt by charging the appellants whole resources with a specific payment to his step-mother had to that extent diverted his income from him and had directed it to his step-mother to that extent what he received for her was number his income it was number a case of the application by the appellant of part of his income in a particular way it was rather the allocation of a sum out of his revenue before it became income in his hands. This decision at the first sight appears to lend support to the assessees companytention but in understanding the ratio of the decision, we must bear in mind the fact that in that case the Advocate-General had abandoned before the High Court the companytention that the assessee and his stepmother were members of undivided family and accepted the Position that the appellant was liable to be assessed as an individual and in numberother manner. In view of this companycession, the payment that had to be made to the step-mother of the assessee became a 1 1, I.T.R. 135. 1007 charge on tile estate even before that estate devolved on him. Therefore what the assessee got was the income of the property minus what he had to pay to his step-mother. The above companyclusion of ours receives support from a later decision of the Judicial Committee in P. C. Mullick and anr. Executors v. Commissioner of Income-tax, Bengal 1 . Therein a testator had by his will appointed the appellants his executors and had directed them to pay Rs. 10,000/- out of the income of his property on the occasion of his addya sradh for expenses in companynection therewith to the person who was entitled to perform the sradh. He had also directed them to pay out of the income of his property the companyts of taking out probate of his will. During the year of account the executors had paid Rs. 5,537/- for expenses in companynection with the addya sradh and a sum of Rs. 1,25,000/- for probate duty. The question arose whether those payments were deductible in companyputing the chargeable income. The Judicial Committee held affirming the judgment of the Calcutta High Court, that the payments made for the sradh expenses and the companyts of probate companyld number be excluded in companyputing the chargeable income. Those were payments made out of the income of the estate companying to the hands of the appellants as executors and in pursuance of obligation imposed by the testator. Their Lordships were of opinion that it was number a case in which a portion of the income was by an overriding title diverted from the person who would otherwise have received it as in Bejoy Singh Dudhurias 2 case, but a case in which the executors having received the whole income apply a portion of it in a particular way. From this judgment of the Judicial Committee, it is dear that the true test is that if the income in question is an income of the assessee, the application of the same being number relevant for determining its assessability, it is assessable in his hands but if it is number his income then it cannot form part of his assessable income. The scope of s. 16 1 c of the Indian Income-tax Act, 1922 came up for companysideration by this Court in Commissioner of Income-tax, Bombay City v. Sitaldas Tirathdas 3 . Therein the assessee Sitaldas Tirathdas of Bombay had many sources of income, chief among them being property, stocks and shares, bank deposits and share in a firm known as M s. Sitaldas Tirathdas. He followed the financial year as his accounting year. For the assessment years 1953-54 and 1954- 55, his total income was respectively companyputed at Rs. 30,375/- and Rs. 55,160/-. This companyputation was number disputed by him but he sought to deduct Rs. 1350/- in the first assessment year and a sum of Rs. 18,000/- 1 1 I.T.R. 135. 3 41, I.T.R. 367. 2 6 I.T.R. 206. 1008 in the second assessment year on the-ground that under a decree, he was required to pay these sums as maintenance to his wife and his children. In support of his claim, he relied on the decision of the Judicial Committee in Bejoy Singh Dudhurias case supra . This Court rejected that companytention observing at pp. 374 and 375 of the Report In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, numberdoubt, there are in every case, but it is the nature of the obligation which is the decisive fact. There is a difference between an-amount which a person is obliged to apply out of his income and amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible, but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same companysequence, in law, does number follow. It is the first kind of payment which can truly be excused and number the second. The second payment is merely an obligation to pay another a portion of ones own income, which has been received and is since applied. The first is the case in which the income never reaches the assessee who even if he were to companylect it, does so, number as part of his income, but for and on behalf of the person to whom it is payable. Counsel for the assessee tried to lay stress on the observation of this Court that the income should reach the hands of the assessee before it can be companysidered as his income. According to him in the case before us, the income in dispute never reached the hands of the assessee. We are unable to accept this companytention as companyrect. The income is the income of the family. It reached the hands of the family as soon as it reached the hands of any of the members of the family who were entitled to receive it on behalf of the family. The members of the family received that income on behalf of the family and applied the same in discharge of an obligation of the family. When this Court spoke of the income reaching the hands of the assessee, it did number refer to any physical act. It was dealing with a legal companycept a receipt in law. Viewed that way, it is quite clear that the income with which we are companycerned in this case was received by the family. One other decision on the point in issue which we would like to refer is the decision of the Bombay High Court in Commis- 1 5 I.T.R. 539. 1009 sioner of Income-tax, Bombay v. Makanji Lalji 1 , wherein Beaumont C.J., speaking for the companyrt held that in companyputing the income of the H.U.F. for purposes of income-tax, moneys paid to the widow of a deceased companyarcener of the- family as maintenance and residence allowance cannot be deducted, even though the amount of such allowance has been fixed by a decree of the Court and has be en made a charge on properties belonging to the family.

Case appeal was rejected by the Supreme Court

CIVIL APPELLATE JURISDICTION Civil Appeals Nos. 1343 and 1473 of 1971. Appeals by special leave from the judgments and orders dated September 3, 1971 and August 6, 1971 of the Delhi High Court in I.A. No. 1170 of 1971 in Election Petition No. 1 of 1971 and Election Petition No. 2 of 1971. K. Daphtary, M. C. Bhandare and C. M. Oberoi, for the appellant in C.A. No. 1343 of 1971 . D. Chawla, B. P. Nanda and J. B. Dadachanji, for the appellant in C.A. No. 1473 of 1971 . V. Gupte, U. M. Trivedi, S. N. Marwah, R. P. Bansal,B. Sabarwal, N. M. Ghatate and K. C. Dua, for respondent No. 1 in C.A. No. 1343/71 . B. Agarwala, S. N. Marwah, B. P. Bansal A. K. Marwah and C. Dua, for respondent No. 1 in C.A. No. 147 3 of 1971 P. Joshi, for respondent No. 6 in both the appeals .Respondent No. 8 appeared in person in both the appeals . The Judgment of the Court was delivered by Hegde, J. These appeals by special leave arise from the decision of Andley J. Delhi High Court permitting inspection of the ballot papers polled during the last general election to the Lok Sabha held last March in the South Delhi Constituency and the Delhi-Sadar Constituency. The appellants are the successful candidates. They company- tested in the two companystituencies mentioned earlier on behalf of the ruling Congress party. Their symbol was company and calf. Their nearest rivals were the Jan Sangh numberinees whose symbol was Deepak. The appellants were declared elected. The unsuccessful Jan-Sangh candidates have challenged the validity of the election of the appellants. The main ground pleaded in support of the election petition was that the ruling party had rigged the election. The process adopted in rigging the election, according to the election petitioners is a somewhat companyplicated one. That process was explained to us thus Millions of ballot papers were chemically treated the symbol of the companygress candidates in those ballot papers was mechanically stamped by using invisible ink. As a result of the chemical treatment of those ballot papers, the mark put at the time of the polling disappeared after a few days and the stamping mechanically placed earlier emerged. The suggestion was that this was done as a result of a companyspiracy between the ruling party and the Election Commission. To carry out the design in question, we were told that quite companytrary to the earlier practice, the Election Commission instructed the Returning Officers to forward to Delhi a substantial number of ballot papers of each companystituency, ostensibly for the purpose of scrutiny but really for the purpose of carrying out the design mentioned earlier, According to them in place of the ballot papers received, the Returning Officers were supplied with the ballot papers chemically treated and mechanically stamped. Those ballot papers formed a part of the ballot papers used at the election. It was further said that in furtherance of the above design, the Eelection Com- mission made two alterations in the practice followed earlier. Firstly it provided a larger interval between the date of polling and the date of companynting and secondly by precipitate alteration of a rule, it provided for mixing up of the ballot papers of various. booths and rotating them in drums. We were further told that these innovations were introduced so that the chemical treatment of the ballot papers may have the desired effect. The election petitioners do number claim to have any direct evidence to support their version. They seek to prove their version primarily on the basis of the examination of the ballot papers. But to probabilise their version, they have put forward various circumstances. They have filed affidavits of two persons who claim to have been present at the time of companynting. They supported the allegations in the petitions seeking inspection regarding the facts said to have been observed at the time of companynting In those petitions it was alleged that at the time of the companynting, it was numbericed that the companyour of a large number of ballot papers was different from the companyour of the other ballot papers, stamping of, the symbols in those ballot papers was uniform, at an identical spot in each of those ballot papers, the stamps were uniform in density and they looked bright and fresh. Those features were quite dissimilar to those found in the other papers including those companytaining votes in favour of the defeated candidates. The election petitioners in this companynection referred to the rumours prevailing about the rigging of the election, the landslide victory of the ruling party which according to them was wholly unexpected and finding of huge quantity of unused ballot papers in a godown in Chandigarh. The, material facts supporting the allegation of rigging are those said to have been observed at the time of the companynting. In addition they also pointed out the changes made by the Election Commission in the companynting procedure and tried to draw an adverse inference therefrom. Whether the, observations said to have been made are true or whether they were merely the figment of imagination of some fertile brains has yet to be examined. The only effective way of checking the companyrectness of those allegations is by inspecting the ballot papers. We are free to admit that we are unable to companyprehend the theories propounded by the election petitioners. But we are companyscious of our limitations. The march of science in recent years has shown that what was thought to be impossible just a few years back has become an easy possibility number. What we would have thought as wild imaginations some years back are number proved to be realities. Hence we are unable to reject the allegations of the election petitioners without scrutiny. We shall accept numberhing and reject numberhing except on satisfactory proof. We are approaching the allegations made in the election petition in that spirit. The learned trial judge did number hold that the allegations made by the election petitioners were number bona fide allegations. We see numberreason to companye to a companytrary companyclusion. He took the view that those allegations were of serious character and the material facts stated in suport of those allegations were such as to call for investigation into the truth of those allegations. We are of the same opinion. The allegation that our electoral process has been fouled is a very serious allegation, That allegation is a challenge to the integrity and impartiality of the Election Commission. Those allegations if believed are sure to undermine the companyfidence of our people in our democratic institutions. Herein we are number merely companycerned about the validity of elections in two companystituencies. They are numberdoubt important but in the companytext of things their importance pales into insignificance. What is more important is the survival of the very democratic institu- tions on which our way of life depends. It was said, on behalf of the appellants that those allegations were numberhing but propaganda stunts and they were wholly devoid of truth. If that is so, it is in public interest that the falsity of that propaganda should be exposed. The companyfidence in our electoral machinery should number be allowed to be companyroded by false propoganda. It is of utmost importance that our electorate should have full companyfidence in the impartiality of the Election Commission. Even the very best institutions can be maligned. In all companyntries, at all times, there are gullible persons. The effectiveness of an institution like the Election Commission depends on public companyfidence. For building up public companyfi- dence, public must be given the opportunity to know the truth. Any attempt to obstruct an enquiry into the allegations made may give an impression that there might be some truth in the allegations made. From the records we gather that the allegations with which we are companycerned are. being made in several places in this companyntry with some persistency. It is number unlikely that a section of our people, rightly or wrongly, have persuaded themselves to believe in those allegations. Such a situation should number be allowed to remain. The strength of a democratic society depends on the knowledge of its ordinary citizens about the affairs of the institutions created to safeguard their rights. It is dangerous to, allow them to feed themselves with rumours. It was urged on behalf of the appellants that the scrutiny of ballot papers is a very serious thing the secrecy of the ballot is of utmost importance except on very good grounds, inspection of ballot papers should number be allowed and the petitioners have failed to make out a case for inspection. It was further urged that at the time of companynting, the attention of. the Returning Officer was number invited to the strange features mentioned earlier number was the acceptance of any of those ballot papers objected to on the ground that they were spurious ballot papers. According to the election petitioners, they did invite the attention of the Assistant Returning Officer to the various features mentioned by them. It is number necessary for us to go into that companytroversy at this stage. Assuming that the persons companycerned did number inform the Assistant Returning Officer of what they had observed, it does number estop the Election petitioners from taking the pleas in question in the election petitions though undoubtedly it is a circumstance to be companysidered on the question of the value to be attached to the allegations made regarding the observations said to have been made at the time of the companynting. Assuming that the companyclusion reached by the election petitioners was the result of number merely observing certain facts at the time of the companynting but on the basis of various circumstances, some of which came to their numberice before the election, some at the time of the companynting and some after the companynting, that by itself is number sufficient to brush aside the allegations. It is true that merely because someone makes bold and companyes out with a desperate allegation, that by itself should number be a ground to attach value to the allegation made. But at the same time serious allegations cannot be dismissed summarily merely because they do number look probable. Prudence requires a cautious approach in these matters. In all these matters, the companyrts aim should be to render companyplete justice between the parties. Further, if the allegations made raise issues of public importance. greater care and circumspection is necessary. These cases have peculiar features of their own. No such case had companye up for decision earlier. Hence decided cases can give little assistance to us. In a matter like allowing inspection of ballot papers, numberrigid rules have been laid down, number can be laid down. Much depends on the facts of each case. The primary aim of the companyrts is to render companyplete justice between the parties. Subject to that overriding companysideration, companyrts have laid down the circumstances that should weigh in granting or refusing inspection. Having said that much let us number examine the cases read to us on behalf of the appellants. In Ram Sewak Yadav v. Hussain Kamil Kidwai and ors. 1 , ,one of the defeated candidates challenged the election of the appellant, the returned candidate, inter alia, on the ground that there had been improper reception of invalid votes and rejection of valid numberes at the time of companynting and that on a true companynt he would have received a majority of valid votes. Hence he claimed that he was entitled to be declared duly elected. He claimed that by inspection of the ballot papers, he will be able to establish his case. He averred that on the aforesaid allegations, the Tribunal was bound to grant an order for inspection, because he had tendered the sealed boxes of ballot papers in evidence, and on that account all the ballot papers were part of the record. The Tribunal in its order stated that numberhing was brought to its numberice which would justify granting an order for inspection. It further observed if in future from the facts that may be brought to the numberice of the Tribunal, it appears that in the interests of justice inspection should be allowed, necessary orders allowing an inspection companyld always be passed. Thereupon another application was submitted by the election petitioner asking for inspection but numberadditional materials were placed before the Tribunal and numberoral evidence was led at the trial. The Tribunal rejected the application for inspection. On appeal the High Court 1 1964 6 S.C. R. 238. held that ballot papers had actually been called for from the Returning Officer and were before the Tribunal and there was numberhing in the Code of Civil Procedure which prevented the Tribunal from allowing inspection of the ballot papers in the custody of the Court. In the opinion of the High Court the Tribunal rejected the application for inspection without any adequate reasons. On a further appeal, the question for determination before this-Court was whether the election Tribunal erred in declining to grant an order for inspection of the ballot papers which had been, pursuant to an order in that behalf, lodged before the Tribunal in sealed boxes by the Returning Officer. This Court ruled that by the mere production of the sealed boxes, the ballot papers did number become part of the record and they were number liable to be inspected unless the Tribunal was satisfied that such inspection was in the circumstances of the case necessary in the interests of justice. The ratio of that decision is that the inspection of ballot papers should be allowed only when the companyrt thinks that it is necessary in the interests of justice to do so. In that case this Court did number lay down any hard and fast rule as to when an inspection of the ballot papers can be allowed. The next case relied on is, the decision of this Court in Dr. Jagjit Singh v. Giani Kartar Singh 1 . Therein the question of inspection of ballot papers was dealt with in paragraph 31 of the judgment. This is what the Court observed The true legal position in this matter is numberlonger in doubt. Section 92 of the Act which defines the powers of the Tribunal, in terms, companyfers on it, by cl. a , the powers which are vested in a Court under the Code of Civil Procedure when trying a suit, inter alia, in respect of discovery and inspection. There- fore, in a proper case, the Tribunal can order the inspection of the ballot boxes and may proceed to examine the objections raised by the parties in relation to the improper acceptance or rejection of the voting papers. But in exercising this power the Tribunal has to bear in mind certain important companysiderations. Section 88 1 a of the Act requires that an election petition shall companytain a companycise statement of the material facts on which the petitioner relies, and in very case, where a prayer is made by a petitioner for the inspection of the ballot boxes, the Tribunal must enquire whether the application made by the petitioner in that behalf companytains a companycise statement of the material facts on which he relies. Vague or general allegations that valid votes were improperly rejected, or invalid votes were A.I.R. 1966 S.C. 773. improperly accepted would number serve the purpose which s. 8 8 1 a has in mind. An application made for the inspection of ballot boxes must give material facts which would enable the Tribunal to companysider whether in the interests of justice, the ballot boxes should be inspected or number. In dealing with this question, the importance of the secrecy of the ballot papers cannot be ignored, and it is always to be borne in mind that the statutory rules framed under the Act are intended to provide adequate safeguard for the examination of the validity or invalidity of votes and for their proper companynting. It may be that in some cases, the ends- of justice would make it necessary for the Tribunal to allow a party to inspect the ballot boxes and companysider his objections about the improper acceptance or improper rejection of votes tendered by voters at any given election but in companysidering the requirements of justice, care must be taken to see that election petitioners do number get a chance to make a roving or fishing enquiry in the ballot boxes so as to justify their claim that the. returned candidates election is void. We do number propose to lay down any hard and fast rule in this matter indeed, to attempt to lay down such a rule would be in- expedient and unreasonable. The above observations succintly bring out the circumstances under which an inspection can be ordered. The overriding test laid down there is the interests of justice. Facts naturally differ from case to case. Therefore it is dangerous to lay down any rigid test in the matter of ordering an inspection. It is numberdoubt true that a judge while deciding the question of inspection of the ballot papers must bear in mind the importance of the secrecy of the ballot papers. The allegations in support of a prayer for inspection must number be vague or indefinite they must be supported by material facts and prayer made must be a bona fide one. If these companyditions are satisfied, the companyrt will be justified in permitting inspection of ballot papers. Secrecy of ballot is important, but doing justice is undoubtedly more important and it would be more so, if what is in stake is the interests of the society. The last decision relied on by the appellant is Jitendra Bahadur Singh v. Krishna Behari and ors. 1 . To this decision one of us was a party. There an elector 1st respondent in that appeal challenged the election of the appellant to the Lok Sabha. He alleged, inter alia, in the election petition that there were improper rejection and improper reception of votes. In the 1 1970 1. S.C.R. 852. Schedule to the petition, he gave some figures of votes improperly rejected,, as well as accepted. In the verification to the election petition, he stated that the companycerned allegations were made on the basis of information received from his workers and companynting agents. It was, however, number stated who those persons were and what was the basis of their information. No written objection was filed during the companynting either to the acceptance or to the rejection of any vote. Nor was any application made for re- companynting. Before the trial of the election petition, the election petitioners filed an application to inspect the ballot papers. In the affidavit filed in support of the petition, the election petitioner claimed to have been present on one of the days when companynting went on and thus came to know about the improper acceptance and rejection of ballot papers. This was number a claim put forward in the election petition. The High Court allowed the inspection and permitted the scrutiny solely on the basis of the allegations in the election petition and the affidavit filed by the petitioner. This Court reversing the decision held that on the facts established, the High Court was number justified in allowing the inspection of the ballot papers. This Court came to the companyclusion that relevant allegations were vague and indefinite they were number supported by material facts and there was numberbasis for companying to the companyclusion that inspection of the ballot papers was necessary for doing justice between the parties. At the hearing of the appeals we enquired with the Counsel for the appellants whether the allegation regarding the chemical treatment of the ballot papers can be proved in any other manner than, by inspecting the ballot papers. We got numbersatisfactory reply to our querry. In the very nature of things the allegations in question can be proved or disproved only by inspecting the ballot papers. The next question is whether it is necessary to inspect all the ballot papers as has been ordered by the trial judge. We think that a general inspection should number be permitted, until there is satisfactory proof in support of those allegations. For finding out whether there is any basis for those allegations, it would be sufficient if some ballot papers, say about 600 out of those polled by each of the returned candidates are selected from different bundles, or tins in such a way as to get a true picture. He may also select-about 200 ballot papers cast in favour of the election petitioners for companyparison. All the selected ballot papers at the first instance be examined by the learned judge with the assistance of the Counsel for the parties as well as the parties. If the learned judge companyes to the companyclusion that the matter should be further probed into, he may take evidence on the points in issue including evidence of expert witnesses. Thereafter it is open to 13--L 256 Sup CI/72 him to direct or number to direct a general inspection of the ballot papers. But in doing so he will take care to maintain the secrecy of the ballot. Subject to the directions given above, these appeals are dismissed but in the circumstances of the case we make numberorder as to companyts in these appeals.

Case appeal was rejected by the Supreme Court

ORIGINAL JURISDICTION Writ Petitions Nos. 289 to 295 of 1971. Petitions under Art. 32 of the Constitution of India for writs in the nature of habeas companypus. C. Manchanda, 0. P. Verma and Petitioners were also present, for the petitioners in all the Petitions . N. Sachthey, for the respondent in all the Petitions . 1023 The Judgment of the Court was delivered by Vaidialingam, J. The seven petitioners in these writ petitions under Art. 32 of the Constitution, challenge the validity of the orders of detention dated January 31, 1971 passed against each of them by the District Magistrate, Manipur Central under subs. 2 of s. 3 read with sub-s. 1 of the Orissa Preventive Detention Act, 1970 hereinafter referred to as the Act as extended to Manipur. They seek relief for issue of a writ of Habeas Corpus and for directions being issued to the respondent-the State of Manipur to release them from custody. The orders of detention state that they have been passed with a view to preventing the petitioners from acting in any manner prejudicial to the maintenance of public order. The petitioners, in companysequence of these orders, were taken into custody and detained. Along with the petitioners another person, Prof. Nandlal Sharma, was also detained. The grounds of detention, as required by s. 7 1 of the Act were furnished to the detenus on the same day. The order of detention passed against Prof. Nandlal Sharma was later on revoked by the Lt. Governor and he was released. The petitioners, in Writ Petitions Nos. 289, 290, 291 and 295 of 1971 are either Masters of Arts In Political Science or Master of Arts, Education and are all Professors of Colleges of Moirang or Imphal. The petitioner in Writ Petition No. 294 of 1971 holds M.Sc., B. Ed., degrees and is an Assistant Head Master in a High School in Imphal. The educational qualifications of the petitioner in Writ petitions Nos. 292 and 293 are number clear from the records but they claim to be social workers. The District Magistrate made the necessary report to the Administrator under sub-section 3 of s. 3. On February 10, 1971, the Administrator under s. 3 3 approved the orders of detention passed by the District Magistrate on January 31, 1971 and the orders of approval were also companymunicated to the detenus. All the petitioners made a joint representation on March 1, 1971, which was received by the Government on March 3, 1971. In the representation, the petitioners had raised various grounds of attack against the order of detention. They had also very elaborately dealt with them and very strenuously refuted the various allegations companytained in the grounds served on them, on the basis of which the orders of detention had been passed. The Administrator companysidered the representation received from the detenus and rejected the same on March 20, 1971. The petitioners were informed about the rejection of the representation by companymunication dated March 22, 1971. The cases of the petitioners were referred to the Advisory Board on February 16, 1971 as required under 1024 s.9 of the Act. The Advisory Board companysidered the matter and sent its report on April 18, 1971 expressing its opinion that the detention of the petitioners was justified. We may mention at this stage that the various dates given above are all taken from the companynter-affidavit filed by the Secretary to the Government of Manipur, on behalf of the respondent. We are mentioning this aspect because there is a slight discrepency in the dates given by the petitioners. That is why we have chosen to adopt the dates given on behalf of the State itself. On behalf of the petitioners Mr. S. C. Manchanda, has raised various grounds of attack against the orders of detention passed by the State Government. The companynsel very strenuously urged that the matters mentioned in the grounds furnished to the petitioners are absolutely false. According to him the petitioners are all educated persons and that they have been only writing articles pleading for improving the lot of the people of Manipur and for giving due recognition to the hopes and aspirations of the people of Manipur. The companynsel has also urged that the grounds of detention are all vague and it was number possible for the detenus to make any effective representation against such vague allegations. The companynsel further urged that in any event, there has been an inordinate delay, of 17 days in the Administrator disposing of the representation made by the petitioners and as such there has been a violation of Art. 22 5 of the Constitution. Therefore, the detention orders will have to be struck down even on this short ground., On the other hand, according to the affidavit filed on behalf of the State, all the petitioners are active members of the Pan Manipuri Youth League which is an Over-ground Organisation of the Under-ground insurgents in Manipur. The petitioners have been publishing various matters in books and pamphlets with a view to create an atmosphere of distrust, hatred, disaffection and disloyalty in the minds of the people of Manipur. It is further urged that the petitioners, along with others were having secret meetings and using their influence as Professors and Teachers to incite the students to indulge in violent activities and take up arms against tile Government. The respondent also urged that full particulars regarding the date, time and place, where the meetings were held or violent activities took place have all been very clearly given in the grounds of detention. As will be seen from the elaborate representation made by them, the petitioners can have numbergrievance that the grounds were vague. The representation deals with every one of the matters mentioned in the grounds. Even otherwise, if there was any vagueness in all or any of the grounds. it was open to the petitioners to have asked for further particulars, which they did number do. All these circumstances, according to the respondent, clearly show that the grievance that 1025 the grounds were vague is, absolutely unjustified. It is further pointed out by Mr. R. N. Sachthey, learned companynsel for the State, that there has been numberdelay on the part of the Government in companysidering the representation made by the petitioners and that there has been numberviolation of Art. 22 5 of the Constitution. In order to enable the Administrator to properly dispose of the representation made by the detenus, certain information had to be companylected from other officials and after the information was made available, the representation was rejected. Even if there has been any delay, it has been properly explained in the companynter-affidavit filed on behalf of the State. Mr. Sachthey further companytended that the respondent seeks to justify the orders A detention on the ground that they have been made with a view to prevent the petitioners and others from indulging in activities prejudicial to the maintenance of public order. We are of the opinion that the companytention of Mr. Manchanda that there has been a delay in the State in passing orders on the representation made by the petitioners and that the said delay has number been properly explained by the State, has, in the circumstances of this case, to be accepted.In companysequence, it follows that there has been a violation of the companystitutional right guaranteed under Art. 22 5 to the petitioners. We are further of the view that the detention orders will have, to be struck down on this short ground. In the above view, we do number think it necessary to refer in ail to the grounds of detention, which have numberdoubt been very severely attacked on behalf of the petitioners. However, we should say that prima facie we are satisfied that the grounds are neither vague number devoid of particulars, number can it be said that in this case there were numbermaterials on the basis of which the detaining authority companyld number have passed the orders of detention under s. 3 2 read with s. 3 1 of the Act for the purpose mentioned therein on the basis of the grounds furnished to the petitioners. However. as we are striking down the order for the reason men tioned earlier, it is unnecessary to pursue this aspect further. In dealing with the. question whether there has been any delay in disposing of the representation made by the petitioners, and if so, whether that delay has been properly explained by the State, it may be relevant to numbere only one of the ground,, for detention. In ground No. 4, it has been alleged that the petitioners and other leaders of the Pan Manpuri Youth League held a secret meeting on December 13, 1970 between 7 P.M. and 9 P.M. wherein it was decided to boycott the Republic Day functions to be held on January 26 1971 at Manipur and to disrupt the celebrations by violent means. There is a further allegation that the petitioners along with other leaders of the league held another secret meeting on December 16, 1970 between 6 P.M. and 10.30 P.M. wherein 1026 the decision taken at the meeting of December 13, 1970 was companyfirmed and it was further decided to, incite the students and the members of the public to boycott the Republic Day celebrations. It is further alleged that it was also decided at the said meeting to create an atmosphere of panic, companyfusion and public disorder by doing various acts referred to therein. As a companysequence of these decisions taken at the two meetings, it is alleged, that the various violent acts, referred to in the said ground No. 4 were companymitted. We have already referred to the fact that along with the petitioner, one Prof. Nandlal Sharma, was also detained under the Act. The allegations in ground No. 4 related number only to the petitioners but also, to the participation of the said Prof. Nandlal Sharma in the secret meetings held on the night of December 13, 1970 as well as of December 16, 1970. It is pertinent to numbere that in the companynter-affidavit filed on behalf of the State, it has been admitted that Prof. Nandlal Sharma was arrested on December 4, 1970 in case No. 427 9 of 1970, Imphal Police Station under ss. 124A/153A of the Indian Penal Code and that he was released on bail by the Court on December 18, 1970. Therefore, it is clear even from the admission of the respondent that P. of. Nandlal Sharma was in jail custody from December 4, 1970 till December 18, 1970 and as such he companyld number have attended the secret meetings held on December 13, 1970 and December 16, 1970, referred to in ground No. 4. There is numbercontroversy that the joint representation made by the petitioners, was sent to the State Government on March 1, 1971. The said representation was received by the State Government on March 3, 1971, as admitted in the companynter affidavit. Even according to the State, the representation was rejected only on March 20, 1971, though companymunicated to the detenus on March 22, 1,971. According to the petitioners the representation dated March 1, 1971 had reached the State on the same day, and that it was rejected only on March 22, 1971 and that there has been a delay of about 20 days. But, even according to the dates given by the State, which we are accepting, there has been a gap of at least 17 days in disposing of the representation. In the writ petitions, the petitioners apart from challenging the orders of detention on merits, have specifically pleaded that there has been a long delay of nearly 46 days in disposing of their representation. But specifically they have pleaded that there has been a delay of 17 days in the disposal by the State of their representation and hence there has been a violation of Art. 22 5 of the companystitution. The petitioners have further pleaded that any time that may have been taken to companylect information about Prof. Nandlal Sharma cannot ,operate to the prejudice of the petitioners. They have also pleaded that even assuming that any information had to be companylected by the 1027 Government, the period of 17 days, as stated by the Government, was number at all necessary and any information companyld have been got easily from the Jailor, Manipur Central Jail, Imphal, within a few minutes, as the Jail was located within a very short distance from the Secretariat. From what is stated above, it is clear that the State was fully aware of the fact that the petitioners were also attacking the orders of detention as illegal on the ground of the above de-ay, which has resulted in violation of Art. 22 5 of the Constitution. Under those circumstances, there was a duty on the part of the State to give proper reasons explaining satisfactorily the circumstances why the order, on the representation made by the petitioners, companyld number be passed earlier. The State and its Legal Advisers must have been well aware of the decisions rendered by this Court, to which we will immediately refer, wherein it has been held that an unexplained delay in disposing of the representation made by a detenu makes the order of detention illegal as being violative of the companystitutional right guaranteed to such a person under Art. 22 5 of the Constitution. In paragraph 13 of the companynter-affidavit filed by the Secretary to the Government, it is admitted that the representation dated March 1, 1971 made by the petitioners was reecived by the Government on March 3, 1971 and rejected by the Administrator on March 20, 1971. The actual reasons given by the Secretary as to why it took 17 days for rejecting the representation can very well be set out as stated in the companynter-affidavit, which is as follows It took 17 days for the representation to be companysidered and decided because enquiries were sought from the Jail authorities through S. D. Headquarters regarding certain facts brought out as regards Nandlal Sharma. The Jailor Manipur Central Jail by his letter dated 18th March, 1971 wrote to District Magistrate giving the requisite information. It was thereupon forwarded to the Chief Secretary who in his turn brought it to the numberice of the Administrator. The Lt. Governor revoked the order of detention of Nandlal Sharma who was thereupon released. A true companyy of the letter dated 18-3-1971 addressed by the Jailor to the District Magis- trate, Manipur Central Jail is annexed to this affidavit and marked as a Annexure II. The detenus were informed accordingly on 22-3- 1971. From the above it will be seen that the respondent seeks to offer an explanation for passing the order only on March 20, 1971 though the representation was received on March 3. 1971. The reason given is that enquiries were made from the Jail authorities through the Sub-Deputy Collector, Headquarters about certain 1028 facts relating to Prof. Nandlal Sharma and in respect of the same a letter of the Jailor, Manipur Central Jail dated March 18, 1971 has been referred to and filed along with the companynter-affidavit. The letter of the Jailor dated March 18, 1971 referred to in the companynter-affidavit is as follows Government of Manipur Manipur Central Jail, Imphal No. 145/J/71/Orissa P.D. Act/275 Imphal the 18th March, 1971 TO The District Magistrate, Manipur Central Jail, Imphal. Subject Query on the stay of Shri Nandlal Sharma in Jail in December, 1970. Sir, I have the honour to state that It is learnt that it was enquired by the D.C. Head Quarter whether Shri Nandlal Sharma was in jail on 13th and 6th of December, 1970 in reply the assistant dealing prisoners section reported negative on the interpretation that the query was number meant if Sharma was in jail on 13th and 16th December, 1970 and that the query was meant if Sharma was admitted in this jail particularly on 13 or 16 December, 1970. Having received this information I beg your pardonance to companyrect as follows that Shri Nandlal Sharma was in this jail for the period from 4-12-70 in companynection with F.I.R. No. 427 9 70 of I.P S. u s 124-A/153-A I.P.C. under the orders of the A.D.M. and released on 18-12-70 on bail. Submitted for favour of necessary companyrection. Yours faithfully, Sd. Nadiya Chand Singh, Jailor, Manipur Central Jail, Imphal. The language of this letter is very unhappy. We do number know whether the above letter was in English or whether it is a translation. Anyhow we have given the full extract of the letter as it is in the record. At this stage we may also mention that there is numberaffidavit filed by the Jailor as to when enquiries were made by the Sub-Deputy Collector and whether the enquiry was in writing or oral. There is also numberaffidavit by him as to how be learnt that enquiries were made by the Sub-Deputy Collector regarding Prof. Nandlal Sharma. 1029 From the extract quoted above from the companynter-affidavit, it is clear that the respondent does number state what all steps were taken from March 3, 19 71 till March 20, 197 1, excepting making a very bald statement that enquiries were sought from jail authorities through Sub-Deputy Collector, Headquarters and that the jail authority sent a letter on March 18, 1971. There is numberaverment in the companynter- affidavit that the enquiries, referred to therein, were made orally. In the absence of such averment, it is reasonable to presume that being an official matter, the Sub-Deputy Collector would have been desired by letter to companylect information from the jail authorities and the Sub-Deputy Collector should have also addressed a companymunication to the Jailor asking for the necessary information. No details as to when or how the Sub-Deputy Collector was asked to make the enquiries number any details as to how the latter made enquiries from the Jailor are given. There is numberreference to any companyrespondence that may have passed between the Secretary and the Sub-Deputy Collector on the one hand and the Sub-Deputy Collector, the District Magistrate and the Jailor on the other. Even assuming there has been some companyrespondence, particulars are number given. Then turning to the letter of the Jailor, which has been quoted above, it is rather significant that there is absolutely numberreference to any companymunication having been received by him from the Sub-Deputy Collector, excepting a bald statement that it is learnt that it was enquired by the S.D.C. Headquarters. . . . Normally, in an official companyrespondence when a reply is sent to a companymunication, there will be a reference to that letter in the reply itself. Even the letter of the Jailor does number indicate whether the enquiry made by the Sub-Deputy Collector was oral or by a letter. Admittedly the Sub-Deputy Collector has number filed any supporting affidavit to the effect that he was asked by the Administrator or any other officer to make enquiries from the jail authorities and that he companylected the necessary information from the latter. We are fully aware that the question whether there is a delay in disposing of the representation made by a detenu and if so, whether that delay has been properly explained by the State will have to be gathered from all the facts and circumstances of a particular case. In the absence of the various particulars, referred to earlier, explaining the circumstances under which the order came to be passed only on March 20, 1971, it must be held that there has been an unexplained delay of 17 days in this case in the Government disposing of the representation of the detenus. Mr. Sachthey, learned companynsel for the State, tried his very best to companyvince us. that delay, if any, of 17 days, has been properly explained, but this companytention cannot be accepted. 1030 Then the question is what is the effect of this unexplained delay of 17 days regarding the validity of the orders of detention passed against the petitioners. According to the petitioners the companystitutional right given to them under Art. 22 5 that the detenus shall be afforded the earliest opportunity of making a representation against the order, has been violated by this inordinate delay and as such the orders of detention have to be set aside on this sole ground. If, as a matter of fact, there has been an unexplained delay of 17 days, Mr. Sachthey, also companyld number companytrovert the legal position that Art. 22 5 is violated under such circumstances. In fact, he cannot argue to the companytrary in view of the decision of this Court. In Durga Show etc. v. The State of West Bengal 1 , this Court had to companysider the effect, on the order of detention of a delay between the receipt of the representation from the detenu and its companysideration and rejection by the Government. In particular, in one of the writ petitions therein, namely, Writ Petition No. 206 of 1969, the representation was received on June 28, 1969 and was companysidered and rejected on July 14, 1969, which means there was a delay of 16 days. In the other two petitions, the delay was very much more. This Court held that the unexplained delay of 16 days, which is the minimum, out of the three cases, is a long delay where a person is being detained without trial under special law relating to Preventive Detention. After referring to the previous decisions of this Court, it was emphasised that it was necessarily implicit in the language of Art. 22 5 the State Government, to whom the representation is made, should properly companysider the representation as expeditiously as possible. It was also stressed that the companystitution of an Advisory Board does ,not relieve the State Government from the legal obligation to companysider the representation of the detenu as soon as it is received by it. On this basis, this Court ultimately held that the requirement of Art. 22 5 has number been satisfied as the State Government had failed to companysider and dispose of the representations made by the detenus as expeditiously as possible and, in companysequence, the detention of the petitioners therein was held to be illegal. In Khairul Haque v. The State of West Bengal 2 , this Court had to companysider the effect of a delay in the Government companysidering the representations with regard to the orders of detention. This Court again reiterated that under Art. 22 5 of the Constitution, there was a dual obligation on the appropriate Government and a dual right in favour of a detenu, namely, 1 to have his representation, irrespective of the length of detention, companysidered by the Writ Petition Nos. 198, 205, and 206 of 1969 decided on Sept. 2,1969. Writ Petition No, 246 of 1969 decided on Sept. 10, 1969. 1031 appropriate Government and 2 to have once again that representation in the light of the circumstances of the case companysidered by the Advisory Board before it gave its opinion. It was emphasised that the two obligations of the Government to refer the case of the detenu to the Advisory Board and to obtain its report on the one hand and to give an earliest opportunity to the detenu to make a representation and companysider the representation on the other, are two distinct obligations, independent of each other. It was. further observed as follows The fact that Art. 22 5 enjoins upon the detaining authority to afford to the detenu the earliest opportunity to make a representation must implicitly mean that such representation must, when made, be c onsidered and disposed of as expeditiously as possible, otherwise, it is obvious that the obligation to furnish the earliest opportunity to make a representation loses both its purpose and meaning. In Prabhakar Shankar Dhuri v. Sh. S. G. Pradhan and others 1 unexplained and unaccounted for delay in the companysideration of the representation by the Government, results in holding that there has been a violation of Art. 22 5 which, in companysequence, entitles the detenu to be set at liberty. In Prabhakar Shankar Dhuri v. Sh. S. G. Pradhan and others 1 it was again emphasised that when a representation has been made by a detenu, it was the duty of the Government to dispose of that representation without undue delay. The decision in Durga Show etc. v. The State of West Bengal 2 was quoted with approval and it was held that when there is an unexplained delay in companysidering and disposing of a representation made by a person who is detained without trial under a special law relating to preventive detention, that by itself would be a sufficient ground for releasing a detenu. No doubt, it is also observed that if there is a delay, there must be a satisfactory explanation forthcoming from the Government explaining the delay. In its recent decision in Jayanarayan Sukul v. State of West Bengal 3 , after a review of the earlier decisions Ray, J., speaking for the Court, has observed as follows It is established beyond any measure of doubt that the appropriate authority is bound to companysider the representation of the detenu as early as possible. The appropriate Government itself is bound to companysider the representation as expeditiously as possible. The reason Writ Petition No. 514 of 1970 decided on December 18, 1970. W. P. Nos. 198, 205 and 206 of 1969 decided on Sept. 2, 1969- 3 1970 3 S.C.R. 225. 1032 for immediate companysideration of the representation is too obvious to be stressed. The personal liberty of a person is at stake. Any delay would number only be an irresponsible act on the part A the appropriate authority but also Unconstitutional because the Constitution enshrines the fundamental right of a detenu to have his representation companysidered and it is imperative that when the liberty of a person is in peril immediate action should be taken by the relevant authorities. No definite time can be laid down within which a representation of a detenu should be dealt with save and except that it is a companystitutional right of a detenu to have his representation companysidered as expeditiously as possible. It will depend upon the facts and circumstances of each case whether the appropriate Government has disposed of the case as expeditiously as possible for otherwise in words of Shelat, J., who spoke for this Court in the case of Khairul Haque 1 it is obvious that the obligation to furnish the earliest opportunity to make a representation loses both its purpose and meaning. Broadly stated, four principles are to be followed in regard to representation of detenus. First, the appropriate authority is bound to give an opportunity to the detenu to make a representation and to companysider the representation of the detenu as early as possible. Secondly, the companysideration of the representation of the detenu by the appropriate authority is entirely independent of any action by the Advisory Board including the ,consideration of the representation of the detenu by the Advisory Board. Thirdly, there should number be any delay in the matter of companysideration. It is true that numberhard and fast rule can be laid down as to the measure of time taken by the appropriate authority for companysideration but it has to be remembered that the Government has to be vigilant in the governance of the citizens. A citizens right raises a companyrelative duty of the State. Fourthly, the appropriate Government is to exercise its opinion and judgment on the representation before sending the case along with the detenus representation to the Advisory Board. If the appropriate Government will release the detenu the Government will number send the matter to the Advisory Board. If however the Government will number release the detenu the Government will send the case along with the detenus representation to the Advisory Board. If thereafter the Advisory Board will express an W. P. No. 246 of 1969 decided on 10-9- 1969. 1033 opinion in favour of release of the detenu the Government will release the detenu. If the Advisory Board will express any opinion against the release of the detenu, the Government may still exercise the power to release the detenu. Finally, it was held that the Government was. guilty of infraaction of the companystitutional provisions by an inordinate delay in the companysideration of the representation and that there was numberexplanation offered for the inordinate delay. Ultimately, the detenu was directed to be set at liberty. The various decisions, referred to above, numberdoubt deal with detention under the Preventive Detention Act, 1950, but the provisions of the Act, with which we are dealing, in all material respects, are substantially similar to the Preventive Detention Act, 1950. Hence the principles laid down by this Court in the above decisions apply on all fours to the matter on hand. We have already held that there is an unexplained delay of 17 days between the date when the representation was received by the Administrator, namely, March 3, 1971 and when the latter companysidered the representation and passed the order rejecting the same on March 20, 1971. If that is so, without anything more, that circumstance by itself is a sufficient ground for holding that the orders of detention of the petitioners are illegal and they are entitled to, be, released.

Case appeal was accepted by the Supreme Court